The Social Business Model


Unveiling the Economic Rationale Behind the Social Business Model, Special issue of Social Business, Edited by Alejandro Agafonow, Cam Donaldson and Thomas Hoerber; Deadline 30 Apr 2014

Social Business Special Issue

Special Issue on Unveiling the Economic Rationale Behind the Social Business Model

Guest Editors: Dr Alejandro Agafonow (ESSCA School of Management, France); Professor Cam Donaldson (Glasgow Caledonian University, UK); Dr Thomas Hoerber (ESSCA School of Management, France)

Deadline for submissions 30 April 2014

Westburn Publishers, in a bold strategy to push forward the frontiers of knowledge on unconventional approaches to management, announces a Call for Papers intended to unveil the economic rationale behind the Nobel Peace Laureate Muhammad Yunus’s social business model. Social business is a new form of commercial venture that lies somewhere between for-profits and charities. We are particularly interested in contributions that cast light on what a social business does differently from for-profits while remaining financially sustainable, on the one hand, and the extent to which a social business is able to prevent mission drift in its departure from the work of a charity on the other.

The media provides numerous examples of firms that close down or restructure if they fail to turn sufficient profit, to the ensuing distress of their laid-off employees. The common-sense idea of efficiency is thus closely related to profit-making; if a good is to be produced, the selling price needs to exceed the cost of production in order to allow for profit and dividend distribution. In a challenge to the conventional wisdom of efficiency, however, Yunus has introduced a new form of commercial venture that forgoes dividend distribution, as in charity or conventional philanthropy, and yet retains the financial sustainability principle of the conventional for-profit.

Yunus calls this new form of commercial venture, a company that neither incurs losses nor generates dividends, a type I social business. In Yunus’s words, it is a "’non-loss, non-dividend company,’ dedicated entirely to achieving a social goal" (2010: XVII, 02, 04; see also Yunus et al., 2010). What distinguishes a social business from a charity is the non-loss part of the equation, so to speak; it is intended to be economically sustainable enough to recoup operating costs without relying on donors’ non-reimbursable contributions or donations. Thus, it situates its income-generating activity in the marketplace. According to Yunus (2010: XVII), "The social business is a business because it must be self-sustaining-that is, it generates enough income to cover its own costs."

Contributions to this special issue are expected to draw conclusions by comparing a social business to for-profit firms and their conventional wisdom of economic efficiency. The conventional view holds that a profit-driven enterprise operates until the difference between total revenue and total cost is maximised, that is, until the marginal cost of production equals the marginal revenue, hence maximising profits. Thus, enterprises will engage in cutthroat competition, attempting to outperform one other with the consequent outcome of reallocating resources to the most urgent demands. According to an early, widely-known formulation in this respect, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest" (Smith, 1904: 16).

Yunus, however, downgrades the importance of profit. Because a social business is dedicated to achieving a social goal, its primary orientation is towards the poor. The moral goal of not making a profit at the expense of the poor is an explicit, built-in characteristic of this business model. As Yunus (2010: 11) asserts, "I believe it’s immoral to make a profit-and especially to pursue the usual business goal of maximum profit-from the poor" (see also Kickul et al., 2012). When a social business turns a profit, it must be devoted to the expansion of the business itself, to widening its outreach so that it serves a larger clientele among the poor. The permissible uses of surpluses thus include expansion, improvement, and reserves to cover unforeseen circumstances (Yunus, 2010).

Contributions to this special issue can also consider social business vis-à-vis a strand of the literature that does not view relinquishing the aim of profit to be a sine qua non of social entrepreneurial activities (e.g. Drucker, 1994; Dees, 1998; Seelos & Mair, 2004; and Martin & Osberg, 2007). Peredo and McLean (2006), for instance, claim that social entrepreneurship can be better understood as the creation of social value in a broad sense, and that it is unwarranted to draw a line excluding for-profits from social entrepreneurship and social objectives. Martin and Osberg (2007) maintain that social entrepreneurial ventures can be organised as for-profits as long as their value proposition targets a disadvantaged population and, even while struggling with the third sector’s identity, Dees (1998) stresses that commercialisation can harness the enterprise’s mission-related impact. Picking up on this thread, Dees and Anderson (2003) and Mair and Martí (2006) advocate the advantages of combining social ventures and profit aims, while Porter and Kramer (2011) have advanced the idea of shared value to posit that profit coupled with societal benefit can be a higher form of profit.

As a mode of orientation, possible lines of inquiry include the following:

  • What are the implications of the spread of the social business model for economic efficiency?
  • Is the conventional wisdom of economic efficiency flawed in light of the social business model, or vice versa?
  • Can precedents to the social business model be found in the history of economic and organisational thought?
  • Does the pricing method of social businesses differ from that of for-profits?
  • How do social businesses reconcile marketability and mission-related outcomes?
  • How can the performance of a social business be gauged if profit margins are secondary to the goal of the enterprise?
  • How effective is a social business compared to a charity in achieving mission-related outcomes?
  • Can social businesses prevent mission drift, and if so, how?
  • How does the social business model compare to other models of social enterprise?

Contributions are welcomed from a range of theoretical and methodological traditions. It is expected that the authors of selected papers present their works in a workshop that will be organised at ESSCA School of Management on its campus of either Paris or Angers. The Guest Editors expect this to be an opportunity to foster scholarly cooperation on social business and neighbouring topics. …[Read More at the full Call for Papers]

For the full Call for Papers and details about how to submit visit the journal CFP webpage:

For more details about Social Business visit the main journal webpage:


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