December 10, 2006

Social Business: The next economic phenomenon?

Dr. Muhammad Yunus and his Grameen Bank have received the 2006 Nobel Peace Prize valued at 10m Swedish kronor ($1.35m, £730,000) at a ceremony in the Norwegian capital Oslo today. The event was televised live in many Bangladeshi TV channels. Yunus has indeed become a pride for Bangladesh.

There was an interesting thing in his speech. He mentioned a new term "social business" and according to him:

"In future, Grameen will bring a new concept of business, which is social business. Today’s concept of business is to make profit, but this is a narrow interpretation of business. Human beings are not only for making money, they are also for changing lives of other people. Doing good to the people is as enjoyable as making profit.

Social business will be a new kind of business introduced in the market place with the objective of making a difference in the world. Investors in the social business could get back their investment, but will not take any dividend from the company. Profit would be ploughed back into the company to expand its outreach and improve the quality of its product or service. A social business will be a non-loss, non-dividend company.

Once social business is recognized in law, many existing companies will come forward to create social businesses in addition to their foundation activities. Many activists from the non-profit sector will also find this an attractive option. Unlike the non-profit sector where one needs to collect donations to keep activities going, a social business will be self-sustaining and create surplus for expansion since it is a non-loss enterprise."

Connie Bruck wrote in the New Yorker that Yunus's idea of microcredit as self sustaining social entrepreneurship has attracted many high tech entrepreneurs who would like to utilize their donations for a long lasting initiative.

I think soon we will find this term 'social business' everywhere because it provides an win-win situation for the entrepreneurs and the aid recipients and the underlying mission is to create a positive change in the society.


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