guest post: Social Venturing – Because we can

Undoubtedly we are living in interesting times. You might read this from the Bahamas, Russia, The United States, India, Mali  or any other country that has access to the fast lanes of the internet. It’s strange to think how much has changed over the past few decades.  Just the other day one of my students asked me what  a post stamp was and when I explained she said “Well that’s stupid.  Why they didn’t send an e-mail back then?“.  I felt like a dinosaur.

Shift in paradigms
Paradigm is one of those words that is fun to use in a paper when you want to pretend to know what you’re writing about.  It’s often abused or misused and  we continue to do so in this post.  Let’s say that when we are talking about a shift in paradigms, we are talking about  how assumptions and models of global and domestic economies change, in this slightly absurd era of compression of time and space.

A lot of these changes came with the internet. The digital revolution of nineties has worked as both an accelerator and a catalyst for modern globalization. Humanizing the ‘other’. Though we like to hold on to those silly stripes, the mental states and nations increasingly disappear. We’ve became global spectators, all from the same village. We’re not that photo from a far distant country anymore but hearts that share the same basic values and hopes. Increasingly concerned with what happens with our fellow social medians across the globe. Young girls and activists-groups effectively pressured make up brands such as L’Oreal for testing on animals. Equadorians  in Brazil and Canada have filled lawsuits against Chevron for causing, what ChevronToxico calls, a Rain Forest Chernobyl.  and in Holland Teun van de Keuken prosecuted himself for buying and eating chocolate.

During the whirlwind of the publicity that came with the criminal charges, Teun van de Keuken decided to bring his own slave free chocolate bar on the market. Short after, Verkade – one of the oldest Dutch family companies till its takeover in 2006 – decided to bring a range of fair trade chocolate on the market. Its examples such as these that show how much customer’s buying power has radically increased. As much as multinational organisations would like to dodge cross border values, they can’t. Once caught red-handed… word no longer spreads like fire but like a digital virus.

Another force that drives economic globalization is the acquisition of production of facilities or firms in other countries also known as foreign direct investments (FDI). Traditionally, multinational enterprises (MNE’s) took interest in developing countries because of low labor costs and availability of resources (not to mention poor law enforcement). Now this interest has changed to the vast untapped consumer markets of emerging markets and developing nations. Joint ventures, acquisitions and green field investments  influenced organizational behavior of MNE’s that had  to adapt to local circumstances in developing nations. These processes are already an increased object of study but  more interesting and far less covered is the way MNE’s from emerging markets challenge traditional MNEs. How did they manage to rise and be able to compete on the global business arena?

Beyond E2k towards Social Venturing
Some years back I read an article by Thomas Friedman when writing a really bad paper for Business English. According to Thomas Friedman E2k stands for:

“all the energy programming and monitoring that thousands of global companies are going to be undertaking in the early 21st century to either become carbon neutral or far more energy efficient than they are today […] It is going to be the next big global business transformation. And it’s going to require tons of software, programming and back-room management to measure each company’s carbon footprint and then monitor the various emissions-reduction and offsetting measures on an ongoing basis.”

However this vision he  had falls short. Stuart L. Hart argues. in his book Capitalism at the Crossroads that:

By moving beyond greening, companies hope not only to address mounting social and environmental concerns, but also build the foundation for innovation and growth in the coming decades. In so doing, they would outperform their competitors in today’s businesses and even more important, outrun them to tomorrow’s technologies and markets. In short, sustainable global enterprises would create competitively superior strategies that simultaneously move us more rapidly toward a sustainable world.

MNE’s in emerging markets seem to recognize this more than their ‘Western’ counterparts. Equity Bank Kenya is one of the best examples. Its CEO, Dr.James Mwangi, was recently named Ernst&Young Entrepreneur of the year 2012. Equity Bank went where traditional MNE’s would not even think of going; the so-called bottom of the pyramid, the billions of people living of less than 2 dollar a day.

Equity Bank’s highly successful and innovative  model challenges the existing banking tacit knowledge by reshaping the model of credit history. By social rating and ranking, or assessment by the community – Equity Bank works around the obstacle of credit history (lack of collateral) for low income customers. They adapt conventional ways of doing business to the needs and dynamics of the informal sector. Offering loans as little as 6$, enabling any customer to open an account and bringing the bank to the customers in rural area’s with armored trucks that serve as mobile branches of Equity Bank Kenya. The bank has transformed lives in East-Africa, continues financial growth and expands across borders.

Social venturing (using expertise, vision and financial resources to invest in projects that are inaccessible to commercial investors and ineligible for government subsidies)   taking all stakeholders in account and not just the shareholders  – is not some utopian way of conducting business. It’s real and it’s profitable. Besides the competitive advantage of moving towards becoming sustainable small medium enterprises or MNE’s.. there is also something else why the shift towards social venture entrepreneurship is so important. An enterprise that conducts business in a criminal way, by ignoring laws and universal values, is not a business but a criminal organization.  And we enable them. As a global community we are responsible for the world we live in. We are the prosecuted and the prosecutors in a world where business as we’ve always known it finds itself on a verging point.

It’s a long road but the more we exercise our customer power, the more businesses are pressured into being ethical, the more we try to solve social issues through innovation, community building and entrepreneurship; the more we move towards a global sustainable business environment.

Because we can.

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* This part is from a paper, my dear friend James from Zambia and I wrote for the Transnational Organizational Behavior course. I’m not sure if this is something we copied/quoted or wrote ourselves. As usual I was being a lousy student and we had just 2 days to finish the paper. James was on the verging point of killing me. It was a hot mess but we must have done something right. We got a 9 on a scale of 1 out of 10.  

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