Lectures

Enterprises are traditionally defined as either for-profit businesses or non-profit organizations.  The social enterprise is a new classification of enterprise that blends generating profits with complementary social benefits. However, even for-profit and non-profit enterprises provide substantial social benefits, which make this factor alone insufficient to differentiate social enterprises from them; demanding other issues be considered. Unfortunately social entrepreneurship is ambiguously defined even by universities who teach it and individuals who support it.  Therefore, for the purposes of this essay, I define a social enterprise as an organization willing to forfeit profitability or competitive pricing to provide an additional social benefit complementing their primary product offering. The fundamental ethical assessment an entrepreneur must make is whether their motivations and aspirations for establishing a social enterprise are based on Individualism, which is the pursuit of one’s rational self-interest or Altruism, which is self-sacrificing. Establishing a social enterprise has both positive and negative practical consequences.  On the positive side, an added social benefit can motivate an entrepreneur, investors and consumers, who equally share the same values, to support a social enterprise, thereby enhancing its value.  If ill-considered there are also potentially negative consequences.  For the entrepreneur, it can undermine both their incentive and their motivation for becoming an entrepreneur.  For investors it can diminish profitability and their return on investment.  For consumers it can result in higher prices. There are several more issues to consider as well. The entrepreneur, as a creative producer, must assess the degree to which the value propositions they bring to market are based on innovations related to their products or merely social benefits often unrelated to them.  The entrepreneur must decide whether providing social benefits is most appropriately an individual decision, a corporate social responsibility or a requirement imposed by government. Seeking government support for social enterprises is as morally questionable as corporate cronyism as well as dangerous to long term financial sustainability. And finally social entrepreneurs who endorse Altruism can become victims of this sanction and give up the moral high ground they need to defend their right to establish an enterprise that serves their own rational self-interests.