Social entrepreneurship is the pursuit of business with social benefit as a primary concern rather than simply profit. In some cases, social entrepreneurship relies upon the intended social benefit as the chief marketing point. In the best cases, the entrepreneurs provide a good, needed service at a competitive price, but distribute profits with something other than the bottom line or shareholder value as the primary concern.
A reasonable profit is a good thing and necessary for a humane economy. Entrepreneurs generally risk their livelihood for their business. Profits allow business to continue, entrepreneurs to feed their families, companies to expand, and more people get jobs that support their families. Poverty will not be ended without business.
In The Accidental Social Entrepreneur, Grant Smith outlines his own life experience as a social entrepreneur. In a memoir-style book, he covers the successes, challenges, and failures he has experienced while running his Hand In Hand company with several faces and outlets. In one of its most significant aspects, Smith’s company became one of the largest home construction entities in Kenya.
Smith recognizes that business is a good thing. When run justly, companies provide opportunities for employees to feed their families. In Smith’s accounting, justice includes remunerating workers in proportion to the value they add to the company rather than as little as the market will allow. So, for example, although unskilled labor is paid near-starvation wages in Kenya, Smith’s construction company chooses to pay a significantly higher wage that ensures greater financial stability for those laborers. It works in this particular application because the profit margins for home construction in Kenya are very high. The difference between the market rate and the rate his company pays is found in the profit taken by the company itself.
For Smith, social entrepreneurship means building businesses that meet legitimate needs at a competitive price, providing a decent (though by no means extravagant) living for workers in proportion to the value they add (he is very big on merit based pay), and using a fair portion of remaining profits to invest in other charitable activities. Investors in Smith’s various schemes get a benefit, but that benefit is limited by other goals that the investors agree to in advance. Smith runs companies, but they are companies that take all stakeholders into account.
The Accidental Social Entrepreneur is an encouraging volume. It celebrates the good of business for creating wealth and freeing people from poverty. It also introduces a paradigm of valuing something besides maximizing profits to the discussion. Smith’s book strikes a healthy balance between recognizing the good of markets and considering the potential harms of markets.
Although he does not state it directly, Smith does seem to lean toward the moral superiority of his company’s practice of redistributing up to 85% of profits to more direct charitable causes. It is commendable that Smith decided to do so, but by no means morally obligatory. In some cases, by choosing to distribute profit rather than reinvest in other ventures, Smith may have made his company’s endeavors more difficult. This is by no means the major emphasis of the book, but more discussion would have been beneficial.
Another helpful aspect of this book is Smith’s honesty about times that his endeavors failed. In some cases, he even admits the mistakes that prevented entrepreneurial efforts from being successful. This adds value to the book, because it shows that the life of the entrepreneur is not necessarily a straight line toward success or failure. Rather, the entrepreneurs should expect ups and downs, successes and failures that hopefully contribute to the general good of society.
Hopefully, The Accidental Social Entrepreneur inspires some readers to take a step toward building a business with society in mind. Even if they take a more profit-oriented approach than Smith, the world will be a better place. Pastors and lay leaders in church would benefit from reading the book. It could shape social endeavors facilitated through the local church.
Note: I received a gratis copy of this volume from the publisher with no expectation of a positive review.