Social Enterprise

Social Enterprise is a featured research topic and an initiative at Harvard Business School.

HBS pioneered the concept of “social enterprise” with the founding of its Social Enterprise Initiative (SEI) in 1993. Under the early leadership of James Austin on the importance of collaborative relationships to the success of nonprofits and Allen Grossman and V. Kasturi “Kash” Rangan on new directions in nonprofit strategy, we adopted a problem-focused approach toward understanding the challenges associated with driving sustained, high-impact social change. Current research focuses on leadership of socially mission-driven organizations; the role of business leaders and corporate citizenship in driving social change; business models that address poverty; management of high-performing K-12 public school districts; and financing models for the non-profit sector.

  1. Clearwater Seafoods

    Forest L. Reinhardt

    Clearwater sought to market value-added shellfish products in a traditionally commodities based industry, while facing supply uncertainties and regulatory, environmental, and foreign exchange challenges. Clearwater harvested lobsters, clams, scallops, shrimp, and other marine creatures from the Canadian Atlantic, and sold the seafood all over the world. Although seafood buyers traditionally bought on price, Clearwater's innovations and technology investments enabled it to produce higher quality products; still, it faced the challenge of convincing buyers to pay a premium price. The firm's managers also prided themselves on their sustainable fishing practices, which were not the historical norm for the industry; here, again, translating these practices into increased willingness to pay was a challenge. As background, the case also discusses the challenges of fishery management at the national and international levels, using the collapse of the cod fishing industry as an example, and discussing the economics and politics of the fishery in classical terms of externalities and public goods.

    Keywords: Agribusiness; Profit; Goods and Commodities; Governing Rules, Regulations, and Reforms; Product Marketing; Corporate Social Responsibility and Impact; Environmental Sustainability; Agriculture and Agribusiness Industry; Canada;


    Reinhardt, Forest L. "Clearwater Seafoods." Harvard Business School Case 716-023, October 2015. View Details
  2. MOD Pizza: A Winning Recipe?

    Boris Groysberg, John D. Vaughan and Matthew Preble

    Scott and Ally Svenson, the founders of MOD Pizza, had to make a number of decisions in planning how to scale their small company. They wanted to grow MOD from 45 stores as of May 2015 to 200 stores by the end of 2016, and while the two believed that MOD could manage this growth from an operational standpoint, they wanted to make sure that MOD's culture was sufficiently strong to survive this rollout. The company had developed a strong culture, and the Svensons did not want MOD's core values and philosophies to be compromised as it rapidly expanded. To that end, they considered what the company needed to do in order to protect its core culture. Should it put rigid safeguards in place or trust that MOD could successfully scale its culture by hiring the right people and helping them develop as employees? The Svensons also discussed the possibility of an IPO at some point in the near future; what would this mean for its ability to stay true to its core values?

    Keywords: entrepreneurship; employees; employee relationship management; selection and staffing; leadership; growth and development strategy; marketing; service delivery; organizational culture; corporate social responsibility and impact; mission and purpose; Entrepreneurship; Employees; Employee Relationship Management; Selection and Staffing; Leadership; Growth and Development Strategy; Marketing; Service Delivery; Organizational Culture; Corporate Social Responsibility and Impact; Mission and Purpose; Service Industry; United States;


    Groysberg, Boris, John D. Vaughan, and Matthew Preble. "MOD Pizza: A Winning Recipe?" Harvard Business School Case 416-004, September 2015. View Details
  3. Market Reaction to Mandatory Nonfinancial Disclosure

    Jyothika Grewal, Edward J. Riedl and George Serafeim

    This paper examines the equity market reaction to events associated with the passage of a directive in the European Union (EU) mandating increased nonfinancial disclosure, which affected firms listed on EU exchanges or having significant operations in the EU. The mandated disclosures relate to firms' environmental, social, and governance performance. Using a cross-country sample, we first document an on average negative market reaction to events increasing the likelihood of passage for this regulation, consistent with equity investors anticipating net costs with the directive's passage for most firms. Exploiting cross-sectional variation, we then predict and document a more negative market reaction for firms having: (i) low pre-directive nonfinancial disclosure levels, consistent with investors anticipating these future disclosures to reveal worse-than-expected news; (ii) weaker performance on nonfinancial issues, consistent with expectations for these firms to incur future costs to internalize current externalities; and (iii) lower ownership by institutional asset owners, consistent with such investors demanding further disclosures than mandated by the directive. The average market reaction for firms with superior nonfinancial performance and disclosure in our sample is positive, suggesting that investors expect net benefits from the passage of the directive for these firms.

    Keywords: accounting; disclosure; regulation; mandatory disclosure; mandatory reporting; sustainability; sustainability reporting; environmental and social sustainability; environment; environmental performance; corporate governance; corporate social responsibility; Corporate Disclosure; Corporate Social Responsibility and Impact; Accounting; Environmental Sustainability; Corporate Governance; European Union;


    Grewal, Jyothika, Edward J. Riedl, and George Serafeim. "Market Reaction to Mandatory Nonfinancial Disclosure." Harvard Business School Working Paper, No. 16-025, September 2015. View Details
  4. Social Networks, Ethnicity, and Entrepreneurship

    William R. Kerr and Martin Mandorff

    We study the relationship between ethnicity, occupational choice, and entrepreneurship. Immigrant groups in the United States cluster in specific business sectors. For example, Koreans are 34 times more likely than other immigrants to operate dry cleaners, and Gujarati-speaking Indians are 108 times more likely to manage motels. We develop a model of social interactions where non-work relationships facilitate the acquisition of sector-specific skills. The resulting scale economies generate occupational stratification along ethnic lines, consistent with the reoccurring phenomenon of small, socially-isolated groups achieving considerable economic success via concentrated entrepreneurship. Empirical evidence from the United States supports our model's underlying mechanisms.

    Keywords: occupations; social entrepreneurship; social networks; clusters; ethnicity; Entrepreneurship; Social Entrepreneurship; Industry Clusters; Ethnicity; United States;


    Kerr, William R., and Martin Mandorff. "Social Networks, Ethnicity, and Entrepreneurship." Harvard Business School Working Paper, No. 16-042, October 2015. (NBER Working Paper Series, No. 21597, September 2015.) View Details
  5. The Value of Corporate Citizenship: Protection

    Dylan Minor

    We explore the notion that corporate citizenship, as obtained through Corporate Social Responsibility (CSR), is used by managers to protect firm value, helping their firm better withstand negative business shocks. We formally explore two parallel mechanisms for such protection—one of building moral capital (CSR Contributions) and another of improving investor posteriors (CSR Investments). We find some theoretical and empirical support for both of these, but in different settings. In particular, we find that firms with higher CSR Investments enjoy an average of $1 billion of saved firm value upon an adverse event. In contrast, CSR Contribution firms lose value (on average) upon an event, possibly due to disingenuous contributions. Meanwhile, due to managerial moral hazard, firms with high levels of CSR Contributions face adverse events more often, whereas those with high levels of CSR Investments face them less often.

    Keywords: Value; Corporate Social Responsibility and Impact; Finance;


    Minor, Dylan. "The Value of Corporate Citizenship: Protection." Harvard Business School Working Paper, No. 16-021, August 2015. View Details
  6. Team Rubicon: Bridging the Gap from Startup to National Organization

    Leonard A. Schlesinger and Dan Nidess

    Team Rubicon, a military veteran volunteer disaster relief organization, has experienced significant success in attracting attention and support in its first 4 years of operation. The challenges of managing the volunteer base, the cost of responding to disasters and the evolution of the organization raise significant strategic and organizational issues for the founding team.

    Keywords: Organizational Change and Adaptation; growth strategy and execution; disaster relief; NGO; Organizational Change and Adaptation; Growth and Development Strategy; Growth Management; Non-Governmental Organizations;


    Schlesinger, Leonard A., and Dan Nidess. "Team Rubicon: Bridging the Gap from Startup to National Organization." Harvard Business School Case 315-124, June 2015. View Details
  7. Denver Museum of Nature & Science

    Jill Avery and Jim Rosenberg

    Digital was on Vice President of Strategic Partnerships and Programs Bridget Coughlin's mind these days. DMNS had been dabbling in digital for the past few years, but had never fully committed to it. The time had come to establish a strategic vision, and to decide whether to designate serious human and financial resources. It was time to make some decisions about the DMNS' digital future. The digital discussion was taking place within a larger strategic conversation about the primacy of the onsite experience of the Museum and the need to get outside of its walls to reach new constituents. How should she balance onsite programming, offsite programming, and online programming to maximize attendance and deliver against the Museum's mission? Was digital the magic pill that would allow the Museum to reach new audiences or was DMNS better off delivering a face-to-face museum experience within its own four walls or out on the streets of the Denver community?

    Keywords: marketing; digital; social media; marketing strategy; nonprofit; Arts; Education; Marketing; Marketing Communications; Marketing Strategy; Nonprofit Organizations; Education Industry; North America; United States;


    Avery, Jill, and Jim Rosenberg. "Denver Museum of Nature & Science." Harvard Business School Case 315-081, June 2015. View Details
  8. Regulator Leniency and Mispricing in Beneficent Nonprofits

    Jonas Heese, Ranjani Krishnan and Frank Moers

    We posit that nonprofits that provide a greater supply of unprofitable services (beneficent nonprofits) face lenient regulatory enforcement for mispricing in price-regulated markets. Consequently, beneficent nonprofits exploit such regulatory leniency and exhibit higher mispricing. Drawing on organizational legitimacy theory, we argue that both regulators and beneficent nonprofits seek to protect their legitimacy with stakeholders, including those who demand access to unprofitable services. Using data from hospitals, we examine mispricing via "upcoding", which involves misclassifying ailment severity. Archival analysis indicates less stringent regulatory enforcement of upcoding for beneficent nonprofit hospitals, defined as hospitals that provide higher charity care and medical education. After observing regulator leniency, beneficent hospitals demonstrate higher upcoding. Our results suggest that lenient enforcement assists beneficent nonprofits to obtain higher revenues in price-regulated markets.

    Keywords: Nonprofit Organizations; Business Earnings; Fairness; Governance Compliance;


    Heese, Jonas, Ranjani Krishnan, and Frank Moers. "Regulator Leniency and Mispricing in Beneficent Nonprofits." Art. 11998. Academy of Management Proceedings (2015). View Details
  9. Colgate-Palmolive Company: Marketing Anti-Cavity Toothpaste

    John A. Quelch and Margaret L. Rodriguez

    In October 2013, Colgate-Palmolive Company, the world's leading oral care company, was about to launch its new Colgate® Maximum Cavity Protection™ plus Sugar Acid Neutralizer™ toothpaste in Brazil. Oral care category accounted for 46 percent of Colgate's $17.4 billion sales worldwide in 2013. The new toothpaste was clinically proven to reduce and prevent cavities more effectively than toothpaste with the same level of fluoride alone. All major industry players, including Procter & Gamble, GlaxoSmithKline and Colgate itself, had long ago launched products with the maximum amount of fluoride allowed by Health authorities. Yet cavities remained a significant threat to public health in many countries, both developing and developed. As Suzan Harrison, Colgate's president of Oral Care, prepared to launch CMCP+SAN in Brazil, the world's third largest oral care market, her executive team was divided over the product's positioning and pricing. Should it be positioned as a basic product to maximize reach for its health benefits or as a premium product for consumers who sought superior cavity protection?

    Keywords: marketing; new product management; Consumer segmentation; global marketing; corporate social responsibility; healthcare; sustainability; Health Care and Treatment; Environmental Sustainability; Marketing; Segmentation; Product Development; Product Launch; Corporate Social Responsibility and Impact; Consumer Products Industry; Brazil; United States;


    Quelch, John A., and Margaret L. Rodriguez. "Colgate-Palmolive Company: Marketing Anti-Cavity Toothpaste." Harvard Business School Case 515-050, May 2015. (Revised September 2015.) View Details
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