Social Enterprise

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 managerial, leadership, and governance challenges associated with driving sustained, high-impact social change. From the outset, our faculty focused on societal needs and, through that vantage point, pursued an exploration of the organizational forms or processes that would most effectively mobilize resources to address those needs, with a concentration on the following major topics:

Leadership, strategy, and governance of socially mission-driven organizations across the spectrum from entrepreneurial to established
The role of business leadership and corporate citizenship in driving social change
Business at the Base of the Pyramid—business models that address the needs and wants of the four billion people living on less than $5/day
Management levers needed to create and sustain high-performing K-12 public school districts in the United States
Evolving models being deployed to mobilize financial resources, including venture philanthropy; impact investing; and capital flows within the nonprofit sector

Defined by a cross-disciplinary, multi-sectoral approach, our research framework encompasses nonprofits, corporate involvement in the social sector, cross-sector collaboration, hybrids that were nonprofits with for-profit dimensions, and for-profits with nonprofit dimensions. For example, Alnoor Ebrahim and Michael Chu in General Management collaborate with Shawn Cole in Finance to explore impact investing’s performance metric, optimization, and structural challenges, while General Management Professors Joseph Bower, Herman B. “Dutch” Leonard, and Lynn Paine develop frameworks for rethinking the role of business in society. Through such research, we are helping to stimulate the adaptation of innovative business practices across the public, non-profit, and for-profit sectors, serving as a catalyst to creating social value worldwide.

Keywords: business and society, business at the base of the pyramid, cause marketing, corporate citizenship, corporate social responsibility, cross-sector collaboration, economic development, global poverty, impact investing, nonprofit governance, nonprofit marketing, nonprofit strategy, public education, social capital, social development, social entrepreneurship, social marketing, social value, venture philanthropy

Featured Works

Article | Stanford Social Innovation Review | Summer 2012
In Search of the Hybrid Ideal
Julie Battilana, Matthew Lee, John Walker and Cheryl Dorsey
In the first large-scale, quantitative study of nascent social entrepreneurs, researchers from Harvard Business School and Echoing Green examine the rise of hybrid organizations that combine aspects of nonprofits and for-profits and the challenges hybrids face as they attempt to integrate traditionally separate organizational models.
Citation:
Battilana, Julie, Matthew Lee, John Walker, and Cheryl Dorsey. "In Search of the Hybrid Ideal." Stanford Social Innovation Review (Summer 2012).
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Article | Harvard Business Review | June 2011
Segmenting the Base of the Pyramid
V. Kasturi Rangan, Michael Chu and Djorjiji Petkoski
The bottom of the economic pyramid is a risky place for business, but decent profits can be made there if companies link their financial success with their constituencies' well-being. To do that effectively, you must understand the nuances of people's daily lives, say Rangan and Chu of Harvard Business School and Petkoski of the World Bank. Start by dividing the base of the pyramid into three segments according to people's earnings and related personal needs: 1) Low income: 1.4 billion people, $3 to $5 a day; 2) Subsistence: 1.6 billion people, $1 to $3 a day; and 3) Extreme poverty: 1 billion people, less than $1 a day. Next, consider the roles of various groups in the value-creation relationship: consumers, coproducers, and clients. Specific strategies work best with people in certain roles and at particular income levels. Success requires appreciating the diversity at the base of the pyramid and the importance of scale in undertaking ventures there. Witness Manila Water's success in the Philippines and Hindustan Unilever's in South Asia. Failure to appreciate those elements can foil base-of-the-pyramid ventures, as Microsoft and Procter & Gamble each discovered.
Keywords: Risk and Uncertainty; Profit; International Finance; Segmentation; Poverty; Value Creation; Economics; Relationships; Human Needs; Income Characteristics;
Citation:
Rangan, V. Kasturi, Michael Chu, and Djorjiji Petkoski. "Segmenting the Base of the Pyramid." Harvard Business Review 89, no. 6 (June 2011).
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Chapter | The Jossey-Bass Handbook of Nonprofit Leadership and Management | 2010
The Many Faces of Nonprofit Accountability
Alnoor Ebrahim
Calls for greater accountability are not new. Leaders of organizations, be they nonprofit, business, or government, face a constant stream of demands from various constituents demanding accountable behavior. But what does it mean to be accountable? By and large, nonprofit leaders tend to pay attention to accountability once a problem of trust arises-a scandal in the sector or in their own organization, questions from citizens or donors who want to know if their money is being well spent, or pressure from regulators to demonstrate that they are serving a public purpose and thus merit tax-exempt status. Amid this clamor for accountability, it is tempting to accept the popular normative view that more accountability is better. But is it feasible, or even desirable, for nonprofit organizations to be accountable to everyone for everything? The challenge for leadership and management is to prioritize among competing accountability demands. This involves deciding both to whom and for what they owe accountability. This chapter provides an overview of common dilemmas of nonprofit accountability, lays out tradeoffs inherent in a range of accountability mechanisms, and closes with insights for practice.
Keywords: Crime and Corruption; Corporate Accountability; Governing Rules, Regulations, and Reforms; Taxation; Leadership; Management; Nonprofit Organizations; Behavior; Trust;
Citation:
Ebrahim, Alnoor. "The Many Faces of Nonprofit Accountability." Chap. 4 in The Jossey-Bass Handbook of Nonprofit Leadership and Management. 3rd ed. Edited by David O. Renz, 110–121. San Francisco: Jossey-Bass, 2010.
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Casebook | 2007
Managing School Districts for High Performance: Cases in Public Education Leadership
Stacey Childress, Richard F. Elmore, Allen S. Grossman and Susan Moore Johnson
Managing School Districts for High Performance brings together more than twenty case studies and other readings that offer a powerful and transformative approach to advancing and sustaining the work of school improvement. At the center of this work is the concept of organizational coherence: aligning organizational design, human capital management, resource allocation, and accountability and performance improvement systems to support an overarching strategy. This central idea provides a valuable conceptual framework for current and future school leaders.

The case studies presented in Managing School Districts for High Performance grow out of the Public Education Leadership Project (PELP), a unique partnership between the Harvard Business School, the Harvard Graduate School of Education, and a network of urban school districts. This rich array of cases explores the managerial challenges districts face as they seek to ensure rich learning opportunities and high achievement for all students across a system of schools.
Keywords: Education; Leadership; Organizational Design; Performance Improvement; Problems and Challenges; Strategy;
Citation:
Childress, Stacey, Richard F. Elmore, Allen S. Grossman, and Susan Moore Johnson, eds. Managing School Districts for High Performance: Cases in Public Education Leadership. Cambridge, MA: Harvard Education Press, 2007.
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Case | HBS Case Collection | 2012
Carolina for Kibera
Kathleen L. McGinn, Beth-Ann Kutchma and Cailin B. Hammer
Carolina for Kibera (CFK) is an international non-profit organization whose mission is to promote youth leadership and gender and ethnic cooperation in Kibera, the largest unstructured settlement situated in the heart of Nairobi, Kenya. CFK's programs constructively leverage the power of the community, offering an exemplar of participatory development. CFK's affiliation with University of North Carolina offers a new model of social enterprise. After eight years of success under the founding leadership of Salim Mohamed, Rye Barcott and Kim Chapman, CFK is at a critical juncture. Mohamed, Executive Director of all operations in Kibera, is leaving to go to graduate school. Rye Barcott, Founder and President, has a new career and a growing family and can no longer play an active role in CFK's operations. Kim Chapman, Chair of the U.S. Board of Directors, has accepted a full-time faculty position and must step down from her roles at CFK. These departures come at a time when the Gates Foundation has just awarded CFK a two-year, $1 million grant. The case ends as CFK begins to grapple with impending changes in organizational leadership and activities.
Keywords: power and influence; organizational behavior; social enterprise; negotiation; Power and Influence; Non-Governmental Organizations; Social Enterprise; Negotiation; Kenya; United States;
Citation:
McGinn, Kathleen L., Beth-Ann Kutchma, and Cailin B. Hammer. "Carolina for Kibera." Harvard Business School Video Case 913-701, October 2012.
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Book | 2007
Entrepreneurship in the Social Sector
Jane Wei-Skillern, James Austin, Herman Leonard and Howard Stevenson
"Entrepreneurship in the Social Sector provides an excellent overview of the many tools available to the entrepreneur to advance his or her mission, and it discusses many of the problems that organizations and their managers encounter at different points of a growth process."
-NONPROFIT AND VOLUNTARY SECTOR QUARTERLY
Written for students and practitioners, this unique text, with Harvard cases, provides detailed analysis and frameworks for achieving maximum impact through social entrepreneurship. Entrepreneurship in the Social Sector enables readers to attain an in depth understanding of the distinctive characteristics of the social enterprise context and organizations. The authors offer tools to develop the knowledge to pursue social entrepreneurship more strategically and achieve mission impact more efficiently, effectively, and sustainably.
Keywords: Entrepreneurship; Society;
Citation:
Wei-Skillern, Jane, James Austin, Herman Leonard, and Howard Stevenson. Entrepreneurship in the Social Sector. Sage Publications, 2007.
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Recent Publications

Article | Harvard Business Review | May 2013
The Performance Frontier: Innovating for a Sustainable Strategy
Robert G. Eccles and George Serafeim
By now most companies have sustainability programs. They're cutting carbon emissions, reducing waste, and otherwise enhancing operational efficiency. But a mishmash of sustainability tactics does not add up to a sustainable strategy. To endure, a strategy must address the interests of all stakeholders: investors, employees, customers, governments, NGOs, and society at large. To do that, it has to increase shareholder value while at the same time improving the firm's performance on environmental, social, and governance (ESG) dimensions. This article outlines a process that can be used to execute a sustainable strategy and extend the boundaries of The Performance Frontier.
Keywords: sustainability; innovation; environment; governance; corporate reporting; corporate social responsibility;
Citation:
Eccles, Robert G., and George Serafeim. "The Performance Frontier: Innovating for a Sustainable Strategy." Harvard Business Review 91, no. 5 (May 2013).
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Article | Administrative Science Quarterly | March 2013
Punctuated Generosity: How Mega-events and Natural Disasters Affect Corporate Philanthropy in U.S. Communities
Andras Tilcsik and Christopher Marquis
Geographic communities have been shown to affect organizations through their enduring features, but less attention has been given to communities as sites of human-made and natural events that occasionally disrupt the lives of organizations. We develop a social-normative perspective to unpack how and why major events within communities affect organizations. To test this framework, we examine how different types of mega-events (the Olympics, the Super Bowl, political conventions) and natural disasters (such as floods and hurricanes) affected the philanthropic spending of locally headquartered Fortune 1000 firms between 1980 and 2006. Results show that philanthropic spending fluctuated dramatically as mega-events generally led to a punctuated increase in otherwise relatively stable patterns of giving by local corporations. The impact of natural disasters depended on the severity of damage: while major disasters had a negative effect, smaller-scale disasters had a positive impact. Firms' philanthropic history and communities' inter-corporate network cohesion moderated some of these effects. This study extends institutional and community literatures by illuminating the geographic distribution of punctuating events as a central mechanism for community influences on organizations; sheds new light on the temporal dynamics of both endogenous and exogenous punctuating events; and provides more nuanced understanding of corporate-community relations.
Keywords: geographic communities; punctuated equilibrium; corporate social responsibility; institutional theory;
Citation:
Tilcsik, Andras, and Christopher Marquis. "Punctuated Generosity: How Mega-events and Natural Disasters Affect Corporate Philanthropy in U.S. Communities." Administrative Science Quarterly 58, no. 1 (March 2013): 111–148.
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Article | Strategic Management Journal | 2013
Who Is Governing Whom? Executives, Governance, and the Structure of Generosity in Large U.S. Firms
Christopher Marquis and Matthew Lee
We examine how organizational structure influences strategies over which corporate leaders have significant discretion. Corporate philanthropy is our setting to study how a differentiated structural element-the corporate foundation-constrains the influence of individual senior managers and directors on corporate strategy. Our analysis of Fortune 500 firms from 1996 to 2006 shows that leader characteristics at both the senior management and director levels affect corporate philanthropic contributions. We also find that organizational structure constrains the philanthropic influence of board members but not of senior managers, a result that is contrary to what existing theory would predict. We discuss how these findings advance understanding of how organizational structure and corporate leadership interact and of how organizations can more effectively realize the strategic value of corporate social responsibility activities.
Keywords: Organizational Structure; Corporate Strategy; Giving and Philanthropy; Leadership; Governing and Advisory Boards; Corporate Social Responsibility and Impact; United States;
Citation:
Marquis, Christopher, and Matthew Lee. "Who Is Governing Whom? Executives, Governance, and the Structure of Generosity in Large U.S. Firms." Strategic Management Journal 34, no. 4 (2013): 483–497. (Earlier version distributed as Harvard Business School Working Paper No. 11-121.)
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Article | Nonprofit Management & Leadership | Fall 2012
Enacting Our Field
Alnoor Ebrahim
This keynote address, delivered to the Nonprofit Academic Centers Council at its 25-year "benchmark" conference, examines the pedagogical challenges facing the field of nonprofit management in American higher education. It interrogates four binary distinctions commonly used in scholarship and teaching about the social sector, but which now show signs of eroding: for-profit versus nonprofit, funder versus grantee, local versus global, and secular versus faith-based. Each distinction is examined with the aim of answering two questions: What are the implications for new theorizing about this field? What are the implications for teaching and action? In closing, the essay explores innovations in structuring social sector management programs in order to educate cross-sector leaders capable of addressing critical societal problems.
Keywords: Conferences; Higher Education; Teaching; Social Issues; Innovation and Invention; Programs; Management; Nonprofit Organizations;
Citation:
Ebrahim, Alnoor. "Enacting Our Field." Keynote Address. Nonprofit Management & Leadership 23, no. 1 (Fall 2012): 13–28. (Keynote Address to the Nonprofit Academic Centers Council, 25 Year Benchmark Conference.)
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Article | Journal of Business Ethics | 2012
Organizing for Society: A Typology of Social Entrepreneuring Models
Johanna Mair, Julie Battilana and Julian Cardenas
In this article, we use content and cluster analysis on a global sample of 200 social entrepreneurial organizations to develop a typology of social entrepreneuring models. This typology is based on four possible forms of capital that can be leveraged: social, economic, human, and political. Furthermore, our findings reveal that these four social entrepreneuring models are associated with distinct logics of justification that may explain different ways of organizing across organizations. This study contributes to understanding social entrepreneurship as a field of practice and it describes avenues for theorizing about the different organizational approaches adopted by social entrepreneurs.
Citation:
Mair, Johanna, Julie Battilana, and Julian Cardenas. "Organizing for Society: A Typology of Social Entrepreneuring Models." Journal of Business Ethics 111, no. 3 (2012): 353–373.
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Working Paper | HBS Working Paper Series | 2012
Reinforcing Regulatory Regimes: How States, Civil Society, and Codes of Conduct Promote Adherence to Global Labor Standards
Michael W. Toffel, Jodi L. Short and Melissa Ouellet
In response to pressure from various stakeholders, many transnational businesses have developed codes of conduct and monitoring systems to ensure that working conditions in their supply chain factories meet global labor standards. Many observers have questioned whether these codes of conduct have any impact on working conditions or are merely a marketing tool to deflect criticism of valuable global brands. Using a proprietary dataset from one of the world's largest social auditors, containing audit-level data for 31,915 audits of 14,922 establishments in 43 countries on behalf of 689 clients in 33 countries, we conduct one of the first large-scale comparative studies of adherence to labor codes of conduct to determine what combination of institutional conditions promotes compliance with the global labor standards embodied in codes. We find that these private transnational governance tools are most effective when they are embedded in states that have made binding domestic and international legal commitments to protect workers' rights and that have high levels of press freedom and nongovernmental organization activity. Taken together, these findings suggest the importance of multiple, robust, overlapping, and reinforcing governance regimes to meaningful transnational regulation.
Keywords: supply chain management; governance; Government and Politics; legal aspects of business; Operational Control; quality; operations strategy; outsourcing; social responsibility; labor management; Accounting Audits; Corporate Accountability; Governance Compliance; Governance Controls; Working Conditions; Law Enforcement; Production; Corporate Social Responsibility and Impact; Performance Evaluation; Safety; Quality; Nonprofit Organizations; Non-Governmental Organizations; Supply Chain; Supply Chain Management; Apparel and Accessories Industry; Electronics Industry; Manufacturing Industry; Asia; Europe; China; United States;
Citation:
Toffel, Michael W., Jodi L. Short, and Melissa Ouellet. "Reinforcing Regulatory Regimes: How States, Civil Society, and Codes of Conduct Promote Adherence to Global Labor Standards." Harvard Business School Working Paper, No. 13–045, November 2012.
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Article | Harvard Business Review | July–August 2012
A Better Way to Tax U.S. Businesses
Mihir Desai
The article argues that U.S. taxation reform should reduce corporate taxes, incorporate an awareness of the global marketplace, and generate revenue-neutral incentives for innovation. According to the article, a reduction in corporate tax rates would be offset by a tax on noncorporate business income and an expansion of taxable income. Topics include tax-avoidance techniques, globalization, repatriation taxes, corporate social responsibility, and U.S. workers. Graphs are included, which compare the U.S. tax rate with other countries.
Citation:
Desai, Mihir. "A Better Way to Tax U.S. Businesses." Harvard Business Review 90, nos. 7-8 (July–August 2012): 135–139.
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Working Paper | HBS Working Paper Series | 2012
Engaging Supply Chains in Climate Change
Chonnikarn Fern Jira and Michael W. Toffel
Suppliers are increasingly being asked to share information about their vulnerability to climate change and their strategies to reduce greenhouse gas emissions. Their responses vary widely. We theorize and empirically identify several factors associated with suppliers being especially willing to share this information with buyers, focusing on attributes of the buyers seeking this information and of the suppliers being asked to provide it. We test our hypotheses using data from the Carbon Disclosure Project's Supply Chain Program, a collaboration of multinational corporations requesting such information from thousands of suppliers in 49 countries. We find evidence that suppliers are more likely to share this information when requests from buyers are more prevalent, when buyers appear committed to using the information, when suppliers belong to more profitable industries, and when suppliers are located in countries with greenhouse gas regulations. We find evidence that these factors also influence the comprehensiveness of the information suppliers share and their willingness to share the information publicly.
Keywords: Multinational Firms and Management; Governing Rules, Regulations, and Reforms; Information; Knowledge Sharing; Supply Chain; Corporate Social Responsibility and Impact; Environmental Sustainability; Weather and Climate Change; Competitive Advantage;
Citation:
Jira, Chonnikarn Fern, and Michael W. Toffel. "Engaging Supply Chains in Climate Change." Harvard Business School Working Paper, No. 12–026, October 2011. (Revised October 2012. Forthcoming at Manufacturing and Service Operations Management.)
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Talk | 14 May 2012
Capitalism at Risk: Rethinking the Role of Business
Lynn S. Paine and Joseph L. Bower
Keywords: capital markets; innovation; Corporate Social Responsibility and Impact; Innovation Leadership; Consumer Products Industry;
Citation:
"Capitalism at Risk: Rethinking the Role of Business." Lunch Discussion with Professor Joseph L. Bower and Lynn S. Paine, Harvard Business School Europe Research Center, Paris, France, May 14, 2012.
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Working Paper | HBS Working Paper Series | 2012
No News Is Good News: CSR Strategy and Newspaper Coverage of Negative Firm Events
Jiao Luo, Stephan Meier and Felix Oberholzer-Gee
One of the benefits of Corporate Social Responsibility (CSR) programs, it has been argued, is that they build up a reservoir of public good will, shielding companies in times of trouble. In this paper, we test the view that CSR provides protection from public ire by analyzing the media's response to corporate crises. Our application is spills in the oil industry. We find the media far more likely to report accidents if they occur at a company with a superior CSR record. Rather than acting as an effective form of insurance, our results suggest that a strong CSR record can be a liability. Moreover, the tone of coverage is no less critical for organizations with a greener reputation. At the same time, firms with substantial past environmental problems are also more likely to find their corporate failings broadcast in the news. Companies hoping to minimize the risk of media attention to accidents need to be careful not to place their organizations at the very top or the very bottom of CSR rankings. This result has important implications for thinking about CSR and the privately optimal level of such activities.
Keywords: Corporate Social Responsibility and Impact; Crisis Management; Media; Newspapers; Business and Community Relations; Corporate Strategy;
Citation:
Luo, Jiao, Stephan Meier, and Felix Oberholzer-Gee. "No News Is Good News: CSR Strategy and Newspaper Coverage of Negative Firm Events." Harvard Business School Working Paper, No. 12–091, April 2012.
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