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. Rumie: Bringing Digital Education to the Underserved

    John J-H Kim and Amram Migdal

    In fall of 2015, the Toronto, Canada-based education technology non-profit Rumie had distributed thousands of computer tablets preloaded with collections of thousands of pieces of curated educational content to nongovernmental organizations (NGOs) in some of the most impoverished countries around the world that lacked basic educational resources. Founder and executive director Tariq Fancy, with his team, were deciding whether to accept a large new order from an NGO in Pakistan that would require Rumie for the first time to provide ongoing services such as teacher training, performance monitoring, and other support. Some on the team felt that providing a full suite of bundled services would detract from their recent push to decouple Rumie's software and services from the physical tablets to achieve greater reach and scale. In October 2015, Rumie opened the LearnCloud, its proprietary online content curation portal for NGOs, to the public. Now anyone could discover, share, and rate free digital educational content from any source. Fancy considered, "Education Access represents a big order and huge growth, but does it lead us into doing things we haven't done before, may not be good at, and may not be scalable to be used by different partners in different geographies?"

    Keywords: education; Edtech; education technology; social enterprise; technological innovation; nonprofit; education startup; Education; Social Entrepreneurship; Technological Innovation; Growth and Development Strategy; Education Industry; Canada; Africa;

    Citation:

    Kim, John J-H, and Amram Migdal. "Rumie: Bringing Digital Education to the Underserved." Harvard Business School Case 316-140, January 2016. View Details
  2. SAP SE: Autism at Work

    Gary P. Pisano and Robert D. Austin

    This case describes SAP's "Autism at Work" program, which integrates people with autism into the company's workforce. The company has a stated objective of making 1% of its workforce people with autism by 2020. SAP's rationale for the program is based on the belief that "neurodiversity" contributes to the company's overall innovative capabilities ("We believe that innovation comes from the edges"). Thus, the program is not viewed as a subsidized Corporate Social Responsibility activity, but as a positive net benefit activity, as well as a way of addressing skills shortages by tapping into non-traditional pools of (considerable) talent. The case explores how SAP is also using the program to rethink and re-engineer its Human Resource Management policies and processes, to make them more inclusive and effective.

    Keywords: software; human resource management; Diversity Management; Germany; Germany;

    Citation:

    Pisano, Gary P., and Robert D. Austin. "SAP SE: Autism at Work." Harvard Business School Case 616-042, January 2016. View Details
  3. Executive Compensation and Misconduct: Environmental Harm

    Dylan Minor

    We explore the relationship between managerial incentives and misconduct using the setting of environmental harm. We find that high-powered executive compensation can increase the odds of environmental law-breaking by 40-60% and the magnitude of environmental harm by over 100%. We document similar results for the setting of executive compensation and illegal financial accounting. Finally, we outline some managerial and policy implications to blunt these adverse incentive effects.

    Keywords: Executive Compensation; corporate governance; Misconduct; environmental performance; accounting scandal; sustainable finance; Crime and Corruption; Corporate Social Responsibility and Impact; Executive Compensation; Environmental Sustainability; Corporate Governance;

    Citation:

    Minor, Dylan. "Executive Compensation and Misconduct: Environmental Harm." Harvard Business School Working Paper, No. 16-076, January 2016. View Details
  4. Haiti Hope: Innovating the Mango Value Chain

    Amy C. Edmondson and Jean-François Harvey

    This case study examines a market-based approach to economic development through the eyes of NGO TechnoServe's project manager, implementing a US$9.5 million five-year public-private partnership between Coca-Cola, IDB, and USAID. The case ends at the beginning of the final year of the project, presents the project’s advances, and invites students to position themselves in front of three options regarding the exit strategy to be deployed to ensure sustainability.

    Haiti Hope was to provide 25,000 Haitian farmers with world-class business and industry expertise to help them grow mangos more efficiently and abundantly, and secure access to new markets with the aim of doubling their income and raising their standard of living and, ultimately, contributing to the revitalization of the Haitian economy. The project structure devised by the partners to govern execution consisted of an implementation team and operating and steering committees. The partners with the implementer, TechnoServe, had agreed on a strategy that turned out to be difficult to execute due to local institutions, farmer cooperatives, which acted as gatekeepers and made it difficult to reach the critical mass of farmers to participate in the project. TechnoServe's project manager had to convince the partners to shift strategy to work directly with cooperative members rather than with the leadership. The project manager succeeded—Partners accepted to create a new intermediary channel with and for smallholder farmers, termed Producer Business Groups (PBGs). PBGs eschewed the diverse political goals of most cooperatives, and focused on the production and commercialization of members' mangoes and other agricultural products.

    By 2013, 18,000 farmers had been organized into PBGs for better access to markets, information and agricultural extension services, and approximately 70% of them had adopted best practices from training. Project trained farmers were using standardized sales units, enjoying greater bargaining power, and had access to credit. They were also earning higher prices for mangoes, which rose by 32% on average. By 2014, 3,356 of these farmers were selling directly to exporters via this new PBG channel. With the project entering its final year of implementation, only one season remained for course corrections and formulation of an exit strategy. Although confident in the new strategy, the partners recognized that sustainability of the innovations to the mango supply chain depended on ensuring that every player was profitable, and that local actors possessed both the motivation and capability to take over the activities being performed by TechnoServe. The project manager had to be sure that under the control of private sector partners the PBGs would continue to provide training and other agricultural extension services, such as communicating market prices, as well as continue to pursue ways to connect farmers directly and efficiently with exporters. Only one year remained to identify and implement additional initiatives to improve the structure of their supply chains so as to enable farmers and exporters to better compete in international markets.

    Keywords: sustainability; supply chain management; economic development; corporate social responsibility; emerging country; teaming; Public-private partnership; inter-organizational relationships; collaboration; strategy implementation; learning; agricultural commodity; Plant-Based Agribusiness; Public Sector; Supply Chain Management; Customer Value and Value Chain; Corporate Social Responsibility and Impact; Learning; Partners and Partnerships; Private Sector; Developing Countries and Economies; Food and Beverage Industry; Agriculture and Agribusiness Industry; Haiti;

    Citation:

    Edmondson, Amy C., and Jean-François Harvey. "Haiti Hope: Innovating the Mango Value Chain." Harvard Business School Case 616-040, January 2016. View Details
  5. Harnessing Productive Tensions in Hybrid Organizations: The Case of Work Integration Social Enterprises

    Julie Battilana, Metin Sengul, Anne-Claire Pache and Jacob Model

    We examine the factors that influence the social performance of hybrid organizations that pursue a social mission, and sustain their operations through commercial activities, by studying work integration social enterprises (WISEs). We argue that social imprinting and economic productivity are both important drivers of WISEs' social performance. However, there is a paradox inherent in the social imprinting of WISEs: although it directly enhances their social performance, it also indirectly weakens it by negatively affecting economic productivity. Results based on panel data of French WISEs between 2003 and 2007 are congruent with our predictions. In order to understand how socially imprinted WISEs may mitigate this negative relationship between social imprinting and economic productivity, we also conduct a comparative analysis of case studies. We find that one effective approach is to assign responsibility for social and economic activities to distinct groups while creating "spaces of negotiation"—areas of interaction that allow members of each group to discuss the trade-offs they face. We conclude by highlighting the conditions under which spaces of negotiation can effectively be used to maintain a productive tension in hybrid organizations.

    Keywords: hybrid organizations; social enterprise; Social Entrepreneurship; Organizations;

    Citation:

    Battilana, Julie, Metin Sengul, Anne-Claire Pache, and Jacob Model. "Harnessing Productive Tensions in Hybrid Organizations: The Case of Work Integration Social Enterprises." Academy of Management Journal 58, no. 6 (December 2015): 1658–1685. View Details
  6. Wage Elasticities in Working and Volunteering: The Role of Reference Points in a Laboratory Study

    Christine L. Exley and Stephen J. Terry

    Volunteers provide a large source of labor in the United States, yet volunteer effort is often unresponsive to traditional incentives. To clarify the sources of this unresponsiveness within volunteering, we appeal to a classic explanation: targeting behavior. In particular, we provide a laboratory test of effort response to changes in wages, either accrued to individuals or to a charity, in the presence of expectations-based reference points or targets. When individuals earn money for themselves, higher wages lead to higher effort with relatively muted targeting behavior. When individuals earn money for a charity, higher wages instead lead to lower effort with substantial targeting behavior. For managers contemplating the use of performance goals or targets within nonprofit organizations, our results suggest careful consideration about the extent to which they may render other incentives less effective.

    Keywords: reference points; wage elasticities; labor supply; effor; volunteering; prosocial behavior; Wages; Motivation and Incentives; Nonprofit Organizations; Behavior;

    Citation:

    Exley, Christine L., and Stephen J. Terry. "Wage Elasticities in Working and Volunteering: The Role of Reference Points in a Laboratory Study." Harvard Business School Working Paper, No. 16-062, November 2015. View Details
  7. 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;

    Citation:

    Reinhardt, Forest L. "Clearwater Seafoods." Harvard Business School Case 716-023, October 2015. View Details
  8. 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;

    Citation:

    Groysberg, Boris, John D. Vaughan, and Matthew Preble. "MOD Pizza: A Winning Recipe?" Harvard Business School Case 416-004, September 2015. View Details
  9. 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;

    Citation:

    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
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