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. Monitoring Global Supply Chains

    Jodi L. Short, Michael W. Toffel and Andrea R. Hugill

    Firms seeking to avoid reputational spillovers that can arise from dangerous, illegal, and unethical behavior at supply chain factories are increasingly relying on private social auditors to provide strategic information about suppliers' conduct. But little is known about what influences auditors' ability to identify and report problems. Our analysis of nearly 17,000 supplier audits reveals that auditors report fewer violations when individual auditors have audited the factory before, when audit teams are less experienced or less trained, when audit teams are all-male, and when audits are paid for by the audited supplier. This first comprehensive and systematic analysis of supply chain monitoring identifies previously overlooked transaction costs and suggests strategies to develop governance structures to mitigate reputational risks by reducing information asymmetries in supply chains. Firms seeking to avoid reputational spillovers that can arise from dangerous, illegal, and unethical behavior at supply chain factories are increasingly relying on private social auditors to provide strategic information about suppliers’ conduct. But little is known about what influences auditors’ ability to identify and report problems. Our analysis of nearly 17,000 supplier audits reveals that auditors report fewer violations when individual auditors have audited the factory before, when audit teams are less experienced or less trained, when audit teams are all-male, and when audits are paid for by the audited supplier. This first comprehensive and systematic analysis of supply chain monitoring identifies previously overlooked transaction costs and suggests strategies to develop governance structures to mitigate reputational risks by reducing information asymmetries in supply chains.

    Keywords: Monitoring; transaction cost economics; industry self-regulation; auditing; Codes of conduct; supply chains; corporate social responsibility; globalization; Corporate Social Responsibility and Impact; Supply Chain; Globalization;


    Short, Jodi L., Michael W. Toffel, and Andrea R. Hugill. "Monitoring Global Supply Chains." Strategic Management Journal 37, no. 9 (September 2016): 1878–1897. (Revised July 2015. Previously titled "Monitoring the Monitors: How Social Factors Influence Supply Chain Auditors.") View Details
  2. ESG Integration in Investment Management: Myths and Realities

    Sakis Kotsantonis, Christopher Pinney and George Serafeim

    The authors’ aim in this article is to set the record straight on the financial performance of sustainable investing while also correcting a number of other widespread misconceptions about this rapidly growing set of principles and methods: Myth Number 1: ESG programs reduce returns on capital and long-run shareholder value. Reality: Companies committed to ESG are finding competitive advantages in product, labor, and capital markets; and portfolios that have integrated “material” ESG metrics have provided average returns to their investors that are superior to those of conventional portfolios, while exhibiting lower risk. Myth Number 2: ESG is already well integrated into mainstream investment management. Reality: The UNPRI signatories have committed themselves only to adhering to a set of principles for responsible investment, a standard that falls well short of integrating ESG considerations into their investment decisions. Myth Number 3: Companies cannot influence the kind of shareholders who buy their shares, and corporate managers must often sacrifice sustainability goals to meet the quarterly earnings targets of increasingly short-term-oriented investors. Reality: Companies that pursue major sustainability initiatives, and publicize them in integrated reports and other communications with investors, have also generally succeeded in attracting disproportionate numbers of longer-term shareholders. Myth Number 4: ESG data for fundamental analysis is scarce and unreliable. Reality: Thanks to the efforts of reporting and investor organizations such as SASB and Ceres, and of CDP data providers like Bloomberg and MSCI, much more “value-relevant” ESG data on companies has become available in the past ten years. Myth Number 5: ESG adds value almost entirely by limiting risks. Reality: Along with lower risk and a lower cost of capital, companies with high ESG scores have also experienced increases in operating efficiency and expansions into new markets. Myth Number 6: Consideration of ESG factors might create a conflict with fiduciary duty for some investors. Reality: Many ESG factors have been shown to have positive correlations with corporate financial performance and value, prompting ERISA in 2015 to reverse its earlier instructions to pension funds about the legitimacy of taking account of “non-financial” considerations when investing in companies.

    Keywords: ESG; sustainability; investment management; finance; corporate social responsibility; Integrated Corporate Reporting; Corporate Social Responsibility and Impact; Investment; Environmental Sustainability; Corporate Governance;


    Kotsantonis, Sakis, Christopher Pinney, and George Serafeim. "ESG Integration in Investment Management: Myths and Realities." Journal of Applied Corporate Finance 28, no. 2 (Spring 2016): 10–16. View Details
  3. Hamilton: An American Musical

    Anita Elberse and Jennifer Lauren Schoppe

    In July 2013, composer, writer, actor and rapper Lin-Manuel Miranda, director Tommy Kail, and producer Jeffrey Seller met to discuss how to launch Hamilton, a new musical based on the life of the first Treasury Secretary of the United States, Alexander Hamilton. With a hip-hop score and an ethnically diverse cast that looked nothing like their historical counterparts, Hamilton was an unlikely candidate for success on Broadway. The trio needed to decide which of two popular routes was best to bring their new musical to Broadway: either take the production straight to Broadway in a 'cold open,' or strike an 'enhancement deal' with a non-profit theater so the musical could be tested before mounting a more expensive Broadway run. Could a hip-hop musical about a largely forgotten Founding Father be a Broadway blockbuster? And if so, what was the right next step in bringing Hamilton closer toward that goal?

    Keywords: entertainment; Creative Industries; performing arts; product development; product launch; marketing; (general) management; strategy; blockbusters; non-profit; Strategy; Risk Management; Nonprofit Organizations; Arts; Creativity; Product Launch; Product Development; Theater Entertainment; Entertainment and Recreation Industry; United States;


    Elberse, Anita, and Jennifer Lauren Schoppe. "Hamilton: An American Musical." Harvard Business School Case 517-015, July 2016. View Details

    John J-H Kim, Lauren Barley and Allison M. Ciechanover

    The case explores Hadi Partovi’s mission to provide every K-12 student in the United States the opportunity to learn computer science. Students can assess how Partovi transformed his passion into an organization that reached millions around the globe through the launch of not-for-profit,, and its well-known awareness building event entitled “The Hour of Code." The case provides students the opportunity to consider the organization’s multi-faceted approach, its team, and partnerships strategy. A particular focus is on the path taken by this relatively young social enterprise to address issues of scalability and sustainability.

    Keywords: Nonprofit Organizations; Information Technology; Hardware; Software; Education; Education Industry; United States;


    Kim, John J-H, Lauren Barley, and Allison M. Ciechanover. "" Harvard Business School Case 317-008, July 2016. View Details
  5. Shareholder Activism on Sustainability Issues

    Jody Grewal, George Serafeim and Aaron Yoon

    Shareholder activism on sustainability issues has become increasingly prevalent over the years, with the number of proposals filed doubling from 1999 to 2013. We use recent innovations in accounting standard setting to classify 2,665 shareholder proposals that address environmental, social, and governance (ESG) issues as financially material or immaterial, and we analyze how proposals on material versus immaterial issues affect firms’ subsequent ESG performance and market valuation. We find that 58% of the shareholder proposals in our sample are filed on immaterial issues. We document that filing shareholder proposals is effective at improving the performance of the company on the focal ESG issue, even though such proposals nearly never received majority support. Improvements occur across both material and immaterial issues. Proposals on immaterial issues are associated with subsequent declines in firm valuation while proposals on material issues are associated with subsequent increases in firm value. We show that companies increase performance on immaterial issues because of agency problems, low awareness of the materiality of ESG issues, and attempts to divert attention from poor performance on material issues.

    Keywords: sustainability; activism; Activist Investors; Activist shareholder; corporate social responsibility; corporate accountability; environment; Corporate performance; corporate governance; Corporate Accountability; Corporate Social Responsibility and Impact; Performance; Environmental Sustainability; Corporate Governance; Business and Shareholder Relations; Investment Activism;


    Grewal, Jody, George Serafeim, and Aaron Yoon. "Shareholder Activism on Sustainability Issues." Harvard Business School Working Paper, No. 17-003, July 2016. View Details
  6. Beyond Symbolic Responses to Private Politics: Examining Labor Standards Improvement in Global Supply Chains

    Andrea R. Hugill, Jodi L. Short and Michael W. Toffel

    Worker rights advocates seeking to improve labor conditions in global supply chains have engaged in private political strategies prompting transnational corporations (TNCs) to adopt codes of conduct and monitor their suppliers for compliance, but it is not clear whether organizational structures established by TNCs to protect their reputations can actually raise labor standards. We extend the literature on private politics and organizational self-regulation by identifying several conditions under which codes and monitoring are more likely to be associated with improvements in supply chain working conditions. We find that suppliers are more likely to improve when they face external compliance pressure in their domestic institutional environment, when their buyers take a cooperative approach to monitoring, and when their auditors are highly trained. We find, further, that a cooperative approach to monitoring enhances the impact of auditor training, and that auditor training has a greater impact on improvement when coupled with a cooperative approach than with external compliance pressures. These findings suggest key considerations that should inform the design and implementation of monitoring strategies aimed at improving conditions in global supply chains as well as theory and empirical research on the organizational outcomes of private political activism for social change.

    Keywords: Monitoring; supply chain; supplier relationship; supply chain management; corporate social responsibility and impact; labor; Working Conditions; sustainability; Sustainability Management; Sustainable Operations; sustainable supply chains; NGO; Globalization; Corporate Accountability; Operations; Supply Chain; Supply Chain Management; Business Processes; Corporate Social Responsibility and Impact; Performance Evaluation; Safety; Risk and Uncertainty; Apparel and Accessories Industry; Electronics Industry; China; Indonesia; India; Bangladesh;


    Hugill, Andrea R., Jodi L. Short, and Michael W. Toffel. "Beyond Symbolic Responses to Private Politics: Examining Labor Standards Improvement in Global Supply Chains." Harvard Business School Working Paper, No. 17-001, July 2016. View Details
  7. World Wildlife Fund (WWF)

    Ramon Casadesus-Masanell and Jordan Mitchell

    Nearly all environmental organizations have a similar aim: to stop the degradation of the natural environment. However, the strategies which environmental organizations choose to employ are sometimes starkly different. Compares the models of two dissimilar environmental powerhouses: Greenpeace and World Wildlife Fund for Nature (WWF). Active in 100 countries, WWF works with governments, businesses, other NGOs, and communities to set up conservation programs to preserve natural habitat. In contrast, Greenpeace works to campaign for environmental change against governments and corporations and accepts funding only through individuals and foundation grants. Explores the detailed history and business models of both organizations.

    Keywords: Business Model; Business and Community Relations; Business and Government Relations; Environmental Sustainability; Non-Governmental Organizations; Business Strategy;


    Casadesus-Masanell, Ramon, and Jordan Mitchell. "World Wildlife Fund (WWF)." Harvard Business School Case 716-468, June 2016. View Details
  8. Shared Value: A New Global Agenda

    Michael E. Porter

    Harvard Business School's Michael Porter introduces and engages World Bank President Jim Yong Kim in conversation on partnering with the private sector for delivering on global development goals.

    Keywords: shared value; Society; collective impact; Corporate Social Responsibility and Impact; Value; Business and Community Relations; Cooperation; Society;


    Porter, Michael E. "Shared Value: A New Global Agenda." Shared Value Leadership Summit, FSG, New York, NY, May 10, 2016. (Video.) View Details
  9. Revitalizing State Bank of India

    Srikant M. Datar, N. M. Bhatta, Rishikesha T. Krishnan and Rachna Tahilyani

    State Bank of India is India’s oldest and largest bank with the government of India as its majority shareholder. Arundhati Bhattacharya, a 35-year veteran of the bank, is appointed as its chairman in October 2013. Her appointment coincides with Moody’s downgrading the bank’s debt due to rising nonperforming assets. She embarks on a mission to improve the bank’s risk taking and management abilities, ensure uniform customer experience, and encourage greater collaboration among various verticals. Her efforts help the bank reduce its nonperforming assets and improve its profitability. However, Bhattacharya knows that these gains will be fleeting without the development of a trained workforce who can address 21st century industry problems with speed and creativity. This requires transforming SBI into a performance-oriented bank supported by a new career development and remuneration system. Bhattacharya wonders if attempting to change the culture of a 206-year-old mammoth organization is feasible or a mere pipe dream.

    Keywords: change management; transformation; Communication strategy; Leadership Style; organizational culture; Organizational Change and Adaptation; Performance Evaluation; culture; corporate social responsibility and impact; human resources; employees; Compensation and benefits; recruiting; capital markets; Performance Expectations; Financial Services Industry; Asia; India;


    Datar, Srikant M., N. M. Bhatta, Rishikesha T. Krishnan, and Rachna Tahilyani. "Revitalizing State Bank of India." Harvard Business School Case 116-043, May 2016. View Details
  10. Strategy Beyond Markets

    John de Figueiredo, Michael Lenox, Felix Oberholzer-Gee and Rick Vanden Bergh

    Strategy beyond markets has been an active area of research inquiry since the early 1990s. Since its inception, the scholarship emanating from this research stream has grown substantially in quantity, quality, and breadth. Likewise, firms across the world have increasingly implemented broad and sophisticated non-market strategies. Within strategy beyond markets, there are a handful of focus areas. In Private Politics we observe firms working more closely with NGOs and other special interest groups to preempt unfavorable policy choices, react swiftly to crises, and proactively develop socially responsible strategies. In Public Politics, firms have become increasingly sophisticated in using campaign funding, lobbying, committee participation, and other instruments to influence local, national, and international political environments. Also firms that are heavily influenced by politics are more likely to craft Integrated Political Strategy as part of a more comprehensive competitive strategy and/or international expansion strategy. Despite significant progress in the literature, we have identified three areas for extension and enhancement in understanding strategy beyond markets. First, we currently have limited understanding of the critical attributes for firms to establish a sustainable non-market strategy. While there have been excellent studies highlighting the importance of preemption in Private Politics, political ties in Public Politics, and forum shopping in Integrated Political Strategy, it is unclear if these types of factors are sustainable in the context of political or market dynamics. Furthermore it is unclear whether these factors differ significantly from those identified in the broader competitive strategy literature (e.g., Are political resources different fundamentally from market resources? Do firms organizing political resources use a fundamentally different logic than firms utilize to organize market resources?) Second, there has been very little (if any) significant research linking firm strategy to both nonmarket outcomes and firm performance. Most research has developed theories and/or empirical analyses that explore the determinants of a firm's strategy beyond markets. Very few studies have shown that a firm's strategy increases policy performance; almost none have demonstrated a link between policy and firm profitability. Third, the topical areas of analysis appear to be limited. Environmental issues and corporate social responsibility dominate Private Politics research, heavily regulated firms dominate Public Politics studies, and theoretical studies dominate research on Integrated Political Strategy. With this AiSM volume we seek theoretical and/or empirical articles that extend and/or enhance the literature by addressing strategy beyond markets in the three areas discussed above in the context of Private Politics, Public Politics or Integrated Political Strategy.

    Keywords: Strategy;


    Figueiredo, John de, Michael Lenox, Felix Oberholzer-Gee and Rick Vanden Bergh, eds. Strategy Beyond Markets. Vol. 34, Advances in Strategic Management. Emerald Group Publishing, 2016. View Details
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