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. The Type of Socially Responsible Investments That Make Firms More Profitable

    George Serafeim

    Keywords: sustainability; corporate social responsibility; corporate sustainability; Investing; investment; investment management;

  2. Pearson Affordable Learning Fund

    Michael Chu, Vincent Dessain and Kristina Maslauskaite

    An in-house venture capital fund for affordable private schools at the base of the pyramid established by Pearson, the world's largest education company, PALF sought to invest in business models providing superior educational outcomes in emerging markets on a profitable and scalable basis. With Pearson's overall strategy shifting from the developed to the developing world and from a supplier of books to a host of other learning products and services, the company thought PALF's lessons might be applicable to Pearson's core businesses. By 2014, Katelyn Donnelly, the Managing Director of PALF, and her team had made seven investments in Africa and Asia and were close to fully committing the $15 million earmarked for the initiative. In the upcoming meeting of PALF's Investment Committee, Donnelly must present a recommendation: should Pearson allocate more internal money to the fund or should they open it up to third party investors?

    Keywords: impact investment; low cost private schools; investment fund; business at the base of the pyramid; Education; Social Entrepreneurship; Investment; Business Growth and Maturation; Transition; Development Economics; Private Sector; Emerging Markets; Education Industry; United Kingdom; Ghana; India; Philippines; South Africa;

    Citation:

    Chu, Michael, Vincent Dessain, and Kristina Maslauskaite. "Pearson Affordable Learning Fund." Harvard Business School Case 315-109, March 2015. View Details
  3. Corporate Sustainability: First Evidence on Materiality

    Mozaffar Khan, George Serafeim and Aaron Yoon

    An increasing number of companies make sustainability investments, and an increasing number of investors integrate sustainability performance data in their capital allocation decisions. To date however, the prior academic literature has not distinguished between investments in material versus immaterial sustainability issues. We develop a novel dataset by hand-mapping data on sustainability investments classified as material for each industry into firm-specific performance data on a variety of sustainability investments. This allows us to present new evidence on the value implications of sustainability investments. Using calendar-time portfolio stock return regressions we find that firms with good performance on material sustainability issues significantly outperform firms with poor performance on these issues, suggesting that investments in sustainability issues are shareholder-value enhancing. Further, firms with good performance on sustainability issues not classified as material do not underperform firms with poor performance on these same issues, suggesting investments in sustainability issues are at a minimum not value-destroying. Finally, firms with good performance on material issues and concurrently poor performance on immaterial issues perform the best. These results speak to the efficiency of firms' sustainability investments, and also have implications for asset managers who have committed to the integration of sustainability factors in their capital allocation decisions.

    Keywords: sustainability; corporate sustainability; corporate social responsibility; investment; investment management; investment return; investment strategy; Investments; Corporate performance; Corporate Social Responsibility and Impact; Performance; Investment; Environmental Sustainability;

    Citation:

    Khan, Mozaffar, George Serafeim, and Aaron Yoon. "Corporate Sustainability: First Evidence on Materiality." Harvard Business School Working Paper, No. 15-073, March 2015. View Details
  4. Making the Business Case for Environmental Sustainability

    Rebecca Henderson

    Can a business case be made for acting sustainably? This is a difficult question to answer precisely, largely because there is no generally accepted definition of the term "sustainability". Is it acting sustainably to protect the human rights of the firm's workforce? To invest in education in local communities? To switch to renewable power? All of these actions might improve social welfare, and some of them might improve profitability but they are very different, and the business case for each of them is similarly likely to look quite different. Here I begin to explore the issue by focusing on a more limited question, namely whether a business case be made for acting in an environmentally sustainable way, which I define as acting in any way that reduce a firm's environmental footprint.

    Keywords: Corporate Social Responsibility and Impact; Decision Making; Environmental Sustainability;

    Citation:

    Henderson, Rebecca. "Making the Business Case for Environmental Sustainability." Harvard Business School Working Paper, No. 15-068, February 2015. View Details
  5. Edyficar and Mibanco: The Emergence of M&A in Microfinance

    Michael Chu

    Mibanco, a microfinance icon, is for sale and Edyficar, owned by BCP, Peru's largest bank, is evaluating its acquisition. Until recently, such a transaction would have been fanciful given Mibanco's pre-eminent role in Peruvian microfinance which has made it the country's fifth largest bank. The case examines why Mibanco is on the block, while also relating the evolution of Edyficar and its own acquisition by BCP (Banco del Credito) several years earlier. Percy Urteaga, Edyficar's CEO, and Gianfranco Ferrari, the chair of his board and senior BCP executive, must decide whether to go forward and, if so, at what price.

    Keywords: Microfinance; base of the pyramid; Peru; Latin America; mergers and acquisitions; Microfinance; Commercial Banking; Mergers and Acquisitions; Banking Industry; Latin America; Peru;

    Citation:

    Chu, Michael. "Edyficar and Mibanco: The Emergence of M&A in Microfinance." Harvard Business School Case 315-030, February 2015. (Revised March 2015.) View Details
  6. Abby Falik at Global Citizen Year

    Robert Steven Kaplan and Lauren Barley

    Abby Falik, founder and CEO of Global Citizen Year (GCY), quickly read through the most recent news updates regarding the Ebola crisis in West Africa as she prepared for her board call on July 31, 2014. Based in Oakland, California, GCY was a five-year-old not-for-profit with a fiscal year (FY) 2015 budget of $3.5 million. Its mission was to make it much more the norm for graduating high school students in the U.S. to choose a "bridge year." GCY believed this experience after high school, but before college, would help students build self-awareness, learn about the world, and develop grit. In turn, GCY felt these attributes laid the foundation for success in college, and beyond.

    Keywords: not-for-profit; public service; developing countries; Secondary Education; Nonprofit Organizations; Higher Education; Developing Countries and Economies; Giving and Philanthropy;

    Citation:

    Kaplan, Robert Steven, and Lauren Barley. "Abby Falik at Global Citizen Year." Harvard Business School Case 415-052, February 2015. View Details
  7. Marie Trellu-Kane at Unis-Cité: Establishing Youth Service in France

    Julie Battilana, Michel Anteby and Anne-Claire Pache

    Marie Trellu-Kane is trying to decide how Unis-Cité should respond to French President Jacques Chirac's announcement in 2005 of a new national voluntary civil service program. Since 1994, Trellu-Kane and her co-founders had been creating and overseeing a civil service program called Unis-Cité, in which youth, particularly from the disadvantaged immigrant population, volunteered nine months of their time to work on community projects. Based in Paris, France, Unis-Cité had begun to expand to other areas. With the announcement that the government would provide funding to mobilize thousands of youth volunteers, Trellu-Kane needed to decide how Unis-Cité would proceed.

    Keywords: Expansion; leadership; non-profit management; government and business; social enterprise; Growth and Development Strategy; Organizational Design; Business and Community Relations; Business and Government Relations; Social Enterprise; Paris;

    Citation:

    Battilana, Julie, Michel Anteby, and Anne-Claire Pache. "Marie Trellu-Kane at Unis-Cité: Establishing Youth Service in France." Harvard Business School Case 415-035, January 2015. View Details
  8. Mobile Money: The Effect of Service Quality and Competition on Demand

    Karthik Balasubramanian and David F. Drake

    The use of electronic money transfer through cellular networks ("mobile money") is rapidly increasing in the developing world. The resulting electronic currency ecosystem could improve the lives of the estimated 2 billion people who live on less than $2 a day by facilitating more secure, accessible, and reliable ways to store and transfer money than are currently available. The development of this ecosystem requires a network of agents to conduct cash-for-electronic value transactions and vice versa. This paper estimates the effect of competition and service quality on mobile money demand. In this setting, service quality consists of service reliability (lower stockout and system downtime rates), pricing transparency, and agent expertise. Among our results, we find that agents experience reduced demand for service failures due to stockouts, but not for service failures due to network downtime, suggesting that consumers differentially ascribe responsibility for service failure based on the type of failure they experience. We find that both stockout rate and agent expertise are important competitive dimensions in this setting. Pricing transparency, on the other hand, has a main effect on demand but has no significant interaction with competitive intensity. This paper furthers our understanding of the impact and interaction of quality and competition in service settings, while developing a foundation for the exploration of mobile money by OM scholars.

    Keywords: service operations; operations strategy; competition; base of the pyramid; mobile money; Competition; Currency; Service Operations; Mobile Technology;

    Citation:

    Balasubramanian, Karthik, and David F. Drake. "Mobile Money: The Effect of Service Quality and Competition on Demand." Harvard Business School Working Paper, No. 15-059, January 2015. View Details
  9. San Francisco, 2015 #tech #inequality

    Clayton Rose, Allison Ciechanover and Kunal Modi

    In December 2013 a group of angry protesters blocked one of the commuter buses provided by the large Silicon Valley firms (known as "Google buses") which was stopped in San Francisco on its way to the company's headquarters 40 miles south. The protests were a tangible manifestation of the sharp increase in tensions between citizens upset with changes they saw in San Francisco and the "techies" and technology companies they held responsible for the disappearing middle class, increased homelessness, languishing public education, and a sense of departure from the unique culture and values of the city's past. This case explores some of the substantial economic inequality problems facing San Francisco, and how much responsibility for creating or exacerbating the problems rests with the government, technology firms, their employees, and the nature of capitalism, among others. It also allows for discussion of what technology firms and the "techies" might do to help alleviate the problem.

    Keywords: income inequality; Economic inequalty; technology; Silicon Valley; Income Characteristics; Equality and Inequality; Technology Industry; United States; California; San Francisco;

    Citation:

    Rose, Clayton, Allison Ciechanover, and Kunal Modi. "San Francisco, 2015 #tech #inequality." Harvard Business School Case 315-076, January 2015. (Revised March 2015.) View Details
  10. 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: Regulator leniency; nonprofit organizations; beneficence; mispricing; upcoding; Nonprofit Organizations; Fairness; Revenue;

    Citation:

    Heese, Jonas, Ranjani Krishnan, and Frank Moers. "Regulator Leniency and Mispricing in Beneficent Nonprofits." Harvard Business School Working Paper, No. 15-056, January 2015. View Details
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