CHAPTER 4

Business Models and Social Entrepreneurship

MICHAEL A. PIRSON

Assistant Professor for Global Sustainability and Social Entrepreneurship, Fordham University Research Fellow, Harvard University; and Partner, Humanistic Management Network

INTRODUCTION

The 2007−2008 financial crisis caused many to question the basic premises of the current business system (Kaletsky 2010). Books and articles on how to rethink the current business system abound. From notions of Capitalism 3.0 (Barnes 2006) to moral capitalism (Young 2003) or humanistic management (Pirson and Lawrence 2009), many authors suggest that business needs to reinvent itself to meet the challenges of the twenty-first century. For example, Porter and Kramer (2011) suggest that the purpose of the corporation needs to be redefined. They posit that the corporation should pursue shared value creation rather than merely pursuing financial value creation. The authors also suggest that managers should view the corporation as socially embedded and actively uncover potential for value creation for all stakeholders to remain competitive and secure organizational longevity. Porter and Kramer basically refurbish the older stakeholder management argument by stating that economic value can only be created in a sustainable fashion when all stakeholders, including society, can appreciate the value created. In a certain new twist to the argument, the authors highlight the example of social entrepreneurs from which corporations can learn. ...

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