Tuesday, 13 December 2011

Myth about 'social enterprises'

The controversies surrounding social enterprises in Hong Kong stem from three fundamental reasons.  First, the definition of a social enterprise is contextual. It is difficult to come to a universal consensus on what a social enterprise is. Creating job opportunities in rural India is certainly a social enterprise, but it may not be the case in Hong Kong. The government advisory committee for social enterprise funding discussed a definition for months, but unable to reach a consensus, decided to put it aside.

Second, the Government puts policy responsibility for social enterprises under the Home Affairs Bureau. But as rightly pointed out by Raymond Yim of the Social Enterprise Incubation Centre, social enterprises should not be the monopoly of NGOs and should definitely not be run as charities. Making profit should not be perceived as something evil. Indeed I would argue that we should encourage more for-profit companies to run social businesses. This is the only way to ensure that people with business skills can build and grow the enterprises on a sustainable basis.

Third, most people assume that enterprises can only do good by benefiting the ‘bottom of the pyramid’ - the disadvantaged, the disenfranchised and the disabled. But the reality is that challenges in health care, environment, education and many other social issues are as relevant to other segments of the society as to the underprivileged. An enterprise can still be ‘social’ if it is addressing the obesity issue of middle class kids.

The November issue of the Harvard Business Review carried a special feature on good companies that ‘create value for society, solve the world’s problems, and still make money’.  This is a new generation of companies that are doing good and doing well in a variety of ways. They improve the lives of people, provide jobs, address environmental issues, enhance employees’ job satisfaction and quality of life, develop a responsible network of suppliers and partners, and last but not the least operate on a financially viable basis to provide resources for the attraction/ retentions of talent and continuous innovation.  They can be big multinational companies as well as small and medium sized enterprises.  Whether they are social enterprises or not are irrelevant. My favourite example is Google. Is Google a social enterprise? Probably not. But has it created enormous value for the world? A resounding yes.

Policy priority (and resources) should therefore be directed at encouraging and supporting the development of ‘good companies’ that can create economic, social and/or environmental value in a profitable (and thus sustainable) manner. Government policies and regulations should encourage responsible investment taking into account Environment, Social and Corporate Governance (ESG) issues.  Government funding support should favour entrepreneurs who aspire to do good and do well.  The annual Make a Difference Award, which champions young and innovative change makers, is a case in point. We have selected 3 finalists for the 2012 Make a Difference Award, and not all of them are the classic ‘social enterprises’. But they are definitely doing good and doing well. You can check them out from www.MaD.asia and cast your vote on the Grand Award winner.



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