Social Companies vs Coorporate Social responsibility

According to Professor Muhammad Yunus, sponsor of microfinance and Nobel Peace Prize laureate, a social enterprise is an organization without dividends that exists to address a social problem. Investors in this context can recoup their initial investment but not aspire to enrich themselves. The social mission becomes more important than profits or the distribution of dividends. In these, the increase in EBITDA is not crucial, but it is:

  • the objective of the common good is the motive for its commercial activity.
  • Most of its profits are reinvested in achieving the social objective with a problem-solution approach.
  • in which the method of organization and the system of ownership reflects the corporate mission using democratic and participatory principles and focusing on social justice.

For this type of companies with social impact, the source of financing is fundamental, and in this line we have the so-called impact investors or impact incubators, such as the Social Exchange (https://www.bolsasocial.com/enterprise-impact/). With 140 social enterprises members of Social Enterprise Spain, we see that it is a viable option and that it is possible to design companies with this important social work. The degree of success of these companies depends on the number of Angel Investors, Groups or Funds that are interested at the community, country, coalition and advocacy level. Therefore, I see different signs:

  • not just the % of investors available and their background for philanthropy,
  • also the degree of society’s awareness and indicators of major concerns of citizens as well as their willingness to participate and invest, through crowdfunding for example in these initiatives
  • and ending with the type of government, supporting to a greater or lesser extent with Keynesian policies or aimed at impacting available resources on social welfare.

With these 3 factors in mind, I think we have in Spain:

  • A very supportive population but with a very limited purchasing power, with increasing use of digital platforms that can drive this type of companies but that require much capacity to materialize leads to their causes and campaigns.
  • an investment layer that we see with examples of Foundations and investments that are becoming more and more popular in this field due to the profit in its commercial balance due to the improvement of its business or personal brand image and a Spanish company whose evolution went from having in many cases international investors/owners who increasingly see the positive balance in their commercial balance of a healthy brand image and a Spanish company that aims 2019 to have more and more good news of exports abroad and therefore with the capacity to give its investors and businessmen better profits and these repercussions in causes for what has been mentioned above.
  • The last agent is the government, that after the elections on 2019, we will see if we are in a Spain that turns towards populism and very possibly deteriorating with this type of initiatives and with final consequences difficult to predict in its entirety.

This type of companies would differentiate them from the rest of companies, in which every time by impact in brand and by requirement of the investors / regulators becomes more important the Corporative Social Responsibility. And the weight of it has much to do with the concern of investors when reviewing the risk to their businesses and if they transfer the social impact as one of the considerations to be taken into account in their agendas. 76% of Millenials believe that their business should have a positive social impact and another 67% believe that business leaders should commit themselves to helping improve society, according to Deloitte’s ‘Millenials 2017 Survey’ (ref: http://www.rrhhdigital.com/secciones/empleo-joven/132224/Los-Millenials-apuestan-por-el-impacto-social-positivo-de-las-empresas ). However, it must be taken into account that it will happen with the consciousness of the millenials as they mature, if they will transform their social commitment into a sort of more individualistic thinking. The subsequent generation Z, is ultra-demanding with companies and their contractors, but one of their greatest sources of anxiety is the security of their workplace so they are hyperformed and educated.

For me, the degree of social responsibility will definitely depend on the mentality of the population, that if they have the possibility of having security and continuity in their jobs and following the principles of Maslow’s pyramid, their next goal will be for companies to be responsible towards both their workers and society, almost always prioritizing the first aspect.

Big data will help a lot to show investors how social impact directly affects their own coffers. And with Machine Learning expected to be an accessible commodity for many companies through online platforms by 2020, interest in processing huge amounts of information will increase. Not to mention the next step in IA with deep learning that requires even greater amounts of information to be processed.

With these arguments, I conclude my reflectionon these questions:

Do you think that we are really before the consolidation of a new model of social enterprise?

I think we are facing two main threats: the arrival of populist governments that push back the degree of social awareness or their degree of influence in education and on the other hand the arrival of possible new economic crises as the main economic actors with decelerations in the main economies. This will make the risk management of funds, companies and international coalitions take precedence over other types of matters, relegating them to the background. If these two threats can be mitigated, if I believe that we would be in a scenario of more pressure for cooperative social responsibility and in any scenario if I see the consolidation of social enterprises by the pressure of the millennial generation as they reach their maximum purchasing power and with the arrival of generation Z as long as they have security in their jobs.

Do you think that big data will favor the consolidation of new business monopolies?

I believe that we will continue to see large companies becoming even bigger and therefore more capable of having access to and investing in big data and its application in machine learning and deep learning as well as in the analysis for decision making by the management bodies. And I believe in start ups dedicated to not trying to maintain the interest of their entire portfolio of clients, but to attract the attention of very specific groups and with options to be bought by these large monopolies. However, there are still big problems to be solved with the GDPR and the challenge of personal data for commercial use posed by the European regulator.

Are we talking about scientific advances to which only a few will have access and where commercial logic will prevail?

For the most part, I would say that this is going to be the context most likely.

Is corporate responsibility bottomless rhetoric to improve consumer image or are we really talking about companies seeking to contribute to a better society?

Yes, as long as it has repercussions on trade balances. In the end, the interest of an investor will be the interest of its customers or business engine (regulator, agencies, …) and employees. So in the end the paradox for me is that the degree of responsibility you want to see, will be a reflection of the individual’s own with himself and with society. If Generation Z becomes more and more individualistic as the current studies point out, they will be demanding with the companies around them and what they can offer them in benefits. So if we have large employers, their greatest social impact will be through measures that favor their employees and their retention. And in this last scenario, the capacity of the State to convert its population into highly qualified workers who cannot be easily replaced by automatic processes or robots carries enormous weight.

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