Eco-Social Business in Developing Countries: The Case for Sustainable Use of Resources in Unstable Environments

Despite recent interest in the ‘new’ social enterprise movement, the issue of how to connect this successfully to ecological concerns has not yet found widespread interest. There is much development in the relations between business and social ventures: for example, there is an extensive history of nonprofits using fees for services and other revenue-raising techniques in order to supplement or complement their mission activities (Alter, 2007). Over more recent years, many nonprofits have formed closer ties with corporate sponsors, and they have adopted more business-like procedures. Drawing on a survey of nonprofit activity around the world, SustainAbility (2003: 51) believes that the nonprofit sector is gearing towards more market-based solutions, mechanisms and dynamics. On the other hand, businesses in general have assumed social responsibilities in a broad array of their activities, as well as responsibilities for the natural environment and natural resource consumption. We have also seen the rise of an organization type in an apparently new hybrid space, which combines social and economic goals. The literature most commonly identifies this as a ‘social enterprise’. Alter (2007) sees the pioneer social entrepreneurs as: John Durand, who began the first ‘social firm’ with disabled employees in 1964; Mimi Silbert, who established Delancy Street social businesses for recovering addicts in the 1970s; and Mohammad Yunus, who popularized microfinance with the Grameen Bank in 1976. There is no clear, consensual definition of ‘social enterprise’ in the literature – much less so for eco-social business. As far as social enterprise is concerned, it appears that each discipline or field defines in its own image. The Nonprofit Good Practice Guide (2009), for example, defines a social enterprise as ‘a nonprofit venture that combines the passion of a social mission with the discipline, innovation and determination commonly associated with for profit businesses’. Alter (2007) takes a more market-oriented definition: ‘A social enterprise is any business venture created for a social purpose – mitigating/reducing a social problem or a market failure – and to generate social value while operating with the financial discipline, innovation and determination of a private sector business’. The literature is virtually silent on developing-country-based and -financed social enterprises (Chikandi, 2010), apart from micro-finance, which is used as an exemplar of social entrepreneurship. Our contribution enlarges these consolidated research fields, offering a theoretical framework that tries to put in a more holistic vision the topic of eco-social business in developing countries. The model analyzes this topic, focusing on the main aspects that should be considered for supporting the sustainable development of emergent countries. The literature recognizes several variables that influence the effectiveness of a sustainable use of resources in a developing country, but we did not find a consolidated definition of social business. There also is no clear definition of social entrepreneurship. Although entrepreneurship has long been recognized as a fundamental institution of economic growth, it has only recently begun to receive attention by development economics, which has historically favored top-down, planning-oriented strategies to poverty alleviation (McMullen, 2011). But if entrepreneurs are an important factor for developing countries, the sustainability issue requires a clear analysis of why responsible investment is made. There are three main approaches that deal with responsible investments in emerging nations: the ‘bottom or base of the pyramid’ approach, the ‘social business’ approach and the ‘public purpose capitalism’ approach. Even though all the approaches, to some extent, consider the ‘eco-business’ issue – that is, responsible care and sustainable use of local natural resources within a strategy or a set of strategies – it is thought that the sustainability perspective warrants a more encompassing view. So we offer an extended association among these approaches and some other ‘ingredients’ to the issue. Based on the above, we develop a model that could lead to explaining and expounding eco-social business formation in the developing world. We will show the role of entrepreneurs and of what is known as the ‘factor-four strategy’ for developing eco-social businesses. Connecting this to emerging markets, the main aim is to find how this can progress in an environment with limited economic resources, scarce employment opportunities, abundance of unskilled labor, low levels of technological know-how and insufficient governmental capabilities. The answer would lie in a combined effort of integrating strategies developed by all the actors of an emergent country.