Role of Corporates in Driving the Success of Social Enterprises

There are approximately 10 million social enterprises worldwide which collectively generate around $2 trillion in annual revenues, creating over 200 million jobs.

This astounding figure reflects the increasing significance of social enterprises in addressing societal issues. Yet, the success of these ventures often hinges on the support and involvement of larger corporate entities. As a platform dedicated to helping students start their businesses, we understand the critical role corporates play in the development and success of social enterprises.

Social enterprises and corporations are increasingly finding common ground in their missions and operations. Corporates can offer resources, mentorship, and financial support, while social enterprises provide innovative solutions and a commitment to social impact that align with corporate social responsibility (CSR) goals.

Financial Investment

One of the most tangible ways corporates support social enterprises is through financial investments and grants. According to a survey, approximately 50% of social enterprises receive some form of financial support from corporations. These investments can take the form of direct funding, grants, or impact investments aimed at generating social and environmental impact alongside a financial return.

Case Study: Patagonia

Patagonia, the outdoor clothing company, is renowned for its commitment to environmental sustainability. The company allocates 1% of its sales to the preservation and restoration of the natural environment, which includes funding various social enterprises focused on environmental issues. This financial support helps these organizations scale their operations and magnify their impact. Patagonia employees decide which organizations receive these funds, and in fiscal year 2014, they distributed $6.6 million to 770 environmental groups across 16 countries.

Mentorship and Expertise

Beyond financial support, corporates can offer invaluable mentorship and expertise. Established businesses possess a wealth of knowledge in areas such as marketing, operations, and management, which can be crucial for the growth of social enterprises.

Accenture’s Mentorship Program

Accenture, a global consulting firm, runs a comprehensive mentorship program for social enterprises. Their consultants work closely with social entrepreneurs to refine their business strategies, improve operational efficiency, and enhance their overall impact. Such mentorship programs not only help social enterprises navigate complex business environments but also foster a culture of continuous learning and improvement.

Access to Networks and Markets

Corporates have extensive networks and market reach that social enterprises can leverage. By partnering with established companies, social enterprises gain access to broader audiences and potential customers. This exposure can significantly enhance their visibility and credibility.

Unilever’s Sustainable Living Brands

Unilever’s Sustainable Living Brands initiative highlights how corporates can drive the success of social enterprises. By integrating socially responsible products into their brand portfolio, Unilever has opened doors for numerous social enterprises to access global markets. Over the past decade, Unilever has championed sustainability through its Unilever Sustainable Living Plan (USLP). The USLP, which concluded in 2020, aimed to make sustainable living commonplace for 8 billion people. Unilever improved its business by growing brands, driving innovation, and avoiding over €1 billion in costs.

Joint Ventures and Collaborations

Collaborative efforts between corporations and social enterprises can lead to innovative solutions that neither could achieve alone. Joint ventures harness the strengths of both parties, resulting in products or services that drive social change while generating profits.

“Corporate venturing allows established companies to access forms of innovation that are difficult or impossible to produce internally. corporate typically look at lagging metrics, such as revenue and EBITDA, but if you are working with an early-stage start-up, you should be thinking about strategic metrics tied to the value-added activity and long-term impact on society,” says Vishal, CTO, Nasscom Foundation.

Coca-Cola and WaterHealth International

Coca-Cola’s partnership with WaterHealth International is a prime example of such collaboration. Together, they launched a project to provide sustainable access to clean drinking water in developing countries. This joint venture combines Coca-Cola’s logistical expertise and WaterHealth International’s innovative water purification technology to create a scalable and impactful solution.

Enhancing Corporate Social Responsibility (CSR)

For corporates, supporting social enterprises is not just altruistic but also strategic. Engaging with social enterprises enhances their CSR efforts, improving brand image, fostering customer loyalty, and even driving employee satisfaction. A study by Cone Communications found that 87% of consumers would purchase a product because a company advocated for an issue they cared about.

As Richard Branson, Founder of Virgin Group says, “We need to shift our focus from not-for-profits and CSR to supporting businesses that are making a tangible difference in the world.”

thingQbator: Bridging the Gap

An excellent example of corporate support in action is the thingQbator initiative by Cisco, implemented by the Nasscom Foundation. thingQbator is a platform for students and budding entrepreneurs to turn their ideas into prototypes. Through access to cutting-edge technology, mentorship, and resources, thingQbator equips young innovators with the tools they need to develop impactful solutions. This initiative supports the growth of social enterprises and fosters a culture of innovation and problem-solving among the youth.

Conclusion

Michael Porter, Professor at Harvard Business School says, “Companies must take the lead in bringing business and society back together. They must reconnect company success with social progress.”

The role of corporations in driving the success of social enterprises cannot be overstated. From financial investments and mentorship to market access and collaborative ventures, support from established businesses is pivotal in scaling the impact of social enterprises. Initiatives like thingQbator by Cisco and Nasscom Foundation exemplify how corporate backing can nurture young innovators and foster a thriving ecosystem of social entrepreneurs.

As students embark on their journey to create socially-driven businesses, recognizing and leveraging corporate partnerships can be a game-changer. By aligning their missions with the CSR goals of corporations, social enterprises can not only thrive but also drive profound societal changes.