The View From Taft

SOCIAL enterprises are growing in number. The factors that contribute to this trend include the increasing complexity of societal problems, which governments are inadequate to address, nonprofits are unable to sustainably address, and for-profits are disinclined to address.
A social enterprise is considered a hybrid organization because it has a dual mission -— to earn profits and to address a social issue. As such, it fills the gap that governments, nonprofits, and for-profits leave.
According to Bob Doherty (The York Management School), Helen Haugh (University of Cambridge), and Fergus Lyon (Middlesex University in London), a social enterprise combines the organizational characteristics of a traditional, for-profit business and of a nonprofit organization to pursue this dual mission. Ideally, social enterprises would be able to pursue both missions in a balanced way. However, the pursuit of two bottom lines — those of profit and of the social mission — often dictates contradictory courses of actions. Fiona Wilson (University of New Hampshire) and James Post (Boston University) posit that while social enterprises are organized as for-profit entities, they often prioritize the social mission and end up sacrificing profits.
In their 2017 master’s thesis on “Marketing in For-profit Social Ventures,” Ana-Maria Ignat and Martin Leon of Lund University state that the tension between the pursuit of profits and the pursuit of mission bleeds into how social enterprises market their products. Their study of six Swedish social enterprises operating in the fashion industry revealed that the degree of tension that an enterprise experiences depends partly on whether the social entrepreneur prioritizes the social mission or the profit, and on where in the value chain the social enterprise operates.
A curious finding was that some of the social enterprises that cater to the high-end market were careful not to overemphasize the social mission when communicating to their clients. As such, one of the practical implications identified by the study is to prioritize the communication of the quality of the product itself over the “doing good” aspect of the purchase. Another finding is that high-end customers prefer to learn about the positive changes that social enterprises introduce into the production process (e.g., using organic cotton, or sourcing gemstones ethically) instead of the negative practices that their non-social enterprise counterparts do (e.g., using cotton grown with chemical fertilizers, or mining blood diamonds).
Another recommendation that the Swedish social entrepreneurs made is for social enterprises to avoid using paid advertisements and to instead use Instagram as their main marketing tool. The Swedish social entrepreneurs have realized that online platforms, particularly the companies’ websites, are the best way of generating profit margins.
Curious about the difference between social enterprises in Sweden and in the Philippines, I interviewed Marie Cavosora, the owner and CEO of CalaBoo Dairyard, a Filipino social enterprise. CalaBoo Dairyard was founded at the Gawad Kalinga Enchanted Farm, but is now based in Magdalena, Laguna. In partnership with the Philippine Carabao Center, CalaBoo produces fresh and natural dairy products such as milk, cheese, and yogurt from carabao milk. Operating with a farm-to-fridge concept, it produces only when clients order, and delivers the orders to the clients’ doorsteps, effectively cutting the middlemen and improving the lives of small farmers by providing them with steady income.
I realized that the tension identified by Ignat and Leon also exists for this Filipino social enterprise. Also consistent with the social enterprise literature, CalaBoo, while established as a for-profit business, does not maximize profit. In fact, there have been times when the enterprise sacrificed potential profit to stay true to its social mission. For example, when considering an investment, CalaBoo makes sure that any condition attached to it will be consistent with its mission. Else, the investment is not accepted. Although this criterion significantly slows the growth of the organization, CalaBoo deems it necessary.
Throughout its operations and most especially in marketing, the owner makes sure that the mission of CalaBoo remains at the center. The mission guides the way in which CalaBoo forms relationships with its clients and selects its marketing platform and channels. CalaBoo makes sure that it partners with like-minded individuals and organizations to amplify its message.
Social enterprises may do well to learn from these practices if they want to thrive.
Shieradel V. Jimenez teaches Management of Organizations and Human Behavior in Organizations at the Ramon V. Del Rosario College of Business of De La Salle University.