NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, July 19, 2013

Business leaders group the World Economic Forum (WEF) are excited about social entrepreneurship. That’s abundantly clear from reading Breaking the Binary: Policy Guide to Scaling Social Innovation, a recent report published by WEF and the Schwab Foundation for Social Entrepreneurship, the social entrepreneurship organisation started by WEF’s founder, Klaus Schwab.

It’s primarily a report on policy-level interventions by governments around the world designed to promote “social innovation”. Their two-part definition of “social innovation” begins with the claim that “fundamentally, [social innovation] is about leveraging private enterprise and capital for public benefit” and concludes in the next sentence with: “We define [social innovation] as the application of innovative, practical, sustainable, business-like approaches that achieve positive social and/or environmental change, with an emphasis on low-income or underserved populations.”

The bulk of the report is made up of case studies of government that, in some way, explain how this two-part definition fits together. Whether you like the explanations will depend very much on what you want to happen.

It’s difficult to object to targeted interventions by governments designed to enable the economy to deliver better social outcomes, such as The Impact Investing Working Group of the Presidential Investment Councilin Senegal, which brings together private, public and social enterprise to target “impact investment” at tackling key social challenges, such as unemployment.

Another initiative that seems equally social useful is China’s Micro-Credit Company Pilot Programme, set up in 2005 to “address the lack of financial services available to entrepreneurs in impoverished rural regions”. The result is that there are now 6,000 micro–credit companies providing $87bn worth of loans to farmers and other enterprises in rural China.