Globalization and Social Entrepreneurship

Over the past quarter, we have covered a significant amount of information regarding social justice and its influence on business. During the closing weeks of the course, we went over globalization problems and solutions, and learned more about social entrepreneurship. The alignment of both of these topics has been my strongest take-away from this course, and I am excited to learn more about social entrepreneurial opportunities that exist in the world today.

The readings provided a good background into the effects of globalization, and whether we can summarize them as good or bad. Generally speaking, opening up the global market to third world communities has led to a stronger economic and infrastructure development, however it has come at a price. The movie Life and Debt, showed how Jamaica was negatively impacted by the cheap, mass-produced and subsidized commodities that became available to the Jamaican people. Unable to compete, many Jamiacan farmers had to look elsewhere for work. Instead of creating self-sufficiency, the large MNCs invested the capital to open up new foreign markets and drove local markets out of business. While globalization has spurred up commerce, education, and infrastructure in many areas, it has also taken away from the harmony and sustainability that exists with a community-based traditional market. In Alternatives to Globalization: A Better World is Possible, Helena Norberg-Hodge asks, “(In a community-based economy) The people were cared for and the environment was well sustained—which criteria for judging a society could be more important?”

How do we judge the success of a society? Should it be based on economic progress? What about human health or happiness? These philosophical questions are brought to attention in David Korten’s book Agenda for a New Economy. Korten compares the opinions of two economists who both agree that there is a need for action to reverse environmental damage and eliminate poverty—Jeffrey Sachs and James Gustave Speth. Korten proclaims that his perspective is aligned closer to Speth, and that is evident in his writing. While Sachs feels that these issues can be resolved through foreign aid and new technologies, Speth asserts that capitalism is flawed and wealth redistribution is required to eliminate poverty. This argument brings me back to our first intensive when Jill presented the quadrant map (an image is displayed on my first reflective post.) If I were to assign a quadrant for each of these gentlemen Sachs and Speth would be found under reform and replace, respectively.

We were graced with David Korten’s attendance on an Elluminate session one week, and I found his ideas quite interesting and unordinary. The biggest problem with radical ideas I have is the likelihood of implementation. How do we solve the world’s issues? By making easy incremental changes or ushering in an entirely different set of rules? I \ relate this question to the debate on healthcare reform that is alive today (and just passed! Woot!). There will always be a strong bloc of the population that is against any large shift from the status quo. Sachs and the rest of the “reform” quadrant work to find a solution within the boundaries of our current system. I still place myself in that section.

One proposed “reform” solution that I went over in depth was the base of the pyramid theory. The premise of this theory is that there are approximately 4 billion people in the world who are currently underserved in today’s economy. The income of that market is less than $2 per day, but despite this, there are opportunities for MNCs to create new markets and profit from this sector. The creation of new markets would spur the economic development of the poor, and reduce poverty. I had been introduced to the work of Stuart Hart (Capitalism at the Crossroads) and C.K. Pralahad (The Fortune at the Bottom of the Pyramid: Eradicating Proverty through Profits) during my senior year, who covered this topic. I was excited to learn more, and decided to make this the topic of my book report. One of our readings during Week 8 was Aneel Karnani’s article The Mirage of Marketing to the Bottom of the Pyramid: How the Private Sector Can Help Alleviate Poverty, and challenged the viewpoints of the theorists.

My excitement about this topic has had its ebb and flow, but ultimately I see how many of the case studies Pralahad uses for his argument can serve the social entrepreneur. Both Prahalad and Karnani proclaim that there is, in fact, a market open for business. However, it takes ingenuity, creativity, scalability, collaboration, and local learning to achieve an effective business model. “All elements of the business—capital intensity, work flow, volume, manufacturing and logistics, design of products, its maintenance, pricing, use of people, skill development, and building an ecosystem of specialized suppliers—must be challenged and examined without relaxing the self-imposed constraints.” (Prahalad) These opportunities can be claimed by the financial capital of an MNC, or the relentless pursuit of a social entrepreneur. My largest concern with MNC’s adopting Base of the Pyramid strategies is the exploitation of the poor. I think businesses need to tread very lightly and be regulated very heavily. Transparency of operations through CSR reporting should be a requisite to those who decide to open markets to the BOP. Also, there needs to be a strong understanding of the local economy and a willingness to work within those constraints.

I strongly believe that the social entrepreneur is better equipped and a more appropriate enterprise to handle these opportunities as opposed to large MNCs. Social entrepreneurs can adapt their business models to fit with cultural differences. Reaching the rural poor would be a difficult undertaking for an MNC whose business relies on scalability and large distribution centers. Most importantly, the social entrepreneur has a vested interest in the well being of their stakeholders and the community.

“As the number of leading pattern-changing social entrepreneurs has been increasing everywhere, and as the geographic reach of their ideas has been expanding ever more rapidly, the rate of plowing and seeding therefore has multiplied. As have the number of local changemakers. This whole process is enormously contagious. As the number of large-scale entrepreneurs and local changemakers multiplies, so does the number of support institutions, all of these make the next generation of entrepreneuring and changemaking easier.”

It was refreshing to read those words from Everyone a Changemaker: Social Entrepreneurship’s Ultimate Goal. Reflecting over the entire course, social entrepreneurship has been a resounding chord that has led me down trails of self-interested research. So is globalization good or bad? I think the jury is still out. Although many disparities have taken place in the past, I believe that globalization can increase the education, infrastructure and technology of the poor around the world. Most importantly, this exposure to the global market can pave the way for the social entrepreneur. My hope is that through continued transparency of institutions, and freedom of information, corporations will be too heavily regulated to commit the injustices that have been made in the past. I admit, however, that I feel like I have only scratched the surface of this global issue, and I am excited to learn more through both my education at BGI and my own discovery.