5/11/2023 0 Comments Enterprise journalIndia’s handwoven-carpet industry offers a prime example of this dynamic. Social and economic problems often reflect an imbalance of power among the economic actors involved. In the following pages we’ll describe how representative entrepreneurs have successfully made these changes. In studying these leaders and their ventures, we have found that they all focus on changing two features of an existing system-the economic actors involved and the enabling technology applied-to create sustainable financial models that can permanently shift the social and economic equilibrium for their targeted beneficiaries. More than 100 social entrepreneurs representing 91 organizations have received Skoll awards to date. Each year the foundation confers the Skoll Award for Social Entrepreneurship (SASE) on a small number of people. Over the past 15 years we have studied successful social entrepreneurs up close through our work for the Skoll Foundation, which was established in 1999 by the internet entrepreneur Jeffrey Skoll. What can social entrepreneurs do to increase their chances of achieving sustainability-and perhaps even profitability? We think we have an answer. As others around the world saw that it was actually possible to make a tidy profit lending to poor people, they adopted the Grameen model, vastly magnifying the impact of Yunus’s initial innovation. The experiment grew into the famed Grameen Bank, a financially sustainable social business serving disadvantaged Bangladeshis. In the late 1970s, for example, Muhammad Yunus secured funding to conduct an experiment in which very poor borrowers were given tiny loans. In some cases a social enterprise may even spawn a profitable business. To achieve sustainability, an enterprise’s costs should fall as the number of its beneficiaries rises, allowing the venture to reduce its dependence on philanthropic or governmental support as it grows. Otherwise the new socioeconomic equilibrium will require a constant flow of subsidies from taxpayers or charitable givers, which are difficult to guarantee indefinitely. The endeavor must also be financially sustainable. In Afghanistan, GoodWeave’s supply chain inspectors are all female, so they may enter the women’s quarters in homes, where most carpets are made. Today GoodWeave operates globally, and Kiva is on track to facilitate more than $1 billion in microloans within the next couple of years. And through the Kiva platform, Matt Flannery and Jessica Jackley enabled small-scale lenders in wealthy countries to lend to small-scale borrowers in poor countries. For example, the children’s rights activist Kailash Satyarthi realized that reaching ethically concerned consumers through Rugmark (now GoodWeave International) could help foil exploitative labor brokers in India’s carpet-weaving industry. In studying the winners of the Skoll Award for Social Entrepreneurship, the authors found that they all focus on changing two features of an existing system: the economic actors involved and the enabling technology applied. Grameen Bank is a famous example of a social venture that met both goals. But the endeavors should be financially sustainable, because there’s no guarantee that subsidies from taxpayers or charitable givers will continue indefinitely. Ventures in this realm are usually intended to benefit economically marginalized segments of society that can’t transform their prospects without help. "Organizational Capabilities and the Economic History of the Industrial Enterprise.Social entrepreneurship has emerged over the past several decades as a way to identify and bring about potentially transformative societal improvements. Finally, I suggest the value of the transactions cost and evolutionary theories to historians and economists who are attempting to explain the beginnings and growth of modern industrial enterprises. Next, I relate my explanation of these "empirical regularities" to four major economic theories relating to the firm: the neoclassical, the principal-agent, the transaction cost, and the evolutionary. In this paper, I first describe the similarities in the historical beginnings and continuing evolution of these enterprises and then outline my explanation for these similarities. I did so by comparing the fortunes of more than 600 enterprises-the 200 largest industrial firms at three points in time (World War I, 1929, and World War II) in each of the three major industrial economies (those of the United States, Britain, and Germany). In my book Scale and Scope (1990), I focused on the history of the modern industrial firm from the 1880s, when such firms first appeared, through World War II.
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