From a historical perspective, our social civilization has evolved from primitive society to slave societies and feudal societies, and then from those to the modern society dominated by capitalism. This evolution indicates that our social civilization is always changing and will continue to change. With all the improvements brought by technology in various aspects of society, our lives are undergoing significant changes. Therefore, as responsible members of society, we need to reflect on what kind of social structure we should choose for the next era.
In this context, I am particularly concerned about the economy, as everyone living in society is part of the economic cycle. The economy of the next era should transcend capitalism, becoming more rational and efficient, allowing each individual to realize their own value.
Through our ongoing research on the economy, we have named the economic system of the next era “social economy.” This system aims to further strengthen the connections between organizations, society, and individuals. While it differs from socialism, it indeed incorporates elements of collectivism.
In a social economy, the form of enterprise is social business. Social businesses are commercial models aimed at addressing social issues such as poverty and environmental challenges.
Dr. Muhammad Yunus, the founder of the Grameen Bank and an economist, proposed the following seven principles for social enterprises:
- The primary purpose of a business is not to maximize profits, but to address issues that threaten people and society, such as poverty, education, health, access to information, and environmental concerns.
- Achieving financial and economic sustainability.
- Investors can only recover their initial investment and will not receive dividends exceeding the principal amount.
- Profits generated beyond the investment amount will be used to promote, improve, and expand the social enterprise.
- Protecting the environment.
- Providing employees with market wages and working conditions that exceed standard requirements.
- Engaging joyfully in the work.
According to Dr. Yunus’s theory, the primary goal of a social enterprise is to reduce poverty and address social issues, generating sustainable social impact through ongoing business activities.
However, we believe that the concepts of social enterprises are still in their early stages, and they are not sufficient to achieve social reform. Key areas such as how to establish social enterprises, what structures and systems to adopt, and how to achieve sustainable operations and scale expansion require further in-depth research to develop a more comprehensive theoretical framework.
Why is it important to study aspects like organizational structure and systems? To make things work, it is important to combine practice with correct theories. A theory without practice is like a spring without a source, and practice without theory is like a voyage without direction. Daron Acemoglu and James A. Robinson point out in their book “Why Nations Fail” that institutions are a major factor in a society’s success or failure. A sound economic system can incentivize citizens to invest, promoting capital accumulation and the development of new technologies.
The same applies to enterprises. A well-structured and effective system can unlock employees’ talents, broaden their perspectives, and generate greater value. Moreover, a robust system can support leadership by guiding them in making informed strategic decisions. While individual skills and qualities are undeniably important, a strong system can help bridge gaps in those areas. It not only reduces risks but also fosters talent development, profit growth, and overall business advancement.
Social enterprises are by no means “charitable organizations engaging in trade”. Tthey embody a revolutionary business model that stands at the forefront of our era.
Many companies encounter challenges in developing new products, creating content, or nurturing talent. However, the solutions often reside within the frameworks of social enterprises.
In future articles, I aim to explore how we can address these operational challenges through social enterprises and how we can leverage their principles to drive economic reform.
See you next time!
