CSE is aimed at generating value for the organisation and for society. This can be seen in value creation and the double return in addition to co-generating value.
Value Creation and The Triple Return is experienced through entrepreneurship and finding innovative ways to create value. CSE aims to ensure that the very purpose of the organisation moves from one of maximizing returns for investors to optimizing returns for stakeholders, who are defined as those who are significantly affected by company actions and who can in turn impact the company (employees, partners, the community and society). The underlying premise is that serving this constituency will make the company more sustainable creating both economic and social value, which some have referred to as a triple bottom line. The important purpose of CSE is to find ways make these returns complementary rather than competing. Organizations’ social value creation is therefore embedded in a larger and transparent accountability system that reports performance to the internal and external stakeholders. The CSE approach aims to ensure that these performance measures have parity with the traditional ones and become part of the organisations DNA.
Timberland CEO Jeff Swartz stated, “I’m convinced business can create innovative, valuable social solutions that are good for business and society. Commerce and justice don’t have to be antagonistic notions.” He explained Timberlands’s approach, “We operate on the core theory, on the belief that doing well and doing good are not separate ideas; they are inseparable ideas. That, in fact, they are inextricably linked and that everything we do, every business decision we make, every strategy we promulgate, every speech we make, or every pair of boot or shoes that we ship, have to be the embodiment of commerce and justice, and that’s a different model.”
Co-generating Value is a vital part of the value generating strategy in collaborating with other organizations – businesses, civil society, or governmental. These alliances help achieve what the CSE definition refers to as extending the firm’s domain of competence and corresponding opportunity set through innovative leveraging of resources outside its direct control. Strategic alliances that combine complementary core competencies can create new resource opportunities that enable innovative solutions to long-standing social and economic problems. Leveraging distinct organizational capabilities and resources produces powerful co-generation of social and economic value. Strategic alliances are also critical to the success of emerging innovative business strategies.
CS Intrapreneurs are also Entrepreneurs who are constantly reaching out to leverage these resources outside their direct control, building internal and external relationships. Externally, these companies leverage their relationships with stakeholders for joint action through partnerships. The aligning of company agendas with those of external groups to create social value becomes an institutional habit, engrained in the company’s culture, and carried out through CSE. Partnerships are considered assets through which organizations overcome their organizational constraints. By engaging decisively their external stakeholders, these companies are able to multiply the impact of their efforts.
According to Sue Mecklenburg, Starbucks Vice President of Business Practices, partnerships allows the company “to extend our reach to areas where we have interests, but perhaps not influence or expertise. It’s a real extension of what we can do, and often what we would like to do, or what our customers expect us to do –issues that are very complex and difficult to solve.” Starbucks entered into a partnership with Conservation International to foster environmentally sustainable coffee production among small farmers in Chiapas, Mexico. This nonprofit brought to partnership its environmental expertise and its capacity to work with small farmers. Starbucks contributed it knowledge of quality coffee production and its marketing channels. This entrepreneurial combination of distinctive competencies created a process that developed new production techniques and new supply of organic coffee for Starbucks, which in turn generated significant income enhancements to the farmers and improved environmental conditions in the growing areas. This initial partnership expanded to other countries and even led to the reformulation of Starbucks’ basic coffee procurement criteria and procedures. In effect these partnerships created sustainability for the coffee farmers and Starbucks.
The Challenges and Opportunities of Applying CSE
The penetration of the social realm into corporate strategy has gathered momentum in the last years. The movement for CSR has “won the battle of ideas” (Crook 2005). By now, most well managed companies have adopted CSR practices. Managing the social and environmental footprint of economic activity is generally accepted as part of the cost of doing business. But much remains to be done. If companies are to move their CSR activities from satisfising behaviour and take their commitment to society and the environment to the next level, they will need to rethink their current approaches to CSR, tapping into the creativity of every individual. CSE, like all entrepreneurship, is not about managing existing operations or CSR programs; it is about creating disruptive change in the pursuit of new opportunities. It combines the willingness and desire to create joint economic and social value with entrepreneurial redesign, systems development, and action necessary to carry it out.
Accelerated organizational transformation faces a host of obstacles well-documented in the change management literature. Because CSE expands the core purpose of corporations and their organizational values, it constitutes fundamental change that can be particularly threatening and resisted. Furthermore, it pushes the corporation’s actions more broadly and deeply into the social value creation area where the firm’s experiences and skill sets are less developed. The search for disruptive social innovations intrinsic to the CSE approach amplify this zone of discomfort. However, these challenges are achievable as innovative companies reveal. Furthermore, it is continually becoming more evident that values-based leadership, synergistic generation of social and economic value, and strategic cross-sector alliances are key ingredients to achieving sustainably successful business. The CSE process will contribute to the collective quest for superior organizational performance and societal betterment. This is the great opportunity and action imperative
Reports / Working Papers
- Corporate Social Entrepreneurship Working Paper
- Social & Commercial Entrepreneurship: same, different or both?
- The 2030 Agenda for Sustainable Development