Perspective

History of business is as old as the history of civilization. More precisely, it is as old as the history of agriculture. People at the earliest stage of agriculture based civilization used to produce by themselves everything they need. Soon after, they realized that it is better to exchange goods, to focus on certain sector of production, in which they have special ability. This is what we call, now days, “Specialization of labor”. Even though they don’t know the theory, they did it quite naturally. They found it useful to daily life.

But, things were and are not that plain. Every problem offers some new horizon of opportunity, and every opportunity creates some new problem, thus resulting in a continuous cycle of problem-opportunity game. Exchanging goods creates a new problem of fixing the value of goods being exchanged. Some goods are more precious, needed while others are less wanted. Context also determines the value, sometimes. To solve this valuation problem, money came as a dominant solution. What I am trying to put here is that, entire human civilization is a continuous flow of problems and creating opportunities. So all entities involved in human civilization always stayed dynamic solving problems. Among them, Business stands second in showing its dynamism, being change seeker, change maker too.

In the early 1960s, US businesses faced a new wave of demand from customers, that business should be socially aware. Obviously, this didn’t come suddenly. It was a response to some gradual events. Before the happening of industrial revolution in 17th century, business was less impact leaver on society. Market was producer centric. The abundance of product, which was a result of industrial revolution, jeopardizes the situation and made it a customer centric market. Now customer got the power to bargain with business as there were more producers to pursue customers.

Mallen Baker defined CSR as “

CSR is about how companies manage the business processes to produce an overall positive impact on society.”

He used the following diagram to depict his definition.

His points are built around two bases. 1) The quality of firm’s management – both in terms of people and processes (the inner circle). 2) The nature of, and quantity of their impact on society, in different dimensions.

Wikipedia, the people’s encyclopedia described this as

“a form of corporate self-regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure its adherence to law, ethical standards, and international norms.”

CSR, as a concept, was evolved mainly from USA. Early at 1960s, USA defined CSR as a philanthropic giving. Firms make profits, undisturbed except by fulfilling their duty to pay taxes. Then they donate a certain share of the profits to social causes. But Europe redefined the concept. They put in a pro-active way. They said firms will focus on operating the core business in a socially responsible way in addition with investment in communities. While US view was much more reactive European view is proactive.

The shift between US view to European view is a result of increased public concern about business’s impact on society. Time passes, and public understand more precisely that business is a dominant person that affect others in the society. So, it is evident that, this concern will continue to increase.

The factors that led to shift the views are listed below-
1.Ethical consumerism
2.Globalization and market forces
3.Social awareness and education
4.Ethics training
5.Laws and regulation
6.Crises and their consequences
7.Stakeholder priorities

Ethical consumerism led to build a concern among consumers about their consumption impact on society. After this concern, they demanded the firms to react to those fatalities. Globalization increased competition by removing the border in free market economy. Then consumers have choices to choose among the best responding companies that conforms with their changing demands. Ethical consumerism is a result of social awareness that resulted from increased rate of education. In organizational domain, ethics intrudes also. This is because of ethics training. With raising public concern, government responded by enacting timely laws and regulations. By the last 50 years, different catastrophic crisis have also led to this changed view of CSR. Credits of these crises can be passing along to business. All the factors combined created an aura that demanded proactive measures from firms to mitigate coming disasters.

So, it is time to advance the CSR concept. Some professor at Harvard proposed an advanced form of CSR, named Corporate Social Entrepreneurship (CSE). A quick definition of CSE is, it is a process aimed at enabling business to develop more advanced and powerful forms of Corporate Social Responsibility (CSR).

CSE embraces three different concepts: Entrepreneurship, Corporation and Society. Firstly, CSE is all about entrepreneurship. It asks for taking initiatives to work for the betterment of society under corporate environment. Obviously, this will not hurt the corporation’s motto of profit. Rather, it will enhance its viability to remain profitable. Thus, CSE will bring new output. Output that will be translated as profit for corporation (economic value) and welfare to society (social value). This extended value creation concept requires newer process within and across organization. Only firm’s internal resources are not enough to achieve dual value goal. For example, in poverty alleviation, NGOs like Grameen Bank have years of experience. If firm like Grameen Phone wants to work in poverty alleviation as a supplementary goal of its business, it might not succeed if it relies only on its own management capacity. GP needs to join in with GB to share its management capacity. Together, the corporate management and NGO management can result in a synergistic approach.

At this point of discussion, if we want a better definition of CSE, we might list the catalyst factors.

1.Extending firm’s domain
2.Leveraging resources, within & outside of firm
3.Dual goal – Economic & social value creation.

Veteran Harvard Professors (Austin, Leonard, Reficco, and Wei-Skillern) gave the definition of CSE in the following way. “The process of extending the firm’s domain of competence and corresponding opportunity set through innovative leveraging of resources, both within and outside its direct control, aimed at the simultaneous creation of economic and social value.”

Backdrop of CSE
It’s been already mentioned that, CSE is the advanced form of CSR. However, we might list some specific reasons for the emergence of CSE replacing CSR concept.

1.Saturated market for CSR
2.Firms failed to integrate CSR significantly into their organization
3.Traditional CSR is not sustainable thus creating debate and public concern.
4.Lack of dominant framework to move forward
5.CSE is that needed framework
6.CSE is a process for invigorating and advancing the development of CSR

Key Elements
It is evident from prior discussion that, aligning both social and economic goal within the border of corporation is really a daunting task. It requires a total restructure of the attitude of the firm and change in the structure of relationship of different organization within the society. However, here we will focus mainly on the pre-requisite actions on the part of corporation for ensuring CSE to work.

1.Enabling Environment
2.The Corporate Social Intrapreneur
3.Corporate Purpose: values-based organizations
4.Value Creation and The Double Return
5.Co-generating Value

Organization that intend to initiate a CSE (corporate social enterprise) must be strongly and consciously willing to do so. As CSE requires disruptive changes in organization structure and attitude, this changes must be brought in by the top managements. Authority should champion the changes within them and gradually replicate them all over the organization. Without this enabling environment, other key requisite of CSE will fail to groom.

As CSE is a blend of entrepreneurship and corporate mechanism, firm needs to corporate intrapreneur to start new projects on a regular basis. Corporate intrapreneurs are the employees who possess the entrepreneurship ability and are motivated to initiate any project voluntarily. Sometime these intrapreneurs are termed as employeepreneurs. Firm must provide enough motivating factors to attract and retain such potential social intrapreneurs.

Traditional corporate values includes profit maximization which is the result of, according to noble laureate Dr. Yunus, “Narrowly defined capitalism”. To Yunus, corporation can sustain by maintaining social goals too. Certainly, this is a value shift from existing corporate philosophy. Corporate purpose must be redefined and revisited to ensure that a value based organization is established to motivate all its employees to work to achieve both social and economic goals.

Another relevant here is the source of values that firm will deploy to motivate and control its employ in a CSE. As MNCs are going highly international, it is a decent move to localize management to reflect the diversity in global culture. Like this, while creating a value based organization, firm must give first priority to local values to direct, motivate and control its employees towards the social goals. In their book “Climate for change” two Texas Tech university researchers, Katharine Hayhoe and Andrew Farley, took Christian faith to combat global warming issue. “Together, we have talked to people who are asking whether or not climate change is real”, the researcher duo said. ““They want to know if it’s a genuine crisis that requires our attention or if the whole thing is just a lot of smoke and mirrors. They also want to know what the Bible says, if anything, about a Christian response.” It is evident that, these two researchers successfully transferred the theme of Bible’s age old mandate “Love God, love your neighbors and remember the poor” to raise public awareness and actions against climate change. For a firm working in Bangladesh, the core value of CSE must reflect the local values. Religion has proved its worth being the changing agent in people’s behavior. At the end of this article, we will show how CZM, a corporate social enterprise (CSE) of Rahimafrooz to manage Zakat money, has successfully integrated Islamic Belief to its actions. Bottom line, firm must incorporate local values in CSE and religious values can best serve to motivate and illicit proper response among employees and stakeholders.

We already described about creating dual values-economic and social values. In plain, it might seem that creating social value on part of a firm will lead to return. In short run, this might happen. Conrad van Oostrom, a dutch CEO of OVG claimed that “going green pays nicely.”

Finally, a CSE will work with other organizations in its area to create synergy and maintain efficient use of resources. Bangladesh government has a supply chain all over the country. For Rahimafrooz, it will be impossible to build such a big network instantly. So, they can join and work together which will ensure usage of idle supply chain on government part and save investment in building chain on firm’s part.

Challenges

Obviously this poses great challenges and risks for firm in the following ways.-

1.Rethink current approach to CSR. Most firm find current payment through CSR portfolio easy and it yields modest benefit for a firm. So any rethinking will certainly be unwelcomed by the responsible management.

2.CSE is disruptive changes in pursuit of new opportunity. New opportunity is one of the major reasons for the emergence of CSE over CSR. But this disruptive change is hardly welcomed by the management.

3.Willingness and desire to-

1.Entrepreneurial redesign requires ensuring motivating factors for intrapreneurs. As CSE is a new concept, aligning management and entrepreneurship is a tough task.

2.Necessary actions are needed to be taken by the top management to initiate required changes. Some of the managers might be convinced, while others might offer huge difficulties.

4.Firms are less expert at managing social value creation.

Case of CZM

Center for Zakat Management (CZM) is a new generation of CSE in Bangladesh, supported by Rahimafrooz(RA), which is a extended form of RA’s previous Zakat Fund (ZF). CZM started its journey in June 2009. Main idea behind CZM is to ensure efficient and effective usage of Zakat money to alleviate poverty. Traditionally Zakat is given in shari or lungi form before Eid-ul-fitr. This is not a sustainable way to give Zakat and it is not the original essence of giving Zakat. Governing motive of giving zakat is to empower the poor so that they become self reliant. So, CZM aims to disburse Zakat money in such a way that this year’s receiver will pay zakat within a few years in near future.

Another major concern of CZM is to collect as much Zakat as possible. For this, it launched a month long campaign in last Ramadan in Dhaka city. Main messages of this campaign are built around the appeal of Islam. It is found that, citing verses from Quran has layed enough impact on potential Zakat payers. Many of this year’s payer are first time payer.

On disbursement side, CZM gave faith based motivation to the receiver to use the money efficiently. Currently we can’t measure the effectiveness of this approach, but it is supposed to result positive.

RA top management has performed a great role in rolling CZM. They are very willing to institutionalize the process of Zakat payment and disbursement. Their passion for Islam and poor has led to accept this concept which was first given by one of their manager-level employee. This is the sign of enabling environment that motivate social intrapreneurs. As the operating value, CZM accepted values of Islam that will motivate its employees and stakeholders. While recruiting, applicants are rigorously checked for their passion to Islam and poor. This is very logical as without passion such project might not succeed.

Lastly, we can’t comment right now about CZM’s success as a CSE. But it is a very good and timely start. Undoubtedly, CZM’s success will start a new era of CSE in our country. It is evident that CSE is the future of CSR as public are very dubious about the success of CSR approach. So its high time for the firms to revisit their CSR approach and do something more sustainable, for the business and society. CSE can be a convincing solution.