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Society & Enterprise Debuts as Final Foundations Segment

It is perhaps fitting that Professor James Austin, the course head for Society & Enterprise was in the same study group as Mr. Ray Gilmartin, Chairman, President, and CEO of Merck. A discussion with Mr. Gilmartin and two case discussions with Merck professionals on the company’s role in developing specific health programs in parts of Africa kicked off the two and a half day Society & Enterprise foundations module for first year students.

MBA 2002 is the first class to experience a reformulated Society & Enterprise module taught over a concentrated three days. Faculty members with extensive experience in the social enterprise arena collaboratively designed the course, with input from program directors of the Initiative on Social Enterprise. The latter was created to address the mutual needs of non-profit organizations for management skills on the one hand, and business leaders and corporations’ needs for a more effective means of involvement with the social sector.

The necessity of such a module being included in the curriculum in perhaps best explained by the polemical views on the role of business in community service. At one extreme lie students skeptical of the ability of and role for profit-seeking enterprises to make a broader societal impact beyond the scope of their core businesses. Proponents of this view tend to rely most frequently on arguments based in stakeholder interests, practicability, and definition/discharge of corporate responsibility. They support the morality of non-profit activities but believe corporations pursuing these enterprises conflicts fundamentally with their shareholder mandate. Definitions of the scope of corporate responsibility tend to center around serving direct stakeholders and non-profit activities are justifiable to the extent that they yield ostensible benefits to a company. The key fallacy of the above argument is that benefits are often intangible, immeasurable and sometimes far in the future. Corporations must therefore focus on and understand an expanded big picture, as it were, in ascertaining the benefits of non-profit activities.

Opponents of the above argument reason that societal non-profit objectives must be served and in the absence or failure of other private or governmental bodies to provide necessary services, corporations are obliged to step in. As bodies that profit from the communities they operate in, corporations must seek to broaden their scope into depressed markets in need of improvement irrespective of stakeholder interests. The fallacy of the latter argument lies in lack of regard for the idea that all corporations have a threshold for non-profit activity beyond which they would be sacrificing the interests of some stakeholders for the benefit of others.

Society & Enterprise strived to submit that there is a medium to be struck between the two viewpoints delineated above. The virtue of the nexus between public and private in funding and providing non-profit services is now well established. The last fifteen years have witnessed a sea change in the funding and execution of non-profit projects. Seeking to undo some of the inefficiencies of non-governmental organizations, activist corporate and individual philanthropy now encompasses developmental and arts/ culture initiatives. While private sector involvement in the non-profit arena has introduced new levels of transparency and accountability into the sphere, private funding of non-profit activity remains a small, but growing percentage of the total. With non-governmental organizations attracting greater scrutiny and indeed, criticism of their latent inefficiencies and inherent bureaucracies, private sector involvement in the social sector has become a necessity rather than a supplement.

For further information on the Initiative on Social Enterprise, please contact Stacey Childress, Executive Director, or Marguerite Dushin, Associate Director. Email address: se@hbs.edu

February 20, 2001
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