Many of today’s business students are not only focused on innovation but also philanthropy and social responsibility. Mihaylo Center for Entrepreneurship Director John Bradley Jackson discusses the trend toward socially responsible for-profit business models.
In 2002, Blake Mycoskie first visited Argentina while competing in the reality television program “The Amazing Race.” Returning to the South American country in 2006, he was struck by the poverty of the less-fortunate residents of the Buenos Aires area.
Combining his passion for helping others and entrepreneurial innovation, Mycoskie founded Playa del Rey-based TOMS Shoes, an enterprise world-renowned for its socially responsible “one-for-one” model, in which one pair of shoes is given to an impoverished child for each pair they sell to consumers. More than 50 million pairs of shoes have been donated through this program. As the company has grown, it has expanded its philanthropic efforts to include providing optometry care and sustainable drinking water solutions for residents of developing countries and sponsoring the annual One Day Without Shoes event, which raises awareness for the millions of people around the world without adequate footwear.
Giving Feels Good, But It’s Also Good for Business
“Giving feels good, but it’s also good for the bottom line. Charity is a viable growth strategy for a lot of companies,” Mycoskie says. “Our customers get excited to be a part of what we’re doing. If you ask anyone wearing TOMS how they first heard about us, most won’t mention an advertisement; they’ll say a friend told them our story.”
TOMS’ for-profit model with social responsibility as an integral aspect of its concept may sound groundbreaking, and it is becoming more common.
In 2015, there were 1,381 corporations in 41 countries certified as B Corporations, a designation by the nonprofit organization B Lab to highlight firms that meet social responsibility, environmental sustainability, corporate accountability and transparency standards.
“Socially responsible firms, although not a new phenomenon, are definitely on the rise,” Mihaylo Center for Entrepreneurship Director John Bradley Jackson says. “Millennials are particularly attracted to these kinds of enterprises for employment or patronage.”
How Can Businesses Be More Socially Responsible?
Businesses can incorporate social responsibility into their models through a number of avenues, including volunteerism, involvement in the community or financial support for charities. They can attain the designation of a benefit corporation under the laws of 30 U.S. states, including California, which mandates social and environmental activities in addition to the profit consideration.
While many business owners would like to incorporate doing good into their business models, social responsibility initiatives often depend on the business cycle. Yet during the Great Recession, social responsibility remained an integral part of many business concepts. Klara Placier of the Brno University of Technology in Brno, Czech Republic, noted that many corporations moved toward sustainable and strategic efforts that could be merged into their business models, demonstrating that the trend toward doing good while making money is here to stay.
Doing Something that Matters
Many people starting businesses express an interest to do something that “matters,” something that is more than just a paycheck. This is a noble goal and one that is achievable in the business world. There are many reasons for companies to “give back.” One of which is that it’s good business. Tom’s Shoes has made a name for itself with it’s “One for One” model. How will you “give back” in business?
For more on developing socially responsible business models, visit the Center for Entrepreneurship online or at SGMH 3280. The center offers support and networking for business development concepts, speaker events and entrepreneurship resources. For more on opportunities in the nonprofit sector, visit Mihaylo’s Gianneschi Center for Nonprofit Research, which provides training and networking, at SGMH 5271 or online.