Page 45 - Social Enterprise A New Business Paradigm for Thailand

1.4 Social Business in Practice Versus the Yunus Definition

In practice, the distinction between social businesses and social enterprises, or between socially
oriented private organizations and strictly defined social businesses, has increasingly blurred. This
blurring often stems from practical needs on the ground, varying local contexts, and competitive
pressures in the goods and services market.

As a result, social businesses that strictly follow Yunus’s definition are rare. These include:

• Category 1: Businesses created solely to solve social problems and operating on a non-loss,
non-dividend basis.
• Category 2: Businesses that may return the original capital but only to impoverished investors.

In reality, many so-called social businesses are mission hybrids, profit-driven companies that
incorporate social and environmental safeguards into their operations. One clear example is
Whole Foods in the United States, which combines high-profit ambitions with socially responsible
business practices. Other social businesses operate as financial hybrids, blending donations with
revenue-generating activities. A notable example is Oxfam, an organization whose core mission is
poverty alleviation but which also funds itself through secondhand retail stores that complement
its donor base.

Another recurring question relates to the role of innovation in qualifying an initiative as a social

business or enterprise. Does the innovation need to be new to the world, to the country, or simply
to a specific local market? In most real-world cases, the innovation is not globally novel, it’s locally
adapted, taking inspiration from proven models elsewhere and tailoring them to underserved or
overlooked communities. For example, Grameen Bank became a prototype for microcredit
institutions worldwide following its success in Bangladesh (Beckmann et al., 2014, cited in Grove
and Berg, 2014).

Clarifying Social Business vs. CSR and Other Models

Despite these hybrid models, Yunus firmly insists that social businesses must be clearly
distinguished from Corporate Social Responsibility (CSR). While CSR initiatives are part of
traditional for-profit companies and typically involve allocating a portion of profits toward social
or environmental projects (often as a brand-enhancing or goodwill strategy), social businesses
are founded with the explicit and primary mission of solving social problems. They are not
offshoots of for-profit firms, nor are they instruments of image-building.

Social businesses are also frequently grouped with non-profit organizations like foundations and
cooperatives, but Yunus outlines five key distinctions that set them apart:

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