The Mission-Driven Venture. Lane Marc J.

      The truth is that Corporate Social Responsibility (CSR) should not be uncritically accepted as a legitimate reflection of a company's commitment to deliver a positive social impact. Some skeptics see CSR as a public relations counter-offensive to offset the ill will that results from a company's perceived social or environmental underperformance or, as in the case of TOMS Shoes, a misdirected, albeit compassionate, branding strategy. Others, following the lead of hawkish economist Milton Friedman, who provocatively insisted that “the social responsibility of business is to increase its profits,” continue to dismiss any suggestion that corporations owe a moral duty to society.

      Yet, Friedman's take may not radically diverge from the view of Adam Smith, the father of modern economics, who, in his iconic 1776 work, The Wealth of Nations, famously declared, “What improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be flourishing and happy of which the far greater part of the members are poor and miserable.”

      Milton Friedman could foresee a place in our economy for the mission-driven venture. In 1970, when defending profit as the ultimate goal of business, he allowed for the possibility that “a group of persons might establish a corporation for an eleemosynary purpose – for example, a hospital or school. The manager of such a corporation will not have money as his objective, but the rendering of certain services.” Although Friedman wouldn't have endorsed a manufacturer's dedication of its profits to launch a soup kitchen, neither would he have objected to a business whose mission is to run soup kitchens successfully within the free-market system. Nor would he have quarreled with a profitable business's pursuit of a market opportunity that provides a direct societal benefit. To him, selling fresh produce in a food desert might make perfect sense; giving away that produce undoubtedly would not.

      Although Milton Friedman and other free-market capitalists might support the notion that some private enterprises could legitimately serve a public good, they generally draw a bright line between corporate good – the pursuit of profit – and social good. The opposite view, espoused by noted Harvard Business School professor Michael E. Porter, who popularized the notion of “shared value,” invites companies to “take the lead in bringing business and society back together.” To function, capitalism needs both a brain and a soul. Without accepting, even embracing, their social and civic responsibilities, most enterprises today simply would not survive.

      Profits and Purpose

      No matter how good companies' intentions are or how deep their commitment to social responsibility, corporate law in the United States and elsewhere is often understood to require them, first and foremost, to maximize shareholder value. While Professor Porter argues that all businesses should reinvent themselves as social enterprises, the shareholder primacy rule continues to collide with concerns about the ends to which profits are pursued, how they are gained, and where their impact is felt. However socially responsible businesses might want to be, whether by ensuring that their employees are well paid or shrinking their environmental footprint, the results of corporations' socially responsible practices just aren't great enough, at least yet, to solve the formidable social problems we face in America and throughout the world.

      Sadly, the same applies to government and traditional non-profits. The work they do is critically important, but the hard truth is that their resources are not up to the challenge: some 842 million people in the world go hungry every night according to the Food and Agriculture Organization of the UN, at least 80 percent of the world's population lives on less than $10 per day according to the World Bank, and 783 million people in the world lack access to clean water according to UNESCO. There's much more work to be done, and mission-driven ventures are doing much of the heavy lifting.

      Mission-driven ventures in the United States have joined forces in the Social Enterprise Alliance (“SEA”), an organization with sixteen chapters in major American cities that connect mission-driven entrepreneurs, promote their ventures, and advocate for public policy that will help them drive positive social change on a scale as large as the problems they work to solve. Since 2010, SEA has partnered with its sister organizations in other countries to put on the annual Social Enterprise World Forum, which allows mission-driven entrepreneurs from around the world to network and collaborate as they advance social enterprise development internationally.

      In academia, centers or programs for the study of mission-driven ventures have been established at some of the world's leading business schools, including Harvard, Yale, Stanford, Northwestern, Duke, and Berkeley. Oxford's Skoll Centre for Social Entrepreneurship has for several years played host to the annual Skoll World Forum, the world's premier conference for international social enterprise collaboration. More and more MBA students are forgoing high-paying, status-conferring jobs and instead are pursuing careers with mission-driven ventures in order to make a positive difference. Business schools have responded to this shift. According to the Bridgespan Group, the number of social enterprise courses offered by the nation's top MBA programs has more than doubled over the last decade. And members of America's most educated and tech-savvy generation, the Millennials, are founding startup companies that make money by solving social and environmental problems through the use of such tech innovations as crowd-funding and computer application software.

      The Association to Advance Collegiate Schools of Business (AACSB) International, numbering 670 accredited institutions in nearly fifty countries and territories, recently revised the core principles underlying the business curricula it sanctions to encourage an academic commitment to environmental sustainability and corporate social responsibility. According to Linda Livingstone, AACSB's vice chair and the dean of the Graziadio School of Business at Pepperdine University, “Early on, this movement was probably very much driven by individuals who had a personal passion. Some of them created their own companies around that passion, whereas others brought it into the companies they were part of. But I think, as it has developed and become more widespread, companies began to realize it can also be good for business and it can be profitable.”

      At the same time, many of the most influential members of the private sector have called for the reinvention of capitalism as a force for social good in the 21st century – a sustainable capitalism in which long-term success is inextricably linked with serving a higher social purpose. Jay Coen Gilbert, a co-founder of the successful basketball shoe and apparel company AND1, believes we have reached a turning point in the evolution of capitalism where the 20th century model of maximizing the value of shareholders' investments without regard to the social and environmental impact of companies' business activities is giving way to a 21st century model of companies doing business in a way that creates value for their shareholders, their workers, the communities in which they do business, and the environment. Gilbert and his partners, Andrew Kassoy and Bart Houlihan, are using B Lab, the non-profit organization they founded, to build a nationwide community of certified “B Corps” to make it easier for people “to tell the difference between good companies and good marketing.” Certified B Corps (like Vanessa Bartram's WorkSquare, LLC) are sustainable businesses and for-profit social enterprises that meet B Lab's rigorous standards of social and environmental performance and legal accountability. The chairman and CEO of the British retailer Marks & Spencer, boasting over 1,000 stores in forty countries, issued a warning to companies everywhere that B Lab might echo: if companies fail to adopt sustainable business models, they will become casualties of the combined forces of population growth, diminishing resources, and global climate change.

      Governments, both in the United States and abroad, have also begun to see the power of the mission-driven venture. In the United States, the Obama Administration created a White House Office of Social Innovation and Civic Participation