• Service: Enterprise, Family business
  • Type: Business and industry issue
  • Date: 1/16/2013

Social enterprises at the heart of local economies 

Social enterprises
Thierry Sibieude is a teaching professor at the ESSEC Business School, as well as the founder and director of the Institut de l’innovation et de l’entrepreneuriat social. This is his contribution to the 2012 Barometer of Social Entrepreneurship

As early as March 2008, even Muhammad Yunus, in his book Towards a new capitalism, was already claiming that the globalisation of the economy had brought about the creation of wealth and, on average and taken as a whole, an improvement in people’s lifestyles, both in developed and developing countries. Modern capitalism has brought new material progress, extraordinary technological innovations, exceptional scientific discoveries, and significant educational and social progress. But…

These benefits and this wealth are not equally distributed

  • 94% of the global income goes to 40% of the population
  • The remaining 60% having to be satisfied with 6% of this global income
  • In 2005, half of the 300 million stockholders on the planet (that is 5% of the world population) were Americans
  • At the same time, in the United States, nearly 20% of the population did not benefit from any medical insurance and experienced great difficulties receiving basic medical care.

The gaps therefore exist not only between countries but also within countries. To limit these gaps, social entrepreneurs have a critical role to play. They try a business model which is then validated and replicated, when possible, in other areas to allow the creation of value.

The social entrepreneur is therefore to be found at the heart of local economies for three reasons…

Taking the environment into account

First, social entrepreneurs take into account the environmental ecosystem and the natural potential of the areas in which they work. In France, “Les Jardins de Cocagne” (which, through a shortened supply chain, sell organic fruit and vegetables produced by integration employees) or, in Bangladesh, the approach inspired by Grameen-Veolia Water’s Base of the Pyramid (BoP) Protocol (which distributes arsenic-free water to rural populations), are social enterprises that have carved out their development while taking into account the preservation of the environment and a reasoned use of local natural resources.

Entrepreneurial ecosystem

Second, social entrepreneurs take into account the entrepreneurial ecosystem of the area in which they implement their activity. They identify stakeholders and then act, which leads to well-thought-out change for the benefit of all. They create or assemble the financial and human resources and techniques necessary to maximise their social impact on a given area.

In the South, fair-trade businesses subscribe to this rationale of local development and community enrichment. In France, the cooperative farm credit banks, mutual insurance companies and also work integration social enterprises illustrate this approach.

Responsive to needs

Third, social entrepreneurs seek to respond to a need that neither the markets nor the public authorities have been able to satisfy properly in a given area. The social entrepreneur uses the logic of the market to serve the need they wish to respond to, and not the reverse: the jobs created are therefore by nature attached to the area in which they have been created.

In the North, they cannot be relocated. Home service associations, nursing homes for the elderly or national aid and social action associations are concrete examples. In developing countries, social entrepreneurs enable identified needs to be transformed by offering a solution that simplifies the daily lives of the population: the BoP activities of Essilor in India, allowing affordable glasses to be produced for the poorest populations, thus follow this logic.

Social entrepreneurs are therefore strategic actors creating the social value that is missing in a given area.

Christophe Bernard

Christophe Bernard
I am a KPMG partner based in the French firm’s Paris office, responsible for encouraging the growth of our firms’ middle markets practice across Europe, Middle East and Africa, a majority of that market comprises of family businesses.

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