Muhammed Yunus, Nobel Laureate and founder of the Grameen Bank, has authored several books on microfinance and social enterprise. In his 2010 book,”Building Social Business: The New Kind of Capitalism that Serves Humanity’s Most Pressing Needs” he defines the conceptual framework for a new kind of business focused on impact. Professor Yunus calls this framework, social business.Unlike the often less-defined articulations of social innovation, social entrepreneurship, and social enterprise—for Professor Yunus, social business is distinct and clearly delineated in its focus of serving the poor, being sustainable, but not seeking to provide dividends (see Type I social business below).
Here, we take a look at some of the features of Professor Yunus’ social business.
Professor Yunus Explains Social Business, in His Own Words [Video]
“A social business is not a social enterprise. It is not an non-profit.” – Muhammad Yunus
Professor Yunus’ Definitions for Type I and Type II Social Businesses
Type I Social Business : A company that is non-loss, but does not give dividends.
According to Professor Yunus, a Type I social is focused on social objectives. It either produces a product or delivers a service targeted to the poor or to address a pressing problem. An example he discusses at length in the book is that of Shakti Doi, a fortified yogurt product designed and created specifically to improve nutrition for children of poor families in Bangladesh. The yogurt is the result of a joint venture between Yunus’ Grameen Bank and the multinational brand Danone.
In order to meet Yunus’ vision of a true social business, multiple iterations of the yogurt were tested to maximize nutrients while ensuring cost was low enough (i.e. originally sold at 5 Taka or $.07).
|Child eating Shakti Doi yogurt in Banglades. Credit: Yunus Centre
Type II Social Business : A company that takes profit, but is wholly owned by the poor.
Professor Yunus provides a second type of social business as well. Type II social businesses can adopt a profit-maximizing, dividend-generating model, so long as they they are owned by the poor and disadvantaged. The profits can be returned to owners/employees through dividends or indirect benefits.
The most famous example of a Type II social business Grameen Bank, as it owned by the disadvantaged borrowers of the bank, mostly women.