Social Business according to Nobel Prize winner Yunus

Social Business according to Nobel Prize winner Yunus

Social Business, as defined by Nobel Prize winner Muhammad Yunus, is an innovative model to solve social problems. Professor Yunus is the inventor of microcredit and the founder in Bangladesh of Grameen Bank, the first concrete example of Social Business, disbursing microcredit to 8.000.000 people.

In his model, Professor Yunus explains the 7 fundamental principles a Social Business should follow to be defined as such:

1. The business objective is to combat poverty or one or more problems (like education, health, environment) that affect people and society; the objective is not maximizing profit. 

2. Self-sustainability, both economic and financial.

3. Investors are only repaid the capital they initially invested. No dividend is disbursed, besides the one to refund the investment. 

4. Once the initial investment has been repaid, profits stay inside the business to finance its expansion and improvement.

5. Respectful of the environment.

6. Collaborators are paid with salaries that are aligned to the market, but with better working conditions. 

7. Do it with joy.

There are also Social Business models that deviate from these 7 principles, particularly the point concerning the distribution of profits to shareholders; Yunus says these models can and should coexist, one is not better than the other, and the choice of a model depends on each entrepreneur. 

Personally, I prefer Yunus’, but I know people who have chosen other paths. 

Social Business does not aim to replace the traditional capitalist model, but wants to complement it, using market logics to solve social problems, particularly of the poorest people, in an economically self-sufficient way and without depending on public money and/or private donations. 

The first Social Businesses created by Yunus were born in Bangladesh, but it’s a phenomenon destined to spread to the western world as well. 

Image source here.

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