MSG Team's other articles

9285 Factors Influencing Employee Satisfaction

Employee satisfaction ensures employees are happy with their jobs and also give their heart and soul to the organization. Such people seldom think of changing their jobs and motivate not only themselves but also others to work hard for the betterment of the organization. Let us go through few factors influencing employee satisfaction: Working conditions […]

11358 Special Training Programs

Most of training is either technical or behavioural in nature, but there are still other trainings that are neither. These fall under the ambit of special training programs and are conducted with an agenda of smoothening the work process within the organisation. Workforce diversity can be both positive and negative for the organisation. Positive in […]

9944 Innovation According to Peter Drucker

Innovation according to Peter Drucker Innovation is the buzzword among many companies operating internationally as well as in the domestic economy. Increasingly, the ability of an organization to innovate is being seen as a source of competitive advantage. The well known management expert, Peter Drucker throws light on the “sources of innovation” as well as […]

9379 Benefits of Formal Succession Planning

Succession planning is one of the most important career development tools used by organizations. This is done to determine the backups for each senior position by identifying and training the executives who are at the next-lower levels. This is an important process as most organizations rely on it to find their next CEO and other […]

12203 The Problem with ESOP’s

Employee Stock Option Plans (ESOP’s) are one of the most popular ways in which modern startup companies reward their early employees. In Silicon Valley, many companies such as Google and Facebook have used Employee Stock Option Plans (ESOP’s) to lure the best talent from the market. Since these companies have become very successful, there are […]

Search with tags

  • No tags available.

The idea of social business was given by Prof. Muhammad Yunus of Bangladesh. It was unique because unlike other concepts or businesses that were serving the society for namesake, social business was based on certain principles. These principles are seven in number and are called the principles of social business.

Like any other principle, the seven principles of social business define the purpose of a social business and its modus operandi. They outline the priority sectors for any organisation or individual that aims to venture into the field and also define the how the financials would be managed.

  1. The first principle of social business defines the purpose of existence for any social business. It states that the business objective for a social business will be to overcome poverty or deal with some problem like education, nutrition, healthcare, environment and enabling technology access for the downtrodden and not just profit or share holders wealth maximization.

  2. The second principle talks about the financial and economic sustainability. This is both from the perspective of the organisation and those who it aims to serve. Any social business is disallowed to take funds from outside like grants or NGO. Those who run the business are supposed to invest.

  3. The third principle governs the return on investment. Investors in a social business are disallowed to take money beyond their investment. No dividend is given on the investment.

  4. Amount earned over and above the investment is supposed to be reinvested back in for scaling the business and for improvement. Expansion here is aimed at reaching out to more number of people or to improvise the quality of services.

  5. Social businesses are supposed to be responsible to the well being of the environment. They are to play a major role in betterment of the environment either directly or indirectly. Indirectly means through their operations they will ensure that they do no harm to the environment.

  6. Those working with the business as its employees will get a fair compensation, which is in accordance with the industry benchmark. In addition the workforce will get better working conditions.

  7. Since social business is not with the objective of profit maximization. Therefore only those who have a passion for contributing to the society and the environment will run a social business. This means that business will run in an environment of joy and not stress.

These seven principles were given by Prof. Muhammad Yunus in collaboration with Hans Reitz who is also the co-founder of the Grameen creative Lab. These principles are very simple in nature and easy to follow. They are important because they draw a distinction between social business and other businesses carried out in the name of contributing to social welfare.

The seven principles of social business are followed world over by organisations that either promote or run social businesses. Ashoka, the Omidyar network, NIKA water company in U.S, Grameen Bank in Bangladesh are examples of such organisations.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles

Who is a Social Entrepreneur ? – Famous Social Entrepreneurs

MSG Team

What is Social Business ?

MSG Team