QUOTE OF THE DAY
“When we want to help the poor, we usually offer them charity. Most often we use charity to avoid recognizing the problem and finding the solution for it. Charity becomes a way to shrug off our responsibility. But charity is no solution to poverty. Charity only perpetuates poverty by taking the initiative away from the poor. Charity allows us to go ahead with our own lives without worrying about the lives of the poor. Charity appeases our consciences.” - Muhammad Yunus
SUMMARY
In the past couple of decades we have seen the rise of "social entrepreneurship," or companies that develop, fund, and implement solutions for social, cultural, economic, or environmental challenges. The vast majority of entrepreneurship students want to make a social impact with their future ventures and consider themselves "social entrepreneurs." But are social entrepreneurs any different than for-profit entrepreneurs? If so, in what ways? Also, how do we measure social impact? And who, ultimately, creates more value for ordinary people?
This is an important question that we need to answer before we jump into our entrepreneurship journey because many students, more often than not, believe that for-profit businesses are somewhat inferior to social enterprises. As we will see, however, the question is more complicated than commonly assumed.
This module will also give us an opportunity to reflect on the "why" of your entrepreneurship journey. Which should be the starting point of
Read the following debate between Milton Friedman, one of the most influential economists of the 20th century (and a Nobel laureate in Economics), and John Mackey, founder of Whole Foods, and come to class ready to debate your point of view.
QUESTIONS TO THINK ABOUT WHILE DOING THE READINGS
1. What is social entrepreneurship and why should we care about it?
2. How do social entrepreneurs determine the impact of their ventures? In other words, what do we mean by “social value”? What is the example that TJ Rodgers gives about creating social value in his response to John Mackey? Can you think about other examples of how for-profit businesses create value?
3. According to John Mackey, what are the six most important stakeholders for every business? Why is caring about customers and employees a good business? What about community and the environment?
4. How much is enough when it comes to corporate philanthropy? Where do we draw the line when it comes to investing profits back into the community (5%, 10%, 50%)?
5. Economists assume that people are motivated by self-interest. Why is this assumption so important to Milton Friedman? Is self-interest really the most important drive in our lives?
6. What percent of corporations have been accused of wrongdoings? What is the percentage of US presidents that have been (almost) removed from office? Do these numbers surprise you?
7. What is John Mackey’s argument to Milton Friedman’s assertion that companies should stick to maximizing profits? What is your point of view?
8. Do you believe that there should be an ethical boundary on the percent of profit a company should get? Why or why not.
REQUIRED READINGS/VIDEOS
- (12 pages) CATO DEBATE: Milton Friedman vs John Mackey [read here]
- (4 pages) What are companies for? (2019). The Economist [read here]
- (2:23 min) Milton Friedman on Greed [watch here]
- (7:29 min) John Mackey on Conscious Capitalism [watch here]
- (5:40 min) Bill Gates on Creative Capitalism [watch here]
- (6:32 min) I, pencil [watch here]
OPTIONAL MATERIALS
- (18:56 min) How I fell in love with a fish [watch here]
- How a college dropout grew Whole Foods into the company Amazon just bought for $13.7 billion [read here]
- John Mackey talk on Conscious Capitalism [watch here] or [book on Conscious Capitalism here]
- TED Talks on social entrepreneurship [watch here]
ASSIGNMENTS:
1. Take Quiz 2: Social Entrepreneurship (due Sep 6 at noon on Canvas).
Please note that Sep 6 (Monday) is Labor Day. However, you will have a whole week (from Aug 30 to Sep 6) to take the quiz (I just want to establish a routine by having all quizzes due on a Monday, so it's easier for you to remember the deadline).
2. Classroom Discussion: Social Entrepreneurship (be ready to come to class to discuss the following questions):
In the past couple of decades, we have seen the rise of "social entrepreneurship," or companies that develop, fund, and implement solutions for social, cultural, economic, or environmental challenges. The vast majority of entrepreneurship students want to make a social impact with their future ventures and consider themselves "social entrepreneurs." But are social entrepreneurs any different than for-profit entrepreneurs? If so, in what ways? Also, how do we measure social impact? And who, ultimately, creates more value for ordinary people?
Read the debate between Milton Friedman, one of the most influential economists of the 20th century (and a Nobel laureate in Economics), and John Mackey, founder of Whole Foods, and answer the following questions:
How do social entrepreneurs determine the impact of their ventures? In other words, what do we mean by “social value”? What is the example that TJ Rodgers gives about creating social value in his response to John Mackey? Come up with two examples (on your own) of how for-profit businesses create social value and then do the same for social businesses. What is the difference? Which business creates more value?
What is John Mackey’s argument to Milton Friedman’s assertion that companies should stick to maximizing profits? What is your point of view? Are social businesses better than for-profit businesses (why or why not?)
Do you believe that there should be an ethical boundary on the percent of profit a company should get? Why or why not.