Social Capitalism: The New Trend in Business (and Women are Leading the Charge)

Education

Jun 14

Social Capitalism

A new socially-conscious approach to business, social capitalism, is spreading around the world—and it’s being powered largely by women. 

What is Social Capitalism?

Social Capitalism, also known as Social Entrepreneurship or Conscious Capitalism, is capitalism with a conscience.

It’s a movement that combines the idea of doing social good with a profit-driven business model. It’s capitalism for the greater good, as well as for business success.

The idea of socially conscious businesses has been around for a while, but really started to gain steam after the 2008 market crash. Suddenly, it became very clear that a purely profit-driven model can lead to irresponsible business practices that might ultimately have a negative effect on the entire global economy—like the subprime mortgage crisis

In response, many entrepreneurs began to view the business landscape in a new, more socially conscious light. Sources of funding like crowd sourcing and microloans gained popularity, evening out the business landscape, while angel investors sprang up, willing to take on riskier investments with a longer-term profit strategy.

The Social Capitalist

In 2012, social entrepreneurs Josh and Lisa Lannon published their book ‘The Social Capitalist’, identifying a growing desire in society to both give back AND make a profit. Running a profitable business, they argued, doesn’t have to mean putting those profits ahead of people.

The Lannons, who run a successful and lucrative business of addiction treatment centres across the US, started writing their book in 2002.

“We had no idea that what we were planning would make us part of a growing tidal wave, a surge of private enterprises focused on bettering the world,” they write in the book’s introduction.

“A tidal wave it absolutely has been. Over the last decade, social entrepreneurship has grown exponentially, due to a number of factors.”

“First, funding and resources for this particular brand of entrepreneurship have sprung up, providing greater opportunities where before there were few besides banks. Second, faith in Corporate America at large, and in its concern for our well-being in particular, has diminished. And third, social entrepreneurs’ labours can be seen bearing real fruit in terms of both doing good for the world and creating real wealth.”

For the Lannons, social capitalism came into their lives organically—Josh struggled for years with an alcohol dependency. When he finally got clean, he and Lisa wanted to give back, so they founded the first Journey Healing Center.

Now there are six Journey Healing Centers, and in 2013 the company was bought by Elements Behavioral Health. Josh and Lisa now spend their time on new business ventures, as well as following their passion, travelling the world speaking about Social Capitalism and business.

Why are Women Leading the Charge?

1. Women are better at non-traditional funding

Resources like Kiskstarter, GoFundMe and Kiva have a very different approach from traditional bank loans, and it’s one where women excel.

Crowdsourcing requires an extensive social network—something which women, who are the social centres of their families, tend to excel at over men, while microloans like those done through Kiva allow a personal connection between investor and business owner.  

And while Kiva financing is available to both men and women, 81% of the loans made through their site go to women.

2. Women invest more in social causes

Women value their time and energy differently. If they are going to sacrifice time with their families, they want to make sure it’s worth it.

Additionally, having a greater cause can help women find more confidence and drive in the business world – you can read more about this in our article, Why the World Needs More Women Entrepreneurs.

Women are taught from a young age to put the needs of others ahead of their own, all while being told that they can succeed at whatever they put their minds to. How better to reconcile these two impulses than through social capitalism?

3. Women are more socially-minded than men

In their 2014 corporate social responsibility survey, Nielsen found that “women appear more invested in more human-oriented causes, such as disease and maternal health” than men.

And that investment is a good thing—according to Nielsen, “55% of global respondents say they’ll pay extra for products and services from companies that are committed to positive social and environmental impact.”

 

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