Changing the Market

Traditionally, we equate the idea of creating social impact with the mission of a conventional non-profit organization.  Non-profits have been a way to provide goods and services in areas where policy cannot fulfill citizen’s demands. However, many social entrepreneurs have taken a different approach to creating a social impact through a for-profit  model.

What makes these organizations and this method unique is that it looks to create change by working in the for profit market system. I found a resemblance between this week’s readings and public policy issues the cohort was exposed to this past weekend. During our trip to DC, we met with Felicia Escobar, Special Assistant to the President for Immigration Policy, who spoke about creating change a broken system. Comprehensive immigration reform, Escobar explained, could not pass congress, a scenario too often faced by policy makers. However, Escobar also explained that this motivated her team to find ways to work within the current system in order to provide benefits to immigrants without having to completely change the system.

This type of mentatlity can be applied to the field of social innovation. Economists everywhere agree that markets often fail: people could be priced out of essential goods and services such as healthcare and housing options, negative externalities such as pollution are sometimes overlook, and costumers do not always enjoy full information. So a social entrepreneur may ask herself how can she make the most social impact? While non-profits still have a place in society by filling in the gap where the market and policy fall short, such as aid immediate aid relief, for profits can work with the system and also create change.  

Rather than outwardly challenging the status quo, for-profit companies with a socially motivated mission statement can work from inside the system and essentially shift the market curves. As representatives from Thread International and the Idea Foundry explained last week, the existence of companies with a socially-conscience mission attract socially conscience consumers, which influences the market and consumer preferences. This in turn creates higher standards for regular for-profit companies to follow, indirectly affecting the rules of the traditional market. While social enterprises that seek to follow this path face many difficulties such as maximizing their profits and social impacts, their existence shows the reality of creating alternatives to the traditional markets.