ISSN: 2278-3369

International Journal of Advances in Management and Economics Available online at www.managementjournal.info

REVIEW ARTICLE

From Micro-credit to Social Business to Social Economy-detail Proposal: A Case Study: Compare and Contrast and Canada Kazi Abdur Rouf

Social Economy Centre Leadership, Higher Adult Education Department, University of Toronto, Canada.

*Corresponding Author: E-mail: [email protected]

Abstract

In Canada, many research papers, articles and books have been written about social economy that give students, academicians, researchers and policy planners ideas about different types of social business organizations- cooperatives, nonprofit agencies, community economic development organizations, social enterprises etc. For example, Understanding the social economy: A Canadian perspective written by Quarter, J., Mook L., Armstrong A. (Eds.), (2009) and Quarter & et al (2010) is an example of a research paper that has documented different concepts of social economy and different types of social economic organizations and their diverse funding models, legal structures, functional frameworks and operational strategies, and challenges they face in the Canadian context [1- 3]. In Bangladesh, different social economic organizations and models, funding models and frameworks exist, but there is no one place where this information can be found. Such a research study could help Bangladeshi social entrepreneurs, social economists, and private sector and public sector leaders to get different ideas. Moreover, the study will compare and contrast Canadian social economic organizations with Bangladeshi social economic organizations/initiatives, helping each respective country gain insight into new ideas, policies, and lessons in order to improve initiatives in both countries. Introduction The current proposed post-doc paper focuses participate in the field of social on studying, comparing and contrasting the entrepreneurship? framework of different social-economic • How does the non-profit sector reorient itself organizations in Canada and different and started covering the costs for its services initiatives/models of micro-credit, small and from the market place? medium size (SMEs) enterprises and different • What challenges are they facing to run the innovative types of social organizations and what are the means to businesses/enterprises, especially Grameen achieve financial sustainability of the hybrid social businesses in Bangladesh. organizations? Through the case study of the social economy The study will focus on what kind of social of these two countries, the study will attempt economic organizations prevail in Bangladesh to answer the following broader questions: and in Canada. The study will help the public • What are the different micro-credit models sector, the social economy sector, educators that exist in Bangladesh? Why are micro- and students to learn about different types of credit programs very popular in Bangladesh, organizations, their scope, contributions, why not in Canada although Toronto future possibilities, barriers and limitations Employment and Social Services (TESS) has in Bangladesh. There will be in-depth case self-employment services to unemployed studies of each type of social organization like people? community micro-financing institutions- • How do social economic business Grameen Bank/BRAC/ASA; social businesses- organizations form and function, specifically Grameen Health [4], BRAC; hybrid social in terms of decision making practices and businesses-Grameen Danone, Grameen governance in Bangladesh and Canada? How Veolia Water, Grameen Mosquito Nets [4,5], can individuals prepare themselves to cooperatives-Comilla Cooperatives, Commercial Cooperatives- Mipur Cooperative

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Market, Aziz Cooperative Market, are screaming for their loan capital [10]. Bangladesh Rural Development Board Public sector community economic (BRDB) workers/employees cooperatives- development programs are limited in Tangail Grameen Housing; social enterprises, Bangladesh. As a Bangladeshi born citizen, I trade unions, community economic have noticed that many social economic organizations, membership-based organizations and social enterprises are organizations, nonprofit mutual unable to expand their services they are organizations, professional organizations, growing in demand in Bangladesh. Bornstein joint stock companies, socially responsible & Davis (2010) mention in their book that a private sector businesses, international NGO tiny percentage of U.S. firms employ almost organizations, Bangladesh Chamber of half of the nation’s salaried workers [4]. Commerce, foundation trust and networking Corporations have grown immensely apex organizations-NGOS bureau, and Palli- powerful. Three hundred multinational Karma Shahag Foundation (PKSF).In corporations control roughly a quarter of the Bangladesh, MFIs are popular while world’s wealth [4]. In Bangladesh, the Dhaka Canadian Charitable organizations, civil Stock Exchange, and the Chittagong Stock society organizations, farmers’ cooperatives Exchange are setting the Securities and and credit unions are providing services that Exchange Commission Rules in Bangladesh meet the needs of the citizens. In Canada, and corruption, mismanagement, tax and many social organizations and community share scandals, and poor corporate economic programs get funding from the governance are the dark stories of the public sector, which happens less in the Bangladesh stock market [7,11]; National Bangladesh context. Currently, many in the Daily Newspapers Bangladesh, dated private sector have opened foundations and January 15-24, 2011). Grameen Bank micro- funds to do work with a social mission in credit innovation has massively created Bangladesh and Canada. The study will focus hundreds of micro-finance institutions (MFIs) on how various types of social economy in Bangladesh who have served more than 30 organizations form, function, and make million marginalized poor people in decisions. It will also look at the governance Bangladesh (Yunus 2011), which has helped of these organizations, their sources of millions become self-employed and addressed funding, sources of revenue, public sector, and the issue of poverty, revitalizing local living board design. economics and empowering them Statement of the Problem economically and socially. Hundreds of MFIs in Bangladesh generate millions of social In Bangladesh millions of peoples are businesses and green businesses in rural suffering from poverty, poor health care Bangladesh. According to Jack Quarter services, child malnutrition, and lack of safe (2011), these MFIs are social economy drinking water. The urban poor are living in organizations that have a social mission in unhygienic conditions in the urban slums addition to their economic services. Vancity (World Health Organization 2009). Necessary community micro loan funds in Canada has commodity prices are sky rocking. The private more than 500 micro-borrowers in Vancouver sector is focused mainly on maximizing profit and are well known all over the world. [5,6]. Government funding is limited and to Moreover, the Ottawa Community Micro- obtain it is a lengthy, complicated process. Loan Funds in Canada are different from Donor funds are decreasing and public sector traditional banking in these two countries corruption is increasing [7], Amnesty [12-15]. Moreover, Toronto Employment and International Bangladesh 2010]. Foreign aid Social Services (TESS) provide services to is channeled almost exclusively through marginalized people to be employable in their governments. Nevertheless, today donors give unemployed transitional crisis periods, which more resources directly to citizen is absent in Bangladesh. The Immigrant organizations in Bangladesh [4,8,9]. Employment Loan program operates under played a major role in Alterna Savings in partnership with the accelerating this trend. However, many MFIs Maytree Foundation in Canada and offers

Kazi Abdur Rouf|May.-June. 2012 | Vol.1 | Issue 3|66-77 67 Available online at www.managementjournal.info immigrants and refugees loans for training or these examples of social entrepreneurship are upgrading their skills to increase the a team approach to social economy. likelihood of finding a job in Canada in their Social enterprises have accessed capital from field of expertise [ 13,16,17]. These Canadian impact investors, but markets for this kind of micro-finance projects are managed in such a financing are still in their embryonic stages. way that micro-borrowers become economic Social entrepreneurs running small or actors, social actors and community medium size organizations pursue development actors. Unfortunately, although government funding with reluctance [21-23]. the size of the social economy has increased in To qualify for funding, groups may have to Canada, this sector is underrepresented in reshape themselves to fit standardized businesses and economic textbooks. guidelines. Hence social entrepreneurs prefer [18].These MFI organizations/projects have to raise money from philanthropists. But each both a social agenda and require economic philanthropist has unique application performance. Yunus (2010) regarded MFIs as procedures and reporting formats. Moreover, social business organizations, social fund raising is time-consuming and enterprises and community-based economic expensive. Social entrepreneurs and business organizations whose aim is to operate without leaders need to form partnerships so they can a loss, rather dividends are reinvested for the discover how to transform business practices improvement/extension of the program. The to meet pressing needs [1,24,25].The Grameen Bank and its other sister researcher has observed that many of the organizations; ASA, BRAC and other micro- rich, business people and people working credit projects in Bangladesh fall in this abroad in the Middle East, North America social business model, but each has different and other countries are trying to establish micro-credit products, legal frameworks, social business in Bangladesh for the well- different implementation models and being of their communities. They give strategies [4,19,20]. The present study will donations to people, build mosques, orphan compare and contrast Bangladeshi MFIs with centers etc. in an informal way. Many of them Canadian community micro-loans programs avoid becoming registered as charities or to analyze their strengths and weaknesses, community-based organizations; because they their legal structures, funding sources and think that it would be a hassle to go to implementation strategies. There are many government’s office. However, for different social economic organizations institutional sustainability, legal framework models, funding models and frameworks that enlistment is necessary. Bangladesh has exist, which are unknown even in institutional frameworks for different types of Bangladesh. For example, Bengal Meat is organizations inherited from the British committed to link the poor livestock producer period [7]. There are various statutes for to the domestic and international market creating public enterprises, private through ensuring a supply of quality, halal enterprises, social economic business, joint and hygienic meat [11]. Hathay Bunano is a stock businesses, non-governmental social enterprise founded in 2005 who organizations (NGOs), micro-finance employs 3500 women across a network of 32 organizations (MFIs) etc under different acts rural cooperatives; it sells toys in the US, UK, like the Companies Act, the Insurance Act, Australia, Europe and generates sufficient the Banking Companies Act, the Income Tax returns to be self-sustaining. KK Tea is 100% Ordinance, Joint Stock Companies etc.; certified organic tea focused on poverty however, there is no act for social businesses alleviation. It provides interest free loans in or social economic businesses. Therefore, it is the form of cows that are paid back in long- important to develop an act that can provide term installments through the selling of milk, a legal framework for social economy business cow dung and calves. Kumindini Cares organizations in Bangladesh, which is present provide free medical care for rural people, and in Canada. Many Bangladeshi non-profit spreads education among poor children in organizations and micro-finance organization Bangladesh. It has 1,500 full- time employees officials are not skilled in the English and around 5,000 seasonal workers [2,20] All language and do not have the technology to Kazi Abdur Rouf|May.-June. 2012 | Vol.1 | Issue 3|66-77 68 Available online at www.managementjournal.info prepare financial reports or progress reports and lessons from each other, and each can as designed by the donors and the public develop/ improve his/her respective initiatives sector, hence many active social organizations in both countries. are unable to market themselves to foreign Why is there a need to Study Bangladeshi donors and foundations. Moreover, the MFIs and Social Businesses Organizations Bangladeshi organizations do not have the and Compare them with Canadian Social same resources that have supported the Economic Organizations? growth of E-social economy organizations in developed countries like the United States In Canada, many social economic and Canada. The Internet is the fastest organizations (SEOs) are receiving growing medium of social and economic government funding [8,21,28,29,30] like activities. [3,26]. 80% of the Canadian Canada Community Futures Development population has access to Internet [3] whereas Corporations, Community Development in Bangladesh only 1.5% of the population Corporations (CDCs) Quebec, Canadian has access [5,9,27] and many other believe Health Nework, Canadian Institute for that university research can promote the Health Information (CIHI), Canadian development of future social businesses and Alternative Investment Co-operative (CAIC), social economic organizations in the world as and Canadian Community Investment they have done in Bangladesh and in Canada Network Co-operative (CCINC). Social respectively. For example, the Grameen Bank economy organizations are more prevalent in micro-credit social business concept Quebec than in the rest of Canada and have originated from Yunus’s university research been operating for a long time [9,31,32]. Many in Bangladesh. Quarter’s social economy Canadian SEOs are combinations of private bridging private and public sector concept is and public sector organizations and expanding in Canada. However, Abed (2010), foundations. Although Bangladeshi MFIs the founder of BRAC has debated Yunus’s have to survive from their investments; social business concept. Abed believes that however, many NGOs like BRAC, without profit, without shareholder/owners, ANNESHA, Nejera Kori, Community no business can exist. Nevertheless the record Satellite Clinics, Women for Women, CARE- of the Grameen Bank has a social business Bangladesh etc organizations depend on that earns revenues speaks for itself. In external donors funding like CIDA, SIDA, Bangladesh, different types of social business, NORAD, US-AID, World Bank for education, NGOs, Charities, are serving the health, environment, relief and other services disadvantaged people, many of them to Bangladeshi people. Many NGOs currently unidentified. However, it is necessary to charge fees for their services to cover some of document the variety of social business their costs. The following are some of the innovations in Bangladesh. A description social economic organizations in Bangladesh: about the different types of micro-credit Grameen Danone and Grameen Mosquito organizations, social economic organizations, Nets- social hybrid businesses earning social businesses initiatives, their funding revenues from selling their products at structures, operational structures, legal cheaper prices in Bangladesh [5-7]. While the framework, governance and their pros and Government of Bangladesh is committed to coins could help Bangladeshi social the aim of faster economic growth, but the entrepreneurs, social economists, and the strategy is sometimes slowed down by private sector and public sector leaders to get fundamental problems like politically different ideas from the descriptions. The instability, poverty, natural calamities, different social entrepreneurs could rethink bureaucracy and corruption [7]. The culture of and redirect their social business ideas for the loan defaults by the rich entrepreneurs is a well-being of the public [5,6]. Moreover, national concern in Bangladesh causing a comparing and contrasting Canadian social burden on the banks. Most domestic economic organizations with Bangladeshi companies in Bangladesh are family owned social economic organizations/initiatives could and are not listed on the stock exchange. It help respective countries to get ideas, policies, leads to the problem of a lack of transparency

Kazi Abdur Rouf|May.-June. 2012 | Vol.1 | Issue 3|66-77 69 Available online at www.managementjournal.info in the management of businesses [7]. very important to the social entrepreneurs, Moreover, in the 1990s, Bangladesh has been policy makers, private sector and public pursuing the principles associated with sector, who can benefit from these different market economy, leaving behind the social organizational models, funding models, and economy. Although the private sector is operational strategies. making a contribution to their own capital, (2010) promotes the idea of a social stock their social, ethical and environmental market which has not yet been developed in performance has raised concern in society [7]. Canada or in Bangladesh, but exists in India The private sectors are maximizing profits [6]. The social stock market can assist social through tax evasion, loan defaults and share economic business organizations to get scandals; they provide sub-standard goods to funding for their social businesses with less the market, creating health hazards for the interest or without interest. Hence a policy people. Social Economic organizations can dialogue is needed among government address the above mentioned issues in an agencies, the private sector and social accountable and transparent manner because economy organizations. As social economy the philanthropic mission is the first goal in organizations in Canada have clearly been addition to revenue generation commitment identified, the SEOs have interactions with [33]. The third sector organizations are the public sector; this type of interaction is isolated from the mainstream policy process necessary in Bangladesh. In Canada at the in Bangladesh, but in England the voluntary federal level there has been a Secretary for sector has built a formal representational and the Social Economy since 2004. They are reporting institutional process framework lobbying for the federal budget to include [34]. However, in Canada, cooperatives and social economy programs resulting in $100 nonprofits have millions of members and million donors allocated for SEOs capacity manage millions of dollars every day. Social building. In the United States, a coalition of businesses put people before profit and are more than 80 social entrepreneurs called still economically viable [18,26 ]. Therefore America Forward, under the leadership of Yunus, Quarter, Hall, Polany, and Putnam’s New Profit Inc., working with the Centre for (1996) idea of social business is not a utopian American Progress, put forward a set of policy dream, but a viable alternative to organizing ideas that led the Obama administration to economic enterprises. [26,33,35]. Muhammad create a White House Office on Social Yunus (2010) wrote a book on his new ideas Innovation and Civic participation and to called ‘Building Social Businesses (2010) that support an innovation fund, congress talks about his hybrid social business appropriated $50 million in seed capital. Grameen Danone-a low cost fortified vitamin However, this kind of public funding for social Yogurt project that addresses the issue of businesses is limited in Bangladesh. rural child malnutrition, Grameen Veolia Therefore, there are no social economy R &D Water- a social R &D project to address the projects in Bangladesh. However, there are crisis of poor drinking water and Grameen many research projects conducted in the Mosquito-chemically treated nets for public and private sectors about the impact of preventing mosquito bites. The Grameen micro-finance institutions in Bangladesh Creative Lab at Weisbaden, Germany [19,20]. The Canadian nonprofit sector was provides information about social business second only to the Netherlands, with a paid that incubates social businesses and supports staff and voluntary workforce that accounted the creation of new social businesses by to 11.1% of the economically active others. This Grameen social business population, 16% of all non-financial infrastructure provides the opportunity to use cooperatives in Canada and account for 11% Grameen resources in helping to establish of total revenues [36]. Hospitals, universities private sector multinational corporations to and colleges are included within social make hybrid social businesses in Bangladesh economy as well as business and professional [6]. These hybrid organizational models, associations, unions and places of worship. In funding models and operational strategies are Ontario there are more than 46, 000 social unknown to public, but this information is economy organizations whose collective total

Kazi Abdur Rouf|May.-June. 2012 | Vol.1 | Issue 3|66-77 70 Available online at www.managementjournal.info revenue was approximately $56.2 billion for organizations apex/networking offices, 2007. 1% of these organizations account for associations/bureau offices and directories. $19.8 billion of these revenues. Ontario social The researcher will visit each category of economy organizations rely on the paid labor respective organizations and collect their of over 970,000 full-time and part time staff brochures, an organizational memorandum of and the unpaid labor of 7.8 million incorporations, annual reports, articles and volunteers. Cooperatives are organizations books (if any). The researcher will meet with that are owned by the members who use their the management of these organizations to services or purchase their products. They are learn about their financial structures, funding working in different sectors in Canada like sources and challenges they are facing. After housing, childcare centers, financial services collecting all these materials, the researcher (credit unions, insurance, renewable energy, will review the information, classify social services, arts, and culture, retail sales organizations as per above defined categories and in agricultural goods and services. There of organizations and write the paper. The were 5,753 non-financial co-operatives, with research study paper will contain the 5.6 million members, 85,073 employees, $27.5 following chapters: the introductory chapter billion revenues and $17.5 billion assets. 12 will describe different social economy type million Canadians are associated with organizations and common definitions, the cooperatives; there are 1,140 credit unions second chapter will describe the different with 3,400 service locations, 10.5 million organizational innovation backgrounds and members, 64,600 employees and 248.8 billion how the mission of the organization changes in assets. Financial co-operatives transact over time, the third chapter describes the 12.7% of the Canadian financial GDP for the legal framework of the organizations, the financial sector [2]. The co-operatives have fourth chapter will describe funding sources, contributed to the well-being and economic financial structures and the financial growth of Quebec [2]. Desjardins, a credit constraints/challenges they are facing, and union in Canada is a successful financial the fifth chapter will compare and contrast credit union working across Canada. In Bangladeshi social economic agencies with Bangladesh, on the other hand, the system of Canadian social economy organizations. The cooperatives is very weak. In Bangladesh data collection will start from September there are no private daycare centers, private 2011-August 2012 in Bangladesh. The draft sports centers, or public shelters. However, will be written in Bangladesh from Comilla Cooperatives in Bangladesh was September 2012- March 2013. Canadian world famous in the 1960s. Its model was social economy organizations of each category replicated rapidly in Bangladesh in the 1970s will be studied from April –July 2013. The and early 1980s by the government before it final draft of the study will be completed by drifted away from its mission. Today, Arang, April 2014. The researcher with do this Karu Palli, Nari Prabatana Shops collect research under the close guidance and in embroidery products, handmade toys, correspondence with Professor Jack Quarter, souvenirs from the rural poor women that Founder and Director of the Social Economy create some employment opportunities, but Center, University of Toronto. they are running under the shadow of BRAC Compare and Contrast and BRDB and NariPakka. Over the past two decades, social Methodology entrepreneurs in Bangladesh have The researcher will collect the lists of increasingly employed business strategies to different social economic organizations-MFIs, address problems and generate revenues. For Cooperatives, NGOs, INGOs, social example in the mid 1970s, while Yunus and businesses, Trade Unions, Abed were drawing attention to the potential Foundations/Trusts, community economic of social enterprise in Bangladesh, Ed Skloot organizations, commercial non-profits, of New Ventures and Jerr Boschee of the charities (formal and informal), and relief National Career for Social Entrepreneurs organizations from the respective were advancing this model for a achieving

Kazi Abdur Rouf|May.-June. 2012 | Vol.1 | Issue 3|66-77 71 Available online at www.managementjournal.info impact and sustainability in the United innovations. Social economists demand States [4]. From the Grameen Bank and increased access to finance, support for BRAC in Bangladesh, to Shorebank in the research and development, and greater access United States, to the Self-Employed Women’s to new markets. Bangladesh needs social Association in India to VanCity in Canada; economic institutions that care more about there are many other organizations who have solving social problems than becoming achieved dramatic results through nonprofit personally wealthy [37]. A nonprofit social business and hybrid enterprises [2,6]. organization is a club, society or association Social entrepreneurs are more talented than that’s organized and operated solely for social ordinary businessmen who have created the welfare, civic improvement, pleasure or rural jobs in Bangladesh. In this context, recreation, or any other purpose except profit. organizations like the Grameen Bank, BRAC, Humboldt California Foundation (2009) Ashoka, Teach for America, City Year, The defined it as a self-governing organization- Harlem Children’s Zone–demonstrate new including a corporation without share capital, possibilities and potentialities to renew hope societies or trusts, but also unincorporated and optimism at a societal level. [4]. The associations-formed not for private gain but social economic organizations in Canada are for public or mutual benefit purposes. A part of broader Canadian society and are Statistics Canada survey (2003) estimated contributing to Canadian social economy. that there were 161, 000 nonprofit However, in Bangladesh, many micro-credit corporations and trusts in Canada with $112 social businesses (other than Grameen, billion of revenues, 139 million memberships BRAC, ASA etc) are facing challenges to and about two million employees [38]. They achieving their vision for social change. all add 7.1% to Canada’s GDP [50]. In Different countries have different forms and Bangladesh there are more 10,000 legal structures of nonprofit organizations. NGOs/MFIS/charities- small, medium and For example, the Johns Hopkins Comparative large in scale. Many of them depend on Nonprofit Sector Projects in the USA are external funds and membership fees. The small scale NGOs (serving 50, 0000 clients) organized, private in nature, self-governing, include Shapla Neer- Bangladesh, Nijera Kori, nonprofit distributing-not returning profits to Dhaka Ahania Mission (DAM). The medium size their owners or directors and require (less than 1 million) include Care Bangladesh, voluntary participation. In Bangladesh, some Oxfam Bangladesh, Plan Bangladesh, Assistance social organizations receive funds from the for Slum Dwellers (ASD) etc. are providing their government or external donors, but many services by receiving external funding. All of them now move to MFIs institutions as donations are social development organizations. However, are scarce like BRAC, and ASA, RDRS some are social business organizations like Bangladesh. They are growing, but MFIs as Christian Commission for Development in social economy agencies in Canada are not as Bangladesh, Anesha, Dushtha Shasthya Kendra popular as Canadian farmers’ cooperatives, (DSK), Gono Shasthaya Kendra that receive small fees for their services from their clients, but and Canadian Credit Unions. Hence, the they also receive funds from donors. Big social present study will look at why MFIs as a business organizations like Grameen Bank, social economic business is popular in BRAC, ASA, Rangpur Dinajpur Rural Service Bangladesh, and why MFIs are not serving in (RDRS) and many other MFIs are providing scale in Canada. Social businesses and social micro-credit to the poor people and earn economic organizations emerge in response to income from their loan investments. The needs and learn to efficiently meet the social Grameen Bank housing loan program and economic needs of the marginalized supplies loans and building materials for people [5,6]. Policies that promote the cheaper prices to borrowers. It received a emergence of third sectors are important for housing award from Aga Khan Award in the development of social economy. Canada 1994.Social entrepreneurs earn profit through opens up and encourages dialogue and social enterprises. The social entrepreneurs collaboration, but they have to adopt flexible are cleantech, greentech. A social Purchasing governance. Governments need new Portal (SPP) is an Internet accessed business mechanisms to seed and grow social to business database that connects socially Kazi Abdur Rouf|May.-June. 2012 | Vol.1 | Issue 3|66-77 72 Available online at www.managementjournal.info responsible companies in Canada [39], which has not yet been developed in Bangladesh. Canada Private sector Literature Review public for profit orgs Public sector funded practices social According to Quarter et al. (2009) the social orgs economy is a bridging concept for Bangladesh (MFIs) organizations that have social objectives Social Economy central to their mission and their practice, Organizations and either have explicit economic objectives or generate some economic value through the services they provide and the purchases that they undertake. The majority of social organizations are charities in Canada. Fig.1: Common characteristics of the social economy Moulaert & Ailenei (2005) termed it a form of organizations mobilizing economic resources towards the According to Muhammad Yunus (2010) the satisfaction of human needs . The SEOs have social business is a cause-driven business. democratic principles of one member/one vote The company must cover all costs and make with very high participation rates. It is revenue, at the same time and at the same serving the public as well as mutual time achieve a social objective [6] such as, associations and cooperatives, making healthcare, housing or financial services for connections to people and to the communities the poor, nutrition for malnourished children, [2]. Social economy organizations like micro- providing safe drinking water, introducing credit institutions, community economic renewable energy, etc. in a business-like way. organizations, NGOs, and social businesses According to Peredo & McLean (2006), the are becoming models for the whole world social entrepreneurship allows the [2,5]. In Canada and many other countries, entrepreneur to balance the interests of many various social economic business models were people and remain true to the mission in the invented that better serve the disadvantaged face of moral intricacy [44]. Social community people in economic way, entrepreneurs excel at recognizing and taking democratic way [40]. These organizations advantage of opportunities to deliver, in a created huge employment opportunities in superior way, the social value they aim to these two countries. Social entrepreneurship provide. Social entrepreneurs show the risk- has many societal impacts [41,42]. Not-for- tolerance, innovativeness, and pro-activeness profits/NGOS, civil societies, non-profit displayed by commercial entrepreneurs. organizations (NPOs), self-help groups, Social entrepreneurs have “social value” ie. Solidarity Economic etc. organizations belong contribute to the well being of a given human to the category of social economy because they community. However this definition does not are performing social and economic objectives allow for wealth creation. Even some (The under different frameworks, different Northland Institute) say that social strategies and different funding models [2]. entrepreneurs do not necessarily even need to These social economic organizations are very make money, they just need to find different important because they are working in ways of delivering services, even if they don’t opposition to multinational corporations and charge anything. Not for profit (NFP) private sectors who work in profit maximizing organizations taking this route are often exploitative market [2,4,7,43]. The figure described as “hybrids”. An example of this is below diagrammatically describes the the Grameen Bank in Bangladesh and other intersection between the private sector, public microcredit lending agencies. Their aim is to sector and social-economic organizations improve the aim of their clientele and profits three areas. The common characteristics of are used to increase lending capacity” [6]. The the social economy organizations include Bangladesh Rural Advancement Committee social mission, social ownership, (BRAC) not only supports the foundation of volunteer/social participation, and civic agricultural and credit ventures to empower engagement. poor people to support themselves; it has set

Kazi Abdur Rouf|May.-June. 2012 | Vol.1 | Issue 3|66-77 73 Available online at www.managementjournal.info up revenue-generating enterprises-BRAC organized to lobby for their products, rights Printing Press, BRAC Cold Storage and and to link their products to the local and the BRAC Garments Factories to generate profits international markets. Mondragon is Spain’s that will support core operations. Non profit largest workers cooperative with a number of organizations can also partner with for-profit integrated functions including organizations. The innovations of civil manufacturing, banking, and education. It is societies have successfully involved the interesting to note that the evolution of government as a financial contributor and as Mondragon includes the formation of an institution that enables policies towards educational institution, which is closely social economy organizations. According to linked to the human resource needs of both Bornstein and Davis (2010) social manufacturing and service cooperatives entrepreneurship is a process, a way to within Mondragon [46]. Rothschild J, Russell organize problem-solving efforts. It has R (1986) and Quarter (2000) also indicate blended social and economic values [4]. Social that government or state support is important entrepreneurship represents fundamental for organizations in maintaining democratic reorganizations of the problem solving work and participatory practices [2]. Since in many of society- a shift from control-oriented top cases social economy organizations are down policy implementation to responsive, dependent on government funding, there is a decentralized institution building. They shift towards project-based funding and away provide services and do businesses with the from core operational funding. There is a bottom of the pyramid. They are do-gooders, lower availability of operational funding that many exert self-sacrifice. Social economy is utilized for steady long-term employment organizations encompass the full range of positions. The shift towards project based human needs and interests [2, 6]. They funding will weaken the ability of many provide opportunities for economic organizations to sustain participatory development and solidarity in the community. practices. Social economy has been renamed According to Mendell & Neamtan, (2010) as the ‘Third Sector’-as they may produce and social economy is a process of re-engaging market services and employ people Elson P. government in new ways and working across (2010); Mook Quarter and Ryan (2010); boundaries to participate in new policy Schugurrensky D, and McCollum E. (2010) design. For example, the Bangladesh Ashraon regard these agencies as alternative genuine Housing Project has been funded by the economics, real economy. Sharage and Fontan public sector. Social economy involves the co- (2000) argue that a social economy implies a construction of new ideas and approaches basic reorientation of the whole economy and arising out of a multi-stakeholder dialogue related institutions. The Economic and Mendell& Neamtan 2010). Schugurensky & Employment Summit in Quebec in 1996 Mccollum (2010) mention that in Canada and defined social economy objectives as serving internationally, the social economy makes a members and the community. Here, SEOs significant contribution to the social, management is independent. Here, economic, cultural and environmental well- stakeholders participation, empowerment, being of communities. The Human Resources individual and collective responsibility are and Social Development in Canada (2005) key values. The Human Resources and Social acknowledges that ‘the government of Canada Development Canada (HRSDC, 2005) defined is just beginning to understand the power and the social economy as a grass roots potential of social economy enterprises and entrepreneurial, not-for-profit sector, based organizations’ [45]. Another form of economic on democratic values that seek to enhance the cooperation between social economy social, economic conditions of communities organizations is through social purchasing and focus on their disadvantaged members. portals [2], a marketplace for organizations The Waton Council, Belgium, termed it ‘social providing goods and services. Social economy market economy’. According to, Canadian organizations support each other by buying nonprofits are institutionally separate from goods and services through social purchasing government, they are self-governing, but [2]. In Canada, Farmers Cooperatives are incorporated with governments. These social

Kazi Abdur Rouf|May.-June. 2012 | Vol.1 | Issue 3|66-77 74 Available online at www.managementjournal.info entrepreneurships have a “double bottom Moreover several studies highlight the fact line” meaning they place equal emphasis on that Grameen Bank microcredit, Grameen profit and social benefit [47] Jill Sperandio Danone, BRAC and ASA, Nijera Kori in (2005) studied BRAC, Society for Lowest Bangladesh and Vancity, Maytree Urban Mass (SLUM), The ASHA project- Foundation, The Harlem Children’s Zone in British Philanthropy project, and Bright Canada as social business organizations, Stars Project in Bangladesh and regarded social economy organizations, cooperatives, them all as social business NGOs. According credit unions, NGOs and nonprofit to Peredo & Chrisman (2006) they are based organizations have contributed both socially on available community skills, multiplicity of and economically to people. These new goals- economic, social and environmental organizations are balancing the private benefit and will be directed by profits, but sectors monopoly on maximizing profits and dependent on community participation [48]. public sectors bureaucracy in the world [2,4]. However, there are challenges for CBEs like This new emerging ideology fascinated me to maintaining a balance between individual conduct research in the social economy field and collective needs, and among economic and that can help me gain insight into social social goods. businesses as well as benefit social Biographical Information on the Researcher entrepreneurs to get ideas from this research paper. The researcher Kazi Abdur Rouf is a PhD Contribution candidate of the University of Toronto. Currently he is researching the “Grameen I have worked with Nobel Laureate Professor Bank Women Borrowers Private Space and Muhammad Yunus, the founder of Grameen Public Space Development in Patriarchal Bank in Bangladesh who has encouraged me Bangladesh” under Professor Jack Quarter, to conduct social business research in the Founder of the social economic center, Bangladesh and Canada. My working University of Toronto. Rouf has worked in experiences in community-based GB micro- several microcredit programs, Small and credit programs, SME projects, Comilla Medium Enterprise (SME) and women’s cooperatives, Credit Unions in Canada, Good development in different countries like Faith Funds in USA and theoretical Grameen Bank Bangladesh, UNDP, Namibia, knowledge of social economy development Lesotho, UNHCR Afghanistan, Pakistan, through using micro-credit and social Philippines, India, USA and in Canada[49- businesses can contribute to fostering 55]. equitable human social development Why I Have Chosen This Research specially in Bangladesh, Canada and USA. The findings of this research will be I have worked in the micro-credit discipline important for other micro-finance and social business organizations in many institutions, social entrepreneurships, countries and I find micro-credit programs community development organizations and have an amazing positive socio-economic many other social economic organizations in impact on the lives of marginalized people. Bangladesh and elsewhere. Reference 1. Mendall M, Neamtan N (2010) The Social Economy 4. Bornstein D, Davis S (2010) Social in Quebec: Towards a New Political Economy. in entrepreneurship: what everyone needs to know: (eds) Laurie Mook, Jack Quarter & Sherida Ryan New York: Oxford University Press. (2010). Researching the Social Economy. Toronto: 5. Yunus, M. (2007). Creating a world without poverty: University of Toronto Press Incorporated. Social businesses and the future capitalism. New 2. Quarter J (2000) Beyond the bottom line: Socially York: Public Affairs. innovative business owners. Westport CT: 6. Yunus M (2010) Building social business: a new Greenwod/Quorum. kind of capitalism that serves humanity’s most 3. Ryan, S. (2010). The Online Social economy. In pressing needs. New York: Public Affairs. (eds.) Mook, L, Quarter, J & Ryan, S. (2010) 7. Belal AR (2008) Corporate Social Responsibility Researching the Social Economy. Toronto: Reporting in Developing Countries-A case of University of Toronto Press Incorporated. Bangladesh. England: Ashgate Publishing Ltd. Kazi Abdur Rouf|May.-June. 2012 | Vol.1 | Issue 3|66-77 75 Available online at www.managementjournal.info

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