Social Business is a concept that places social and ecological responsibility at the core of a corporate strategy. The goal of this approach, also known as social entrepreneurship, is to improve the long-term quality of life in society.
The idea of social business is frequently attributed to Muhammad Yunus. The economist was awarded the Nobel Peace Prize in 2006. He is the founder of Grameen Bank, which promotes the financing of investments for small entrepreneurs in developing countries through microcredits. Muhammad Yunus characterizes the social business model primarily through the following features:
While social entrepreneurs apply established economic methods operationally to survive in the market—including professional marketing—the decisive feature of these social enterprises is how profits are used. Instead of being distributed to investors, profits are reinvested into the company. This secures the long-term objectives of the organization, creating social added value rather than purely individual commercial gain. The primary aim is to increase social benefit.
Social business enterprises are not the same as non-profit organizations. Rather, they sit between two extremes:
| Model | Impact | Financing |
| Non-profit organizations | Do not change the market, but retroactively correct negative developments. | Donations and grants |
| Social Business enterprises | Change existing market structures and economic methods in the long term. | Reinvestment of profits for charitable/social goals |
| Traditional companies | Adapt to existing market conditions. | Profit-oriented investments |
A hallmark of social business is its overarching, long-term objective: society should be steered in a positive direction through the “social impact” generated by these enterprises. This approach solves societal problems using entrepreneurial means. Business takes the place of politics, and investments take the place of donations.
There are various motivations and founding concepts for social businesses:
The movement for a social and responsible economy has become a significant economic factor not only in the USA and the UK but also in Germany. Successful social business examples from Germany include:
Networks play a vital role for companies in the social business sector—not least for accessing funding and other resources. Non-profit organizations such as the Ashoka foundation in the USA support social enterprises worldwide that operate in fields like education, environmental protection, human rights, and economic development. One of Ashoka’s most famous Fellows is Muhammad Yunus’s Grameen Bank. In Germany, companies like BonVenture invest venture capital and support social enterprises through professional consulting.
Social Business contributes to increasing the “Well-being” indicator. This value illustrates quality of life, which is determined not only by material wealth but also by general sustainability and overall living standards. Raising this indicator is a global political goal. Consequently, social enterprises are often directly supported by policy through improved economic infrastructure and optimized conditions for new startups.
In this context, Sustainable Business and Corporate Sustainability also play a role. Companies that identify as social businesses commit to sustainable business models with eco-friendly products and production methods, as well as fair wages and working conditions for their employees.
In social business, the focus is not on profit maximization, but on social success. Any profits are reinvested directly back into the company or into other social, charitable, or ecological projects. The principle is based on the idea of making sustainable business—oriented toward overarching, non-profit goals—a condition for maintaining one’s own livelihood. In this way, innovative companies put the frequently cited principle that “the economy should serve the people” into concrete practice.
