The Innovation of a Hybrid Business Model for Social Enterprises

Noor Abu Jbara

Social entrepreneurship sheds light on emerging businesses that combine commercial and social values offered to markets and communities. In other words, social entrepreneurship looks for social gains rather than financial gains or profit shares. Leading businesses have said that entrepreneurs gain the maximum benefits from social enterprises, if they choose the right business model, structure and strategy for their enterprises.

Although there are two types of business models; traditional business models and sustainable business models, both are missing key commercial and social components. We’ll be sharing a new business model, known as hybrid linking traditional and sustainable business models (HSBM) to be used by social enterprises that have profitable, social and commercial objectives.

The Innovation of a Hybrid Business Model for Social Enterprises

A Closer Look at Social Entrepreneurship

In general, social entrepreneurship is about performing an innovative activity that has a social impact in a commercial venture, or a corporate, or a not-for-profit organization (NPO), or a hybrid organization that has a mixed structure between non-profit and for-profit organizations.

On the other hand, a narrow definition of social entrepreneurship is about applying managerial and business practices in an NPO, in order to allow the organization to be innovative and to create new values. The aim here is to prioritize social value rather than personal gains and profits.

The Innovation of a Hybrid Business Model for Social Enterprises
Michelini Business Model and The New Hybrid Social Business Model (HSBM)

The Michelini business model is a model that includes 13 components under 7 areas, which are: offer, market, governance, ecosystem, surplus, economic profit equation and social value equation.

The most important three components that distinguish social enterprise from others are: the social mission that will be identified in the business in addition to the revenue model and dividends management, where the dividends could be ranged from 0 to 100%.

On the other hand, the structure of the new hybrid social business model (HSBM) has four main sections, which are social value, product/service, market and financial equation. However, the main two components that have been added based on the “Lean Canvas” model are key metrics and problem components. The main components that highlight the social aspects related to the business are social value (risks and benefits), in addition to the surplus (dividends) in the financial equation.

Social entrepreneurship is about having an entrepreneurial mind-set that is able to exploit a business opportunity and generate social value that satisfies community and market demand. Accordingly, social enterprises have many legal forms, whether they are a non-profit or for-profit organizations, as the most important features of them is having social driven structure, norms and values.

On the other hand, scholars have argued that the base of a business model is the ability to show how the business creates, delivers and captures the use and monetary values. Fundamentally, sustainable business models are those that help social enterprises illustrate how the business will create, deliver and capture its social value.

The Innovation of a Hybrid Business Model for Social Enterprises

HSBM is significant as it highlights the social value proposition of the social enterprise in addition to the business strategy for managing the revenue surplus along, with key performance indicators that measure business performance.

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