Scribd
Upload
91 views2 pages

Hera Abcissa M. Batara Social Entrepreneurship Reaction/Reflection Paper

1) Classical economics focused on profit maximization for firms, but theories have evolved to consider social complexity, like the idea that a strong middle class drives an economy. 2) Societal changes like globalization, demographics, and knowledge-based economies create new social needs and challenges that businesses can no longer ignore. 3) Investors now demand that firms address social issues, growing socially responsible investing over 20 years as awareness increased through technology.

Uploaded by

Hera Abcissa Batara
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
91 views2 pages

Hera Abcissa M. Batara Social Entrepreneurship Reaction/Reflection Paper

1) Classical economics focused on profit maximization for firms, but theories have evolved to consider social complexity, like the idea that a strong middle class drives an economy. 2) Societal changes like globalization, demographics, and knowledge-based economies create new social needs and challenges that businesses can no longer ignore. 3) Investors now demand that firms address social issues, growing socially responsible investing over 20 years as awareness increased through technology.

Uploaded by

Hera Abcissa Batara
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

HERA ABCISSA M.

BATARA
SOCIAL ENTREPRENEURSHIP
REACTION/REFLECTION PAPER

Classical economics postulated that the firm’s main purpose is to maximize profits. Overtime, economic
theories have evolved to consider the increasing complexity of markets and the society, we now have,
theory of trickle-up economics focusing on the idea that the middle class can drive an economy. The
changes in society such as globalization, demographic shifts including increasing life expectancy and
economic shift towards being knowledge based, results in new societal needs and challenges. Coupled
with the increasing social awareness of the market brought about by the technological leaps in
communication, these new social challenges are something firms can no longer ignore.

Today, the market has the power to demand for firms and businesses to care and mobilize themselves to
participate in solving current social concerns. Therefore, it is not surprising that this demand stretches to
the realm of investing and that the industry of Socially Responsible Investing has substantially grown over
the last 20 years, as the article has affirmed. Personally, I agree with this movement. It is good that
investors have grown a social consciousness and conscience. But it is better that there is deliberate action
on the part of investors to support good initiatives and withdraw support from companies that add to
environmental degradation, violate basic human rights or do not exemplify good governance. It is good
for companies to realize that the impact of social awareness is not just conceptual or lip service, that
something concrete can happen if they do not participate. Investors can choose not to support them or
divest.

However, because of the novelty of the industry it is also not surprising that there are some contentions
about the nature and industry of Socially Responsible Investing. One interesting debate highlighted in the
article is the idea that ‘you can invest to make money, or you can invest for social or environmental values,
but you cannot do both.’ I find this idea ancient and limiting for today’s setting and should be left in the
past. There are many examples of organizations and people that tell us that you can do both. Bill Gates,
the most obvious example, spends a large sum of his money in social initiatives, such as the Breakthrough
Energy Ventures, which aims to invest one billion dollars to radical energy start-ups capable of drastically
cutting global emissions. And Bill Gates is not alone in this endeavor, he is joined by Ali Baba’s Jack Ma,
Amazon’s Jeff Bezos and other people who are considered the world’s richest.
Another debated issue discussed would be the way in which screening is done, should the screening focus
on seeking out companies that have objectionable behavior and excluding them or should it instead be
looking for companies that outperform others based on social aspects (human rights, environmental
practices, etc)? To me it is best to do both, and all socially responsible investors should do their due
diligence. Investors should not feel guilty for being stern in their screening practice because there have
been cases of fraud, and money lost because of fraud means money that cannot be invested to promote
social responsibility. A glaring example is the case of Theranos, and HBO just released a documentary
about it. Theranos is a start-up that was supposed to change the world by providing accessible,
inexpensive blood tests. Theranos, was able to amass $900 million dollars in investments from reputable
names in the business industry including Rupert Murdoch, the Walton Brothers (founders of Walmart),
former secretaries of state, etc. But Theranos was a sham, the company was enveloped in secrecy, the
technology did not work, and some say is impossible, they committed fraud in reporting to their investors
and treated their employees badly. The investors believed in the beauty on the vision so much, that they
neglected to see objectionable behavior happening in the current. Stories like these should serve as
caution to investors to come up with a more structured and thorough screening process. But while risks
like that of Theranos exists, this should not hamper investors who are truly bent on doing good and
participating in initiatives that are for public good.

Lastly, like its sibling-social entrepreneurship, the definition, terminologies and structure of socially
responsible investing varies depending on context and geographical location. Indeed, it would be good if
one recommendable definition and theory would be formulated. Because this will provide the industry
with a blueprint for success. Putting science to this movement means successes can be repeated.
However, the lack of a common theory should not be taken negatively and should not hinder social
initiatives like these. It should not take away from the fact that something is happening in this world,
people are starting to care, and this is better than nothing.

Sources:

https://www.huffpost.com/entry/trickle-down-for-1-rising-trickle-up-economy-will_b_5a47c0fce4b0df0de8b06a8a

https://www.exploring-economics.org/en/orientation/neoclassical-economics/

https://www.youtube.com/watch?v=3CccfnRpPtM

You might also like