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Why Micro Social Enterprises Matter
by George Hiley
I am Co-founder and Director of The Shop for Change, a startup social enterprise creating “A marketplace for good”. Our customers trade directly with small and micro-enterprises that support communities with limited access to basic human needs, including Tibetan refugees in India, rural artisans in Peru and disadvantaged Cambodian communities. By removing costly supply chains and middlemen, maximizing transparency and enabling direct communication, we can return the share of profits back to the people who need it most.
With the holidays approaching, it's important to realize that small and micro-enterprises bring huge benefits to society, both locally and abroad, and here are the reasons why.
For stronger communities
Small and micro-enterprises connect with the people of their community. Making positive decisions for their customers and community benefits them in return. Comparatively, larger organizations such as Walmart are typically beholden to distant shareholders or corporate strategic affairs, therefore distancing themselves from a relationship with the people in the communities they serve.
For increased transparency
With a death toll of 1,129, the crude awakening of the recent Rana Plaza Disaster in April 2013 has catapulted the issue of transparency in supply chains. With visibility, action is being taken and independent inspections have found that "one in six clothing factories used by Walmart in Bangladesh failed to meet basic standards of structural, fire or electrical safety." Due to their size and nature of trade, small and micro-enterprise are inherently more transparent about their supply chains. Social enterprise Nisolo shoes, demonstrates this ability by featuring shoemaker profiles, and ‘Enlightened’ Everlan cranks it up a notch with “radical transparency."
For fairer wages and spread of wealth
The pay gap disparity between the CEOs of companies and the average worker are substantial. The larger the corporation, the greater the disparity. In 2012, the CEOs of S&P 500 Index companies earned an average of 354 times the average wage of rank-and-file US workers. Comparatively the average pay for a managing director of a small business is almost half that of a large company. In developing countries such as India, the gap seems to be steadily increasing resulting in small scale agricultural farmers forced to fold and take up work with larger agricultural companies, leading to even lower wages and further detrimental effects for communities.
Rith, Kong, Ms. Sross, Mrs.Thearny, Chantha and his daughter, Rosana of Craftworks Cambodia, a fair trade social enterprise in Phnom Phen, which upcycles materials including brass bombshells, and cement bags.
For business agility and innovation
As a consultant working with top tier enterprise and government, I am fortunate to work amongst amazing people: thought leaders and gurus in their fields. Nonetheless with the greatest skills and intentions, the size of large organizations leads to bureaucratic challenges and inefficiencies. Governments and corporates battle with middle management power struggles, hoping to enable agility and innovation. We should be investing big budgets in corporate innovation programs and universities should keep creating programs on for better business innovation.
For new business models
With due reason, a shakeup has started in the wake of the global financial crisis. Pillars of our financial system are being challenged by progressive alternatives such as Muhammad Yunus’ “social business.” Social business redirects the fundamental motivation of trade away from economic growth and shareholder dividends, toward a balance of financial and social sustainability. “Social enterprise” is the new black, with entrepreneurs investing their efforts in building enterprises for a positive social impact in society. Meanwhile the case for charity becomes weakened by the struggle to deliver sustainability and accountability.
I believe in a convergence of these business models to provide economic empowerment to small and micro-enterprise. While charity is problematic, and public companies are legally obliged to prioritize wealth, small and micro-enterprise could pave the way to financial and social equanimity. In Australia, we are seeing networks of social enterprises empowering indigenous people through community art centers and other initiatives.
The small and micro-enterprise global solution
High levels of consumption in developed nations is a disturbing contrast to the ongoing plight of the impoverished developing world. Nonetheless, the entrepreneurial spirit is alive and kicking in small and micro-enterprise, from the cities of wealthy nations, to those of the rural poor. Through mindfully directing our consumption behavior, our efforts for creating a more equanimous world may be in reach. Whether supporting a local florist, or an artisan across the world.
#GivingTuesday is a chance to think about where we bank our bucks. Do we invest in the coffers of complex bureaucracy and non-transparent supply chains? Or in the potential to create a positive social impact through the unique, intimate, innovative and transparent small and micro-enterprise sector?
Will you join me in supporting small and micro-enterprises? For a day, I challenge you to only trade with small and micro-enterprises. It might just make for a better world.
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