Designing Business Models for Social Enterprises: A Proposed Framework

Abstract

Social enterprises practice inclusive business models that create an opportunity to the marginalized sections of the society to participate economically. They initiate enterprises that aim at production or supply of goods and services that are affordable
to the Base of the Pyramid, like affordable water, healthcare, energy, sanitation and housing. According to the surveys done by the Intellecap, the business models in India are hybrid models combining the welfare objective (social value logic of not for profit)
and business objective (commercial logic) of the for-profit business, which make them self-sustainable. The business model of such enterprises is taken as a central unit of analysis for understanding the functioning of such hybrid organizations. However, in the pursuit of financial sustainability they may drift from their mission, while a rigid adherence to the social mission may prevent hybrid organizations from reaching financial sustainability. To understand the alignment of profit with impact, a review on the current literature on business models is done and through this review, a framework with a set of elements for social enterprise business models are proposed. The second  part of the paper explains the application of the proposed business model on two case studies of social enterprises in the livelihood sector. Consequently, the study aims to understand the social enterprises working for livelihood sector with a business model perspective.