From Helping Hand to Invisible Hand: Social Enterprise Models in Poverty-Reduction

Abstract

This paper profiles and analyzes the efforts of social enterprises engaged in international development. It traces the historical roots of the movement back to the neoliberal movement in academia and politics, which championed free markets and their ability to address economic and social ills. It showcases the present poverty-reduction models, many of which focus on empowering the poor as consumers and fulfilling their basic material needs through market provision. Practitioners see such models as more financially sustainable and accountable to needs of aid recipients. However, all social enterprises surveyed experience trade-offs in terms of financial and social return. Although social enterprises are best suited for problems caused by individual information or behavioral failures, many situations of poverty are caused by systemic failures. Moving forward, social enterprise should recognize the systemic causes of poverty and market failures, which are best addressed by regulation and government involvement. Without such recognition from social enterprises and development institutions, social enterprise poverty reduction efforts can only address symptoms or sections of the bigger problem.