Businesses are challenged to take part into a value-based revolution. One that further integrates their for-profit capital models into a sustainable and social value creation. Michael E. Porter (2011) has argued that outdated business models focused on optimizing short-term financial performance overlook the greatest unmet global market needs as well as broader influences of an integrated shared value for long-term success. The business sector, on one hand, is challenged with reinventing its profit-only bottom line model into an integrated triple-bottom line model where stakeholders’ well-being and renewability of natural resources are integral to their mission and core-operations. The nonprofit sector, on the other hand, is challenged with delivering essential social services and protecting the environment, often covering a gap left from the public sector. Nonprofit organization’s soaring aspirations and ambitious missions are often wing-clipped by limited and unsustainable revenue models failing to attract and retain a high performing workforce.
In the last decade, a number of ‘hybrid organizations’ have emerged. The so-called social enterprises are those organizations that attempt to fully integrate social-environmental values and concerns with business revenue and operational models. The Social Enterprise Alliance defines social enterprise as “an organization or initiative that marries the social mission of a non-profit or government program with the market-driven approach of a business.” There are many organizational examples of social enterprises worldwide including Benefit Corporations (B-Corps), the limited liability company with low profit (L3C) and Community Development Corporations (CDCs) in the United States and the Social Cooperatives, Community Interest Companies and Social Purpose Companies in Europe. In the Global South, social enterprise organizations (SEOs) are emerging as social problem solutions obviating to the constant uncertainty of public and development funds. Other countries are following up with legislative adjustments to regulate and promote social enterprises as in the Public Benefit Organizations (PBO) Act 2013 and the examples of the Savings and Credit Cooperative Organization (SACCOs) in Kenya.
The emerging hybrid structures and other for-profit/non-profit business models that embed, integrate or relate their missions to social and environmental benefits is more than a trend. In the last decade, the growth of hybrid organizations has started to bring new solutions to global problems from humanitarian emergencies, to sustainable development, and urban-rural poverty alleviation. Social enterprise organizations are hybrid organizational models that challenge both traditional philanthropic-nonprofits as well as socially irresponsible and unsustainable business models. This paper analytically illustrates the emergence of this new ‘fourth sector’ in its classifications, innovative examples and eco-systems exemplified in the San Francisco Bay Area. It reviews the role of academia to create curricula spaces and opportunities for future leaders to think outside their sector while providing the appropriate skills and mindsets for social entrepreneurship, social innovation and social impact.