Evan Chen joined our team last spring and is an undergraduate at the University of Pennsylvania’s Wharton School of Business. He has spent the last 5 months mapping out social enterprise globally. This blog post is the first of several in which Evan shares and reflects on his findings.
The purpose of my research, which is still ongoing, is to map out social enterprises around the world. Since Ayllu’s mission is to scale the most high-impact market-solutions to poverty, we needed to understand how we fit into the social enterprise space. While the list I’ve created is not exhaustive, my research creates the foundation for Ayllu to understand social enterprise from a high-level. Over the summer while I was back home in the Philippines, I scoured possible information sources for high-performing businesses that make money by making a difference in poor communities.
I developed a system to categorize social enterprises and used these categories to identify trends. We paid attention to mission, target demographic, location, maturity, growth models, and microfranchise potential. The list also maps technologies for the poor and Multinational Corporations (MNCs) that use microfranchising in low-income markets. When I began researching, we wondered how Ayllu’s definition of social enterprise stood up to the reality of what’s going on in low-income markets. Our definition was: a social enterprise is a profitable business that solves a root social or environmental cause of poverty.
After consolidating the first 3 months of research, I’m glad to report that Ayllu’s definition of social enterprise holds upwell. I was able to compile a list of 90 social enterprises (not including MNCs and other tracked entities) and our findings reflected the exponential growth in social enterprise in recent years. We identified market-based solutions to a range problems such as healthcare, food security, water, sanitation, energy, and internet technology The most mature and common social enterprises were in the areas of healthcare (23%), clean water (14%), and renewable energy (18%). These three industries seem to be making a lot of progress in entering low-income markets.
Given the range of social enterprises, our next question to answer was: How many of these social enterprises could be scaled through a microfranchise model? Microfranchising is the systematization, packaging, and replication of a model. For example, Vision Spring has been using its “business in a backpack” concept to provide quality eye care through local women who sell reading glasses. Many social enterprises are still early-stage and are not yet expanding, however 22% of the social enterprises we identified currently use microfranchise models to scale. I found that 75% of the social enterprises we mapped had developed, were planning to develop, or could potentially develop microfranchise models.
In literally “mapping out” social enterprises, I found that 44% of the solutions were based in rural communities, another 32% had a presence in urban and rural communities, and 18% had a presence in only urban communities. Why are there so many social enterprises in more remote communities? Although rural-urban migration is a major problem in developing countries, why is it that we haven’t seen so much innovation and concentration in the urban market? It is possible that rural communities are easier to impact more quickly, or that because they have less potential access to goods and services, they are targeted… Why do you think this is so?
India dominates the social enterprise field by leaps and bounds. 24% of the social enterprises on our list are operating solely in India. Why is India so far ahead? What cultural, regulatory, geographic, and socioeconomic factors may explain this? Other high-potential markets that caught our attention are Mexico, Brazil, the Philippines, Thailand, Ghana, East Africa, and South Africa.
While my research points to the viability of social enterprises, their ability to traverse borders and continents, and the frequency of microfranchising as a scaling tool, there are many more questions that beg exploration. As Ayllu digs deeper in this area, we will continue to share our questions, learning and reflections with you. We also hope to publish the findings of our market research and pilot launch next year.
If you have questions, comments and suggestions to help Ayllu improve our market research, leave us a comment below!
*This Research is ongoing and is not publicly available. If you’d like to participate, we’re interested in collaboration with research institutions and invite you to get in touch!
