Transcript Presentation 2()

Social Enterprises
Prof. Stephen Y L Cheung
Department of Economics and Finance
City University of Hong Kong
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1. Challenges of globalization
2. Social enterprise in Hong Kong
3. Partnership
– Government
– Business sector
– NGOs
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Globalization
“Since 2001 the pay of the typical worker in the United
States has been stuck, with real wages growing less
than half as fast as productivity.….. If you look back 20
years, the total pay of the typical top American manager
has increased from roughly 40 times the average--the
level for four decades--to 110 times the average now.…
In China each person now produces four times as much
as in the early 1990s. Having joined the global labour
force, hundreds of millions of people in developing
countries have won the chance to escape poverty.
Hundreds of millions more stand to join them.… But in
the rich world labour's share of GDP has fallen to historic
lows, while profits are soaring.” (Economist, 2007)
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Globalization
• Increase competition
– Encourage specialization
– Consumers gain from lower prices and
greater variety
• Increase in trade and investments
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World Trade
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Source: 2005 Annual Report, Federal Reserve Bank of Dallas
Assets Aboard
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Source: 2005 Annual Report, Federal Reserve Bank of Dallas
Globalization
• Price stability
– Lower inflation
– Seven largest developed nations: U.S., U.K.,
Canada, Italy, Germany, France and Japan
– Average annual inflation
• 10.2% (During 1973-1893)
• 1.8% (Since 1995)
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GDP per Capita
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Source: IMF, Morgan Stanley Research
Shares of National Income:
G7+ Economies
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Source: National Sources, Morgan Stanley Research
Participation in the Global Economy Importance of Partnership
• The Government
– Competitive and flexible workforce
– Redistribution
– Education and Retraining
• Industrial Corporations
– Technical and managerial skills
– Aspects of international best practices
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Participation in the Global Economy -
Importance of Partnership
• Civil Society Organizations
– Ensure proper investments
• Research Institute
– Provide technical training and diagnostic
studies
• Multinational Organizations
– Policy advocacy
– Watchdog
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What is Social Enterprises?
• No common definitions
– Social Enterprises are businesses with social objectives
– “A business with primarily social objectives whose surpluses are
principally reinvested for that purpose in the business or in the
community, rather than being driven by the need to maximize
profit for shareholders and owners.” (Social Enterprise – A
strategy for success, U.K. Department of Trade and Industry,
2002:7)
– Social Enterprises have developed in that sector of the economy
that lies between the market and the State. Theses enterprises
seek to reconcile market and non-market forces within a plural
economy (OECD,1996)
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Social Enterprises in HK
As at the end of January 2006,
• 43 NGOs assist/ engage in 172 social
enterprise projects
• The projects involve 37 kinds of
businesses
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Source: Social Enterprises Resource Center
Social Enterprises in HK
Services provided by social enterprises in
HK
• Production and sales
• Domestic services
• General cleaning services
• Catering services
• Personal care services
• Other products and services
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Source: Social Enterprises Resource Center
Social Enterprises in HK
Social enterprises in HK are mainly:
• Operated by charities and non-profit
organizations
• Run by some for-profit business
organizations as a subsidiaries
• Projects supported by Government seed
funding.
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Source: Social Enterprises Resource Center
Challenges of
Social Enterprises
• Lack of personnel in NGO with
professional business experience
• Financing
– Double ‘bottom line’
– Limited understanding
– Restriction on private benefits
– Familiarity
– Type of entrepreneur
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Success Factors of
Social Enterprises
• Entrepreneur spirits
• Expectation for participants
• Recognition and support from the general
public
• Government policy
– Administrative barriers?
– Promoting the concepts of social enterprises
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Potential Benefits of
Social Enterprises
• Create job opportunities, especially for the
underprivileged groups
• Increase employability of participants
→ Enhance integration into labor market
→ Become self-reliant
• Innovation
→ Meet new needs
• Increasing density of community network and
cross-sector partnerships
→ Promote community inclusion
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Fostering of Entrepreneurship in
Social Enterprises
• Role of university
– Training, executive education, and research
support
• Role of business sectors
– Expertise, funding support, and mentorship
• Role of the government
– Legislation tax advantages, and seed money
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Government
Social
Enterprises
Business
Sectors
NGO
“You can’t fly with one wing.”
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What is Corporate Social
Responsibility (CSR)?
• Old ideas of doing business
– Profit maximization
– Concern on shareholders interest
• Today’s new standard
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Innovation
Comply with international standard
Sustainable development
Consider interest of all stakeholders and are expected
to take greater responsibilities in running a business
– Corporate social responsibilities (CSR)
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What is Corporate Social
Responsibility (CSR)?
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Major trends in international business in recent years
Business’s contribution to sustainable development
Related to basic business activities
Impacts on stakeholders:
– Social;
– Economic; and
– Environmental
• Create additional value and strategic advantage
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How to Measure?
• Four possible indicators
– Dow Jones Sustainability Index (DJSI)
– Global Reporting initiative (GRI)
– Carbon Disclosure Project (CDP)
– ISO 14001 Certifications
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CSR in Hong Kong
• Corporate Governance Scorecard project
– Survey results based on publicly available
information
– HIS, HSHKCI, and HSCEI constituent stocks
– 2002: 168 companies are covered
– 2005: 174companies are covered
Section / Year
Role of Stakeholders in
Corporate Governance
2005 Mean
40.21
2002 Mean
54.32
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Drivers for Organizations
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Enhance image and reputation
Increase shareholders value
Reduce business risk
Legislative requirements
Customer loyalty
Employee loyalty
Improve business operation
Control of legal risks
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Obstacles in Running Socially
Responsible Businesses
• Management practice
• Increasing cost?
• Monitoring and enforcement
• Sustainable development
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Role of Government in Promoting
CSR
• Enforcement strategies and legal and
regulatory risk management
• Tax initiatives
• Contribution to compliance expertise
• Moral suasion
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Incentives
• CSR index
– Brand name
• CSR investment fund
– Investment communities
• Education
→發財立品
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~END~
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