Tyler Wry is an associate professor at The Wharton School
The interview is conducted by Zain Sohail
Hi Tyler, could you give a brief introduction to your background and what you do at The Wharton School?
I’m a professor at The Wharton School, studying social enterprises, social venture creation and impact investing.
I have been extremely interested in entrepreneurship at the start of my career, and in fact, had a number of startups which were, unfortunately, unsuccessful. I had really bad experiences whereby these co-founders were only out for themselves and money, and, worst of all, hid all of their actions behind the saying “it’s not personal, it’s just business.” I realised that entrepreneurship should be more than just profit maximization, and this led me to discover a huge impact in social entrepreneurship. With the help of my mentor, I got more involved in social entrepreneurship and eventually got a PhD in social enterprise and CSR.
You’ve mentioned in your bio on the Wharton Social Impact Initiative page that ‘social enterprises are inherently counterintuitive and realistically shouldn’t work, but they do.’ Could you explain this in more detail?
Scholars are still puzzling over this idea. For a very long time, the only missions of corporations were profit maximization and pleasing their stakeholders. Apart from these corporations, there were charities and philanthropists. The government, which largely controls the aggregate economy, would regulate both of these sectors.
As times have changed, these lines have blurred: nonprofits now act like enterprises and for-profit companies have adopted social missions. These companies now face issues balancing social impact and financial returns: the simple idea is that you need to sacrifice one to get another(more social impact=less profit and vice versa), while the more complex idea states that you need to work on one and secure it in order to ensure the success of the other in the future. This concept makes these organizations extremely unstable. This principle needs to be thought about and a plan of action must be established early on in order to ensure the success of the social enterprise.
Do you believe that businesses are better equipped to aid in societal problems than other organisations?
No…not at all. While social enterprises and giving back to the community is a fundamentally good thing, businesses naturally cannot lead this movement. They cannot fully commit themselves to a social cause because they have so many other pressures and priorities — they have to sustain themselves in order to be effective in their social goal. Corporations are not designed to act in altruistic ways, they have to just go with the flow and give back as much as they choose. Social enterprises need the government and a strong policy framework for businesses to be a part of. A metaphor could be a symphony: everyone could be playing a different piece perfectly, but it wouldn’t sound right, so you need a conductor to instruct the others. The social enterprises are part of this symphony being conducted by the government.
Why do you think social entrepreneurship has become more popular over the last few years?
Consumers are putting more pressure on companies to have a position on social issues and do things that are prosocial than before. Along with this, there is also that the next generation of talented business professionals don’t want to silo their life: they want to have both authenticity and integrity throughout all their actions, not make billions immorally to then make philanthropic donations sometime down the line like in previous times. They want to have this change be a part of their day-to-day lives.
The trend towards moving more prosocial has been manifesting for a while now. Recently we have just been seeing a few events, such as COVID-19 and the Black Lives Matter Movement, that have amplified these sentiments. In fact, of all the entrepreneurial ventures in the Wharton incubator program, 72% of them found social impact goals in their venture. Remember, they were studying ALL ventures, not just social enterprises. Social impact is clearly a huge motivation for a majority of them. Surprisingly enough, social impact was slightly higher in importance than maximizing profits a little over 50% of the time.
Do you think the economy is shifting in a way in which businesses will have to have some sort of social goal or CSR initiative in order to be successful?
While it would be great to say yes, we can’t know for certain right now. There is a large chance that these pressures for pro social action keep increasing, so these businesses have to follow with the trends. However, what the consumer sees is not always the entire story — many companies can show so much good, but then be acting very immorally behind the scenes. Fundamentally, all businesses react to market pressures, so if pressures stay how they are, businesses will implement these changes, however they still have to meet their bottom line — if companies need to get away with this by doing something in the shadows, they will.
While corporations are usually looked down upon for showing all the good they do then being corrupt behind the scenes, you cannot get mad at them for doing what they are built to do. It is simply what they do. Regardless of their other priorities, companies will always try to maximize their profits; we either have to accept this and increase societal pressures to ensure that they are beneficial, rather than detrimental, to society or alter the fundamentals of how corporations operate as a whole. Corporations are not naturally altruistic, so, with the current structure of how businesses operate, we have to be grateful of those which are and understand why some are not.
What advice would you give to someone trying to get involved in social business, whether it’s through investing, entrepreneurship or some other avenue?
The best thing you can do right now is learn about the industry — get a stable, foundational knowledge on not just the social sector of business, but business in general. Unlike jobs, there is no shortage of information in these areas — one can easily go out and learn about the new exciting companies or types of investment in the space. The first step is to get basic entrepreneurial or finance knowledge to build a base that you can eventually add the social component to. With this, you will be even more effective in making your social change. I would like to emphasize this again: you cannot start out with your social change, you first NEED foundational knowledge to put real action to your good intentions.
Zain Sohail is a current junior in high school and blog writer on pro-social business, specifically social entrepreneurship. In his blogs, he conducts interviews with social entrepreneurs and other business professionals in hopes to inspire the next generation of “Change-Makers”. Feel free to connect with him via Linkedin or on Medium.
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