“Fair or Failed: A timely Examination of Global Social Entrepreneurship and its role in

alleviating humanitarian needs for the world’s most destitute communities.”

Domenico Celli
Introduction to World Geography
April 28, 2017
Abstract:
In the field of International Social Service, there have traditionally been three general channels to
affecting change: Government Organizations, Non-Profit Organizations, and For Profit
Organizations. In the 21st century global trends have emerged that see for-profit businesses
increasingly taking interest in making efforts to address and improve social issues. While
geography was once a largely determinant factor of access to life sustaining and enhancing
resources, technological innovations in logistics & distribution and communications have made it
possible to support communities that were previously barred in any considerable respect from
sustainable self-improvement.
At the start of the 21st century, dynamic, flexible and focused enterprises emerged, with a core
aim to harness new technologies to produce varying social goods. However, as profit-earning
enterprises geared towards alleviating social ills, they were free from the constraints that
traditional channels bared. Within the academic field of international social service “Social
entrepreneurship”, scholars and experts received the apparent shifting with great optimism,
analogous to the zeitgeist of liberal politicians and diplomats following the Second World War,
as they observed the emergence of international governance. Today, entire industries such as Fair
Trade coffee and mainstream brands such as TOMS are commonly identified with the “social
entrepreneurship” label.

Introduction:
In 2017, there is a need to pause and examine the state of global social entrepreneurship. This
essay will take specific aim at the explosion and mainstreaming of the Fair Trade coffee industry
and make an evaluation of TOMS, a brand that has become nearly synonymous with social
entrepreneurship, but in many ways, the antithesis of the movement’s foundational principles.
This essays will focus its attention on efforts made to improve socio-economic and humanitarian
issues in the most remote and impoverished regions of Latin America and Sub-Saharan Africa.
The purpose of this research was first, to identify the characteristics that distinguish global social
entrepreneurship from traditional channels of effecting social change; second, to determine in
which ways general trends and practices in social entrepreneurship have deviated from its core
aims; and third, to evaluate whether social entrepreneurship, in its current state is on a course
towards influencing and alleviating social and humanitarian issues around the world in an
effective manner.

Literature Review:
In 2007, the Stanford Social Innovation Review published “Social Entrepreneurship: The Case
for Definition” in response to the rising global trend and ambiguous perception surrounding it​[i]​.
At that time, the field was still in its earliest stages and its impacts were not yet readily apparent,
though it was attracting increased attention and investments​[ii]​. SSIR sought to provide a more
finely pointed definition and framework for what social entrepreneurship ​should​ be, throughout
the world. The nebulous subject encompassed a broad range of activities under its umbrella;
SSIR advocates for a stricter label as opposed to a more inclusive one.
Starting in the late 20th century and coinciding with the broader rise of social enterprise,
Fair Trade products have exploded in popularity. Fair Trade is meant to signal that a product was
ethically sourced in a way that provides fair wages to smallholding coffee farmers in
underdeveloped countries, predominantly in Sub Saharan Africa and Latin America. The Fair
Trade, Employment and Poverty Reduction Project (FTEPRP) conducted a four-year research
project, examining Ethiopia and Uganda​[iii]​. The project collected evidence from areas
producing agricultural exports on how rural labor markets affect poor people’s lives.
Fellow at the Adam Smith Institute, Tim Worstall, further explains the limitations and
pitfalls of Fairtrade’s ability to affect the lives of workers in Sub Saharan Africa and Latin
America while operating primarily from Europe and the United States. Worstall notes the "social
premium" consumers pay for products from Fair Trade enterprises as a reflection of the profit
motive of these operations that has overcome the social improvement provision of the field’s
original intent​[iv]​. Worstall also touches on another issue; Fairtrade seems to inhibit
smallholding farmers from scaling, expanding and upgrading to modern machinery to increase
productivity​[v]​.
Throughout my search for material regarding the current state of social entrepreneurship, I found
very little useful material to create a full picture. I found some research into particular trends and
organizations. FTEPR found evidence that the Fair Trade coffee industry was not positively
affecting the community it purportedly exists to benefit. At the conclusion of their study, FTEPR
made several recommendations, all aimed at providing regulations and accountability through
governmental oversight. However, nothing was mentioned in regards to social enterprise as a
whole, what reforms should be made or what can be done to autonomously improve the dynamic
between profit and social good that intrinsically is part of the field.
TOMS, a footwear-selling social enterprise quickly rose to great fame and popularity among, as
Thiat Makinwa of OKAYAfrica states, everyone from “suburban teens to urban hipsters”​[vi]​.
Makinwa examined the founder, Blake Mycoskie's origin story for the enterprise and then
proceed to examine the oversimplification of its business model and consequent social impact.
As she explains, “after befriending barefoot children in Argentina, founder, Blake Mycoskie’s
shoe brand has expanded astronomically almost overnight”​[vii]​.
The case of TOMS begs the question of whether the brand is representative of the reality of
global social enterprise or a failure that isn't really a social enterprise at all. If TOMS is
emblematic of global social enterprise’s troubling relationship between business profits and
social services then an evaluation of whether the field deserves the recognition as a “new sector”
needs to be questioned. If so, it could be understood as a private sector entity’s perversion of the
social missions of benevolent government and nonprofit organizations for the sake of purely
business driven considerations.
As noted by Johnathan Favini of Why.Dev, TOMS may be undermining the long-term
development of local businesses, increasing unemployment and intensifying poverty while
providing short-term or immediate relief​[viii]​. In addition to the point brought up by Favini and
Makinwa, Favini examines how TOMS is using its financial and technological resources to
alleviate issues in an extremely ineffective manner. He also calls on Global Northern consumers
of socially conscious products to be more educated and hold social enterprises accountable for
their practices and impact. Seemingly, a trend has emerged in which consumerism is branded as
socially conscious and aid is reduced to simplistic terms. However, international development is
a complex machine and as exemplified with Fair Trade and TOMS, it cannot be done simply or
superficially. As seen with TOMS, Fivini acknowledges, what may seem to be a reputable and
effective enterprise at first could actually be detrimental to the communities in need​[ix]​. As a
strong case for more conscious and nuanced consumption and business practices, TOMS
demonstrates that something as seemingly harmless as giving a pair of shoes to a poor child can
have disastrous consequences.

Methodology:
For this essay, I first examined literature from SSIR which aimed to isolate a more directed
definition for global social entrepreneurship. I chose these documents to focus my early research
on to gain insight into what leading academics and experts thought of social entrepreneurship
during its rise. From this research, I was able to understand what the community’s aspirations
and goals for the field were.
In this research, I found that the source of social entrepreneurship’s birth was to empower
organizations to have an unlimited impact that could be scaled, replicated and repeated, beyond
the scope of what nonprofit organizations were capable of and free them from the bureaucratic
and financial restraints of government agencies.
I moved on to examine a popular industry within the current realm of social enterprise, Fair
Trade coffee. I aimed my research on an organization that completed a four year study aimed on
comparing the effectiveness in relieving poor socioeconomic and humanitarian conditions among
smallholder coffee farmers in Uganda and Ethiopia which worked under Fairtrade enterprises
and regular enterprises. I then examined a European economic research fellow’s review of the
study. Both sources provided clarity into the impact of this specific kind of social enterprise and
allowed me to gain a greater understanding in context of the communities as a whole, by
comparing them to standard businesses operating in the same industry.
Then, I examined sources that analyzed studies done by Northwestern University’s Social
Entrepreneurship Institute (SEI) into the social impact and business practices of popular social
enterprise, TOMS. I focused on this specific enterprise because of its popularity and general
public perception of TOMS as an operation that is emblematic of social entrepreneurship. The
sources I analyzed were useful in providing a detailed look into the business practices of TOMS
and a clear overview of its social impact.
Results:
To form a more accurate definition of social entrepreneurship, forms of socially valuable activity
were distinguished​[x]​. The first was a social service provision​[xi]​. In this case, an individual
recognizes an unfortunate stable equilibrium and establishes a program to address it​[xii]​. For
example, an individual founds a new school in a remote mountain community where
transportation to good schools is too difficult or expensive​[xiii]​. Obviously, a school would
certainly help the community it serves and could even have the long term effect of helping
educated students find jobs and break their personal cycles of poverty. However, unless it is
designed to be replicated on a large scale, it will not result in an improved equilibrium. SSIR
took issue with that type of operation because it never breaks out of its limited frame: the impact
remains constrained, their service area stays confined to a local population, and their scope is
determined by whatever resources they are able to attract​[xiv]​. These ventures are inherently
vulnerable, which may mean disruption or loss of service to the populations they serve. “Millions
of such organizations exist around the world – well intended, noble in purpose, and frequently
exemplary in execution – but they should not be confused with social entrepreneurship”​[xv]​. In
the analysis by SSIR, it is mentioned that “it is too early to tell whether ….will succeed in
creating a new equilibrium that ensures more equitable treatment” when examining emerging
enterprises that seemed to have early success​[xvi]​.
By 2015, 40% of all commercially distributed coffee was Fair Trade​[xvii]​. Comparative
evidence was collected to cover Fairtrade certified production and non-certified production.
FTERP found that the workers were severely impoverished by any standard​[xviii]​. However, the
study shockingly found that workers on Fairtrade certified co-operatives were more deprived by
comparison to the average farm in rural Ethiopia and Uganda​[xix]​. FTEPR recorded a high
proportion of female agricultural wage workers had little or no primary education, poor diet, and
meager access to resources that were widely available even among comparable non- Fairtrade
rural areas​[xx]​. The comparison also found Fairtrade female workers to be generally more
vulnerable than other rural women because of their higher likelihood of being divorced,
separated or widowed and without any support from a male partner​[xxi]​. This conclusion was
drawn following in depth interviews of 100 female Fairtrade workers in each country. While
these reviews can be subordinated to examples of the bad apples of the Fair Trade system being
utilized by scores of foreign coffee sourcers operating in the region, FTEPR found similarly
troubling results from the relatively better faring Fairtrade operations. Based on quantitative data
and in depth interviews from the study’s sample, a high percentage of rural people at highest risk
in Uganda and Ethiopia depend on wage employment​[xxii]​. However, with the average number
of 120 days of employment available to people who depend on such work in order to survive, the
question of whether even the best Fair Trade enterprises can create an improved socioeconomic
equilibrium for these people is a difficult one​[xxiii]​. FTEPR researchers don’t claim to possess a
complete explanation but aimed to provide clearer understanding of how these Fair Trade social
enterprises operate.
Still, the research findings definitively demonstrate Fairtrade has made no measurably positive
difference in comparison to non- Fairtrade operations. In fact, the findings indicated Fairtrade
certified producer organizations earned less than equivalent workers in research sites without
Fairtrade. Fairtrade certified channels earned less than 60 percent of the median wage for
equivalent work in relatively high proportions​[xxiv]​.
Forbes’ Tim Worstall commented, “it was also surprising to learn that many people do
not benefit from the "community" projects supported with funds generated​[xxv]​. Researchers at
London's School of Oriental and African Studies (SOAS) found that many of the poorest
workers didn’t even have access to resources and basic amenities provided to European and
American managers​[xxvi]​. In one Fair Trade cooperative in Ethiopia cited by Worstall, modern
toilets were designated for the exclusive use of senior co-op managers​[xxvii]​.
Worstall explained, under Fair Trade enterprises, people use the most basic hand tools,
which inhibit productivity and consequently, the potential for economic growth. As Worstall put
it, “Fair Trade might make the poor marginally better paid but at the price of insisting that they
remain poor peasants​[xxviii]​. In summary of his conclusion, “Fair Trade simply doesn't do what
it saws on the tin”​[xxix]​.
As Thait Makinwa of OKAYAfrica explains, TOMS established itself as an enterprise
founded on a socially conscious mission and simple business model​[xxx]​. It’s BOGO (buy one
give one) model gave one child in need a pair of shoes, for every pair of shoes sold. While at first
glance, TOMS seems like the epitome of SSIR’s 2007 definition of social entrepreneurship,
marrying profit to social benefits for the globe’s most at risk citizens, further examination tells a
different story. In fact, as Makinwa reveals, TOMs has actually had a devastating impact on local
economies in places like rural Argentina, Honduras and Kenya​[xxxi]​. While the BOGO model
might seem like a noble and clearly beneficial one, in actuality, TOMS’ injection of free goods
into a struggling community destroys the local industries. Contrary to the picture painted by
TOMS, local shoes are more prevalent in many areas than the average Westerner would expect.
Instead of supporting business growth and development to establish an improved socioeconomic
equilibrium, TOMS bypasses local industry and leaves communities powerless and dependent of
the donations of outsiders. Relying on the sympathy and ignorance of wealthy Western buyers is
certainly not a sustainable and empowering strategy. While the ability of technology to surpass
geographic barriers and reach previously unreachable segments of the world population gave
birth to social enterprise, it has also given birth to a harmful new dynamic. Unwittingly or
uncaringly trampling and extinguishing local industries, global social enterprise, TOMS has
created a dependency on foreign assistance in impoverished communities throughout the Global
South. Makinwa calls this “short-sighted and dangerous”​[xxxii]​.
As cited by Johnathan Favini of Why.Dev, Shoes are typically a product that is
inexpensive in many of the developing nations aided by the TOMS​[xxxiii]​. In places like
Port-au-Prince, a pair of shoes is routinely sold for as little as $2; shipping a pair of shoes often
costs much more​[xxxiv]​. Fivini suggests well-meaning Western enterprises would do better to
partner with local shoe manufacturers to provide low-cost footwear, if their missions were truly
to aid the world's most vulnerable communities. In doing so, it could support local
entrepreneurship and still fulfill its mission of helping children who would otherwise go
barefoot.

Discussion:
As social entrepreneurship continues to explode in popularity around the world, a critical
discussion must be had in regards to where the field is and how it has deviated from its original
intent. Originally, social entrepreneurship was intended to combine the well intentioned missions
of many government agencies and nonprofit organizations with the power and autonomy of
for-profit business. Throughout my examination of the research I have found, it is apparent that
there are many cases in which the worst of each traditional sector are combined to produce a
greater social ill. Global social enterprises are replacing government bureaucracy with complex
and ineffective systems of distributing social goods to communities in need and placing new
constraints on economic growth within impoverished regions. While there is plenty of material
on the limitations and inefficiencies of nonprofits and government agencies as well as the harm
done by ruthlessly profit-seeking business, little has been examined in the way of measuring the
success of social enterprises.
This essay seeks to bridge the gap in academic material focusing on broad trends in social
entrepreneurship since its early stages to where the field has deviated in its practices from those
core aims. In this essay, i examine the existing research that evaluated how specific industries or
companies have attempted to influence and alleviate social and humanitarian issues around the
world.
Examining the FTEPR study was one of the few pieces found that critically review the actual
current impact being made by one of the most mainstreamed industries taken hold by social
entrepreneurs, Fair Trade. Additionally, a review of the limited detailed analysis of TOM’S, a
brand that has become nearly synonymous with social entrepreneurship, but in many ways, the
antithesis of the movement’s foundational principles will give insight that for the time being, can
be extrapolated to guide an understanding of global social enterprises on a whole. Taking aside
the enterprise aspect of TOMS and Fair Trade operations, the findings, specifically ones that
explain failures to provide social good, can be useful in understanding and reforming traditional
governmental, nonprofit and private sector operations .This essay focuses its attention on efforts
made to improve socio-economic and humanitarian issues in the most remote and impoverished
regions of Latin America and Sub-Saharan Africa.
Conclusion (& Suggestions for Further Research):

I found an abundance of academic material geared towards explaining the early stages of social
entrepreneurship and defining what it ought to be, however detailed research into the
effectiveness of efforts into changing unsatisfactory equilibriums was scarce and comprehensive
analysis into the direction of the field now, as opposed to its earlier aims was nonexistent.
In my study, I found troubling patterns within the Fair trade enterprise industry. Namely,
conditions on smallholder coffee and tea farms displayed little or no improvement in any
quantitatively and qualitatively measurable capacity. In many cases, conditions were measurable
worse than on purely profit driven farms. These finding beg for more comprehensive research to
be done into all fields of global social entrepreneurship and for more critical analysis to be done
in order to isolate the root causes of its failure to substantively improve conditions for the most
at-risk communities of the world.
In my study of available materials regarding TOMS, one of the most popular Western social
enterprises, I found that the enterprise provides short term fixes but measurably destructive
outcome for local economies as well as crippling restraints on economic growth in highly
vulnerable communities. The study found the enterprise to be financially inefficient while
charging a social premium to Western consumers. The case of TOMS lends itself to more
research that should be done into the most effective methods for sustainably and inclusively
impacting communities foreign to the social enterprise. Additionally, more research must be
done and initiatives must be made to educate Western consumers of the effects of their
consumerism. To start, I recommend, social enterprises pause to reexamine their core objectives
and business methods while the masses of consumers demand transparency from social
enterprises. At this critical juncture, past the infancy of the field of global social entrepreneurship
and while its long term impacts are not yet set in stone, it is essential that more is done to
understand exactly what the field exists to do, how best it can be achieved and how in its current
state, social enterprise deviates from its early ideals.

Notes
[i] Martin, Roger L., and Sally Osberg. "Social Entrepreneurship: The Case for Definition ." Stanford
Social Innovation Review, Spring 2017.
https://ssir.org/articles/entry/social_entrepreneurship_the_case_for_definition.
[ii]​ Social Entrepreneurship: The Case For Definition
[iii]​ Christopher Cramer et al., Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda,
publication no. 1, The Fair Trade, Employment and Poverty Reduction , SAOS University of London
(UK Department for International Development, 2014).
[iv]​ Worstall, Tim. "Surprise! Fairtrade Doesn't benefit The Poor Peasants." Forbes.com. May 25, 2014.
Accessed April 28, 2017.
https://www.forbes.com/sites/timworstall/2014/05/25/surprise-fairtrade-doesnt-benefit-the-poor-peasants/
#47e6dde0370d.
[v]​ Surprise! Fairtrade Doesn’t Help The Peasants
[vi]​ Makinwa, Thiat . "The Trouble With TOMS." OKAYAFRICA. October 4, 2012. Accessed May 28,
2017. http://www.okayafrica.com/stories/the-trouble-with-toms/.
[vii]​ The Trouble With TOMS
[viii]​ Favini, Jonathan . "Some Bad News About TOMS Shoes." Why.Dev.org. Accessed 2013.
http://www.whydev.org/some-bad-news-about-toms-shoes/.
[ix]​ Some Bad News About TOMS
[x]​ Social Entrepreneurship: The Case For Definition
[xi]​ Social Entrepreneurship: The Case For Definition
[xii]​ Social Entrepreneurship: The Case For Definition
[xiii]​ Social Entrepreneurship: The Case For Definition
[xiv]​ Social Entrepreneurship: The Case For Definition
[xv]​ Social Entrepreneurship: The Case For Definition
[xvi]​ Social Entrepreneurship: The Case For Definition
[xvii]​ Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda
[xviii]​ Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda
[xix]​ Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda
[xx]​ Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda
[xxi]​ Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda
[xxii]​ Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda
[xxiii]​ Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda
[xxiv]​ Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda
[xxv]​ Surprise! Fairtrade Doesn't benefit The Poor Peasants
[xxvi]​ Surprise! Fairtrade Doesn't benefit The Poor Peasants
[xxvii]​ Surprise! Fairtrade Doesn't benefit The Poor Peasants
[xxviii]​ Surprise! Fairtrade Doesn't benefit The Poor Peasants
[xxix]​ Surprise! Fairtrade Doesn't benefit The Poor Peasants
[xxx]​ The Trouble With TOMS
[xxxi]​ The Trouble With TOMS
[xxxii]​ The Trouble With TOMS
[xxxiii]​ Some Bad News About TOMS Shoes
[xxxiv]​ Some Bad News About TOMS Shoes
Work Cited

Christopher Cramer et al., Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda,
publication no. 1, The Fair Trade, Employment and Poverty Reduction , SAOS University of London (UK
Department for International Development, 2014).

Makinwa, Thiat . "The Trouble With TOMS." OKAYAFRICA. October 4, 2012. Accessed May 28, 2017.
http://www.okayafrica.com/stories/the-trouble-with-toms/​.

Martin, Roger L., and Sally Osberg. "Social Entrepreneurship: The Case for Definition ." Stanford Social
Innovation Review, Spring 2017.
https://ssir.org/articles/entry/social_entrepreneurship_the_case_for_definition​.

Worstall, Tim. "Surprise! Fairtrade Doesn't benefit The Poor Peasants." Forbes.com. May 25, 2014.
Accessed April 28, 2017.
https://www.forbes.com/sites/timworstall/2014/05/25/surprise-fairtrade-doesnt-benefit-the-poor-peasants/#
47e6dde0370d​.