JBIB
The Journal of Biblical Integration in BusinessPREPARED FOR WORK + LIFEA CALVIN EDUCATION IS ABOUT:+ Learning from the best+ Thinking courageously+ Living fully and faithfully+ Becoming world ready+ Connecting globally+ Engaging locallyEmployers appreciate how Calvin’s rigorous liberal arts education shapes the whole person with the faith, knowledge and skills to walk confidently into a career and life.www.calvin.edu“”Ryan Bierma ’03, studies volcanoes in Alaska for UNAVCOEvery day I’m shaking my head thinking, ‘I’m working on an active volcano, and somebody is paying me to do this.’ I have the dream job every young geology major wants. I fly around and look at rocks and study volcanoes. It’s what I always wanted, but I never anticipated that it would fall together.
JBIB
The Journal of Biblical Integration in Business
JBIB VOL. 15, NO, 1, SPRING 2012
ISSN# 1527-602
PUBLISHING RIGHTS NOTICE
The JBIB grants the right, under fair use laws, for articles tobe copied and disseminated for educational use. Articles sodisseminated should prominently note the JBIB as the source.The following citation would be appropriate:
<author> <issue> <article title>
The Journal of Biblical Integration in BusinessA Publication of the Christian Business Faculty Association
CBFA
800 MARTINSBURG RD
MOUNT VERNON, OH 43050
740-504-4524
CONTENTS
Review Board for JBIB Special Issue.............................................................................................................................. 6
EDITOR’S PERSPECTIVE
Introduction to the Special Issue on Organizational Hybridization:Both for Profit and Not: Biblical Views of Organizational Hybridization................................................................. 7
Margaret Edgell, Guest Editor
PEER-REVIEWED ARTICLES
Blurring the Boundaries: Emerging Legal Forms for Hybrid Organizations—Implications for Christian Social Entrepreneurs.........................................................................................................11
Teresa Gillespie, Northwest UniversityTimothy Lucas, Northwest University
Organizational Hybridization: A Business Model to Integrate Best Practices of For-Profitand Non-Profit Organizations.........................................................................................................................................29
Orneita Burton, Abilene Christian University
Jozell Brister, Abilene Christian University
Teaching Social Entrepreneurship in Christian Higher Education Business Schools.............................................46
Timothy Lucas, Northwest University
Teresa Gillespie, Northwest University
INVITED PERSPECTIVE
Hope for Hybrids: Faithful Presence in Organizational Life.....................................................................................60
Roland Hoksbergen, Calvin College
INVITED ARTICLES: BUSINESS AS MISSION
“Business as Mission” Hybrids: A Review and Research Agenda.............................................................................66
Steve Rundle, Biola University
Is Business as Mission (BAM) a Flawed Concept? A Reformed Christian Response to the BAM Movement.....80
Scott A. Quatro, Covenant College
The Future of BAM in the Academy: A Response to Rundle and Quatro................................................................88
R. Joseph Childs, Southeastern University
Response to Quatro and Childs.....................................................................................................................................98
Steve Rundle, Biola University
Is Business as Mission (BAM) a Flawed Concept? A Response to Childs...............................................................102
Scott Quatro, Covenant College
BOOK REVIEWS
Good to Great in the Social Sectors: Why Business Thinking Is Not the Answer, by Jim Collins..........................104
Reviewed by Michael Zigarelli, Messiah College
Social Entrepreneurship: What Everyone Needs to Know, by D. Bornstein and S. Davis.......................................106
Reviewed by Ruby Simpson, Simpson Commercial Properties
Hybrid Organizations and the Third Sector: Challenges for Practice, Theory, and Policy, by D. Billis (ed.)........108
Reviewed by Jim Dupree, Grove City College
Academic Capitalism and the New Economy: Markets, State, and Higher Education,by Sheila Slaughter and Gary Rhoades.......................................................................................................................110
Reviewed by Margaret Edgell, Calvin College
ENDINGS
JBIB Information for Contributors.............................................................................................................................114
Call for JBIB Operations Editor..................................................................................................................................117
Call for JBIB Media Review Section Editor...............................................................................................................117
REVIEW BOARD FOR JBIB SPECIAL ISSUE
Orneita BurtonAbilene Christian University
Melodi GuilbaultWarner University
Kenny HoltSouthwest Baptist University
Steve RundleBiola University
Steven WhitingBethel University
Charlie WilliamsCharleston Southern University
7
EDITOR'S PERSPECTIVE
BOTH FOR PROFIT AND NOT:
BIBLICAL VIEWS OF ORGANIZATIONAL HYBRIDIZATION
Margaret Edgell, Guest Editor
THE HYBRIDIZATION TREND
Recent scholarly literature and discussion, including past JBIB articles on Business as Mission and recent CBFA presentations on Business as Mission and social entrepreneurship, indicate that the activities of organizations are shifting in ways that blur the dividing line between for-profit and not-for-profit business. This drift takes the form of each side borrowing visions, missions, goals, structures, resources, or strategies from the opposite end of the spectrum (Strom, 2007).
Christian business scholars and practitioners are at the forefront of hybridization. Business as Mission is a Christian movement that promotes doing business according to Kingdom values of stewardship, reconciliation, justice, dignity, and peace (e.g., Johnson, 2009). Social entrepreneurship is a movement of interest to Christians in business because it “combines the passion of a social mission with an image of business-like discipline, innovation, and determination commonly associated with, for instance, the high-tech pioneers of Silicon Valley” (Dees, 2001, p. 1).
Global interest in hybridization is high. Hybrids are often called “the fourth sector,” as an added sector after the business, civil society, and government sectors. The United Nations produced a report by Goldman Sachs on ways to evaluate the environmental, social, and management performance of firms, in order to get a better handle on the fuller impact of more socially-responsible companies (Strom, 2007).
Examples of hybrids set in a for-profit context include Jeffrey Immelt, a Christian and CEO of General Electric, who founded its Ecomagination unit with $1 billion in research and development funds to reduce the environmental impact of G.E. products. Now more than seven percent of G.E. sales are Ecomagination products. WikiHow is a for-profit spin-off from the non-profit Wikipedia. It is run as a community service to its members, where profit comes second, in the form of advertising on its how-to web pages. WikiHow members are happy that they are never asked for donations. Its founder receives some of the profit, of course.
Hybrid activities in the non-profit sector include any profit-making activity that supports a non-profit organization, for example, national sales of Girl Scout cookies. Such activities are
8
becoming more sophisticated, as seen in the increasing use of low-interest program-related investments (PRI) loans from foundations to start up profit-making activities by non-profits (Strom, 2007).
The growing variety of profit/non-profit blends bring with them opportunity and innovation, as well as risk and unforeseen change. Of core interest to this line of research are biblical views on the issues that arise from hybridization. The benefits of hybridization are more than we currently know, but they include increasing access to low-interest loans from non-profit foundations, and responding to the rising interest of investors in the long-term holistic approaches to business that enhance sustainability. Such fourth-sector financiers are called patient capital, because they are willing to wait for profits. Hybridization raises issues such as the tax treatment of hybrids, the fiduciary responsibilities of asset managers to maximize profit, and the inherent difficulties of quantifying long-term social benefits and internalizing the true costs of doing for-profit business.
SCRIPTURAL FOUNDATION FOR ANALYSIS
The Christian church, as the Body of Christ in this world, serves society. 1 Peter 4:10, in the context of Peter’s charge to the church to love and serve others, states: “Each one should use whatever gift he has received to serve others, faithfully administering God’s grace in its various forms.” The influence of the church, both among its members and in society, is evident in Acts 2:42-47:
They devoted themselves to the apostles’ teaching and to the fellowship, to the breaking of bread and to prayer. Everyone was filled with awe, and many wonders and miraculous signs were done by the apostles. All the believers were together and had everything in common. Selling their possessions and goods, they gave to anyone as he had need. Every day they continued to meet together in the temple courts. They broke bread in their homes and ate together with glad and sincere hearts, praising God and enjoying the favor of all the people. And the Lord added to their number daily those who were being saved.
The church is the source and sustainer of modern faith-based organizations.
The Apostle Paul’s tent-making business is typically considered as a financial support for his evangelistic work. I suspect that he evangelized and mentored, needle in hand, just as everything Paul did was an opportunity to help others walk victoriously with Christ in all of life. His business was very likely a prime example of Business as Mission, and as such, a full-on hybrid.
Paul’s holistic approach to life in Christ, and a Christian view of life as explained by Reformed thinkers (Kuyper and Dooyeweerd as interpreted by Greene, 1998), lead me to argue that the trend of hybridization, at its essence, only reflects the inherent wholeness of the creation. Man separated profit-generating activities from their religious roots. Now we rejoin them via hybridization.
A second principle of Kuyperian thought is sphere sovereignty. Each human activity has its rightful place or sphere in the creation, over which its norm for activity is sovereign, and should not be intruded upon by other spheres. For example, the norm for the family is troth, or promise-keeping. Business should follow its norm of stewardship, but not to the point that parents cannot keep their godly promises to their children. The concept of sphere sovereignty has been applied by Kurt Schaefer and others in the study of how faith-based organizations interact with government. It could also be applied to the analysis of profit and non-profit activities and norms. For example, if the norm for non-profit organizations is the common good, hybridization implies a blending of the norms of stewardship and the common good. Analysis along these lines would delineate areas of congruence and areas of conflict for these two norms.9
In these ways and others, biblically-based analyses of this important trend can prepare Christians in business to respond knowledgeably to hybridization.
Biblically-based analyses can address issues such as:
• How do biblical views of the roles of government, business, and church inform the hybridization movement?
• Which laws, regulations, and codes are being challenged by hybrids? How are Christians pushing the envelope and contributing to the form that change is taking?
• How is the contribution of civil society, much of it faith-based, changing with hybridization? What are the potential impacts on faith-based organizations?
• What advice can scholars and consultants offer to practitioners during this transition?
• What clashes and conflicts of interest can be expected in blending often polarized public versus private motivations, missions, constituencies, and resources? How can a biblical analysis foster reconciliation where needed and preserve differentiation where appropriate?
Prominent recent examples in the news of the clashes and conflicts of interest accruing from the hybridization trend include:
• Bill Novelli, former CEO of AARP, discussed on NPR the conflicts of interests caused by hybridization. For example, AARP receives royalties when its members buy AARP-endorsed insurance plans, while AARP simultaneously monitors insurance products for its members.
• The U.S. Olympic Committee, a registered non-profit organization, fired its CEO, apparently because she had no sports management background. Her unfamiliarity with Olympian and sports cultures was thought to be the source of much miscommunication and misunderstanding between the Committee and its stakeholders. Generic business background did not transfer to this major organization.
IMPLICATIONS
Christian business professors observe that they serve students in two “camps:” hard-core business students, and social justice types. I find that the hard-core business students are attracted to finance, money and banking, or forecasting courses. I find the social-justice students mainly in courses on international development or non-profit management. They divide into two camps for the same reason that our greater society is divided into two ideologies or logics: industry logic and social institutional logic (Gumport, 2002).
The implication here is: How can hybrid organizations, which are commonly composed of both camps, hold together? Strong ideological and cultural forces pull them apart, so how can they work together? How can hybrids become strong organizational cultures? These two student camps come together in courses on organizational hybridization, such as social entrepreneurship courses. Thus the question at hand for our membership is: How can we teach two opposing camps at once?
I offer one potential response. I understand that excellent results come from the implementation of polarity management techniques (Johnson, 1996), which bring both sides to understand and actually value each other’s positions. Such techniques are very useful for our students to learn and apply as managers in the polarized political environment that is the United States today.
CONCLUSION
This special issue offers discussion and analysis of the complex nature of organizational hybridization. Because this is a cutting-edge trend, regulation has yet to catch up and settle into clear lines of demarcation in their treatment of hybrids. Teresa Gillespie and Timothy Lucas trace developments in the legal terrain that offer more organizational options for hybrid business
EDITOR'S PERSPECTIVE 10
es. They also discusse implications for Christian social ventures. Timothy Lucas reflects on his experience teaching social entrepreneurship, a sub-category of hybrid organizations. He points out how underdeveloped social entrepreneurship is as a discipline, and offers recommendations for “advancing social entrepreneurship as a dedicated field of study within Christian higher education.” Orneita Burton and Jozell Brister conducted empirical research to shed light on best practices of non-profit and for-profit business that suggest which form hybrid businesses can take to maximize stewardship and sustainability. In an invited paper, Roland Hoksbergen, an expert on civil society and economic development, discusses the place of these three papers within the larger context of historical trends in organizational hybridization.
A second section of this special issue focuses in on one sub-category of organizational hybridization: Business as Mission. Three invited authors respond to each other from their different disciplinary and theological perspectives. They raise and debate the question: Is Business as Mission a new field with great potential for Christian scholarship?
It is our hope at JBIB that our contributions in this issue will clarify the opportunities and issues of organizational hybridization and their implications for business practice, research, and pedagogy.
REFERENCES
Dees, J. G. (2001). The definition of “social entrepreneurship.” Kansas City, MO: Kauffman Center for Entrepreneurial Leadership.
Gumport, P. J. (2002). Universities and Knowledge: Restructuring the City of Intellect. In Brint, S. (Ed.), The Future of the City of Intellect (pp. 47-81). Stanford: Stanford University Press.
Greene, A. E. (1998). Reclaiming the Future of Christian Education. Colorado Springs: Association of Christian Schools International.
Johnson, B. (1996). Polarity Management: Identifying and Managing Unsolvable Problems. Amherst, MA: HRD Press.
Johnson, N. (2009). Business as Mission: A Comprehensive Guide to Theory and Practice. Downers Grove, IL: InterVarsity Press.
Strom, S. (2007, May 3). Businesses Try to Make Money and Save the World. New York Times, Retrieved November 30, 2009 from http//www.nytimes.com
ABOUT THE AUTHOR
Margaret Edgell is Associate Professor of Business at Calvin College, currently on leave in Seattle. Her research interests include how higher education is financed and how business students grow in Christ. Her recent book with Johan Hegeman and Henk Jochemsen is Practice and Profile: Christian Formation for Vocation.11
PEER-REVIEWED ARTICLES
BLURRING THE BOUNDARIES: EMERGING LEGAL FORMS FOR HYBRID ORGANIZATIONS
IMPLICATIONS FOR CHRISTIAN SOCIAL ENTREPRENEURS
Teresa Gillespie and Timothy Lucas Northwest University
ABSTRACT
Hybrid social enterprise organizations, which combine profit and social goals, are one of the emerging trends in the business world. Christians are also using new forms to pursue ministry. This article explores the legal and practical limitations of combining social mission with profit generation in the same organizational structure. This article also addresses some of the broader implications of this trend, especially for Christian social ventures.
INTRODUCTION
Until recently, there were only two basic structural choices for an organization: profit or nonprofit. An entity with a charitable social focus would be established as a foundation, nonprofit corporation, or trust. An entity with a product or service to sell would select a for-profit form, perhaps a corporation or limited liability company.1 But traditional differences between business and charity are eroding. The division between a profit and nonprofit organization is no longer sharp and clear. We now have revenue-generating businesses directing profits to social causes, such as Tom’s Shoes, which donates one pair of shoes for every pair sold, with over 1 million shoes given away (Toms, 2011). There are also nonprofit organizations using for-profit business models to supplement their revenue streams, such as Northwest Center, a nonprofit in the Seattle area providing training and support to the disabled. The Center operates a number of businesses services, such as assembly, packaging, document shredding and a commercial laundry, that employ disabled clients and also helps fund the operation (Northwest Center, 2011).
For much of American history, philanthropy was considered the “third sector” of society alongside government and business. As Thomas Billitteri (2007) and others have noted, we may now be seeing an emerging “fourth sector” of social enterprise organizations. These hybrids combine charitable mission, corporate methods 12
and social awareness in unprecedented ways, transcending traditional business and charitable models (Billitteri, 2007, p. 2). The reasons for the emergence of these hybrids are varied, but include recognition that charities can benefit from market efficiencies, the spread of free-market capitalism and its values of entrepreneurship, innovation and self-reliance. Factors supporting the growth of hybrid organizations include globalization with greater access and increased awareness of needs, expanding market opportunities as a result of new technology, and disillusion with the obsession of greed and resulting ethical failures in the traditional business environment.
In his seminal article, “The Meaning of Social Entrepreneurship,” J. Gregory Dees (2001) noted that while entrepreneurial solutions to social problems are not an entirely new phenomenon, what has changed is a “blurring of sector boundaries.”
The time is certainly ripe for entrepreneurial approaches to social problems. Many governmental and philanthropic efforts have fallen far short of our expectations. Major social sector institutions are often viewed as inefficient, ineffective and unresponsive. Social entrepreneurs are needed to develop new models for a new century (Dees, p.1, 2001).
If form follows function, we will need new organizational structures for these new hybrids. Or, to use an analogy from the Gospels, we need new wineskins to hold new wine (Matthew 9:17). To provide a context for this discussion, let us consider the mission of several social entrepreneurs in the Seattle area and review how their organizational structure is working for them.
Vision House provides transitional housing with integrated support services to homeless single mothers and their children and separately to homeless single men recovering from drug and alcohol addiction. The founder and executive director started Vision House as a nonprofit after seeing a documentary on America’s homeless children. The initial funding was through government grants and is the primary reason for the nonprofit status (Lucas, 2011).
As initial funding expired, the executive director realized the difficulty of sustaining an entity solely reliant on donations and grants and, as a result, created separate Limited Liability Company (LLC) entities that support the nonprofit. One is a local, upscale daycare facility that includes both underprivileged children of mothers supported by the nonprofit, and children of revenue-paying families from the local community. Another LLC is a plumbing business that was created to offset one of the largest operating costs, i.e., plumbing repairs for the transitional housing facilities, as well as to provide training and jobs for some of the homeless single men. The LLCs were created to allow for business revenue without jeopardizing the legal nonprofit status, and as a means to offset dependency on donations and grants (Lucas, 2011).
Operation Military Family is a nonprofit founded to support military families. The founder is a former member of the military who recognized that there was an unmet need to address the unique challenges faced by couples serving in the armed services. He also identified the detrimental impact of high divorce rates on the military as an organization. As a result, he formed a nonprofit and created seminars and workshops aimed at providing assistance to military couples. The nonprofit accepts federal grant monies and private donations to support its services. The founder created a separate sole proprietorship to generate additional revenue removed from the nonprofit organization. This includes revenues from book sales and workshops in addition to public speaking fees. The founder finds the nonprofit structure, specifically the myriad regulations, reports, restrictions and fees inherent in the nonprofit structure, to be burdensome (Lucas, 2011).
Vox Legal is a virtual legal firm that also earns the distinction of having earned a certified “Benefit Corporation” designation (or “B Corp,” described more fully later in this paper). The founder pursued the certification process to help 13
with branding, as its target clients are social entrepreneurs, but also to help with his own internal decision-making. One area of expertise is advising clients about the various corporate structure options, particularly the B Corp and L3C options. One concern the founder had about the B Corp certification process is how applicable it was to a sole proprietor business and whether the certification process was stringent enough. There is a risk that companies will pursue certification primarily for marketing purposes (Lucas, 2011).
Cedar Park Church in Bothell, Washington, is organized as a traditional nonprofit, but has created several Limited Liability Companies to further support the church ministries. Separate entities within the domain of the larger nonprofit include a mechanics shop, a funeral home and an embryo adoption services organization. Each is a distinct LLC within the domain of the church. The pastor believes that work and business are honorable activities for Christians, as opposed to early Greek and Roman traditions where slaves performed work. He also believes the church should not rely solely on tithing. The reason the entities were created under separate corporate structures was to protect the nonprofit status of the church and not dilute church infrastructure (Lucas, 2011).
For each of these organizations, the legal structure is not a perfect fit. Three of the organizations operate a nonprofit entity for their mission side and a for-profit (sole proprietorship or LLC) for their revenue-generation side. Keeping the models separate in a single organization requires careful attention to the IRS regulatory process, state corporate law requirements and coordination between the two, as well as separate books, accounting systems and boards. Can a legal form be designed that would allow the social mission and revenue stream to reside in the same organization? Is the B Corp certification process the answer or is it marketing hype? Before addressing these questions, it will be useful to clarify terms and consider why the traditional forms are problematic for social hybrids.
DEFINITIONS
The founders of these organizations do not necessarily describe themselves as social entrepreneurs nor see themselves as engaging in Business as Mission. However, it is clear that in their passion for solving a social need and focusing on sustainability, they do not fit neatly into the “either or” categories of nonprofit and profit organizations. They are clearly hybrids, but do they need a separate label? Further, is there a difference between a social venture or enterprise, social entrepreneurship and Business as Mission?
One problem in this emerging field of hybrids is a lack of an agreed upon definition (Lucas, 2010). Martin and Osberg (2007) note that “Social Entrepreneurship is attracting growing amounts of talent, money and attention. But along with its increasing popularity has come less certainty about what exactly a social entrepreneur is and does” (p. 29).
Neal Johnson (2009), in his comprehensive text, Business as Mission, also acknowledges the definitional challenge: “It is difficult to define exactly what BAM (Business as Mission) means… [and] few really understand how to do it” (p. 27).
Ashoka, a leading association promoting the field of social entrepreneurship, defines the role on their front webpage as “men and women with system-changing solutions for the world’s most urgent social problems” (2011). The Skoll Foundation, another influential organization in this new field, identifies social entrepreneurs as “society’s change agents: creators of innovations that disrupt the status quo and transform our world for the better” (2011).
While there is not complete agreement on the definition of these developing hybrids, we take the position that there are significant distinctions between social enterprise, social entrepreneurship and Business as Mission. We use these definitions:
Social enterprise is a for-profit organization that implements its mission to address a social need through a business format, regardless of its legal structure. The business model need not be original, innovative or unique (Lucas, 2010, p.5).
PEER-REVIEWED ARTICLES 14
Social entrepreneurship is a revenue generating, innovative and unique approach to solving a social problem where profits are reinvested in the mission regardless of the distinction between nonprofit or commercial enterprise (Lucas, 2010, p. 5).
Business as Mission is a for-profit commercial business venture that is Christian-led, intentionally devoted to being used as an instrument of God’s mission to the world and is operated in a cross-cultural environment, either domestic or international. (Johnson, 2009, pp. 27-28).2
As the chart below demonstrates, social enterprise, social entrepreneurship and Business as Mission all share the common blend of social mission and revenue-generation. However, they differ in several significant ways. Social enterprise and Business as Mission almost always use a for-profit business form. Social entrepreneurship is the most flexible as it can use a for-profit or non-profit format. (Revenue generation in the non-profit form means that any profits are returned to the organization). Business as Mission can overlap with social entrepreneurship if it employs an innovative approach.
The differences can be illustrated in a visual form as follows:
Chart 1 Social Enterprise Forms
Of the three, social enterprise is the broadest concept. Social entrepreneurship is less broad as it requires innovation. Business as Mission is much more exclusive. The terms overlap, however. Business as Mission is a form of social enterprise and, if it is also innovative, would also be considered social entrepreneurship.
Table 1 Definitions Chart Social Enterprise
Social Entrepreneur
Business as Mission
Social Mission
X
X
X
Revenue Generator
X
X
X
Innovative
X
Intentional Christian
X
Cross-cultural
X
0 comments:
Post a Comment