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Social sustainability via socially responsible corporate behavior is currently gaining attention, particularly with the emergence of small businesses with distinct missions to act as agents of social change. The aim of social sustainability is to create, maintain, and enhance the quality of life for current and future generations (McKenzie, 2004). Specifically, social sustainability involves protecting the mental and physical health of all stakeholders, ensuring their equitable access to key services, such as education, transport, housing, etc., and facilitating their participation in socially meaningful community activities. In this paper, we examine the social enterprise model that takes social responsibility to the core of its profit engine.

We refer to such a model as profit-seeking social enterprise (PSSE) and visit unique aspects of this model that are different from general for-profit organizations and non-profit social enterprises. We identify four distinct characteristics of PSSE, which include (1) addressing social issues as the core of its profit model; (2) building community activities and involvement into a business model; (3) network-based marketing and advertising activities; (4) being a role model. In so doing, we analyze TOMS Shoes as an exemplar case to illustrate components of PSSE.

The most widely adopted definition of sustainable development is the one set forth by UNCED (United Nations Conference on Environment and Development), which indicates conscious development that meets the needs of the present without compromising the ability of future generations to meet their own (Partridge, 2005). Sustainable development concerns three distinct, yet related, domains: eco-system, economic system, and social system.A development that ensures the healthy continuation of ecological systems for the future is referred to as environment sustainability; economic sustainability is related to growth, development, and productivity of an economic system, in that an economic system would support present consumption without sacrificing future needs;social sustainability is about preserving social capitalfor the future (Basiago, 1998).

Corporations that are conscious of sustainable development have recognized these multiple dimensions of sustainability and have attempted to incorporate multiple values of sustainability in their business strategies (DyllickandHockerts, 2002; Ketola, 2008). Still yet, much of the strategic efforts have been focused on achieving environmental sustainability and economic sustainability, specifically in the context of implementing green productionand marketing, and understanding the revenue generating value of sustainable development for the firm’s bottom line (Choi and Ng, 2011). Comparatively,little attention has been paid to the concept of social sustainability and the ways businesses can achieve it. This may be because the concept of social sustainability is relatively new and it has been recently acknowledged (Partridge, 2005). It may also be because the discussion on social sustainability is not easy, given that the context of “social” implies many issues, which are difficult to define(McKenzie, 2004).

McKenzie is one of the few who offered definitional clarification on social sustainability. According to him, social sustainability concerns sustainable development promoting “a life-enhancing condition within communities, and a process within communities that can achieve that condition” which includes the access to key services ¾ equity between generations, a system of cultural relations, and a sense of community responsibility (p. 12). Western Australia Council of Social Services (WACOSS) also proposed the concept of social sustainability: it is to promote “the formal and informal processes, systems, structures and relationships actively support[ing] the capacity of current and future generations to create healthy and livable communities. Socially sustainable communities are equitable, diverse, connected and democratic and provide good quality of life” (p. 4). Both McKenzie and WACOSS’s definitions involve the concepts of equity, cultures, relations, community, and quality of life. Based on these definitions, we refer to social sustainability as maintaining and enhancing the well-being and quality of life for current and future generations in terms of the mental and physical health of all stakeholders, and ensuring equitable access to key services, and facilitating their participation in socially meaningful community activities.

Traditionally, a corporate strategy addressing social sustainability has been peripheral, typically carried out in the context of a donation model or as a part of marketing strategies. For example, a company develops a specific brand line where the portion of profits goes to support a charitable organization for underprivileged populations or social causes, encourages employees to donate their time for community involvement, and/orsponsors events to increase awareness of social issues which need to be addressedfor the future generation. In terms of managerial implications,the concept of social sustainability has been most significantly applied to a firm’shuman resource management. One way that businesses can achieve social sustainability is to support employees by providing better working conditions, education and training, and equity. These efforts can contribute to social sustainability as they enhance health and safety through decreased accident or injury while increasing well-being (von Geibler et al., 2006; Tanzil and Beloff, 2006). As a result, a company can attract and retain better employees (Jenkins, 2004; Battacharya et al., 2008) and improve organizational culture (Loucks, 2010). Some research also examined how practicing social responsibility, particularly in the context of exercising a fair labor relationship and supply chain management, would affecta company’s reputation and profitability (Hoivikand Shankar, 2011).

Businesses can also attain sustainable development by encouraging customers to practice sustainable acts and change their behavior. Porritt (1998) and Robinson(2004) emphasize that sustainability is a process as much as it is a concept, and people should be involved in order to achieve sustainable development. Through participatory practices, a business can encourage people to practice sustainable consumption. Carrigan (2011), for example, discusses how responsible small businesses can influence customers and change their behavior to support environmental change in society. There are also quite a few B-to-C business models whose main competitive advantage is its environmentally conscious way of doing business. It is noted, however, that discussions around B-to-C profit models whose missionsare to achieve social sustainability are relatively scant. Rather, business activities promoting people’s support of social issues are mostly related to the domain of social entrepreneurship, the concept we discuss below.

Based on the discussions of Dees (1998) and Sullivan Mort et al. (2003), Marshall (2011) defines social entrepreneurship as entrepreneur activities that recognize and pursue opportunities to create social value through continuous engagement in innovation and actions taken without accepting perceived extant resource limitations.In defining entrepreneurial activities that characterize social entrepreneurship, the most critical factor is whether its mission and goals are to explicitly address social issues and create social value (Dees, 1998b; Sullivan Mort, Weerawardena, and Carnegie, 2003). For example, Dees (1998) argued that the primary goal of social entrepreneur activities is to create superior social value for the stakeholders, as opposed to maximizing profit. Some researchers went so far as to advocate social entrepreneurship as a partial solution to the need for radical welfare reform to meet social demands that are led by enterprising people (Thompson, 2002). Particularly with diminishing public funding, Johnson (2000) put forth that “social entrepreneurship is emerging as an innovative approach for dealing with complex social need” (p.1).

In terms of organizational forms, social entrepreneurship can be manifested either as a for-profit enterprise, a non-profit enterprise, and the hybrid of the two. It is noted, however, that the notion of social enterprise has often been associated with the latter two and that there are still some debates as to what specific forms of for-profit enterprise can be considered as social enterprise. For example, Cook, Dodds, and Mitchell (2001) argue that enterprises that carry out for-profit activity to support other nonprofit activities can be viewed as social entrepreneurs. Others have argued that for-profits that may take some innovative action towards building social capital can be considered as being socially entrepreneurial (Thompson, Alvy, and Lees, 2000). Thompson (2002) tried to offer some definitional clarification to what constitutes social enterprise. Specifically, he proposed three different models of social enterprise. The first model is when profit-seeking businesses have some commitment to help society and conserve the environment with their business strategies and through financial donations. That is, while the core mission and goal of these organizations are to carry out for-profit activities, they may take some actions toward building social capital. The Body Shop can be a good example of this form. With their belief that their business has the power to make a difference to the world, they are involved in activities that raise awareness and funding for women suffering from domestic violence. They also engage in social campaigns to increase the awareness and prevention of HIV and AIDS among young people by working with MTV Networks International. The second model of social entrepreneurship is social enterprises whose main goal is to address a social cause with little or no consideration of generating profit. Computer Aid International is a good example of a social enterprise. The organization refurbishes and tests used computers donated by UK companies and distributes them to education, health, agricultural, and non-profit organizations in under-developed countries. By charging minimal costs to the recipient for a small handling fee, it empowers organizations in less developed parts of the world to increase the work efficiency through affordable computing. Computer Aid has grown from a small charity to the largest supplier of recycled computers globally. The third model is the voluntary form where an organization relies on voluntary donations of money and time from people who believe in the goals and missions of the organization.Streetshine in London provides opportunities for people who are homeless or unemployed to earn a regular incomeand re-establish their lives by running a shoeshine service for office workers. They provide training in shoe repair, leather care, and customer service for free. After the training, the company recruits from these people or helps themfind jobs so they can earn wages.

This paper expands the understanding of a self-sustaining, profit-seeking social enterprise, which we will refer to as PSSE, whose business orientation is to generate profit with the goal of addressing social issues. Different forms of organizations may display different behavioral and operational characteristics in their responses to the environment. While few studies have discussed the definitional characteristics of for-profit social enterprise, little has been discussed about the way PSSE engages in business activities that are different from a typical for-profit enterprise. In understanding these characteristics, we pay close attention to the manners in which PSSE engages with consumers to build brand recognition and generate profits.

As illustrated in Figure 1, we focus onfouraspects of the behavioral and operational characteristics that are unique to the PSSE model. First, PSSE addresses social issues as the core of its profit model. Scholars have recognized the for-profit enterprise model whose profit-seeking commercial exchanges are directly related to supporting social causes (Murphy and Coombes, 2009; PeredoandMcClean, 2006; Weerawardenand Mort, 2006). While academic attention to this enterprise model has been comparatively scarce, Peredo and McLean (2006) argued that the social mission and commercial exchange can coexist as long as an organization maintains the social mission as a primary objective of this operation. Marshall (2011) points to that “the paucity of research to consider for-profit SE may be due to the perceived incongruence between for- profit status and social mission primacy” (p. 98).

Second, PSSE builds community activities and involvement into a business model. Social enterprises need to include diverse stakeholders with strong social aims and social values. Also, there is commitment to support the community for positive social impact, and social enterprises need to be directly involved in either production or providing services (Shaw et al., 2007).When customers feel good about themselves after meaningful consumption that contributed to help someone, they like to share their experience with those people who make a community that shares the same norms and values. This characteristic can be achieved through the existence of social capital in businesses. Unlike physical capital, human capital is able to connect people by having social networks, trustworthiness, and the same norms (Putnam, 2000). In addition, existence of community as a social network helps businesses deliver their objectives more efficiently (Ardichvili, 2003). In order to continue growth of the community, the company will need to provide higher levels of organizational visibility (Lepoutre, 2006). By doing that, a company can build trust and mutual reciprocity allowing for more opportunities to capitalize on the benefits of being socially responsible.

Third, the main channel of brand promotion for PSSE is network-based marketing and advertising activities. Dahle’n et al. (2009) discusses nontraditional media advertising enhancing consumer-perceived value. They argued that non-traditional media can create positive emotions, but this is dependent on its form. That is, while non-traditional media can be a good strategy for advertising, the form needs to be well chosen and delivered to customers. Building and spreading storytelling can be an effective form of non-traditional advertising. Guber (2011) argued that storytelling takes an essential role in persuading consumers and enabling consumers to connect with a company, and eventually win in business. Also, he suggested that good storytelling “is a dialogue, not a monologue” (p. 203). His view of storytelling about dialogue could make a connection between non-conventional advertising and social networks.

Forth, the entrepreneur of PSSE is innovative, open-minded, and a role model who inspires others to pursue the values of PSSE. Social entrepreneurs are people who solve social problems by way of generating value from business opportunities (Borstein, 2004). Ashoka, the organization promoting social entrepreneurship, offered a more detailed definition that social entrepreneurs are individuals “with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change” (Ashoka Organization, 2007). In addition, they operate in the community and are more concerned with caring and helping than with making money. Nga and Shamuganathan (2010) also identified a set of personality characteristics of social entrepreneurs related to the performance of social entrepreneurship, which include agreeableness and openness. In addition, several studies have emphasized the role of innovation, proactiveness, and risk taking as being central to social entrepreneurship (Borins, 2000; Sullivan Mort et al., 2003). Specifically, Sullivan Mort et al. (2003) lay out four characteristics of social entrepreneurs, which include “the virtuousness of their mission to create better social value; unity of purpose and action in the face of complexity; an ability to recognize opportunities to create better social value for their clients; and their propensity for risk-taking, proactiveness and innovativeness in decisionmaking’’ (p. 82). In the next section, we use TOMS as an exemplar case to illustrate specific ways that PSSE can accomplish these goals.

Figure 1 Characteristics of Profit-Seeking Social Enterprise (PSSE) Model

Founded by Blake Mycoskie in 2006, TOMS Shoes is a company known for its unique One for One model¾ providing a new pair of shoes to a child in need in an underdeveloped country for every pair purchased. While TOMS Shoes is a for-profit organization, social responsibility defines its entire brand identity, product offerings, and operations. Specifically, the company demonstrates the core of social sustainability by upholding the concept of “doing well by doing good.” TOMS Shoes also has unique and innovative ways of gaining brand recognition and achieving financial success. While still small in size, TOMS Shoes has been successful financially and has set a small trend for social entrepreneurship. By providing in-depth analysis of this business model, we argue that successful execution of PSSE can create a powerful brand identity that propagates its aspiration toward social sustainability. Such a brand identity can leave behind a legacy that not only influences the behavior of the customers but also perpetuates its capacity to bring about change in a society.

While a relatively new phenomenon compared to environmental and economic sustainability, social sustainability is gaining attention, particularly with the emergence of small businesses with distinct missions to act as agents of social change. We examine a for-profit business that takes social sustainability to the core of its profit model. We refer to such a model as profit- seeking social enterprise (PSSE) and identify operational characteristics of PSSE. Using TOMS Shoes as a case study, we discuss how PSSE can achieve financial success and at the same timefoster socially conscious consumer consumption.

It is important to note, however, some of the criticisms and ethical issues facing the TOMS business model, or more generally the non-cash donation of the OneforOne model. The most significant concern with this model is the potential to create dependency. It has been argued that some types of aid do not allow countries to develop themselves in order to address their own issues,which creates dependency on aid in the future. Before TOMS, Christian NGO World Vision had a charity program distributing shoes to children in developing countries for Christmas gifts. When an informal interview was conducted to evaluate the value of this donation, an unexpected finding was reported that it created a certain tendency on the part of the recipient. That is, people who had received free shoes did not want to buy their children shoes because one day World Vision would come back and give free shoes to the children again. They even blamed their children’s lack of new shoes on the organization because World Vision had not distributed new shoes for free yet again. To address this issue, a better model may be that, as opposed to simply giving away goods that people need, organizations may sell goods at prices that people in developing countries can afford and allocate part of the budget to educating local people on the value of having the goods offered (Mason, 2010). Some also argue that the OneforOne campaign created dependency as this model may curtail the opportunity for local businesses to develop. For example, while TOMS distributes their shoes through local partners, their shoes are manufactured, assembled, and shipped from overseas. Such operations can destroy or delay a chance for local industries to develop and produce needed goods of their own (The BYU Political Review, 2011). The Onefor One campaign can be more effective if products are manufactured, assembled, and distributed locally as it can create local jobs as well as empowerment of local merchants (Good Intentions, 2010).

Even with these concerns, TOMS Shoes was recognized as one of the most innovative companies in 2010 by Fast Company. With its OneforOne model and unique operational strategies, TOMS Shoes successfully gains brand recognition, social awareness, and role model status for those pursuing PSSE. By analyzing its business model, we highlight that organizations with socially responsible brand identities can achieve commercial successes as well as social sustainability. Furthermore, we shed light on ways in which social entrepreneurship can plant and grow the seeds of behavioral change toward social sustainability for generations to come and how consumers can join forces to build a more sustainable mode of life.

Creating shared value