Social business definition

Muhammad Yunus

Social businesses are designed to use market mechanisms to solve social challenges

With the idea of social business, Prof. Muhammad Yunus has introduced a new dimension for capitalism: a business model that does not strive to maximize profits but rather to serve humanity’s most pressing needs. Although the social business is pioneering in its aims, it is traditional in its management.

Its workforce is professional and paid according to market wages. In every sense the social business is sustainable: in its direct environmental impact, its impact down the value chain, and critically, in its financial independence. This is a key difference between social business and charity. Once its initial investment is repaid, the social business aims to be financially self-sustaining, giving it the independence and security to focus its efforts on the long-term improvement of the lives of the disadvantaged.


Social business follows 7 principles, which serve as its defining elements:

  1. Business objective is to use market mechanisms to address problems which threaten people and society (e.g. education, health, technology access, environment, etc.)
  2. The business is supported by its stakeholders
  3. The business must achieve financial and economic sustainability
  4. Investors get back their fair share of investment while the society benefits from positive externalities created by the business
  5. The business is environmentally conscious.
  6. Workforce gets market wage with better working conditions.
  7. …do it with joy.