Sustainable Promises? The Evolution of Business Models Founded on the Promise of Corporate Social Responsibility: An Abstract
Most consumers look favorably on companies that promise to do good (Kelleher 2007), that is, companies with an explicit statement of supporting a social cause, for example, engaging in charitable donations or environmental stewardship. In 2000, Carroll predicted that businesses would focus on aligning their philanthropic interests with their economic mandates, allowing both to be achieved at the same time. Carroll (2000, p. 37) referred to these efforts as “strategic philanthropy.” While Carroll did not go so far as to predict the development of a new business model based on philanthropy, his description of strategic philanthropy seems to have been a harbinger of this movement. The purpose of this research is to conduct an investigation into the long-term sustainability of one of the newest classes of business models, one that integrates social enterprise into traditional for-profit business. TOMS Shoes, for example, promises to donate one pair of shoes for every pair of shoes purchased. This study investigates the history and evolution of three businesses founded on an integration of social enterprise and traditional for-profit models: TOMS Shoes, Warby Parker, and Ten Tree. We traced the evolution of the social promise at the core of each of these businesses—all variations of the buy-one-give-one promise. Our objective was to examine whether businesses founded on promises of charitable donations in exchange for purchases are in fact profitable and sustainable in the long-run, or whether the high costs associated with the donations, along with the appropriateness of the social interventions, require adaptation and down-scaling of the promises to be sustainable as the businesses grow over time. Our research revealed that companies founded on a for-profit, social enterprise business model adapt their promise of social responsibility as the company grows and matures. Throughout their histories, these companies have expressly promoted their promises to good, something which resulted in positive media coverage and set the foundation for building goodwill with customers and a positive brand image. This also created expectations of continued social responsibility in the future. When companies are so vocal about their corporate ethics, and then are faced with the need to change their promises, they would perhaps be better served by being as open about the reasons for changing as they were about making the promise in the first place.