The economic rationale behind the social business model: a research agenda

Alejandro Agafonow, Cam Donaldson

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This article's purpose is to set out the economic rationale that underpins social businesses, engaging in a research agenda's conceptual development on hybrid firm ecosystems. A different form of business is needed to prevent dividend-distributing companies from abusing the market power allowed by barriers that keep competitors away at the expense of the poor. Thus, bottomup development strategies have limits if solely based on dividend-distributing companies. An alternative is offered by social businesses, but these are difficult to theorise within the constraints of Pareto optimality (Pareto, 1971). In exploring alternatives to the latter, this article posits that, despite shortcomings, there are neoclassical contributions that provide a basis for researching social businesses, which can be understood and modelled as companies maximising worst off customers' well-being. [ABSTRACT FROM AUTHOR]
Original languageEnglish
Pages (from-to)5-16
Number of pages12
JournalSocial Business
Issue number1
Publication statusPublished - 1 Mar 2015


  • bottom of the pyramid
  • development
  • hybrid firms
  • muhammad yunus
  • pareto optimality
  • social business


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