Kelli Levey Reynolds, Texas A&M University Mays Business School
As the world grapples with complex challenges such as climate change, poverty, and human rights issues, organizations are uniquely positioned to drive positive change. A new study recently published in the Journal of Marketing explores how companies can simultaneously generate profit and foster societal well-being.
The research has been led by Mays Business School Professor Leonard L. Berry, with researchers from Monash Business School (Australia); Tobin College of Business, St. John's University; Gabelli School of Business, Fordham University; and NHH Norwegian School of Economics. The study examines the benefits of adopting a social profit orientation to benefit both the organization and society. This approach encourages organizations to invest resources purposefully to enhance the common good.
The study, based on 62 in-depth executive interviews across 21 organizations worldwide, reveals the significant benefits of embracing a social profit orientation. These organizations develop new approaches and strategies that address critical problems, thereby driving business innovation and improving societal outcomes.
“The life-quality challenges of modern society — climate change, poverty, hunger and homelessness, wars, pandemics and more — alter what society needs from corporations and other organizations,” Berry said. “Generating financial profits, noble and important, is no longer enough. Society needs organizations to invest their skills and resources to also create social profits through initiatives that specifically enhance the well-being of people and/or the planet.”
What is Social Profit Orientation?
Social Profit Orientation is an organization-wide perspective in which organizations embrace in their core mission the creation of sustainable, positive social and environmental impacts on individuals, communities, and society at large. Organizations with this orientation proactively invest resources such as knowledge, infrastructure, labor, reputation, money and time to enhance the common good, especially improving the well-being of people and safeguarding the health of the planet. It reflects a deliberate, conscious effort to address systemic social or environmental challenges, rather than being merely a by-product of making financial profits.
Examples from the Study
Oportun tackles financial exclusion by providing affordable credit to underserved communities, offering an alternative to payday lenders. With significant investments in technology, Oportun has successfully issued millions of loans, enabling its customers to avoid exorbitant interest rates and fees. CEO Raul Vazquez highlights the challenge: “50% of customers who come to us have no FICO [credit] score, and other folks we serve may have a score based on limited history.” Despite these obstacles, Oportun has managed to provide more than $18.2 billion in credit by year-end 2023, saving its customers $2.4 billion in interest and fees.
Gundersen Health System (renamed Emplify Health) exemplifies how a holistic approach to sustainability can be woven into the fabric of an organization. Under the leadership of Dr. Jeff Thompson, Gundersen became the first U.S. health system to offset 100% of its fossil-fuel use with self-produced energy. Their initiatives include harnessing solar and wind power and transforming landfill biogas into electricity and heat. Dr. Thompson remarks, “We are not just a ‘fix-it’ shop. Our mindset was: how do we protect the environment so it is a part of how we work, how we live, and how we work with our communities.”
By adopting a social profit orientation, organizations not only drive meaningful societal impact but also experience enhanced legitimacy, stronger stakeholder relationships, improved employee engagement, and increased innovation. These benefits contribute to long-term business success and sustainability.
Best Practices for Building a Social Profit Orientation
- Align employee and organizational values to create a unified mission.
- Ensure organizational resources and governance structures maximize societal benefits.
- Inspire executive and board leadership to deeply commit to social profit goals.
- Make informed investment decisions that focus on initiatives with the greatest social impact.
- Measure and evaluate social impact rigorously to ensure meaningful contributions.
- Foster external partnerships and communicate purpose through compelling storytelling.
“Organizations today are at a crossroads where they can choose to be mere profit-generating entities or become catalysts for global change. Our study shows that the most profitable strategy might also be the one that makes the world a better place. By embracing a social profit orientation, organizations can lead their sectors, drive innovation, and make significant societal impacts,” said Lerzan Aksoy, dean at Fordham University’s Gabelli School of Business.
By Texas A&M University Mays Business School
