Why Business May Lead Social Innovation in China

I have been traveling quite a bit recently, and one of the things that have become much clearer to me is that social innovation really does take different forms in different countries. This is something I have always thought was true, but the more I meet and talk with people from around the world, the more certain I am that this is the case.

One of the ways that these differences manifest themselves is in the types of organizations that people use to foster social innovation. In the United States and much of Europe, nonprofit and philanthropic organizations have been the primary vehicles for social innovation. But in other parts of the world, for-profit businesses are either leading or likely to lead the way.

In March, I was in Beijing to participate in a conference on philanthropy put on by Stanford Social Innovation Review’s parent organization, the Stanford Center on Philanthropy and Civil Society, and the publisher of SSIR China, Leping Social Entrepreneur Foundation. This is my third trip to Beijing in as many years to attend this gathering, and one of the striking things is the large number of people from business attending, many more than one would see at a philanthropy event in the United States.

Some of the business people attending the gathering, which this year was titled “Blurring of the Boundaries,” were there because they wanted to learn more about philanthropy. But many more were there because they wanted to learn how the business they worked at or led could be a force for social good. The reason for this is that in China, businesses are more likely than nonprofits to take the lead in fostering social innovation.

One of the main reasons for this is that it is much easier to start and operate a business in China than it is to start and operate a nonprofit. The Chinese government has shown for the last few decades that it is comfortable with capitalism and has given businesses fairly wide latitude in which to operate.

The same cannot be said for nonprofits and philanthropy, which operate under laws that restrict what types of activities they can engage in and how they can raise money. The government would like these organizations to provide some of the social services that are desperately needed—such as health care and education for the rural poor—but it does not want them to give rise to social movements or a vibrant civil society that operates outside the control of the government.

China is home, however, to numerous social businesses, including seven B Corps, with many others undergoing the certification process. One B Corp is People’s Architecture Office, a business I visited that is located in one of the older districts (hutongs) in the center of Beijing. The firm takes on big projects to pay the bills but has also developed creative and inexpensive ways of retrofitting the older homes in the hutongs, where many of Beijing’s elderly and low income residents live. I expect to see many other mission-driven firms like this emerge in China.

Read more stories by Eric Nee.