Inclusive business vs corporate social responsibility

Last week, I shared with you the concept of inclusive business (IB) which many corporations integrate in their business models. As mentioned, big corporations venture into inclusive business by forging partnerships and collaborations with micro and small corporations by providing affordable goods and services to the base of the pyramid (BOP) by making them suppliers, distributors, retailers and customers. Aside from achieving the company’s goals, they also address socially relevant issues such as poverty, unemployment and community development.

But how are these different from corporate social responsibility? Unlike CSR which are not related to the companies’ goals, inclusive businesses aim to empower microentrepreneurs by forging value-chain collaborations and providing technology and innovations that would further help these microentrepreneurs increase profitability, productivity and competitiveness. CSR are also considered as “add-ons” to the company’s activity. These are usually organized by the company’s foundation or human resource department.

As Markus Dietrich and Armin Bauer shared in their study entitled The Inclusive Business Market in the Philippines (September 2013), “IB differs from CSR, social enterprise, impact investments, microfinance… through its business scale, growth potential and focus on systematic change for poor people.” The key in this is system is the creation of shared value for both the corporations and microentrepreneurs.

Here are more examples of inclusive businesses in the Philippines:

Nestle’s Nescafe is also known for its programs for farmers. One of their programs is the Farmer Connect which is a direct buying system that enables small farmers to sell their coffee produce directly to Nescafe. Nescafe opened buying stations in different provinces in the country. Today, 30 percent of the Robusta coffee needed by Nescafe are outsourced from local farmers.

Water supplier, Manila Water also taps low-income communities in Manila to gain potable water at a much lower cost compared to the usual price of water. Its Tubig Para sa Barangay program enables consumers to have access to clean water.

Coca-Cola also committed to empower their sari-sari store retailers in the country through its Sari-sari Store Training and Access to Resources (STAR) program which is in partnership with TESDA. This program provides women microentrepreneurs access to training, resources, and financing.

On the other side of inclusive business, one of Go Negosyo’s 2016 Inspiring Filipina Entrepreneurs Lydia Malot is a microentrepreneur from Davao who supplies nata de coco to many international canned-fruit companies. Her small enterprise produces tons of nata de coco regularly for companies from Korea, Singapore, Malaysia, Thailand and many more. She is part of the corporations’ inclusive business as she acts as a supplier of one of their key ingredients.

Companies such as Coffee for Peace, MCPI and Coco Technologies are also some of the inclusive businesses mentioned by Dietrich and Bauer in their study. These companies in the agribusiness sector source products from small farmers and fishermen. Under a contract growing scheme or other arrangements, they employ the farmers and fishermen to produce coffee beans, seaweeds and coco fiber.

There are a lot of viable inclusive business models in the country. But there are still a lot of improvements that need to be implemented. First and foremost is to address the limited knowledge and understanding of the public and private entities about inclusive business. Yes, the country poses a large potential for IB as there are many companies that need supplies from micro and small entrepreneurs or their need to distribute their products through them as well.

We at Go Negosyo continue to share the concept of inclusive business to our entrepreneur community. If all the big corporations consciously apply the IB model, low-income communities in the country will be given opportunities for growth and development. 

So more than doing philanthropic activities and other CSR programs, going the inclusive business way helps in a more sustained pace.  Through this, we provide a more sustainable support for the community with long-term effect. 

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We recently joined the Philippine Franchise Association’s (PFA) Franchising Negosyo Seminar and Expo in Davao City. Hundreds of Davaoeños actively participated in the fora provided as we shared how they can succeed in a franchised negosyo, banking on tried and tested business concepts. Go Negosyo executive director Mon Lopez joined the PFA leaders like Chairman Samie Lim, Bing Limjoco, Alan Escalona, Franklin Go, Richard Sanz, Chit Estrada, Lin Deres among others.

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Good news to Go Negosyantes! As part of Go Negosyo’s mission of bringing enterprising mindset and know-how to all Filipinos, we conducted the Go Negosyo Mentor Me program, this time in Calapan City in Oriental Mindoro yesterday. We brought in “Go Negosyo angelpreneurs Ardy Roberto to discuss Entrepreneur Mindset and Values Formation; Henry Tenedero for Marketing; and Vix Madlangbayan for Product Development and Spotting Business Opportunities. Entrepreneur advocate Carl Balita also joined us. ”

To know more about the Mentor Me program, you may visit www.gonegosyo.net.