Responsaqbilidad Social

BH 287

Copyright 2008 by Kelley School of Business, Indiana University. For reprints, call HBS Publishing at (800) 545-7685.

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Business Horizons (2008) 51, 341—352

www.elsevier.com/locate/bushor

Socially responsible entrepreneurs: What do they
do to create and build their companies?

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David Y. Choi *, Edmund R. Gray

College of Business Administration, LoyolaMarymount University, One LMU Drive,
Los Angeles, CA 90045-2659, U.S.A.

KEYWORDS

Abstract This paper examines 30 entrepreneurs who created profitable companies,
and who were also exemplary in their efforts towards social responsibility. It examines
their management practices to understand how these socially responsible entrepreneurs created and built their companies. The study reveals thatthese socially responsible entrepreneurs founded their companies, at least in part, to achieve idealistic
objectives, and pursued financial and non-financial objectives simultaneously. Most
avoided financing from institutional sources, hired employees for their shared values,
and shrewdly leveraged their social identities to differentiate themselves in the
marketplace. Many of theseentrepreneurs made unusual efforts to create a strong
organizational culture and implement sustainable operational processes to meet their
self-imposed ethical standards. These socially responsible entrepreneurs gave a substantial amount of their profits to causes of their choosing, and volunteered themselves
as role models for other businesses and entrepreneurs to follow.
# 2008 Kelley School of Business,Indiana University. All rights reserved.

tC

Entrepreneurship;
Triple bottom-line;
Corporate social
responsibility;
Sustainability;
Management practices

No

1. Socially responsible entrepreneurs:
What do they do to build and grow
their companies?

Do

In contrast to [Milton] Friedman, I do not believe
maximizing profits for the investors is the only
acceptable justificationfor all corporate actions.
The investors are not the only people who matter.
Corporations can exist for purposes other than
simply maximizing profits. — John Mackey, Founder and President of Whole Foods (Reason, 2005)

* Corresponding author.
E-mail addresses: dchoi@lmu.edu (D.Y. Choi), egray@lmu.edu
(E.R. Gray).

We are helping to create a new mind-set that
responsible practices andprofitable practices are
one and the same. It’s more difficult to manage
responsibly and profitably but it’s within our human means. It just takes being intentional about
being good as well as being successful. — Tom
Chappell, Founder and President of Tom’s of
Maine (Chappell, 1993, p. 35)

2. The socially responsible
entrepreneur
More than 35 years ago the late Milton Friedman
wrote a muchcelebrated article for The New York

0007-6813/$ — see front matter # 2008 Kelley School of Business, Indiana University. All rights reserved.
doi:10.1016/j.bushor.2008.02.010

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342

D.Y. Choi, E.R. Gray

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tthe objectives and values of our society.’’ McGuire
(1963, p. 77) added that, ‘‘the idea of social responsibilities supposes that the corporation has not only
economical and legal obligations but also certain
responsibilities to society that extend beyond
these.’’ Hay and Gray (1974) proffered a historical
evolution model that depicted the CSR concept
progressing through three phases (Figure1). Phase
I was the Friedman perspective of profit maximization. The second phase, trusteeship, which emerged
in the 1930s, expanded corporate responsibilities to
include primary stakeholders other than the shareholders, such as employees, suppliers, creditors,
and communities. The third phase, quality of life,
suggested that business corporations, as an integral
part of society, had...