For Profit, For Good

What we can achieve when we teach at the intersection of international business and sustainable development.

Traditionally, the worlds of international business and international development have been so far apart that they sometimes seemed like the Capulets and Montagues of the economic sphere. Business types thought of sustainable development advocates as left-wing tree-huggers; development types viewed businesspeople as evil destroyers of earth and people. These attitudes stemmed largely from diametrically opposed educational approaches. Business students learned that their ultimate goal was to maximize shareholder value; development students learned that businesspeople will trample on social and environmental interests in pursuit of profit.

During the past two decades, however, traditionally narrow views on both sides have been giving way to more nuanced perspectives that allow for a partnership between for-profit and not-for-profit organizations. Even Michael Porter, writing in the January 2011 Harvard Business Review, has advanced the principle of shared value, “which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. … Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success.”

I believe that, in a globalized economy marked by shrinking resources, schools must take a new approach to teaching students about the role of the corporation as well as the NGO. They must teach business students that the corporation has to produce value for society in addition to profits for stakeholders; they must teach development students that nonprofits rarely will thrive without the discipline and metrics employed by business. In essence, they must prepare students to function at the intersection of business and philanthropy. This intersection is a perilous place to teach, because the instructor risks losing all credibility with one world by advocating principles from the other. But it’s also rewarding, because the potential benefits are so high.

My adventures in negotiating this maze began when I taught globalization at Brandeis University’s International Business School in the 1990s. While I mostly presented the Thomas Friedman version—the world is flat, globalization is both inevitable and glorious—I also noted that globalization increases income inequality, produces winners and losers, and operates on a far from level playing field. While some students accepted these notions, others waited impatiently for me to get to the spreadsheets and hard data.

I then spent time teaching a similar course at the World Learning/SIT Graduate Institute’s master’s program in sustainable development in Washington, D.C. My new students were largely international development professionals and Peace Corps and CityYear alumni. Some embraced the idea that non-profits can benefit from rigorously applied business metrics, but more wondered why we weren’t focused solely on the empowerment programs and fieldworkers who would fight poverty one Bangladeshi village at a time.

The question I’ve strived to answer is, how can the tree-huggers and the earth-destroyers be brought together in one classroom?

Obstacles and Pitfalls

I believe it’s essential for business schools to offer courses that meld business and development perspectives. But they must be aware of some key challenges and be ready with creative solutions.

The first challenge often is simply getting the course into the curriculum to begin with, as many faculty and students question the notion of blended value. One approach is to keep a hard-headed focus on the job market—noting, for instance, that “socially responsible” areas such as community investing, impact investing, and microfinance are among the fastest-growing fields in the world of finance. Two other potential pitfalls must be faced head-on:

Keeping the class from getting too personal. I have found that students in these types of blended classes often want to relate their own experiences. These can be moving and valuable moments for the class, but tricky for the professor to handle. For example, in one of my classes, an Indian student began to explain that India had a higher development level than Pakistan because Indians have a higher cultural tone and native intelligence—a position that dismayed the Pakistani student seated next to her.

In another class, students were debating the degree to which multinational companies (MNCs) should adhere to local customs. Some students argued that if a country failed to impose worker safety or child labor laws, the MNC shouldn’t be responsible for worker protection. Some even suggested that a lack of environmental or labor protection laws could be a competitive advantage for a developing country, helping to lure foreign investors. Then a student from Vietnam, who had never before spoken up in class, began relating his experiences working in a textile factory. He described being beaten by overseers so that he would work harder and faster, and raised his shirt so that we could see the scars on his back. The class was profoundly moved, but also deeply disturbed.

In each case, it was up to me to defuse the situation while still incorporating the lesson learned. In fact, in any blended value class, the role of the professor is much more ambiguous and challenging than it is in the traditional classroom. The teacher must ensure that the class is a safe environment for everyone and that unacceptable behavior is immediately shut down.

Decisions about ethics and morality are ultimately personal. The professor must respect this, while still guiding the discussion toward universal values, such as protecting children, paying workers a living wage, and preventing environmental devastation.

Avoiding the easy solutions. When I first taught my globalization class, I used a case study on Nike, whose code of ethics was challenged when activists discovered that some of its Asian subcontractors were using sweatshop labor. It was easy for students to determine that Nike needed to protect its brand by closing the sweatshops and implementing oversight on subcontractors to avoid the problem in the future. This wasn’t much of a hardship for Nike, which had an ample cash flow. But the case was too easy, because avoiding sweatshop labor was both smart business and the “right” thing to do.

Unfortunately, the real world is rarely that simple, and we should be studying cases with hard decisions and tricky tradeoffs. What if the company makes widgets for other widget companies, so has no consumer brand name to protect? What if the company is struggling to survive and has no cash for subcontractor oversight and non-sweatshop labor?

I stopped using the Nike case. My goal was to challenge the students to reexamine their goals, their priorities, and their values—not to let them settle for easy solutions.

Developing the Class

I have found that classes of this nature succeed or fail based on the case studies I select, because only real-world examples will convince students that this approach has potential. For instance, I use Harvard’s Patagonia case study so students can ponder how a business could succeed while begging customers not to buy their products if they can recycle or reuse old products instead. We contemplate Newman’s Own, which donates all its profits to charity. We debate Genzyme’s initiative to create new drugs for underserved diseases and communities.

At this stage, MBA students are still unconvinced that social value is a worthwhile tradeoff for prof t, and development students retain their distrust of capitalism. So in the next phase I have the students really get their hands dirty by digging into microfinance.

We begin in 1976, when Chittagong University professor Muhammed Yunus met 21-year-old Sufiya Begum, who wove beautiful bamboo stools but was locked in abject poverty because she didn’t have the 22 cents to buy the raw material for her product. Yunus tried a small experiment; he lent $27 to 42 people in the village who, like Sufiya, were essentially bonded slaves to middlemen.

And thus a bank and an industry were born. By 2010, Yunus’s Grameen Bank had lent over US$11 billion to millions of borrowers, 97 percent of them women. Yunus himself had won the Nobel Peace Prize, while Grameen Bank had been prof table every year since 1992. Today, microfinance institutions around the world provide banking services to the poorest of borrowers, reportedly enabling many to climb out of poverty while also turning a tidy profit for their shareholders.

Now the students are interested. The MBA types triumphantly wave articles describing the hugely successful IPO of microfinance institution Banco Compartamos in Mexico, while the development types pounce on Yunus’s prediction that “one day our grandchildren will go to museums to see what poverty was like.”

But in the next class I puncture their illusions. I return to the saga of Sufiya Begum, who allegedly died in abject poverty. We learn about the crisis in Andhra Pradesh, India, where farmers have committed suicide because of their microfinance debts, and the government has told borrowers to stop repaying loans. We discover that Yunus himself was forced out of Grameen Bank in 2011, and that new, randomized studies find that microfinance has had virtually no impact on poverty alleviation.

The students are dispirited and confused, wondering what to make of all this. So I admit that no one really knows what happened to Sufiya Begum, and no one really knows how much impact microfinance can have. I quote Starbucks’ CEO Orin Smith: “Aligning self-interest to social responsibility is the most powerful way to maintaining a company’s success.”

To my students I suggest, “Let’s roll up our sleeves and get to work. But let’s temper our work with realistic expectations. Microfinance will not relegate poverty to the museum, and Michael Porter’s concept of shared value is still largely theoretical.”

Ending on the Sweet Spot

We finish on a more upbeat note by delving into social impact investing—the sweet spot where the business and development worlds intersect. Social impact investing is a hybrid of philanthropy and private equity, because its investments are aimed at solving social and environmental challenges, while generating sustainable financial returns. It is a disruptive notion, challenging my students’ assumption that for-prof t investments are organized solely around the bottom line, while social problems should be left to philanthropists and government. It is also a fundamentally optimistic notion, built on the idea that business can promote a common good while also generating profits.

Students thrill to this premise. Many of the development students have discovered how much NGO time is spent wooing donors rather than doing good; they are well aware of the inherent unsustain-ability of pure philanthropy. At the same time, many of the MBA students have discovered that they’re uncomfortable focusing solely on profits in a world dealing with climate change and impoverished indigenous populations.

Business schools must teach students that business can be both successful and responsible.

Thus, social impact investing appeals to them. At this point, it is a market in its infancy, dogged by weak infrastructure, a minimal track record, and a lack of standardized metrics for measuring impact—but the students see its potential. First we consider Social Finance UK’s successful placement of a Social Impact Bond in September 2010, an innovative new instrument that is used to fund social programs aimed at reducing prison recidivism. Investors reap the rewards from their investment if these programs succeed in cutting recidivism by a set amount—surely a win-win outcome by any measure.

Then we turn to Leapfrog Investments, which invested US$6.7 million in All Life, a South African company that provides life insurance to people living with AIDS. What seems like a laughably awful business model—offering life insurance to people with a terminal disease—makes more sense when students learn that the insurance is only provided if clients take regular blood tests to prove that they are taking lifesaving anti-retroviral drugs. The company charges a high enough rate to ensure strong profits; the clients are incentivized to stick with a diff cult and demanding drug regimen. Another win-win.

I conclude by reminding students that there are moments in history when the needs of an age create lasting, positive innovations in the world of finance. Think of the home mortgage, which created a class of homeowners. Think of project finance—which repays investors out of the cash flow generated by the project itself—and which has enabled huge projects from oil wells to Tokyo Disneyland. We now know that pure philanthropy is unsustainable and often ineffective in solving social and environmental challenges; we also know that a narrow focus on prof t maximization leads businesses down an ugly, even destructive, path.

It is time for business schools to lead the way in teaching students that business can be both successful and responsible. Then other educators might get emails like the one I recently received from a former student, who had just accepted a job working for the first solar power company in Thailand. “It was all because of your class,” she told me. “I want to work for a business that does good and does well at the same time.” One student at a time, one business at a time, we move closer to that fabled intersection.

Teaching This Class

If you’re interested in launching a class on the intersection of business and social development at your school, I can offer several tips on the way I structure my course.


I divide the course into four units: corporate social responsibility, socially responsible investment, microfinance, and impact investing. This provides something of a timeline as well, since earlier thinking on the role of business in solving social problems paved the way for microfinance and impact investing.

Course Materials

I have not yet found one comprehensive textbook for this class, so I use a combination of book chapters, articles, websites, and case studies. Some good resources include the following:


  • The HIP Investor by R. Paul Herman
  • More Than Good Intentions by Dean Karlan and Jacob Appel
  • Banker to the Poor by Muhammed Yunus

Harvard Business School case studies:

  • Good Capital and Better World Books (a study on socially responsible investing)
  • Patagonia (a somewhat extreme example of corporate social responsibility)
  • Genzyme’s CSR Dilemma (an excellent insight into the difficulties of doing good and doing well)
  • ACCION International (a good overview of microfinance at its outset, and how the industry has evolved)
  • Banco Compartamos: Life After the IPO (about a microfinance bank that has gone through an IPO and is immensely prof table but faces numerous challenges)
  • Starbucks and Conservation International (a case that shows how the best of intentions can still become mired in complexity)

Other resources:

Guest Speakers

In the past, I have invited speakers from microfinance institutions and impact investing firms, and sustainability officers from multinational corporations.

Deliverables and Grading

I base my final grades on case study analysis papers, midterm exams, class participation, and final projects. All students write a case study analysis paper for each class. The essay-based midterm gives students the opportunity to reflect on cases or readings that we have discussed in class. Class participation reflects both the quantity and quality of students’ contributions to class discussions. For the final project, I require student teams to create business plans for impact investment projects; they present their plans to the class and a group of judges drawn from the academic and business communities.

Jane Hughes is director of knowledge management at Social Finance US, a Boston-based nonprofit that mobilizes investment capital to drive social progress. She has taught at Brandeis University International Business School, SUNY Levin Institute, and SIT Graduate Institute, and is currently an adjunct professor at Simmons College School of Management and Boston College’s Carroll School of Management.