Social innovation in the private sector: Evaluating the effectiveness of the Business Model Canvas in fostering social value creation

Abstract

The capitalist system has proven to be a powerful machine for wealth creation. However, many people are questioning the capability of capitalism to improve the wellbeing of people and benefit the society. It is a common perception among many people that companies are generating profit at the cost of the broader society. It is also a common supposition inside the business world that actions driven by the desire to help the surrounding society are usually harmful for the profitability of the company. On the contrary, there are also many companies that claim to go beyond the ‘only for profit’-thinking. These companies argue that they have a mission to benefit the society in broader ways than just acting as a part of the capitalist system.

This thesis touches the relationship between profitability and benefitting the society. The study focuses on social innovation, a specific type of innovation, which arises from the aspiration to meet the needs of the society. The context of this thesis is organizations within the private sector with a specific focus on companies that claim to have positive social ambitions. The concept of social value - value that accrues to the society as a whole - is examined and it will be discussed how organizations can integrate social value creation into their business models.

This will be followed by introducing a business model innovation tool called ‘The Business Model Canvas’, which will be examined through retrofitting the business models of four example organizations on it. The chosen example organizations claim to create social value and the different logics of how they strive to do it are examined with the help of the canvas. Based on this experiment, it will be evaluated how suitable ‘The Business Model Canvas’ is for fostering social innovation. It will be evaluated if the tool has the necessary elements to be helpful for those people who are aiming for innovation that brings value for the broader society. The findings are used to create an initial proposal for a possible development of the Business Model Canvas to be more sufficient for fostering social value creation.

This thesis suggests that in the private sector the importance of social innovation is likely to grow. It is also concluded that an efficient way for achieving positive social impact is to embed social value creation as an integrated part of a company’s business model. It is argued that the holistic approach associated with ‘The Business Model Canvas’ is appropriate for social innovation. However, it will also be suggested that ‘The Business Model Canvas’ as such may need certain improvements to be more efficient for social innovation.