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Hybrid Value Chains: new opportunities for business growth while tackling development challenges?

2011-06-26 · By Michael Jarvis

By Michael Jarvis, World Bank Institute Can social entrepreneurs forge a more productive collaboration with corporations? One that is good for business growth but also tackles development challenges? Bill Drayton and Valeria Budinich suggest just that in a new article in Harvard Business Review. They introduce the concept of hybrid value chains (HVCs) based around…

By Michael Jarvis, World Bank Institute

Can social entrepreneurs forge a more productive collaboration with corporations? One that is good for business growth but also tackles development challenges? Bill Drayton and Valeria Budinich suggest just that in a new article in Harvard Business Review. They introduce the concept of hybrid value chains (HVCs) based around four key criteria – that they create real economic as well as social value, have the potential to go to scale across borders, are profitable and hence sustainable, and offer a basis for new competition. This is an interesting spin on the base of the pyramid business case that prioritizes an integrated role for social entrepreneurs, but I wonder how many settings are conducive to this model.

Of course businesses will develop even in the most difficult settings. As reported recently in the Financial Times, entrepreneurship is alive and well in Somaliland despite lack of clarity on its status and the absence of many typical state structures. Investors are exploring options in such sectors as oil, fishing, power, and livestock exports – including a proposed $9m cold packing camel meat export business. What’s more, the early risk takers tend to be those connected to the country, notably returning diaspora, who are likely to have an interest in broader benefits for their homeland. So is there a role for social and private entrepreneurs to jointly shape private sector development from the beginning? Would HVCs generate sufficient jobs for the poor?

It is unlikely that HVCs can be successful without some capacity in the civil sector, but even where civil society is vibrant, how do the complementary company and social entrepreneur find each other? There are close to a million CSOs in Brazil alone. This is bewildering for companies, who struggle to pinpoint those with good ideas and capacity. It is no surprise that the authors come from Ashoka, an organization that has helped play a broker role between social entrepreneurs and corporations in many of the examples they cite. How can that brokering be made available globally? Most of the proposed HVC examples cited by Drayton and Budinich stem from relatively few countries, notably India and Mexico, and target better service delivery – overlapping with oft repeated base of the pyramid cases. For HVCs to take hold – and join the canon of established acronyms with CSR and BOP – it will need to be proven in more contexts. Ideas for HVCs in Mongolia or Uganda anyone?