Social Entrepreneurship at Tom Shoes - Essay Example

Tom’s shoes case study Place Introduction Due to the global expansion of information, technology and organizing capability, there emerged a growing attention to social entrepreneurship explained by such factors as economic, social and political changes (Hoogendoorn, Pennings & Thurik, 2010). With such huge alteration, millions of people around the world still suffer from lack of proper medical treatment and living and working conditions. That is why public and private initiatives should increasingly recognize social entrepreneurship to address a wide range of these social needs (Bornstein & Davis, 2010). Social entrepreneurs look to market products to meet the human needs as much as possible, distinguish themselves from other social venture players by doing real things. The importance of social entrepreneurs is called by their ability to be relentlessly focused on influence and society’s changes and implementations of innovations that would help to build platforms for many people in order to enable them to think about positive impact on the global move (Osberg and Martin, 2007). The purpose of study of social entrepreneurship is to suggest factors associated with changes and how societies renew themselves. It will investigate the role of social entrepreneurs, challenges and pathway that made them move into social entrepreneurship. Since, the potential of social entrepreneurship is beyond human thought, the concrete example of such man, as the founder of Toms Company will be investigated and its nature and social impact will be studied. The background A concept of social entrepreneurship is already a widespread thing, according to the Global Entrepreneurship Monitor (GEM Global Report, 2014). The GEM network conducted a global survey on the adoption of social entrepreneurship among forty-nine countries. The results showed an more than one adult in forty participants were already involved into some social entrepreneurship activity (see Appendix A). In modern time, more companies become social entrepreneurs to be able to puzzle upon such social issues as increasing college enrollment rate for students with low-income and fighting with poverty by using numerous innovative nonprofits, social-purpose ventures and hybrid organizations to generate social value for the society (Noruzi, Westover and Rahimi, 2010). Wealth creation is a part of entrepreneurship, but is not the end in itself. What is more important, it is the promotion of social change that sees the opportunities to improve systems, create solutions and develop new approaches for creation of social value (see Appendix B). Moreover, social entrepreneurs are focused and hard-driving in their desire to have a social vision, operating in a broad social context within the business world. However, they have limited access to capital and traditional market support systems, thus they should be skilled at utilizing the human, financial and political resources as efficient as possible to be able to bring their social initiatives to the mass (Noruzi, Westover and Rahimi, 2010). Praszkier and Nowak (2011) state that social entrepreneurs produce measurable returns, they in turn show the society about the existing realities of the world. However, they also open up new pathways for the marginalized people unlocking society’s capability to effect social change (Praszkier & Nowak, 2011). The vivid example of social entrepreneurs is TOMS, the American footwear and eyewear company with its non-profit subsidiary organizations, founded in 2006 and headed by Blake Mycoskie. It sells its products throughout the U.S. and thirty countries around the world. The history of the company starts with visiting Argentina where the entrepreneur experienced the facts of extreme poverty in that region along with the strife of rural dwellers. The hardships faced by children growing up without shoes in Argentina called for searching a proper solution and thus the revolutionary decision was made- to create a profit business with the accent on sustainability and which would rely on donations, as a result of which children from Argentina would have an opportunity to wear shoes. Such vision of Blake Mycoskie has turned into the powerful foundation for TOMS that provides today shoes for thousands of children in need (TOMS, 2010). Moreover, TOMS shoes have developed the business model of One for One, which helps a person in need with every product from TOMS’ collection purchased. Such idea has grown into a global movement providing more than thirty million pairs of shoes to children who simply did not have them (Blake Mycoskie, n.d.). Finally, the company gives all the people and business to join the giving partnerships, which will give an opportunity to provide a pair of shoes to children in need and thus contribute the improvement of standard of living for certain community (see Appendix C). Challenges and pathway into social enterprise With the desire of social entrepreneurs and non-for-profit organizations to make impact on different social issues of the modern world, they often attempt not only to make changes on the local level, but also to challenge the overall system that due to different reasons, such as economic, technological and environmental, creates social issues. Such conditions are examined by social entrepreneurs and the pathways for system change appear (Defourny & Nyssens, 2010). Thus, social entrepreneurs adopt different initial conditions and opportunities for creating better well-being for those levels of population that are protected the least. Lehner and Kansikas (2011), however, state that there is no straight path to reaching their goals and certain barriers, as well as the motivation behind the decision are emerging. With many capabilities of social entrepreneurs, they strive to create social value through utilizing innovative ways of addressing social problems. Such ways include adaptation, evolvement and meeting the emerging needs (Dorado, 2006). More and more entrepreneurial and business practices are involved into provision of greater good for the community. Here the focus is given to environmental sustainability and health of poor people (as displayed in Appendix D). Social entrepreneurial of the for-profit along with the non-profit generating activities creates social sustainability developing social value. These activities are aimed to created economic value through socially responsible business and different practices of social responsibility (Network for Business Sustainability, 2013). Besides, here is the intention to seek the ways how to empower the neediest people and social entrepreneurs are the best performers. In addition, the NBS report (2013) defines social entrepreneurship as one of the solutions for poor people in their need for such resources as water and clothes. Due to the economic downturn people are facing lack of social guarantees, cutbacks and fewer donations (Social Entrepreneurship, n.d.). For TOMS’ founder, empathy and willingness to help children of Argentina and also responsibility to do more for them have led to the creation of the real company that provides focus on the environmental and social impacts of its products and operations (Corporate responsibility at TOMS, n.d.). Thus, its Eyewear gives an opportunity to restore sight to one poor person with every purchase of this product. A for-profit social enterprise, TOMS tries to change the cycle of poverty by implementing its unique charitable availabilities. Such model is the integral to the company’s ventures and drives its operations as the social mission as well (Corporate responsibility at TOMS, 2006). With an estimated hundred million dollars that company earned in six years, its products are currently produced in China, Argentina and Ethiopia (TOMS: One for One Movement, 2011). Products produced in these countries are either donated (Ethiopia or Argentina) or enter the other markets, such as U.S. Notwithstanding the country of production, TOMS ensures that no children are engaged in the manufacturing process and that local labor standards are followed that gives the company possibility to meet consumers’ expectations and ensure proper workplace conditions for the employees of TOMS (TOMS: One for One Movement, 2011). While there is no official corporate responsibility division at TOMS, its CEO or Chief Shoe Giver dedicates all efforts to prioritization of socially responsible concerns as the main business model. That is why it is unclear what percentage of each sale goes for donation and toward distribution. In addition, due to the private character of TOMS’ incorporation status, there is no financial information available for public, as well as profit and staff compensation. Such privacy is expected from such a private company, however, calls for additional criticism. In addition, charitable activities like TOMS’s, with all its intentions to be good, can lately negatively impact the society that it wants to support. Without focusing on development of local business, whose shoes production will fall then, TOMS’ giving model of regular shoe donations can fail in meeting the needs of poor population of Argentina and other countries where it operates. Thus, a report (Jain, 2011) determined that donations for clothing imported to Africa through charitable organizations was responsible for more than fifty percent fall in domestic employment during 1981 -2000. Besides, as it is stated in the report (Jain, 2011) such donations have also blocked the local industry development in places like Senegal and Ghana. Despite all the pitfalls that TOMS faces on its pathway to social entrepreneurship, it markets itself as the company that enables customers to establish a relationship with the brand due to the contribution they make when purchasing TOMS shoes. (Source: https://averima.files.wordpress.com/2011/09/toms-pr-plansbook.pdf) With every pair of shoes donated to the children from poor countries, TOMS thinks not only about health improvements, but also provides opportunities for children to education and thus opens more opportunities for them (TOMS Shoes Strategic Plan, 2011). According to the Strategic plan (2011), since 2006, ten million pairs of TOMS’ shoes were sold to children in more than sixty countries and the company has restored the sight of over one hundred and fifty thousand people spending money obtained from purchases of TOMS Eyewear. All that became possible due to the use of cause marketing approach, when the company along with its non-profit Friends of TOMS were working for the mutual benefit. Besides, the three-pronged marketing approach that TOMS uses bring the company popularity and lets the potential buyers that such contribution will have a great social impact (Tribby, 2013). The nature and social impact of the organization With its giving approach where buying a pair of shoes, TOMS will donate another one to someone in need, creates an image of the company that thinks not only about the profit, but cares of people with less possibilities. Stating that TOMS is not just a company, but a movement, it involves its customers to become a part of that movement with a lifelong relationship. Through changing of marketing in several ways, TOMS wants to make sure that it is talking to the customers in a long-term way, engaging them with the relevant dimension. Customer centric organization with the collaboration between all the shareholders leads to the success of everything the company does (Ellet, 2014). With the purpose that is more than a profit for the company, TOMS attracts and retain not only the customers, but makes the society to think about other people, their needs and opportunities that they can provide. Besides, the socially-minded business attracts other to help as well, bringing new partners to the company and connecting customers with a new way. However, despite the great positive impact on social sphere of certain countries such as Argentina, TOMS model in inefficient, because it struggles against concrete issue, the shoelessness and does not help to solve the problem in general- the bad living conditions of those children it helps to. Besides, as the founder of TOMS states, the company is “very close to… turning a profit” (Mycoskie, B., 2008.). In an interview (see Appendix E) the findings were agreed with Blake Mycoskie who states that the company considers it is important to have more people in their staff to continue what it does. Moreover, the stability of the company was proved from a cash flow standpoint, however, TOMS is not a profitable company yet. Conclusion and recommendation There always ways where the company, especially social directed can move forward. Thus, TOMS can improve its model by better understanding the problem of poverty in the developing countries, because such question is deeper than just children that do not have shoes. What is more important is to know the systemic reasons for poverty in a given community and the ability to focus more attention of the surrounding world on that problem. Being now a famous brand with its opportunities and resources for creating more, TOMS company can call other companies to implement the like-minded approaches in order to help children around the world. The TOMS model of its One to One is a great marketing campaign when it comes to person’s sense of compassion. However, here is a challenge for TOMS CEO to know how to keeping pace with the changes in society. This is called by the constant developments of new products and designs and TOMS should use its young, media-savvy and ambitious plans to double their attempts in being socially friendly company (Zimmerman, 2009). References Blake Mycoskie, n.d., The TOMS official website, Available from [Assessed on 01 of February, 2015]. Bornstein, D. & Davis, S. 2010. Social Entrepreneurship: What Everyone Needs to Know, Oxford University Press Corporate responsibility at TOMS, n.d., Available from [Assessed on 01 of February, 2015]. Defourny, J. and Nyssens, M., 2010. Conceptions of Social Enterprise and Social Entrepreneurship in Europe and the United States: Convergences and Divergences, Journal of Social Entrepreneurship, Vol. 1, No. 1, 32–53, Dorado, S. 2006. Social entrepreneurial ventures: different values so different process of creation, no? Journal of Developmental Entrepreneurship, Vol. 11, No. 4 Network for Business Sustainability, 2013. Driving Social Change: Best Practices for Business Leaders and Social Entrepreneurs. [pdf] London, Canada: Network for Business Sustainability. Available at: Ellet, J. 2014. How TOMS Creates Customers For Life, The Forbes, [online] Available at: [Assessed on 01 of February, 2015]. GEM Global Report, 2014. Available from [Assessed on 01 of February, 2015]. Mycoskie, B., 2008. The TH Interview: TOMS Shoes, The Treehugger, Available from [Assessed on 01 of February, 2015]. Hoogendoorn, Pennings & Thurik, 2010. What Do We Know about Social Entrepreneurship? An Analysis of Empirical Research, International Review of Entrepreneurship 8(2) Jain, N. 2011, Shoes for Business, The unintended consequences of doing good, The Harvard Crimson, [online] Available from [Assessed on 01 of February, 2015]. Lehner, O. and Kansikas, J., 2011. Social entrepreneurship research across disciplines: paradigmatic and methodological considerations, 3rd EMES international research conference on social enterprise, Roskilde University, [pdf] Available at: Noruzi, M., Westover, J. and Rahimi, G., 2010. An Exploration of Social Entrepreneurship in the Entrepreneurship Era, Asian Social Science, Vol. 6, No. 6 Osberg, S. and Martin, R., 2007. Social Entrepreneurship: The Case for Definition, Stanford Social Innovation Review, [online] Available from http://www.ssireview.org/articles/entry/social_entrepreneurship_the_case_for_definition [Assessed on 01 of February, 2015]. Praszkier, R. and Nowak, A., 2011. Social Entrepreneurship: Theory and Practice, Cambridge University Press Social Entrepreneurship, n.d., Social economy network, [online] Available from [Assessed on 01 of February, 2015]. TOMS: One for One Movement, 2011. [pdf]. Available at: TOMS, 2010. Social Enterprise Institute, Social Enterprise Case Series, Northeastern University, Boston, MA TOMS Shoes Strategic Plan, 2011. TOMS Public Relations Plan, Available at: [Assessed on 01 of February, 2015]. Tribby, M. 2013. These Shoes Aint Just Made for Walkin: The Cause Marketing Biz Model, The Huffingtonpost, [online] Available at: [Assessed on 01 of February, 2015]. Zimmerman, M. 2009. The Business of Giving: TOMS Shoes, The Success, [online] Available at: [Assessed on 01 of February, 2015]. Appendix A Appendix B Appendix C Appendix D Appendix E Mycoskie, B., 2008. The TH Interview: TOMS Shoes. Interviewed  by Jacob Gordon. [radio] Treehugger, September, 18, 2008 Questions by Treehugger reporter: 1. So, Blake, you make shoes. Big deal. Whats different about TOMS?  2. Tell me more about that experience in Argentina when this dawned on you. 3. Tell me about the implication of having shoes.  4. Is there a TOM? Is this a secret code? Is this a person? Is this your alter ego? 5. You describe yourself as a serial entrepreneur, but you also say that your background is in media and stuff like that. Do you come from a line of shoemakers, fashionistas? How did you figure out the actual nuts and bolts of shoemaking? 6. The design of the shoe is based on this traditional Argentine shoe. What do they call that? 7. Do you have any Argentine friends who were tripped out by seeing all these hipsters walking around in them? 8. Lets talk about the response of the people who are receiving the shoes and where this is going on. I have heard you describe them as "shoe drops." What is your distribution network? And what is peoples reaction when you roll up in your truck with thousands of shoes? 9. So can we tell TreeHugger Radio listeners that potentially, if they apply, they could go down and partake in one of these operations? 10. Have there been naysayers along the way? And has there been any negative feedback, either on the purchasing end where people buy TOMS, or on the receiving end from those people who are taking the donations of shoes? 11. Do you have peers in the business world who have heard about your idea of giving a pair of shoes away for every one you sell who say that this is loco? Read More