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Driving Economic Development with Inclusive Business
An Inclusive Business is a business model that strives to benefit the community by directly including low-income populations into their business cycles, whether as producers or consumers of the good or service. It is a strategy that aids a large and often forgotten section of the community through social initiatives while still fostering business growth and for-profit policies. A main driving force behind Inclusive Business models is to create sustainable means of support for the society without the use of welfare.
Inclusive Business models vary slightly in the way they approach social issues then the Social Enterprisemodels discussed in our previous blog. Social Enterprises are organizations that blend their business between financial and social returns on investment in attempts to raise social awareness and aid to their cause, and to funnel monetary support to both the company’s growth and social issue as well. Though extremely similar concepts, Inclusive Businesses are created with the direct intent of benefiting one social issue – the poor. Going further, Inclusive Business models do not just raise awareness or financial aid for their cause; rather, they take frank and hands-on approaches towards achieving their goals. This is done by utilizing local suppliers for the company, creating products and services that are targeting towards the low-income community, or by making a point in employing a large majority of low-income persons.
The Inclusive Business model theorizes that if companies target the low-income community, who on a global economic pyramid are our base and largest sector, we can slowly integrate them towards more modern and formal economies. Through employment, a sector that primarily works in labor now will begin to gain human capital through formal training as well as an income that introduces them to new financial markets. As consumers, the community can be endowed with new products and services that specifically match their needs. With all of these segments of the business cycle fully turning, we would see a rise in local employment, skill, and income which in turn would drive economic development and growth.