The key to unlocking global prosperity may be right under our noses. Partnering with small and growing businesses can create social wins even for corporations not explicitly focused on social impact.
More and more multi-national corporations have recognized that working with local small and growing businesses — commercially viable ventures with five to 250 employees, and with significant potential and ambition for growth — can boost a corporation’s bottom line and improve the lives of people in less-developed economies. Supply chains, distribution, technology, and reaching new markets are all key areas where the corporation and small and growing businesses can benefit.
Small and growing businesses, and social enterprises, often offer products or services that address specific social problems like access to electricity, access to clean water and safe food, or basic health care. Small and growing businesses create jobs in places and for people that have few employment opportunities. These businesses add value to corporate partners, help expand their customer bases, and even advance the Sustainable Development Goals.
But finding the right partners can be difficult: a corporation may not know where to look, or may have trouble finding local partners that meet all of their standards and expectations. Each market presents its own unique challenges that require a deep understanding of local business ecosystems.
Multinational consumer goods company, Unilever, for example, has partnered with d.light, a global solar energy company delivering affordable solar-powered solutions to the more than 2 billion people without electricity. Beginning in 2014, d.light sold solar products to Unilever, which placed these products in small shops that sell Unilever products, enabling the shops to remain open longer. Unilever has benefitted from increased sales. d.light has gained increased awareness about their products. Store owners have seen increased revenues. Customers appreciate the flexibility in store hours — and often become d.light purchasers.
Other partnerships focus on shoring up supply chains. Partners in Food Solutions, in collaboration with the U.S. Agency for International Development (USAID) and Technoserve, engaged the expertise and passion of more than 1,000 employees of major companies like General Mills, Cargill, and Hershey to train African food businesses in best practices in food processing, nutrition, process development, and business planning. The efforts have improved these companies’ linkages to African suppliers, and strengthened the capacity of more than 900 food companies in East, West, and Southern Africa.
Organizations that help entrepreneurs start up or scale up serve as important brokers between large international corporations and small and growing businesses. Many are members of the Aspen Network of Development Entrepreneurs, or ANDE, which has more than 260 members in 150 countries.
For example, Acumen, the global impact investor, creates a variety of partnerships to help corporations work with small and growing businesses. Some corporations lend their skills to small firms. Others incorporate small businesses directly into the corporation’s core business. Acumen has worked with Dow, Unilever, SAP, GE, Nespresso and others to find new benefits to collaboration.
“What started as an experiment has become a core part of how we work,” says Acumen’s Yasmina Zaidman. “We believe it will become an instrumental part of how social innovations are nurtured and scaled to achieve their greatest possible impact, as well as part of how social enterprises and multinational corporations can achieve large scale impact while growing their businesses.”
In 2015, EY’s Enterprise Growth Services, which supports social enterprises, formed a skills partnership with EthioChicken, the only private company in Ethiopia focused exclusively on reaching smallholder chicken farmers. EY offered consulting to improve operations and finances within EthioChicken. The social enterprise gained valuable insight and consulting advice that led to real impact in the business. The firm boosted food production and supply for rural farmers, helped raise farmers’ incomes, and created a more reliable and regular access to vital proteins and nutrients for rural families. For EY, the partnership helps them align the values of their company and employees with their core business strengths.
GOAL, an Irish non-profit, has been working with Microsoft’s 4 Afrika division in Uganda since 2015. They are collaborating with local technology companies such as FitUganda to help smallholder farmers access technology that allows them to engage more successfully in the market. For Microsoft, GOAL helped them engage successfully in a promising, yet challenging market. For FitUganda, the link to the corporation has been an important tool to drive innovation and build products that deliver social impact and strengthen the bottom line.
Other ANDE members have also helped broker relationships between local growth-oriented businesses, and large corporations looking to expand their customer base, improve sales, and have a positive social impact on local communities.
FUNDES, a Latin American non-profit consultancy firm based in Costa Rica, with the support of the Inter-American Development Bank’s Multilateral Investment Fund, has been working to improve the business and social leadership skills of 40,000 small shop owners to enhance their role as suppliers of goods and services in their communities. SABMiller has also been contributing its distribution networks, skills, and resources to assist to the program. As these shopkeepers improve their business acumen, they’re more likely to sell more SABMiller products, and the training they receive can make them more effective community leaders to improve recycling and waste management, community health, and education outcomes.
Water & Sanitation for the Urban Poor (WSUP) builds public-private partnerships to improve water, sanitation, and hygiene services for low-income communities in emerging markets. In Lusaka, Zambia, WSUP has brokered a relationship between Borealis & Borouge, leading manufacturers of high-quality polyethylene material for drinking water pipes, and a number of water trusts, which are similar to social enterprises, to improve provision of water services to low-income communities through the use of more resilient water pipes.
Through this partnership, Borealis & Borouge demonstrates to utilities the benefits of high quality pipe material, including easier installation, lower maintenance costs and most importantly reduction of leakage. WSUP also supported the relationship with the Lusaka Water & Sewerage Company, which manages water infrastructure across the city and was responsible for installing the pipes. Now, the water trusts are serving tens of thousands of people in Lusaka.
WEConnect International is a global network that connects women-owned business to multinational corporate buyers around the world. As a result of getting WEConnect certified, Madelaine Artavia Sotela, an architect and founder of Arquitectura Arquenz in Costa Rica, was able to secure a contract with Marriott International — a WEConnect International corporate member. Marriott International gained a trusted local construction partner in Costa Rica, and Madelaine grew her business and gained recognition on the market, helping to pave the way for other female architects and entrepreneurs in Costa Rica.
Corporations that explicitly seek to develop partnerships with small and growing businesses can improve both their financial performance and their social impact, which is increasingly important to employees, customers and shareholders. Because of the mismatch between the scale and complexity of large corporations and smaller local and social businesses, a specialized intermediary who understands the specific business challenges of local businesses can increase the chances of success. Intermediaries are also looking for ways to engage global corporations, recognizing that these cross-sector collaborations can help them achieve more impact.
Given the business opportunities and social challenges found in emerging markets, the need for these collaborations is becoming clearer to corporations, local businesses, and the intermediaries that can help them find each other and partner successfully.
This post originally appeared on ImpactAlpha, the leading news publication purpose-built to cover impact finance. ImpactAlpha’s five-day-a-week newsletter, The Brief, is read by more than 22,000 professionals and influencers globally. Subscribe here.
Originally published October 24, 2017