Gabelli School of Business Dean Lerzan Aksoy and a Team of Esteemed Academics Publish Research on Social Profit Orientation

Faculty | Aug 14, 2024 | Gabelli School of Business

Study examines the benefits of adopting a social profit orientation to benefit both the organization and society at large.

As the world grapples with complex challenges such as climate change, poverty, and human rights issues, organizations are uniquely positioned to drive positive change. A new study titled “Social Profit Orientation: Lessons from Organizations Committed to Building a Better World,” recently published in the Journal of Marketing, explores how companies can simultaneously generate profit and foster societal well-being.

The research, conducted by Gabelli School Dean Lerzan Aksoy, Ph.D., and a team of esteemed academics, including Leonard L. Berry, Ph.D., (Texas A&M), Tracey S. Danaher, Ph.D., (Monash University, Melbourne, Australia), Timothy Keiningham, Ph.D.,  (St. John’s University), and Tor W. Andreassen, Ph.D., (Norwegian School of Economics), examines the benefits of adopting a social profit orientation to benefit both the organization and society. This approach encourages organizations to invest resources purposefully to enhance the common good.

The study, which was based on 62 in-depth executive interviews across 21 organizations worldwide, reveals the significant benefits of embracing a social profit orientation. These organizations develop new approaches and strategies that address critical problems, thereby driving business innovation and improving societal outcomes.

On the parallels between the findings in the study and the values of sustainability, responsible business, and equitable outcomes that are at the heart of the teaching and learning experience at the Gabelli School, Dean Aksoy commented, “I am particularly proud of this research, as it resonates deeply with our mission of educating those who are committed to leveraging business as a catalyst for creating meaningful change.”

Social Profit Orientation is an organization-wide perspective where organizations embrace in their core mission the creation of sustainable, positive social and environmental impacts on individuals, communities, and society at large. Organizations with this orientation proactively invest resources such as knowledge, infrastructure, labor, reputation, money, and time to enhance the common good, especially improving the well-being of people and safeguarding the health of the planet. It reflects a deliberate, conscious effort to address systemic social or environmental challenges, rather than being merely a by-product of making financial profits.

Specific examples from the study illustrate concretely that organizations can meet the needs and expectations of stakeholders, while also making a lasting difference in the world. Oportun, a company that provides loans, tackles financial exclusion by making affordable credit available to underserved communities, offering an alternative to payday lenders. With significant investments in technology, Oportun has successfully issued millions of loans, enabling its customers to avoid exorbitant interest rates and fees. CEO Raul Vazquez highlights their challenge: “50% of customers who come to us have no FICO [credit] score, and other folks we serve may have a score based on limited history.” Despite these obstacles, Oportun has managed to provide more than $18.2 billion in credit by year-end 2023, saving its customers $2.4 billion in interest and fees.

Gundersen Health System (renamed Emplify Health) exemplifies how a holistic approach to sustainability can be woven into the fabric of an organization. Under the leadership of Dr. Jeff Thompson, Gundersen became the first U.S. health system to offset 100% of its fossil-fuel use with self-produced energy. Their initiatives include harnessing solar and wind power and transforming landfill biogas into electricity and heat. Dr. Thompson remarks, “We are not just a ‘fix-it’ shop. Our mindset was: how do we protect the environment so it is a part of how we work, how we live, and how we work with our communities.”

By adopting a social profit orientation, organizations not only drive meaningful societal impact but also experience enhanced legitimacy, stronger stakeholder relationships, improved employee engagement, and increased innovation. These benefits contribute to long-term business success and sustainability.

Several best practices for building a social profit orientation also were revealed by the study. They include:

• Aligning employee and organizational values to create a unified mission.
• Ensuring organizational resources and governance structures maximize societal benefits.
• Inspiring executive and board leadership to deeply commit to social profit goals.
• Making informed investment decisions that focus on initiatives with the greatest social impact.
• Measuring and evaluate social impact rigorously to ensure meaningful contributions.
• Fostering external partnerships and communicate purpose through compelling storytelling.

“Organizations today are at a crossroads where they can choose to be mere profit-generating entities or become catalysts for global change. Our study shows that the most profitable strategy might also be the one that makes the world a better place. By embracing a social profit orientation, organizations can lead their sectors, drive innovation, and make significant societal impacts,” concluded Dean Aksoy.

To attain a full copy of the research and download the associated teaching guides click here.