Social enterprise: three schools and Grameen's seven principles

Suppose you are setting up a small workshop that employs disabled people. A funder asks whether it is a social enterprise. An investor asks when the dividends start. The answers depend on which definition is in use. This post sets three definitions side by side, then uses Grameen's seven principles as a checklist and marks which can be read from public documents and which cannot.

What are the three schools of social enterprise?

The library sorts the field into the earned-income school, the social innovation school and Grameen-style social business (Defourny and Nyssens, 2010; Yunus et al., 2010). The table is the library's own comparison.

In my reading, the columns ask different questions. Does trading income pay for the mission? Has anything changed? Who receives the profit?

How do service, activism and social entrepreneurship differ?

Martin and Osberg (2007) ask two things: is the action direct or indirect, and does the system afterwards stay as it was or settle into a new equilibrium (Martin and Osberg, 2007). Service provision acts directly and improves outcomes within the existing equilibrium. Activism acts indirectly, by persuading others to act. Social entrepreneurship acts directly to create a new, lasting equilibrium, which lasts because others copy it.

Their example is a school for AIDS orphans. It is a service, unless the plan is to spread it as a network, so that one school closing would not end the arrangement. On profit they set no dividend rule: a venture may be non-profit or for-profit, but the social entrepreneur neither expects nor organises to produce substantial financial profit for investors (Martin and Osberg, 2007).

Where do the seven principles come from, and how solid is the list?

The library gives two origins for the seven principles: Social Business Pedia, a community wiki and not peer-reviewed, and Yunus, Moingeon and Lehmann-Ortega (2010) (Social Business Pedia, 2015; Yunus et al., 2010). I could confirm the full list only on the wiki page. The abstract of the Yunus paper does not list the seven principles; I have not read the full paper, so I cannot say whether it does.

On 3 November 2026 the wiki page said it was last updated on 10 June 2015 and, in the text I could read, named no author or source for the list. The paper's DOI page shows no abstract, so I read it in the HAL copy indexed by RePEc. It describes five lessons from nearly 30 poverty-fighting businesses that Grameen created. So I treat the seven principles as a working checklist, not as Yunus's official definition.

How far can the seven principles be checked on TOMS and Grameen Bank?

Principles 3, 4 and 6 need internal records (articles of association, shareholder agreements, payroll), so a public page can hardly prove them. Principle 7 has no document behind it. Principles 1, 2 and 5 can appear on a public page, but only as statements.

TOMS. The impact page of the shoe brand, which I read on 3 November 2026, says the mission has stayed "use business to improve lives" although the giving model has evolved since 2006, and that purchases help support children's education, health and well-being. The company reports more than US$200 million given in grants and shoe donations, and more than 106 million "lives positively impacted", with no counting method given. It does not say who owns the company, whether dividends are paid, where profit goes or what staff are paid; it mentions a B Corporation certification but no legal form (TOMS, n.d.).

The right verdict is that principles 3, 4 and 6 cannot be verified from this page, which is not the same as TOMS failing them. The library uses TOMS to contrast social enterprise with corporate social responsibility (on proof for claims, see sustainable marketing is not CSR). Company pages change, so this is one day's snapshot.

Grameen Bank. The Nobel page on Grameen Bank says only that the 2006 Peace Prize went jointly to Muhammad Yunus and Grameen Bank, one half each, "for their efforts to create economic and social development from below" (NobelPrize.org, 2006). The library calls Grameen Bank a microfinance bank, while the abstract of Yunus and colleagues says Grameen created nearly 30 poverty-fighting businesses and draws lessons from them (Yunus et al., 2010). Say whether you are testing the bank or one of those businesses.

How does a hypothetical workshop fare against the seven principles?

In this hypothetical example, Workshop A clashes with common startup practice on principles 3 and 4. Hypothetical example. Workshop A, a name I made up, is in Can Tho and employs 12 people with mobility disabilities to sew cloth bags as corporate gifts. Every figure is invented. Four people put in VND 600 million, and profit after costs is VND 90 million a year.

In numbers: if the workshop used all VND 90 million of annual profit to repay the capital, the four would be repaid after 600 ÷ 90, about 6.7 years. With half, VND 45 million, it takes about 13.3 years. Their return is capped at 1.0 times the money put in. The library defines venture capital as a fund that invests in high-growth firms and aims for an exit, and a cap of 1.0 times sits badly with that aim. That is my inference, so ask the fund.

This suits you if you have backers who accept only their capital back and you can grow from retained profit. It does not suit you if you need a lot of capital quickly, or if the founders need dividends as income. The model is not better: it closes off one source of money in exchange for a commitment.

Where does Workshop A sit on Martin and Osberg's matrix?

As planned, Workshop A is service provision: direct action, system unchanged. It becomes social entrepreneurship only if there is a plan to make employing disabled workers normal in the trade, even if Workshop A closes.

The seven principles ask how the business is funded and run. The matrix asks what changes outside it. In my analysis Workshop A could meet all seven principles and still be service provision (Martin and Osberg, 2007).

On my reading of the library table, the earned-income school suits a non-profit that needs trading income for its programmes. The social innovation school suits you if change is the goal, but not if you need steady cash early.

Going deeper: what do the sources support, and what is missing?

The library credits Defourny and Nyssens (2010) and Yunus and colleagues (2010) as the origin of the three-school table. For the first I read only the abstract, taken from OpenAlex's index because the DOI page shows none. It says the paper traces how the two concepts took root in Europe and the United States and sets out convergences and divergences between and within the regions. It names no earned-income or social innovation school: those labels and the three columns are the library's own (Defourny and Nyssens, 2010).

I read Martin and Osberg in full on the SSIR site on 3 November 2026. The essay thanks colleagues at the Skoll Foundation and counts it among supporters of social ventures, so I read the definition as written partly from a funder's seat. The authors also note that entrepreneurship is a term applied after the fact, so a new equilibrium can be confirmed only years later (Martin and Osberg, 2007).

The Yunus abstract says these models put stakeholders in place of shareholders as the focus of value maximisation (Yunus et al., 2010). In my view the seven principles are a blunt measure of that idea. I have not read the impact reports the TOMS page links to, and I read only the Nobel summary page. The post does not cover Vietnamese law on social enterprises. Ask a lawyer and read the current texts.