Social Innovation and Entrepreneurship: Nurturing the Institutional Sine Qua Non for the Informal Sector

Abstract

Social enterprises (SEs) have sprouted in India over the past couple of decades, addressing several social and economic demands. But their emergence and evolution, partaking of the market and the state, has received little academic attention. Besides the compelling reason that the state has to and can play a major role in facilitating SEs that ensure inclusive development, there is an institutional imperative, a need to explore and explain the institutions (rules and norms) that are at the heart of social innovation and lead to the creation and growth of SEs. This chapter argues that the SEs embody a set of principles that are central to inclusive innovation. Here, the social entrepreneur’s capacity to question existing norms, rules and ways of working and find alternative norms that ensure social value and prosperity for the ‘excluded’ become the game changer. The analysis leads us to question what scale means to the SE, and whether and how the Indian state can enable an appropriate ecosystem for fostering and upscaling SEs.

Annexure: Three Cases - The State and Social Enterprises

The three cases presented here and interviews with policymakers and other ecosystem actors conducted as part of this study are about SEs in health care and agri-business. The social, economic and ecological spaces and conversion into value-addition opportunities for society and for the enterprise are what we highlight in these brief case descriptions here. To avoid repetition, the case analyses have been incorporated thematically in the text, along with insights from interviews and focus group discussions. This annexure presents a minimal description of three cases.

Health Care (Case 1)

Why do the state and the public and private sector health services it supports address health care as services during illness? The state’s perception of health care as illness and not as well-being is a problem statement that needs to be studied carefully. This observation comes from a social entrepreneur Rajan Mehta, whose initiative Mycare Health Solutions is ushering in much more than a new business model for health care. This SE carries a key message on the legacy of state intervention and support for health care and demands an alternative epistemology of health care. The current ‘fee for service’ model of health care is tied to a curative approach; it is approached by people during times of illness and forgotten until the next episode of illness. Mehta’s concern as a social entrepreneur is to devise a business model that would make money and provide support or guidance in times of well-being.

Based on a profile of illness and people’s desire for well-being, Mehta conducted a survey of several business models, including the Health Maintenance Organization (HMO) model. What he wanted was a model that would sustain well-being; in other words, generate a sustainable income for all based on ‘wellness’. He decided on a subscription-based and accountable system, where a SE would create and sustain integrated health (IH) which neither the state nor the private sector provides. When the economics worked out to a minimal subscription of Rs. 350 per person per month, and a sustainable scale of 25,000 members to start with, Mr. Mehta pulled in some of his own investments from the financial/stock exchange business he had just wound up, found a few well-meaning investors (friends and colleagues), and started the SE—Mycare Health Solutions in Mumbai in 2012. This SE—a business model for integrated health care, gives a clear message of personal care, well-being and accountability between the firm, its doctors and individual members.

Health Care (Case 2)

The founders of Swasth India—Sandeep Kapila and AnkurPegu, from IIT Mumbai—begin their conceptualization of problems and problem statement from the fact that every year over 32 million people move from above poverty line to below poverty line levels because of morbidity in the family (this WHO finding is quoted in their web page—www.swasthindia.in). How can a business model, a SE, support well-being of the poor, especially, the urban poor? Swasth India presents a model that provides affordable, easily accessible and quality health care to low-income households, so that ill-health, leading to impoverishment and further vicious cycles, is avoided.

Having seeded the idea that health care services for the urban poor needed a different approach, the SE model for Swasth India was tried out in 2011. The business model drew significantly from the context—basically four lessons that the team learnt over three years, providing technical backstopping for some donor-driven and state-supported health, insurance and social mobilization projects. For the poor, (i) Out Patient (OP) attention is crucial to avoid serious morbidity (note that villagers in locations where doctors or medical networks for OP care are limited end up with hospitalization three times more than villagers with doctors or medical networks for OP care); (ii) waterborne diseases are the root cause of 95% of infant and child morbidity, (iii) upper respiratory tract infections cause nearly 25% of total medical expenditure of the family, and (iv) a very small fraction of the unwell need surgery and hospitalization. The business was provision of primary health care and preventive health care for the urban poor, with about 20,000 families enlisted as customers, paying Rs. 700–1000 per family annually to access regular and quality OP care. Besides regular OP care which reduces annual medical bills by 30%, the model also ensured that when needed, the family gets Rs. 30,000 worth cashless hospitalization. But this model had problems—not every urban poor family was willing to pay for preventive health care. The strategy soon evolved to go beyond the micro-insurance based OP care model. The renewed business had to own the customer, reach out and promote the idea of well-being and preventive care, and needed social mobilization of a range of actors (besides the customer). The three pillars of this business are (i) preventive health care and primary health services; (ii) integrated approach to well-being; and (iii) technology as an enabler—in linking, monitoring, learning. The brand equity is promoting ‘good health’ and the core physical entities are ten Swasth India health care centres in the slums of Mumbai. The urban health monitoring in place now within these Swasth India centres, and their database are powerful inputs that can transform the health, medical expenses, livelihoods and skill base of the workforce in the city. The business model ensures that every rupee invested results in savings to the customer. No urban poor family must suffer economic and social deterioration because of morbidity!

Healthy Consumption (Case 3)

Systemic fault lines are abundant in the food we consume and the impacts it has on health—our bodies and our ecosystems. Using the market and the social fabric, to address these fault lines, Pristine Organics is a firm that produces a range of organic foods and nutritional supplements. K. C. Raghu, founder-director of the firm, embodies the byline on the firm’s web page, always willing to unlearn so as to enable learning. In separate interviews with the founder and individual employees (Uma, who handles marketing and brand equity, and Akshatha, a nutritionist who works with the NGOs, services and support system), it is the drive to ensure ‘organic linkages’ that comes across as the key to addressing the evident fault lines in our food production, distribution and consumption systems. Ownership with accountability is built into each of the units or partners that the firm works with. A Gandhian trusteeship is evident in its dealings. But that is what Pristine Organics is about; it has no qualms about running a business with Rs. 15 crore turnover annually, and is happy about the impacts that its products and services have on immunologically challenged people, farmers, NGOs, government schemes or programmes, other private enterprises, and on the organic movement in India. Starting off in 1992 with a small food testing lab, with a bank loan and some personal finance, Pristine focused on two segments in the food industry, nutraceuticals and animal nutrition products. Having gained a reasonable market, business clientele and reputation, within a decade, Pristine was thinking about the food system (soil, water, biodiversity, cultural and culinary diversity, etc.) and the need to bring traditional knowledge and diversity, organic wholesome, healthy, tasty, lively essence of food back to the table.And this it builds with a network of actors who share the economic prosperity and social/ecological benefits.