Scaling

Scaling social impact has always been considered among the most important criterion to evaluate the performance of inclusive business, since it is the main focus of mostly all stakeholders’ activities.

Scaling an inclusive business is the ongoing process of increasing the net value created for income-constrained groups without sacrificing the ability to capture adequate value. Inclusive business scales the social impact by expanding both quantitative and qualitative positive changes in society as they solve social problems at individual and/or systemic levels and is considered an on-going process.

There are three categories of scaling tactics that can be distinguished;

1. Increase the number of beneficiaries of a product or service

Accomplished through market penetration and market development. A part of this is breadth-scaling. Scaling in breadth means expanding to benefit a greater number of people (quantitative dimension). This type of scaling builds on economies of scale, in which the average cost of a product or service decreases as the output increases.

2. Expand the product or service with a social impact

Through product development and market diversification. A part of this is depth-scaling. Scaling in depth means expanding to provide greater benefits to existing beneficiaries (qualitative dimension). This type of scaling builds upon economies of scope, which makes it cheaper to produce a variety of products and services together rather than on their own.

3. Increase the generated income

Increase the revenue per stream and diversifying revenue streams.

Besides increasing the number of users and expanding the product and/or service offer, acquire funding is also crucial for inclusive businesses. Funding is necessary for collaborators to execute the chosen strategy to scale inclusive value creation for income-constrained groups. Especially in the BoP market, where stringent price-performance ratios and low margins per unit result in a lack of financial viability for inclusive businesses. In addition, it is hard to attract sufficient external funding because these funds are often used to support innovative ideas rather than business model replication. Such difficulties with regard to funding limit the magnitude of the impact achieved by the collaborators. For this reason, it is crucial for the collaborators to choose the right financing strategy.

Figure 1: Bocken et al 2016: Framework developed for scaling up social business

References

[1] Bocken, N. M. P., Fil, A., & Prabhu, J. (2016). Scaling up social businesses in developing markets. Journal of Cleaner Production, 139, 295–308.

[2] Gradl, C., & Jenkins, B. (2011). Tackling barriers to scale: From inclusive business models to inclusive business ecosystems. CSR Initiative, Harvard Kennedy School, Cambridge MA.

[3] Han, J., & Shah, S. (2020). The Ecosystem of Scaling Social Impact: A New Theoretical Framework and Two Case Studies. Journal of Social Entrepreneurship, 11(2), 215–239.