92 percent of businesses in the country are micro or small
November 11, 2017
Research shows that Bhutanese social enterprises can be driver for practical change.
Fergus Lyon (PhD) and Rabsel Dorji shared this during the International Conference on Gross National Happiness (GNH) while presenting their paper ‘Social enterprise well-being models as an articulation of alternative development models: lessons from Bhutan’s Gross National Happiness approach.’
Fergus Lyon is a professor of enterprise and organisations at the Centre for Enterprise and Economic Development Research, Middlesex University in London. Rabsel Dorji is a senior lecturer in the business department at the Royal Thimphu College.
Fergus Lyon said that in-between the two extremes of purely profit driven businesses and Non Governmental Organisations, a balance could be other innovative alternatives such as social enterprises – businesses that are trading for a social or environmental purpose and B Corps- companies with a defined mission for social good but can make a profit.
There are about 28,000 registered businesses in the country, 92 percent of which are either micro or small businesses.
Rabsel Dorji said that 76 percent of these businesses employ less than five people, over 90 percent are sole proprietorship, and two percent are Foreign Direct Investment owned. “Make up of the private sector in Bhutan is primarily and essentially small businesses or family owned enterprises who are primarily engaged in retail, wholesale, and tourism.”
The main challenges businesses in Bhutan face are access to finance, high cost of transportation, and the small market. “Despite these challenges, there are many businesses that have been able to address socioeconomic, cultural and environmental issues while also growing and maintaining their commercial activities,” Rabsel Dorji said.
Bhutan is interesting, Fergus Lyon said as its idea of interdependences and GNH of multiple criteria is at the heart of what a lot of people are doing. “May be they do not want to express it explicitly but it is at the basis of how they make decision and how they combine different ideas.”
Citing examples such as Bhutan Media and Communication Institute, Maiyesh clay studio, and Yangphel adventure travel from the nine businesses assessed, Rabsel Dorji said that whether micro, small or a larger enterprise, the businesses show how GNH and social entrepreneurship can be put into practice. “Not only do they have to find ways to be financially sustainable, but they are also bringing together a wide range of social and environmental objectives within their operations.”
He said that BMC’s business model is to win contract that are competitively tendered by the government and attract paying customers. “However, their social objective is to educate and built capacity in the use of media across the country. In this way they are seeking profit but with a purpose.”
Maiyesh clay studio sells pottery but at the same time promotes the country’s arts and crafts. Yangphel adventure travel has a range of investors looking to make financial returns but they also have social, cultural and environmental objectives such as building capacity in the tourism industry.
Fergus Lyon said that businesses face many challenges of sustainability and well being, which they try to tackle especially though Corporate Social Responsibility (CSR). “But at the same time they are trying to survive, thrive, run their business, and keep it going often in difficult circumstances.”
He said that the essence of a social entrepreneur is what they can do, and how they balance social and the commercial aspects of a business. “Ideal social entrepreneur is going beyond CSR, (companies just giving) and putting social and environmental objective in their mission and the way they run their business.”
Fergus Lyon said that from the examples of social enterprises and other businesses in Bhutan that has social and environmental purpose, it sheds light on how to apply GNH in practice.
Rabsel Dorji said that GNH certification tool is an important step towards promoting businesses to instill GNH values but it should also provide support services such as technical and networking support, and capacity building to attract businesses in Bhutan. “Another way to incentivise these businesses to adopt GNH certification is to help them with access to finance by including them in the matrics to calculate business credit worthiness and the government scoring system for procurement.”
He said that GNH in Bhutan has traditionally been a top down government led, policy oriented approach. “But if you really want to encourage GNH in the private sector, we must also look at a bottom up business led and practical approach. That is where social entrepreneurship we believe plays a vital role.”
AMICI DEL BHUTAN - ITALY