The Dilemma of Balancing Financial and Social Responsibilities

One of the significant challenges of social enterprises like Microfinance Institutions is to balance financial sustainability and social responsibilities in executing their grand mission. There is a temptation to forgo social responsibility to sustain the institution financially. The social and financial objectives are inseparable and should be seen in totality. The conflict between the two objectives is resolved by making them compatible. The two objectives are not necessarily conflicting if the institution designs a suitable business model and starts to see performance beyond some quantitative measures, such as profitability, which are limited in scope. Organizations are not only guided by internal organizational issues and leader rationality. The organization’s decisions are guided and highly influenced by the action and reactions of stakeholder groups such as government, competitors, culture, and norms. Organizations are also social agents with values, ideologies, norms, and social responsibilities to guide their decisions. The economic rationale is essential but cannot stand by itself. It should be equally sympathetic and responsive to social demands.