NONPROFIT COMPANY (part2)
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5. ORGANIZATIONAL FORM AND MANAGEMENT STRATEGY
OF NP COMPANIES
Because NP companies never distribute profits, it is unlikely that NP companies will take the form of an organization called a stock company that assumes that dividends are made to shareholders. In contrast to the fact that the company owns private ownership of the shareholder, regarding the ownership of the NP company, that is, who owns the NP company, the NP company exists itself as a business entity when it is established,and do not adapt to the concept of ownership of someone. If it have to say daringly, NP companies will be the owners of NP companies themselves. It can be said that NP companies are jointly owned by entrepreneurs, employees or other stakeholders according to the degree of involvement and relationship with the company. NP companies are not subject to existence defined relationships with society by ownership, but are defined as existing as themselves by the joint shoulders of NP companies holding relationships in relation to society, those exist socially by holding (retention) relationship. Under the current law, it will be established as a general incorporated corporation or limited liability company (LLC).
The basic strategy in the organization and management of NP companies is to realize the fusion of competition and collaboration both socially and within the enterprise. As state in "Competition and Collaboration", the principles are: (1) openness (disclosure of information to internal and external), (2) autonomy (self-reliance), (3) fulfillment (fulfillment of conditions for establishment of each of competition and collaboration), (4) empathy (mutual understanding), (5) cooperativeness.
By organizing the project execution sector in NP companies as a project team at every each business, it become easy to realize the fusion of competition and cooperation, and it is possible to secure a competitive advantage by combining the businesses. Because, as mention in "Development of Economic Structure for Information Society", it is enable to realize the principle of 'competition and collaboration' meaningfully and concretely by the project team for each specific business in each workplace is structured as an organization that has been integrated with each other according to the relevance between the objects.
It is not enable by an organization such as business division, department, and section that responds to universal, permanent, rank-oriented seniority system, and way of making decisions by responsibility dispersion type consensus forming system that the responsibility of decisions pushing up from bottom to top along the rank in organizations.
It is thought appropriate organization management that regarding the formulation of corporate management strategy and management plan, reporting / approval of management situation, at the strategic management meeting that is composed of the representative of the company who is the chief executive officer, the special number of expert advisors as necessary, and the representative of all project teams, furthermore all members of project team of target as necessary, discussions are made based on reports from the project management team, and the results are immediately reported to relevant stakeholders. The report of the company management data required by the strategic management meeting is fully possible by the project team consisting of a few specialized management data processing engineers due to the progress of the information processing technology, and the stratified control and dominance system is no longer unnecessary.
The highest decision-making body of the NP company is naturally a general meeting of employee with voting rights of each person, and it is appropriate that other various stakeholders have the right to participate and express their opinions but have no voting rights. The decisions of the general meeting of employees are the selection of CEO, executive officer, corporate auditor and determination of the basic plan and strategy of the project. The important thing here is not to make the discussion of decision making in the general meeting of the employee skeletonize and hollow. For that, it is necessary to fully discuss beforehand in each project team which execute the business and their opinions provide to the general meeting so as to be reflected. As a prerequisite for this, it is essential that important information on management be disclosed and publicized to all employees. In addition, if it is coming to a situation where discussion can not be debated properly gathering the number of employees in one place by the number of employees has become enormous, it may be possible to substitute the representative meeting where the representatives of the project team attend to the general meeting of employees.
Since such NP companies are corporate organizations in which competition and cooperation are harmonized, it can be said that those are best adapted to develop new solutions to various social issues and to generate new social values and to develop new social businesses. In doing so, by collaborating with other organizations and institutions such as existing social enterprises, intermediate support organizations, funding agencies, universities and research institutions, they can demonstrate high competitiveness. For this reason, it is preferable for NP companies as effective strategy to create a so-called social innovation cluster, in which these companies, organizations and institutions are geographically concentrated with constructing cooperative and competitive relationships.
In addition, NP companies of such organization type are more advantageous than the private enterprises based on the principle of competition and profit margin based on the ownership principle, when utilizing the network which is a feature of the information society to increase the efficiency of the business. Since private enterprises have competition principle and profit mission principle, it is impossible in principle to try to increase efficiency by using the network in collaboration with other private enterprises, as a result only a very limited extent can be realized. On the other hand, in NP companies based on collaboration principle, each of project teams can freely work forming a highly organically organized network with project teams of other NP companies, and the necessary activities can be carried out extremely efficiently, so NP companies can effectively establish a network formation strategy.
Business fields suitable for NP companies to develop include such as (1) knowledge intensive industries related to IT, (2) labor-intensive industries related to interpersonal services such as welfare, (3) agriculture and various local industries that revitalize the area, (4) regional improvement, tourism and community formation rooted in regional culture. These fields overlap with the fields currently mentioned as growth fields, which shows that historically unavoidable flow of NP companies dominates these businesses. In addition, it will be appropriate that NP companies combine social enterprise division (by donation / volunteer) to execute mission and to realize value, if a business has high social value but the profit (business continuity) can not be hoped.
6. ABOUT SOCIAL BUSINESS
Finally, I will explain the "social business" which seems to have the basic idea the same as or close to the above-mentioned NP companies.
Muhammad Yunus, who founded Grameen Bank and received the Nobel Peace Prize, as a way to create many types of companies that will serve the poor, raises a corporate form of "social business" that sell products at self-sustainable prices and the owner can recover investment in a certain period of time, but profits in the form of dividends does not pay to investors. (Muhammad Yunus, translated by Hiroko Inokuma, "Creating a world without poverty", Hayakawa Shobo, 2008, and Muhammad Yunus, supervised by Shoji Okada, translated by Toshiaki Chiba, "Social Business Revolution", Hayakawa Shobo, 2010). This is innovative and even revolutionary in that it has many points in common with the NP companies in this paper, and it is actually realized far in advance.
Looking at this trend, especially when "social business" is realistically realized and its idea is being widely accepted, society where disadvantages generated by global financial capitalism of profit supremacy are dispelled seems to be realized in the not far future. However, from the viewpoint of NP companies in this paper, "social business" seems that there is a limit in that it leaves the stock system and ownership concept, and it is mentioned as business of nonprofit, non-profit distribution, but weak in perception of what it means. It seems that "social business" is a business form realized based on the view that responds to social needs in the condition of success of Grameen Bank in Bangladesh where the people are poor and the capitalist system is not generally established.
Specifically, mobile phone company 'Grameen Phone', established in 1996, has shares in Norway's Terenol at 62% and Grameen Telecom at 38%, but at the beginning of the establishment it is pledged that after six years from the company's occasion Telenol to sell its shares and lower its holding rate to 35% or less so that Grameen Telecom will become the largest shareholder. However, contrary to anticipation, the market has been successfully expanding rapidly and the possibility of making profit as a business of a private enterprise has emerged, so Terenoll refuses with explanation that the above pledge is not legally binding. (At least as of 2007). Although it can be said that it is a natural result over the company, it is a state incompatible with the idea of "social business".
In 2005, a joint venture "Grameen Danone" was established as a "social business" to provide yogurt to poor people in Bangladesh with the Danone Group that is a nutritional food manufacturing company. It seems that it is made a joint venture with a 50% stake in this time, making failure of Telenor as lesson. However, it is decided to pay a 1% dividend after repaying the investment money to recognize ownership, bending the principle. In December 2009, it was decided that the basic principle was faithfully obeyed and the owner of the company not to receive the dividend exceeding the original investment. Meanwhile, at the side of the private company of Danone, devise measures was necessary to receive establishment permission by the French securities exchange regulatory body as a mainstream money market fund, so that a variable capital investment company Danone Community Fund (investing 90% in financial markets to secure market yields, 10% investing in social business to bring social benefits) was constituted. It can be said that it was realized only by the investment based on the founder's faithful philosophy at the time of founding Danone and the company image enhancement strategy as an international company Danone and furthermore incorporating it as a part of the money market fund.
Also, as an incentive of profit supreme private companies to invest for "social business", it has been announced that if invest in "social business" investment money will come back and can be owner of independent company. In addition, although it is described that "It is better to be able to trade stocks of social business", "Social stock market to trade social business stocks will be soon needed", "Stock price will reflect the consensus of the house of owners of social business investment", it is difficult to understand that these expressions do not contradict the philosophy of "social business ". Even though providing the funds at start-up, even after being repaid the funds - possibly with a reasonable interest - to continue to assert legal ownership seems to not conform with the idea of "social business". Although, it does not mean that we can not understand the idea securing liquidity of funds and encouraging investment by doing that when a person who contributed at start-up suddenly needs funds, the funds can be collected quickly by transferring the status of owner and collection of investment to a third party, it seems that in doing so "social business" will be dependent on the system of profit supremacy, eventually not reforming the economy, but self-defeating themselves as complementary objects that wipe harmful influence brought by the profit supremacy system.
Furthermore, it is positioned that "social business" is a missing piece of a capitalist system, and capitalism will have the power to take on a extremely big global problem in the world what is left of the business concept that is currently mainstream and the system may be rescued by introducing a system of "social business". Also, it is described that in order to complete the capitalist structure, we need to introduce another kind of business that will allow us to recognize the multidimensional nature of human beings, and a new business may be called "social business", if the existing business is described as "Profit Maximizing Business (PMB)". As can be seen from this, it have to be said that "social business" is positioned only as a supplement to capitalism, and it has not been clarified that construct a society that eliminates the harmful effect of modern capitalist society itself. Conversely, it is obvious that if a company that faithfully adheres to the basic philosophy of "social business" becomes mainstream economy, capitalism driven by profit distribution will have to be driven out, and it should not be able to stay in such a state that "Add social business to the capitalist framework". It can be said that as long as makes this point ambiguous, or as long as shackles social business so as not to become mainstream, existence of "Social business" is tolerated by investors with profit-earning principles.
It can be said that the "social business" is ultimately a stock company owned by shareholders, and it is realized by currently doing that shareholders having a majority shareholding decide that they will not be distributed beyond the original investment. However, as long as the decision is made by the stock company, it can be freely changed at the shareholders meeting decided by the majority vote of the number of shares held. If, for example, a shareholder with a strong influence on the decision of the business intends to make decision of excessive business expansion measures on purpose or on good intentions, and as a result the company falls into a state immediately before bankruptcy, then the shareholders threaten to the low conscious shareholders that the stocks valued at a reasonable price in the social stock market will be out of paper and in a story to buy it at a predefined price before that,thus the shareholders can take up a majority of the stock. If that happens, the dividend is revived by the pretext that it is necessary to distribute even a little, for example 1%, in order to collect funds and establish corporate governance, after that it is highly likely that the business will eventually regenerate as an ordinary private enterprise in a blink of an eye based on the business developed by "social business" and will grow greatly. It is prayed that best attention to "social business" is payed so that it can be said that such a situation has only been a concern even after Mr. Yunus retired.
7. IN CONCLUSION
As mentioned at the beginning, since disadvantages due to the capitalist economic system have become more and more prominent in recent years, its limits are clearly recognized, and it has become to expect to the role of non-profit organization. However, most existing non-profit organizations work with the aim of mitigating the adverse effects, basically on the premise of the existence of the capitalist economic system. However, still, it is becoming to propose some view that non-profit organizations become economically mainstream.
For example, Masashi Tao said, "as a capitalism promotes crowds of organizations called stock companies, a society where resources become to scarce requires organizations called nonprofit organization, and becoming to a society where bristling with organizations called nonprofit organization is only natural" ( see: Tao & Yoshida ed., "Nonprofit Organization Theory", Yuhikaku Alma, 2009, p.208 ). In Sweden's Environmental Education Textbook "Changing the Perspective", it is presented the opinion that human beings have desire to own possession and desire to exist, and while industrial society is a society overwhelming possessive desire in the sacrifice of existence desire, but when becoming a knowledge society the desire to exist exceed the desire to possess.
Also, it is said that non-profit enterprises can only raise business funds by issuing stocks like Mr. Yunus's "social business", but what is not so is evident from the explanation in Mr. Yunus's writings that there are many funds provided to do social contribution without seeking profits. In addition, many excellent entrepreneurs have found the significance of entrepreneurship not in money but in self-fulfillment, a sense of mission towards social issues. Although many entrepreneurs with such a strong sense of mission have been existed for a long time, because in recent years has become increasing more and more, it seems that it is not a dream tale that many entrepreneurs establish NP companies, the NP companies become mainstream in the economic society, and the economic society is constituted quite heterogeneous from modern capitalism and global financial capitalism.
OF NP COMPANIES
Because NP companies never distribute profits, it is unlikely that NP companies will take the form of an organization called a stock company that assumes that dividends are made to shareholders. In contrast to the fact that the company owns private ownership of the shareholder, regarding the ownership of the NP company, that is, who owns the NP company, the NP company exists itself as a business entity when it is established,and do not adapt to the concept of ownership of someone. If it have to say daringly, NP companies will be the owners of NP companies themselves. It can be said that NP companies are jointly owned by entrepreneurs, employees or other stakeholders according to the degree of involvement and relationship with the company. NP companies are not subject to existence defined relationships with society by ownership, but are defined as existing as themselves by the joint shoulders of NP companies holding relationships in relation to society, those exist socially by holding (retention) relationship. Under the current law, it will be established as a general incorporated corporation or limited liability company (LLC).
The basic strategy in the organization and management of NP companies is to realize the fusion of competition and collaboration both socially and within the enterprise. As state in "Competition and Collaboration", the principles are: (1) openness (disclosure of information to internal and external), (2) autonomy (self-reliance), (3) fulfillment (fulfillment of conditions for establishment of each of competition and collaboration), (4) empathy (mutual understanding), (5) cooperativeness.
By organizing the project execution sector in NP companies as a project team at every each business, it become easy to realize the fusion of competition and cooperation, and it is possible to secure a competitive advantage by combining the businesses. Because, as mention in "Development of Economic Structure for Information Society", it is enable to realize the principle of 'competition and collaboration' meaningfully and concretely by the project team for each specific business in each workplace is structured as an organization that has been integrated with each other according to the relevance between the objects.
It is not enable by an organization such as business division, department, and section that responds to universal, permanent, rank-oriented seniority system, and way of making decisions by responsibility dispersion type consensus forming system that the responsibility of decisions pushing up from bottom to top along the rank in organizations.
It is thought appropriate organization management that regarding the formulation of corporate management strategy and management plan, reporting / approval of management situation, at the strategic management meeting that is composed of the representative of the company who is the chief executive officer, the special number of expert advisors as necessary, and the representative of all project teams, furthermore all members of project team of target as necessary, discussions are made based on reports from the project management team, and the results are immediately reported to relevant stakeholders. The report of the company management data required by the strategic management meeting is fully possible by the project team consisting of a few specialized management data processing engineers due to the progress of the information processing technology, and the stratified control and dominance system is no longer unnecessary.
The highest decision-making body of the NP company is naturally a general meeting of employee with voting rights of each person, and it is appropriate that other various stakeholders have the right to participate and express their opinions but have no voting rights. The decisions of the general meeting of employees are the selection of CEO, executive officer, corporate auditor and determination of the basic plan and strategy of the project. The important thing here is not to make the discussion of decision making in the general meeting of the employee skeletonize and hollow. For that, it is necessary to fully discuss beforehand in each project team which execute the business and their opinions provide to the general meeting so as to be reflected. As a prerequisite for this, it is essential that important information on management be disclosed and publicized to all employees. In addition, if it is coming to a situation where discussion can not be debated properly gathering the number of employees in one place by the number of employees has become enormous, it may be possible to substitute the representative meeting where the representatives of the project team attend to the general meeting of employees.
Since such NP companies are corporate organizations in which competition and cooperation are harmonized, it can be said that those are best adapted to develop new solutions to various social issues and to generate new social values and to develop new social businesses. In doing so, by collaborating with other organizations and institutions such as existing social enterprises, intermediate support organizations, funding agencies, universities and research institutions, they can demonstrate high competitiveness. For this reason, it is preferable for NP companies as effective strategy to create a so-called social innovation cluster, in which these companies, organizations and institutions are geographically concentrated with constructing cooperative and competitive relationships.
In addition, NP companies of such organization type are more advantageous than the private enterprises based on the principle of competition and profit margin based on the ownership principle, when utilizing the network which is a feature of the information society to increase the efficiency of the business. Since private enterprises have competition principle and profit mission principle, it is impossible in principle to try to increase efficiency by using the network in collaboration with other private enterprises, as a result only a very limited extent can be realized. On the other hand, in NP companies based on collaboration principle, each of project teams can freely work forming a highly organically organized network with project teams of other NP companies, and the necessary activities can be carried out extremely efficiently, so NP companies can effectively establish a network formation strategy.
Business fields suitable for NP companies to develop include such as (1) knowledge intensive industries related to IT, (2) labor-intensive industries related to interpersonal services such as welfare, (3) agriculture and various local industries that revitalize the area, (4) regional improvement, tourism and community formation rooted in regional culture. These fields overlap with the fields currently mentioned as growth fields, which shows that historically unavoidable flow of NP companies dominates these businesses. In addition, it will be appropriate that NP companies combine social enterprise division (by donation / volunteer) to execute mission and to realize value, if a business has high social value but the profit (business continuity) can not be hoped.
6. ABOUT SOCIAL BUSINESS
Finally, I will explain the "social business" which seems to have the basic idea the same as or close to the above-mentioned NP companies.
Muhammad Yunus, who founded Grameen Bank and received the Nobel Peace Prize, as a way to create many types of companies that will serve the poor, raises a corporate form of "social business" that sell products at self-sustainable prices and the owner can recover investment in a certain period of time, but profits in the form of dividends does not pay to investors. (Muhammad Yunus, translated by Hiroko Inokuma, "Creating a world without poverty", Hayakawa Shobo, 2008, and Muhammad Yunus, supervised by Shoji Okada, translated by Toshiaki Chiba, "Social Business Revolution", Hayakawa Shobo, 2010). This is innovative and even revolutionary in that it has many points in common with the NP companies in this paper, and it is actually realized far in advance.
Looking at this trend, especially when "social business" is realistically realized and its idea is being widely accepted, society where disadvantages generated by global financial capitalism of profit supremacy are dispelled seems to be realized in the not far future. However, from the viewpoint of NP companies in this paper, "social business" seems that there is a limit in that it leaves the stock system and ownership concept, and it is mentioned as business of nonprofit, non-profit distribution, but weak in perception of what it means. It seems that "social business" is a business form realized based on the view that responds to social needs in the condition of success of Grameen Bank in Bangladesh where the people are poor and the capitalist system is not generally established.
Specifically, mobile phone company 'Grameen Phone', established in 1996, has shares in Norway's Terenol at 62% and Grameen Telecom at 38%, but at the beginning of the establishment it is pledged that after six years from the company's occasion Telenol to sell its shares and lower its holding rate to 35% or less so that Grameen Telecom will become the largest shareholder. However, contrary to anticipation, the market has been successfully expanding rapidly and the possibility of making profit as a business of a private enterprise has emerged, so Terenoll refuses with explanation that the above pledge is not legally binding. (At least as of 2007). Although it can be said that it is a natural result over the company, it is a state incompatible with the idea of "social business".
In 2005, a joint venture "Grameen Danone" was established as a "social business" to provide yogurt to poor people in Bangladesh with the Danone Group that is a nutritional food manufacturing company. It seems that it is made a joint venture with a 50% stake in this time, making failure of Telenor as lesson. However, it is decided to pay a 1% dividend after repaying the investment money to recognize ownership, bending the principle. In December 2009, it was decided that the basic principle was faithfully obeyed and the owner of the company not to receive the dividend exceeding the original investment. Meanwhile, at the side of the private company of Danone, devise measures was necessary to receive establishment permission by the French securities exchange regulatory body as a mainstream money market fund, so that a variable capital investment company Danone Community Fund (investing 90% in financial markets to secure market yields, 10% investing in social business to bring social benefits) was constituted. It can be said that it was realized only by the investment based on the founder's faithful philosophy at the time of founding Danone and the company image enhancement strategy as an international company Danone and furthermore incorporating it as a part of the money market fund.
Also, as an incentive of profit supreme private companies to invest for "social business", it has been announced that if invest in "social business" investment money will come back and can be owner of independent company. In addition, although it is described that "It is better to be able to trade stocks of social business", "Social stock market to trade social business stocks will be soon needed", "Stock price will reflect the consensus of the house of owners of social business investment", it is difficult to understand that these expressions do not contradict the philosophy of "social business ". Even though providing the funds at start-up, even after being repaid the funds - possibly with a reasonable interest - to continue to assert legal ownership seems to not conform with the idea of "social business". Although, it does not mean that we can not understand the idea securing liquidity of funds and encouraging investment by doing that when a person who contributed at start-up suddenly needs funds, the funds can be collected quickly by transferring the status of owner and collection of investment to a third party, it seems that in doing so "social business" will be dependent on the system of profit supremacy, eventually not reforming the economy, but self-defeating themselves as complementary objects that wipe harmful influence brought by the profit supremacy system.
Furthermore, it is positioned that "social business" is a missing piece of a capitalist system, and capitalism will have the power to take on a extremely big global problem in the world what is left of the business concept that is currently mainstream and the system may be rescued by introducing a system of "social business". Also, it is described that in order to complete the capitalist structure, we need to introduce another kind of business that will allow us to recognize the multidimensional nature of human beings, and a new business may be called "social business", if the existing business is described as "Profit Maximizing Business (PMB)". As can be seen from this, it have to be said that "social business" is positioned only as a supplement to capitalism, and it has not been clarified that construct a society that eliminates the harmful effect of modern capitalist society itself. Conversely, it is obvious that if a company that faithfully adheres to the basic philosophy of "social business" becomes mainstream economy, capitalism driven by profit distribution will have to be driven out, and it should not be able to stay in such a state that "Add social business to the capitalist framework". It can be said that as long as makes this point ambiguous, or as long as shackles social business so as not to become mainstream, existence of "Social business" is tolerated by investors with profit-earning principles.
It can be said that the "social business" is ultimately a stock company owned by shareholders, and it is realized by currently doing that shareholders having a majority shareholding decide that they will not be distributed beyond the original investment. However, as long as the decision is made by the stock company, it can be freely changed at the shareholders meeting decided by the majority vote of the number of shares held. If, for example, a shareholder with a strong influence on the decision of the business intends to make decision of excessive business expansion measures on purpose or on good intentions, and as a result the company falls into a state immediately before bankruptcy, then the shareholders threaten to the low conscious shareholders that the stocks valued at a reasonable price in the social stock market will be out of paper and in a story to buy it at a predefined price before that,thus the shareholders can take up a majority of the stock. If that happens, the dividend is revived by the pretext that it is necessary to distribute even a little, for example 1%, in order to collect funds and establish corporate governance, after that it is highly likely that the business will eventually regenerate as an ordinary private enterprise in a blink of an eye based on the business developed by "social business" and will grow greatly. It is prayed that best attention to "social business" is payed so that it can be said that such a situation has only been a concern even after Mr. Yunus retired.
7. IN CONCLUSION
As mentioned at the beginning, since disadvantages due to the capitalist economic system have become more and more prominent in recent years, its limits are clearly recognized, and it has become to expect to the role of non-profit organization. However, most existing non-profit organizations work with the aim of mitigating the adverse effects, basically on the premise of the existence of the capitalist economic system. However, still, it is becoming to propose some view that non-profit organizations become economically mainstream.
For example, Masashi Tao said, "as a capitalism promotes crowds of organizations called stock companies, a society where resources become to scarce requires organizations called nonprofit organization, and becoming to a society where bristling with organizations called nonprofit organization is only natural" ( see: Tao & Yoshida ed., "Nonprofit Organization Theory", Yuhikaku Alma, 2009, p.208 ). In Sweden's Environmental Education Textbook "Changing the Perspective", it is presented the opinion that human beings have desire to own possession and desire to exist, and while industrial society is a society overwhelming possessive desire in the sacrifice of existence desire, but when becoming a knowledge society the desire to exist exceed the desire to possess.
Also, it is said that non-profit enterprises can only raise business funds by issuing stocks like Mr. Yunus's "social business", but what is not so is evident from the explanation in Mr. Yunus's writings that there are many funds provided to do social contribution without seeking profits. In addition, many excellent entrepreneurs have found the significance of entrepreneurship not in money but in self-fulfillment, a sense of mission towards social issues. Although many entrepreneurs with such a strong sense of mission have been existed for a long time, because in recent years has become increasing more and more, it seems that it is not a dream tale that many entrepreneurs establish NP companies, the NP companies become mainstream in the economic society, and the economic society is constituted quite heterogeneous from modern capitalism and global financial capitalism.