25 March 2010
Darden School of Business Offers Course on Markets in Human Hope
Three Darden School of Business professors believe you can, and they are guiding students through an unusual course called “Markets in Human Hope.’’
The goal: treat “social’’ entrepreneurs in poverty-stricken areas who have great ideas and good products just like everyday entrepreneurs. Lend them money, invest in their potential, and odds are wealth creation will blossom.
Professors Saras D. Sarasvathy and Frank Warnock, and Batten Fellow Veronica Cacdac Warnock joined forces to create the course they hope will help change how we approach the seemingly intractable problem of poverty.
“It comes down to economic development,’’ says Veronica Warnock, who saw her share of privation in the Philippines where she grew up. “It’s poverty alleviation in a financially sustainable way. It’s getting away from dependence on donor funds.’’
“Funding is so messed up in the social sector,’’ says Prof. Sarasvathy. “Why don’t we invest in solutions to human misery instead of donating money?’’
Sarasvathy sees not just credit markets but a whole panoply of financial instruments – bonds, futures, mutual funds – being used to bankroll social entrepreneurship or franchise programs that develop human potential and thus profit. In her book titled Effectuation: Elements of Entrepreneurial Expertise, she writes, “My position is that since all economic value ultimately derives from human beings, investments in the eradication of human misery should be both viable and valuable … all markets are ultimately markets in human hope.’’
There are about 100 countries where access to credit is practically non-existent, says Frank Warnock, who spent two years in the Peace Corp teaching in the poverty-ridden country of Malawi in southeast Africa. “No matter how good an idea, the average Malawian had no way of funding it,’’ he says. “It was amazing to see the difference it made to have access to capital.’’
In the course, Darden students are asked to come up with private sector solutions for long-standing social dilemmas such as lack of credit. Two years ago, for example, a student worked on turning wool made by Tibetans – a good, sellable product – into a business instead of an operation funded by charity. “We wanted to know how this could be done in a business context,’’ says Frank Warnock.
The classes – which are really workshops with the professors acting as coaches – began as a doctoral course in 2006 for which MBA students showed up and wanted in. Now the classes are part of the Darden curriculum and are taught each year.
Students take their ideas and help each other develop them with guidance from the professors. Though many of the ideas might not take off by the end of the course, says Frank Warnock, the best will be passed down to new students and eventually implemented.
“What we have is a seed of an idea,’’ says Sarasvathy. “We see the students as innovative farmers who will experiment, crossbreed and cultivate a variety of new ideas and new instruments that they can nurture as they go forward into their chosen careers. We hope those seeds grow in ways we haven’t even thought of.’’
Students are now required to go on a field study to face poverty head on. The class will leave March 2 for South Africa for 10 days of meetings with entrepreneurs large and small. The hope is these future business leaders will eventually tilt successfully at the windmill.
“We hope this is where business and society are headed as a whole,’’ says Sarasvathy.
Founded in 1954, the University of Virginia’s Darden School of Business improves society by developing principled leaders in the world of practical affairs.