Adam Smith Business School

Dr Andrew Smith, University of Liverpool

'Organizing Entrepreneurial Philanthropy in the Age of Effective Altruism: Towards a Conceptual Model' (co-authored by M. McCaffrey)
Wednesday 16 March, 3.30pm – 4.30pm
Zoom online seminar

Register at business-school-research@glasgow.ac.uk

Abstract

Entrepreneurial philanthropy occurs when entrepreneurs pursue big social objectives on a not-for-profit basis. Since about 2000, entrepreneurial philanthropy has been transformed by the advent of the new style of data-driven philanthropy as associated with the “Effective Altruism” movement. The thought leaders of this movement say that successful entrepreneurs have a moral obligation both to donate generously to charity and to donate in the fashion that will reduce the most sentient suffering per dollar donated. The Effective Altruism movement argues that entrepreneurs will do the most good if they keep their business and charitable ventures separate, avoiding participation in hybrid or social enterprises, and then donate the resulting profits using a new scientific methodology that is designed to maximize reduction of sentient suffering per dollar donated. Organizations such Founders’ Pledge, Give Well, and the Oxford Centre for Effective Altruism have sought to influence the giving practises of entrepreneurs, with some success.

While many philanthropic entrepreneurs have continued to donate using the methods the Effective Altruist movement regards as hopelessly unscientific, Effective Altruism has proved popular with some populations of entrepreneurs, particularly tech entrepreneurs in English-speaking countries. For instance, Mark Zuckerberg in the US and Ben Delo in the UK has publicly committed to donating generously and in an explicitly effective altruist fashion. Within the population of entrepreneurs who have endorsed Effective Altruism, we see considerable variations in how their philanthropy is organized, with some entrepreneurs choosing to donate via a foundation they actively manage (the model used by Bill Gates), while others outsource active management of the funds to others. Some entrepreneurs associated with Effective Altruism have even brought their philanthropic activities within the boundaries of their commercial firms. Given that the Effective Altruism movement has exerted a strong influence on the giving of some but not most entrepreneurs, it is important for us to be able to account for the observed variation in the response of entrepreneurs to the effective altruism movement.

Unfortunately, the entrepreneurship literature does not give us a theoretically informed model that can help to explain why entrepreneurs’ responses to the Effective Altruism movement have been so different. The model we present explains why some entrepreneurs have been far more receptive to the teachings of effective altruism than others, doing so by referring to differences in the cognitive styles and institutional contexts of entrepreneurs. Our model also illuminates why the entrepreneurs who have expressed agreement with the doctrine of Effective Altruism differ in how they have organized their philanthropy. We use insights from the theory of the firm and transaction cost economics to understand those decisions about the organization of philanthropy.

Biography

Andrew Smith is a Senior Lecturer at the University of Liverpool Management School. He is also the Director of Research in the Strategy, International Business, and Entrepreneurship department. His academic research straddles the boundaries of business and economic history on the one hand and strategy and entrepreneurship on the other. He was trained at Queen's University and the University of Western Ontario in Canada and the University of London here in the UK. Andrew has published social-scientific articles in such journals as Business History, Journal of Management Studies, Enterprise and Society, and Journal of Management Inquiry. In 2019, he was elected to the executive of the MH Division of the Academy of Management.

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Further information: business-school-research@glasgow.ac.uk 

First published: 2 March 2022