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sitions motivated by hubris in unfa- miliar or distant environments. s It grants greater autonomy to acquired firms in distant locations. s It encourages better screening, contracting, and due diligence during the deal-making process. s It results in diverse organiza- tional strengths and performance-en- hancing synergy. The study also found evidence that acquisitions go better when ac- quiring companies are from countries with stronger corporate governance systems than the target firms. For more information, contact Narayanan Jayaraman at narayanan.jayaraman@mgt.gatech .edu or Rajesh Chakrabarti at rajesh.chakrabarti@mgt.gatech.edu. Learning from Social Entrepreneurs When corporations enter new markets, they often take a standard approach—find a demand for their offering and set the price that customers are willing to pay. That approach, however, is not well-suited to markets in devel- oping countries, say researchers Jo- hanna Mair and Christian Seelos, professors at the University of Navarra's IESE Business School in Barcelona, Spain. "Markets that comprise people with incomes below $1,500 per year are not easily tapped," explains Mair. "The ability to pay is limited for those at the base of the economic pyramid. Companies seeking oppor- tunities in these markets may first need to take an intermediate step by joining forces with social entrepre- neurs who understand the needs and conditions in developing countries." Mair and Seelos are engaged in ongoing research that analyzes the impact of collaborations between so- cial entrepreneurs and businesses driven strictly by profit. They pre- sented their most recent work re- cently at a conference, "Social Entre- preneurs as Competitors and Partners in Global Markets," held at IESE in collaboration with the Euro- pean Academy of Business in Society (EABIS). For the last four years, Mair and Seelos have examined social entrepreneurial initiatives that com- bine social and economic value cre- ation. "Over time, we've moved on to investigate the intersection be- tween companies and social entre- preneurs," says Mair. In their current research, Mair and Seelos are looking primarily at three models of collaboration: s The integrated model. When lens manufacturer Aurolab and Aravind Eye Hospital collaborated to treat cataract patients in India at an affordable price, the venture was financially successful. The integrated eye care project delivered treatment to 2 million pa- tients, including 220,000 sight-restoring operations, and achieved a 60 percent profit margin, even though 47 percent of patients were unable to pay. s The symbiotic model. Te- Johanna Mair Christian Seelos profit WasteConcern and agricul- tural company MAP Agro collabo- rated to solve the waste collection problem in Dhaka, Bangladesh. WasteConcern created a door-to- door collection service, set up local composting plants, and trained resi- dents to operate the plants. MAP Agro, in turn, purchased the com- post from the plants to use as fertil- izer. The collaboration reduced methane emissions and the need for chemical fertilizers, mitigated waste accumulation in the city, and pro- duced 160,000 new jobs. Mair and Seelos have found that such collaborations be- tween socially minded and profit-driven organizations can be profitable and maxi- mize opportunities in un- derdeveloped markets. Moreover, they say, these collaborations can do more to solve social problems, such as environmental damage and poverty, than conventional companies can do alone. The two professors are lenor and Grameen Bank collaborated to sell mobile telephone service to people in Bangladesh who lack the financial resources to purchase the service. The two organizations cre- ated a microloan program in 1997, GrameenPhone, and had 4 million customers by August 2004. s The complementary model. Non- currently working on a one-year project on collab- orations between corpora- tions and social entrepre- neurs, which is sponsored by EABIS. "There aren't yet many best practices in this area—we hope that our research will help foster best practices further," says Mair. "We believe there is a huge opportunity for busi- nesses that view social entrepreneurs as potential resources." By partnering with social entrepreneurs, she adds, corporations not only stake a claim in a developing market's economic po- tential—they also help create it. s z BizEd JANUARY/FEBRUARY 2006 51