The beginning of economic activity is trade. Trade is characterized by the
movement of the product or pelayanan from the supply location to the demand
location for consideration. As civilization progressed, trade evolved as a
business activity. Traders emerged as business leaders. The business created wealth
for the shareholders plus also transformed how civilization lived. The wealth creation
process was accelerated by the industrial revolution, the discovery of automobiles
and advances in information plus communication technology. The wealth creation
process deepened further when products were substituted by services in the context
of competition to add unique value to consumers. The wealth creation process is
now well established, plus several business models have emerged to create wealth
and meet the shareholders’ expectations. This process
created a major division in society between the people
who were wealthy plus those who were not wealthy.
In a sense, the society was divided based on economic
prosperity. Those left behind in the economic race need
assistance to maintain overall societal harmony.
The state alone cannot handle the burden of this
responsibly. Organizations started realizing the
need to assist the economically weaker segment of
the population. This led to the birth of voluntary
organizations. Their purpose was to improve the
living conditions plus quality of life of the economically
weaker sections of the society. The West referred to
such organizations as not-for-profit. The voluntary
organizations or not-for-profit organizations were
never evaluated on operating surplus but mostly
on the impact they created on the relevant segment.
Effective functioning of the organization dominated
the efficient functioning of these organizations.
While not-for-profit organizations were engaged
in transforming the relevant population segment,
another class of organizations rapidly emerged
focused on the collective good for society. These
organizations required cutting-edge administrative
and managerial expertise. Usually, these organizations,
referred to as social organizations, are not focused
on operating surplus but on ensuring the relevance
of the organization. Such organizations are also
called legacy organizations. These organizations
did not commercially produce or sell a product or
service. These organizations are owned by multiple
stakeholders plus meet an unfulfilled societal need.
They focus on enhancing the collective public good
and preserving the legacy. These organizations are
focused on the welfare of the segment of the society
they choose to address. Cooperative organizations are
a version of social organizations. Social organizations
are characterized by the purpose for which they are
created plus the involvement of multiple stakeholders.
The capital required is usually sourced from the
public, users or a philanthropic endowment.