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Can TROSA compete?

October 25, 2011

In the previous post, we discussed the difference between Marginal Private Benefit and Marginal Social Benefit, and related the concept of the externality to social enterprises attempting to cover the costs they incur while producing public goods.

Let’s finally try to briefly relate this to one of TROSA’s businesses. TROSA’s businesses differ from the hypothetical social enterprise discussed above because the goods/services produced by, say, TROSA’s moving service include goods one may obtain from a typical business. We could also say, though, that TROSA’s moving service produces moving services as well as the social good of rehabilitating former substance abusers. The problem with producing these goods, though, is best seen in a comparison with a typical moving service. A generic moving service incurs the costs of paying its workers, among other things, and receives revenue from selling moving services. TROSA (assuming the quality of the service is the same, which it likely is not) receives the same revenue from producing the (hypothetically) equal service, but the costs it incurs rehabilitating its workers may be significantly higher than the cost incurred by the generic company paying wages. Thus TROSA is at a disadvantage to such companies.

Where does this model break down, though? If TROSA can provide a more desirable service than its competition, it can demand the higher price that’s necessary to cover costs. Perhaps individuals will also feel better about purchasing services from a company that they know will use revenue to do good (or, at least, to do more than a typical corporation might), in this case to rehabilitate substance abusers. Thus, in purchasing TROSA’s services over any other moving company’s, the individual (potentially) receives the typical or superior benefit of its moving services plus a feeling that they are improving their community and/or the lives of others. That being said, similar feelings can also work against the organization. Individuals may find less benefit in former substance abusers and criminals handling their furniture than they would in normally employed people performing these same tasks (not considering the very real possibility that even the normally employed movers may still be substance abusers or criminals). This may decrease the perceived value of TROSA’s services.

Finally, to answer the question proposed in this post’s title: The Carnegie Mellon Heinz College’s Chronicle of Social Enterprise presented a brief case study on TROSA. It identified TROSA as the “largest independent moving company” in the Durham-Raleigh-Chapel Hill area, suggesting that it has had no trouble competing. It reported that, in order to dispel negative conceptions about its workforce, TROSA employees must constantly uphold a “work ethic and mentality that emphasizes professionalism.” It would seem TROSA has at least discovered a creative solution to this particular problem. But is TROSA entirely self-sufficient? If not, is it just that it can control such a large portion of this market? We’ll attempt to address these questions in upcoming posts.

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