Social entrepreneurship
Social entrepreneurship is an approach by individuals, groups, start-up companies or entrepreneurs, in which they develop, fund and implement solutions to social, cultural, or environmental issues.[1] This concept may be applied to a wide range of organizations, which vary in size, aims, and beliefs.[2] For-profit entrepreneurs typically measure performance using business metrics like profit, revenues and increases in stock prices. Social entrepreneurs, however, are either non-profits, or they blend for-profit goals with generating a positive "return to society". Therefore, they use different metrics. Social entrepreneurship typically attempts to further broad social, cultural and environmental goals often associated with the voluntary sector[3] in areas such as poverty alleviation, health care and community development.
At times, profit-making social enterprises may be established to support the social or cultural goals of the organization but not as an end in themselves. For example, an organization that aims to provide housing and employment to the homeless may operate a restaurant, both to raise money and to provide employment for the homeless.
In 2010, social entrepreneurship was facilitated by the use of the Internet, particularly social networking and social media websites. These websites enable social entrepreneurs to reach numerous people who are not geographically close yet who share the same goals and encourage them to collaborate online, learn about the issues, disseminate information about the group's events and activities, and raise funds through crowdfunding.[4]
In recent years, researchers have been calling for a better understanding of the ecosystem in which social entrepreneurship exists and social ventures operate.[5] This will help them formulate better strategy and help achieve their double bottom line objective.[6][7]
Characteristics[edit]
Bill Drayton founded Ashoka in 1980, an organization which supports local social entrepreneurs. Drayton tells his employees to look for four qualities: creativity, entrepreneurial quality, social impact of the idea, and ethical fiber.[20] Creativity has two parts: goal-setting and problem-solving. Social entrepreneurs are creative enough to have a vision of what they want to happen and how to make that vision happen.[21] In their book The Power of Unreasonable People, John Elkington and Pamela Hartigan identify why social entrepreneurs are, as they put it, unreasonable. They argue that these men and women seek profit in social output where others would not expect profit. They also ignore evidence suggesting that their enterprises will fail and attempt to measure results which no one is equipped to measure.[22] About this, the Schwab Foundation says that entrepreneurs have "A zeal to measure and monitor their impact. Entrepreneurs have high standards, particularly in relation to their own organization's efforts and in response to the communities with which they engage. Data, both quantitative and qualitative, are their key tools, guiding continuous feedback and improvement."[23] Ashoka operates in multiple countries.
Entrepreneurial quality builds from creativity. Not only do entrepreneurs have an idea that they must implement, they know how to implement it and are realistic in the vision of implementing it. Drayton says that, "Entrepreneurs have in their heads the vision of how society will be different when their idea is at work, and they can't stop until that idea is not only at work in one place, but is at work across the whole society."[24] This manifests through a clear idea of what they believe the future will look like and a drive to make this come true. Besides this, entrepreneurs are not happy with the status quo: they want healthy change.[25] This changemaking process has been described as the creation of market disequilibria through the conversion of antagonistic assets into complementarities.[26][27]
Social impact measures whether the idea itself will be able to cause change after the original founder is gone. If an idea has intrinsic worth, once implemented it will cause change even without the charismatic leadership of the first entrepreneur.[28] One reason that these entrepreneurs are unreasonable is that they are unqualified for the task they take on. Most entrepreneurs have not studied the skills needed to implement their ideas. Instead, they bring a team of qualified people around themselves.[29] It is the idea that draws this team.
Ethical fiber is important because leaders who are about to change the world must be trustworthy. Drayton described this to his employees by suggesting that they picture a situation that frightens them and then place the candidate in the situation with them. If they feel comfortable in this scenario, the entrepreneur has ethical fiber.[30] One distinguishing attribute of entrepreneurs is that they rarely take credit for making change. They insist that the change they have brought about is due to everyone around them. They also tend to be driven by emotion; they are not trying primarily to make a profit but to address suffering.[31] Muhammad Yunus says about this characteristic, "He (or she) competes in the marketplace with all other competitors but is inspired by a set of social objectives. This is the basic reason for being in the business."[32]
Challenges[edit]
Because the world of social entrepreneurship is relatively new, there are many challenges facing those who delve into the field. First, social entrepreneurs are trying to predict, address and creatively respond to future problems[33] and often face difficulties in identifying the right problems to solve.[34] Unlike most business entrepreneurs, who address current market deficiencies, social entrepreneurs tackle hypothetical, unseen or often less-researched issues, such as overpopulation, unsustainable energy sources, food shortages.[35] Founding successful social businesses on merely potential solutions can be nearly impossible as investors are much less willing to support risky ventures. If entrepreneurs are able to receive funding from investors, the challenges do not stop with balancing both the social and business aspects of the business. [36]
The lack of eager investors leads to the second problem in social entrepreneurship: the pay gap. Elkington and Hartigan note that "the salary gap between commercial and social enterprises… remains the elephant in the room, curtailing the capacity of [social enterprises] to achieve long-term success and viability."[37] Social entrepreneurs and their employees are often given diminutive or non-existent salaries, especially at the onset of their ventures. Thus, their enterprises struggle to maintain qualified, committed employees. Though social entrepreneurs are tackling the world's most pressing issues, they must also confront skepticism and stinginess from the very society they seek to serve.[37]
Another reason social entrepreneurs are often unsuccessful is because they typically offer help for those least able to pay for it. Capitalism is founded upon the exchange of capital (most obviously, money) for goods and services. However, social entrepreneurs must find new business models that do not rely on standard exchange of capital in order to make their organizations sustainable.[38] This self-sustainability is what distinguishes social businesses from charities, who rely almost entirely on donations and outside funding.[39]
History[edit]
Social entrepreneurship is distinct from the concept of entrepreneurship, yet still shares several similarities with its business cousin. Jean-Baptiste Say (1767–1832), a French economist, defined an entrepreneur as a person who "undertakes" an idea and shifts perspectives in a way that it alters the effect that an idea has on society.[17] An entrepreneur is further defined by Say as someone who "shifts economic resources out of an area of lower and into an area of higher productivity and greater yield."[40] The difference between "entrepreneurship" and "social entrepreneurship", however, stems from the purpose of a creation. Social entrepreneurs seek to transform societies at large, rather than transforming their profit margin, as classic entrepreneurs typically seek to do. Social entrepreneurs use a variety of resources to bring societies into a better state of well-being.
The concept of "social entrepreneurship" is not a novel idea, but in the 2000s, it has become more popular among society and academic research, notably after the publication of "The Rise of the Social Entrepreneur" by Charles Leadbeater.[13] Many activities related to community development and higher social purpose fall within the modern definition of social entrepreneurship. Despite the established definition nowadays, social entrepreneurship remains a difficult concept to define, since it may be manifested in multiple forms.[41] A broad definition of the concept allows interdisciplinary research efforts to understand and challenge the notions behind social entrepreneurship. No matter in which sector of society certain organizations are (i.e. corporations or unincorporated associations, societies, associations or cooperatives), social entrepreneurship focuses on the social impact that an endeavor aims at.[13] Whether social entrepreneurship is altruistic or not is less important than the effect it has on society.
The terms social entrepreneur and social entrepreneurship were used first in the literature in 1953 by H. Bowen in his book Social Responsibilities of the Businessman.[42] The terms came into widespread use in the 1980s and 1990s, promoted by Bill Drayton,[43] Charles Leadbeater, and others.[44] From the 1950s to the 1990s, the politician Michael Young was a leading promoter of social entrepreneurship and in the 1980s, he was described by Professor Daniel Bell at Harvard University as the "world's most successful entrepreneur of social enterprises". Young created more than sixty new organizations worldwide, including the School for Social Entrepreneurs (SSE) which exists in the UK, Australia, and Canada and which supports individuals to realize their potential and to establish, scale, and sustain, social enterprises and social businesses. Another notable British social entrepreneur is Andrew Mawson OBE, who was given a peerage in 2007 because of his urban regeneration work including the Bromley by Bow Centre in East London. Although the terms are relatively new, social entrepreneurs and social entrepreneurship may be found throughout history. A list of a few noteworthy people whose work exemplifies the modern definition of "social entrepreneurship" includes Florence Nightingale, founder of the first nursing school and developer of modern nursing practices; Robert Owen, founder of the cooperative movement; and Vinoba Bhave, founder of India's Land Gift Movement. During the nineteenth and twentieth centuries some of the most successful social entrepreneurs straddled the civic, governmental and business worlds. These pioneers promoted new ideas that were taken up by mainstream public services in welfare, schools and health care.
Ecosystem of social entrepreneurship[edit]
The ecosystem framework can be very useful for social entrepreneurs in formulating their strategy. The need for understanding the ecosystem of social enterprises has been increasingly supported as researchers emphasize on the importance of contextual factors supporting and constraining social ventures.[5] Researcher note that there is a need to understand the ecosystems of social enterprises, as they often operate in a context which is highly localized, interacting with small, local actors, but may also be intimately connected to other systems operating at a broader (regional, country level or even global) level which influence their immediate environment.[45]
Many researchers such as P. N. Bloom and J. G. Dees attempted to develop an ecosystem model for social entrepreneurs. The ecosystem model proposed by them comprises all the actors operating in the ecosystem, as well as the larger environment the laws, policies, social norms, demographic trends, and cultural institutions within which the actors play.[7] Similarly, Dees et al. (2008) developed a framework to describe the key elements of the social entrepreneurship ecosystem in which they organized the elements into two broad categories – capital infrastructure and context-setting factors.[46]
More recently in 2020, Debapratim Purkayastha, T. Tripathy and B. Das extended the business ecosystem literature to the social policy and social entrepreneurship arena. They developed a comprehensive ecosystem model in the context of the Indian microfinance sector that can be also used by other social enterprises as a framework to understand their own ecosystem and formulate their strategy. The researchers define the ecosystem as consisting of "the complex and evolving network of the focal organization (social enterprise) and all other individuals and organizations that the focal organization interact with including competitors, suppliers, complementors, customers, beneficiaries, regulators, resource providers, etc. that directly or indirectly influence each other; their interactions, as also the immediate and the broader environment (economic, social, political, etc.) the organization is influenced by and reside in".[6] The model helps identify all the actors in the complex ecosystem, the capital infrastructure and the context-setting factors.
International presence[edit]
Organizations such as the Skoll Foundation, the Omidyar Network, the Schwab Foundation for Social Entrepreneurship, New Profit Inc., National Social Entrepreneurship Forum, and the Global Social Benefit Institute among others, promote and providing resources to advance the initiatives of social entrepreneurs.[41] The North American organizations tend to have a strongly individualistic stance focused on a handful of exceptional leaders. For example, The Skoll Foundation, created by eBay's first president, Jeff Skoll, makes capacity-building "mezzanine level" grants to social entrepreneurial organizations that already have reached a certain level of effectiveness.[56]
Role of technology[edit]
The Internet, social networking websites and social media have been pivotal resources for the success and collaboration of many social entrepreneurs.[57] In the 2000s, the Internet has become especially useful in disseminating information to a wide range of like-minded supporters in short amounts of time, even if these individuals are geographically dispersed. In addition, the Internet allows for the pooling of design resources using open source principles. Using wiki models or crowdsourcing approaches, for example, a social entrepreneur organization can get hundreds of people from across a country (or from multiple countries) to collaborate on joint online projects (e.g., developing a business plan or a marketing strategy for a social entrepreneurship venture). These websites help social entrepreneurs to disseminate their ideas to broader audiences, help with the formation and maintenance of networks of like-minded people and help to link up potential investors, donors or volunteers with the organization. This enables social entrepreneurs to achieve their goals with little or no start-up capital and little or no "brick and mortar" facilities (e.g., rented office space). For example, the rise of open-source appropriate technology as a sustainable development paradigm enables people all over the world to collaborate on solving local problems, just as open source software development leverages collaboration from software experts from around the world. [58] The COVID-19 pandemic and the need to physically distance has further increased the significance of technologies for social ventures.[59]
Public opinion[edit]
Controversy[edit]
Many initiatives carried out with social entrepreneurs while innovative, have had problems becoming sustainable and effective initiatives that ultimately were able to branch out and reach the larger society as a whole (versus a small community or a group of people). Compromises in social initiatives were developed, which often did not reach large audiences or help larger communities. Since the concept of social entrepreneurship has been popularized in the 2000s, some advocates suggest that there needs to be some standardization of the process in scaling up social endeavors to increase the impact of these ventures across the globe.[15]
Policymakers around the globe may need to learn more about social initiatives, to increase the sustainability, effectiveness, and efficiency of these projects.[13] Involvement and collaboration between private corporations and government agencies allows for increased support for carrying out social entrepreneurship initiatives, increased accountability on both ends, and increased connections with communities, individuals, or agencies in need. For example, private organizations or nonprofit organizations have tackled unemployment issues in communities.[60] One challenge is that in some cases, social entrepreneurs may only propose short-term solutions, or that they are unable to scale up their virtual, online organization to a larger degree to maximize the number of people who are helped.[60] Government programs are able to tackle large issues; however, there is often little collaboration between governments and social entrepreneurs, which may have limited the effectiveness of social entrepreneurship. This lack of inter-sectoral collaboration may lead to stagnation, if the motives and goals of social enterprises and of those in policy-making and programs are not aligned.[61] Those in policy-making and the development of delivery of government programs tend to have different priorities than social entrepreneurs, resulting in slow growth and expansion of social initiatives.
Since social entrepreneurship has only started to gain momentum in the 2000s, current social entrepreneurs are encouraging social advocates and activists to develop into innovative social entrepreneurs.[61] Increasing the scope and scale of social entrepreneurship may increase the likelihood of an efficient, sustainable, and effective initiative; although it may also render social entrepreneurship more challenging. Increased participation draws more attention to social entrepreneurship ventures from policymakers and privately owned corporations. The increased involvement of corporations and governments may help to strengthen social entrepreneurship, as it may lead to policy changes and to the development of training programs and leadership development programs for social entrepreneurs. Simultaneously, research shows that as social entrepreneurs attempt to widen their impact and scale their efforts, external institutions will have a key role to play in their success.[62]
