Social entrepreneurship

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Social entrepreneurship is the attempt to draw upon business techniques and private sector approaches to find solutions to social, cultural, or environmental problems.[1] This concept may be applied to a variety of organizations with different sizes, aims, and beliefs.[2] Conventional entrepreneurs typically measure performance in profit, revenues and increases in stock prices, but social entrepreneurs also take into account a positive "return to society". Social entrepreneurship typically attempts to further broad social, cultural, and environmental goals often associated with the voluntary sector.[3] At times, profit also may be a consideration for social enterprises, but not as an end in itself, but rather as a means to further the social or cultural goals of the organization. In the 2010s, social entrepreneurship is facilitated by the use of the Internet, which helps people who are not geographically close yet who share the same goals to collaborate to achieve social goals and facilitates the dissemination of information.

Modern definition[edit]

There are continuing arguments over which individuals can be defined as social entrepreneurs. Thus far, there has been no consensus on the definition of social entrepreneurship, as so many different sorts of fields and disciplines are associated with social entrepreneurship. Philanthropists, social activists, environmentalists, and other socially oriented practitioners are referred to as social entrepreneurs. The fact that social entrepreneurs fall under various career types is part of the reason it is difficult to determine who is truly a social entrepreneur. David Bornstein has even used the term "social innovator" interchangeably with social entrepreneur, due to the creative, non-traditional strategies that many social entrepreneurs use.[4] For a clearer definition of what social entrepreneurship entails, it is necessary to set the function of social entrepreneurship apart from other voluntary sector and charity-oriented activities and identify the boundaries within which social entrepreneurs operate.[5] Some have advocated restricting the term to founders of organizations that primarily rely on earned income–meaning income earned directly from paying consumers. Others have extended this to include contracted work for public authorities, while still others include grants and donations.

Social entrepreneurship in modern society offers an altruistic form of entrepreneurship that focuses on the benefits that society may reap.[6] Simply put, entrepreneurship becomes a social endeavor when it transforms social capital in a way that affects society positively.[7] It is viewed as advantageous because the success of social entrepreneurship depends on many factors related to social impact that traditional corporate businesses do not prioritize. Social entrepreneurs recognize immediate social problems, but also seek to understand the broader context of an issue that crosses disciplines, fields, and theories.[7] Gaining a larger understanding of how an issue relates to society allows social entrepreneurs to develop innovative solutions and mobilize available resources to affect the greater global society. Unlike traditional corporate businesses, social entrepreneurship ventures focus on maximizing gains in social satisfaction, rather than maximizing profit gains.[8] Both private and public agencies worldwide have had billion-dollar initiatives to empower deprived communities and individuals.[7] Such support from organizations in society, such as government-aid agencies or private firms, may catalyze innovative ideas to reach a larger audience.

Prominent individuals associated with the term include Pakistani Akhter Hameed Khan and Bangladeshi Muhammad Yunus. Yunus was the founder of Grameen Bank, which pioneered the concept of microcredit for supporting innovators in multiple developing countries in Asia, Africa, and Latin America.[9] He received a Nobel Peace Prize for his efforts. Others, such as former Indianapolis mayor Stephen Goldsmith addressed social efforts on a local level by using the private sector to provide city services.[10][11]


Social entrepreneurship is distinct from the concept of entrepreneurship, yet still shares several similarities with the classic concept. Jean-Baptiste Say, 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.[9] 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."[12] 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 it recently has become more popular among society and academic research, notably after the publication of "The Rise of the Social Entrepreneur" by Charles Leadbeater.[6] 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.[13] A broad definition of the concept allows interdisciplinary research efforts to understand further and constantly challenge the notion behind social entrepreneurship. No matter in which sector of society certain organizations are (i.e. corporations or unincorporated associations and societies), social entrepreneurship focuses on the social impact that an endeavor carries.[6] 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 on his book "Social Responsibilities of the Businessman".[14] The terms came into widespread use in the 1980s and 1990s, promoted by Bill Drayton,[15] Charles Leadbeater, and others.[16] From the 1950s to the 1990s Michael Young was a leading promoter of social entrepreneurship and in the 1980s, was described by Professor Daniel Bell at Harvard as 'the world's most successful entrepreneur of social enterprises' because of his role in creating 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 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 effectively straddled the civic, governmental, and business worlds. Such pioneers promoted ideas that were taken up by mainstream public services in welfare, schools, and health care.

Current practice[edit]

Major organizations[edit]

Groups focused on social entrepreneurship may be divided into several categories: community-based enterprises, socially responsible enterprises, social services industry professionals, and socio-economic enterprises.[6] Community-based enterprises are based on the social ventures of an entire community that uses its culture and capital to empower itself as an entire enterprise.[17] Socially responsible enterprises focus on creating sustainable development through their initiatives that focus mostly on societal gains.[6] Social service industry professionals work specifically in the sector of social services to expand social capital for different individuals, communities, and organizations. Socio-economic enterprises include corporations that balance earning profits and nonprofit social change for communities. In addition, there are organizations dedicated to empowering social entrepreneurs, connecting them with mentors, strengthening their enterprise models, and preparing them for capital investments. These accelerators help take social entrepreneurs to global scale.

One well-known contemporary social entrepreneur is Muhammad Yunus, who founded the Grameen Bank in 1976. He is known as the "father of microcredit," and established the microfinance movement, which aims to help millions of people rural communities access small loans.[9] For his work, he was awarded a Nobel Peace Prize in 2006.[18] The work that Yunus did through Grameen Bank has been described as a major influence on later social entrepreneurs.[19] Larger countries in Europe and South America have tended to work more closely with public organizations at both the national and local level.


In The Power of Unreasonable People, John Elkington and Pamela Hartigan describe social entrepreneurs' business structures as falling under three different models, applicable in different situations and economic climates:

  1. The Leveraged Non-Profit: This business model leverages resources in order to respond to social needs. Leveraged non-profits make innovative use of available funds, in order to respond to a need. These leveraged non-profits are more traditional ways of dealing with issues, though are distinguished by their innovative approaches.[20]
  2. The Hybrid Non-Profit: This organizational structure can take on a variety of forms, but is distinctive because the hybrid non-profit is willing to use profit to sustain its operations. Hybrid non-profits are often created to deal with government failures or market failures, as they generate revenue to sustain the operation outside of loans, grants, and other forms of traditional funding.[21]
  3. The Social Business Venture: These models are set up as businesses designed to create change through social means. Social business ventures evolved through a lack of funding. Social entrepreneurs in this situation were forced to become for-profit ventures.[22]

There are also hybrid profit models, where a conventional business invests some portion of its profits on socially, culturally or environmenally beneficial activities. The term "Philanthropreneurship" has been applied to this type of activity.[citation needed] Corporate employees can also engage in social entrepreneurship, which may or may not be officially sanctioned by the company. This has been described as corporate social entrepreneurship.[23]

International presence[edit]

Organizations such as Ashoka, the Skoll Foundation, the Omidyar Network, the Schwab Foundation for Social Entrepreneurship, Athgo, New Profit Inc., National Social Entrepreneurship Forum, Echoing Green, and the Global Social Benefit Institute among others, focus on highlighting these hidden change-makers who are scattered throughout the world, and providing various levels of resources to advance their initiatives.[13]

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.[24]

Role of technology[edit]

The Internet and social networking websites have been pivotal resources for the success and collaboration of many social entrepreneurs.[25] In the twenty-first century, the Internet has become especially useful in disseminating information in short amounts of time. In addition to this, the Internet allows for the pooling of design resources using open source principles. These media allow ideas to be heard by broader audiences, help networks and investors to develop globally, and to achieve their goals with little or no start-up capital. 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.

Public opinion[edit]


Many initiatives carried out with social entrepreneurs while innovative, have had problems becoming sustainable and effective initiatives that ultimately are able to branch out and reach the larger society as a whole (versus a small community or group of people).[7] Studies over the qualities encompassed in a social entrepreneur have shown that very few individuals possess the talent and skills of entrepreneurs with a primarily socially motivated outlook.[26] Thus, compromises in social initiatives developed, often do not reach large audiences. Since the concept of social entrepreneurship has been popularized only recently, some advocates suggest that there needs to be some standardization of the process in scaling up social endeavors to increase impact across the globe.[7]

A need for policymakers around the globe to understand social initiatives further is useful in increasing sustainability, effectiveness, and efficiency.[6] Involvement and collaboration between private corporations and government agencies allow for increased monetary gain for carrying out 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 in the past.[27] Only short-term solutions are presented, however, or solutions are unable to scale up to a larger degree in order to maximize the number of people affected.[27] Government policies in the financial sector are able to tackle such a large issue; however, the little collaboration that has occurred between the two modes that serve society has stagnated the effectiveness of social entrepreneurship. This stagnation primarily rests in the motives and goals of social enterprises and of those in policy-making.[28] Those in policy-making naturally tend to have different priorities than social entrepreneurs, resulting in slow growth and expansion of social initiatives.

Since social entrepreneurship has only recently started to gain momentum, current social entrepreneurs are encouraging social advocates and activists to step up as innovative social entrepreneurs.[28] Increasing the scope of social entrepreneurship naturally increases the likelihood of an efficient, sustainable, and effective initiative. Increased participation draws more attention, especially from policymakers and privately owned corporations that may help shape social entrepreneurs through policy changes, training programs, and leadership development focused on developing social entrepreneurs. Simultaneously research shows that as social entrepreneurs attempt to widen their impact and scale their efforts, institutions will have a key role to play in their success.[29]

See also[edit]


  1. ^ The New Heros, What is Social Entrepreneurship, Oregon Public Broadcasting, 2005
  2. ^ "The Meaning of Social Entrepreneurship," J. Gregory Dees, 1998, rev 2001 "The Meaning of Social Entrepreneurship". CASE at Duke. Retrieved 2013-05-03. 
  3. ^ Thompson, J.L. (2002). "The World of the Social Entrepreneur". The International Journal of Public Sector Management 15 (4/5): 413. 
  4. ^ David Bornstein, "How to Change the World" (New York: Oxford University Press, 2007), 1, 92
  5. ^ Abu-Saifan, S. 2012. Social Entrepreneurship: Definition and Boundaries. Technology Innovation Management Review. February 2012: 22-27.
  6. ^ a b c d e f Wee-Liang, Williams, John, and Tan, Teck-Meng. "Defining the ‘Social’ in ‘Social Entrepreneurship’: Altruism and Entrepreneurship." The International Entrepreneurship and Management Journal. no. 3 (2005): 353-365.
  7. ^ a b c d e Alvord, Sarah H., Brown, David L., and Letts, Christine W. "Social Entrepreneurship and Societal Transformation: An Exploratory Study." The Journal of Applied Behavioral Science. no. 3 (2004): 260-282.
  8. ^ Baron, David P. "Corporate Social Responsibility and Social Entrepreneurship." Journal of Economics & Management Strategy. no. 3 (2007): 683-717.
  9. ^ a b c Martin, R. L.; Osberg, S. (2007). "Social entrepreneurship: The case for definition". Stanford social innovation review 5 (2): 28–39. 
  10. ^ "Let's hear those ideas". The Economist. August 12, 2010. Retrieved December 2010. 
  11. ^ Goldsmith, Stephen (March 2010). The Power of Social Innovation: How Civic Entrepreneurs Ignite Community Networks for Good. Jossey-Bass. ISBN 978-0-470-57684-7. 
  12. ^ Peter F. Drucker, Innovation and Entrepreneurship (New York: Harper Business, 1993), 21
  13. ^ a b Mair, Johanna, and Marti, Ignasi. "Social entrepreneurship research: A source of explanation, prediction, and delight." Journal of World 1 (2006): 36-44.
  14. ^ For example, the phrase was used as a description of Howard R.Bowen, Social Responsibilities of the Businessman, America, 1953
  15. ^ "The Social Entrepreneur Bill Drayton". US News & World Report. 2005-10-31. Retrieved 2006-11-03. 
  16. ^ 'The Rise of the Social Entrepreneur, Demos, London, 1996
  17. ^ Peredo, Ana Maria; Chrisman, James J. (2006). "Toward a theory of community-based enterprise". Academy of Management Review 31 (2): 309–328. doi:10.5465/amr.2006.20208683. 
  18. ^ "The Nobel Peace Prize 2006". Nobel Foundation. 2006. Retrieved 2006-11-02. 
  19. ^ "Business-Social Ventures Reaching for Major Impact". Changemakers. November 2003. Archived from the original on 2006-06-14. Retrieved 2006-11-03. 
  20. ^ The Power of Unreasonable People, 2008. pg. 31
  21. ^ The Power of Unreasonable People, 2008. pg.37
  22. ^ The Power of Unreasonable People, 2008. pg. 42
  23. ^ Hemingway, Christine A. Corporate Social Entrepreneurship: Integrity Within. Cambridge: Cambridge University Press, 2013. pg.135 ISBN 978-1-107-44719-6.
  24. ^ Pearce, Joshua M. (2012). "The Case for Open Source Appropriate Technology". Environment, Development and Sustainability 14: 425–431. doi:10.1007/s10668-012-9337-9. 
  25. ^ Malecki, E. J. (1997). Technology and economic development: the dynamics of local, regional, and national change. University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship.
  26. ^ Seelos, Christian, and Mair, Johanna. "Social entrepreneurship: Creating new business models to serve the poor." Business Horizons. no. 3 (2005): 241-246.
  27. ^ a b Cook, Beth, Dodds, Chris, and Mitchell, William. "Social Entrepreneurship: False Premises and Dangerous Forebodings." The Australian Journal of Social Issues. no. 1 (2003): 57-72.
  28. ^ a b Drayton, William. "The Citizen Sector: BECOMING AS ENTREPRENEURIAL AND COMPETITIVE AS BUSINESS." California management review 44, no. 3 (2002).
  29. ^ Sud, M.; VanSandt, C.V.; Baugous, A. (2009). "Social Entrepreneurship: The Role of Institutions". Journal of Business Ethics 85: 201–216. doi:10.1007/s10551-008-9939-1. 

Further reading[edit]