Social entrepreneurship

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see also social enterprise

Social entrepreneurship is the work of a social entrepreneur. A social entrepreneur is someone who recognises a social problem and uses entrepreneurial approaches to organise, create, and manage a venture to create social change. Whereas a business entrepreneur typically measures performance in terms of financial return, a social entrepreneur assesses success in terms of the impact s/he has on society. While social entrepreneurs often work through nonprofits and citizen groups, many work in the private and governmental sectors.

Contents

History

The terms social entrepreneur and social entrepreneurship were first used in the literature on social change in the 1960s and 1970s [1]. It came into widespread use in the 1980s and 1990s, promoted by Rosabeth Moss Kanter, Bill Drayton the founder of Ashoka, [2], and others such as Charles Leadbeater.[3] From the 1950s to the 1990s Michael Young was a leading promoter of social enterprise 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 over 60 new organisations worldwide, including a series of Schools for Social Entrepreneurs in the UK.

Although the terms are relatively new, social entrepreneurs and social entrepreneurship can be found throughout history. A list of a few historically noteworthy people whose work exemplifies classic "social entrepreneurship" might include Florence Nightingale, founder of the first nursing school and developer of modern nursing practices, Robert Owen, a founder of the cooperative movement and Vinoba Bhave, founder of India's Land Gift Movement. During the 19th and 20th centuries some of the most successful social entrepreneurs successfully straddled the civic, governmental and business worlds, promoting ideas that were taken up by mainstream public services in welfare, schools and healthcare.

Current practice

One well known contemporary social entrepreneur is Muhammad Yunus, founder and manager of Grameen Bank and its growing family of social venture businesses, who was awarded a Nobel Peace Prize in 2006.[4] The work of Yunus and Grameen echoes a theme among modern day social entrepreneurs that emphasises the enormous synergies and benefits when business principles are unified with social ventures.[5] In some countries - including Bangladesh and to a lesser extent the USA - social entrepreneurs have filled the spaces left by a relatively small state. In other countries - particularly in Europe and South America - they have tended to work more closely with public organizations at both the national and local level.

Some have created for profit organizations. A recent example is Vikram Akula, founder CEO of SKS Microfinance, the McKinsey alumnus who started a microlending venture in villages of Indian state of Andhra Pradesh. Though this venture is for profit, it has initiated a sharp social change amongst poor women from villages.

There are continuing arguments over precisely who counts as a social entrepreneur. Some have advocated restricting the term to founders of organisations 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 others still include grants and donations. This argument is unlikely to be resolved soon. Peter Drucker once wrote that there was nothing as entrepreneurial as creating a new university: yet in most developed countries the majority of university funding comes from the state.

Today, non-profits and non-governmental organisations, foundations, governments and individuals promote, fund, and advise social entrepreneurs around the planet. A growing number of colleges and universities are establishing programs focused on educating and training social entrepreneurs.

Organisations such as Ashoka, the Skoll Foundation, the Omidyar Network, the Schwab Foundation for Social Entrepreneurship, New Profit Inc. and Echoing Green focus on highlighting these hidden change-makers who are scattered across the globe. Ashoka's Changemakers "open sourcing social solutions" initiative uses an online platform for what it calls collaborative competitions to build communities of practice around pressing issues. The North American organisations tend to have a strongly individualistic stance focused on a handful of exceptional leaders, while others in Asia and Europe emphasise more how social entrepreneurs work within teams, networks and movements for change.

Youth social entrepreneurship is an increasingly common approach to engaging young people in solving social problems. Youth organisations and programmes promote these efforts through a variety of incentives to young people.[6]

The magazine Fast Company annually publishes a list of the 25 best social entrepreneurs, which the magazine defines as organisations "using the disciplines of the corporate world to tackle daunting social problems."[7]

The International Business Leaders Forum, an NGO that promotes responsible business practices, has shown how multinational companies can support social entrepreneurship - either in their businesses, engaging in public policy debate or creating better internal climates within their organisations.

Organisational models

The Schwab Foundation for Social Entrepreneurship distinguishes three organizational models[8]:

Leveraged non-profit ventures

The entrepreneur sets up a non-profit organisation to drive the adoption of an innovation that addresses a market or government failure. In doing so, the entrepreneur engages a cross section of society, including private and public organizations, to drive forward the innovation through a multiplier effect. Leveraged non-profit ventures continuously depend on outside philanthropic funding, but the longer term sustainability is often enhanced given that the partners have a vested interest in the continuation of the venture.

Hybrid non-profit ventures

The entrepreneur sets up a non-profit organisation but the model includes some degree of cost-recovery through the sale of goods and services to a cross section of institutions, public and private, as well as to target population groups. Often, the entrepreneur sets up several legal entities to accommodate the earning of an income and the charitable expenditures in an optimal structure. To be able to sustain the transformation activities in full and address the needs of clients, who are often poor or marginalised in society, the entrepreneur must mobilise other sources of funding from the public and/or philanthropic sectors. Such funds can be in the form of grants or loans, and even quasi-equity.

Social business ventures

The entrepreneur sets up a for-profit entity or business to provide a social or ecological product or service. While profits are ideally generated, the main aim is not to maximize financial returns for shareholders but to grow the social venture and reach more people in need. Wealth accumulation is not a priority and profits are reinvested in the enterprise to fund expansion. The entrepreneur of a social business venture seeks investors who are interested in combining financial and social returns on their investments

Further reading

  • David Bornstein, How to Change the World: Social Entrepreneurs and the Power of New Ideas, Oxford University Press (and others) ISBN 0-19-513805-8
  • Charles Leadbeater, The Rise of the Social Entrepreneur, Demos, 1996
  • Joanna Mair, Jeffrey Robinson, and Kai Hockerts, Social Entrepreneurship, Palgrave, 2006. ISBN 1403996644
  • Peredo, A. M., & McLean, M. 2006. Social Entrepreneurship: A Critical Review of the Concept. Journal of World Business, 41(1): 56-65.

Publications/Media

Articles

References

  1. For example, the phrase was used to describe Robert Owen in J Banks, The Sociology of Social Movements, London, MacMillan, 1972
  2. The Social Entrepreneur Bill Drayton, US News & World Report, 31 Oct 2005 [1]
  3. The Rise of the Social Entrepreneur, Demos, London, 1996
  4. http://nobelprize.org/nobel_prizes/peace/laureates/2006/
  5. Business-Social Ventures Reaching for Major Impact, Changemakers, Nov 2003 [2]
  6. Sheila Kinkade, Christina Macy, Our Time Is Now: Young People Changing the World, ISBN 0977231909
  7. Entrepreneurs who are changing the world [3]
  8. http://www.schwabfound.org/sf/SocialEntrepreneurs/Profiles/Abouttheorganizationalmodels/index.htm

This article was originally imported from Wikipedia in April 08 and has since been extended.