This article provides a definition for the term social entrepreneurship as well as some of the defining characteristics of social entrepreneurs versus traditional for-profit entrepreneurs. We'll examine the real-life application of social entrepreneurship, with examples of such ventures across several economic sectors—nonprofits, for-profits firms, and governmental entities—though most of our discussion centers on nonprofits engaged in social entrepreneurship. Furthermore, key factors influencing the surge in social entrepreneurial activity will be analyzed. In line with this increase, we'll investigate the crossing of philosophical lines of demarcation between nonprofits and for-profit firms in pursuit of social entrepreneurship, concluding with the practical challenges associated with this apparent convergence.
Keywords Entrepreneur; Nonprofit; Social Entrepreneurship; Social Entrepreneur; Social Value
Entrepreneurship: Social Entrepreneurship
Social entrepreneurship is a rather ambiguous notion for most people due to the scant attention paid to the topic in the past. Contributing to this ambiguity was the lack of a universal term for entrepreneurship with a social focus. While the practice of social entrepreneurship has been around for some time, the term "social entrepreneurship" is a somewhat recent creation. Likewise, social entrepreneurship is a fairly new construct as a field of academic study, formally recognized and subjected to scholarly research. In fact, according to Austin, Stevenson, and Wei-Skillern (2006, p.1), "Social entrepreneurship is still emerging as an area for academic inquiry."
Given the rather esoteric nature of the subject, a logical starting point is to define the term social entrepreneurship. Roberts and Woods (2005, p.49) define it in this manner: "Social Entrepreneurship is the construction, evaluation and pursuit of opportunities for transformative social change carried out by visionary, passionately dedicated individuals."
Harding (2007, p.74) more broadly defines social entrepreneurship as “any attempt at new social enterprise activity or new enterprise creation, such as self-employment, a new enterprise, or the expansion of an existing social enterprise by an individual, team of individuals or established social enterprise, with social or community goals as its base and where the profit is invested in the activity or venture itself rather than returned to investors."
In line with these two definitions, social entrepreneurial activity falls into either of two categories: 1) providing public services in new and innovative ways, under the umbrella of established social services; 2) start-up organizations with new approaches to specific social problems. "The term 'caring capitalism' has been coined to describe this type of activity because the achievement of relevant social goals relies on competitiveness in the marketplace" (Hibber, Hogg, and Quinn, 2005, pp.159-160).
It is also important to realize that social entrepreneurial activity may occur within and between various economic sectors, such as non-profit organizations, for-profit businesses, or the governmental sector. "Thus, social entrepreneurship is not defined by legal form, as it can be pursued through various vehicles. Indeed, examples of social entrepreneurship can be found within or can span the nonprofit, business, or governmental sectors" (Austin et al, 2006, p.2). Examples within each sector will be provided later in this article. What is common to each sector is that each organization is involved in a socially focused entrepreneurial innovation to a social problem, which creates social value, as opposed to the primary purpose of creating personal or shareholder value(Austin et al, 2006).
Thus, while there is no single universal definition, social entrepreneurship is essentially the application of business practices and procedures to organizations with a mission of solving some pressing societal problem. These social entrepreneurial initiatives may address social issues such as reducing homelessness, increasing home ownership among underserved populations, reducing unemployment in disadvantaged groups, or alleviating hunger in impoverished nations.
Having touched on the various definitions of social entrepreneurship, the next logical question focuses on defining what a social entrepreneur is. We can infer an intuitive definition based on the defining characteristics of social entrepreneurship mentioned earlier. However, for the sake of precision, the discussion below offers several defining comparisons between social entrepreneurs and commercial entrepreneurs (entrepreneurs driven primarily by the profit motive).
The word entrepreneur originates from the French word, entreprendre, which means "to undertake." The actual term entrepreneur was first coined by Irish economist Richard Cantillon. "He described entrepreneurs as 'undertakers' engaged in market exchanges at their own risk for the purpose of making a profit" (Roberts and Woods, 2005, p.46). An entrepreneur is commonly defined as a person who starts or owns their own for-profit business enterprise. Yet, entrepreneurship also entails a certain amount of innovative thinking in regards to seizing opportunities for creating value in an enterprise. Drawing upon the many definitions of the term, we'll generally define an entrepreneur as someone who seeks out opportunity so as to generate value through innovative means, by either starting a new venture or improving upon an existing enterprise.
William Drayton, a MacArthur Fellow and founder of a non-profit organization known as Ashoka, is often credited with introducing the term "social entrepreneur." In 1980, Drayton founded Ashoka, one of the very first organizations dedicated to funding the activities of social entrepreneurs, with the idea of empowering these social entrepreneurs to solve social problems (Barendsen and Gardner, 2004). However, it is important to note that the social entrepreneur is not a new phenomenon. Barendsen and Gardner (2004, p.43) identify two early social entrepreneurs in the United States:
William Lloyd Garrison founded the Anti-Slavery Society in 1833. Publisher of the first anti-slavery newspaper, the Liberator, Garrison campaigned tirelessly for abolition throughout his lifetime. Also, Jane Addams, social worker and reformist, founded the social settlement Hull House in Chicago in 1889. Hull House provided a welfare center for the neighborhood poor and offered a new model that was later replicated throughout the nation.
Bornstein (2004, p.1), views social entrepreneurs as being "transformative forces: people with new ideas to address major problems, who are relentless in the pursuit of their vision, people who simply will not take no for an answer and who will not give up until they spread their ideas as far as they possibly can." Similarly, Olsen (2004, p.21) defines a social entrepreneur as “a person who takes the same skills one usually sees put to use in the private sector and applies them to solve a social problem. These people have drive, visions, administrative ability, and financial acumen — and yet desire not to get rich, but to make others rich in spirit or accomplishment." Also, Barendson and Gardner (2004, p.43) define the social entrepreneur more succinctly in stating, "Social entrepreneurs are individuals who approach a social problem with entrepreneurial spirit and business acumen. Whereas business entrepreneurs create businesses, social entrepreneurs create change."
Going a bit further, Mort, Weerawardena, and Carnegie (2003) conceptualize social entrepreneurs versus commercial entrepreneurs (those who are primarily profit-driven) using a multidimensional construct. Using their framework, social entrepreneurs compare with commercial entrepreneurs in the following ways:
Typical social entrepreneurs are primarily driven by the social mission of creating social value, manifested in entrepreneurial-based virtuous behavior. This virtuous behavioral dimension is that which singularly differentiates the social entrepreneur from the commercial entrepreneur.
Secondly, social entrepreneurs exhibit balanced judgment and unity of purpose in dealing with the extreme complexity of weighing and deciding between conflicting goals and objectives, without sacrificing or compromising their social mission.
Also, social entrepreneurs explore and recognize market opportunities to create better social value for their clients. This social value concept is in contrast to commercial entrepreneurs, who are driven by the primary aim of creating commercial value to their customers.
Finally, when it comes to key decision-making, social entrepreneurs, like commercial entrepreneurs, display the key dimensional traits of innovativeness, being proactive, and having a propensity for risk-taking.
From the preceding discussion, a few common elements emerge about...
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