What is Social Entrepreneurship? Ecological, Sustainable

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What is Social Entrepreneurship?

Social entrepreneurship is a concept that refers to the use of entrepreneurial principles and innovative approaches to address social, environmental, and community issues in a sustainable and impactful way. Social entrepreneurs are individuals or organizations that apply business techniques and strategies to create positive social change and tackle pressing problems faced by society.

History of Social Entrepreneurs

The term ‘social entrepreneur’ is comparatively new in usage, but the practice of social entrepreneurship is far from new. Florence Nightingale deserves the label of a social entrepreneur who brought about social change. She is the pioneer of modern nursing and healthcare reforms. She revolutionalized the theory of hospital conditions in the late 18th Century. She is known as the ‘Lady with the Lamp’.

She used to take night rounds to take care of the wounded soldiers. She devoted her life to ensuring safe and compassionate treatment for the poor and the suffering for the sake of preventing diseases. She organized a corps of nurses to care for soldiers and improved the sanitary conditions at a British base hospital which reduced the death count by two-thirds during the Crimean War. During the Victorian era, hailed from an affluent British family and elite social circle, it was a brave move to take up a job that was viewed as lowly menial labor by the upper social classes.

From her early youth, Florence Nightingale was very active in philanthropy and was determined about pursuing nursing for a divine purpose. She was very keen on her mission to improve hygiene practices and significantly lowered the death rate at the hospital. She contributed to the improvement of quality of the hospital stays through various patient services.

She introduced the concept of an ‘invalid’s kitchen’ for cooking appealing food for patients with special dietary requirements. She established a laundry for providing clean linens to patients. She set up a classroom and a library for the entertainment and intellectual stimulation of patients. She funded the establishment of St. Thomas Hospital in 1860 and within it the Nightingale Training School for Nurses.

Florence Nightingale became a figure of public admiration. Poems, songs, and plays were dedicated to her. Women aspired to be like her. Affluent women from upper social classes opted for the nurse’s profession as an honorable vocation. At the age of 38, she contracted a Crimean fever and was homebound and bedridden for the rest of her life and would never fully recover. She continued her work from her bed. In 1859, she published ‘Notes on Hospitals’ which was based on the proper administration of civilian hospitals.

The term ‘social entrepreneur’ was first introduced, according to Nicholls, in 1972 by Banks, who noted that social problems could also be deployed by managerial practices. Social entrepreneurship is focused on a social mission. Social entrepreneurs strive for opportunities and create social value. They deal with unsatisfied social needs. In the light of social and environmental issues, the complex nature of these problems, and their serious repercussions; the concept is gaining visibility and prominence. It is closely related to the concept of corporate social responsibility and corporate social innovation.

Social Entrepreneur Definition

“The social entrepreneur targets its programs at the “underserved, neglected or highly disadvantaged population that lacks the financial means or political clout to achieve the transformative benefit on its own”.

Roger L. Martin and Sally Osberg

“Entrepreneurial activity with an embedded social purpose”.

Austin, Stevenson, and Wei-Skillern

“Combines the passion of a social mission with an image of business-like discipline, innovation, and determination”.

J. Gregory Dees

“Social entrepreneur aims for value in the form of large-scale, transformational benefit that accrues either to a significant segment of society or to society at large”.

Roger L. Martin and Sally Osberg

Social entrepreneurship is necessary to mitigate the financial repercussions on the most vulnerable in society. To quote him, “Fewer people will receive adequate health care. Because of the financial burden that formal education can place on parents, fewer children will attend school. Tensions and violence may increase as the poor compete for jobs and income opportunities.

J. Gregory Dees

According to Dees, social entrepreneurs play the role of change agents in the social sector by

  • adopting a mission to create and sustain social value (not just private value)
  • recognizing and relentlessly pursuing new opportunities to serve that mission
  • engaging in the process of continuous innovation, adaptation, and learning
  • acting boldly without being limited by resources currently in hand
  • exhibiting a heightened sense of accountability to the constituencies served and for the outcomes created

In the words of Alvord, Brown, and Letts, social entrepreneurship creates innovative solutions to immediate social problems and mobilizes the ideas, capacities, resources, and social arrangements required for sustainable social transformations.

Said Business School defines social entrepreneurship as a professional, innovative, and sustainable approach to systemic change that resolves social market failures and grasps opportunities.

Social entrepreneurs, also termed sociopreneurs, usually start at a local level with small-scale efforts. It leads to the creation of new industries, new business models. They target problems and issues of global relevance. They offer innovative solutions to neglected social problems and issues which profoundly impact the socioeconomic system. In the words of Haugh, “Social entrepreneurship is the simultaneous pursuit of economic, social, and environmental goals by enterprising ventures”.

Social entrepreneurs are entrepreneurs who focus on a social mission and not on profit. They are interested in social value creation. However, it is not appropriate to differentiate between these two sets of entrepreneurs based on their motivations assuming that entrepreneurs are interested in money and social entrepreneurs are driven by social purpose. The reality is entrepreneurs are rarely motivated by the possibility of money making.

They take pleasure in sensing opportunities, exploiting those opportunities for the betterment of the society through creation of products/services. They may work for money or charity; it is mostly seen that the output or the result may not be worth the time, risk, effort, and capital they invest in their ventures.

Entrepreneurs wish to serve markets with the need for satisfying and value-added products and services to make money. Financial benefit is implied in all entrepreneurial activities. In the absence of adequate profits, the venture may not sustain its existence. However, a social entrepreneur never anticipates substantial profit for himself/herself or the investors. Instead, the target is the enhancement of value and need satisfaction to a significant part of society. It integrates economic and social value creation.

Social entrepreneurship has been recognized as a new type of entrepreneurship. It is oriented towards social wealth creation in comparison with the approach of generation of economic wealth. These activities have far-reaching economic consequences in terms of growth, poverty reduction, and social development. It refers to a process or behavior. It can be perceived as a fair and ethical way of creating enterprises that generate surplus through their activities where the focus is on reasonable profit or fair profit and not on profit maximization. Social enterprise is the outcome of social entrepreneurship and social entrepreneur is the founder of the initiative.

Social entrepreneurs possess the ability to sense and exploit environmental opportunities and create value. They are characterized by the drive to innovate and risk bearing attitude.

European Commission defined the term ‘social enterprise’ as covering the following types of businesses: those for which the social or societal objective of the common good is the reason for the commercial activity, often in the form of a high level of social innovation; those where profits are mainly reinvested to achieve this social objective, and where the method of organization or ownership system reflects their mission, using democratic or participatory principles of focusing on social justice. A social enterprise comes up to deal with a social cause and solve different societal problems. It strives to cater to the needs of society and maintain profitability.

Finance is one of the major challenges faced by social entrepreneurs. Financing the growth of their organizations is more challenging than financing a new idea. The government provides money for social ventures. But there are several hurdles in complying with the government reporting requirements and tedious procedural formalities. There are various sources through which social entrepreneurs finance their social enterprises such as family members, friends, relatives, and the like.

It is difficult for social entrepreneurs to attract talent and retain it. It is problematic for them to compensate adequately to the human resources and provide them opportunities for the advancement of their career.

Assessment of the performance of social entrepreneurs is not easy. It is essential to measure the impact of such initiatives. Like ‘return on investment’, there is a talk about ‘social return on investment’.

Ecological Entrepreneurship

According to Keogh and Polonsky, the traditional entrepreneur may see opportunities beyond resource limitations and identify business prospects missed by others; it is the technopreneur who assesses the potential and availability of resources through an environmental commitment and vision that pursues an eco-friendly initiative.

In the opinion of Dixon and Clifford, ecopreneurship represents triple drivers – environmental, social, and economic.

Isaak defines ecopreneurship as a person who seeks to transform a sector of the economy towards sustainability by starting up a business in that sector with a green design, green processes, and a life-long commitment to sustainability. He speaks about the efforts of an entrepreneur who starts up a business with green initiatives from day one, with a strong commitment to transforming a sector of the economy towards becoming more sustainable and environmentally responsible.

Ecological entrepreneurs exhibit environmental and social concerns along with the drive for money. They strive for improving the environment and enthuse others also. They are creative and innovative. They work on various ideas like green technology, green and social marketing, organic farming, socially responsible business, environmental justice, sustainability, etc.

There are four broad types of ‘environpreneurs’ viz. innovative opportunists, visionary champions, ethical mavericks, and accidental environpreneurs. There are different motives for being an environpreneur. The visionary champion adopts a transformative, sustainability orientation. The ethical maverick environpreneur is typically characterized by a sustainability orientation and soft structural influences.

Friends, networks, and past experiences influence business formation strongly in comparison with the vision of changing the world. Ad hoc entrepreneur i.e. accidental green entrepreneur is motivated by money and not by values. Family, friends, and personal networks influence such entrepreneurs the most.

According to Linnanen, ecopreneurs can be classified based on two criteria:

  • their desire to change the world and improve the quality of environment and life; and
  • their desire to make money and grow as a business venture.

Sustainable Entrepreneurship

Let us see what sustainability is, what is sustainable development, and the meaning of sustainable entrepreneurship. The term sustainability is broad and complex in orientation. It is associated with ecology and the protection of natural resources. It also speaks about sustained economic progress. It refers to social issues and also focuses on the development and support of the most disadvantaged. It also comprises the potential of value creation. Sustainable development is the balance between environmental, social, and economic development.

The World Commission on Environment and Development of the United Nations first described and defined sustainable development as a process in which the exploitation of natural resources, the allocation of investment, and the process of technological development and organizational change are in harmony with each other for both current and future generations. The concept of sustainability goes beyond the classical theory of firms which is based on the objective of profit maximization. Instead, it presents a long-term orientation that is all-comprehensive and focused on the present and also future generations.

Sustainable entrepreneurs are those entrepreneurs who contribute to sustainable development. They perform business activities and sustainably orient business. To quote Kofi Annan (United Nations Global Compact Network): ‘….let’s choose to unite the powers of markets with the authority of universal ideals. Let us choose to reconcile the creative force of private entrepreneurship with the needs of the disadvantaged and the requirements of the future generations….’.

Sustainopreneurship (a portmanteau of sustainability and entrepreneurship) indicates finding solutions to the problems related to social and environmental sustainability. It connotes ‘a business with a cause’ wherein with the help of sustainable innovations problems are turned into business opportunities. It is similar to social entrepreneurship. Social entrepreneurship speaks about not-for-profit institutes and charities which focus on social problems and discover innovative resolutions.

Sustainable entrepreneurship emphasizes economic efficiency and effectiveness aspects of economic entrepreneurship. It also focuses on issues like social responsibility, socio-effective, and also future considerations. In the words of Surinder Batra, ‘sustainable entrepreneurship is consistent with entrepreneurs striving simultaneously for profit and for improving local and global environmental and social conditions; and it takes into account both social aspects and environmental effects while also considering the long-term economic and business consequences of new venture opportunities’.

World Business Council for Sustainable Development defines sustainable entrepreneurship as the continuing commitment by businesses to behave ethically and contribute to economic development while improving the quality of life of the workforce, their families, the local and global community as well as future generations. This definition implies the responsibilities of the enterprises towards the shareholders, society, nature, and also future generations. Sustainable entrepreneurship protects the interests of all these stakeholders. The decisions and actions of sustainable entrepreneurship are finalized in light of all these interests.

It is said that sustainable development deals with the 3Ps i.e. people, planet, and profit. ‘People’ refers to an enterprise’s treatment of its human resources. The people component of the enterprise is treated with care and dignity. ‘Planet’ refers to the impact of the enterprise on natural resources. ‘Profit’ refers to not just the financial returns of the enterprise but also to the allocation of financial returns between investments and the distribution of the gains. Human values are incorporated in business decisions and actions with a focus on various issues like fair practices, protection of human rights, and gender equality.

Janssen provided a list of ten ground rules for becoming a sustainable entrepreneur:

  • The corporation should start reducing environmental damage, respecting human rights, and treating its employees with great care;

  • Sustainable entrepreneurship has to be a self-initiated process and should not simply be a response to external pressure;

  • If a corporation wants to practice sustainable entrepreneurship, it should identify clear aims and targets;

  • The aims should be closely related to the corporation’s practice and should match the corporate values and its primary activities;

  • The aims have to be closely related to the consumer’s needs;

  • The corporation has to be capable of explaining the relationship between sustainability and its activities and production process;

  • The corporation should adhere to these aims on a long-term basis;

  • Consumers and pressure groups should have a transparent overview of investments made by the corporation related to sustainable entrepreneurship;

  • Sustainable entrepreneurship practiced by the corporation should not be shifted to the consumers via a price increase; and

  • A corporation should not attempt to overemphasize its efforts. Bos added a rule to the above list:

  • A corporation should make sure that its practices are shared by the corporation as a whole, and that they are not solely efforts of the management.
Article Source
  • Baporikar Neeta, Entrepreneurship Development and Project Management, Himalaya Publishing House, Mumbai, 2011

  • Hisrich Robert D., Peters Michael P., Shepherd Dean A, Entrepreneurship, Tata McGraw Hill Education, New Delhi, 2010

  • Kuratko Donald F., Entrepreneurship in the New Millennium, Cengage Learning, 2007

  • Mohanty Sangram Keshari, Fundamentals of Entrepreneurship, PHI Learning, New Delhi, 2010

  • Reddy P. Narayana, Entrepreneurship Text and Cases, Cengage Learning, Delhi, 2010

  • Shankar Raj, Entrepreneurship Theory and Practice, Vijay Nicole Imprints, Chennai, 2012

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