BU3690 - Social Entrepreneurship Individual Essay PDF

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Daniel Waldron – 15324801

BU3690 – Social Entrepreneurship Individual Essay Daniel Waldron – 15324801

A social entrepreneur can be defined as “someone who takes reasonable risk on behalf of the people their organisation serves” (Brinckerhoff, 2009). They are “individuals with innovative solutions to society’s most pressing social problems […] They are both visionaries and ultimate realists, concerned with the practical implementation of their vision above all else” (Ashoka, 2012). Social entrepreneurship is an intriguing phenomenon, and unlike business entrepreneurship, social entrepreneurs see the social mission as central to their activities with wealth being just a means to an end (Dees, 1998). Social entrepreneurs do not allow their lack of available resources to hinder them in their pursuit of their wider vision and are known for acting boldly without being limited by resources currently at hand (Dees, 1998). Social entrepreneurial organisations exist at all levels throughout society; locally, nationally and internationally, and strive to efficiently and effectively utilise the means they possess to serve their intended purpose and achieve their ultimate social vision. There are three identifiable types of social entrepreneurial organisations within society; charitable organisations which provide relief to those who are in need or deprived, social action organisations which actively engage in political and justice issues with the aim of societal change, and developmental organisations which aim to initiate economic activities among deprived sections in society by introducing organisational and technological innovation with considerable experimentation (Prabhu, 1999). In this paper I will endeavour to identify and discuss a number of social, political and economic changes that are encouraging and contributing to the growth of social entrepreneurial action across the world and how these factors are leading to such an increase in social entrepreneurship within society.

There is an ever-growing number of initiatives across the world that have been actively defying and overcoming the obstacles that have previously prevented business from providing services to those in need, collectively these initiatives constitute what is being dubbed “social entrepreneurship” (Seelos & Mair, 2005). Social entrepreneurship helps to combine the resourcefulness of traditional business entrepreneurship while simultaneously committing to a mission of positive societal change. The primary objective of social

Daniel Waldron – 15324801 entrepreneurs is to create social value, with the creation of economic value often occurring as a beneficial by-product of their activities (Seelos & Mair, 2005). Social entrepreneurs are continuously developing solutions to some of society’s most pressing and complex problems, creating social capital and new, innovative services from scratch (Leadbeater, 1997). Social entrepreneurs are widely regarded as “agents of change” and are wholeheartedly committed to formulating inventive solutions to address many of the critical and compelling issues facing the world today. These problems are broadly classified into areas relating to the environment, education, health-care and livelihood opportunities (Bhatia, 2016). Social entrepreneurship is undoubtedly a growing phenomenon in emerging economies with entrepreneurs integrating social causes into their innovative business models, thus generating economic development while addressing societal needs (Bhatia, 2016). This integrated social entrepreneurship is characterised by surplus-generating activities that simultaneously create social benefits (Fowler, 2000). Beyond their social contribution, social entrepreneurial organisations add value through the creation of jobs, improved utilisation of development funds and the empowerment of their client groups and as a result add greatly towards economic growth (Prabhu, 1999). We know that social entrepreneurship, if employed effectively, can help to address the most critical problems facing society, but it will only flourish in the appropriate environmental conditions (Leadbeater, 1997).

In today’s world, social entrepreneurship is no longer constrained to social activities alone, it has become a worldwide phenomenon experiencing unprecedented growth and providing growth opportunities to vulnerable sections of society with sustainable and innovative business solutions (Bhatia, 2016). Various economic, social and political factors and changes have acted as catalysts for the global growth of social entrepreneurial activity. In recent years, social entrepreneurship has experienced an upsurge of interest, driven largely by the changes occurring in the increasingly competitive environment in which they operate. Social entrepreneurial organisations are competing in an increasingly competitive environment characterised by increasing needs in their target communities and greater competition for donations and subsidies (Weerawardena & Mort, 2006). This increased competition has driven social entrepreneurs to strive to deliver the most efficient and effective service they can in order to achieve supremacy over potential rivals and ensure that they give themselves the greatest opportunity possible to achieve their social vision. Such dedication shown by

Daniel Waldron – 15324801 social entrepreneurs to the effectiveness, efficiency and sustainability of their social missions has stemmed from these increased levels of market competition and has led to widespread growth and involvement within social entrepreneurship across the world, helping to generate a greater impact, both locally and globally, and helping to alleviate some of society’s most prevalent issues. The continual worldwide growth of social entrepreneurship can also be attributed to a more integrated approach to the concept which typically introduces business practices that create reinforcing horizontal, vertical, backward and/or forward linkages, creating further social developments and economic benefits for a wider array of beneficiaries (Fowler, 2000). An integrated approach to social entrepreneurship such as this can be seen within the Bangladesh Rural Advancement Committee (BRAC). Its first integrative addition was potato cold stores, providing a steady upward linkage to a marketing system helping to benefit both the producers and the organisation. Another method employed was installing vocational training programmes, providing practical commercial experience and generating increased income (Fowler, 2000). Social entrepreneurs are realising the old mantra of “teach a man to fish and you’ll feed him for life” and as such we are seeing a growing amount of integrated social entrepreneurial operations being established in deprived areas to create innovative, sustainable solutions.

Profound social changes are occurring across the board with many traditionally-styled charity organisations becoming more business-like, realising the benefits of implementing innovative business models within their operations to maximise the effectiveness and efficiency of their efforts. Many social entrepreneurs no longer see themselves as engaged in “charity” and recognise its faults and limitations. This change is amplified by social entrepreneurs such as Muhammad Yunus who emphatically makes the point that “charity is no solution to poverty. Charity only perpetuates poverty by taking the initiative away from the poor.” Social entrepreneurs view their work as fundamentally different to charity as they aim to initiate sustainable improvements rather than temporary assistance (Dees, 2007). Since the 1980s, non-profit organisations (NPOs) have become increasingly similar to forprofit enterprises in their business models and their operations. Many NPOs are beginning to adopt business-like goals, increasing their emphasis on commercialisation and their reliance on revenue generated from the sales of goods and services (Maier, et al, 2016). The organisational performance of NPOs adopting business-like practices has been positively

Daniel Waldron – 15324801 affected by these practices, and as result they have experienced considerable growth and expansion (Maier, et al, 2016). From this we can see that social entrepreneurship has benefited from the incorporation of more business-like practices into its framework and has seen significant growth and success as a result. Conversely to non-profit organisations becoming more business-like in their activities, for-profit businesses are becoming increasingly more socially aware in conducting their operations. There has been a gradual change in how the role business plays in society is viewed with a general shift away from the traditional viewpoint of academics such as Milton Friedman who stated that “the sole purpose of business is to generate profit for their shareholders” (Friedman, 2007). More contemporary thinkers on the subject see societal needs as playing a huge part in defining markets alongside conventional economic needs and how social harms and imbalances can create internal costs for all firms. Large companies are becoming increasingly concerned with the ‘public policy’ aspects of their operations. The most successful large firms recognise that they are social as well as commercial organisations. (Leadbeater, 1997). The idea of shared value does not refer to the redistribution of existing value already created by businesses, instead it refers to the expansion of the total pool of economic and social value leading to a bigger “pie” of revenue and positive initiatives for society to benefit from (Porter & Kramer, 2011). As more and more for-profit businesses recognise the potential advantages to be gained from implementing social initiatives, the boundary between profit and non-profit organisations becomes increasingly blurred (Porter & Kramer, 2011). According to Forbes magazine, “many of today’s leading social entrepreneurs have created organizations that are neither businesses nor charities, but rather hybrid entities that generate revenue in pursuit of social goals.” ( Murphy & Sachs, 2013). Hybrid organisations encompassing aspects from both for-profit and non-profit business models are becoming more prevalent in society and as a result there is a growing need for skilled and ambitious social entrepreneurs to create innovative solutions to social problems. An example of such an organisation where the line between profit and non-profit is TOMS, a footwear manufacturer. Blake Mycoskie, the founder of TOMS, initiated a “buy one, give one” business model where for every pair of shoes his company sold, TOMS would distribute a new pair of shoes to under-privileged children in developing countries free of charge. This model initiated by TOMS has now expanded into 70 countries with over 60 million people having benefited from a free pair of shoes, more than 400,000 people have had sight saving

Daniel Waldron – 15324801 medical treatment and over 335,000 people have received a week of safe drinking water. TOMS serve as an example of how a growing number of business leaders are dedicating themselves to societal change through social entrepreneurship (Grace College, 2018).

The rapid growth of social enterprise in Ireland and beyond is largely down to the innate need for its existence in order to help right the wrongs that are so prevalent within our society. This, coupled with an increase in formal education has led to a higher level of awareness of these issues and an appetite to initiate social change. Social injustices and international incidents such as climate change and the Syrian refugee crises have created an imperative for social entrepreneurs to establish effective and sustainable business solutions to help remedy these situations as best they can. This high level of growth within social entrepreneurship is evident worldwide with employment at social enterprises rising by 36% between 2013 and 2015 and turnover increasing by 24% during that same period (Abnamro.com, 2016). Many varying factors working in tandem are responsible for the recent growth in social entrepreneurship and together have helped to create an ideal environment in which social entrepreneurs can thrive. More funding for social entrepreneurship is becoming available due to the global economic upturn following the financial crash of 2007. The Irish GDP, for example, has increased by close to 6.5% in 2017 and social entrepreneurs are reaping the benefits of this steady economic growth (BurkeKennedy, 2017). Alongside economic growth, reduced regulation and legal barriers have allowed social entrepreneurship to flourish. New, more lenient laws in the Netherlands regarding crowdfunding were introduced in April 2016 to make the process easier and less restrictive and has resulted in more funds and donations being raised for social entrepreneurial projects. As well as this, increased investment in social entrepreneurial activities by private organisations such as ABN AMRO, a bank based in the Netherlands, have helped the growth of social entrepreneurship by providing financial assistance to entrepreneurs to help them achieve their vision. ABN AMRO earmarked a total pf €10 million for social entrepreneurs in the Netherlands through its Social Impact Fund (Abnamro.com, 2016). There are many organisations, such as the Schwab foundation and Ashoka, who support social entrepreneurship directly by providing seed capital and easy access to invaluable support networks. These foundations play a major role in the growth and survival of many social enterprises as these enterprises often initially heavily depend on

Daniel Waldron – 15324801 foundations like Ashoka for support until they can fully rely on the contributions of their customers (Seelos & Mair, 2005).

Government initiatives supporting social entrepreneurship are becoming more commonplace. In the Netherlands, for example, May 15th 2015 saw the opening of the government sponsored Social Impact Factory in Utrecht where social entrepreneurs, corporate partners and local government group together to develop innovative, tangible solutions to tackle social problems (Abnamro.com, 2016). “Reinventing government” initiatives have completely changed the relationship between government and social enterprise and have helped to attract commercial providers to markets traditionally served exclusively by non-profit organisations. This increased competition, coming about through government action, has resulted in social enterprises adopting a more competitive configuration in their operations, encouraging them to focus on outcomes targeted by government policy as well as forcing them to pursue innovative methods of delivering superior value to their target market, thus affording them the opportunity to achieve a sustainable level of competitive advantage over their commercial competitors (Weerawardena & Sullivan Mort, 2001). In this way, government intervention and support thoroughly aids the growth of social entrepreneurship, but contrarily, can also prove a hindrance in some cases. One of the more persistent criticisms made of local government by social entrepreneurs is its disruptive changeability, they would rather the governments to adopt twinning arrangements where a dedicated department of local government becomes responsible for all relations with the voluntary sector, thus allowing social entrepreneurs to form a relationship with a single department becoming their voice within the local government (Leadbeater, 1997). In some instances where confidence in governments and markets has begun to wane, leaders from across the political spectrum have propagated private initiatives for the public good (Maier, et al, 2006). In this sense, the private sector should consider what role it might play in providing start-up and growth finance for social entrepreneurs in order to nourish and cater for the increased growth of social enterprise (Leadbeater, 1997). This is where we see Social Venture Partners (SVPs) come into play, these SVPs make matches between individual social investors and philanthropists and the local social enterprises, providing them with funding and business management consultation (Kickul & Lyons, 2016). Such invaluable funding and business advice provided by these Social

Daniel Waldron – 15324801 Venture Partners enables the significant growth of non-profits and social entrepreneurship as a whole.

The modern age technology allows us to connect and share ideas, information and stories across the world with the click of a button. Such global connectivity, facilitated by communications technology such as social media, has helped spread awareness of global societal problems and has inspired more people to take action to address these issues. Professor Stephen Hawking notes in his reading that an unintended consequence of the global spread of the internet and social media is that the stark nature of such global inequalities and injustices are far more apparent than they have been previously before such technologies existed. He also notes how the lives of the richest and most prosperous in society are painstakingly visible to anyone and everyone with access to a phone (Hawking, 2016). The broadcasting of these lavish lifestyles serves to highlight the widening global disparities that exist in the world, helping to inspire and motivate more and more people to make an positive social impact through entrepreneurial innovations and ideas. Social media outlets such as Facebook provides social entrepreneurs with an invaluable platform to raise awareness and attract potential investors to their causes with a reach of nearly 2.2 billion active users to convey their message to (Statista, 2017). Another major factor facilitating the increased growth social entrepreneurship is its decentralisation. The decentralisation of social entrepreneurship has allowed for improved knowledge for innovation, experimentation and resource mobilisation. The creative nature of social entrepreneurship means the centralisation of its processes inhibits its effectiveness, it’s as Gregory Dees put it ”centralising social problem solving makes as much sense as centralising art production” (Dees, 2007). These independent social entrepreneurs must mobilise resources to continue pursuing their visions, and as a result, have to convince investors, financiers and talented employees to devote their skills, time and resources to the entrepreneur’s cause (Dees, 2007). This decentralisation of ideas and increased independence and innovation has undoubtedly aided the growth of social entrepreneurship and the effectiveness of social enterprises across the globe.

Ultimately, the scale and scope of social entrepreneurship depends on the amount of individuals who choose to dedicate themselves to entrepreneurship with a primary social

Daniel Waldron – 15324801 mission. It has been suggested that the qualities that make up social entrepreneurs stem from very specific and scarce individual characteristics (Seelos & Mair, 2005). The importance of the role that social entrepreneurs play in society cannot be overstated, they create tremendous social value when catering to basic humanitarian needs and help to safeguard the needs of future generations by instituting more sustainable practices (Seelos & Mair, 2005). While many social, economic and political changes have encouraged the consistent growth of social entrepreneurship, there are still many factors for us to consider in order to further its growth and extract the most benefit from its practices. Social entrepreneurs are still over-regulated by a system that is onerous and complicated. Governments should take it on themselves to create a simpler, more de-regulated corporate structure for social enterprises that combine commercial and charitable work (Leadbeater, 1997). The right kind of government regulation, however, can encourage organisations to pursue shared value while the wrong kind can cause trade-offs between economic and social objectives inevitable (Porter & Kramer, 2011). The onus does not just lie with the government, public policy for social entrepreneurship and innovation canno...