Social Entrepreneurship Defined
“As a field of inquiry, social entrepreneurship is still in its infancy. We do not yet have the deep, rich explanatory or prescriptive theories that characterize a more mature academic field.”[1] Much of the current literature emphasizes only practical considerations (ie case studies with lessons learned) and “How-to’s.” The handful of expository sources which does exist is often contradictory. The field is ripe for consolidation.
In the late 90s two antagonistic schools emerged with opposing views of “social entrepreneurship.” The definingfeatures of each are summarized below.
SocialEnterpriseSchool[2]
“A social entrepreneur is any person, in any sector, who uses earned income strategies to pursue a social objective, and a social entrepreneur differs from a traditional entrepreneur in two important ways:
Traditional entrepreneurs frequently act in a socially responsible manner: Theydonate money to nonprofits; they refuse to engage in certain types of businesses;they use environmentally safe materials and practices; they treat their employees with dignity and respect. Social entrepreneurs are different because their earnedincome strategies are tied directly to their mission: They either employ people whoare developmentally disabled, chronically mentally ill, physically challenged, povertystrickenor otherwise disadvantaged; or they sell mission-driven products andservices that have a direct impact on a specific social.
Secondly, traditional entrepreneurs are ultimately measured by financial results: Thesuccess or failure of their companies is determined by their ability to generate profitsfor their owners. On the other hand, social entrepreneurs are driven by a doublebottom line, a virtual blend of financial and social returns. Profitability is still a goal,but it is not the only goal, and profits are re-invested in the mission rather than beingdistributed to shareholders.[3]
Distinguishing characteristics
- Grounded in an understanding of entrepreneurship that defines entrepreneurs as individuals who start their own businesses” (Bhide)
- Focused on the generation of “earned-income” to serve a social mission
- “Sector-bending,” blurring the lines between the business and social sectors
- Experimentation with market-based solutions to social problems that seek to align economic and social value creation
- Differentiates between innovation and entrepreneurship
Major proponents:Jerr Boschee and Jim McClurg
SocialInnovationSchool
“Social entrepreneurs play the role of change agents in the social sector, by:
Adopting a mission to create and sustain social value (not just provide value),
Recognizing and relentlessly pursuing new opportunities to serve that mission,
Engaging in a process of continuous innovation, adaptation, and learning,
Acting boldly without being limited by resources currently in hand, and
Exhibiting heightened accountability to the constituencies served and for the outcomes created.
Distinguishing characteristics
- Descends from the etymological traditions of Jean Baptiste Say[4], Joseph Schumpeter[5], Peter Drucker[6], and Howard Stevenson[7].
- Grounded in an understanding of entrepreneurship that defines entrepreneurs as innovators who carry out “new combinations” that “reform or revolutionize the pattern of production” (Schumpeter)
- Focused on establishing new and better ways to address social problems or meet social needs.
- Not defined around organizational structure, i.e. nonprofit or for-profit
- Often incorporates themes of effecting large scale, lasting, and systemic change
Major proponents:J. Gregory Dees and Beth Battle Anderson
Most recently Dees and Anderson published "Framing a Theory of Social Entrepreneurship: Building on Two Schools of Practice and Thought" (2006) in which they attempt to respond to the criticisms of Boschee while uniting these disparate lines of inquiry at their logical intersection. The so-called EnterprisingSocialInnovationSchool is the result.
Enterprising SocialInnovationSchool
Social Entrepreneurs carry “out innovations that blend methods from the worlds of business and philanthropy to create social value that is sustainable and has the potential for large-scale impact.
Innovations (what Schumpeter would call “new combinations”) include the creation of a new good or service as well as producing a delivering an existing good or service in a new way or to a new market.
In order to be considered ‘enterprising,’ the innovation must involve some business-inspired elements, whether through the adaptation of business methods to create or enhance social value, the operation of a social purpose business, or the formation of cross-sector partnerships.
The primary intention of the innovation must be the creation of benefits for society. Furthermore, the intention must be to add value that will be sustainable or scaled up over time.
Distinguishing characteristics
- It acknowledges the intimate connection between social and economic realities and the role of markets in the social sector.
- It challenges the artificial barriers between business and the nonprofit sector.
Major proponents:J. Gregory Dees and Beth Battle Anderson
There are also a number of “spin-offs” espoused by such industry leaders as Ashoka. Although these have not gained the traction of the above, they are nonetheless important as they represent related but distinct approaches. A single, representative example follows.
Seeds of ChangeSchool
Motivated by altruism and a profound desire to promote the growth of equitable civil societies, social entrepreneurschange the performance capacity of society[8] and pioneer innovative, effective, and sustainable approaches to meet the needs of the marginalized, the disadvantaged, and the disenfranchised. Social entrepreneurs play an analogous role to business entrepreneurs in education, health-care, environmental protection, disability and many other fields. They advance systemic change, shifting behavioralpatterns and perceptions. Social entrepreneurs often seem to be possessed by their ideas, committing their lives to changing the direction of their field.
Distinguishing characteristics
- Social entrepreneurs implement on a large scale
- They affect lasting change
- In altering the patterns of societies, social entrepreneurs bring about revolutionary change. Therefore, they represent the source of creative destruction necessary for major social advances.[9]
- Accompanying this disruption of old patterns or action and perception, they catalyze local change makers into being.
Major proponents: David Bornstein and Bill Dreyton
[1]"Framing a Theory of Social Entrepreneurship," Greg Dees and Beth Battle Anderson
[2] First presented in “Toward a Better Understanding of Social Entrepreneurship: Some Important Distinctions,” Social Enterprise Alliance. 2003.
[3] Also key to this definition are the distinctions between “sustainability” and self-sufficiency;” “earned income strategies” and “social purpose business ventures;” and “innovators,” “entrepreneurs,” and “professional managers.”
[4] “The entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.” Entrepreneurs create value.
[5] “The function of entrepreneurs is to reform or revolutionize the pattern of production.” They do this by “exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on.” To Schumpeter, entrepreneurs are change agents in the economy. By serving new markets or creating new ways of doing things, they move the economy forward.
[6] Drucker does not require entrepreneurs to cause change, but sees them as exploiting the opportunities that change (in technology, consumer preferences, social norms, etc) creates. “The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.”
[7] Above all other considerations, Stevenson emphasizes resourcefulness—“the pursuit of opportunity without regard to resources currently controlled.” Entrepreneurs do not allow their own initial resource endowments to limit their options.
[8] Peter Drucker
[9] Joseph Schumpeter