Entrepreneurs are often seen as engines of growth (i.e., they harness opportunities and innovation to fuel economic advancement). Social entrepreneurs, like their business counterparts, are similarly focused; they tap into vast reserves of ambition, creativity, and resourcefulness to solve large, intractable problems. [i] Social entrepreneurs pioneer innovative, effective, and sustainable approaches to meet the needs of the marginalized, disadvantaged, and disenfranchised. [ii]
Social firms, like other types of enterprises, have dominant logics that guide their actions. [iv] They are as old as time with renowned examples such as Marie Montessori who established unique schools and a pedagogy for impoverished areas. These organizations have a different dominant logic about how a manager conceptualizes his or her business. (See the table below for a description of how social entrepreneurship is different from other types of entrepreneurship.)
Types of Entrepreneurs [iii]
|Structure||Profit||Profit||Not-for-profit and profit||Not-for-profit and profit||Within an organization|
|Primary Motive||Returns to shareholders||Institutional reform and development||Cultural diffusion and enlightenment||Social change and well-being||Returns to shareholders|
|Offering to consumers/ constituents||Product or service||Legitimacy||Support and establish norms and values||Promote ideology and social change||Products or services|
|Contemporary Examples||Business services, software developers, tourism, new technology||Edison, Facebook, Google, Kodak, Apple||Museums, Folk art festivals, orchestras, dance||Tom’s Shoes, Grameen Foundation, Scojo Foundation||Compete with existing businesses within the firm|
Tremendous business opportunities exist in addressing the world’s most difficult challenges. Microfinance, for example, provides accessible loans and other assistance to help people who would otherwise not have access to capital markets. [vi] These finance businesses set up infrastructures to loan money and facilitate business. The most renowned attempt has been Grameen Bank, which is located throughout the world.
Certain companies (e.g., Nutriset, which is a private company in France) have been selling food products to combat hunger and malnutrition since 1986. Nutriset is known for developing Plumpy’nut®, the first highly fortified, ready-to-use therapeutic food (RUTF) for the treatment of severe acute malnutrition. Other examples are Scojo Foundation, which sells affordable reading glasses in developing nations such as India; Nicholas Negroponte’s One Laptop per Child program, which tried to get computers into the hands of children; WaterHealth International, which provided “off-the-shelf” technologies to purify water; and Habitat for Humanity, which builds eco-friendly houses. Belgian Bart Weetjens started Apopo, a company that trained giant African rats to sniff out landmines on former battlefields. The program was a modest success, with mine-clearing operations in Mozambique and a contract to expand into Africa’s Great Lakes Region. Apopo wanted to expand its work and tried to get more funding to support its efforts.
Weetjans tried several fundraising techniques such as an adopt-a-rat program and CEO Christophe Cox hired a consulting group (specializing in social enterprises) to run the business using some known principles and practices. They developed strategic options such as expanding mine-clearing operations to the Middle East, getting into the cargo-inspection business, and utilizing the rats for disease detection. Now Apopo is expanding its services into the medical community and is growing financially due to this new opportunity. Apopo serves as a prime example of using innovative thinking to address some of the world’s problems.
While charity may be one solution to addressing the poverty challenge, many analysts point to its failure. Sub-Saharan Africa, despite receiving millions in aid, has not grown economically. Additionally, charitable giving is not a reliable financial source. Total estimated charitable giving in the United States increased just 3.5 percent in 2012 (from 2011) to $316.23 billion in contributions. Giving to religion decreased an estimated 2.0 percent from 2011 to 2012. Inflation-adjusted giving to religious organizations is estimated to have declined over 4.7 percent from 2010. Some organizations (especially religious and foundations) do address world poverty; however, despite this charitable giving, the world is still filled with hunger, illness, and poverty. So, some people argue that the wealthy can save the world by giving money to social entrepreneurs.
Social entrepreneurs share a commitment to pioneering innovations that reshape society and benefit humanity. Whether they are working on a local or international scale, they are solution-minded pragmatists who are not afraid to tackle – and successfully resolve – some of the world’s biggest problems.
SP3 Capital is currently experimenting with impact investing, a hybrid of social entrepreneurship. I’ll discuss more about our approach and how we see entrepreneurship as a disciplining factor for high impact and a way to solve large, intractable problems.
Adapted from Daniel S. Fogel (2016). Strategic Sustainability: A Natural Environmental Lens on Organizations and Management. New York, New York: Routledge: 302-304.
[ii] J.G. Dees and B.B. Anderson, “For-Profit Social Ventures,” in Social Entrepreneurship, ed. M.L. Kourilsky and W.B. Walstad (Dublin: Senate Hall Academic Publishing, 2003): 1–26.
[iii] Throughout history such individuals have pioneered solutions to seemingly intractable social problems, fundamentally improving the lives of countless individuals as well as forever changing the way social systems operate. Among them are Florence Nightingale, who transformed hygiene practices at hospitals, dramatically reducing death rates; Maria Montessori, who created a revolutionary educational method that supports each child’s unique development; and more recently, Muhammad Yunus, who began offering microloans to impoverished people in Bangladesh in 1976 to allow them to become economically self-sufficient, a model that has been replicated in 58 countries around the world. So while social entrepreneurship isn’t a new concept, it is gaining renewed currency in a world characterized by a growing divide between the haves and have-nots.
[iv] J. Austin, H. Stevenson, and J. Wei-Skillern, “Social and Commercial Entrepreneurship: Same, Different or Both?” (Entrepreneurship Theory and Practice 30, no. 1, January 2006): 1–22.
[v] Source: Adapted from P.A. Dacin, M.T. Dacin, and M. Matear, “Social Entrepreneurship: Why We Don’t Need a New Theory and How We Move Forward From Here,” (The Academy of Management Perspectives 24, no. 3, 2010): 37–57; and S.A. Zahra, E. Gedajlovic, D.O. Neubaum, and J.M. Shulman, “A Typology of Social Entrepreneurs: Motives, Search Processes, and Ethical Challenges,” (Journal of Business Venturing 24, no. 5, 2009): 519–532.