social entrepreneurship: a conceptual frameworkirjcjournals.org/ijmssr/aug2013/3.pdf · ·...

International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 Volume 2, No. 8, August 2013

i-Xplore International Research Journal Consortium www.irjcjournals.org

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Social Entrepreneurship: A Conceptual Framework

Suchet Kumar, Sr. Assistant Prof. (Sociology), Rayat College of Law, Dist. Nawanshahr, Ropar, Punjab

Kiran Gupta, Assistant Prof. (Economics), Post Graduate Govt. College for Girls, Chandigarh

ABSTRACT

The area of Social entrepreneurship has become an

important issue of contemporary relevance in academic

literature and research. The paper puts forward a view of

social entrepreneurship as a process that brings social

change or addresses important social needs. Social

entrepreneurship is seen as differing form other forms of

enterprise where a high priority is given to promote social

value and development rather than making financial

profits and gains.

Keywords: Social Entrepreneurship, Entrepreneurs, Innovation,

Market, Organization, Social Welfare

1.1 SOCIAL ENTREPRENEURSHIP

The term „social entrepreneurship‟ was first coined in

1980 by Bill Drayton of Ashoka which is the global

association of the world‟s leading social entrepreneurs.

Drayton calls social entrepreneurship as a model for

bringing social change in a society by those individuals

who combine the pragmatic and results-oriented methods

of a business entrepreneur with the goals of a social

reformer. In other words social entrepreneurs are those

people who use innovative ways for tackling various socio

economic needs of the society in their chosen areas,

whether that is education, health care, economic

development, the environment, the arts or any other social

field.( Dees 1998). They can also be called as socially

conscious individuals who have applied innovative

business models to address social problems previously

overlooked by business, governmental and non-

governmental organizations (NGOs).

Therefore these social entrepreneurs are from those

working communities of voluntary and public

organizations, as well as private firms working for social

rather than for profit objectives (Shaw and Carter, 2004).

Dryton‟s idea of social entrepreneurship emerged during

his visit to India from Harvard in the summer of 1963. Bill

Drayton witnessed the power of a simple idea to effect

vast social change. A Gandhian named Vinoba Bhave was

walking across India and persuading individuals and

whole villages to legally "gift" their land to him. Bhave

then redistributed the land more equitably to support

untouchables and other landless people, thus breaking an

endless cycle of poverty. Ultimately, 7 million acres were

peacefully redistributed, based on the ability of one leader

to turn a powerful idea into reality. Bhave‟s this act was

one of the instrumental reason for Dryton to establish one

of the most reputed global social entrepreneurship

organization named „Ashoka‟ named after another

visionary pragmatist: Ashoka Indian emperor who waged

war to unite a huge swath of south Asia. He subsequently

renounced violence, adopted Buddhism, and dedicated his

empire to tolerance, economic growth, and social projects.

Inspired by ideals, values of great politicians and reforms

like that of Bhave, Asoka and Gandhi Dryton‟s, social

enterprise under the name of „Ashoka‟ Launched in 1980

with $50,000, the organization now has a budget of $30.5

million and has funded 1,600 "fellows" in 60 countries

(Wolk 2007).

1.2 CONCEPT OF SOCIAL

ENTREPRENEURSHIP (SE)

The concept of SE has become the buzzword only in the

recent past, backed by the economic boom in late 1990s

and the government‟s inability to solve social problems.

However By the end of 20th century, social entrepreneurs

became the part of the sphere of development playing a

significant role in the social, political and economic

contexts for poor and marginalized groups. (Prahlad

2006). Social entrepreneurs have also become highly

visible agents of change in developed economies, where

they have applied innovative and cost-effective methods

to address nagging social problems (i.e., poverty, gender

inequality, etc.) that have defied traditional solutions (Cox

and Healey, 1998). The concept of social entrepreneurship

is a relatively new field of study. However a lack of

agreement persists regarding the domain, boundaries,

forms and definitions of social entrepreneurship (Peredo

and McLean 2006). Social entrepreneurship is defined

broadly in some cases and narrowly in others; thus, the

literature has not yet achieved a consensus. The

interpretation of social entrepreneurship ranges from a

narrow perspective to a broader one. A narrow

interpretation of the phenomenon considers social

entrepreneurship to be a not-for-profit initiative in search

of alternative funding strategies or management schemes

to create social value (Austin 2006). On the other hand

contributions on SE view this phenomenon at a broader

perspective by defining it as those social enterprises which



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are considered to be “organizations seeking business

solutions to social problems” (Thompson and Doherty

2006). Several researchers, specifically, provide evidence

that in SE the concept of the social mission is central.

According to this vision, SE is a process that aims to-

• address significant/alleviate social problems/needs

• catalyze social change

• alleviate the suffering of the target group

• benefit society with an emphasis on marginalized

people and the poor

• create and distribute new social value

Thus, all of these definitions agree that social

entrepreneurship is a means to alleviate social problems

and improve well-being. A broader definition of SE was

also given recently by the European Commission (2011),

which considers the social enterprise to be “an operator in

the social economy whose main objective is to have a

social impact rather than make a profit for their owners or

shareholders. It operates by providing goods and services

for the market in an entrepreneurial and innovative

fashion and uses .its profits primarily to achieve social

objectives. The European Commission uses the terms

social enterprise and social business synonymously.

The concept of Social Entrepreneurship can further be

well understood with the help of three distinct

terminologies associated with it. The term „social

entrepreneurship‟ which refers to a process or behavior;

„social entrepreneurs‟ which means the one who focuses

its attention on founder of the imitative while „social

enterprise‟ which refers to the tangible outcome of social

entrepreneurship. The following table gives some

prominent definitions which conceptualizes differences in

the three terminologies or definitions related to SE

Defining Social Entrepreneurship

AUTHORS/ YEAR

DEFINITION

SOCIAL ENTREPRENEURSHIP

Fowler (2000) Social Entrepreneurship is the creation of viable socio-economic structures, relations,

institutions, organizations and practices that yield and sustain social benefits.

Shaw (2004)

The work of community, voluntary and public organizations as well as private firms

working for social rather than only profit objectives.

Said School(2005)

A professional, innovative and sustainable approach to systematic change that

resolves social market failures and grasps opportunities.

Fuqua School (2005) The art of simultaneously pursuing both a financial and a social return on investment

(the “double” bottom line)

Schwab Foundation( 2005) Applying practical, innovative and sustainable approaches to benefit society in

general, with an emphasis on those who are marginalized poor

Tan et al. (2005) Making profits by innovation in the face of risk with the involvement of a segment of

society and where all or part of the benefits

accrue to that same segment of society

Peredo and McLean (2006) Social entrepreneurship is exercised where some person or group….aim(s) at creating

social value…shows a capacity to recognize and take advantage of

opportunities…employ innovation…accept an above average degree of risk…and are

unusually resourceful…in pursuing their social venture

AUTHOR / DEFINITION DEFINITION

( SOCIAL ENTREPRENEUR)

Thake and Zadek (1997) Social entrepreneurs are driven by a desire for social justice. They seek a direct link

between their actions and an improvement in the quality of life for the people with

whom they work and those that they seek to serve. They aim to produce solutions

which are sustainable financially, organizationally, socially and environmentally

Dees (1998) Play the role of change agents in the social sector, by: 1) Adopting a mission to create

and sustain social value (not just private value), 2) Recognizing and relentlessly

pursuing new opportunities to serve that mission, 3) Engaging in a process of

continuous innovation, adaptation, and learning, 4) Acting boldly without being

limited by resources currently in hand, and 5) Exhibiting heightened accountability to

the constituencies served and for the outcomes created



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Reis (1999) Social entrepreneurs create social value through innovation and leveraging financial

resources…for social, economic and community development

Harding (2004) Entrepreneurs motivated by social objectives to instigate some form of new activity

or venture.

DEFINITION

SOCIAL ENTREPRISE

Dees (1994) Social enterprises are private organizations dedicated to solving problems, serving the

disadvantaged and providing socially important goods that were not, in their

judgment adequately provided by public agencies or private markets. The

organization have pursued goals that could not be measured simply by profit

generation, market penetration or voter support.

Haugh & Tracey

( 2004)

Social enterprises are business that trade for social purpose. They combine

innovation, entrepreneurship and social purpose and seek to be financially sustainable

by generating revenue from trading. Their social mission prioritizes social benefit

above financial profit and if and when a surplus is made, this is used to further the

social aims of the beneficiary groups or community

1.3 THE SOCIAL ELEMENT IN THE

DEFINITION

The term in „Social‟ in social entrepreneurship refers to

initiatives aimed at helping others (Prabhu 1999) without

any profit motive as it is in case of business enterprise. It

is an expression of altruism. Social entrepreneurship is

also based on ethical motives and moral responsibility

(Bornstein, 1998: Catford 1998) but at the same time the

motives for social entrepreneurship can be devoid of any

ethical motives supporting any societal welfare. A

business enterprise also has a social aspect. This fact is

well supported by Schumpeter (1934).

“The personal profit motive is a central engine that

powers private enterprise and social wealth.

Entrepreneurship is particularly productive from a social

welfare perspective when, in the process of pursuing

selfish ends, entrepreneurs also enhance social wealth by

creating new markets, new industries , new technology,

new institutional forms, new jobs, and net increases in real

productivity”.

The major question posed is that what is the distinct social

domain of social entrepreneurship? There are three

successful cases of social entrepreneurship around the

globe namely, The Grameen Bank in Bangladesh, the

Aravind Eye Hospital in India and Sekem in Egypt well

support the fact of social entrepreneurship not only

addresses a social problem but also alters changes in the

existing social structures. The Grameen Bank, founded by

Professor Muhammad Yunus in 1976, has changed the life

of millions. By bringing financial services to the poor,

particularly women, it helps them establish profitable

business to fight poverty (Yunus, 1999). Over the last

twenty years, the Aravind Eye Hospital, established in

1976 by Dr. Venkataswamy in India, has offered eye care

services and cataract surgery to cure blindness at a very

small fraction of the cost of such services in the developed

world. Today , Aravind performs 2,20,000 eye operations

per year and applies price discrimination according to the

patients‟ ability to pay : 47 % of its patients pay nothing,

18 % pay two thirds of cost and 35% pay well above cost.

Aravind‟s activities have not only brought social

transformation not only in India but also in Nepal, Egypt,

Malawi, Kenya , Gautemala and other countries where

this initiative has been replicated. Eighty five percent of

male and 60% of female patients who had lost their jobs

as a result of blindness regained their jobs after surgery.

Finally, Sekem, created by Dr. Ibrahim Abouleish in 1977

as a social venture, is today a multi business. It not only

creates economic, social and cultural value, but also has

had a significant impact on Egyptian society. It took the

lead in reducing pesticide use in Egyptian cotton fields by

90% and has created institutions such as schools, a

university, an adult education center, and a medical

center. Thus Sekem‟s social act was successful in filling

this institutional void by providing structures that people

trust and help them escape the poverty trap and gain

control over their lives. ( Seelos & Mair,2005a). These

examples show that how social entrepreneurship catalyzes

social transformation by meeting social needs. Value

creation in all three cases embraces both social and

economic aspects. The main focus, however, is on social

value, while economic value creation is seen as a

necessary condition to ensure financial viability.

1.4 THE ENTREPRENEURIAL

ELEMENTS IN THE DEFINITION

The term entrepreneur is increasingly employed to refer to

the type of individual who is highly determined,

confidant, creative and sales oriented personality, familiar

with the trends and able to translate a vision into real

business (Colombo Plan Staff College 1998). These

individuals are often viewed as reckless risk takers. They

are people who recognize the strengths, weaknesses,

opportunities and threats of their enterprise and build



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opportunity for its success. Under this a substantial body

of research in the tradition of David McClelland who

identifies psychological factors underlining

entrepreneurship. An entrepreneur has a typical

personality with creative, managerial and imaginative

skills who can innovate and contribute positively to an

industrial project. This kind of personality develops in a

person who has strong motivation for achievement.

The works of Max Weber is prominent for giving a

sociological interpretation of entrepreneurship and

modern capitalism. Weber articulated the cause of

entrepreneurship due to singular shift in attitude towards

work in case of protestants who progressed due to the

strong ethical values of hard work, fragility, individual

accountability and reliability, propagated by their religion

which advocated the principle of economic rationality. In

mid 1980s the focus of entrepreneurship research was on

entrepreneurial process or entrepreneurial behavior but in

contemporary times the phenomenon is far more complex

and heterogeneous. Under the current paradigm the notion

of opportunities has been widely accepted as a defining

element of entrepreneurship. Shane and Venkataraman

(2000) , for example, describe entrepreneurship as a field

that analyses how, by whom, and with what effects

opportunities to create goods and services are discovered,

evaluated and exploited.

1.5 CONCEPTUALIZING SOCIAL

ENTREPRENEURSHIP AT INDIVIDUAL

AND ORGANIZATIONAL LEVEL

The concept of S.E. is primarily based on two fields, first

at individual level and second at organizational and inter-

organizational level. At the individual level, definitions of

social entrepreneurs focus on the founder of the imitative.

They are generally referred to as „Change maker acting

upon an opportunity and gathering resources to exploit it.

There are numerous stories and examples of individual

successes like that of Yunus success of Grmaeen Bank,

Bill Drayton‟s „Ashoka‟ , Aarvinds‟Eye Hospital‟ etc. The

individual approach towards SE is treated to be narrow

and biased by the contemporary researchers and

academicians. It states that social entrepreneurship in a

way lays over emphasis on personality cult on individual

traits such as achievement, motivation, tolerance for

ambiguity, optimism, intelligence, talent, and so forth.

This focus strays from what the entrepreneur does to who

the entrepreneur is and his or her ability to sell an idea.

Much of the research that underlies this thinking has

failed to prove that personality traits contribute to

entrepreneurial success. Moreover, the available evidence

from exemplary social entrepreneurs suggests that success

depends less upon personality than it does on teachable

skills, such as the ability to activate the public, raise

capital, negotiate results, and manage the difficult

transitions involved in taking an organization from its

initial start-up phase to maturity.

The further limitation to this approach is that the internal

traits of ambitious zeal and perseverance for an aspiring

entrepreneur cannot be substituted by skill. If skills can be

defined and taught, there is the possibility that social

entrepreneurship need not be so rare in the future. Instead

of one entrepreneur in a million, there may be one in a

hundred or one in five. The second bias that comes from

focusing on individuals is a tendency to ignore the role of

organizations and the resources they provide for pattern-

breaking change. Researchers have long known that

successful ideas require a mix of talents that is rarely

found in one person. Indeed, the most compelling research

on business entrepreneurship suggests that successful

change requires a stream of capabilities including

leadership, management, marketing, organizational

design, and finance. Whereas philanthropists almost

always focus on the individual, venture capitalists almost

always focus on the leadership team and the organization

to back it ( Light 2006).

1.6 ORGANIZATIONAL LEVEL

This perspective recognizes that social entrepreneurship is

often driven by teams and organizations, not just

individuals. It recognizes that social entrepreneurship

occurs in many different sectors (governments, nonprofits,

businesses, and in between), not just in nonprofits. And it

recognizes that entrepreneurship can occur in small units

within large organizations and in single chapters within

large federations, not just in the new organizations that

social entrepreneurs often create. At the(inter)

organizational level, definitions of SE typically refer to

the process of value creation, including opportunity

recognition, adopting a mission to create social value,

engaging in a process of continuous innovation,

adaptation, and learning (Dees, 1998;Roberts and Woods,

2005).

From organizational level the perspective of S.E. could be

described as commercializing a nonprofit organization. It

means it brings a „for profit‟ philosophy to the many not

for profits that experienced a financial crunch and found it

difficult to sustain without donations and grants. Second

perspective is of efficient nonprofit management by way

of bringing expertise and market-based skills to the

nonprofit sector (Johnson, 2000). A base for third

perspective suggests that there also exists a tradition to

link a specific ownership structure to social enterprises.

For example, the cooperatives and other mutually owned

organizations are often referred to as social enterprises. A

fourth view suggests social entrepreneurs as social

purpose business ventures. In this case an emerging social

innovation is seen as a business opportunity and turned

into a commercial for-profit business creating, in the

process, new market space is created while attaining a



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social objective. At the societal level SE is often

understood as networks for social entrepreneurs and

venture philanthropy. And in this case, information and

practical support, as well as charitable donations or equity

capital, are made available to entrepreneurial individuals

and organizations that have a clear social mission and

require a targeted amount of funds to realize it

1.7 FACTORS LEADING TO

EMERGENCE OF SOCIAL

ENTREPRENEURSHIP

The growing attention paid to social entrepreneurship on a

global scale can be explained by several economic, social

and political changes Two types of developments can be

distinguished: first, persisting problems that call for

innovative approaches (i.e., demand side), and second,

developments that increase the chances for those problems

to be solved(i.e., supply side) (Nicholls, 2006). These

general developments contextualize the rise of social

entrepreneurship.

On the demand side, the awareness of the ever-growing

inequality in wealth distribution (World Bank, 2007) and

concern for the environment are two important drivers.

The global movement toward privatization and

marketization has profoundly influenced not-for-profit

organizations and NGOs, pressuring them to address the

gaps left in the provision of social services. Though

funding for these activities from traditional sources has

declined the costs of delivering these programs have

increased (Leadbetter, 1997).This has led to coming of

more and more not-for-profit organizations to deal with

complex social needs of society by applying

entrepreneurial strategies and business models . Secondly

the growth of large number of non profitable

organizations has resulted in a competition amongst each

for raising funds and finally, there is an increasing

demand for improved effectiveness and efficiency for

both the social sector and nonprofit institutions (Zahra et

al., 2009).

On the supply side, there are chances and circumstances in

favour of alternative approaches in dealing with societal,

economical, and environmental problems. First, the

increasing concentration of wealth in the private sector is

promoting calls for increased corporate social to deal with

complex social problems of a society. Second, people are

earning fortunes at younger ages than the previous

generation. Many of them are devoting their time and

resources to philanthropy earlier in life (Reis & Clohesy,

2001). Third, a new group of philanthropists is emerging,

a group of young innovators from diverse backgrounds

who are challenging old assumptions about charitable

giving. Bill Gates, founder of Microsoft, serves as a

salient example of this group. He began devoting his life

and capital to enhancing healthcare and reducing extreme

poverty before he turned forty by creating The Gates

Foundation, today the largest private foundation in the

world. In particular, this new group of philanthropists

argues that traditional philanthropy has focused too much

on donor satisfaction and not enough on producing

measurable results (Reis & Clohesy, 2001). Finally,

organizations are influenced by a strong Corporate Social

Responsibility movement, rethinking the assumption that

doing social good and making a profit are mutually

exclusive (Zahra et al., 2008). Being socially responsible

is no longer an exception but has become a mainstream

opinion; having a social conscience is also good for

business.

CONCLUSION

The present paper has tried to identify the distinctive

domain of Social Entrepreneurship. It has been argued

that Social Entrepreneurship differs from other forms of

entrepreneurship in that it gives high priority to social

value creation by catalyising social change. Social

entrepreneurship is not an isolated phenomenon but an

integral part of a social system. Thus the role, nature and

scale of social entrepreneurship cannot be discussed

without taking into consideration the complex set of

institutional, social, economic and political factors. For

research, social entrepreneurship represents an exciting

discipline for scholars and academicians in future and

looking at its contemporary relevance it may take a form

of a separate discipline for studies.

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