theory of social entrepreneurship

8/12/2019 Theory of Social Entrepreneurship

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Int. J. Social Entrepreneurship and Innovation, Vol. x, No. x, xxxx 1

Copyright 200x Inderscience Enterprises Ltd.

Social entrepreneurship: an overview of itstheoretical evolution and proposed research model

John O. Okpara

College of Business,

Bloomsburg University of Pennsylvania,

266 Sutliff Hall, 400 East Second Street,

Bloomsburg, PA 17815, USA

E-mail: [email protected]

Daphne Halkias*Center for Family and Youth Enterprise (CYFE),

University of Bergamo,

Giannitson 11A, Holargos, Athens 15562, Greece

E-mail: [email protected]

*Corresponding author

Abstract: Social entrepreneurship is an emerging area of research in theentrepreneurship and related disciplines. Social entrepreneurship is seen asdiffering from other forms of entrepreneurship because of the higher prioritygiven to promoting social and development economic values. A review of theliterature emerging from a number of disciplines reveals that the definitionof the concept of social entrepreneurship is fragmented and confusing. Current

conceptualisations of social entrepreneurship fail to effectively consider theunique characteristics of social entrepreneurs and the context within whichthey must operate. The purpose of this paper, therefore, is to advancethe conceptualisation of the concept by adding some clarity to the debate.

Keywords: social entrepreneurship; theoretical evolution; social values;innovation.

Reference to this paper should be made as follows: Okpara, J.O.,and Halkias, D. (xxxx) Social entrepreneurship: an overview of its theoreticalevolution and proposed research model, Int. J. Social Entrepreneurship andInnovation, Vol. x, No. x, pp.xxxxxx.

Biographical notes: John O. Okpara, PhD, is a Professor in the Departmentof Management at Bloomsburg University of Pennsylvania, USA. He gainedhis BSc at the University of London (Birbeck College), MS at SUNY(Maritime College), MA at CUNY (City College) and PhD at New YorkUniversity. He has been on the Faculties of New York Institute of Technologyand the Universities of Phoenix (US) and Warsaw (Poland). He is a businessconsultant, and has published numerous papers, articles and book chapters andauthored two of his own. He is Editor-in-Chief of International Journalof Social Entrepreneurship and Innovation.


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2 J.O. Okpara and D. Halkias

Daphne Halkias, PhD, is a distinguished academic, cross-cultural researcher,

consulting psychologist and executive coach. Publications carry her name inresearch on entrepreneurship, womens issues, family business, organizationalbehaviour, education and clinical psychology. She is currently a SeniorResearch Fellow at The Center for Young and Family Entrepreneurship(CYFE) at the University of Bergamo, Italy, Research Affiliate at the Institutefor Social Sciences at Cornell University and Affiliate at Institute of Coachingat McLean Hospital of Harvard Medical School. Her forthcoming appliedresearch books are in the areas of international management, immigrantentrepreneurship and sustainability, fatherdaughter succession in familybusinesses and cross-cultural e-negotiation. She is Editor of InternationalJournal of Social Entrepreneurship and Innovation.

1 Introduction

Despite the rapid increase in social entrepreneurship as a field of research and practice

and increasing interest within the policy-making authorities (Roper and Cheney, 2005;

Peattie and Morley, 2008), research on social entrepreneurship still falls far behind the

practice (Johnson, 2000). The different concepts used by the literature are often ill

defined and can take on a variety of meanings with little consensus so far reached

among scholars (Weerawardena and Sullivan Mort, 2006). The concept of social

entrepreneurship continues to mean different things to different people and there is no

clear understanding on where to locate it and on how to qualify social entrepreneurs.

The same can be said for the term social enterprise, which is either used to refer to an

activity carried out or to particular organisations and institutions. It can be said that

definitions of social entrepreneurship and social enterprise vary to a great extent at theinternational level with a number of authors using the two interchangeably (Peredo and

McLean, 2006).

Social entrepreneurship is not an entirely new concept because social entrepreneurs

have been around for decades. However, the term and its interpretation may be fairly

new, the concept is not new to social entrepreneur who have been promoting social

entrepreneurial strategies that deal with social issues for decades (Barendsen and

Gardner, 2004). For instance, William Lloyd Garrison, founder of the Anti-Slavery

Society (ASS) in 1833 and publisher of the first anti-slavery newspaper, the Liberator,

fought vigorously to end slave trade and slavery throughout his life. Jane Addams,

a social worker, humanitarian and reformist, founded the social settlement Hull House

in Chicago in 1889. Hull House provided shelter and welfare to people who were

poor and offered a new model that was later replicated throughout the USA.Social histories are filled with many similar examples throughout the world. Only in

recent years have these change-makers become known as social entrepreneurs

(Okpara and Ohn, 2008).

The emergence of social entrepreneurship as an identifiable field is most likely due to

several factors, including present discontent with the speed and management of typical

charities, foundations and government administration of social services to the

disadvantaged, disabled and those who have been displaced due to catastrophic events

such as the hurricane Katrina in Louisiana, the 2004 tsunami in Asia, the recent

earthquake in China, cyclone in Burma, drought in Ethiopia and HIV/AIDS in Africa.


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Social entrepreneurship: an overview of its theoretical evolution 3

Undeniably, one of the main reasons behind the recognition of the social

entrepreneurship movement is William Draytons elevation of the concept. Draytonintroduced the term social entrepreneur when he founded Ashoka in 1980 with the belief

that social entrepreneurs have the most potential for solving social problems. Ashoka is

one of the very first ventures designed explicitly to fund social entrepreneurs .Its purpose

was and still is to empower social entrepreneurs with financial resources and a

professional network within which they are able to disseminate the ideas and solutions

of social entrepreneurship.

While entrepreneurial phenomena aimed at economic development have received a

great deal of scholarly and practitioners interest, entrepreneurship as a means to foster

social progress has only recently attracted the attention of researchers (Alvord et al.,

2004; Dees and Elias, 1998). Similar to entrepreneurship in its early days as a field of

scholarly endeavour, social entrepreneurship research is still largely phenomenon-driven.

Existing most studies are typically based on anecdotal evidence or case studies, applyingdiverse research designs and methods and introducing insights from other disciplines.

Like entrepreneurship, which even today lacks a unifying paradigm (Shane and

Venkataraman, 2000), the term social entrepreneurship has taken on a variety of

meanings (Dees, 1998).

Social entrepreneurship seems to be one of the most misunderstood concepts in

entrepreneurship literature. Everyone, it seems, has a particular definition of what the

term means. Yet, the concept is still poorly defined and its boundaries to other fields

of study remain vague. To enhance our understanding of social entrepreneurship as a

field of study and practice, it is necessary to define and clarify the key concepts and

constructs of social entrepreneurship. This paper aims to clarify the core concept of social

entrepreneurship and develop a model to guide future research.

The paper is organised as follows. First, we examine the meaning of the terms social

entrepreneurship, which constitute the essence of the phenomenon. We offer a working

definition of social entrepreneurship and elaborate on its distinctive characteristics.

In a next step, we developed a social entrepreneurship model based on the existing

literature. We conclude the paper with some propositions for future research that could

define the future of social entrepreneurship as an area of research.

2 Evolution of entrepreneurship

Entrepreneurship has been described as a relatively young academic discipline.

This seems to create problems in defining and developing a consensus definition of the

concept. For example, there is a lack of a unifying framework that distinguishes

entrepreneurship from other management disciplines such as strategic management,human resource management and operations management (Zahra and Dess, 2001).

Therefore, we believe that the development of the concept of entrepreneurship

should be looked at from the classical viewpoint. For example, pioneers such as

Richard Cantillon, Adam Smith, Jean Baptiste Say, John Stuart Mill, Carl Menger

and Joseph Schumpeter all have made substantial contributions towards both the

initial development and the latter contemporary developments of the concept of

entrepreneurship.


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Richard Cantillon, for instance, was a French economist who has been credited with

giving the concept of entrepreneurship a central role in business management andeconomics (Okpara and Ohn, 2008). In his Essaisur la nature du commerce en gnral,

Cantillon described an entrepreneur as a

person who pays a certain price for a product to resell it at an uncertainprice, thereby making decisions about obtaining and using resources whileconsequently assuming the risk of enterprise.

A significant point in Cantillons definition was that entrepreneurs consciously make

decisions about resources allocations. Cantillon suggested that the entrepreneur shifts

economic resources out of an area of lower and into an area of higher productivity

and greater yield (Sullivan Mort et al., 2003). Cantillon also argued that entrepreneurs

were directly involved in the equilibrium condition of supply and demand functions

(Jennings, 1994).

Adam Smith, a brilliant British economist, also defined the enterpriser in his 1776Wealth of Nations as an individual who undertook the formation of an organisation for

commercial purposes. In Smiths view, entrepreneurs reacted to economic change,

thereby becoming the economic agents who transformed demand into supply. Another

French economist, Jean Baptiste Say, in his 1803 Trait d economie politique,

described an entrepreneur as one who possessed certain arts and skills of creating new

economic enterprises, yet a person who had exceptional insight into societys needs and

was able to fulfill them. Another British economist John Stuart Mill (1848) elaborated

on the necessity of entrepreneurship in private enterprise.

The term entrepreneur subsequently became common as a description of business

founders, and the fourth factor of endeavour was entrenched in economic literature

as encompassing the ultimate ownership of a commercial enterprise. Carl Menger

(18401921) established the subjectivist perspective of economics in his 1871Principles of Economics. The entrepreneur becomes, therefore, the change agent who

transforms resources into useful goods and services, often creating the circumstances that

lead to industrial growth. However, Menger saw the entrepreneur as an astute individual

who could envision this transformation and create the means to implement it (Okpara and

Ohn, 2008). Menger assigned priority numbers to different events in this chain so that a

high-priority event would have a low number and would be an ultimate end use to

satisfy a human need. At the other extreme, Menger assigned a low-priority event with a

high number and this might represent raw material needed to create the number one

event; fields of unharvested wheat would have a low priority (Okpara and Ohn, 2008).

Schumpeter (1934), an Austrian economist, revived the concept of entrepreneurship

when he joined Harvard University Faculty in Cambridge, Massachusetts. His research

on entrepreneurship was published in the USA in 1934. Schumpeter described

entrepreneurship as a force of creative destruction whereby established ways of doing

things are destroyed by the creation of new and better ways to get things done. He argues

that enhancement of profits are made possible by innovation, which, in turn, stimulates

imitation, which finally brings the flow of the innovators profits to an end.

In support of the classical perspectives on entrepreneurship, Sullivan Mort et al.

(2003) stated that entrepreneurs play a significant role in an economy because of

innovators who drive the creative-destructive process of capitalism. In general,

early literature suggests that the primary function of an entrepreneur is to start new

profit-seeking business ventures. Subsequent literature, however, reflects that this


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function is not considered a sufficient condition for entrepreneurship. In an extensive

review, Cunningham and Lischeron (1991) observe the existence of six schools ofthought about entrepreneurship in the literature. First, the great person school of thought

suggests the entrepreneur has an intuitive ability a sixth sense and the traits and

instincts he or she is born with. Second, the psychological characteristics school

suggests that entrepreneurs have unique values, attitudes and needs, which drive them.

Third, the classical school of entrepreneurship reflects the early approaches to

entrepreneurship and suggests that the central characteristic of entrepreneurial behaviour

is innovation. Fourth, the management school suggests that entrepreneurs are organisers

of an economic venture; they are people who organise, own, manage and assume the risk.

Fifth, the leadership school argues that entrepreneurs are leaders of people. They have the

ability to adapt their style to the needs of people. Sixth, the intrapreneurship school

suggests that entrepreneurial skills can be useful in complex organisations. Cunningham

and Lischeron (1991) observe that a judgement concerning each models appropriatenessdepends on the researchers assessment of its capacity for explaining and improving

certain aspects of the entrepreneurial process.

In a major departure from the classical perspectives, a number of researchers

have suggested that entrepreneurship can be viewed as a behavioural characteristic

of the organisation. This school of thought argues that entrepreneurs display three

characteristics in their decision making within organisations: tolerance for risk,

proactiveness and innovativeness. These characteristics form the basis of the behavioural

entrepreneurship scale developed by Covin and Slevin (1986). Furthermore, the

proponents of this school of thought argue that adoption of a firm-behaviour model of

entrepreneurship has a number of advantages over more traditional entrepreneurship

models and theories that focus on traits of the individual entrepreneur, primarily because

the level of analysis at firm level is more appropriate to understand effectiveness and the

types of firm-level behaviours that result in performance (Okpara and Ohn, 2008).

Recently,someresearchers have produced a compelling argument that entrepreneurial

opportunity recognition and exploitation are constructs that fall squarely within the

unique domain of entrepreneurship and should be the focus of research in the field

(Shane and Venkataraman, 2000). Casson (1982) defines entrepreneurial opportunities as

those situations in which new goods, services, raw materials, and organising methods

can be introduced and sold at greater than their cost of production. This definition

requires profit generation as a precondition for an entrepreneurial opportunity, which can

be applied post hoc only, after profits have been achieved. With a view to reconciling

this debate, Singh (2001) suggests that the potential to generate profits would be an

appropriate indicator of an entrepreneurial opportunity. Against this background, it is

appropriate to examine the concept of social entrepreneurship.

3 Social entrepreneurship

Martin and Osberg (2007) have argued that any definition of the social entrepreneurship

must start with the word entrepreneurship. They contend that the word social simply

modifies entrepreneurship. Thus, we will begin our analysis with the definition of

entrepreneurship and then switch to social entrepreneurship. The definition of

entrepreneurship has been debated among scholars, educators, researchers and

policy-makers since the concept was first established in the early 1700s. What exactly is


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an entrepreneur? More importantly, what is entrepreneurship? According to Kautz

(1999), the definition of entrepreneurship is still evolving as the field itself comes into themainstream business. Despite the complex and dynamic nature of entrepreneurship,

an operational definition can be identified to help explain the characteristics

of entrepreneurial activity and its positive effects on the economy. The term

entrepreneurship comes from the French verb entreprendre and the German word

unternehmen, both of which mean to undertake (Okpara and Ohn, 2008).

Entrepreneurial process is still involving, including all the functions, activities and

actions connected with the opportunities and the creation of organisations to pursue

them (Carton et al., 1998). The modern definition of entrepreneurship was introduced

by Schumpeter (1934). Schumpeter stated that the carrying out of new combinations

of business is called enterprise and the individuals whose function is to carry them

out are called entrepreneurs. Carton et al. (1998) provided an operational definition

of entrepreneurship that attempts to encompass definitions from scholars like Schumpeterinto a comprehensive and adequate concept: He defined entrepreneurship as the

pursuit of a discontinuous opportunity involving the creation of an organisation

(or sub-organisation) with the expectation of value creation to the participants. According

to Carton et al. (1998), an entrepreneur is the individual (or team) that identifies the

opportunity, gathers the necessary resources, creates and is ultimately responsible for the

performance of the organisation. Therefore, entrepreneurship is the means by which new

organisations are formed with their resultant job and wealth creation. An important

criterion of the Carton, Hofer and Meekss definition is that the organisations must

provide goods or services to society. Though this definition will not satisfy everyone,

it does capture the important aspects of entrepreneurship.

Scholars such as Shane and Venkataraman (2000) and Singh (2001) define an

entrepreneurial opportunity as

a practicable, profit seeking, potential venture that provides an innovative newproduct or service to the market, improves on an existing product/service, orimitates a profitable product/service in a less-than-saturated market.

Singh (2000) argues that this definition is purposely broad and can be applied to

entrepreneurial opportunities based on incremental market improvements, those that are

highly innovative and create new markets, and everything in between. Drucker (1995)

defines entrepreneurship as a systematic, professional discipline. This definition brought

a new level of understanding to the concept (Maurer et al., 1995). Sharma and Chrisman

(1999) identified two schools of thought on the meaning of entrepreneurship. One group

focused on the characteristics of entrepreneurship (innovation, growth and uniqueness)

whereas a second group focused on the outcomes of entrepreneurship (for example, the

creation of value). On the basis of the different definitions of entrepreneurship, the

concept appears to be confusing. Filion (1997) argued that the confusion surrounding the

definition of the concept of entrepreneurship was not as serious as was previously

believed because similarities in the perception of the entrepreneur emerge within each

discipline, for example, social science scholars, such as economists, associate the term

entrepreneur with innovation, whereas the behavioural scholars focus on the creative and

intuitive characteristics of entrepreneurs. In sum, Outcalt (2000) concluded that three

traits are associated and included in the definition of entrepreneurship. These are:


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uncertainty and risk

complementary management competence

creative opportunism.

Outcalt (2000) warned that to ignore any of these areas is to risk repeating, rather than

learning from the history of the concept of entrepreneurship. With this in mind, we are

ready to explore the concept of social entrepreneurship.

3.1 Different definitions of social entrepreneurship

The concept of social entrepreneurship means different things to different people

including researchers (Dees, 1998). Specifically, some in the literature see a social

enterprise as a more efficient outgrowth of not-for-profit institutions, while others see the

concept as a for-profit business attempting to address social needs in the marketplace

(Harding, 2004; Massetti, 2008). For example, the UKs Global Entrepreneurship

Monitor has divided social enterprises into three categories, depending on the form of

funding stream used by each.

Dees (1998) stated that any definition of social entrepreneurship should include an

emphasis on discipline and accountability with the philosophy of value creation,

innovation, change agents, pursuit of opportunity and resourcefulness. According to Dees

(1998) articulation, to qualify as a social entrepreneurship, entrepreneurs must be change

agent by adopting a mission to create and sustain social value, 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. Dees (1998) noted that social entrepreneurs will exemplify these

characteristics in different ways and to different degrees. The closer a person gets tosatisfying all these conditions, the more that person fits the model of a social

entrepreneur. Definitions of entrepreneurial phenomena are hardly able to capture the

whole picture. The definition offered in this paper aims to reflect some of our basic

assumptions.

First, we view social entrepreneurship as a process of creating value by combining

resources in new ways. Second, these resource combinations are intended primarily

to explore and exploit opportunities to create social value by stimulating social change

or meeting social needs. And third, when viewed as a process, social entrepreneurship

involves the offering of services and products but can also refer to the creation of new

organisations. Importantly, social entrepreneurship, as viewed in this paper, can occur

equally well in a new organisation or in an established organisation, where it may be

labelled social intrapreneurship. Like intrapreneurship in the business sector, socialintrapreneurship can refer to either new venture creation or entrepreneurial process

innovation. The organisational context in which social entrepreneurship occurs,

i.e., newly created or established organisations, sets it apart from other more loosely

structured initiatives aimed at social change, such as activist movements (Mair and

Mart, 2005).

Martin and Osberg (2007) define social entrepreneurship as having the following

three components:


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identification of a stable but inherently unjust equilibrium that causes the exclusion,

marginalisation, or suffering of a segment of society that lacks the financial meansor political clout to achieve any transformative advantage on its own

identification of an opportunity in this unjust equilibrium, developing a social value

proposition, and bringing to bear inspiration, creativity, direct action, courage

and fortitude, thereby challenging the stable states hegemony

forging of a new, stable equilibrium that releases trapped potential or alleviates the

suffering of the targeted group, and through imitation and the creation of a stable

ecosystem around the new equilibrium, ensuring a better future for the targeted

group and even society at large.

Ashoka Foundation (2007) defines social entrepreneurs as individuals with innovative

solutions to societys most pressing social problems. They are ambitious and persistent

in tackling major social issues and offering new ideas for wide-scale change. Rather than

leaving societal needs to the government or business sectors, social entrepreneurs find

what is not working and solve the problem by changing the system, spreading the

solution and persuading entire societies to take new leaps. Social entrepreneurs often

seem to be possessed by their ideas, committing their lives to changing the direction

of their field. Ashoka further describes the characteristics of a social entrepreneur.

They stated that each social entrepreneur should present ideas that are user-friendly,

understandable, ethical, and engage widespread support to maximise the number of local

people who will stand up, seize their idea and implement it. This means that every

leading social entrepreneur is a mass recruiter of local change-makers a role model

proving that citizens who channel their passion into action can do almost anything. Just

as entrepreneurs change the face of business, social entrepreneurs act as change agents

for society, seizing opportunities others miss and improving systems, inventing newapproaches, and creating solutions to change society for the better. While a business

entrepreneur might create entirely new industries, a social entrepreneur comes up with

new solutions to social problems and then implements them on a large scale (Ashoka

Foundation, 2007).

Schwab Foundation defines a social entrepreneur as someone who innovates

by finding a new product, a new service, or a new approach to perform actions that are

socially responsible (www.schwabfound.org/definition.htm). The Institute for Social

Entrepreneurship defines social entrepreneurship as the simultaneous pursuit of

financial and social returns on investment which is the ultimate benchmark for a social

enterprise or a social sector business. They refer to this as a double bottom line

(www.socialent.org/beta/definitions.htm).

Morfopoulos et al. (2006) argue that a social entrepreneurship venture should fulfil

the following conditions to be successful:

1 Realism: Does the business venture present an opportunity that is feasible

to accomplish its goals while at the same time making a positive outcome

on the society?

2 Affordability: Is the product/service affordable to produce/provide? Is it priced

in accordance with the market and the consumers ability to pay for it?


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3 Profitability: Will this product/service provide the entrepreneur with a vehicle

to make profits?

4 Societal impact: Will this venture have a positive societal outcome for the

community (on local, regional, international levels)?

Boschee and McClurg (2003) define a social entrepreneur as any person, in any sector,

who uses earned income to pursue a social objective. Boschee and McClurg (2003)

who argued that unless a non-profit organisation is generating earned revenue from its

activities, it is not acting in an entrepreneurial manner and that an earned income

will enable a social entrepreneur to become sustainable or self-sufficient.

This definition is somehow related to Morfopoulos et al. profit component definition

of social entrepreneurship.The forgoing discussion clearly demonstrates a lack of agreement on the concept

of social entrepreneurship leading to the lack of a coherent, scholarly approach on how toresearch the concept. On the basis of our review, we conclude that while there is a

substantial body of literature on social entrepreneurship emerging from a number of

domains, the literature is still fragmented, and to our knowledge, there are a few

conceptual frameworks to date that are available to aid the development of the construct.

We, therefore, argue that there is a need to develop a coherent conceptual framework

in the discipline of social entrepreneurship (see Table 1 and Figure 1).

Table 1 Selected social entrepreneurship definitions

Author (s) Definition of social entrepreneurship

Ashoka Foundation (2007) Defined in terms of using innovative solutions to solvesocietys social problems

Boschee and McClurg (2003) Defined in terms of using earned income to solve societyssocial problems

Dees (1998) Defined in terms of value creation, innovation,and opportunity

Drayton (2002) Defined in terms of a change that will solve societyssocial problems

Hartigan (2006) Defined in terms of social transformation

King and Roberts (1987) Defined in terms of innovation and leadership

Korosec and Berman (2006) Defined in terms of identifying and addressing importantsocial issues in the society

Morfopoulos et al. (2006) Defined in terms of doing something that is realistic,affordable, profitable, and benefits society

Sullivan Mort et al. (2003) Defined in terms of creating better social values for society

Prabhu (1998) Defined in terms of a social change whose mission is todevelop people

Schwab Foundation for SocialEntrepreneurship (2007)

Defined in terms of innovation by finding a new product,service, or approach to do things that are socially responsible

Thompson et al. (2001) Defined as a process of adding something new and different


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Figure 1 Framework for studying social entrepreneurship

On the basis of the preceding review, the following definition of competency can be

developed.

Innovation + Leadership + Opportunity + Profitability+ Value creation + Social benefits = Social entrepreneurship.

Our proposed model is that social entrepreneurship (SE) is a function of Innovation

+ Leadership + Opportunity + Profitability + Value creation + Social benefits = Socialentrepreneurship. Thus, SE = (I + L + O + P + VC + SB)

where

I: Innovation

L: Leadership

O: Opportunity

P: Profitability

VC: Value creation

SB: Social benefits.

Thus, the definition of social entrepreneurship should include: innovation, leadership,opportunity, profitability, value creation and social benefits. A social entrepreneur is,

therefore, defined as one who uses his or her leadership and innovative capabilities to

find an opportunity to create a new product, a service, or a new approach to address the

most pressing social issue in the society. The issues include but not limited to Child

Labour, Disability, Education, Environment, Health, Homelessness, Poverty, Water

Purification and so forth. We will discuss our proposed model in the following section.

On the basis of the preceding model and definition, we therefore made several

propositions that need further investigation through detailed studies.


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P1: The greater the presence of leadership qualities in a social entrepreneur, the lower

will be the leadership competency deficit, resulting in a higher level of successful andsustainable social entrepreneurship programme.

P2: The greater the presence of innovative traits in a social entrepreneur, the lower will

be the innovative competency deficit, resulting in a higher level of successful and

sustainable social entrepreneurship programme.

P3: The greater the presence of creativity in a social entrepreneur, the lower will be the

creativity competency deficit, resulting in a higher level of successful and sustainable

social entrepreneurship programme.

P4: The greater the presence of identifying opportunity in a social entrepreneur, the more

likely he or she will establish a social entrepreneurship programme, resulting in a

successful and sustainable social entrepreneurship programme.

P5: A social programme designed to address important social issues that benefit society

is more likely to be successful and sustainable.

P6: A social programme designed to address important social issues that benefit society

as well as to make profit for the entrepreneur is more likely to be successful and

sustainable than the one that is designed for non-profit making.

3.2 Innovation

Innovation is described as the lifeblood of any organisation. Innovation can apply

to many things. It is usually the term applied to a new product, but it can also be used

to describe new processes, methods or inventions (Reavis, 2010). Entrepreneurs

including social entrepreneurs are innovative, they break new ground, develop newmodels and pioneer new approaches. However, as Schumpeter notes, innovation can take

many forms. It does not require inventing something wholly new; it can simply involve

applying an existing idea in a new way or to a new situation. Entrepreneurs need not be

inventors. They simply need to be creative in applying what others have invented.

Their innovations may appear in how they structure their core programmes or in how

they assemble the resources and fund their work.

Social entrepreneurs look for innovative ways to assure that their ventures will have

access to resources as long as they are creating social value. This willingness to innovate

is part of the modus operandi of entrepreneurs. It is not just a one-time burst of creativity.

It is a continuous process of exploring, learning and improving. Of course, with

innovation comes uncertainty and risk of failure. Entrepreneurs tend to have a high

tolerance for ambiguity and learn how to manage risks for themselves and others.

They treat failure of a project as a learning experience, not a personal tragedy.

In a study of innovation and innovative process by Cisco in 2005, the key findings

from this study are that innovation is one of the most important factors in business

success. Fifty-three percent of the respondent in the study cited innovation as having

the biggest impact on competitiveness, while increasing employee education and skill

levels was favoured by 26%. Reducing wages (14%) and cutting corporate taxes (7%)

were not seen as strong drivers of competitiveness (Cisco Innovation, 2005).


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3.3 Leadership

According to the US Small Business Administration (2007), good leaders must be able

to tolerate frustration and stress. Overall, they must be well adjusted and have the

psychological maturity to deal with anything they are required to face (Okpara and Ohn,

2008). They are often competitive, decisive, and usually enjoy overcoming obstacles.

Overall, they are assertive in their thinking style as well as their attitude in dealing

with others. They are usually seen as active, expressive, energetic, optimistic and open

to change. Overall, they are generally quick and alert and tend to be uninhibited.

In addition to these basic traits, entrepreneurs including social entrepreneurship leaders

must also have traits, which will help them motivate others and lead them in new

directions (Okpara and Ohn, 2008).

Visionary leaders reminiscent of social entrepreneurs must be able to envision the

future and convince others that their vision is worth following. To do this, they must becomfortable with criticism, self-assuredness, resiliency, they must be able to work long

hours, remaining alert and staying focused, and empathy being able to put yourself

in the other persons shoes is a key trait of leaders today. In sum, a social entrepreneur

must also be a good leader and excellent leadership traits play a major role in determining

who will and who will not be comfortable leading others, which will, in turn, determine

the success and longevity of a social entrepreneurial programme.

3.4 Opportunity

According to Shane (2003), entrepreneurial opportunity is defined as a situation in which

an entrepreneur can create a new means-ends framework for recombining resources that

will yield a profit. There are two types of entrepreneurial opportunities identified:

Kirznerian and Schumpeterian. Kirznerian opportunities are based on differential accessto the existing information (Kirzner, 1997) while Schumpeterian are created when

changes in technology, political forces, regulation, macro-economic factors and social

trends provide new information that enable entrepreneurs to recombine resources into

more valuable forms (Schumpeter, 1934).

Entrepreneurs discover opportunities because they have better access to information

about opportunities and because they are better at recognising opportunities than others

given the same information (Shane, 2003). In his examination of entrepreneurship

and organisational change in human services, Young (1985) found that entrepreneurial

opportunities were often discovered as part of solving important problems that

reflected trends and long-term developments in the social, economic and technological

environment.

3.5 Entrepreneurial profit

According to Shoemaker (2009), making a profit should be a secondary concern for

social entrepreneurs; however, if social entrepreneurs want to be successful, they cannot

shy away from the idea of profit. They must learn to embrace profit and appreciate it for

what it is, a means to an end (Shoemaker, 2009). Social enterprises, like any other

company, need a money base from which they can operate, particularly when times get

tough. When you are in start-up mode, it is easy to think that profitability is a hurdle you

only have to overcome once. In fact, it is unwise to think that, once established, any flow


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of profit will be constant. Recessions, competition, strategic mistakes, failure to innovate

and so forth can all create periods of un-profitability for an organisation. When theseperiods hit, you will need cash reserves from past profits to draw on to ensure survival

(Okpara and Ohn, 2008).

3.6 Value creation

Adopting a mission to create and sustain social value is the foundation of what

distinguishes social entrepreneurs from business entrepreneurs even from socially

responsible businesses. For a social entrepreneur, the social mission is fundamental.

This is a mission of social improvement that cannot be reduced to creating private

benefits (financial returns or consumption benefits) for individuals. Making a profit,

creating wealth, or serving the desires of customers may be part of the model,

but these are means to a social end, not the end in itself. Neither the profit nor thecustomer satisfaction is the gauge of value creation; social impact is the gauge. Social

entrepreneurs look for a long-term social return on investment. Social entrepreneurs want

more than a quick hit; they want to create lasting improvements. They think about

sustaining the impact.

3.7 Social benefits

Social enterprises need to generate revenue for sustainability but they also have equally

important social or environmental aims. The requirement to manage this triple bottom

line (financial, social and environmental aims) can result in unique challenges for a

social enterprise business. However, the ability to bring about positive change to people

and communities can be enormously rewarding. A wider benefit of running a social

enterprise can be in the employment of local people. People who have traditionally found

it hard to enter the labour market can find social enterprises the ideal environment for

developing their potential, whether as an employee or heading up an operation.

The types of people who can benefit from running or working in social enterprises

include: the long-term unemployed, people with learning disabilities, disabled people,

people with mental health issues, minority ethnic groups, women, young people.

Social enterprises still need to be competitive in any environment in which they

operate. Attracting customers is vital to success and this could be achieved by a social

enterprise being able to offer high-quality services or products in an innovative way.

For instance, customers may be more willing to buy your products or services than a

competitors because they feel they are contributing to the welfare of others in their local

community.

3.8 Challenges for conducting social entrepreneurship research

Many of the issues we have brought up in this paper are typical of any emerging field

of research: the need to draw boundaries so as to delimit scope and clarify whether it

really is an independent field of research, and the need to identify the different levels

of analysis, disciplines and literatures. However, there are several issues to be considered

to advance our understanding of social entrepreneurship. One of the issues

is whether social entrepreneurship is an independent field of research. Many studies on

social entrepreneurship have adopted concepts and terminology used in the established


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entrepreneurship literature. Does this imply that social entrepreneurship is a sub-category

of entrepreneurship, in which the social context provides a new and unusual setting inwhich to study and test entrepreneurial phenomena? Some researchers have argued that

social entrepreneurship differs from other forms of entrepreneurship in that it gives

higher priority to social value creation by catalysing social change and catering to social

need than to value capture (Mair and Mart, 2005). According to Mair and Mart (2005),

social entrepreneurship deserves considerable attention as a field of research because it

has enormous potential to inform and enhance the field of entrepreneurship. They also

argued that it provides an excellent opportunity to challenge and rethink central concepts

and assumptions of social entrepreneurship.

Measuring social performance and impact is one of the greatest challenges for

practitioners and researchers in social entrepreneurship (Mair and Mart, 2005). The real

problem may not be the measurement per se, but how the measures may be used to

quantify the performance and impact of social entrepreneurship (Mair and Mart, 2005).According to Mair and Marti (2005), many researchers consider it very difficult,

if not impossible, to quantify socio-economic, environmental and social benefit/effects

of social entrepreneurship programmes. As Emerson pointed out, cited in Mair and Mart,

(2005), for many of those actively involved in the social sector, it has been taken as a

virtual given that most elements of social value stand beyond measurement and

quantification. Yet, it is necessary to make major efforts in this direction and to develop

useful and meaningful measures that capture the impact of social entrepreneurship

and reflect the objectives pursued. Clearly, more research and managerial practice

is needed to establish social impact as an essential dimension of performance

measurement.

4 Conclusion

The increase and resulting recognition of social enterprises is a wide process that cuts

across various countries. Despite its significant development, a social enterprise

definition shared by the researchers committed to study this phenomenon does not yet

exist. Nonetheless, this lack of general understanding should not be regarded as a

constraint preventing its further development. What appears clearly is that the upsurge

of social enterprises influences the theoretical framework of enterprise. The general

conception of enterprises as businesses promoting the exclusive interests of their owners

is questioned by the emergence of enterprises supplying general-interest services and

goods in which profit maximisation is no longer an essential condition.

We consider social entrepreneurship to be a particularly exciting and fruitful research

topic and it is our hope that this paper will bring us a step closer towards legitimisingand inspiring social entrepreneurship as a means to create social and economic value and

as a field of research. The working definition articulated in this paper and the proposed

model of social entrepreneurship put forward are intended to facilitate a more detailed

examination of the main components of the concept. We suggested that further empirical

and conceptual work is needed to establish a comprehensive picture of social

entrepreneurship. It is our hope that our examination of the concepts of social

entrepreneurship helps to clarify the distinctive value each approach brings to society and

ultimately leads to better understanding and more informed decision making among those

committed to encouraging and advancing positive social change. It is also our hope that


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the conceptual framework and model of social entrepreneurship we have developed

would help researchers in the field to begin to conduct empirical research on thisimportant subject.

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