The term Social Entrepreneur

When we hear the term “entrepreneur”, there is a different vision that comes to our minds. For some it might be the local grocery store owner who sells the groceries himself and for someone else, it might be the big entrepreneurs like Ratan Tata, Dhirubhai Ambani. Although the term ‘entrepreneurship’ is very familiar to most of us but for the ones new in the field I would go by the Oxford dictionary definition “the activity of setting up a business or businesses, taking on financial risks in the hope of profits”.

What is unfamiliar to most of the people is how the term applies to the world of non-profits. In the area of non-profits, the success factor is not measured by how much profits an enterprise makes, but by how effectively it serves the social mission for which it has been established. That is where the term ‘Social Entrepreneurship’ comes into being.

As a term when we think about it, there are two elements clubbed together, one is social which focusses on the community aspect and the social value creation aspect and another is entrepreneurship which means doing things differently.

Therefore, as we club both the terms together we can say a method of carrying out any activity in a manner it is being conducted currently or in an innovative manner which can create social value for the community and help in addressing the social issues that the community is facing. Banks (1972:53) first coined the term ‘Social Entrepreneur’ in the context of an analysis of different approaches to management and their values orientation with reference to Robert Owen.

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It is an alternative that combine efficiency of entrepreneurial market place with the welfare orientation of the state.

According to Austin, Stevenson, & Wei-Skillern (2006), social entrepreneurship as a concept is defined as “entrepreneurial activity with an embedded social purpose”. In the opinion of Seelos and Mair (2005), developing countries are able to come out with more innovative ideas related to social entrepreneurship as compared to the developed countries. The Global Entrepreneurship Monitor (GEM) defined social entrepreneurship in their special report in 2016 as “any activity, organization or initiative that has a particularly social, environmental or community objective”. If we go by the definition it has its mission well defined as being linked to the society and the community and also protection of the environment. There is a continuous debate in research on whether social enterprises are for-profit or not-for-profit.

A few examples as highlighted by Elkington and Hartigan, 2008 are the provision of low cost cataract surgeries to cure blindness, the deployment of sanitation systems in rural villages.

The work that these social entrepreneurs take up is mostly smaller in scale but the issues that they address can be classified to be of a global relevance and also they are all related to the up gradation of the societal aspect of living beings eg. Water, waste management etc. An example is the growth of microfinance industry throughout the world (Seelos et al., 2005). Therefore, as we can say that social entrepreneurship is concerned about creating new industries, trying to work out on better business models and coming out with innovative ideas that have a societal impact and also allocation of resources to the neglected business models.

These developments related to society have started attracting the interest of the academicians. There have been numerous studies that distinguish the commercial entrepreneurship from social entrepreneurship. A lot of definitions have been given by various authors. Social entrepreneurship is commonly seen as hybrid that combines elements of commercial entrepreneurship and social sector organizations (Dees, 2001).

The various activities that are taken care of through social entrepreneurship have certain values attached to them like freedom of expression, protection of environment, providing equal opportunities to all, charity and good for people. But, social entrepreneurship also focusses on social value creation. Certo and Miller (2008) argue that “Social value has little to do with profits but instead involves the fulfilment of basic and long standing needs such as providing food, water, shelter, education and medical services to those members of the society who are in need”. If any activity is able to enhance the utility of the members of the society after accounting for the resources used in that activity, then in that case we can say that social value creation is taking place (Dees, 2001)

On the other hand, value appropriation from an activity happens when the focal actor is able to capture a portion of the value created by the activity (Mizik & Jacobson, 2003). Whenever an organization is functioning they mostly focus on one of the dimensions and just manages the second dimension. For example, if a firm is functioning for the purpose of earning profits, in that case the firm would work to maximize value appropriation and just satisfice of the value creation part of it. But for a social mission driven organization, it would work to maximize value creation and just satisfice value appropriation such that it is able to capture just enough value to sustain the work operations and be able to re-invest in the growth of the organization. (Santos & Eisenhardt, 2009).

The commercial enterprises and their self-interested actors concentrate on ensuring that they control enough of the industry value chain so that they are able to appropriate value to themselves. So the main focus area is that they want to control by deriving maximum profits out of the activity they are involved in and that too for the benefits of the focal actors or themselves as the entrepreneurs. Whereas, when we talk about social entrepreneurs, they concentrate on value creation and through that they want to achieve empowerment for the lower strata of the society or for those who are in need.

A very famous example of a social enterprise is Grameen Bank founded by Mohammad Yunus in Bangladesh in the year 1983. It is a microfinance organization and community development Bank mainly founded for the purpose of making small loans to the impoverished people without a requirement of collateral. The Bank worked wonders to be able to address the issues related to finance of the community. For its efforts, the bank and its founder, Mohammad Yunus, were jointly awarded the Nobel Peace Prize.

Therefore, as we highlight the fact that commercial entrepreneurship is different from social entrepreneurship. The next major question that comes forward is how these social enterprises function. On the basis of the extant literature available it is said that they function following the different models just like the other commercial organizations do. Social enterprises work in public, private and social sectors alike, employing for – profit models, not for profit models and the third category includes the hybrid models (mix of all three).

Every country perceives social entrepreneurship differently and practices also in the direction perceived. As a phenomenon, social entrepreneurship has been quite well researched on both sides of the Atlantic. But if we see the emerging economies which have a great potential for innovation in social enterprises, a lot of research can be done. Extensive empirical investigation of social entrepreneurship concept in the context of Asian countries and the emerging countries. There is also a need to identify what is relevant and can be applied to these countries as a replication of the social entrepreneurship structures and systems developed in the Western countries. (Doherty et al. 2014, Sengupta et al. 2017, & Sengupta & Sahay 2017a).

Although India is known globally for the social entrepreneurs who are trying to bring changes at the grassroots still, social entrepreneurship is an understudied topic and a lot needs to be done in this field (Tiwari et al. 2017). Most of the research carried out in the Indian context have directly jumped on to case development, the kind of impact they are having on the community, the intentions of social entrepreneurs, their motivation, innovation and challenges faced. But, what has been ignored in all this has been what the term means as per the Indian context.

When we talk about a social enterprise, identifying the market orientation becomes necessary as that would be the guiding force on how to be able to attract the markets. For example, it would include the kind of business model that is required to achieve your social mission, whether it is for profit, not for profit, or a hybrid model that combines both. It would also mean identifying the investors, creating markets, business practices that can be followed to name a few (Sengupta & Sahay, 2018). Although previous researches have recognized the fact that that market orientation impacts the performance of social enterprises but, there has been little empirical work that examines what the social enterprises actually follow in context of market orientation for deploying market based resources (Liu et al. 2015; Dohrmann et al. 2015). Therefore, this construct needs to be deeply explored in the context of the Indian enterprises.

When we talk about market orientation, business model and the business practices become very significant to be able to have a successful social enterprise. One such model as highlighted in the literature bearing an impact for the future is the for profit model of social enterprises.

For profit social enterprises also known as the impact model of the future are the new emerging kind of firms wherein, the firm is not dependent on grants or subsidies from the government to stay in operation rather, it focusses on generating some profits which are just enough to sustain the business operations and whatever is invested is for the growth of the enterprise thereby, achieving the social mission it was started for and also to be able to succeed as continuous fulfilment of the social needs of the people.

A for profit social enterprise, bakes social impact directly into its business model. It is more sustainable than a non – profit organization. Due to the incoming revenues it is able to scale up its operations in ways which many other organizations cannot. Thereby, they are also able to hire better and trained staff that works efficiently towards the operation of the firm. People like customers and employees and various other stakeholders are able to relate in a much better way to the companies that have their values aligned with their own. Technology companies are the first ones employing the social impact model eg. Change.org, Spoiler alert etc.

Therefore, there is a need to study in detail the market orientation of the for profit models being talked about much in the recent studies. We also need to highlight how it is different from the not-for-profit models and bring out a kind of comparative analysis between the two cases to provide a kind of guidance for the upcoming future entrepreneurs on how and which way to proceed to be able to have maximum positive impact on the society and the issues that it is facing.

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The term Social Entrepreneur. (2019, Nov 17). Retrieved from http://paperap.com/social-entrepreneurship-best-essay/

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