The concept of ‘social entrepreneurship’ has been rapidly emerging in the private, public and non-profit sectors over the last few years, and interest in social entrepreneurship continues to grow. Currently, the non-profit sector is facing intensifying demands for improved effectiveness and sustainability in light of diminishing funding from traditional sources and increased competition for these scarce resources. At the same time, the increasing concentration of wealth in the private sector is promoting calls for increased corporate social responsibility and more proactive responses to complex social problems, while governments at all levels are grappling with multiple demands on public funds.
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In light of this, social entrepreneurship is emerging as an innovative approach for dealing with complex social needs. With its emphasis on problem-solving and social innovation, socially entrepreneurial activities blur the traditional boundaries between the public, private and non-profit sector, and emphasize hybrid models of for-profit and non-profit activities. Promoting collaboration between sectors is implicit within social entrepreneurship, as is developing radical new approaches to solving old problems. Social entrepreneurship has a strong intuitive appeal, and several recently documented examples highlight its potential in a variety of contexts. However, this is still a very new area, and research on social entrepreneurship lags far behind the practice.
The purpose of this paper is to provide an overview of existing literature in this emerging area, and to examine social entrepreneurship in light of growing expectations that it will generate and support radically new and effective ways of dealing with pressing social problems. The first part of this paper will briefly examine the contextual factors influencing the emergence and development of social entrepreneurship. The second section will focus on defining social entrepreneurship, and understanding the parameters of this rather broadly-used term. The third section will examine the characteristics and motivations of social entrepreneurs. This will be followed by a discussion of some of the key issues emerging around social entrepreneurship in the literature, including support for social entrepreneurs, training and capacity building, implementation issues, and gaps in the existing research/opportunities for future research (with particular emphasis on the Canadian context) in this rapidly developing field.
Although the literature on social entrepreneurship comes from a variety of sources, this literature review draws heavily on the available academic literature, and focusses primarily on social entrepreneurship within the North American context. It should be noted that while there were numerous examples of social entrepreneurship in the United States, no Canadian examples were found in the popular or academic literature, nor were any of the researchers affiliated with Canadian institutions.
As with any change-oriented activity, social entrepreneurship has not evolved in a vacuum. Rather, it has evolved within a complex framework of political, economic and social changes occurring at the global, national and local levels. One change that has had a significant impact in North America has been the global shift away from a social welfare state approach to development and towards a neoliberal approach with an emphasis on market forces as primary mechanisms for the distribution (and redistribution) of resources. Related to this is the emergence of an increasingly globalized economic system. While the impacts of this shift are generally discussed in economic terms, they also have significant implications for social change initiatives, e.g., the contradictory phenomena of our current times – unprecedented wealth creation coupled with a growing gap between rich and poor ( Reis, 1999).
Within a social welfare state paradigm, many social change initiatives were undertaken by the public and/or non-profit sectors, in the latter case drawing on resources transferred from the public sector and/or philanthropic sources. Non-profits were (and to a great degree still are) viewed as valuable contributors to social change. While demand for social services has not decreased in the last two decades (and many would argue it has increased), the transfer of funding to these organizations has decreased significantly. For example, in the United States, federal and state funding for non-profits decreased 23% in the 1980s, and continued to decline in the 1990s (McLeod, 1997).
During this same period, the number of non-profit organizations seeking funding has increased exponentially. Peter Drucker estimates that 800,000 non-profits have been established in the last 30 years (Bornstein, 1998) (although Drucker does not specify the geographic boundaries for this estimate); while Cannon (2000) notes a 40% increase in the number of non-profits in the United States in the last decade. As such, non-profit organizations are finding themselves facing stiff competition from other non-profits, and sustainability of funding has become a serious issue for many.
This competition has many implications for non-profit organizations. It necessitates judicious use of scarce resources and increases pressure on non-profits to demonstrate organizational effectiveness (e.g., by producing empirical results). The prevalence of market-based development models has also resulted in pressure on non-profits to become more conversant with the language and vision of market models (e.g., conducting market research with client groups, targeting ‘investments’ rather than ‘donations’). Finally, the uncertainty surrounding traditional funding sources has required non-profits to begin to rethink funding strategies.
With the decrease in public funding, questions have been raised concerning the sustainability of not only non-profit organizations, but also the sustainability of their social change initiatives. Reis (1999) notes the recent emergence of a new group of philanthropists, much more diverse than the “white, male leaders from mainstream America.” (p.15) who had previously dominated North American philanthropic foundations. Many of these new philanthropists are young ‘emerging innovators’ from diverse backgrounds, and are challenging old assumptions about charitable giving. In particular, they argue that traditional philanthropy has focussed too much on donor satisfaction and not enough on producing measurable results – either outcomes or impacts. (Reis, 1999)
Internationally, the non-profit situation is much the same. Fowler (2000) assesses the situation of non-governmental development organizations (NGDOs) working in developing countries, noting their role as primarily ‘subsidy-providing intermediaries’ on behalf of global donors. This has created the circumstances for patronage, dependency, pathological institutional behaviour and financial malpractice. In addition, the sector has become “…a system whose performance, after 30 years, still leaves much to be desired. For example, poverty-oriented interventions of European development agencies appear to be sustainable in only about 15% of cases” (Fowler, 2000, p. 638).
While the changing global context has had obvious impacts on the non-profit sector, the impacts have been felt in the public and private sectors as well. Within the public sector, governments at all levels have had to adjust to a rapidly changing environment, one that has shifted from a production-based economy to a knowledge-based economy (Reis, 1999, p. 2) and all the changes this entails, including a faster pace of change. Globalization processes have also created an increasingly powerful market sector, one in which governments at all levels are finding they have less overt power to regulate or even influence. The prevalence of a global market model leave governments in a difficult position vis-a-vis social spending in an era of increasing calls for tax relief.
Recent grassroots opposition to globalization processes attest to a growing citizen uneasiness with an increasingly powerful market sector, and some view this as an opportunity for the private sector to balance corporate profit with a corresponding commitment to public responsibility (Reis, 1999, p.2). In a global marketplace, the importance of differentiating a product from one’s competition should not be underestimated, and growing corporate interest in areas such as corporate social responsibility are one way to do this. This is not to say that those in the private sector are not motivated by more idealistic goals, but rather to note that some organizations are rethinking the assumption that doing social good and making a profit are mutually exclusive. Or, as noted in a discussion regarding the success of Ben and Jerry’s, a socially-conscious ice cream company, “… having a social conscience is also good for business” (Cannon, 2000, p.1904).
One of the notable themes arising out of the above discussion is that of a blurring of traditional sectoral boundaries between the public, private and non-profit sectors (Reis, 1999, p. 2) and the need for new approaches to social problem-solving that incorporate inter-sectoral collaboration. Noting that deeply entrenched social problems are not being solved through the fragmented, currently predominant, single-sector approach, Reis (1999) argues that all sectors need to work together exchanging and sharing traditionally accepted roles.
There is growing recognition that entrenched competition between sectors may in fact be counterproductive. “We have shifted to a world of accelerating, never-ending change without the mechanisms for people to work together to deliberate about their changed environment and take collective action….yet signs are everywhere that the old model…simply does not work for the new environment” (Henton et al., 1997, p.2). Cannon (2000) quotes one social innovator who notes that “(g)reat strength can be created when two powerful and traditionally antithetical forces bond in a common purpose” (p. 1904), for example, when the focus is on leveraging both sides against the middle to create a ‘radical centre.’ Implicit within this is the need to create spaces for new forms of collaboration “….to promote, facilitate and invest in more effective approaches to social investment” (Reis, 1999, p. iii). A new generation of ‘social entrepreneurs’ is emerging out of this context, driven by innovators increasingly committed to using market-based approaches to solve social problems.
It is Catford (1998) who articulates the issues and one possible solution most eloquently: “Traditional welfare-state approaches are in decline globally, and in response new ways of creating healthy and sustainable communities are required. This challenges our social, economic and political systems to respond with new, creative and effective environments that support and reward change. From the evidence available, current examples of social entrepreneurship offer exciting new ways of realizing the potential of individuals and communities…into the 21st century” (p. 97).
WHAT IS SOCIAL ENTREPRENEURSHIP?
Defining what social entrepreneurship is, and what its conceptual boundaries are, is not an easy task. This is in part because the concept is inherently complex, and in part because the literature in the area is so new that little consensus has emerged on the topic. While the ideas fuelling social entrepreneurship are not new (Victorian private hospitals and the hospice movement are both cited as examples of social entrepreneurship (Thompson et al., 2000)) the term as it is used in the academic and popular literature currently encompasses a rather broad range of activities and initiatives.
Peter Drucker argues that social entrepreneurs “…change the performance capacity of society” (Gendron, 1996, p. 37) while Henton et al. (1997) speak of ‘civic entrepreneurs’ as “…a new generation of leaders who forge new, powerfully productive linkages at the intersection of business, government, education and community” (p.1). Schulyer (1998) describes social entrepreneurs as “…individuals who have a vision for social change and who have the financial resources to support their ideas….who exhibit all the skills of successful business people as well as a powerful desire for social change” (p. 1). Boschee (1998) presents social entrepreneurs as “…non-profit executives who pay increased attention to market forces without losing sight of their underlying mission” (p. 1). Thompson et al. (2000) describe “…people who realize where there is an opportunity to satisfy some unmet need that the state welfare system will not or cannot meet, and who gather together the necessary resources (generally people, often volunteers, money and premises) and use these to ‘make a difference’”(p. 328).
To add to the confusion of these somewhat differing descriptions of social entrepreneurs, several other terms are currently also used to describe similar activities and initiatives, including, but not limited to: social purpose venture; community wealth venture; non-profit enterprise (Roberts Enterprise Development Fund, no date); venture philanthropy; caring capitalism; social enterprise (Cannon, 2000); and civic entrepreneurship (Henton et al., 1997).
In spite of the varying definitions of social entrepreneurship, one commonality emerges in almost every description: the ‘problem-solving nature’ of social entrepreneurship is prominent, and the corresponding emphasis on developing and implementing initiatives that produce measurable results in the form of changed social outcomes and/or impacts. For example, McLeod (1996) quotes one social entrepreneur who criticized his own organization’s earlier ineffective approach, noting they originally asked “…’how many people walked in the door’ rather than ‘how many people are better off for having walked in the door?” (p. 103).
In the literature overall, the main definitional debates are over the locus of social entrepreneurship. Many define it as bringing business expertise and market-based skills to the non-profit sector in order to help this sector become more efficient in providing and delivering these services (e.g., Reis, 1999). This category includes non-profits running small, for-profit businesses and channelling their earnings back into social service problems as well as non-profits adopting private sector management techniques in order to get more mileage out of existing resources” (McLeod, 1996, p.2). Boschee (1998) distinguishes between for-profit activities which serve to help offset an organizations’ costs, and what he calls ‘social purpose ventures’ whose primary purpose is to make a profit which can then be used for non-profit ventures.
Others define social entrepreneurship more broadly, and argue that social entrepreneurship can occur within the public, private or non-profit sectors, and is in essence a hybrid model involving both for-profit and non-profit activities as well as cross-sectoral collaboration. These definitions tend to put more emphasis on the ‘entrepreneurial’ nature of these activities and the creativity and innovation that entrepreneurs bring to solving social problems in unique ways rather than focussing on the social benefits such services can provide. This conceptualization suggests social entrepreneurship can take a variety of forms, including innovative not-for-profit ventures, social purpose business ventures (e.g., for-profit community development banks, and hybrid organizations mixing for-profit and not-for-profit activities (e.g., homeless shelters that start small businesses to train and employ their residents) (Dees, 1998).
In this spirit, Henton et al. (1997) comment that “…(l)ike the business entrepreneur, the civic entrepreneur operates in a time of dramatic change, sees opportunity and mobilizes others in the community to work toward their collective well-being” (p. 4), essentially acting as catalysts for social change processes. It is the innovativeness of the approach that essentially defines this conceptualization of social entrepreneurship. Dees (1998) comments that just as not every new business venture qualifies as ‘entrepreneurial,’ not every social venture qualifies as ‘socially entrepreneurial.’ This isn’t to depreciate the impact of non-entrepreneurial social initiatives in any way, but merely to make the distinction clear given the broad use of terminology around social entrepreneurship. //Social Entrepreneur
The most recent academic literature on social entrepreneurship shows the emergence of a nascent taxonomy. Thompson et al. (2000) distinguish between activities that emphasis social benefits through traditional means, and those that emphasize creativity and innovation in the problem-solving process. “In some cases the idea will be completely new and innovative and associated with the founder – in essence, truly entrepreneurial. In other cases the initiative will be a variant on a theme – sometimes a close copy, sometimes genuinely different – but real enterprise will be required to make things happen” (p.330). However, they go on to note that some valuable community initiatives are not in any real sense entrepreneurial, and do not achieve anything new and different. In these cases, enterprising and committed people essentially repeat what has happened successfully elsewhere (p. 335).
Fowler (2000) has produced the most complex social entrepreneurship typology to date, highlighting three broad categories of socially entrepreneurial activities. The first, ‘integrated social entrepreneurship,’ refers to situations in which economic activities are expressly designed to generate positive social outcomes, and where surplus generating activities simultaneously create social benefits, and ideally create horizontal, vertical, forward or backward economic linkages. Fowler identifies the Grameen Bank in Bangladesh as an example of integrated social entrepreneurship (p. 645).
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A second type of social entrepreneurship, ‘re-interpretation’ is used in situations where existing non-profit capacity is utilized in ways that either reduce costs for the organization, or increase and/or diversify the organization’s income streams. Fowler cites the example of an organization with the mission of delivering meals to the elderly and infirm finding a market niche for delivering (for profit) meals to an affluent, non-infirm elderly population (p. 646).
Thirdly, Fowler identifies ‘complementary social entrepreneurship,’ referring to non-profit organizations which add a for-profit enterprise division that does not in itself engender a social benefit, but whose profits can be used to offset the costs of the organization’s non-profit social mission. In discussing these three models of social entrepreneurship, Fowler highlights the difference between economic activities that simultaneously provide social benefits and those which do not (as in the third model), and notes that the former make more complex and stringent demands on an organization than the latter. This issue is also raised by De Leeuw (1999) in a discussion of the complex, shifting and often unpredictable environment that social entrepreneurs face in trying to simultaneously fulfill social and economic goals.
As a final note, there is some reference to the various roles required for social entrepreneurial activities. Thompson et al. (2000) note the distinction between social entrepreneurial leaders and managers – the former critical as the catalysts for entrepreneurial projects, the latter being critical for seeing these initiatives through. In some cases one individual will be able to fulfill both roles, in other cases different individuals will be required for each role. De Leeuw (1999) argues that social entrepreneurs are more likely to be found in the role of ‘change agents’ than ‘change managers’ while Thompson et al. (2000) distinguish between ‘enactors’ (entrepreneurs) and ‘enablers’ (professional managers). Henton et al. (1997) argue that a one-size-fits-all approach to social entrepreneurship is not viable, and that each project will proceed through a series of four stages: initiation; incubation; implementation; and improvement/renewal. Breaking initiatives into identifiable stages may be helpful in terms of identifying the type(s) of individuals with appropriate skills for each stage of the process.
MOTIVATIONS AND CHARACTERISTICS OF SOCIAL ENTREPRENEURS
The definitional confusion surrounding social entrepreneurship as a field not surprisingly extends to the definition of individual social entrepreneurs as well. If social entrepreneurship is defined as bringing market sector management and skills to the non-profit sector, the characteristics needed to fulfill the role of a social entrepreneur will be very different than cases where social entrepreneurship emphasizes innovation and creativity in finding new ways to meet existing needs through the private, public or non-profit sectors.
Interestingly, while many definitions of social entrepreneurship emphasize the ‘social’ rather than the entrepreneurial nature of the activity (e.g., by focussing on non-profit organizations and their activities), much of the literature on social entrepreneurs emphasizes the ‘entrepreneurial’ characteristics of such individuals. They are often compared to business entrepreneurs with a social mission, or more colourfully as being “…one species in the genus entrepreneur” (Dees, 1998, p. 3).
Many authors note that social entrepreneurs (much like economic entrepreneurs) do not allow the lack of initial resources to limit their options, and that their reach often exceeds their grasp (e.g., Dees, 1998; Henton et al., 1997). In addition, many social entrepreneurs share with their economic counterparts a strong desire to be in control of their environment, the urge to experiment, and a higher than average tolerance for uncertainty (Prabhu, 1999). Catford (1998) notes that social and economic entrepreneurs share the same focus on vision and opportunity and the same ability to convince and empower others to help them turn these visions into a reality. In social entrepreneurs, however, these characteristics are coupled with a strong desire for social justice.
Obviously, there are also other major differences between social and economic entrepreneurs. Prabhu (1999) argues that they are distinguished primarily by ideology, which guides their choices of mission, means and ends, and that social entrepreneurs are “…persons who create or manage innovative entrepreneurial organizations or ventures whose primary mission is the social change and development of their client group” (p. 140) rather than the pursuit of profit. Social entrepreneurs involved in for-profit activities see profit as a means to an end, while economic entrepreneurs see profit as an end in itself (Dees, 1998; Thalhuber, 1998) In addition, social entrepreneurs are generally operating in community environments that are dynamic and somewhat unpredictable” (De Leeuw, 1999), adding yet another layer of complexity to the process.
Also, somewhat unlike their economic counterparts, social entrepreneurs emerge not only as highly entrepreneurial individuals, but also highly collaborative ones, providing “….collaborative leadership to bring diverse parties to the table, identify common ground and take joint action. They build bridges” (Henton et al., 1997, p. 153). The ability to develop a network of relationships and contacts is a hallmark of visionary social entrepreneurs, as is the ability to communicate an inspiring vision in order to recruit and inspire staff, partners, and volunteers (Thompson et al., 2000, p.331). Because social entrepreneurship often demands establishing credibility across multiple constituencies, and the ability to mobilize support within those constituencies, networking is a critical skill for social entrepreneurs (Prabhu, 1999). Unlike economic entrepreneurs, Prabhu argues that social entrepreneurs are often highly supportive of each other’s efforts, in some cases writing letters to one another to show this support.
As such, the social entrepreneur emerges as a rare individual with multiple talents, including no less than the ability “…to analyse, to envision, to communicate, to empathize, to enthuse, to advocate, to mediate, to enable and to empower a wide range of disparate individuals and organizations” (De Leeuw, 1999, p. 261). Continuing along this theme, Bornstein (1998) characterizes a social entrepreneur as “…a pathbreaker with a powerful idea, who combines visionary and real world problem-solving creativity, who has a strong ethical fibre and who is totally possessed by his or her vision for change” (p.36).
Dees (1998) identifies five criteria that social entrepreneurs possess: adopting a mission to create and sustain social 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 a heightened sense of accountability to the constituencies served and to the outcomes created (p.4). Dees argues that the closer an individual gets to satisfying these criteria, the more that individual fits the model of a social entrepreneur. But he also recognizes that in many ways, the literature on social entrepreneurship describes “…a set of behaviours that are exceptional. These behaviours should be encouraged and rewarded in those that have the capabilities and temperament for this kind of work….Should everyone aspire to be a social entrepreneur? No. Not every social leader is well-suited to being entrpreneurial. The same is true in business. Not every business leader is an entrepreneur in the sense that Say, Schumpeter, Drucker and Stevenson had in mind” (Dees, 1998, p.6).
While common sense dictates that not everyone will have the skills and talents required to undertake entrepreneurial activity for social and/or economic purposes, Thompson et al. (2000) raise the issue of latent entrepreneurial ability. It is possible that latent social entrepreneurship exists in individuals with “…the potential to be entrepreneurial but, for some reason or another, (where) the talent is trapped and needs spotting and releasing” (p. 332).
Coming at the issue from another perspective, various motivations for social entrepreneurship are identified in the literature. Cannon (2000) recognizes three general types of people who become social entrepreneurs. The first are individuals who have made a lot of money elsewhere and are interested in giving some of it back to further social goals. The second are ‘recovering social workers’ who are disenchanted with the existing social support system and looking for a more effective approach. The third type are a new breed who have gone to business schools (or along a similar path) with social enterprise in mind (p. 1904). Thompson et al. (2000) distinguish between ‘vision-oriented’ motivations for socially entrepreneurial activities and ‘crisis-oriented’ ones, while Prabhu (1999) notes uneasiness with the status quo, a need to be true to one’s values, and a need to be socially responsible as other motivations for social entrepreneurs.
Catford (1998) summarizes these issues nicely in his eloquent discussion of social entrepreneurs. “Social entrepreneurs combine street pragmatism with professional skills, visionary insights with pragmatism, an ethical fibre with tactical thrust. They see opportunities where others only see empty buildings, unemployable people and unvalued resources….Radical thinking is what makes social entrepreneurs different from simply ‘good’ people. They make markets work for people, not the other way around, and gain strength from a wide network of alliances. They can ‘boundary-ride’ between the various political rhetorics and social paradigms to enthuse all sectors of society” (p. 96).
ISSUES IN SOCIAL ENTREPRENEURSHIP
Several issues related to the discussions above also emerge out of the literature on social entrepreneurship, and these are noted briefly here. These issues include support for social entrepreneurs; capacity-building and training; implementation issues; and gaps in the literature.
Support for Social Entrepreneurs
One of the issues that emerges out of the discussion above is the need to support the rare and exceptional individuals with the talent and drive to become innovative social entrepreneurs. Given the demands on funding and the need for radical new approaches that social problem solving demands, social entrepreneurs emerge as a dynamic group with a viable and highly sustainable approach. Yet because the concept of social entrepreneurship (in its current incarnation) is relatively new, there are few institutional mechanisms in place to support this work.
Writing about Britain, where no less than Prime Minister Tony Blair has embraced the concept, Zadek and Thake (1997) remark that “(t)he role of the social entrepreneur is neither recognized nor rewarded in contemporary Britain. The business community has long appreciated the role of entrepreneurs in successful commercial ventures…(for social entrepreneurs) their insights, initiatives and wealth of experience are too often unrecognized and unsupported” (p. 1).
The danger in not supporting social entrepreneurship is obvious to Reis (1999) who calls for systematic intervention to accelerate and improve philanthropic efforts. Without this he argues that substantial numbers of potential donors and social entrepreneurs could be “…discouraged, turned-off, and lost from philanthropy and social change work” (p. 4). Catford (1998) argues that “…social entrepreneurs…will only flourish if they are supported by the right environment, which will be created largely by governments together with the private sector” (p. 96). For example, greater flexibility in the use of public resources to respond to innovative community proposals, and venture investments from foundations and the private sector could be used to stimulate innovation in areas thought to be too risky for government as the sole investor (Catford, 1998).
Training and Capacity Building for Social Entrepreneurship
Related to the issue of support for social entrepreneurs is the issue of training and capacity building for social entrepreneurship. To a great extent, the definition of social entrepreneurship used will also determine the degree to which these skills can be ‘taught’ at the individual level. If social entrepreneurship is defined as principally bringing business and management skills to the non-profit sector, the skills of the entrepreneur are fairly replicable. If a social entrepreneur is defined as an ‘exceptionally creative and innovative individual,’ replication will be much more difficult to achieve, and the focus should then be on creating conditions in which latent entrepreneurial talent can be harnessed for social purposes. The latter is obviously the more difficult of the two situations, as it is far easier to develop skills to help people translate ideas into realized opportunities than it is to teach them to spot the opportunities in the first place (Thompson et al., 2000).
Young (1997) criticizes the preponderance of stories about ‘exceptional’ individual leaders, noting that “…there is almost nothing here about how some of the skills described can be transferred to more ordinary people” (p. 20). However, Cannon argues that ordinary people are not triumphing as social entrepreneurs “…because they are not organized for success…They lack the tools, training, finances and resources they need to reach their full potential” (p. 1899) To that end, a multitude of supports have been recommended to help ease the transition from start-up to sustainability for social entrepreneurs
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