Social Entrepreneurship

by 6ari8ameer (student)

University Degree Business and Administrative studies

Tareq Mohamed ENTR101: Social Entrepreneurship November 29, 2013

In recent years there has been increased interest in social entrepreneurship and the social sector. However, do to the wide range of activities, people, and organizations that consider themselves socially entrepreneurial, there hasn’t been an agreed upon definition of social entrepreneurship (Social Enterprise Institute , 2009). So what does “social entrepreneurship” mean? What does it take to be a social entrepreneur? It means a different thing for different people, and it’s important to be aware of the political and scholarly motivations behind definitions (Deakins & Freel, 2009; 249). Thus the aim of this essay is to identify and explain the main characteristics of the social entrepreneurship approach using theory and examples. The paper begins by explaining the meaning of entrepreneurship and having a social mission, it then goes on to discuss the financial characteristics as well as innovation, risk taking, ceasing opportunities, and resourcefulness.

To understand this concept we will first look at the ‘entrepreneurship’ part of social entrepreneurship. The term entrepreneur originated in French economics and it means ‘undertakes’, as in someone who undertakes a certain activity (Dees, 1998; 1). Dees draws on historical economists, Joseph Schumpeter and Jean Baptiste Say, to define entrepreneurs as the agents of change in the economy that create value. He then expands on this theory by referring to contemporary scholars, Drucker and Stevenson, to add that what differentiates entrepreneurs is their innovation and ability to exploit opportunities (Peredo & McLean, 2005).

Building on Schumpeter’s definition, social entrepreneurs are ‘agents of change’ with a social mission. Not every person who starts a small business is an entrepreneur. For instance if a person opens another convenience store in town, it is not entrepreneurial, as there is nothing innovative or change-oriented about it. The same thing applies to non-profit organizations and charities. If you are just going to find donors so that you can send food to Africa, they’re not making any social changes nor are they increasing social value. Social entrepreneurs should resolve and eliminate problems and meet the needs of society, rather than just treating the symptoms. One of the major issues in Nigeria is unemployment, as more than 90% of graduates are not able to find permanent jobs. So Ajegungle decided to teach and help highly skilled Nigerian individuals grow their own small business (Sloan, 2013). This benefits the community by meeting the needs of society rather than reducing it.

The social mission is at the core of the social enterprise and all decisions and opportunities are perceived and assessed according to that mission. Social entrepreneurs set out to help the society by using business-based methods and “are interested in finding solutions to socio-economic problems that combine economic, social, and ecological goals into a triple bottom line” (Deakins & Freel, 2009; 248). Social goals can vary from saving lives, sharing wealth, decreasing global warming, connecting people, and creating comfort and convenience. In a broader sense they are creating sustainable improvements to society (DTI, 2003). So for example, Camara’s mission is to use technology to improve education and livelihood skills in disadvantaged communities of Africa. It determined that it would be more sustainable to train teachers and schools how to teach using technology, instead of just giving them computers (Camara, n.d.). So instead of a one-off impact, these social enterprises aim at having long-term impacts.

Moreover, entrepreneurs are driven by social good need to take the necessary steps to assure that they are creating social improvement and adding value to the community (Dees, 1998; 4). This may require social entrepreneurs to be part of or closely connected to the community it aims to operate in to understand the people they’re intended to serve. So don’t give people books, if they can’t read.

Furthermore, “wealth is just a means to an end for social entrepreneurs” (Dees, 1998; 3). Hence, the short-term goals of the business may be making as much revenue as possible but only ...

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Furthermore, “wealth is just a means to an end for social entrepreneurs” (Dees, 1998; 3). Hence, the short-term goals of the business may be making as much revenue as possible but only to have greater impact in the future and a bigger social return on investment. Unlike business-oriented entrepreneurs, social entrepreneurs place social benefits ahead of profit maximization. Employees and employers in social enterprises are still expecting to be paid a good salary, but what pushes them to wake up every morning and go to work isn’t the money, but their compassion and the social good they are bringing to the world. However, social entrepreneurship ventures may vary in the degree of focus on commercial and social goals (GEM, 2009; 4).

The entrepreneurial element of social entrepreneurship is closely linked with financial dependency (Peredo & McLean, 2005). This refers to the ability of the business to be able to generate a significant amount of its income from trading and is less dependent on grants and donations (BMG Research, 2012; 8). The less the business relies on others, the more sustainable it is. Charities are starting to realize that they would not be able to receive donations forever, for that reason a large number are trying to turn into social enterprises (Social Enterprise UK, 2012). In addition, by using business-based methods, social enterprises are able to raise funds, hire talent and have a large-scale impact, which non-profit NGOs might find extremely difficult to achieve.

A good example of this is the story of Jordan Kassalow who provided eyeglasses to hundreds of thousands of people in developing countries through his non-profit organization, VisionSpring. Many people struggled to find jobs because of poor eyesight and couldn’t afford corrective lenses, so he helped train local people to sell reading glasses, thus creating jobs whilst improving other people’s chances of getting jobs. Overtime he realized that his vision wouldn’t survive if he continued in this path, which relied heavily on charitable donations. So Kassalow aimed at building a self-sustainable operation, he says, “We were a very good charity but not a good business” (Coster, 2011). In 2010 he opened his first shop in El Salvador, which provided prescription specs to those who need stronger lenses at an affordable price. Furthermore he partnered with established brands, which led to increased income and decreased outflows. Although it is not financially dependent on itself, VisionSpring is moving in the right direction.

Another element of social entrepreneurship is that the financial surplus made should be put back into the business. One of BIS’s criteria’s for a social enterprise is “it should not pay more than 50 per cent of profit or surplus to owners or shareholders” (BMG Research, 2012). This means that the majority of profits or surplus that the business generates is used for internal growth of the business. The social enterprise can use the profits to expand to new areas and improve on current products/services. And in VisionSpring’s case all profits are put toward identifying and developing a profitable business model.

A crucial characteristic of the social entrepreneurship approach is innovation. Entrepreneurs can be innovative in different ways such as the way they deliver their products and services, their use of technology, and the way they fund their work. It can even be bringing existing elements to new industries or merging existing fields. One of the recent social innovations in the education sector is Julia Bateson’s Excite-Ed, which allows teachers and students to create and play computer games that teach both digital and social skills (Smedley, 2013). Innovation isn’t always about cutting-edge technology or inventing something new; it can be simple things such as the program that helps estranged fathers and sons connect over woodland activities or the woman who wore the same dress every day for a whole year to raise money and make a statement about living a simple life (Boches, 2011).

With innovation comes the element of risk taking. For entrepreneurs to survive and grow, they require the ability to take and manage risks. Not every idea and innovative approach will successful on the first attempt, so it is the entrepreneur’s job to acknowledge and accept these failures as learning experiences. Organizations, such as Nurse First, which perceive failure as a developmental step, are more likely to be sustainable and successful on the long term (Floyd, 2013).

Social innovation is more than just being creative and imaginative all the time. It’s the willingness to take calculated risks and ceasing opportunities to improve society as well as enhancing your enterprise. Recognizing and relentlessly pursuing new opportunities is a fundamental element of the social entrepreneurship approach. Not only are social entrepreneurs motivated by compassion but they’re also driven by having a vision and doing their best to make their vision work (Dees, 1998; 4). While others might see a problem and give up, social entrepreneurs are persistent in finding solutions. They also adapt and learn from their mistakes. DoGoodBuyUs.com realized they were making a big mistake and would never survive the next year if they kept their status quo. So they changed their business model from just selling products to selling stories, which helped them grow immensely over the last few months (Field, 2013).

In addition, social entrepreneurs do not let their limited resources, whether its funds or talent, prevent them from pursuing their goals (Peredo & McLean, 2005). The Internet and social media have opened the door for social entrepreneurs to collaborate and come up with innovative ideas together. No matter what the mission of the social enterprise is, there is always a way to integrate social media into the business to achieve the mission. Social entrepreneurs, such as Alex Bogusky and Rob Schuhamare, were able to raise funds and find others who share their vision through these mediums (Boches, 2011). There are always alternative methods to resolve a problem, and so social entrepreneurs have to be resourceful and be efficient with what they have in hand. For instance, the community can be involved in a multiple of ways as they can be customers, financial donors, volunteers, and collaborators.

In conclusion, this paper illustrates why creation of sustainable social value, financial dependency, resourcefulness, innovativeness, risk tolerance, and seizing opportunities are the fundamental elements of the social entrepreneurship approach. Individuals, groups, and organizations will exemplify these characteristics in a variety of ways and to different degrees. Having said that, the closer a person gets to satisfy the above conditions, the more the person fits the model of a social entrepreneur (Dees, 1998; 4).

Works Cited

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Boches, E., 2011. Four great examples of social innovation happening right now Read more: http://edwardboches.com/four-great-examples-of-social-innovation-happening-right-now#ixzz2ltNzU5ik. [Online] Available at: [Accessed 20 November 2013].

Camara, n.d. Camara: transforming education. [Online] Available at: [Accessed 22 November 2013].

Coster, H., 2011. How a Social Entrepreneur Brings Sight to the Developing World. [Online] Available at: [Accessed 21 November 2013].

Deakins, D. & Freel, M., 2009. Social Entrepreneuship. In L. Caswell, ed. Entrepreneurship and Small Firms. 5th ed. Berkshire: McGraw-Hill Education. p.248 to 264.

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DTI, 2003. Social Enterprise: A Strategy for Success. [Online] Available at: [Accessed 23 November 2013].

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GEM, 2009. Global Entrepreneurship Monitor Report on Social Entrepreneurship. [Online] Available at: [Accessed 21 November 2013].

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Social Enterprise Institute , 2009. Developing the social economy: critical review of the literature. [Online] Communities Scotland Available at: [Accessed 20 November 2013].