The Value of Social Entrepreneurship - Term Paper Example

The Value of Social Entrepreneurship Introduction With the advancement of technology and spread of knowledge and education, people have become increasingly concerned about finding new ways of solving the social issues in general. “The global dispersion of information, technology, and organizing capability has forced governments to rethink the basis of human security” (Bornstein and Davis, 2010). This has laid the basis for such measures as social entrepreneurship. Social entrepreneurship is an emerging concept directed at the eradication of social issues and promotion of socio-economic growth in the country. Social entrepreneurship is specifically designed to target the social problems and identify innovative and effective ways of dealing with them. Government and the society encourage businesses directed at addressing the needs of the society. This paper provides a review of literature to define the term “social entrepreneurship”, explores the ways in which it creates value for the society and finally discusses the impact of social entrepreneurship on business. Background There has been a lot of research on social entrepreneurship and its impacts on microeconomics and business administration lately particularly after the founder of the Grameen Bank, Muhammad Yunus won the Nobel Peace Prize in the year 2006. Nevertheless, the research to date has generally been confined to defining social entrepreneurship as a phenomenon (Pariyar and Ward, 2005, p. 1) or to the specific case studies. The existing literature does not provide a comprehensive insight into the relationship between economic development policies and social entrepreneurship. This imparts need for research on the significance of social entrepreneurship for the economic prosperity and its implications for the policy makers. Literature Review Definition of Social Entrepreneurship Social entrepreneurship has been largely identified as an emerging field. Although it has been attempted to be defined various times, yet a common definition has not been agreed upon (Austin et al., 2006, p. 1). The term social entrepreneurship “combines the passion of a social mission with an image of business-like discipline, innovation, and determination commonly associated with, for instance, the high-tech pioneers of Silicon Valley” (Dees, 2001, p. 1). Attempts of defining social entrepreneurship date back to Jean-Baptiste Say, the French economist who attempted to define the term with respect to its use in the early nineteenth century. According to Jean-Baptiste Say, a social entrepreneur is somebody who tends to create value by transferring the economic resources from an area of low productivity to a place where the yield is greater and the productivity is higher (Martin and Osberg, 2007, p. 2). Joseph Schumpeter’s definition of the social entrepreneur is one of the most frequently used definitions of the term. Joseph Schumpeter defined an entrepreneur as a creative force that drives economic prosperity, thus serving as a change agent. Conventionally, an entrepreneur is understood as someone who establishes a new business, though this interpretation of the term reflects a loose application contrary to the richness of its history and the significance of its meaning. Although numerous definitions have been traditionally proposed for entrepreneur, the term social entrepreneur is relatively newer and thus, has not been defined as much. Definitions proposed to date differ from one author to another depending upon the context in which social entrepreneurship has been defined. Conditions vary from one country to another, and accordingly, the definitions of social entrepreneur. One of the most frequently used definitions of social entrepreneurship is the one proposed by Gregory Dees et al. who refer to social entrepreneurship as a change agent which, [a]dopts a mission to create and sustain social values, [r]ecognizes and relentlessly pursues new opportunities to serve that mission, [e]ngages in a process of continuous innovation, adaptation, and learning, [a]cts boldly without being limited by resources currently at hand, and [e]xhibits heightened accountability to the constituencies served and the outcomes created” (Gregory Dees et al. 2001, pp. 4–5, cited in Soderborg, 2004). There has occurred a noticeable transition in the focus of the social entrepreneurs from the philanthropic activities and acts of charity to the business activities focused at the entrepreneurial private-sector. While the social entrepreneur has conventionally been associated with the non-profit sector, the boundary line between the for-profit and non-profit has started to disappear, thus increasing the overlap between the sector of social entrepreneur and the voluntary private and public sectors. The contemporary definition of social entrepreneurship is inclusive of the orientation of an enterprise around social objectives, which has increased the accountability of a social enterprise towards the community stakeholders more than towards the shareholders who have invested in it. Thus, in the contemporary age, social entrepreneurship is defined as any business venture that is established to serve a social cause, which may include eradication of a social evil, mitigation of a market failure, and most importantly, creation of social value. A more detailed understanding of the term social entrepreneurship can be gained by considering what it is not. Social entrepreneurship is not a means of profitability for the non-profits. Social entrepreneurship does not value profit more than social impact. Social entrepreneurship is not a modernistic interpretation of the nonprofit sector. Social entrepreneurship is not an opportunity of investment for people whose priority is money. Most importantly, social entrepreneurship must not be confused with socialism. “The socialist doctrine dictates compulsory taxpayer contributions to finance social initiatives, while the social entrepreneur uses the standard business model and innovative approaches to attract customers, fund activities, and accomplish social change” (Zwilling, 2011). Values created by Social Entrepreneurship Social entrepreneurship is of huge significance to the socio-economic prosperity of a country because of the values it creates. Some of the values created by social entrepreneurship have been discussed as follows: Abundance of jobs The first and the foremost value created by social entrepreneurship is the creation of jobs and employment. This is one value which businesses and entrepreneurs share alike. Social entrepreneurs are particularly meaningful for the socially disadvantaged people like the ones who are disabled, racially oppressed, or homeless people. Reintegration of such groups who have been socially disadvantaged into the labor market is not only beneficial for these groups, but also for the whole society as these groups can be made to play their constructive role in the development of the society rather than being a load for others to bear. Innovation Social enterprises are innovative in their approach to the development of new services and products. Issues conventionally addressed by social enterprises include but are not limited to such fatal diseases as HIV and AIDS, and drug abuse. Developments by some social entrepreneurs like Veronica Khosa from Brazil, who proposed a domestic model for the care of patients suffering from AIDS have led to change in the government’s health policy. Social Capital Social capital is yet another very significant value created by the social entrepreneurship. Social capital is frequently used as an umbrella term for all the resources related to the attainment of a network of relationships which are mutually recognizable. For instance, the Japanese and German economies have attained success by displaying ethics of cooperation in the development of industry. Social capital is also significant for the World Bank as a regulator of poverty and a promoter of sustainable development. Investments made in the social capital often commence a cycle in which the social capital leads to physical capital, to financial, human, and organizational capital, which in turn leads to the dividends of interest which generates more social capital that is added to the initial endowment of social capital, and the cycle goes on. Promotion of Equity Social entrepreneurship tends to address the social problems, thus making the society more equitable. Social entrepreneurship also attempts to acquire the sustainable impact by way of social mission instead of just maximization of the profit. Impact of Social Entrepreneurship on Business Social entrepreneurship has mixed impacts on business. As an entrepreneur becomes social, this adds to the entrepreneur’s responsibilities towards the business as he/she is also responsible towards the society. Conventionally, corporate social responsibility and profitability of business are seen as two terms that tend to minimize each other’s effect. As an entrepreneur becomes more conscious about adopting such a strategy that would maximize the profitability of the business, he/she is likely to compromise upon the social interests. On the other hand, as an entrepreneur gets more concerned about fulfilling a noble cause of interest to the society, he/she has to make a compromise upon the profitability of business somewhere. In order to carry the two factors i.e. profitability of business and social entrepreneurship together simultaneously, there needs to be an extremely well-thought and well-planned strategy which requires in-depth knowledge and understanding of the social systems. If not planned for properly, social entrepreneurship assumes immense potential to minimize the profitability of business because addressing a social issue incurs cost, part of which is borne by the social entrepreneur. Apart from the profitability of social entrepreneurship for the entrepreneur, social entrepreneurship has a positive impact on the growth of business in a country because of several reasons including, increased growth domestic product (GDP) of the country, creation of job opportunities, and development of new ways of tackling social issues. Since the overall impact of social entrepreneurship on the society is positive, a positive outcome of the same is the growth of all kinds of businesses. Soccio-economic growth brings economic prosperity, which in turn reduces poverty and promotes a culture of business. Conclusion Concluding, social entrepreneurship plays a very important role in the development and progress of the society. Social entrepreneurship is essentially a changing force which tends to address the societal issues with leading-edge innovation and creativity. The power of social entrepreneurship is restrained by the fact that it operates within the framework of economics and society. Owing to its healing powers for the social issues, social entrepreneurship deserves much more attention and consideration from the policy makers and academic theorists than it is usually given, particularly in the developing countries. Social entrepreneurship is necessary for the socio-economic development of a nation. Social enterprises lie somewhere in between the business and nonprofit models. Social entrepreneurship creates a whole range of social values that include but are not limited to creation of opportunities of employment, incorporation of disadvantaged groups into the labor force, innovation in services and goods, and promotion of equity by satisfying critical needs of the society. Social entrepreneurs bring positive change in the society by eradicating social issues and bringing social and economic prosperity. Social entrepreneurship has an overall positive impact on business, though social entrepreneurs need to have an objective planning to make the business profitable for themselves. References: Austin, J., Stevenson, H., and Wei-Skillern, J. (2006). Social and Commercial Entrepreneurship: Same, Different, or Both? Entrepreneurship Theory and Practice, Harvard Business School. 30(1). Bornstein, D., and Davis, S. (2010). Social Entrepreneurship: What Everyone Needs to Know. New York: Oxford University Press. Dees, J. G. (2001). The Meaning of “Social Entrepreneurship.” Retrieved from http://www.caseatduke.org/documents/dees_sedef.pdf. Martin, R. L., and Osberg, S. (2007). Social Entrepreneurship: The Case for Definition. Stanford Social Innovation Review. Pariyar, B., and Ward, A. E. (2005). Social Entrepreneurship: Producing Yunus out of Branson and Teresa? University of York. Retrieved from http://www.york.ac.uk/enterprise/cetle/docs/papers/Pariyar(2005).pdf. Soderborg, J. (2004). Social Entrepreneurship. Retrieved from http://www.celcee.edu/publications/digest/Dig05-04.html. Zwilling, M. (2011, April 23). Social Entrepreneurs Don’t Need Profit For Success. Retrieved from http://blog.startupprofessionals.com/2011/04/social-entrepreneurs-dont-need-profit.html. Read More