Traits of Social entrepreneurship - Essay Example

MSc Management 2009/10 MLM05: Entrepreneurial Business Models A 05/07 Compare and contrast two of the four business models in pairs (Intrapreneurship - Social enterprise) Student Name: Papavasileiou Dimitrios Student Number: 09835637 Word count: 2963 INTRODUCTION The mixture of intrapreneurship, psychology, and marketing research may be gainful to all disciplines. But entrepreneurs never give you the data. (Shane, 2010) Psychology clearly has a valuable impact on marketing and can have the same effect on understanding. Social enterprise behaviors as well as intrapreneurship can provide an applied test for many psychological and marketing theories, such as in the study of small group behaviors or new product introduction. (Kuratko, p.15) The unique perspective that intrapreneurship provides is highly unstable and unstructured groups in rapidly changing markets. This dynamic environment is an excellent counterpoint to the static and artificial conditions all too frequently encountered in traditional psychological and market research. (Gold, p. 23) The Importance of Context Although it has become increasingly visible that no simple definition of Social entrepreneurship is satisfactory, it remains clear that the creation of a new venture is a social phenomenon that exists in a market desiring the output of that venture. (Bornstein, p.45) In fact, it is nearly impossible to define any entrepreneurial behavior without at least an indirect reference to the market or social context in which it occurs. Social Entrepreneurial behaviors are often viewed as most common in unstable socioeconomic environments, where organizations and society are adapting to rapid change. (Bygrave & Zacharakis, p. 14). So this conception might create an image of destruction to the entrepreneur within the market context. The best known twentieth-century student of entrepreneurship pointed out that the role of innovation is one of the most significant factors for entrepreneurs. He believed that both managers and entrepreneurs experience risk and realized that their challenge is to find and use new ideas. Some possible alternatives are: • To develop new products or services • To develop new methods of production • To identify new markets • To discover new sources of supply To develop new organizational forms Social Enterprise Social enterprise is that business that puts social objectives before financial objectives and is now taking over the world by storm. The charge of "monopolization" as applied to particular business firms and industries often is an example of condemning business behavior on the basis of the actions observed and of neglecting the analysis of alternatives. Too often any business behavior not consequent with the requirements of pure competition is termed "monopolistic." If the problem were only one of terminology, we might properly regard monopoly as the opposite of pure competition and so argue that any behavior intended to get away from pure competition is logically a move in the direction of monopoly. As we have seen, however, "monopolistic behavior" often is a term of high emotional content implying "unwarranted" restrictions of output and "excessive" prices. In Social Enterprise we do tend to have monopolistic companies. If a firm can increase profit by raising prices and producing or selling less, should such behavior be permitted in an social enterprise economy? One of the functions of the search for profits is to assign resources to those industries in which a high rate of profit indicates the need for resources. If entry to a high-profit industry is free, one may argue that high profits secured by raising prices and restricting output will be "corrected" by the entry of new firms. If a high profit rate is maintained over a long period of time, however, one may conclude that entry is restricted by some means so that new firms are unable to survive as effective competitors. But with the case of Social Enterprise it is totally the opposite, the firm is concerned with helping the customers rather than seeking potential profit from the business.   The social enterprise is not based on the profit motive but it is reasonable to conclude that business firms not only will seek to maximize profit but will seek to maintain profits at a high level once such earnings or profits are achieved. This is done by serving the public for a number of years. Over the past 50 years or more, social enterprises have succeeded in developing a number of devices designed both to increase and perpetuate in helping the public. The art of product differentiation, particularly through the devices of advertising and sales promotion, is a most effective means for letting the public know of the firm and for making it difficult for new competitors to enter the market. Product differentiation is most important in what may be termed regional or national markets where the volume of sales is large. Large sales volume usually requires large production, and so large-scale production is usually associated with regional or national distribution. Large-scale production may be much more economical in terms of resources than is small-scale production. In many industries technology tends to be ahead of the market in the sense that plants and equipment are possible which, if built, would result in lower production costs than are obtained with existing plants and equipment. Inability to sell the output required for minimum production cost may limit the size of individual establishments. Social enterprise are likely to attempt to avoid "pure competition" for a number of reasons. In a profit-seeking system an obvious reason exists for avoiding pure competition if profits are lower under such conditions than under alternative forms of industrial organization. Since profit is the difference between cost and revenue, we may expect social enterprise to attempt to widen the spread by various means. Reductions in unit cost by careful management of available resources has been one of the great achievements of public enterprise. Along with attempts to reduce cost with existing resources (plant, equipment, and labor) there has been a rapid and profound change in technology over time so as to increase the ratio of capital to labor and to increase the skill and efficiency of workers. Technological change, while not confined to large firms, is likely to lead to large firms simply because much of technical change consists in developing bigger and more expensive machines and equipment. The total investment required for an efficient physical plant is large, and so in certain industries the best organization has come to be that of a few large producing units.This is what makes Social enterprise special. The Intrapreneurship The concept of intrapreneurship is based on the ability to work within a firm while using specific ideologies that are similar to being an entrepreneur. Firms which wish to increase the level of innovation, competitive advantage and creativity within a firm are initializing the use of intrapreneurship, specifically because it provides new opportunities for individual leadership that enhances the growth of a given corporation. For this to work, the correct environment has to be initiated, specifically which provides a space for intrapraneurs to offer innovation and leadership skills while providing new opportunities for ambitions within a firm. The term is most often used in relation to entrepreneurs, specifically which denotes flexibility, innovation, leadership and the ability to work within a business as a owner that is investing in the growth of a company (Krueger: 394, 2002). An association which is a part of intrapreneurs is based on the individual styles which relate to the business and those working as CEOs within the corporation. This is important because it leads to either the success or hindrances within an organization. If an individual comes into the company as a strong leader with innovative ideas, then there can be drastic changes and growth within the corporation. However, if these are not based on the aims and objectives of the corporation, then it can hinder those that are within the business. The behavioral intentions and the resulted actions which come from intraprneuers then become the main objective in management styles and ensuring that the concept of focusing on intrapraneurs benefits the business. The ability for intrapreneurs to be a benefit to a company then becomes dependent on individual associations with the business (Antoncic, Hirisch, 7: 2003). The first advantage which is associated with intrapreneurship when it works with the right individual styles is based on the competitive edge that it gives businesses. When a business is focused only on structure, then it is likely to build a competitive force only on the existing foundation. However, an intrapreneur is able to provide unique innovations that come from individual behaviors which can’t be mirrored through others in business. The result is the ability for businesses to remain ahead of the competition while giving more leverage to individual leadership (Rule, Irwin, 44: 1993). The ability for leaders to enhance the environment and change the associations within a corporation is then furthered through the support of the foundational structure. The ability to create a high sense of leadership requires the capacity to meet the aims and objectives of an organization while focusing on the concept of knowledge management within the corporation. The innovation and marketing that works with the support of the organizational structure then furthers the competitive advantage for those working with businesses in the marketplace (Drejer, Christensen, Ulhoi, 102: 2004). The dimensions of intrapraneurship that are in a company are based on the concepts of how to incorporate both culture and innovation into the organizational structure. This becomes a challenge to most businesses, specifically because of the approach which many take in relation to the culture that is developed as well as the changes which have to be made in terms of innovation. The cultural structure of the organization has to be able to incorporate a specific level of risk when using intrapreneurs because of the leadership value and the innovation which is required. More important, this risk has to be accepted within the culture of the organization, specifically among employees, because of the changes which are associated with the changes that are being made (Aaltio, 279: 2009). The culture which has to be created with intrapreneurship has to associate with those who have a leadership level on two levels. The first is through acceptance of the individual leadership that is taken within the corporation. The second is through the change management which is associated with the innovation and creativity that is required from intrapreneurs. The organizational strategy is dependent on these two factors for success of the individuals who are interested in innovation. Without this, there is the inability to create the right approach to those who are within the corporation (Heinonen, Korvela, 1: 2005). Another element of intrapraneurship which incorporates both advantages and disadvantages is based on the human resource management which is a part of most corporations. The idea of creating sustainable development has become a key term to those that are within various organizations, specifically because it initiates continuous growth, despite the conditions of the economy or the market. For sustainable development to occur there has to be a balance with the human resources that are used, both with the amount of production offered as well as the way in which the resources work. Human resource management theory states that there needs to be a combined effort with intrapreneurship and human resources, specifically to create the sustainable development which is required in the organization (Ping, Jie, Naiqiu, Zhengzhong, 456: 2010). For the organizational performance to improve, while creating a sense of sustainable development among human resources, is also the need to associate with new measures that allow innovation to be incorporated into the organization without creating a high level of risk for new products or the employees. The main concept used is to provide an understanding of learning within the organization while changing the roles of those in human resources. However, this comes at a disadvantage, specifically because of the associations with performance and the expectations that are currently a part of organizations. This leads to a lack of the correct roles as well as the need to change strategies that are within a given business (Molina, Callahan, 388: 2009). The differences between social enterprise and intrapreneurship become dependent on the structure of the organization, cultural environment and the ability to incorporate innovation into the business. Social enterprise is able to establish this though the main structure and the human resources which provide sustainable development. However, this leads little room for the intrapreneurs and innovation which are required within an organization. Intrapreneurs; however, are able to use the creativity and innovation within an organization. Focusing on this without structure is one which becomes difficult and moves into higher risks within businesses. The complimentary needs within both then become the main component o changing the environment and altering the associations of development that are within a business (Short, Lumpkin, 161: 2009). A case study which shows this is from an examination and comparison of different corporate structures. The intrapreneurship examination consisted of looking at several different businesses, all which were established and incorporated the central mission to providing innovation among employees. In all of the businesses which were surveyed, it was found that the amount of flexibility and innovation created conflict in the environment. The cultural belief systems, different understandings of the mission and vision and the lack of structure which was associated with the concept of innovation became the main problems in all businesses which were incorporating intrapreneurship. The main dilemma then became based on resolving the conflicts, as opposed to creating processes of innovation which could be used in the workplace (Nielsen, Peters, Hirisch, 181: 2005). This specific set of samples and surveys shows how intrapreneurship can work for innovation; however, the human resources, management and organizational structure have to show a high level of support to the main structure. Recommendations To change the associations that are a part of businesses, there is the need to combine sustainable development with initiations for growth and innovation within corporations. Today, there is a belief that there is a need for open innovation within organizations. This is specifically as a response to the information age and the movement into new technologies that are incorporated into this. Creating an innovative set of features for the organization becomes pertinent to the establishment, growth and recognition within different communities. This is furthered by the need to create structures that enable innovation while creating new standards that are based on the needs of those that are interested in innovation with businesses. The use of intrepreneurs as a basis for this is able to provide a different understanding of how to create a different approach to business and moving ahead of competitors through innovation (Chesbrough, Vanhaverbeke, West, 4: 2006). While there is the need to have innovation as a driving force in business, most are also turning back to social enterprises, specifically because of the stability and structure which is incorporated into this. The innovation creates a level of dynamic movement and faster life cycles within business. It also increases the risks that are a part of the corporation, which creates difficulties in moving forward with sustainable development while ensuring that human resources are able to provide new options for those in the community. The infrastructures, technological development and the need to keep the aims and objectives within an organization are known more to social enterprise and remain the main advantage of those that are a part of the building of corporations. From this viewpoint, the use of interpreneurs becomes one which is limited because of the organizational structure used (Hirooka, 289: 2005). To change the main functions of both and to create better results within organizations, there is the need to combine the different types of organizations to work simultaneously. The need to have sustainable development as the foundation of the organization, while keeping organizational structure is the first component to this. However, the structure should leave a space which supports intrapreneurs and which creates a place where innovation is a continuous part of the business. Incorporating this into the structure with human resources, management and financials, there will be the ability to support both the organizational structure and the growth which is available from input from intrapreneurs. The result will be less resistance within the organizational culture while creating a main association with growth in the business as a part of the main structure (Davies, Hobday, 7: 2005). Conclusion Although it has become increasingly visible that no simple definition of social entrepreneurship is satisfactory, it remains clear that the creation of a new venture is social phenomenon that exists in a market desiring the output of that venture. (Bornstein. p.45). In fact, it is nearly impossible to define any entrepreneurial behavior without at least an indirect reference to the market or social context in which it occurs. Social Entrepreneurial behaviors are often viewed as most common in unstable socioeconomic environments, where organizations and society are adapting to rapid change. (Bygrave & Zacharakis, p. 14). It is pointed out that the role of innovation is one of the most significant factors for entrepreneurs. Both managers and entrepreneurs experience risk and realize that their challenge is to find and use new ideas. Social enterprise is that business that puts social objectives before financial objectives and is now taking over the world by storm. In Social Enterprise we do tend to have monopolistic companies. Social Enterprise it is totally the opposite, the firm is concerned with helping the customers rather than seeking potential profit from the business. The social enterprise is not based on the profit motive but it is reasonable to conclude that business firms not only will seek to maximize profit but will seek to maintain profits at a high level once such earnings or profits are achieved. This is done by serving the public for a number of years. Nevertheless social enterprise are likely to attempt to avoid "pure competition" for a number of reasons. On the other hand the entrepreneurs behavior is significantly influenced by the social fabric, or market-oriented network of contacts for both reassurance and for economic motives. Part of the entrepreneurs challenge is to convince the external market to believe in his or her vision, and entrepreneurs, nevertheless, tend to be quite optimistic about their own prospects for success. However the attribution of success is a very personal, one where the individual entrepreneurs image and confidence are critical. (Harris 1994, p.244). If an entrepreneurs venture fails, his or her bankers, employees, and family also suffer. (Fishman, p.24) So the success of the entrepreneurs image has economic consequences as well as social consequences. Finally entrepreneurs count on specific connections, and maintain contacts that gain benefits from them to avoid costs, locate resources in order to be available when needed to provide information and assistance. References Aaltio, Liris. 2005. “Cultural Change from Entrepreneurship to Intrapreneurship.” Entrepreneurship Research in Europe (1), 279-291. Antoncic, Bostjan, Robert Hisrich. 2003. “Clarifying the Intraprenuership Concept.” Journal of Small Business and Enterprise Development 10 (1), 7-24. Chesbrough, Henry, Wim Vanhaverbeke, Joel West. 2006. ‘Open Innovation: Researching a New Paradigm.” New York: Oxford University Press. Dart, R., 2004. The legitimacy of social enterprise. Nonprofit Management and Leadership, 14 (4), pp.411. Available at: http://www3.interscience.wiley.com/journal/108567328/abstract. (Accessed on July 2, 2010) Davies, Andrew Michael Hobday. 2005. The Business of Projects: Managing Innovation in Complex Products and Systems. UK: Cambridge University Press. Drejer, Anders, Karina Christansen, John Ulhoi. 2004. “Understanding Intrapreneurship by Means of State – of the Art Knowledge Management and Organizational Learning Theory.” International journal of Management and Enterprise Development 1 (2). Heinonen, Jarna, Kaisu Korvela. 2005. “How About Measuring Intrapreneurship?” Small Business Institute. Hirooka, Masaaki. 2005. “Nonlinear Dynamism of Innovation and Business Cycles.” Entrepreneurships, the New Economy and Public Policy. (10), 289-316. Horsnell, A., (No date). Social Enterprise. [Online]. Available at: http://managementhelp.org/soc_entr/soc_entr.htm [Accessed 4 July 2010] Krueger, Norris. 2002. Entrepreneurship: Critical Perspectives on Business and Management. London: Routledge. Larson, R., 2010. Ask Them and They Will Come. Blog: Social Enterprise, [Online]. Available at: http://managementhelp.org/blogs/social-enterprise/ [Accessed 27 June 2010] LAST Social Enterprise Alliance. 2010. Succeeding at Social Enterprise: Hard-Won Lessons for Nonprofits and Social Entrepreneurs: Jossey-Bass. Leadbeater, C., 2002. Social Enterprise. Newstatesman, [Online], p.2-4. Available at: http://www.newstatesman.com/pdf/upstarts2002.pdf [Accessed 27 June 2010] Lynch, K. 2009. Mission, Inc.: The Practitioners Guide to Social Enterprise.1st Edtion. San Francisco: Berrett-Koehler Publishers. Matthews, J. Dennis, J. & Economy, P., 2003. Lessons from the Edge: Survival Skills for Starting and Growing a Company. New York: Oxford University Press.* Molina, Carlos, Jamie Callahan. 2009. “Fostering Organizational Performance: The Role of Learning and Inrapreneurship.” Journal of European Industrial Training 33 (5), 388-400. Nielsen, Richard, Michael Peters, Robert Hirisch. 2005. “Intrapreneurship Strategy for Internal Markets – Corporate, Non – Profit and Governmental Institution cases.” Strategic Management Journal 6 (2), 181-189. Ottery, C., 2010. How to set up a social enterprise. [Online]. Available at: http://www.theecologist.org/how_to_make_a_difference/culture_change/406111/how_to_set_up_a_social_enterprise.html [Accessed 29 June 2010] Ping, Wang, Jiang Jie, Li Naiqiu, Xu Zhengzhong. 2010. “A Review and Prospects of Research on Human Resource Management of Intrapreneurship.” Advanced Management Science (9). Rule, Eric, Donald Irwin. 1993. “Fostering Intrapreneurship: The New Competitive Edge.” Journal of Business Strategy 9 (3), 44-47. Seshardi, DVR. 2006. “Innovation through Intrapreneurship: The Road Less Traveled.” Vikapla7 (2). Shimizu, Tamio. 2000. Strategic Alignment Process and Decision Support Systems. London: IRM Press. Short, Jeremy, Todd Moss, G T Lumpkin. 2009. “Research in Social Entrepreneurship: Past Contributions and Future Opportunities.” Strategic Entrepreneurship Journal 3 (2), 161-194. Thomas, A. 2000. “ A case for Comparative Entrepreneurship: Assessing the Relevance of Culture.” Journal of International Business Studies 31 (2), 287-301. Zhao, Fang. 2005. “Exploring the Synergy Between Entrepreneurship and Innovation.” International Journal of Entrepreneurial Behavior and Research 11 (1), 25-41. Read More