Social Enterprises and Their Contribution to the Economic Climate - Coursework Example

NTRЕРRЕNЕURSHIР ЕSSАY Student’s Name: Course Code: Tutor’s Name: Date of Submission Abstract This essay analyzes social enterprises and their contribution to the economic climate. It has provided a clear descriptive analysis on the difference between entrepreneurship and social entrepreneurship as well as social enterprises. The essay explains social entrepreneurship as a phenomenon where entrepreneurs are guided by objectives of making the society better. It has been shown that social enterprises take different models through which their goals are achieved. The essay analyzes with the help of examples from Enactus (Global University social entrepreneurship competition). It has described the social enterprises that engage themselves in business activities to earn profit and later use the profit to benefit the members of the society. Others have shown and well analyzed on how they do their business as a tradeoff between their financial returns and their social impacts. This essay has also shown other models of social enterprises that do business with a very close relationship between financial returns of the business with its social impacts. The essay also shows how UC social enterprise hub is used to nature and train individuals on how to engage with social entrepreneurship so as to benefit the members of the society and gain financially. The essay shows the positive contribution of social enterprises in the economic and social lives of individuals. It has been shown that even the environment will be well sustained by the social enterprises. This essay concludes that social entrepreneurship and social enterprises are usually accompanied by positive contribution to the economic climate. Introduction Social enterprises refer to organizations which have social responsibilities and purposes but they generate most of their income from trading activities (Frumkin 2002). They include cooperatives; community enterprises leisure trusts as well housing associations. It can be a private activity done in the interest of the public and it is organized with a strategy that is entrepreneurial in nature with a purpose of attaining some social and economic goals but not purely profit maximization (Grassl 2012). Social entrepreneurs measure returns which are positive to the society. They usually combine the goals of the society with their spirit of entrepreneurship (Sidek, Ali & Ismail 2016). Entrepreneurship on the other hand is a process through which entrepreneurs bring together the other factors of production with the aim of making profit. These engage in business with an aim of gaining financially without any social responsibility in them. According to Sidek, Ali & Ismail (2016) the difference between the two entrepreneurships is basically that social entrepreneurship carries social responsibility. Social enterprises take different models in terms of business, financial as well as their planning. This essay will critically analyze the contribution of social enterprises as well as social entrepreneurship in the current economic climate. The essay will also show the different business and financial models of social enterprises. Examples will be drawn from UC Social Enterprises. Social entrepreneurship Social entrepreneurship is a phenomenon where entrepreneurs are guided by achieving their societal goals other than making profit. It has led to the formation of social enterprises which basically focus on objectives related to the society (Sidek, Ali & Ismail 2016). The objectives may be environmental, social or community based and their realization makes the lives of individuals in the society better. This makes social enterprises take unique models as far as their financial and business aspects are concerned. Singh (2012) argues that social enterprises involve the people in the society, resources by the entrepreneurs together with the identified purpose of the enterprise. If the purpose of the enterprise is accomplished, both the entrepreneur and the society will benefit. These benefits will take the form of social wellbeing; better spiritual life and good environment to live in together with better economic environment (Singh 2012). On the other hand the entrepreneur will also benefit from the profit earned from the enterprise. Mostly there is lack of resources in social enterprises where these enterprises face challenges when obtaining funding (Dooling, Liburd and Taylor 2008). A good example of overcoming these is the crowd funding initiative. It gives an alternative in financing social entrepreneurship. Bechter, Jentzsch and Frey (2011) say that crowd funding gets its inspirations from different concepts such as micro financing as well as crowd sourcing. It has been defined as open call through the internet which facilitates financial resources provision in form of donations or after exchange with some services. It usually supports initiatives for their specific purposes. This means that crowd funding brings individuals who have the same objectives regarding their society well-being together (Bechter, Jentzsch and Frey 2011). Social entrepreneurship can be either collective or individual in formation. Collective social entrepreneurship must be a functional team with the aim making a green community entrepreneurship (Dooling, Liburd and Taylor 2008). Its drivers include environmental sustainability objective. This is the aim of any undertaking by the social enterprise. It is basically aimed at making the lives of individuals in the society better by provision of social amenities as well as making them self-reliant (Frumkin 2002). Individually formed social enterprises may be faced by funding shock and may bring about the collapse of the market. There are facilitating factors such as strategic partnerships that will also bring about success on the social enterprises. Social capital network together with human capital will also facilitate development of the social entrepreneurship (Singh 2012). To increase the viability and the success of the social entrepreneurship, adoption and implementation of new creative ideas is necessary. There can also be expanded scale of the existing service offered by the social enterprises (Singh 2012). The existing idea can also be accelerated to make the social enterprises have real significance in the current economic climate. This has been evidenced in UC social enterprise hub. It has given opportunity to social entrepreneurs for them to test their trades when out of the hub premises (Grassl 2012). It has also given their members a room to hold their trainings, meeting and conferences. This has made social entrepreneurs a forum to participate in community development as well as their own gain. Social enterprises usually operate in different fields. These include work integration where they train and integrate individuals who are unemployed and the disabled (Sidek, Ali & Ismail 2016). They come with a higher degree of diversity with their objective being assisting the marginalized people to contribute in economic growth and development. Social enterprises also provide personal social services. These include health facilities and medical care. Under this field they help the society to access these facilities for them to be healthy and contribute to the economic growth and therefore they have a considerable part to play in the economic climate (Dooling, Liburd and Taylor 2008). Services to the elderly and the disadvantaged people of the society take an integral part of social entrepreneurship. As the social entrepreneurs do their business in the UC social enterprise hub, they assist the society to develop their different business ideas and therefore come up with new ideas and thinking approaches (Frumkin 2002). Business models in social enterprises Social impact can be made through a number of ways. Social enterprises are usually felt by the society through different methods and these can be viewed as social enterprise models framework. They can take the model of engaging in business activities which have no social to the society (Dooling, Liburd and Taylor 2008). In this model, the business activity carried out by the business is aimed at seeking financial gain or profit. The enterprise will be accompanied by some effects which are desirable like employment creation but the main aim is to make profit. After realization of the profits from these enterprises, the entrepreneurs brings the social impact to the society by transferring some or all the profit earned to other activities which will have social impacts (Frumkin 2002). This is also referred to as profit generator model. Good examples of this model include for profit businesses which also have CSR programs. Other charitable organizations invest their endowments in financial markets. The returns they get from these investments are taken back to the society (Singh 2012). Social enterprises also engage in business activities without direct social impacts to the society but there is a tradeoff between providing social impacts and financial returns. Here there must be a balance between income generation through profits as well as the creation of social impacts (Sidek, Ali & Ismail 2016). If there is an increase in the social impacts an enterprise is giving, the financial returns will automatically reduce. Social responsibility of these enterprises is integral. There must be a social impact to happen if at all there is a trading activity happening under this model. Singh (2012) says that enterprises using this model are always capable of giving a commercial rate of return that is risk adjusted. Examples using this model include fair trade businesses as well as microfinance institutions. Enactus, an international non-profit organization brings together students as well as academicians who use entrepreneurship in lives transformation (Sidek, Ali & Ismail 2016). Individuals in this organization are trained on how to make a sustainable world using social entrepreneurship. It is another example in making individuals aware of how social entrepreneurs can improve the economic climate. There are other social enterprises which engage in business activities which have direct impacts socially and also generate financial returns. The social impact created within the society is closely related to the profit earned or the financial gain from the same business (Grassl 2012). These types of social organizations operate in normal markets which are competitive with other businesses of the same type. The social impact received by the society from these social enterprises is usually parallel with the financial gains gotten from the same business activity. This type of social entrepreneurship just like others is usually found in UC social enterprise hub (Singh 2012). Members are taught on how to engage in businesses such as coal powered electricity generation. This activity will bring about positive social impact as well as financial returns to the involved entrepreneurs. Enactus also engage their members with adequate training on this and many other models that will benefit the society as well as give financial gain (Sidek, Ali & Ismail 2016). Cooperatives are very good examples of these type of social enterprises. They engage in business activities with the aim of making profit and at the same time they have an objective of helping other individuals. Social enterprises in an economy The main objective of social enterprises whichever form they take is to come up with amicable solutions to problems of the society. They apply business strategies and solutions to the problems (Sidek, Ali, & Ismail 2016). They have a goal of being sustainable through supporting their own activities financially other than relying on donation and grants. The strategies used must be innovative in such a way that the presence of social enterprises will help the economy to grow. Dooling, Liburd and Taylor (2008) argue that financial gains and returns from their activities can be invested back to the enterprises’ activities as well as help in solving social problems. The enterprises usually operate in characteristics and values of the market such as diversification, competition and entrepreneurship (Frumkin 2002). Social enterprises’ elements A working social enterprise must have a working strategy that is operating. This includes internal organizational structure as well as partnering externally. This is very important for the creation of the impact that the organization wants to implement. Resources strategy is another equally crucial element (Grassl 2012). This will outline how the enterprise will get its resources or financial support required and on the terms. The model, which is like a channel that the social entrepreneur will turn into tangible outcomes, is also important. It will help in generation of revenue which forms the economic value as well as the social impact which forms the social value. A social enterprise can either be embedded, integrated or even externally related to non-profit organization (Frumkin 2002). This means that not all social organizations are nonprofit as discussed in the models above. The embedded ones are those businesses that are started with the ultimate goal of solving the social problems that may be facing the society. The integrated ones have their business or trading activities overlapping the social programs present. For the external ones, the trading activities and the social are totally separate (Dooling, Liburd and Taylor 2008). Social enterprise models and their working Different social enterprises have different functions in the society making their contribution to the society as well as the economy different. There are some who give support to other entrepreneurs for the entrepreneurs to be able to run their businesses and help the society as well as themselves (Sidek, Ali & Ismail 2016). They sell support services or aids to trade making entrepreneurs comfortable in transacting business. These include consultation organizations or the ones that offer technical support and microfinance organizations (Frumkin 2002). They usually succeed due to the training services they sell to the entrepreneurs. Others offer employment opportunities as well as job training services to the members of the society. The key success factors on these are the appropriateness of job training as well as their viability commercially. They include organizations that offer employment to the youth or the disabled in different capacities. Other social enterprises take the free for service model (Singh 2012). They offer on sale the needed social services to their clients. These include clinics, museums as well as membership organizations. They usually succeed due to the establishment of appropriate fee structure compared to the benefits (Dooling, Liburd and Taylor 2008). Conclusion In conclusion, entrepreneurship is different from social entrepreneurship in that social entrepreneurship aims at achieving social goals or making the lives of people in a society better. Social enterprises focus on social, environmental or community based problems which will be solved through entrepreneurship. These social enterprises can be owned by individuals or even organizations. They operate with higher degree of integration as well as diversity so that they can achieve their goals. This makes them access the various members of the society with social problems and help them to solve their issues including health and medical care problems. Some social enterprises engage in business activities which are not accompanied by any social impact. The profit that they earn is then transferred to the society and makes their lives better. Others will do their businesses which don’t have direct social impacts to the society but there is a tradeoff between providing social impacts and financial returns. There are other social enterprises which engage in business activities which have direct impacts socially and also generate financial returns. Enactus as well as UC Social Enterprise Hub provide their members with knowledge through training together with resources. These business enterprises have some elements such as the working strategy and the resources strategy. This makes these business as well as organizations to contribute heavily in the economic climate where they are situated. They offer support facilities and services to the entrepreneurs making them achieve their goals and objectives. References Bechter, C., Jentzsch, S. and Frey, M., 2011, From wisdom of the crowd to crowdfunding, Journal of Communication and Computer, 8, p. 951-957 Dooling, A., Liburd, J., and Taylor, M. 2008, Doing Well While Doing Good: How to Launch a Successful Social Purpose Enterprise. Toronto Enterprise Fund, Retrieved April 11, 2017, From, www.torontoenterprisefund.ca Frumkin, P., 2002, Social Entrepreneurship On Being Nonprofits, Cambridge, Mass.: Harvard University Press, Grassl, W. 2012, Business Models of Social Enterprise: A Design Approach to Hybridity, ACRN Journal of Entrepreneurship Perspectives, Vol. 1, No. 1, p. 37–60. Sidek, N. Z., Ali, S. M., & Ismail, M., 2016, Proceedings of the ASEAN Entrepreneurship Conference 2014. Singapore: Springer. Singh, P., 2012, social entrepreneurship: A Growing Trend in Indian Economy, International Journal of Innovations in Engineering and Technology, Vol. 1, No. 3, P. 44-52. Read More