Social Entrepreneurship - Literature review Example

ENTREPRENEURSHIP ESSAY Name Institution Course Professor Date ENTREPRENEURSHIP ESSAY Introduction Sustainable development involves the active realization of economic powers through the fields of education, trade, environment, and health. Significant in empowering the economy of a nation is innovation applicable in various industries. According to Mair and Noboa (2006, p. 1), the entrepreneurial initiative is current gaining attention among scholar of various disciplines following their understanding of its central role to the social and economic empowerment. Chell, (2007, p. 5) identifies the social, economic, and political diversity about the actual definition of the terms entrepreneur and enterprise. The imperative is the distinction between social enterprise and entrepreneurship, especially regarding their contribution to the economy. Moreover, Chell (2007, p. 5), identifies that a discussion about the nature of the two terminologies relative to the social, political and economic spheres provides a better understanding of their differences. Therefore, social entrepreneurship and social enterprise are similar though different forms of entrepreneurship actively leading to economical gain. This essay aims to unveil the difference in entrepreneurship through a discussion of social enterprise and social entrepreneurship. It particularly considers the business models, financial models, and the business plan as primary areas contributing to the proper discussion about the differences. Social Entrepreneurship Mair and Noboa (2006, p. 1) define Social Entrepreneurship (SE) as the creation of opportunities by individuals with a purpose to make a difference in the society. The definition compares with the previous definition of the term where SE describes the process of generating social-economic models providing the sustainability of social benefits. It is the definition by Mair and Noboa (2006, p. 1) that makes it possible to identify the aim of SE together with its constituent components enhancing its success. To begin with, Mair and Noboa (2006, p. 2) identifies the creation of opportunities for the effective utilization of resources through developing innovative strategies to tap these resources. Moreover, it involves a particular behavior of the entrepreneurs in conducting the specific activities such that they manage to provide the society with opportunistic resources (Mair & Noboa, 2006, p. 2). In regards to Mair and Noboa (2006, p. 2) it is important to realize the four characteristics of SE including the uniqueness, innovativeness, entrepreneur, and growth. The particular characteristics manage to direct the outcomes of SE in line with its aim of providing a social value to the community. The imperative is to understand its motivation which Mair and Noboa (2006, p. 2) identifies as the need to change the community following the lack of satisfaction with the current situation. Moreover, SE involves actions by people (entrepreneurs) who feel socially responsible in initiating a positive change towards the realization of a powerful goal. Concerning the creation of opportunities, Mair and Noboa (2006, p. 2) identifies multiple reasons characterizing the SE through the entrepreneurs. Usually, traditional entrepreneurs prioritize value through the gaining of profits, while the current scholars in SE identify values surpassing the monetary advantage possible through the implementation of innovative strategies. In this case, the value of SE takes a social form where the innovator aims at impacting a wider population from the innovation. Mair and Noboa (2006, p. 3) provides the example of Fabio Rosa who invented a system of providing electricity at a cheaper cost to approximately 25000 low-income Brazilians. The outcome of such a creation links with the provision of social value which agrees with the desired outcome in SE. Mair and Marti (2006, p. 5) introduces an understanding of SE based on its constituent words of social and entrepreneurship. Following this line of thinking, social is that which aims at helping more than one individual. According to Mair and Marti (2006, p. 5), SE involves altruistic thinking with an objective to provide moral and ethical motives and responsibilities. Nevertheless, SE may occur as a process to fulfill a personal mission such as earning profits characteristic of the private sector. Mair and Marti (2006, p. 5) contribute that despite the personal ambition of creating wealth, the enterprise provides social wealth through opening up new markets, industries, jobs, and introducing new technologies. Moreover, Mair and Marti (2006, p. 5) identify the type of business model exercised in SE involving a combination of resources to address a common or existing social problem. The collective nature of the model allows the easier access to resources that were previously unavailable to an individual person. Moreover, the examples included in the discussion by Mair and Marti (2006, p. 5) point to the direction of the acquired resources to the poor. Specifically, the collective input aims at providing social value through the provision of services to the poor who cannot afford to incur the costs. Consequently, the particular activities contribute to economic empowerment through saving costs and developing the society to become self-sufficient. Mair and Marti (2006, p. 6) argues that SE is central elements in generating social transformation through providing the community with social needs interpreting to social and economic empowerment. SE follows distinctive nature that develops a clear understanding of its business and financial models. Based on Mair and Marti (2006, p. 7), the particular social need addressed by a specific SE organization dictates the pattern of behavior shaped through the financial and business practices. Mair and Marti (2006, p. 7) includes the example of Institute for One World Health (IOWH) operating as a not-for-profit pharmaceutical company. The institute utilizes the model of sharing and donating intellectual property in managing the diseases of the poor. With this type of operation strategies, the company is in a position to recruit highly competent professional in the pharmaceutical industry and have them volunteer in providing drugs to the poor (Mair & Marti, 2006, p. 7). Moreover, the discussion mentions of its source of funding being majorly a contribution of donation with the most significant being that originating from the Bill and Melinda Gates Foundation. Working with a donation policy alongside the non-profit mechanism provides it the advantage of operating license free. The working strategy of a non-profit SE includes heartfelt connector style of financing where the cause of action involves the generation of a social value to the less fortunate. Concerning the business plan, Kernot and McNeill (2011, p.1) provides that the traditional form of entrepreneurship models fails to address the continued inequity in the distribution of resources and opportunities. The imperative is the inequality in the society contributing to challenges in the health and environmental sectors. Consequently, these niches in the society realize the relevance of SE in changing the way of business (Kernot & McNeill, 2011, p.1). Changing the process of conducting a business relies on the development of an effective business plan in achieving a social bottom line. In this line, the business plan in SE includes three distinctive components of market orientation, innovation, and social benefit (Kernot & McNeill, 2011, p. 2). In SE, the process begins by identifying the particular social needs deprived in the community and proceeding to form a collective action in managing their provision with an aim of providing value to the public. Social Enterprise As a different concept of social entrepreneurship, Mair and Marti (2006, p. 3) defines it as the tangible result of SE. However, various scholars develop different meaning about the term social enterprising including the act by private organizations to solving social problems where the public sector is insufficient (Mair & Marti, 2006, p. 4). Moreover, Mair and Marti (2006, p. 3) explains its primary goals as involving the gaining of a public support, profit generation, and ability to penetrate the market. Contributing to the definition is the work of Chell (2007, p. 6) where enterprise refers to a set of behavior or a structure contributing to the individualistic trait of a particular class. It is the behavioral component that allows for the discovering of an opportunity that creates value for the community. The application of the term enterprise in the early 20th century followed the need to identify economic zones by governments that require an industrial or commercial uplift (Chell, 2007, p. 6). However, it currently associates with individualism and a personal responsibility in taking action to improve a condition. As the society continues to develop an understanding of the term, there is the provisional of an education input regarding enterprising as the ability to take a personal initiative in improving the self. Despite the many definitions, Chell (2007, p. 10) narrows down to define social enterprise a business with a social concern where the surplus becomes reinvested in the community to continue its improvement. Similar to SE, social enterprises value the creation of social value in place of maximizing personal profits or that of the shareholders. Concerning the outcome in social enterprising, Chell (2007, p. 11) identifies the entrepreneurship as a model in generating wealth through both the not-for-profit and for-profit approach. In particular, one of the motives in social enterprising involves prioritizing social benefits at the expense if gaining a surplus (Chell, 2007, p. 11). Kernot and McNeill (2011, p.2) agrees to the thought by including that social enterprises aim to generate profit that enhances their social role rather than encourage the increase in value for the shareholder. The disadvantage of such an approach is the overreliance on grants to maintain its sustainability in providing the particular benefits to the society while earning no profits. Comparatively, Chell (2007, p. 11) presents a different motive in social enterprises where the organization prioritizes the generation of wealth through a for-profit mechanism. In this case, the surplus acts a security for the survival of the firm as it continues to create value for the society. According to Chell (2007, p. 11), the underlying challenge for these enterprises is the need to function as a self-sufficient institution through a commercial input and continue to uphold its primary culture of observing a social cause. Kernot and McNeill (2011, p.3) introduces the ongoing changes in social enterprising from a traditional distinction of being either for-profit or non-profit organizations. The change in the nature of the business is an outcome of the continued challenges of the conventional models that may tend to limit their operation as either being social or wealth oriented. Echoing the need to remodel the business plan, Chell (2007, p. 12) agree that it is possible for social enterprises to generate profit and continue to pursue their main purpose of serving the greater community through creating value. Significant in achieving this change is the careful examination of operational issues by those in a leadership position (Chell, 2007, p. 12). Moreover, Chell (2007, p. 18) affirms the need to incorporate an entrepreneurial leadership which manages to identify opportunities and translates them into social and economic value. Grassl (2012, p. 37) introduces the concept of hybridity as a defining factor for social enterprises. The term hybrid implies a mixture of traits that distinguish one factor from another. Looking at the Social enterprises on a hybrid perspective, it provides the benefit of bridging the parallel divides that classify it to a specific entrepreneurship model. Moreover, Grassl (2012, p. 41) argues that the thought of social enterprise as a non-profit venture is ambiguous and fails to provide the true characteristic of its model in entrepreneurship. Contrary, Grassl (2012, p. 41) holds that social enterprises carry out projects with the aim of generating profit and distribute these profits to the specific target groups in the society. Example include the micro-finance institutions that are not non-profits institutions though they qualify as social enterprises from a hybrid point of view. The inclusion of various organizations as social enterprises today follows the realization of alternative sources of funding such as crowdfunding, peer-to-peer, and microfinance (Bruton et al. 2015, p. 9). In particular, Bruton et al. (2015, p. 10) explain that crowdfunding involves the individual contribution of different investors in generating collective funds that meet the necessary capital to start a business or expand an existing venture. Similarly, microfinance provides low-interest loans that attract low-income earners who manage to contribute to social and economic value. Concerning the business model applicable to social enterprises, Grassl (2012, p. 44) identifies the examples of the ecosystem, hivemind, Metafilter, and dynamic signal. In particular, the ecosystem model integrates the shareholders of a business in identifying possible areas to create value as individual participants or as a collective unit. The strategy links with the ideas behind social enterprise hubs, especially in schools where students gain a mentorship opportunity on entrepreneurship and ways to tap unexploited niches (Kernot and McNeill, 2011, p. 23). Comparatively, the hivemind requires high collaboration in the organization providing a cohesive team of the shareholder. The other two reflect the receiving of information and ways to act in meeting an effective social action (Grassl, 2012, p. 44). Conclusion Although similar in objective, social enterprise and SE are different forms of entrepreneurship. SE includes the sole purpose of providing value to the public and may operate as the for-profit or not-for-profit establishments. The imperative in the difference is the type of business model applicable in either situation with the non-profit model pursuing a collective bargain in performance through donations as the primary financial model. Comparatively, social enterprise functions with societal objectives although they may incorporate a commercial feature to earn profits and plow back these profits in developing value to the community. The imperative of the vast growth in social enterprise is the availability of alternative funds through crowdfunding and microfinance projects. The sources of funding explain on grants and loans as the typical financial models in social enterprising. The discovery of different types of entrepreneurship continues to pose a great challenge especially with the changes in their business model and economy. Reference List Mair, J. and Noboa, E., 2006. Social entrepreneurship: How intentions to create a social venture are formed. In Social entrepreneurship, UK: Palgrave Macmillan. Mair, J. and Marti, I., 2006. Social entrepreneurship research: A source of explanation, prediction, and delight. Journal of World business, vol. 41, no. 1, pp. 36- 44. Chell, E., 2007. Social enterprise and entrepreneurship: towards a convergent theory of the entrepreneurial process. International small business journal, vol. 25, no.1, pp. 5- 26. Grassl, W., 2012. Business model of social enterprise: A design approach to hybridity. ACRN Journal of entrepreneurship Perspectives, vol. 1, no.1, pp. 37- 60. Bruton, G., Khavul, S., Siegel, D. and Wright, M., 2015. New financial alternatives in seeding entrepreneurship: Microfinance, crowdfunding, and peer-to-peer innovations. Entrepreneurship Theory and Practice, vol. 39, no. 1, pp. 9- 26. Kernot, C. and McNeill, J., 2011. Australian Social Entreprises. The University of New South Wales. Read More