The Concept of Online Social Entrepreneurship - Literature review Example

Abstract

The concept of online social entrepreneurship has been in the limelight in the business domain in the recent, and it is gaining prominence due to its contribution to the improvement of societal and individual welfare. Social entrepreneurship has attracted the interest of various bodies and academicians, and many researchers have used different kinds of approaches to study the concept so as to determine the main causes of their rapid mushrooming and the driving factors behind the continued support in the global business arena. The present therefore have conducted a comprehensive literature review on the determinants of a successful online social entrepreneurship. The major factors that contribute the success include financial engineering, suitable organisational structure and the presence of a suitable ecosystem. The findings of the paper are necessary for further studies on social entrepreneurship as it provides a general outlook of the concept and also the findings enable the management of the enterprises to adopt the strategies for a successful operation.

Introduction

Overview

Online social entrepreneurship is considered a newly emerging type of entrepreneurship in the world following the advancement of technology with the objective of creating social wealth rather than generating economic wealth (Nicholls 2010, p. 615). There are three significant macro-dynamics which have led to the emergence of online social entrepreneurship in the modern world, and one of them is the reduction of the public offering of social goods and services such as social welfare which have led to the non-fulfilment of their basic needs (Nicholls 2010, p. 623). Additionally, the rising disequilibrium in income distribution between the developed and developing nations have created the sense of devising new business strategies to help bridge the income gap between the nations by creating social wealth. Over the last few decades, online social entrepreneurs have adopted various business strategies that address social problems and contribute to the creation of incomes. Lastly, online social entrepreneurship emerged as a result of the increasing competition within the non-profit sector to achieve donations. With the increasing competition, there has been a need to professionalize the activities of businesses so as to reduce the financial dependency of fewer income nations, thus enhancing economic stability that leads to the growth of social wellbeing (Defourny & Nyssens 2010, p. 37).

For several years, it has been noted that generation of new ideas has become a fundamental tool in the modern society as the new idea can contribute significantly to the development of new business strategies that revolutionise the business sector especially when the information is on the premises of a social entrepreneur. Social entrepreneurs are regarded as individuals having a wealth of innovative methods that help solve some of the most demanding societal problems. Some of their few characteristics include persistence and being ambitious and with these skills, they are capable of tracking various social issues and offer innovative ideas that lead to a positive change (Santos 2012, p. 343). To avoid a high rate of dependency on the government or established businesses, social entrepreneurs identifies the shortfalls in the society and corrects the problem by changing the system, spreading the solution identified and convincing the society to move in different directions (Dacin, Dacin & Matear 2010, p. 39). Through the innovativeness of social entrepreneurs, online social entrepreneurship has evolved into prominence resulting to finding solutions to the rising intensity and complexity of the social, economic and environment problems. Online social entrepreneurship is closely related to various sectors of economies such Corporate Social Responsibility (CSR), the Triple Bottom Line and Corporate Social Innovation (CSI) (Dacin et al. 2010, p. 41). To achieve its goals, various determinants ensure the success of online social entrepreneurship, and some of the identified factors include the availability of proper financial instruments, well-structured organisational structure, and the availability of favourable environmental factors. Moreover, these factors are categorized into categories which are the socio‐political, economic, and cultural determinants of online social entrepreneurship activities (Desa 2012, p. 732).

Research objective

What are the determinants of a successful online social entrepreneurship?

Research method

To fully elaborate and discuss the primary objective of the study, the present paper adopted the use of themed literature review. Through this method, various factors have been analyzed to identify the determinants that contribute positively to the success of online social entrepreneurship.

Literature Review

The Advancement of Social Entrepreneurship contributes significantly to the overall development of a nation. It is noted that the sociological standpoint to the study of entrepreneurship goes beyond the innate characteristics of the social entrepreneurs which are factors considered as personal behavioural traits to the extent of the environmental factors which acts as motivating factors to the success of online social entrepreneurship. Desa (2012, p. 733) observed that the success of any social enterprise is dependent on various environmental factors, organisational traits, and structures, financial generation by the enterprise and the type of ownership and governance.

Financial Engineering

As noted by Defourny and Nyssens (2010, p. 39), the emergence of the 2008 financial crisis greatly damaged the credibility of various financial institutions which were major financiers of the social entrepreneurship. The collapse of the financial markets across the globe led to the depletion of credits across the entire financial system and this, therefore, affected the growth and development of social enterprises whose main mandate is to improve the social welfare and not profit generating (Defourny & Nyssens 2010, p. 39). The collapse of the financial institutions can, therefore, contribute to the fall of some social entrepreneurship as the institutions will not be accessed to loans that offer them funding for growth. Financial engineering, therefore, is considered as a powerful determinant of the success of online social entrepreneurship as it can create an opportunity for the mobilization of capital from different financial fronts which can be used for investments.

Through Financial engineering, the social enterprises will be able to pool funds and resources that help fuel their projects for economic growth aimed at improving the general social welfare of the society (Noruzi, Westover & Rahimi 2010, p. 3). One of the major sources of funding for the social enterprises is charity and therefore with proper and adequate financial innovations made available through financial engineering, these institutions will be able to have wider access to a deeper pool of capital than they could previously before the utilization of proper financial motivations.

As aforementioned, online social enterprises are majorly concerned with the innovation of various solutions to societal problems and therefore, their returns often consists of both the social and financial benefits which they obtain from the provision of their services and donor funding. To enjoy the social benefits and be able to fulfil their mission, one fundamental question that the social enterprise face is; are they capable of generating enough revenue to attract other investments which can compensate for their costs? (Santos 2012, p. 347) To find a solution to this question, the Social Entrepreneurship must devise various methods of generating enough capital which can sustain their operations. Through the use of financial engineering, these organisations can build a good financial base from which they can successfully run their operations. This will enable the organisations to provide goods and services to customers at a premium and still be able to generate enough finances to achieve their objective. Through financial engineering, organisations such Bridges Social Enterprises have been able to pool sufficient funds that can fund several ventures and provide several services to the society such as the provision of community transportation services (Noruzi et al. 2010, p. 7).

organisational Structure

Chell, Nicolopoulou and Karataş-Özkan (2010, p. 78) in their work have indicated that online social entrepreneurship should clearly state its purpose in the society and with such clarity, the credibility of the entrepreneurship will be enhanced, and the organisational roles will be clearly identified and defined. An organisation’s architecture which defines the structure of the social entrepreneurship can be implemented through various ways to ensure the success of the organisation. Usually, these can be through such elements as governance structure, performance tools, efficient contracts with the investors and stakeholders and ownership design (Chell et al. 2010, p. 78). To ensure the success of the online social entrepreneurship, it will be prudent for the social entrepreneur to seek legal authority to help ensure that its operations fall within the organisations’ jurisdictions, and also, it will ensure that it has adequate access to sufficient capital that is vital for its growth and mission. If an online social entrepreneurship lacks clear guidelines on its mandate, then it can face the risk of compromising its objectives to comply with the existing legal terms which usually contradicts with their agenda. The outward appearance of an enterprise should be enticing and designing the structure can be costly and usually requires a critical imagination (Hill, Kothari & Shea 2010, p. 10). However, in the long run, a good business structure will contribute to the maximization of the organisations’ potential that enables the achievement of the intended objectives both socially, environmentally and financial. Under the organisational structure, an online social enterprise needs to prioritize the following elements to ensure the success of its operations;

Stakeholder value

For the success of the online social entrepreneurship, the management should pay more attention to the impacts that their business operations have on the stakeholders. After a successful identification of the various parties that are vital to the success of the organisation’s mission, the online social entrepreneurs should negotiate the unconventional duties and responsibilities that are aimed at enhancing the stakeholders’ inclusion into the achievement of the social entrepreneurship’s mission in the society (Hill, Kothari & Shea 2010, p. 19). Through this strategy, the social entrepreneurship will be able to understand fully the needs of the society they are serving and through their online promotional strategies, the social entrepreneurship will identify the best areas to solicit for funds that will facilitate the satisfaction of the societal needs (Chell et al. 2010, p. 84).

Capitalization

Capitalization is concerned with the creation of a balance of interests between the objective of the online social entrepreneurship and stakeholders expectations with that of its financiers. To ensure smooth operations of the social enterprise, the balance of interest should be in line with the with the stakeholders’ agreement on their commitments in the enterprise and the type of contract with the financiers. The creation of such harmony improves the performance of the online social entrepreneurship as the organisation will have efficient access to capital that facilitates its growth (Bornstein &Davis 2010, p. 104).

Ownership and governance

It is prudent that both the founders and the directors of online social entrepreneurship share a common commitment that inspired the founders to initiate the move of improving the welfare of the communities through online business. It is often challenging for businesses to preserve the mission of an enterprise especially after the transfer of ownership from the founders to the directors (Griskevicius, Cantú & Vugt 2012, p. 119). For the success of the social entrepreneurship, this form of transfer should be transparent that ensures the activities of the organisation are in line with the original objective of the enterprise. A good and comprehensive ownership and governance design of the enterprise will facilitate the achievement of the mission and preservation of the mission of the founders of the online social entrepreneurship. Some of the major characteristics of a good ownership and governance of an online social entrepreneurship may include fair compensation of the workers, preservation of social assets, corporate social responsibility, and transparency in management, inclusive ownership and reasonable (Steyaert & Dey 2010., p. 235). Adherence to these factors will motivate the workers and the management and each responsible party in the organisation will conduct his/her duties diligently to ensure the success of the mission.

A good example of an organisation that adopted the use of good ownership and governance is the Cafédirect, which is one of the largest fair-trade purveyors in the United Kingdom. Through the transfer of a portion of the owner’s shares, the organisation’s directors have been able to achieve successfully the enterprise’s mission (Steyaert & Dey 2010., p. 236).

Finding a Suitable Ecosystem

Every organisation and enterprise operate within the premises of an ecosystem that provides well-established laws, financial markets, customized tools and services and well-established talents, and these factors contribute to the success of the organisations. Finding ecosystems that provide such factors is one of the driving forces that ensure the success of the online social entrepreneurship since these ecosystems provide supporting resources that facilitates their operations (Aldin & de Cesare 2011, p. 363). For instance, within the suitable ecosystems, online social entrepreneurship can get access to specialized legal systems, and these makes the organisations have easy access to the capital, and this enables the organisations to get network support in the online platform (Dacin, Dacin & Tracey 2011, p. 1206). Finding a suitable ecosystem for smooth operations can be achieved through the creation of one where organisations develop and nature talents for those individuals willing to be social entrepreneurs with high performance. Such a strategy is vital because it enables the organisations to have a full understanding of the ecosystems in which they operate (Dey & Steyaert 2010, p. 90).

In a study by Dacin and his associates (2011, p. 1210), finding a suitable ecosystem was found to be one of the challenges that faced organisations such as Lex Mundi Pro Bono Foundation in their effort to balance their economic, environmental and social performance as they aim at achieving their mission. Through the availability of the favourable ecosystem, the organisation has been able to obtain capital for its operations, and this improved its performance pyramid (Dacin et al. 2010, p. 1210).

Conclusions & Recommendations

From the literature review, it is evident that the emergence of online social enterprises has contributed to the revolution of the business sectors in the global arena. Social enterprises contribute positively to the development of societies by providing basic needs and services which are otherwise not possible by the profit-cantered organisations. From the study, various factors are identified to have a positive contribution to the success of the social entrepreneurship and through the careful adoption of these strategies; online social entrepreneurship is capable of attaining their missions. It is, therefore, prudent that various nations both developed and developing provide an environment that supports the operations of the social entrepreneurship as they supplement the services of other organisations and the government in the provision of goods and services.

The findings of this paper can be very helpful when adopted in the public domain as it provides a general outlook of the social entrepreneurship and how their presence in the society is of value. The findings of this paper can be fruitful for researchers who are aiming conduct a study on the success of various social entrepreneurship as it provides an in-depth analysis of the various factors that can lead to the success of social enterprises.

The findings of the study will be vital to the management of social enterprises as it provides a conclusive guideline on the strategies for success. It is a recommendation that social entrepreneurship should strive to adopt these factors that are discussed in the present paper so as to improve their performance. Further, it is also recommended that the management should identify the weaknesses of their social enterprises and adopt the strategies that best maximizes their objectives.

Various factors are not fully delved in this paper such as personal traits and other socio-political and cultural factors that can contribute to the success of social enterprises. Moreover, there is a need to explore the challenges that various social entrepreneurship face in the process of carrying out their roles and missions in various societies and strategies to curb those challenges. I, therefore, recommend that more study be conducted on the missing gaps that are not covered by the present paper. This further study will contribute significantly to the improvement of social entrepreneurship.

Reference List

Aldin, L. and de Cesare, S., 2011. A literature review on business process modeling: new frontiers of reusability. Enterprise Information Systems, 5(3), pp.359-383.

Bornstein, D. and Davis, S., 2010. Social entrepreneurship: What everyone needs to know. Oxford University Press.

Chell, E., Nicolopoulou, K. and Karataş-Özkan, M., 2010. Social entrepreneurship and enterprise: International and innovation perspectives.

Dacin, M.T., Dacin, P.A. and Tracey, P., 2011. Social entrepreneurship: A critique and future directions. organisation science, 22(5), pp.1203-1213.

Dacin, P.A., Dacin, M.T. and Matear, M., 2010. Social Entrepreneurship: Why we do not need a new theory and how we move forward from here. The academy of management perspectives, 24(3), pp.37-57.

Defourny, J. and Nyssens, M., 2010. Conceptions of social enterprise and social entrepreneurship in Europe and the United States: Convergences and divergences. Journal of social entrepreneurship, 1(1), pp.32-53.

Desa, G., 2012. Resource mobilization in international social entrepreneurship: Bricolage as a mechanism of institutional transformation. Entrepreneurship Theory and Practice, 36(4), pp.727-751.

Dey, P., and Steyaert, C., 2010. The politics of narrating social entrepreneurship. Journal of enterprising communities: people and places in the global economy, 4(1), pp.85-108.

Griskevicius, V., Cantú, S.M. and Vugt, M.V., 2012. The evolutionary basis of sustainable behavior: Implications for marketing, policy, and social entrepreneurship. Journal of Public Policy & Marketing, 31(1), pp.115-128.

Hill, T.L., Kothari, T.H. and Shea, M., 2010. Patterns of meaning in the social entrepreneurship literature: a research platform. Journal of social entrepreneurship, 1(1), pp.5-31.

Hoogendoorn, B., Pennings, E. and Thurik, R., 2010. What do we know about social entrepreneurship: An analysis of empirical research.

Nicholls, A., 2010. The legitimacy of social entrepreneurship: reflexive isomorphism in a pre‐paradigmatic field. Entrepreneurship theory and practice, 34(4), pp.611-633.\

Noruzi, M.R., Westover, J.H. and Rahimi, G.R., 2010. An exploration of social entrepreneurship in the entrepreneurship era. Asian Social Science, 6(6), p.3.

Santos, F.M., 2012. A positive theory of social entrepreneurship. Journal of business ethics, 111(3), pp.335-351.

Steyaert, C. and Dey, P., 2010. Nine verbs to keep the social entrepreneurship research agenda ‘dangerous’. Journal of social entrepreneurship, 1(2), pp.231-254.