Social Entrepreneurship and Innovation - Essay Example

Social Entrepreneurship and Innovation Terms of Reference Corporate Social Responsibility - “the way an organization takes account of the economic, social, and environmental impact that it has, maximizing the benefits and minimizing the negative consequences of its operations” (Lowe and Marriott 2006: 215). Social Entrepreneurship - is a concept that can be defined as belonging to both profit and non-profit organizations where products and services are created with the intent of increasing “social wealth enhancement” (Teufel 2007: 11). Some definitions only include non-profit, but considering all of the needs within the world, defining it through product and service type seems more appropriate, regardless of the benefit to the entrepreneur. Innovation - “a process by which opportunities are identified and exploited and it requires the commitment of enterprising people” (Lowe and Marriott 2006: 32). Entrepreneurship - “the pursuit of opportunity without regard to resources currently controlled” (Lowe and Marriott 2006: 49). Enterprise - “the ability to handle uncertainty and respond positively to change, to create and implement new ideas and new ways of doing things, to make reasonable risk/reward assessments and act upon them in a variety of contexts, both personal and work” (Lowe and Marriott 2006: 104). Public Sphere - the space of culture and society in which activity affects across familial and community lines, creating action that affects the whole rather than the individual. 2. Introduction With the recent economic crisis and the nature of global environmental issues rising to the surface, and with the addition of so many social problems emerging in a world that is becoming ever more globally centralized, entrepreneurial efforts through innovative solutions provide a resource to both support the issues that represent deep needs for solutions, as well create a financial opportunity for those who have concepts to increase an aspect of the health of the world. Opportunities that arise through innovations that solve problems create jobs, support human life, and advance civilization. In addition, those types of innovations that are created with a socially responsible solution in mind provide for a more enlightened advancement of civilization, while supporting the true needs of humanity over simply just the financial needs. Entrepreneurial efforts, at their basic level, are the needs that someone has to build and grow a business that provides financial compensation for their efforts. Money is not always the driving force, neither is the concept of being an owner, but those two aspects will always be a part of being a entrepreneur. There are times when it is the product, the innovation that drives a person to enter into an entrepreneurial phase, thus the need to achieve and create supersedes the need for profit. In many of the more altruistic innovations that have come on the market, the need to service a socially responsible demand has been the driving force behind the product. This type of entrepreneurship has the consequence, more often, of creating a high level of product when the business end of the process is well balanced In the end, it is the business end of a company that will support its success, not the value of the product. The product could be something that will cure world hunger, but if no one is developing it, capitalizing it, and promoting it into the hands of the right people, the idea will die without fixing the problems that it had been designed to address. It is great if a person develops the cure for cancer, but if it is done in a basement lab and no one finds out about it - if it is never produced, packaged, and sold - it will be lost. Innovation must come with proper business sense or it will not enter into the conscious of culture. Without proper capitalization, good decision making skills, and proper connections, an idea will die before it ever reaches the market. 3. Social Problems and Innovative Solutions Bornsteins and Davis (2010: xvii) suggest that the world has changed dramatically since the events of the bombing of the World Trade Center in the United States as it has become painfully clear that individuals can have a high impact on the political, economic, and social structures of the world through calculated events. The resulting social shift has indicated that one person or a small group of people can have a high impact with destructive intentions, but the message can also provide context for the ability of an individual or small group to have an impact that is not of a destructive, but of a constructive nature. In order to meet problems, to define new spaces of thinking in which ideas can create meaningful change, a person must be able to see needs and then create connections between what is possible and what must be done to create a solution. Innovations can take place through new opportunities, through the exploitation of new technologies, the growth of new markets, and the expansion of an existing market (Bessant and Tidd 2007: 6). In a new world where an individual can create great change, the imperative exists for resources of how to bring ideas to the pubic sphere to be readily available. Learning outcomes from easily accessible information provides for innovation to meet the needs that they can fulfill, thus increasing the social wealth. 3.1 Companies that have Contributed and Succeeded Companies that have created innovations through ideas, commitments, and resources to socially responsible avenues of business pursuit have provided examples of how to frame social consciousness within the public sphere. Acumen Fund is a non-profit organization that provides venture capital for companies with ideas and innovations that are concerned with addressing global poverty. The fund was founded by Jacqueline Novogratz and was begun in 2001. The fund was created to provide “socially conscious investing” in businesses and non-profit ideas (Social Earth 2011). The Carbon Advice Group provides a consulting service to companies in order to help them reduce their carbon footprint on the world. The company is a for profit company that measures the level of impact that a business is creating and then provides for advice that includes solutions for reducing the impact that a business has on the environment. The company was founded by Mathew Sullivan and Murray Newlands and operates out of the United Kingdom (Social Earth 2011). Charity: Water, is a non-profit company that has taken the low rate of available clean water in the world, measuring at 1 out of every 6 people who do not have clean, untainted water readily available. The problem is a severe situation and quite possible under addressed. However, 80% of all illnesses in underdeveloped nations are caused from a lack of clean drinking water. There are 42,000 people per week, most of which are under the age of 5, who die from the consequences of a lack of clean water. The concept is that for a low donation of 20 US dollars, a person can provide a village with a well and pump that can bring clean water to its inhabitants. Since its beginnings in 2006, the company has created 1,247 wells which have serviced 650,000 people (Social Earth 2011). Future Farm Food and Fuel is a company that utilizes waste streams to create food and fuel on farms, creating a resource management system that utilizes new technologies to help farms to reduce resource consumption. Founded in 2007 in the United States, the company is a for profit company that is using its ideas to support and provide farming solutions (Social Earth) 3.2 Profit or Non-profit Choices Companies have emerged that are both non-profit and for profit that can create a great deal of change within the world. The companies are designed around the idea, their choice for a profit or non-profit dependent upon the way in which the company responds to the solution that has been determined. Powell and Steinberg provide a definition for a non-profit firm as framed through the Arrow-Hansmann model in that “they represent a solution to the ‘contract failure’ that arises in markets which consumers are at an informational disadvantage regarding the quality of service provided by firms” (Powell and Steinberg 2006: 153). This definition suggests that it is the consuming public that is responsible for not supporting a firm at a profit level, rather than the nature of the service or product which allows for the status to be at non-profit. Choosing a model of structure through the concept of profit creates benefits and deficits in regard to how a company is legally framed. The nature of the business, combined with the way in which financial considerations are supported will help to make the decision of how to frame the concept of profit. The type of service or product will suggest the most appropriate type of structure. As an example, Charity: Water is defined by altruistic intent, the endeavors to create clean water resources in developing nations supporting public and private donation potentials. As a non-profit, the company has greater credibility as a viable philanthropic beneficiary. If the company was a for profit company, it would not have the potential for funding that it has as it is structured as a non-profit company. Of course, such an endeavor works with for profit drilling companies within the developing companies that benefit from the project (Social Earth). Therefore, in being a non-profit structured conduit between donations and for profit companies in the benefiting nations, the company provides for funding projects that might otherwise not occur, but also injecting funds into local companies to help support their continued success. Therefore, the choices made between profit and non-profit are directly associated with the position of the company where donation is concerned. It is also made in association with the legal benefits that will result from a non-profit structure is concerned. When a company chooses to be non-profit, benefits will emerge that provide greater latitude for how a company is financially supported, but will create a system in which public access to records means that the company is an open system and must be maintained at a high level of attention to requirements that structure non-profits as defined through its legal structure. Of course, the simplest choice towards being a profit company is in the intent of the founder of an organization. If the founder has decided to make a living off of his or her innovation, a profit structure will be the most appropriate structure. While administrators can receive compensation for their work in a non-profit, if it is run with the intent of its purpose at the forefront, financial remuneration will not always be available. However, if it is the intent of the social entrepreneur to also provide a living for themselves through the development of a business, a for profit structure will be put into place. It is important to note that a for profit structure for a business that highlights a socially responsible service or product does not diminish the contribution of the innovation that has been brought into the public sphere. Profiting from a product stimulates the economy and helps to provide a contribution to the socio-economic plane of culture, thus it should never be considered greedy to create a living off of an idea just because it also provides an addition to the social wealth of society. Too often there is a condemnation in concern for the idea of profit. Profit is part of the economic structure, therefore provides for a contribution to the public economic state. 4. Socially Responsible Innovation Part of the problem in creating socially responsible innovation is in the philosophical separation that has been defined through the concept that “philanthropy is philanthropy and business is business” (Saul 2011: 41). This idea suggests that philanthropic endeavors are above the concept of business, thus the idea of attaching profit to them will diminish the value of their contribution. Unfortunately, in a world looking for solutions, it might be necessary to adjust this type of thinking. Jason Saul (2011: 41) uses the example of how when he wanted to open a bank that had a socially responsible message, he had difficulty getting financers to understand that he wanted a for profit business with a socially responsible mission. The conversation went in circles as he had to repeatedly explain that his profits would not be going to charity and that the mission of the business was not exclusive of the idea of profit. Saul (2011: 41) goes on to describe the strategies of Pfizer where their medications were defined in emerging markets across the world. They state that the intent would be “meeting the diverse medical needs of patients in Emerging Markets around the world in an innovative, socially responsible and commercially viable manner”. This type of thinking suggests that businesses are starting to understand that the marriage of innovation and commercial success is not exclusive to social responsibility. It is another element of the nature of business in a world that has problems that must be addressed during the development of a product or service. 4.1 Social Problems Social problems that might be addressed by an innovative solution might include aspects of global deficits such as hunger, clean water, housing, and food production. In addition, such problems as violence against women, child abuse, and education can be addressed as social problems. Social problems are defined by their impact across a demographic. As an example, hunger affects a region of the world and is defined by the social class in which the lack of food is experienced. Innovations that address these problems provide a service to the global community. Saul (2011: xi) defines the integration of entrepreneurship and socially responsive innovation as “ working in innovative ways that also drive business results”. Business results can range from straight forward profit to public relations through philanthropic use of resources towards providing a service outside of the profit sector of a business. An example of this can be found through the example of soap companies who educate children on proper hygiene (Saul 2011: xi). 4.2 Environmental Problems Industries have emerged in the last ten years that target ‘green’ markets through natural and organic products that leave a lower impact on the environment. In Britain, the green consumer is identified as female, living in a rural environment, and middle aged (Agarwal 2005: 110). However, this is shifting as a larger demographic is emerging through those with more affluent incomes that can indulge in the higher prices of products that are more expensive to manufacture. In addressing the needs of the environment, a thriving market has emerged which is supporting innovations, but is sometimes to costly to be used across socio-economic classes. The next innovation might be to include cost effective ways to support the environment that crosses socio-economic classes, thus creating genuine reductions in environmental impact. 6. Conclusions Participating in social entrepreneurship through supporting innovations that create positive change for needs through solutions to problems that impact social or environmental issues places an entrepreneur at the center of an operation that contributes to the social wealth of society. Because of the philosophical shifts in the importance of the individual, society has become aware that the power of the individual can make radical change. Thus, entrepreneurial efforts can achieve great things, even when spearheaded by only one individual. This shift may have been preceded by the actions of a fanatical fringe group as political, economic, and social structures were transformed after the events in the United States in New York on September 11, 2001, but the cultural shift in attitude towards the power of the individual has provided a context in which the entrepreneur is given more latitude in which to provide solutions that can alter the state of a global problem. 7. Recommendations Social entrepreneurship models should be a central concern for innovators as they position their products or services in global or regional markets. Through the use of socially responsible missions, the nature of the efforts can be directed towards using innovations for positive contributions to social wealth. Solid business structures and models provide a foundation for the building of a good business, thus an idea can become part of the social sphere through the use of good business concepts. Without a good structure, an idea will never become a part of the solution to a problem. Therefore, the best thing that an entrepreneur can do to service an innovation is to become educated in the legal and structural requirements to opening a business. In addition, researching proper capitalization will provide for the best possible choices to be made for supporting the enterprise, thus creating a better hope for success. Making solid choices between a profit or non-profit structure will be a good start in giving the proper support to an innovative idea. Through the use of innovations that support social solutions and solid business decisions, an idea can change the world. References Agarwal, S. K. 2005. Green management. New Delhi: A.P.H. Publishing Corp. Bessant, J. R., and Joseph Tidd. 2007. Innovation and entrepreneurship. Chichester, Angleterre: John Wiley & Sons. Bornstein, David, and Susan Davis. (2010). Social entrepreneurship: what everyone needs to know. New York: Oxford University Press. Brown, Terrence E., and J. M. Ulijn. (2004). Innovation, entrepreneurship and culture: the interaction between technology, progress and economic growth. Cheltenham (UK): E. Elgar. Lowe, Robin, and Sue Marriott. (2006). Enterprise: Entrepreneurship and innovation : Concepts, contexts and commercialization. Oxford: Butterworth-Heinemann. Saul, Jason. 2011. Social innovation, Inc.: 5 strategies for driving business growth through social change. San Francisco: Jossey-Bass. Social Earth. (2011). Company List. Social Earth. Accessed from http://www.socialearth.org/company-list Powell, Walter W., and Richard Steinberg. 2006. The nonprofit sector: a research handbook. New Haven: Yale University Press. Teufel, Frederik. 2007. Social entrepreneurship: understanding a phenomenon and its nexus with current changes in philanthropy. Reflection Running a business is one of the more common dreams that one can find across demographic lines. However, it takes a certain type of person to have the discipline and wisdom to create a solid business framework in which to find success. In addition, an idea is needed that will promote real change in order to really find a place within the ranks of entrepreneurs. Knowledge is the key to success in any business endeavor. Without a specific understanding of how to create the best possible structure to support entrepreneurial efforts, it is more likely that a business will fail. However, it is likely that the requirement that is most important in starting up an entrepreneurial endeavor would be passion for the product of service that will be offered. With passion comes the drive to continue the activity of the business, thus a person will seek out proper information in order to create a good business. This is why many people who own businesses do so without any formal education. They have the passion for what they desire, thus they educate themselves in order to have the best possible success. Therefore, being passionate about the product or service that will be presented is the most important part of being an entrepreneur. No matter how much education that a person has attained, without that passion, it is unlikely that a business will succeed. The desire for success is not enough, but the passion and belief is what is needed to truly become a successful entrepreneur. I believe that I would be a successful entrepreneur as long as I could find a product or service that moved me. Through the passion that I could develop for a product or service, the essential step would be taken in creating a successful enterprise. When I can say “this is where I want to focus my life”, then I will feel that I would want to start a business. The second most important step in becoming an entrepreneur is in being informed and educated in business development. A general knowledge must be gained, then an individual knowledge of the requirements of the industry. Through my educational efforts I have attained a solid understanding of what is required in developing a business. When I find a passion, I believe I would have the education to know where to look to find resources to help develop an industry specific business plan. In becoming an entrepreneur, I would need to find a passion for some form of socially responsible endeavor that would help some aspect of the world towards a solution. Through my natural idealism, I believe that the information that I have seen in this educational experience has provided a natural inclination towards wanting to find some aspect of the world to improve. When I find that aspect, I will know that it Is time to open a business that will improve social standards, whether those standards are within the global stage, or regionally relevant. I believe I would prefer to own my business, to be the entrepreneur, and to have a hands on approach to how the business is developed. Once developed, my role would be to continue the innovative aspect, leaving the administrative to others as I continue to design towards a better world. Read More