Social entrepreneurship is the process of pursuing innovative solutions to social problems.^[1] More specifically, social entrepreneurs adopt a mission to create and sustain social value. They draw upon appropriate thinking in both the business and nonprofit worlds and operate in a variety of organizations: large and small; new and old; religious and secular; nonprofit, for-profit, and hybrid.^[2]

Business entrepreneurs typically measure performance in profit and return, but social entrepreneurs also take into account a positive return to society. Social entrepreneurship typically furthers broad social, cultural, and environmental goals and commonly, is associated with the voluntary and nonprofit sectors.^[3] At times, profit also may be a consideration for certain companies or other social enterprises.

Social entrepreneurship practiced in a world or international context is called international social entrepreneurship.^[4]

Modern definition

There are continuing arguments over precisely who counts as a social entrepreneur. Thus far, there has been no consensus on the definition of social entrepreneurship, so many different sorts of fields and disciplines are associated with social entrepreneurship. Philanthropists, social activists, environmentalists, and other socially-oriented practitioners are referred to as social entrepreneurs. For a clearer definition of what social entrepreneurship entails, it is necessary to set the function of social entrepreneurship apart from other socially oriented activities and identify the boundaries within which social entrepreneurs operate.^[5] Some have advocated restricting the term to founders of organizations that primarily rely on earned income–meaning income earned directly from paying consumers. Others have extended this to include contracted work for public authorities, while still others include grants and donations.

Social entrepreneurship in modern society offers an altruistic form of entrepreneurship that focuses on the benefits that society may reap.^[6] Simply put, entrepreneurship becomes a social endeavor when it transforms social capital in a way that affects society positively.^[7] It is viewed as advantageous because the success of social entrepreneurship depends on many factors related to social impact that traditional corporate businesses do not prioritize. Social entrepreneurs recognize immediate social problems, but also seek to understand the broader context of an issue that crosses disciplines, fields, and theories.^[7] Gaining a larger understanding of how an issue relates to society allows social entrepreneurs to develop innovative solutions and mobilize available resources to affect the greater global society. Unlike traditional corporate businesses, social entrepreneurship ventures focus on maximizing gains in social satisfaction, rather than maximizing profit gains.^[8] Both private and public agencies worldwide have had billion-dollar initiatives to empower deprived communities and individuals.^[7] Such support from organizations in society, such as government-aid agencies or private firms, may catalyze innovative ideas to reach a larger audience.

Prominent innovators associated with the term include Pakistani Akhter Hameed Khan and Bangladeshi Muhammad Yunus. Yunus was the founder of Grameen Bank, which pioneered the concept of microcredit for supporting innovators in multiple developing countries in Asia, Africa, and Latin America.^[9] He received a Nobel Peace Prize for his efforts and also inspired programs such as the Infolady Social Entrepreneurship Programme.^[10][11][12] Others, such as Stephen Goldsmith, former Indianapolis mayor, focused social efforts on a more local level, engaging the private sector in providing many city services.^[13][14]

History

Social entrepreneurship is distinct from the concept of entrepreneurship, yet still shares several similarities with the classic concept. Jean-Baptiste Say, a French economist, defined an entrepreneur as a person who “undertakes” an idea and shifts perspectives in a way that it alters the effect that an idea has on society.^[9] The difference between “entrepreneurship” and “social entrepreneurship”, however, stems from the purpose of a creation. Social entrepreneurs seek to transform societies at large, rather than transforming their profit margin, as classic entrepreneurs typically seek to do.

The concept of “social entrepreneurship” is not a novel idea, but it recently has become more popular among society and academic research, notably after the publication of “The Rise of the Social Entrepreneur” by Charles Leadbeater.^[6] Many activities related to community development and higher social purpose fall within the modern definition of social entrepreneurship. Despite the established definition nowadays, social entrepreneurship remains a difficult concept to define, since it may be manifested in multiple forms.^[15] A broad definition of the concept allows interdisciplinary research efforts to understand further and constantly challenge the notion behind social entrepreneurship. No matter in which sector of society certain organizations are (i.e. corporations or unincorporated associations and societies), social entrepreneurship focuses on the social impact that an endeavor carries.^[6] Whether social entrepreneurship is altruistic or not is less important than the effect it has on society.

The terms social entrepreneur and social entrepreneurship were used first in the literature on social change in the 1960s and 1970s.^[16] The terms came into widespread use in the 1980s and 1990s, promoted by Bill Drayton the founder of Ashoka: Innovators for the Public,^[17] and others such as Charles Leadbeater.^[18] From the 1950s to the 1990s Michael Young was a leading promoter of social entrepreneurship and in the 1980s, was described by Professor Daniel Bell at Harvard as 'the world's most successful entrepreneur of social enterprises' because of his role in creating more than sixty new organizations worldwide, including the School for Social Entrepreneurs (SSE) which exists in the UK, Australia, and Canada and which supports individuals to realize their potential and to establish, scale, and sustain, social enterprises and social businesses. Another notable British social entrepreneur is Andrew Mawson OBE, who was given a peerage in 2007 because of his regeneration work including the Bromley by Bow Centre in East London.

Although the terms are relatively new, social entrepreneurs and social entrepreneurship may be found throughout history. A list of a few noteworthy people whose work exemplifies the modern definition of "social entrepreneurship" includes Florence Nightingale, founder of the first nursing school and developer of modern nursing practices; Robert Owen, founder of the cooperative movement; and Vinoba Bhave, founder of India's Land Gift Movement. During the nineteenth and twentieth centuries some of the most successful social entrepreneurs effectively straddled the civic, governmental, and business worlds. Such pioneers promoted ideas that were taken up by mainstream public services in welfare, schools, and health care.

Current practice

Major organizations

Groups focused on social entrepreneurship may be divided into several categories: community-based enterprises, socially responsible enterprises, social services industry professionals, and socio-economic enterprises.^[6] Community-based enterprises are based on the social ventures of an entire community that uses its culture and capital to empower itself as an entire enterprise.^[19] Socially responsible enterprises focus on creating sustainable development through their initiatives that focus mostly on societal gains.^[6] Social service industry professionals work specifically in the sector of social services to expand social capitol for different individuals, communities, and organizations. Socio-economic enterprises include corporations that balance earning profits and nonprofit social change for communities. In fact, there are even organizations dedicated to empowering social entrepreneurs, connecting them with mentors, strengthening their enterprise models, and preparing them for capital investments. These accelerators help take social entrepreneurs to global scale, the earliest pioneer accelerator is the Global Social Benefit Institute (GSBI®).

One well-known contemporary social entrepreneur is Muhammad Yunus, founder and manager of Grameen Bank and its growing family of social venture businesses. He is known as the “father of microcredit,” and established the microfinance revolution in helping millions of people in global rural communities access small loans.^[9] For his work, he was awarded a Nobel Peace Prize in 2006.^[20] The work that Yunus did through Grameen Bank echoes a theme among modern day social entrepreneurs that emphasizes the enormous synergies and benefits that arise when business principles are unified with social ventures.^[21] Larger countries in Europe and South America have tended to work more closely with public organizations at both the national and local level.

The George Foundation's Women's Empowerment program empowers women by providing education, cooperative farming, vocational training, savings planning, and business development. In 2006 the cooperative farming program, Baldev Farms, was the second largest banana grower in South India with 250 acres (1.0 km²) under cultivation.^[22] Profits from the farm are used for improving the economic status of the workers and for running the other charitable activities of the foundation.^[22][23]

Some individuals have created for-profit and for-a-difference organizations. A recent example is Vikram Akula, the McKinsey & Company alumnus who started a microcredit venture, SKS Microfinance, in villages of Indian state of Andhra Pradesh. Although this venture is for profit, it has initiated a sharp social change amongst poor women from villages. For example, a Ramanujan Bose Awardee,^[24] Dr. Akash S. Rajpal was the founder of Ekohealth. He serves as an example of a social entrepreneur in healthcare. He has been working in India in the field of healthcare against fee splitting and creating a unique ethical facilitation and aggregation services for healthcare providers and price comparison services for patients,^{[25][26][27][28][29]} and to help them reduce health care costs.

Types of social entrepreneurship

At the heart of social entrepreneurship is the innovation of novel social capital to create a more community-based agency for obtaining assets in individual lives.^[30] Private corporations focused solely on profit and nonprofit organizations (NGOs) that are focused solely on social impact are two extremes in the nuanced spectrum of social entrepreneurship, but other types of social entrepreneurs with different visions for their enterprises exist.^[6] This may range from individuals solely seeking to allow a society to profit although there is loss to individuals, to individuals who focus on simultaneously profiting both society and themselves. In either case, individuals are at risk for personal profit loss. There is a trend in organizations, especially private organizations that combine traditional interest in corporate profit gain with a desire to create social enterprises that have meaningful social impacts that are innovative in society. The complexity of defining the type of social entrepreneurship also may increase when boundaries cross. For example, certain nonprofit organizations may have initiatives that generate revenue, but only for the purpose of their social enterprise. Additionally, for-profit organizations may be focused primarily on gaining profit, but arrange some of their profits to benefit social activities.^[6]

International presence

Organizations such as Ashoka, the Skoll Foundation, the Omidyar Network, the Schwab Foundation for Social Entrepreneurship, Athgo, New Profit Inc., National Social Entrepreneurship Forum, Echoing Green, and the Global Social Benefit Institute among others, focus on highlighting these hidden change-makers who are scattered throughout the world, and providing various levels of resources to advance their initiatives.Cite error: The <ref> tag has too many names (see the help page). Then, they are connected through the annual Skoll World Forum and Social Edge, the Foundation's online community, and it highlights their work through partnerships with the Sundance Institute, Frontline World, NewsHour with Jim Lehrer, and other film and broadcast outlets. Skoll also supports the field of social entrepreneurship, including through Skoll's founding of the Skoll Centre for Social Entrepreneurship at the Said Business School at Oxford University. Social entrepreneurial business in the USA often sell products that donate either a portion, or all of their profits, to portions of the developing world. For example, NIKA Water Company sells bottled water in the USA and uses 100% of its profits to bring clean water to those in the developing world, and Newman's Own donates 100% of its profits to support various educational charities.

Role of technology

The Internet and social networking websites have been pivotal resources for the success and collaboration of many social entrepreneurs.^[31] In the twenty-first century, the Internet has become especially useful in disseminating information in short amounts of time. In addition to this, the Internet allows for the pooling of design resources using open source principles. These media allow ideas to be heard by broader audiences, help networks and investors to develop globally, and to achieve their goals with little or no start-up capital. For example, the rise of open-source appropriate technology as a sustainable development paradigm enables people all over the world to collaborate on solving local problems just as open source software development leverages collaboration.^[32]

For example, Blake Mycoskie extensively used the Internet in piloting TOMS Shoes, a company that gives a pair of shoes to a person in need for every pair of shoes purchased.^[33] Another example would be the U.S.-based nonprofit Zidisha leverages the recent spread of internet and mobile technologies in developing technologies to provide an eBay-style microlending platform where disadvantaged individuals in developing countries may interact directly with individual "peer-to-peer" lenders worldwide, sourcing small business loans at lower cost than ever before has been possible in most developing countries.^[34]

Another example would be the award winning Infolady Social Entrepreneurship Programme (ISEP) of Dnet (A Social Enterprise) where women riding bicycles take the internet and other advanced technologies to the rural areas of Bangladesh.

Public opinion

Controversy

Many initiatives carried out by social entrepreneurs, while innovative, have had problems becoming sustainable and effective initiatives that ultimately are able to branch out and reach the larger society as a whole (versus a small community or group of people).^[7] Studies over the qualities encompassed in a social entrepreneur have shown that very few individuals possess the talent and skills of entrepreneurs with a primarily socially-motivated outlook.^[35] Thus, compromises in social initiatives developed, often do not reach large audiences. Since the concept of social entrepreneurship has been popularized only recently, some advocates suggest that there needs to be some standardization of the process in scaling up social endeavors to increase impact across the globe.^[7]

A need for policymakers around the globe to understand social initiatives further is useful in increasing sustainability, effectiveness, and efficiency.^[6] Involvement and collaboration between private corporations and government agencies allow for increased monetary gain for carrying out initiatives, increased accountability on both ends, and increased connections with communities, individuals, or agencies in need. For example, private organizations or nonprofit organizations have tackled unemployment issues in communities in the past.^[36] Only short-term solutions are presented, however, or solutions are unable to scale up to a larger degree in order to maximize the number of people affected.^[36] Government policies in the financial sector are able to tackle such a large issue; however, the little collaboration that has occurred between the two modes that serve society has stagnated the effectiveness of social entrepreneurship. This stagnation primarily rests in the motives and goals of social enterprises and that of those in policymaking.^[37] Those in policymaking naturally tend to have different priorities than social entrepreneurs, resulting in slow growth and expansion of social initiatives.

Since social entrepreneurship has only recently started to gain momentum, current social entrepreneurs are encouraging social advocates and activists to step up as innovative social entrepreneurs.^[37] Increasing the scope of social entrepreneurship naturally increases the likelihood of an efficient, sustainable, and effective initiative. Increased participation draws more attention, especially from policymakers and privately owned corporations that may help shape social entrepreneurs through policy changes, training programs, and leadership development focused on developing social entrepreneurs.