Social entrepreneurship is the intersection of business, management, and social good. It typically involves social enterprise developing and implementing a socially conscious, innovative, and effective solution that acts as value-adding opportunities while creating a positive impact on people.
At its core, the concept combines a business’s fundamental purpose with its capacity to impact society positively. It could be done through operating in fair trade markets, employing community members in meaningful ways, or bridging economic gaps between nations through global sourcing initiatives.
Social Entrepreneurship is not anti-capitalism. It is about tapping into capitalism’s strengths while mitigating some of its weaknesses.
Social entrepreneurship initially developed out of the social sector. It was primarily a way to fund and scale organizations working on health, education, environmental issues, underserved communities, and gender equity issues. But over the years, social entrepreneurship has gone mainstream, and now many for-profit organizations are integrating elements of social entrepreneurship into their business models, disrupting the status quo.
The term “social entrepreneurship” is becoming increasingly more popular. Although, there is much debate over the definition of social entrepreneurship and what it means to be a social entrepreneur. There are many different definitions of what social entrepreneurship encompasses, but the concept revolves around turning challenges into opportunities while simultaneously addressing a societal need or gap. Social entrepreneurship is about using business approaches to solve social challenges. It uses market-based mechanisms and other tools to create a more significant social impact.
An excellent way to have a better understanding of Social entrepreneurship is to define different areas, concepts, and disciplines in this field:
What are social issues?
In the broadest possible sense of the term, social issues are problems that society faces. These can include poverty and access to employment, crime and safety, education and training, or health care and quality of life. They may arise from the actions of individuals or from the development of society itself.
What is a Business Model?
A business model is how a company generates and delivers value to its customers and creates profits for its shareholders. Although specific definitions are hard to come by, generally, a business model tells how the company makes money—in other words, what it does that provides value to someone. It also includes where it manufactures or sources its products, develops and markets them, and what customer base it targets.
What is a Business Plan?
A business plan outlines a business owner’s vision and the steps to make that a reality. It presents the critical assumptions, risks, goals, financials, and other operations and management technical aspects.
A business plan can be a starting point for decision-making but should not be part of the decision-making process. It is meant to guide you in developing your business plan. The most important part of the plan is to create a comprehensive financial model that illustrates how your project will work in practice, where you stand today, and where you want to go. This model needs to include assumptions, estimated outcomes, and projected cash inflows. It also presents information such as competitors, markets, and opportunities.
What is a social enterprise?
A social enterprise or a social entrepreneurship venture, is a company focused on solving a social problem for the people in need. It has an explicit aim to create a social impact. Examples of such enterprises are nonprofit organizations that offer nutrition, clothing, and education to the less fortunate to help them lead better lives.
What is the theory of change?
A theory of change is a conceptual model that describes the factors underpinning the dynamics of change in a specific context and their progression over time. It is based on actors, processes, relationships, and contextual factors that lead to change, including the intervention’s fundamental assumptions.
The theory of change is an essential tool for the planning and monitoring of social development interventions as part of a social innovation process. It can be applied in a variety of development contexts. The theory of change is commonly presented as text or a graphic representation. Although any diagram can be used, the visual representation may be a causal loop diagram or causal map.
What is impact investing?
Impact Investing is the act of taking a step beyond investing, where companies, foundations, and governments consider the environmental and social ramifications of their investments. Impact investors seek to invest in companies or projects with a positive, measurable impact on society and the environment.
Impact investing can be a great way to diversify a portfolio and potentially grow more than just your investment income. It offers some diversification benefits as private equity but with the added benefit of having a broader social impact on public safety, poverty reduction, education, and health.
What are social ventures?
Social ventures are profit businesses that pursue a social mission and pursue profit with innovative solutions. These enterprises expand the reach of social change efforts by harnessing social innovation power to create jobs and economic development. They also engage new sources of capital for solving social problems in a sustainable and replicable way.
Venture philanthropy, a subset of social venture, is private investors funding for-profit companies that seek to impact society positively. Venture philanthropists invest in companies that can generate market value in the form of economic growth. In turn, these companies must then use their profits to achieve their social missions.
What is Social Responsibility?
Social responsibility (also known as corporate social responsibility or CSR) is how a business establishes and maintains a relationship with society, the stakeholders, and employees. Social responsibility defines how companies should act according to their stakeholders’ values and the values they are willing to have. Social responsibility can influence consumers and other stakeholders, as well.
On a local level, social responsibility is a way for companies to engage with their communities to contribute to their economic, environmental, and social development. On a global level, it is an obligation for companies listed on stock exchanges to generate a balance between maximizing value for shareholders and increasing long-term shareholder value by acting responsibly.
Well, there are certainly many different ways to start and run a business that could make a difference, but some of the most well-known leaders in this field did one thing in particular: become an expert first. For instance, Muhammad Yunus started as a textile designer for Grameen Bank before transitioning to pioneering work with microcredit. Similarly, it took Patagonia founder Yvon Chouinard years to perfect his outdoor clothing and gear business before turning to fight the exploitation of the natural environment.
And this is one of the big takeaways from social entrepreneurship, that you’ll only be successful if you have a strong foundation and understanding in a related field, whether it’s sciences, medicine, engineering, law, or something else. The key is not what you study but that you get good at something.
Peter F. Drucker, the founder of modern management, defined social entrepreneurship as creating institutions that serve millions of people so well that they will pay for it voluntarily. Drucker distinguishes between social entrepreneurs and other philanthropic entrepreneurs by understanding that their aims are not merely benevolent but also visionary; in his words, they “aim at nothing less than changing the world.”
Social entrepreneurship is not a new idea. In the early 20th century, social entrepreneurs started organizations such as “The Grameen Bank” in Bangladesh. Social entrepreneurship has been present historically, but it gained traction and popularity recently. There are currently few degree programs available for those interested in pursuing a career in social entrepreneurship. Although, there are social entrepreneurship tracks available at several business schools, including the Haas School of Business at UC Berkeley.
Management guru and author Peter Senge stated: “Social entrepreneurship is about making a profound difference globally. It cannot be only about making money. A higher purpose must drive it”.
Social entrepreneurship is dynamic and constantly evolving. It is an inclusive concept that has evolved from its early beginnings in the social sector. Social entrepreneurs need to think outside of the box, be creative, and take risks to push boundaries and create value where many have not gone before them. The world needs more social entrepreneurs to solve problems that major corporations or governments aren’t solving through new business models (Hybrid Model, for example). Social entrepreneurship and social entrepreneurship programs should be encouraged and supported to continue growing as a movement.
In conclusion, Social entrepreneurs apply business thinking to social problems. They use their intuition to understand the market, and they’re always looking for business opportunities to make a difference. Social Business entrepreneurs are leaders who see the big picture and are aware that they are making a difference by solving a problem and improving people’s lives.