Social Entrepreneurship: Meaning, characteristics & Examples – Given the world’s numerous social challenges, opportunities for social innovation and social entrepreneurship can be found in a variety of societal sectors.
Social entrepreneurship has developed as a promising field for long-term development, economic growth, and social inclusion.
Social Entrepreneurship Meaning
There are social entrepreneurs, social entrepreneurship, and social enterprise. The definition of social entrepreneur refers to the initiative’s founder, whereas social entrepreneurship is the process and social business is the actual consequence or social vehicle of the effort.
Social entrepreneurship is a method of creating economic prosperity while solving social challenges sustainably. It is a type of fusion of the business spirit and social components of society. One of the approaches that are predicted to eliminate social disparity in society is the development of a social entrepreneurship ecosystem in society.
Social entrepreneurship is gaining traction in a rapidly changing corporate world dominated by technology and innovation. It is a process in which social entrepreneurs can combine resources such as human, financial, and material resources in a creative way to service and satisfy an unmet social need that the traditional welfare system cannot meet.
A strong social mission is at the center of social entrepreneurship, with the secondary goal of producing a profit to support its operations. While most people identify entrepreneurship with the pursuit of commercial success, social entrepreneurship refers to corporate activity that aspires to have a beneficial social and environmental impact.
This capability has been encouraged from the public, private, and social spheres, with social entrepreneurship viewed as an alternative solution to the world’s major problems. It is a process that seeks possibilities to meet social problems and/or catalyze social change, thereby adding economic rewards to social entrepreneurs’ social missions.
Unlike nonprofit or charity organizations, social enterprises generate social value and address social problems while making a profit. It refers to persons or groups that engage in socially responsible entrepreneurship. It could include the following items:
- Non-profit organizations that use business experience to become self-sufficient in terms of grants and subsidies
- For-profit enterprises that use market-based strategies to solve persistent social, economic, and environmental problems.
- Organizations that combine social impact with a sustainable business plan are known as hybrid organizations.
Awareness of the SE process requires an awareness of the relationship between entrepreneurial and social orientation. When the foregoing components are combined, SE profits are mostly reinvested to sustain the pursued social goals rather than being addressed to satisfy the requirements of the shareholders and owners.
SE catalyzes social change, and social entrepreneurs do not intend to profit directly from their social projects. Every entrepreneurship serves a social purpose; nevertheless, SE differs from traditional entrepreneurship in that its primary goal is to create social value rather than private economic gains.
Overall, SE can be viewed as a novel activity to increase producer surplus by minimizing negative externalities and/or creating positive externalities through the integration of the essence of social and entrepreneurship frameworks.
If social entrepreneurship achieves a positive social impact, its objective is complete, prompting it to look for a means to scale the model. Traditional initiatives tend to be motivated by the diversification of the company’s services or goods, as well as the placement of its reputation, rather than by social change.
Social entrepreneurship uses business concepts to achieve social impacts, with social value created through innovative solutions that require few resources. Social value creation distinguishes social and commercial enterprises by implying fairness, honesty, altruism, freedom, and equality.
The key difference between a social entrepreneur and a commercial entrepreneur is in the emphasis placed on providing social value over economic gains. It was also noted that social entrepreneurs are not interested in short-term charity operations, but rather in long-term social projects that are integrated into their imaginative social missions. A social entrepreneur is motivated to launch a social venture by the pursuit of a social mission and, eventually, altering the social environment.
Read – Modern Entrepreneurship
Social Entrepreneurship Characteristics
Helps for Sustainable Development
The primary goal of social entrepreneurship is to promote sustainable growth over time. Whether the company’s goal is on enhancing disenfranchised individuals’ access to employment or lowering their carbon footprint, the focus on enhanced social outcomes promotes sustainable development for communities.
Many businesses are already doing this and working toward certain sustainable development goals without even realizing it. Companies are making decisions to lessen their environmental effect, while others are trying to eliminate poverty because they believe it is the moral thing to do.
Different Models can Adopt as a Social Entrepreneurship
- Nonprofit – A tax-exempt, non-profit organization that reinvests surplus funds back into the mission.
- Co-operative – A company run by and for its members. Co-ops include credit unions and community grocery businesses.
- Social purpose business – These companies are based on the concept of addressing a social mission.
- Social firm – Social enterprises hire those in the community who need work, such as at-risk youth.
- Socially responsible business – As part of their daily commercial activities, these organizations support social initiatives.
- For-profit business – These firms, perhaps the most ambiguous, are profit-driven but donate funds, raise awareness, or otherwise support causes.
Social Entrepreneurship Creates Social Values
This covers the fulfillment of basic human needs such as food, water, shelter, medical services, and education for underserved people and societies. To have an impact on social value, one must look beyond the local social concerns and grasp the many interdependencies that exist within the greater social system. Social influence can be accomplished by grasping the big picture. Social entrepreneurship blends commercial concepts with a desire to make a positive social impact. The value created by social companies in completing their social goal to assist alleviate societal problems and produce environmental advantages is referred to as a social impact.
Social Entrepreneurship Makes Community Impact
The major goal of building a social enterprise for social entrepreneurs is to produce long-term change in people’s lives. This transformation should occur at the community level rather than the individual level, with a focus on social impact rather than targeted results. Community development is critical in social entrepreneurship to meet unmet social demands in the market. To achieve the intended beneficial change in society, social entrepreneurs must maintain a strong focus on achieving their social goals while overcoming any financial restraints to become more sustainable.
Read – Eco Entrepreneurship
Social Entrepreneurship Requires Governmental Support
Social enterprises, on the other hand, cannot generate social change on their own. They require government assistance and rely on policies to help them develop. In comparison to governmental institutions, weak, unresponsive, and inefficient governmental institutions created the opportunity for social entrepreneurs to fill the social gap by being more market-oriented and flexible in utilizing more efficient business models. To effect societal change, a social entrepreneur will use a commercial acumen model. According to their report, non-profit organizations must adapt their structure to be more business-like to transition into social entrepreneurs.
Identifies and Fix Social Imbalances
Social entrepreneurship detects an imbalance that causes a group of people to be excluded or suffer. Then recognizes an opportunity to restore balance in the social system by alleviating the suffering of those negatively impacted by the unfair equilibrium. The ultimate goal is to improve the overall situation for everyone in the social system, not just the marginalized or affected group.
Social Entrepreneurship Is a Market-Based Development Strategy
Social entrepreneurship is a market-based development model for addressing social issues such as unemployment, a lack of livelihood and educational possibilities, and poor public health. By operationalizing business models that balance economic and social value creation, social businesses can overcome market shortcomings within a capitalist system.
Social Entrepreneurship Examples
To produce revenue, if not wealth, social enterprises devise innovative and people-friendly ways to effect constructive change in society. Their main goal distinguishes them from the corporate sector; they work for those living below the poverty line and provide flexible working settings. Let’s discuss some examples of social entrepreneurship that implemented in different parts of the world.
The Skoll Foundation – North America
The Skoll Foundation, founded by Jeff Skoll, the first president of eBay, supports social enterprises and highlights their work through partnerships with Sundance Institute and NewsHour with Jim Lehrer. Another social enterprise in the United States is NIKA Water Company. The company sells bottled water throughout the country and uses its income to supply clean water to underdeveloped countries. It invests its entire profit in the operation.
Grameen Bank – Bangladesh
Although the social enterprise is not a new concept, it just became popular in the 1960s. Social companies may have varied rules and regulations over the world, but their essential premise remains the same. Their ultimate goal is to serve the individuals at the bottom of the social pyramid. Muhammad Yunus founded the Grameen Bank in Bangladesh, a microfinance company that gives small loans to people living in rural regions without demanding collateral. The bank does not believe in charity, but rather in assisting people as part of an endeavor to break the cycle of poverty.
Muhammad Yunus, the founder of Grameen Bank and the inventor of microcredit, is a textbook example of social entrepreneurship. He observed a stable but undesirable equilibrium in which poor Bangladeshis had few alternatives for obtaining even small sums of credit. They could only borrow at exorbitant interest rates from local moneylenders because they could not qualify for loans through the regular banking system. They frequently resorted to begging on the streets. A perilous equilibrium existed, one that sustained and even exacerbated Bangladesh’s endemic poverty and misery.
Yunus challenged the system, demonstrating that the impoverished were excellent credit risks by lending $27 from his pocket to 42 women from the village of Jobra. All of the debts were repaid by the women. Yunus discovered that women invested in their ability to generate revenue with even little quantities of capital.
Women, for example, may tailor garments with a sewing machine, earning enough to repay the loan, buy food, educate their children, and pull themselves out of poverty. Grameen Bank survived by collecting interest on its loans and then reinvesting the proceeds to assist additional women. Yunus infused his venture with inspiration, creativity, direct action, courage, and fortitude, proving its viability and spawning a global network of other organizations that replicated or adapted his model to other countries and cultures, solidifying microcredit as a global industry over two decades.
Echoing Green – USA
Echoing Green is a non-profit organization based in New York that invests in the social sector. It has been working in this industry for the last twenty years, promoting and assisting young entrepreneurs to start new businesses.
By 2023, +901 leaders have launched ideas with their assistance, they have made an impact in over 86 countries, and they have invested more than $54 million in Fellows. They are creating a vibrant network of corporate leaders, social innovators, institutions, and investors who are dedicated to addressing global concerns.
Rang De – India
Rang De is a non-profit internet company in India that provides small loans to persons looking to start a new business or expand an existing one. It is a successful endeavor to bring together two sections of India, one of which is progressing effectively while the other is being left out owing to a lack of resources. Rang De, founded in 2006 by Ramakrishna NK and Smita Ram, is now a major internet platform in the country. Rang De supplied credit to 65,000 families with microloans between 2008 and 2017. Over 80 crores were disbursed with the help of over 15000 social investors.
The Schwab Foundation for Social Entrepreneurship, in partnership with the World Economic Forum, is a global platform that develops the world’s top models of sustainable social innovation. For more than 20 years, the Schwab Foundation has selected and curated a network of over 400 late-stage social innovators working in 190 countries, as well as highlighted leading social innovation models to top business and government decision-makers.
The Schwab Foundation’s overarching goal is to assist social innovators in collaboratively creating a more just, equitable, and sustainable society. They assist change-makers from all over the world in addressing systemic issues that fuel inequality and exclusion, allowing them to bring about meaningful change for people.
Sundance Film Festival
Robert Redford founded the Institute in 1981 to support independence, risk-taking, and new voices in American cinema. That year, ten budding filmmakers were invited to the Sundance Resort in the Utah highlands, where they collaborated with top writers, directors, and performers to produce their original independent movies.
Every January, the Sundance Film Festival offers a global audience to pioneering independent film work and new talent. In addition to the Festival, the Sundance Institute sponsors a number of public events in the United States and throughout the world that bring together artists and viewers to expose original perspectives, inspire new ideas, and develop a community centered on independent storytelling. This is an outstanding example of social entrepreneurship.
One World Health
Victoria Hale, a researcher for a pharmaceutical business at the time, discovered the following worrisome statistics: the developing world suffers 90% of the world’s disease burden, while just 3% of pharmaceutical R&D spending is dedicated toward those ailments. The remainder is used to cure the diseases of the wealthy. Such a worry could have been viewed as an unmet societal demand, causing a sense of unfairness. Hale decided to launch a social enterprise to address this problem. Her ultimate goal is to offer much-needed medicine to individuals who may not be able to purchase it. In doing so, she contributes to the resolution of a social issue.
To address the disparity she had witnessed alongside Ahvie Herskowitz as her partner, Hale launched the OneWorld Health Institute in 2000. The next year, OneWorld Health acquired tax-exempt status, making it the first nonprofit pharmaceutical company in the United States. The Economist magazine awarded her the Economist Innovation Award for Social and Economic Innovation in 2005. She was named one of Glamour magazine’s Women of the Year in 2007 for her efforts in creating and providing pharmaceutical care to the world’s impoverished.
Entrepreneurship is for finding current problems and solving the problems in a creative way. Social entrepreneurship is one of the special areas of entrepreneurship that helps to overcome social problems that most people will not like to solve.
Through this article, we discussed the meaning of social entrepreneurship. Then we discussed its special characteristics. Helps for Sustainable Development, Creates Social Values, Makes a Community Impact, Identifies and Fix Social Imbalances, and Market-Based Development Strategy are some of those characteristics we discussed in this article.
The Skoll Foundation in North America, Grameen Bank in Bangladesh, Echoing Green in the USA, Schwab Foundation, Sundance Film Festival, and One World Health are examples that we discussed for social entrepreneurship. So what are your views on social entrepreneurship? Plz, write down them in our comment section.