Reading questions week 8
Costanza et al. (2014)
Why is GDP not enough?
GDP is not enough as it mainly measures market transactions and treats all paid activity as positive, ignoring social costs,
environmental impacts and the difference in the distribution of the income.
What alternatives do the authors discuss?
They discuss alternative measures such as: adjusted economic measures (Index of sustainable economic welfare and the
Genuine Progress Indicator GPI) they correct normal spending with differences, social costs etc.
Second they discuss subjective well-being measures. And third they discuss composite indices; this combines many
dimensions. It focuses more on people’s satisfaction and environmental sustainability instead of production.
If GDP is so flawed, why does it persist?
It keeps being used because GDP is pretty simple, familiar and we have always used it. It is ‘entrenched’ in our world for
decades + there are vested interests and besides that there is no single agreed alternative. We have many alternative
indicators but we lack a clear replacement. Lastly there is a bureaucratic inertia → changing the official indicator is a slow
and difficult process.
Santos (2012)
What is the difference between value creation and value capture?
Value creation means generating benefits for others (how much good you bring to stakeholders and society).
Value capture means keeping a share of that created value for yourself in the form of revenue, profit or other benefits for
owners and investors (how much of that good you appropriate for your own organization and its investors).
What is the distinctive domain of social entrepreneurship?
Dealing with neglected problems that still create a lot of benefits for society. Think of issues that markets and governments
don’t really solve, even though fixing them would benefit people. Solving these problems would have many positive
externalities, but however it is hard to make money from all the people that would benefit from it. This is why normal
businesses don’t really focus on them. Social entrepreneurship focuses mainly on creating value for society and try to solve
these neglected issues, only earning enough money to keep their organization running in the long term.
How do social entrepreneurs differ from commercial entrepreneurs in their logic of action?
The difference is that social entrepreneurs mainly focus on value creation for society while commercial entrepreneurs mainly
focus on value capture. Because of the difference in goals we see that social entrepreneurs mainly use a logic of empowerment
and commercial entrepreneurs are more likely to use control as a logic.
Zahra et al. (2009)
How do Zahra et al. define social entrepreneurship?
They explain social entrepreneurship as all the activities used by entrepreneurs to identify, characterize and take advantage of
opportunities to boost social wealth.
What are the three types of social entrepreneurs, and how do they differ?
 Social bricoleur; they work on small local problems in specific communities.
 Social constructionists; they serve underserved groups and fill the gaps where markets and governments fail.
 Social engineer; tries to change whole social systems when they are unfair or ineffective
What ethical issues do the authors highlight?
They highlight several ethical issues:
Ego and power
Fair allocation of benefits
Use of money and accountability
Manipulation and coercion in large scale change