Social Entrepreneurship
Introduction to Social Entrepreneurship
•Muhammad Yunus, Grameen Bank, and Micro-lending
•Lack of access to credit
•Margins and the removal of the middleman
•“increasing” margins and their impact on sustainability and
venture growth
New Venture undertaking requirements
(Grameen Bank’s Impact)
– On Resources- funds, expertise, and energy
– Bank’s vision - Low adverse risk in borrowers
Why was credit not otherwise available?
– Concept of collateral
– Cultural/Gender bias
– Location - accessibility to banking
– Perceived Risk of default
What is Social Entrepreneurship?
“from the French”- entreprendre, - to undertake.
• Traditional model of entrepreneurship– as a
“commercial” enterprise
– labor mental and physical effort –(Tangible)
– physical capital -plant and equipment –T
– human capital –knowledge and expertise –T
– Managerial Skill – (Intangible)
– Risk willingness – IT
Entrepreneurship models are “process” focused
* Opportunity recognition – From idea into
opportunity
• Concept development – translation of opportunity
into Enterprise concept
• Resource development and acquisition
• Launch and venture growth
• Harvest/grow the venture
Social Entrepreneurship (SE) uses the “enterprise” process,
but seeks different ends/rewards – adding social value
• Pursues/Addresses social problems or needs unmet by private
markets or governments
• Social entrepreneurship is motivated primarily by social benefit
• Social entrepreneurship generally works “with” – not “against”
market forces -a balancing act between “moral imperatives” and
“profit motives”
• Social entrepreneurs combine innovation, entrepreneurship, and
social purpose and seek to be financially sustainable by generating
revenue from trading
• The primary difference between Commercial Entrepreneurship
and Social Entrepreneurship is not the entrepreneurial process,
but the denomination of the rewards (from the created value)
sought
• Exhibit heightened sense of accountability to those served for
outcomes and their impact
Social Entrepreneurship Mission – To create
and sustain “social” value –
– freed from profit as the reward ,the SE can generate
opportunities from failure
– unmet social need may be in the form of unfilled
demand or ‘latent’ demand
– opportunity can lead to development of an
enterprise concept that is denominated in its value in
three ways: 1. identifiable, 2. defensible, and 3.
measurable.
• Note: Failure to identify and denominate social returns and
set clear, specific goals at this stage is a key reason for many
social enterprise failures.
Resources needed are determined and acquired
– Financial needs
– Human resource needs
– Human capital needs (knowledge and expertise)
– Political and negotiation savvy
Launch and growth
– Follow a tangible business strategy with a plan
– Needs a growth strategy, explicit and transparent
– Must cover plans for removing obstacles (plan B)
and measuring progress thru regular, appropriate
monitoring
Goal attainment is a critical point of decision
– Shut down
– Redefine
– Stabilize and continue
– Integrate into another venture with purpose
Social Entrepreneurship Origins
• Environment—latent condition in the
population
• Resources—availability of resources for new
ventures (societal or organizational slack)
• Displacement – structural dislocations in an
existing social structure or system
• Personal traits – “Entrepreneurial
personality”
• Preparation – learning and experience
Who are most likely to become Social
Entrepreneurs?
•
•
•
•
Immigrants --(Innate attribute)
Women -- Innate
Personal life trauma people --Innate
Community awareness and social concern –
social-psych
• Persons who value compassion, justice,
equality, and liberty –(Social-Psychological)
• (continued on next slide)
(cont.)Who are most likely to become Social
Entrepreneurs?
•
•
•
•
•
•
Innovators –(Psychological attribute)
Achievement oriented –Psych
Independent –Psych
Inner-directed --Psych
Tolerant of risk --Psych
Tolerant of ambiguity --Psych
Combining Risk Aversion and Innovativeness to
Trigger Entrepreneurship
• High innovativeness and low risk aversion
= Entrepreneur
• Non-innovative and low risk aversion =
Gambler
• High innovativeness and high risk aversion
= Dreamer
Social Entrepreneurship and Leadership characteristics
• Social Entrepreneur (SE) recognizes a social problem and
all its complexity and binds the problem with a vision that
has the potential to reshape the situation directly and
change public attitudes that perpetuated the original
problem
• SE holds significant personal credibility (referent power)
which allows them to tap critical resources and actually
build the necessary network of participating persons and
organizations
• SE generates followers’ commitment to a project by
framing the project in term of important social values,
rather than purely economic terms. This results in a sense
of collective purpose between and among the social
entrepreneur and those who join the effort.
Common ‘Myths’ about Social and Commercial
Entrepreneurship
• SEs are anti-business – rather collaboration
for alignment and mutual benefit
• Difference between SE and Commercial
Entrepreneurship (CE) is ‘GREED’ – many SEs
are also CEs.
• SEs run non-profits – social entrepreneurship
process can occur in any sector and with any
legal status
• (continued on next slide)
(Continued )
Common ‘Myths’
-
• SEs are born, not made – people can grow and learn to be
comfortable with risk and ambiguity, as well as have their
level of community awareness elevated. Ethical maturity,
following Kolb’s theory of moral development, can be
instrumental in SE creation.
• SEs are misfits – They value different goals, but certainly are
anything but
• SEs usually fail – while slightly less than 50% of CEs actually
fail, an even smaller percentage of SEs actually fail
(<30%)[Cordes, et.al., 2001].
• SEs love risk – there is little empirical evidence for this claim,
rather all successful entrepreneurs utilize “well thought out
risk taking. By thinking, analyzing, and planning well, they
mitigate risk and function under calculated risk paradigm.
Social Entrepreneurship Today
• Two excellent, creative examples of Social
Entrepreneurship in action can be found at the
following web sites: http://www.path.org/ and
http://www.DonorsChoose.org/ .
• Both can be used by students to gain a “feel” of
Social Entrepreneurship in the real world.
• mcamarata@semo.edu or mcamarata@aol.com
for more information!