Social Entrepreneurship Defined
“As a field of inquiry, social entrepreneurship is still in its infancy. We do not yet have
the deep, rich explanatory or prescriptive theories that characterize a more mature
academic field.”1 Much of the current literature emphasizes only practical considerations
(ie case studies with lessons learned) and “How-to’s.” The handful of expository sources
which does exist is often contradictory. The field is ripe for consolidation.
In the late 90s two antagonistic schools emerged with opposing views of “social
entrepreneurship.” The defining features of each are summarized below.
Social Enterprise School2
“A social entrepreneur is any person, in any sector, who uses earned income strategies to
pursue a social objective, and a social entrepreneur differs from a traditional
entrepreneur in two important ways:
 Traditional entrepreneurs frequently act in a socially responsible manner: They
donate money to nonprofits; they refuse to engage in certain types of businesses;
they use environmentally safe materials and practices; they treat their employees
with dignity and respect. Social entrepreneurs are different because their earned
income strategies are tied directly to their mission: They either employ people who
are developmentally disabled, chronically mentally ill, physically challenged,
poverty stricken or otherwise disadvantaged; or they sell mission-driven products
and services that have a direct impact on a specific social.
 Secondly, traditional entrepreneurs are ultimately measured by financial results:
The success or failure of their companies is determined by their ability to generate
profits for their owners. On the other hand, social entrepreneurs are driven by a
double bottom line, a virtual blend of financial and social returns. Profitability is
still a goal, but it is not the only goal, and profits are re-invested in the mission
rather than being distributed to shareholders.3
Distinguishing characteristics
 Grounded in an understanding of entrepreneurship that defines entrepreneurs as
individuals who start their own businesses” (Bhide)
 Focused on the generation of “earned-income” to serve a social mission
 “Sector-bending,” blurring the lines between the business and social sectors
 Experimentation with market-based solutions to social problems that seek to align
economic and social value creation
 Differentiates between innovation and entrepreneurship
Major proponents: Jerr Boschee and Jim McClurg
1
"Framing a Theory of Social Entrepreneurship," Greg Dees and Beth Battle Anderson
First presented in “Toward a Better Understanding of Social Entrepreneurship: Some Important
Distinctions,” Social Enterprise Alliance. 2003.
3
Also key to this definition are the distinctions between “sustainability” and self-sufficiency;” “earned
income strategies” and “social purpose business ventures;” and “innovators,” “entrepreneurs,” and
“professional managers.”
2
Social Innovation School
“Social entrepreneurs play the role of change agents in the social sector, by:
 Adopting a mission to create and sustain social value (not just provide value),
 Recognizing and relentlessly pursuing new opportunities to serve that mission,
 Engaging in a process of continuous innovation, adaptation, and learning,
 Acting boldly without being limited by resources currently in hand, and
 Exhibiting heightened accountability to the constituencies served and for the
outcomes created.
Distinguishing characteristics
 Descends from the etymological traditions of Jean Baptiste Say4, Joseph
Schumpeter5, Peter Drucker6, and Howard Stevenson7.
 Grounded in an understanding of entrepreneurship that defines entrepreneurs as
innovators who carry out “new combinations” that “reform or revolutionize the
pattern of production” (Schumpeter)
 Focused on establishing new and better ways to address social problems or meet
social needs.
 Not defined around organizational structure, i.e. nonprofit or for-profit
 Often incorporates themes of effecting large scale, lasting, and systemic change
Major proponents: J. Gregory Dees and Beth Battle Anderson
Most recently Dees and Anderson published "Framing a Theory of Social
Entrepreneurship: Building on Two Schools of Practice and Thought" (2006) in which
they attempt to respond to the criticisms of Boschee while uniting these disparate lines of
inquiry at their logical intersection. The so-called Enterprising Social Innovation School
is the result.
Enterprising Social Innovation School
“The entrepreneur shifts economic resources out of an area of lower and into an area of higher
productivity and greater yield.” Entrepreneurs create value.
5
“The function of entrepreneurs is to reform or revolutionize the pattern of production.” They do this by
“exploiting an invention or, more generally, an untried technological possibility for producing a new
commodity or producing an old one in a new way, by opening up a new source of supply of materials or a
new outlet for products, by reorganizing an industry and so on.” To Schumpeter, entrepreneurs are change
agents in the economy. By serving new markets or creating new ways of doing things, they move the
economy forward.
6
Drucker does not require entrepreneurs to cause change, but sees them as exploiting the opportunities that
change (in technology, consumer preferences, social norms, etc) creates. “The entrepreneur always
searches for change, responds to it, and exploits it as an opportunity.”
7
Above all other considerations, Stevenson emphasizes resourcefulness—“the pursuit of opportunity
without regard to resources currently controlled.” Entrepreneurs do not allow their own initial resource
endowments to limit their options.
4
Social Entrepreneurs carry “out innovations that blend methods from the worlds of
business and philanthropy to create social value that is sustainable and has the potential
for large-scale impact.
 Innovations (what Schumpeter would call “new combinations”) include the
creation of a new good or service as well as producing a delivering an existing
good or service in a new way or to a new market.
 In order to be considered ‘enterprising,’ the innovation must involve some
business-inspired elements, whether through the adaptation of business methods to
create or enhance social value, the operation of a social purpose business, or the
formation of cross-sector partnerships.
 The primary intention of the innovation must be the creation of benefits for society.
Furthermore, the intention must be to add value that will be sustainable or scaled
up over time.
Distinguishing characteristics
 It acknowledges the intimate connection between social and economic realities
and the role of markets in the social sector.
 It challenges the artificial barriers between business and the nonprofit sector.
Major proponents: J. Gregory Dees and Beth Battle Anderson
There are also a number of “spin-offs” espoused by such industry leaders as Ashoka.
Although these have not gained the traction of the above, they are nonetheless important
as they represent related but distinct approaches. A single, representative example
follows.
Seeds of Change School
Motivated by altruism and a profound desire to promote the growth of equitable civil
societies, social entrepreneurs change the performance capacity of society8 and pioneer
innovative, effective, and sustainable approaches to meet the needs of the marginalized,
the disadvantaged, and the disenfranchised. Social entrepreneurs play an analogous role
to business entrepreneurs in education, health-care, environmental protection, disability
and many other fields. They advance systemic change, shifting behavioral patterns and
perceptions. Social entrepreneurs often seem to be possessed by their ideas, committing
their lives to changing the direction of their field.
Distinguishing characteristics
 Social entrepreneurs implement on a large scale
 They affect lasting change
 In altering the patterns of societies, social entrepreneurs bring about revolutionary
change. Therefore, they represent the source of creative destruction necessary for
major social advances.9
8
9
Peter Drucker
Joseph Schumpeter

Accompanying this disruption of old patterns or action and perception, they
catalyze local change makers into being.
Major proponents: David Bornstein and Bill Dreyton