Free Market in Its Twenties: Modern Business Decision Making in Central and Eastern Europe

2.6. The Rise of Social Entrepreneurship

– 143 – CHAPTER IN BRIEF:   Entrepreneurship evolves and adapts itself to accommodate new forms of value creation such as social entrepreneurship.   The apparent conflict between social and commercial priorities is a central characteristic of social entrepreneurship.  Social entrepreneurship presents an attractive model for CEE. C ontemporary entrepreneurship is highly diverse. It can involve traditional business/commercial activities, not-for-profit entrepreneurial activities focused on social outcomes as well as activities focused on social problems , which trigger entrepreneurial behavior. One reason why a major and growing segment of entrepreneurship deals with social issues is that entrepreneurship may be able to meet unfilled social needs of diverse population groups worldwide . In view of this development, the discussion and solution of social problems has recently entered the sphere of business. The notion of social entrepreneurship is fairly recent, emerging in the late 1990s. It gained prominence with the awarding of the Nobel Peace Prize in 2006 to Mohammad Yunus for establishing the Grameen Bank and for promoting micro financing in Bangladesh. As one recent review put it: The capacity of individuals and communities to self-organize into groups and associations in order to provide goods and services they need has been around for a very long time, but the emergence of more THE RISE OF SOCIAL ENTREPRENEURSHIP Bala Mulloth C h a p t e r 2 .6 . i6 FM.indb 143 2014.06.05. 12:20 – 144 – enterprising social ventures which aim to achieve financial sustainability has only recently attracted the attention of scholars. Social entrepreneurship combines the economic benefits of entrepreneurship with the delivery of social and environmental outcomes, and has the potential to assist the economic and social development of individuals and societies around the world.1 The concept is also increasingly becoming a topic of interest in business schools around the world. More importantly, social enterprises have become increasingly abundant and proven to flourish especially in resource-constrained environments, such as inner-city neighborhoods in the United States2 and small villages in Brazil and India.3 However, it is important to make some careful distinctions with other forms of entrepreneurship especially as social entrepreneurship gets more popular.That is why, in the subsequent sections of this chapter, I will define the main concepts that differentiate and make up the field of social entrepreneurship. Social Entrepreneurship as an Emerging Field of Study Social entrepreneurship research draws from a number of areas of distinguished academic work. In particular, it has roots in literature related to nonprofit organizations,4 corporate social responsibility,5 and entrepreneurship.6 The term social entrepreneurship has multiple implied meanings. A good place to start may be the perspective of Bill Drayton, the founder of Ashoka. In his view, social entrepreneurship is a concept that can help identify and solve societal problems worldwide through the championing efforts of people in local communities. Yet, as it is illustrated in Figure 2.6.1., the scope and focus of definitions of social entrepreneurship vary significantly. Some commentators associate the concept primarily with creating positive social change. The emphasis here is on societal transformation with the business model and funding strategies considered optional. Social entrepreneurs in this case consider achieving their specific social objectives as their prime criteria and do not really care about income generation . Another approach focuses chiefly on revenue generation in the pursuit of social outcomes. Here, social entrepreneurs assume the double bottom line of being financially sustainable as well as having social impact. In this case social entrepreneurship is very much about income generation with the objective that most of the extra income will be put back in the business. Most of the socially entrepreneurial organizations that have made an impact in the past few years have appeared to adopt this double bottom line approach. The process of Social enterprises flourish especially in resource-constrained environments. i6 FM.indb 144 2014.06.05. 12:20 – 145 – Definitions of Social Entrepreneurship, Units of Analysis & Research Focus 4 Figure 2.6.1. Author(s) Christian Seelos & Johanna Mair Paul Tracey & Nelson Phillips Sandra Waddock & James E. Post Paul Light Raymond Dart Johanna Mair & Ignasi Marti Subset of business entrepreneurship Innovation Private sector Social entrepreneur Nonprofit innovation Social entrepreneurship Opportunity Opportunity Individual Opportunity Opportunity Opportunity Definition Social entrepreneurship is the simultaneous pursuit of economic, social and environmental goals by enterprising ventures and has gradually found a place on the world’s stage as a human response to social and environmental...