There has been no consensus on the definition of social entrepreneurship and there are continuing arguments over who counts as a social entrepreneur. This is inevitable for a concept that has been associated with different sorts of fields and disciplines.
Some consider philanthropists and social activists as social entrepreneurs. Others limit the consideration within profit-oriented individuals or organizations whose operations result in outputs that have social benefits.
The most widely held definition came from Gregory Dees. He was a professor at Duke University recognized internationally for developing social entrepreneurship as a field of study in the academe. The term was still novel when he defined it in 1998 in his short but seminal article “The Meaning of Social Entrepreneurship” and was rarely used by individuals who now identify themselves as social entrepreneurs.
Nonetheless, he described the concept as “a phrase well suited to our times” and defined it as the process of combining “passion of a social mission with an image of business-like discipline, innovation, and determination.”
While many entrepreneurs have unintentionally positively affected society as an offshoot of their successful businesses or through their corporate social responsibility, they are not social entrepreneurs. Dees stressed the fact that intention matters. Social entrepreneurs are a breed of entrepreneurs. What sets them apart from regular entrepreneurs is that the prospect of profitability for personal gains does not motivate them. Central to their motivation is a social mission aimed at solving pressing social issues.
Understanding the Definition, Purpose, and Impacts of Social Entrepreneurship
Business-Oriented Definition of Social Entrepreneurship
From a business perspective, social entrepreneurship follows the groundwork of entrepreneurship and principles of business management. Most if not all social entrepreneurs and their social enterprises use innovative business models or frameworks borrowed from management and organizational theory to create social value.
There are social enterprises that follow the usual non-profit model. However, from a business perspective, there are social enterprises that combine not-for-profit and for-profit models. These are social purpose business ventures. Examples of them include for-profit community development banks and privately-owned livelihood and vocational training organizations.
It is also important to highlight the fact that like any other business organization, social entrepreneurship uses and manages resources—from financial resources to human resources—to produce social value as output. Thus, the measure of success of social enterprises is not wealth creation but the positive impacts on the society or communities they serve.
This business-oriented definition of social entrepreneurship also speaks of the importance of sustainability. Non-profit charitable organizations often rely on donations and other fundraising initiatives. But this can be challenging and unsustainable. Social enterprises use business models such as a marketing plan to survive. In other words, to become an effective social influence, social enterprises need to be financially self-sustaining businesses.
The Functions and Operation of a Social Enterprise
Selling Goods and Providing Services
There are three ways to build and run a social enterprise. The first one is by selling goods or services. While this might seem as if a profit-oriented and capitalism-driven business venture, social enterprises that produce and sell products have the chief mission of doing business for greater social benefits. This means that a product should be a response to a social problem or social needs rather than a market demand.
An example of a social enterprise that produces and sells products would be a tech company involved in the manufacturing and distribution of affordable alternative energy solutions. Another example is a social enterprise that allows communities to access cheap agricultural products or medical services. A community development bank is another example. As long as an organization is involved with producing and selling socially beneficial products that are affordable or accessible, it can easily be regarded as a social enterprise.
Promoting and Effecting Institutional Change
Another way to build and run a social enterprise is by stirring institutional change. There are individuals or more appropriately, social entrepreneurs who work diligently to influence people or organizations to change the way they think about social problems.
They usually follow the usual philanthropist route by using personal or private funds to promote their intended change through government policies or sociocultural movements. However, they use business models to do this. Rather than just channeling funds to stakeholders, they use metrics to monitor and measure their performance and success.
An example of a social enterprise that promotes institutional change is a think tank organization or a financial backer of such. Central to the mission of this enterprise is to become a key influencer by performing research and developing advocacies concerned with topics about policies, government strategies, economics, technology, and/or culture, among others.
Building Organizational and Individual Capacity
Capacity building is another way to build and run a social enterprise. Rather than producing and selling a product or stirring an institutional change, social enterprises that follow this centers their operation on the transfer of skills and knowledge or capacity from one organization to another. These enterprises empower the communities they serve particularly by making them self-sufficient and independent.
An example of a social enterprise involved in capacity building is an organization that holds livelihood and vocational training. Its operation revolves around gathering interested people and providing them opportunities to earn money and become financially independent through productivity.
Conclusion: Defining and Appreciating the Benefits of Social Entrepreneurship
Of course, from a non-business perspective, social entrepreneurship can follow the traditional route of philanthropy. The concept remains largely fluid because of the assortments of fields and disciplines that tag along with it. However, from a business perspective, social entrepreneurship involves an attempt to draw upon business models including organizational theory and management principles and practices to find solutions to social problems.
The business-oriented definition of social entrepreneurship centers on using and managing resources to produce outputs that have social value while taking into consideration the established social responsibilities of a business. Thus, unlike regular entrepreneurs, social entrepreneurs are not motivated by wealth creation for personal gains. These regular entrepreneurs normally measure their performance and success based on their profitability.
On the other hand, social entrepreneurs base their measurement on their social impacts—particularly their ability to create a positive return to society rather than a return of investment. They run their social enterprises based on a social mission centered on finding and providing solutions to pressing social problems.