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Social entrepreneurship is the process of pursuing innovative solutions to social problems. More specifically, social entrepreneurs adopt a mission to create and sustain social value. They pursue opportunities to serve this mission, while continuously adapting and learning. They draw upon appropriate thinking in both the business and nonprofit worlds and operate in all kinds of organizations: large and small; new and old; religious and secular; nonprofit, for-profit, and hybrid.
Business entrepreneurs typically measure performance in profit and return, but social entrepreneurs also take into account a positive return to society. Social entrepreneurship typically furthers broad social, cultural, and environmental goals and is commonly associated with the voluntary and not-for-profit sectors. Profit can at times also be a consideration for certain companies or other enterprises.
Social entrepreneurship practiced in a world or international context is called international social entrepreneurship.
There are continuing arguments over precisely who counts as a social entrepreneur. The lack of consensus on the definition of social entrepreneurship means that other disciplines are often confused with and mistakenly associated with social entrepreneurship. Philanthropists, social activists, environmentalists, and other socially-oriented practitioners are referred to as social entrepreneurs. It is important to set the function of social entrepreneurship apart from other socially oriented activities and identify the boundaries within which social entrepreneurs operate. Some have advocated restricting the term to founders of organizations that primarily rely on earned income – meaning income earned directly from paying consumers. Others have extended this to include contracted work for public authorities, while still others include grants and donations.
Social entrepreneurship in modern society offers an altruistic form of entrepreneurship that focuses on the benefits that society may reap. Simply put, entrepreneurship becomes a social endeavor when it transforms social capital in a way that effects society positively. It is viewed as advantageous because the success of social entrepreneurship depends on many factors related to social impact that traditional corporate businesses do not prioritize. Social entrepreneurs recognize immediate social problems, but also seek to understand the broader context of an issue that crosses disciplines, fields, and theories. Gaining a larger understanding of how an issue relates to society allows social entrepreneurs to develop innovative solutions and mobilize available resources to impact the greater global society. Unlike traditional corporate businesses, social entrepreneurship ventures focus on maximizing gains in social satisfaction, rather than maximizing profit gains. Both private and public agencies worldwide have had billion-dollar initiatives to empower deprived communities and individuals. Such support from organizations in society, such as government-aid agencies or private firms, can catalyze innovative ideas to reach a larger audience.
Prominent innovators associated with the term include Pakistani Akhter Hameed Khan, Bangladeshi Muhammad Yunus, the founder of Grameen Bank which pioneered the concept of microcredit for supporting innovators in multiple developing countries in Asia, Africa and Latin America. Yunus also inspired programs such as the Infolady Social Entrepreneurship Programme and Stephen Goldsmith, former Indianapolis mayor who engaged the private sector in providing many city services.
Social entrepreneurship is distinct from the concept of entrepreneurship itself, yet still shares several similarities with the classic concept. Jean-Baptiste Say, a French economist, defined an entrepreneur as a person who “undertakes” an idea and shifts perspectives in a way that it alters the effect that an idea has on society. However, the difference between “entrepreneurship” and “social entrepreneurship” stems from the purpose of a creation. Social entrepreneurs seek to transform societies at large, rather than transforming their profit margin like classic entrepreneurs typically seek to do.
The concept of “social entrepreneurship” is not a novel idea, but it has recently become more popular among society and academic research, notably after the publication of “The Rise of the Social Entrepreneur” by Charles Leadbeater. Many activities related to community development and higher social purpose fall within the modern definition of social entrepreneurship. Despite the established definition nowadays, social entrepreneurship is a difficult concept to define, since it can be manifested in multiple forms. A broad definition of the concept allows interdisciplinary research efforts to further understand and constantly challenge the notion behind social entrepreneurship. No matter which sector of society certain organizations are in (i.e. corporations or unincorporated associations and societies), social entrepreneurship focuses on the social impact that an endeavor carries. Though social entrepreneurship can be altruistic, the effect it has on society is markedly more impactful.
The terms social entrepreneur and social entrepreneurship were used first in the literature on social change in the 1960s and 1970s. The terms came into widespread use in the 1980s and 1990s, promoted by Bill Drayton the founder of Ashoka: Innovators for the Public, and others such as Charles Leadbeater. From the 1950s to the 1990s Michael Young was a leading promoter of social entrepreneurship and in the 1980s was described by Professor Daniel Bell at Harvard as 'the world's most successful entrepreneur of social enterprises' because of his role in creating more than sixty new organizations worldwide, including the School for Social Entrepreneurs (SSE) which exists in the UK, Australia and Canada and which supports individuals to realize their potential and to establish, scale and sustain, social enterprises and social businesses. Another notable British social entrepreneur is Andrew Mawson OBE, who was given a peerage in 2007 because of his regeneration work including the Bromley by Bow Centre in East London.
Although the terms are relatively new, social entrepreneurs and social entrepreneurship can be found throughout history. A list of a few historically noteworthy people whose work exemplifies classic "social entrepreneurship" might include Florence Nightingale, founder of the first nursing school and developer of modern nursing practices; Robert Owen, founder of the cooperative movement; and Vinoba Bhave, founder of India's Land Gift Movement. During the nineteenth and twentieth centuries some of the most successful social entrepreneurs effectively straddled the civic, governmental, and business worlds – promoting ideas that were taken up by mainstream public services in welfare, schools, and health care.
Groups focused on social entrepreneurship can be divided into several categories: community-based enterprises, socially responsible enterprises, social services industry professionals, and socio-economic enterprises. Community-based enterprises are based on the social ventures of an entire community that uses its culture and capital to empower itself as an entire enterprise. Socially responsible enterprises focus on being creating sustainable development through its initiatives that focus mostly on societal gains. Social service industry professionals work specifically in the sector of social services to expand social capitol for different individuals, communities, and organizations. Socio-economic enterprises include corporations that balance earning profits and non-profit social change for communities.
One well-known contemporary social entrepreneur is Muhammad Yunus, founder and manager of Grameen Bank and its growing family of social venture businesses. He is known as the “father of microcredit,” and established the microfinance revolution in helping millions of people in global rural communities access small loans. For his work, he was awarded a Nobel Peace Prize in 2006. The work that Yunus did through Grameen Bank echoes a theme among modern day social entrepreneurs that emphasizes the enormous synergies and benefits that arise when business principles are unified with social ventures. Larger countries in Europe and South America have tended to work more closely with public organizations at both the national and local level.
The George Foundation's Women's Empowerment program empowers women by providing education, cooperative farming, vocational training, savings planning, and business development. In 2006 the cooperative farming program, Baldev Farms, was the second largest banana grower in South India with 250 acres (1.0 km2) under cultivation. Profits from the farm are used for improving the economic status of the workers and for running the other charitable activities of the foundation.
Some have created for-profit and for-a-difference organizations. A recent example is Vikram Akula, the McKinsey & Company alumnus who started a microcredit venture, SKS Microfinance, in villages of Indian state of Andhra Pradesh. Although this venture is for profit, it has initiated a sharp social change amongst poor women from villages. Other examples of social entrepreneurs in Healthcare in India is Ramanujan Bose Awardee Dr Akash S Rajpal, Founder of Ekohealth has been working in India in the field of healthcare against Fee splitting and creating a unique ethical facilitation and aggregation services for healthcare providers and price comparison services for patients and help them reduce health care costs.
At the heart of social entrepreneurship is the innovation of novel social capitol to create more community-based agency for obtaining assets in individual lives. Private corporations focused solely on profit and nonprofit organizations (NGOs) that are focused solely on social impact are two extremes in the nuanced spectrum of social entrepreneurship, when in actuality there is several types of social entrepreneurs with different visions for their enterprises exist. This can range from individuals seeking to allow solely for society to profit even at a profit loss, to individuals that focus on simultaneously profiting both themselves and society. In either case, individuals are at risk for personal profit loss. There is a trend in organizations, especially private organizations that combine traditional interest in corporate profit gain with a desire to create social enterprises that have meaningful social impacts that are innovative in society. The complexity of defining the type of social entrepreneurship can also increase when boundaries cross. For example, certain non-profit organizations may have initiatives that generate revenue but only for the purpose of their social enterprise. Additionally, for-profit organizations may be focused primarily on gaining profit, but arrange some of their profits for socially impactful activities.
Ashoka is an example of a non-profit organization focused on building social entrepreneurs through its system of social venture capital. Ashoka was founded by Bill Drayton in 1981 in Arlington, VA. Ashoka's motto is "Everyone a Changemaker," essentially seeking both to empower individuals with the capacity to become social innovators, and to solve societal problems in such a way that all members of society can have a voice - even previously marginalized populations. With a strong international presence in over 70 countries, the organization seeks to identify entrepreneurs through various iniatives at various ages and stages in life, deeming them "Ashoka Fellows." One of Ashoka's iniatives, the Changemakers program, hosts collaborative competitions that challenges budding entrepreneurs to come up with innovative solutions to global issues. Additionally, Ashoka also operates on a university-level through its Ashoka U initiative, working with university officials and administrators to develop programs that encourage and nurture students that are interested in social entrepreneurship.
Youth social entrepreneurship is an increasingly common approach to engaging youth voice in solving social problems. Youth organizations and programs promote these efforts through a variety of incentives to young people. One such program is Young Social Pioneers, which invests in the power and promise of Australia's young leaders. The program, which is an initiative of The Foundation for Young Australians, strengthens, supports and celebrates the role of young people in creating positive change in their communities. Programs in the USA include Ashoka's Youth Venture (which provides educational materials, challenges and grants), Do Something (which provides project ideas, grants and media exposure), and RandomKid (which provides youth with a wide range of free tools and resources to increase their social impact.) An example in the United Kingdom would be The Duke of Edinburgh's International Award, which has a component for encouraging and recognizing social innovation; and in Canada, one place youth can find opportunities, networks and support is at Take IT Global.
Fast Company Magazine annually publishes a list of the twenty-five best social entrepreneurs, which the magazine defines as organizations "using the disciplines of the corporate world to tackle daunting social problems." In 2009, BusinessWeek followed suit, publishing a review of America's twenty-five most promising social entrepreneurs, defined as "enterprising individuals who apply business practices to solving societal problems." Forbes launched their 30 Under 30 Social Entrepreneurs in 2011, recognizing "folks who apply their entrepreneurial chutzpah to a social problem to make the world a better place. They’re creative, do-gooding business people, and they’re getting a lot done."
Organizations such as Ashoka: Innovators for the Public, the Skoll Foundation, the Omidyar Network, the Schwab Foundation for Social Entrepreneurship, Athgo, New Profit Inc., National Social Entrepreneurship Forum, and Echoing Green among others, focus on highlighting these hidden change-makers who are scattered throughout the world and providing various levels of resources to advance their initiatives. Ashoka's Changemakers "open sourcing social solutions" initiative Changemakers uses an online platform for what it calls collaborative competitions to build communities of practice around pressing issues.
The North American organizations tend to have a strongly individualistic stance focused on a handful of exceptional leaders, while others in Asia and Europe emphasize more how social entrepreneurs work within teams, networks, and movements for change. The Skoll Foundation, created by eBay's first president, Jeff Skoll, makes capacity-building "mezzanine level" grants to social entrepreneurial organizations that already have reached a certain level of impact, connects them through the annual Skoll World Forum and Social Edge, the Foundation's online community, and highlights their work through partnerships with the Sundance Institute, Frontline World, NewsHour with Jim Lehrer, and other film and broadcast outlets. Skoll also supports the field of social entrepreneurship, including through Skoll's founding of the Skoll Centre for Social Entrepreneurship at the Said Business School at Oxford University. Examples of social entrepreneurial business in the USA include NIKA Water Company, which sells bottled water in the USA and uses 100% of its profits to bring clean water to those in the developing world, as well as Newman's Own which donates 100% of its profits to support various educational charities.
The Internet and social networking websites have been pivotal resources for the success and collaboration of many social entrepreneurs. Blake Mycoskie extensively used the Internet in piloting TOMS Shoes, a company that gives a pair of shoes to a person in need for every pair of shoes purchased. Captain Edward Zellem AfghanProverbs has been working with Film Annex's Afghan Development project as an example individual social entrepreneurship that merges his work with the study of languages and culture into the film platform at Film Annex. The US-based nonprofit Zidisha leverages the recent spread of internet and mobile technologies in developing technologies to provide an eBay-style microlending platform where disadvantaged individuals in developing countries can interact directly with individual "peer-to-peer" lenders worldwide, sourcing small business loans at lower cost than has ever before been possible in most developing countries. In addition to this, the Internet allows for the pooling of design resources using open source principles. These media allow ideas to be heard by broader audiences, help networks and investors to develop globally, and achieve their goals with little or no start-up capital. For example, the rise of open-source appropriate technology as a sustainable development paradigm enables people all over the world to collaborate on solving local problems just as open source software development leverages collaboration.
Many initiatives carried out by social entrepreneurs, while innovative, have had problems in being sustainable and effective initiatives that are able to ultimately branch out and reach the larger society as a whole (versus a small community or group of people). Studies over the qualities encompassed in a social entrepreneur have shown that very few individuals possess the talent and skills of entrepreneurs with a primarily socially-motivated outlook. Thus, compromises in social initiatives developed often do not reach large audiences. Since the concept of social entrepreneurship has only been recently popularized, there needs to be some standardization of the process in scaling up social endeavors to increase impact across the globe.
A need for policymakers around the globe to further understand social initiatives is useful in increasing sustainability, effectiveness, and efficiency. Involvement and collaboration between private corporations and government agencies allow for increased monetary gain for carrying out initiatives, increased accountability on both ends, and increased connections with communities, individuals, or agencies in need. For example, private organizations or non-profit organizations have tackled unemployment issues in communities in the past.
However, only short-term solutions are presented, or solutions are unable to scale up to a larger degree in order to maximize the number of people affected. Government policies in the financial sector are able to tackle such a large issue; however, the little collaboration that has occurred between the two modes that serve society has stagnated the effectiveness of social entrepreneurship. This stagnation primarily rests in the motives and goals of social enterprises and that of those in policymaking. Those in policymaking naturally tend to be has different priorities than social entrepreneurs, which is where slow growth and expansion of social initiatives occurs.
Since social entrepreneurship has only recently started to gain momentum, current social entrepreneurs are actively encouraging social advocates and activists to step up as innovative social entrepreneurs. Increasing the scope of social entrepreneurship naturally increases the likelihood of an efficient, sustainable, and effective initiative. Increased participation draws more attention, especially from policymakers and privately owned corporations that can help shape social entrepreneurs through policy changes, training programs, and leadership development focused on developing social entrepreneurs.
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