Social Entrepreneurship: A Conceptual Framework

9 Social Entrepreneurship: A Conceptual Framework Suchet Kumar, Sr. Assistant Prof. (Sociology), Rayat College of Law, Dist. Nawanshahr, Ropar, Punjab Kiran Gupta, Assistant Prof. (Economics), Post Graduate Govt. College for Girls, Chandigarh ABSTRACT The area of Social entrepreneurship has become an important issue of contemporary relevance in academic literature and research. The paper puts forward a view of social entrepreneurship as a process that brings social change or addresses important social needs. Social entrepreneurship is seen as differing form other forms of enterprise where a high priority is given to promote social value and development rather than making financial profits and gains. Keywords: Social Entrepreneurship, Entrepreneurs, Innovation, Market, Organization, Social Welfare 1.1 SOCIAL ENTREPRENEURSHIP The term social entrepreneurship was first coined in 1980 by Bill Drayton of Ashoka which is the global association of the world s leading social entrepreneurs. Drayton calls social entrepreneurship as a model for bringing social change in a society by those individuals who combine the pragmatic and results-oriented methods of a business entrepreneur with the goals of a social reformer. In other words social entrepreneurs are those people who use innovative ways for tackling various socio economic needs of the society in their chosen areas, whether that is education, health care, economic development, the environment, the arts or any other social field.( Dees 1998). They can also be called as socially conscious individuals who have applied innovative business models to address social problems previously overlooked by business, governmental and nongovernmental organizations (NGOs). Therefore these social entrepreneurs are from those working communities of voluntary and public organizations, as well as private firms working for social rather than for profit objectives (Shaw and Carter, 2004). Dryton s idea of social entrepreneurship emerged during his visit to India from Harvard in the summer of 1963. Bill Drayton witnessed the power of a simple idea to effect vast social change. A Gandhian named Vinoba Bhave was walking across India and persuading individuals and whole villages to legally "gift" their land to him. Bhave then redistributed the land more equitably to support untouchables and other landless people, thus breaking an endless cycle of poverty. Ultimately, 7 million acres were peacefully redistributed, based on the ability of one leader to turn a powerful idea into reality. Bhave s this act was one of the instrumental reason for Dryton to establish one of the most reputed global social entrepreneurship organization named Ashoka named after another visionary pragmatist: Ashoka Indian emperor who waged war to unite a huge swath of south Asia. He subsequently renounced violence, adopted Buddhism, and dedicated his empire to tolerance, economic growth, and social projects. Inspired by ideals, values of great politicians and reforms like that of Bhave, Asoka and Gandhi Dryton s, social enterprise under the name of Ashoka Launched in 1980 with $50,000, the organization now has a budget of $30.5 million and has funded 1,600 "fellows" in 60 countries (Wolk 2007). 1.2 CONCEPT OF SOCIAL ENTREPRENEURSHIP (SE) The concept of SE has become the buzzword only in the recent past, backed by the economic boom in late 1990s and the government s inability to solve social problems. However By the end of 20th century, social entrepreneurs became the part of the sphere of development playing a significant role in the social, political and economic contexts for poor and marginalized groups. (Prahlad 2006). Social entrepreneurs have also become highly visible agents of change in developed economies, where they have applied innovative and cost-effective methods to address nagging social problems (i.e., poverty, gender inequality, etc.) that have defied traditional solutions (Cox and Healey, 1998). The concept of social entrepreneurship is a relatively new field of study. However a lack of agreement persists regarding the domain, boundaries, forms and definitions of social entrepreneurship (Peredo and McLean 2006). Social entrepreneurship is defined broadly in some cases and narrowly in others; thus, the literature has not yet achieved a consensus. The interpretation of social entrepreneurship ranges from a narrow perspective to a broader one. A narrow interpretation of the phenomenon considers social entrepreneurship to be a not-for-profit initiative in search of alternative funding strategies or management schemes to create social value (Austin 2006). On the other hand contributions on SE view this phenomenon at a broader perspective by defining it as those social enterprises which

10 are considered to be organizations seeking business solutions to social problems (Thompson and Doherty 2006). Several researchers, specifically, provide evidence that in SE the concept of the social mission is central. According to this vision, SE is a process that aims to- address significant/alleviate social problems/needs catalyze social change alleviate the suffering of the target group benefit society with an emphasis on marginalized people and the poor create and distribute new social value Thus, all of these definitions agree that social entrepreneurship is a means to alleviate social problems and improve well-being. A broader definition of SE was also given recently by the European Commission (2011), which considers the social enterprise to be an operator in the social economy whose main objective is to have a social impact rather than make a profit for their owners or shareholders. It operates by providing goods and services for the market in an entrepreneurial and innovative fashion and uses.its profits primarily to achieve social objectives. The European Commission uses the terms social enterprise and social business synonymously. The concept of Social Entrepreneurship can further be well understood with the help of three distinct terminologies associated with it. The term social entrepreneurship which refers to a process or behavior; social entrepreneurs which means the one who focuses its attention on founder of the imitative while social enterprise which refers to the tangible outcome of social entrepreneurship. The following table gives some prominent definitions which conceptualizes differences in the three terminologies or definitions related to SE Defining Social Entrepreneurship AUTHORS/ YEAR Fowler (2000) Shaw (2004) Said School(2005) Fuqua School (2005) Schwab Foundation( 2005) Tan et al. (2005) Peredo and McLean (2006) AUTHOR / Thake and Zadek (1997) Dees (1998) SOCIAL ENTREPRENEURSHIP Social Entrepreneurship is the creation of viable socio-economic structures, relations, institutions, organizations and practices that yield and sustain social benefits. The work of community, voluntary and public organizations as well as private firms working for social rather than only profit objectives. A professional, innovative and sustainable approach to systematic change that resolves social market failures and grasps opportunities. The art of simultaneously pursuing both a financial and a social return on investment (the double bottom line) Applying practical, innovative and sustainable approaches to benefit society in general, with an emphasis on those who are marginalized poor Making profits by innovation in the face of risk with the involvement of a segment of society and where all or part of the benefits accrue to that same segment of society Social entrepreneurship is exercised where some person or group.aim(s) at creating social value shows a capacity to recognize and take advantage of opportunities employ innovation accept an above average degree of risk and are unusually resourceful in pursuing their social venture ( SOCIAL ENTREPRENEUR) Social entrepreneurs are driven by a desire for social justice. They seek a direct link between their actions and an improvement in the quality of life for the people with whom they work and those that they seek to serve. They aim to produce solutions which are sustainable financially, organizationally, socially and environmentally Play the role of change agents in the social sector, by: 1) Adopting a mission to create and sustain social value (not just private value), 2) Recognizing and relentlessly pursuing new opportunities to serve that mission, 3) Engaging in a process of continuous innovation, adaptation, and learning, 4) Acting boldly without being limited by resources currently in hand, and 5) Exhibiting heightened accountability to the constituencies served and for the outcomes created

11 Reis (1999) Harding (2004) Dees (1994) Haugh & Tracey ( 2004) Social entrepreneurs create social value through innovation and leveraging financial resources for social, economic and community development Entrepreneurs motivated by social objectives to instigate some form of new activity or venture. SOCIAL ENTREPRISE Social enterprises are private organizations dedicated to solving problems, serving the disadvantaged and providing socially important goods that were not, in their judgment adequately provided by public agencies or private markets. The organization have pursued goals that could not be measured simply by profit generation, market penetration or voter support. Social enterprises are business that trade for social purpose. They combine innovation, entrepreneurship and social purpose and seek to be financially sustainable by generating revenue from trading. Their social mission prioritizes social benefit above financial profit and if and when a surplus is made, this is used to further the social aims of the beneficiary groups or community 1.3 THE SOCIAL ELEMENT IN THE The term in Social in social entrepreneurship refers to initiatives aimed at helping others (Prabhu 1999) without any profit motive as it is in case of business enterprise. It is an expression of altruism. Social entrepreneurship is also based on ethical motives and moral responsibility (Bornstein, 1998: Catford 1998) but at the same time the motives for social entrepreneurship can be devoid of any ethical motives supporting any societal welfare. A business enterprise also has a social aspect. This fact is well supported by Schumpeter (1934). The personal profit motive is a central engine that powers private enterprise and social wealth. Entrepreneurship is particularly productive from a social welfare perspective when, in the process of pursuing selfish ends, entrepreneurs also enhance social wealth by creating new markets, new industries, new technology, new institutional forms, new jobs, and net increases in real productivity. The major question posed is that what is the distinct social domain of social entrepreneurship? There are three successful cases of social entrepreneurship around the globe namely, The Grameen Bank in Bangladesh, the Aravind Eye Hospital in India and Sekem in Egypt well support the fact of social entrepreneurship not only addresses a social problem but also alters changes in the existing social structures. The Grameen Bank, founded by Professor Muhammad Yunus in 1976, has changed the life of millions. By bringing financial services to the poor, particularly women, it helps them establish profitable business to fight poverty (Yunus, 1999). Over the last twenty years, the Aravind Eye Hospital, established in 1976 by Dr. Venkataswamy in India, has offered eye care services and cataract surgery to cure blindness at a very small fraction of the cost of such services in the developed world. Today, Aravind performs 2,20,000 eye operations per year and applies price discrimination according to the patients ability to pay : 47 % of its patients pay nothing, 18 % pay two thirds of cost and 35% pay well above cost. Aravind s activities have not only brought social transformation not only in India but also in Nepal, Egypt, Malawi, Kenya, Gautemala and other countries where this initiative has been replicated. Eighty five percent of male and 60% of female patients who had lost their jobs as a result of blindness regained their jobs after surgery. Finally, Sekem, created by Dr. Ibrahim Abouleish in 1977 as a social venture, is today a multi business. It not only creates economic, social and cultural value, but also has had a significant impact on Egyptian society. It took the lead in reducing pesticide use in Egyptian cotton fields by 90% and has created institutions such as schools, a university, an adult education center, and a medical center. Thus Sekem s social act was successful in filling this institutional void by providing structures that people trust and help them escape the poverty trap and gain control over their lives. ( Seelos & Mair,2005a). These examples show that how social entrepreneurship catalyzes social transformation by meeting social needs. Value creation in all three cases embraces both social and economic aspects. The main focus, however, is on social value, while economic value creation is seen as a necessary condition to ensure financial viability. 1.4 THE ENTREPRENEURIAL ELEMENTS IN THE The term entrepreneur is increasingly employed to refer to the type of individual who is highly determined, confidant, creative and sales oriented personality, familiar with the trends and able to translate a vision into real business (Colombo Plan Staff College 1998). These individuals are often viewed as reckless risk takers. They are people who recognize the strengths, weaknesses, opportunities and threats of their enterprise and build

12 opportunity for its success. Under this a substantial body of research in the tradition of David McClelland who identifies psychological factors underlining entrepreneurship. An entrepreneur has a typical personality with creative, managerial and imaginative skills who can innovate and contribute positively to an industrial project. This kind of personality develops in a person who has strong motivation for achievement. The works of Max Weber is prominent for giving a sociological interpretation of entrepreneurship and modern capitalism. Weber articulated the cause of entrepreneurship due to singular shift in attitude towards work in case of protestants who progressed due to the strong ethical values of hard work, fragility, individual accountability and reliability, propagated by their religion which advocated the principle of economic rationality. In mid 1980s the focus of entrepreneurship research was on entrepreneurial process or entrepreneurial behavior but in contemporary times the phenomenon is far more complex and heterogeneous. Under the current paradigm the notion of opportunities has been widely accepted as a defining element of entrepreneurship. Shane and Venkataraman (2000), for example, describe entrepreneurship as a field that analyses how, by whom, and with what effects opportunities to create goods and services are discovered, evaluated and exploited. 1.5 CONCEPTUALIZING SOCIAL ENTREPRENEURSHIP AT INDIVIDUAL AND ORGANIZATIONAL LEVEL The concept of S.E. is primarily based on two fields, first at individual level and second at organizational and interorganizational level. At the individual level, definitions of social entrepreneurs focus on the founder of the imitative. They are generally referred to as Change maker acting upon an opportunity and gathering resources to exploit it. There are numerous stories and examples of individual successes like that of Yunus success of Grmaeen Bank, Bill Drayton s Ashoka, Aarvinds Eye Hospital etc. The individual approach towards SE is treated to be narrow and biased by the contemporary researchers and academicians. It states that social entrepreneurship in a way lays over emphasis on personality cult on individual traits such as achievement, motivation, tolerance for ambiguity, optimism, intelligence, talent, and so forth. This focus strays from what the entrepreneur does to who the entrepreneur is and his or her ability to sell an idea. Much of the research that underlies this thinking has failed to prove that personality traits contribute to entrepreneurial success. Moreover, the available evidence from exemplary social entrepreneurs suggests that success depends less upon personality than it does on teachable skills, such as the ability to activate the public, raise capital, negotiate results, and manage the difficult transitions involved in taking an organization from its initial start-up phase to maturity. The further limitation to this approach is that the internal traits of ambitious zeal and perseverance for an aspiring entrepreneur cannot be substituted by skill. If skills can be defined and taught, there is the possibility that social entrepreneurship need not be so rare in the future. Instead of one entrepreneur in a million, there may be one in a hundred or one in five. The second bias that comes from focusing on individuals is a tendency to ignore the role of organizations and the resources they provide for patternbreaking change. Researchers have long known that successful ideas require a mix of talents that is rarely found in one person. Indeed, the most compelling research on business entrepreneurship suggests that successful change requires a stream of capabilities including leadership, management, marketing, organizational design, and finance. Whereas philanthropists almost always focus on the individual, venture capitalists almost always focus on the leadership team and the organization to back it ( Light 2006). 1.6 ORGANIZATIONAL LEVEL This perspective recognizes that social entrepreneurship is often driven by teams and organizations, not just individuals. It recognizes that social entrepreneurship occurs in many different sectors (governments, nonprofits, businesses, and in between), not just in nonprofits. And it recognizes that entrepreneurship can occur in small units within large organizations and in single chapters within large federations, not just in the new organizations that social entrepreneurs often create. At the(inter) organizational level, definitions of SE typically refer to the process of value creation, including opportunity recognition, adopting a mission to create social value, engaging in a process of continuous innovation, adaptation, and learning (Dees, 1998;Roberts and Woods, 2005). From organizational level the perspective of S.E. could be described as commercializing a nonprofit organization. It means it brings a for profit philosophy to the many not for profits that experienced a financial crunch and found it difficult to sustain without donations and grants. Second perspective is of efficient nonprofit management by way of bringing expertise and market-based skills to the nonprofit sector (Johnson, 2000). A base for third perspective suggests that there also exists a tradition to link a specific ownership structure to social enterprises. For example, the cooperatives and other mutually owned organizations are often referred to as social enterprises. A fourth view suggests social entrepreneurs as social purpose business ventures. In this case an emerging social innovation is seen as a business opportunity and turned into a commercial for-profit business creating, in the process, new market space is created while attaining a

13 social objective. At the societal level SE is often understood as networks for social entrepreneurs and venture philanthropy. And in this case, information and practical support, as well as charitable donations or equity capital, are made available to entrepreneurial individuals and organizations that have a clear social mission and require a targeted amount of funds to realize it 1.7 FACTORS LEADING TO EMERGENCE OF SOCIAL ENTREPRENEURSHIP The growing attention paid to social entrepreneurship on a global scale can be explained by several economic, social and political changes Two types of developments can be distinguished: first, persisting problems that call for innovative approaches (i.e., demand side), and second, developments that increase the chances for those problems to be solved(i.e., supply side) (Nicholls, 2006). These general developments contextualize the rise of social entrepreneurship. On the demand side, the awareness of the ever-growing inequality in wealth distribution (World Bank, 2007) and concern for the environment are two important drivers. The global movement toward privatization and marketization has profoundly influenced not-for-profit organizations and NGOs, pressuring them to address the gaps left in the provision of social services. Though funding for these activities from traditional sources has declined the costs of delivering these programs have increased (Leadbetter, 1997).This has led to coming of more and more not-for-profit organizations to deal with complex social needs of society by applying entrepreneurial strategies and business models. Secondly the growth of large number of non profitable organizations has resulted in a competition amongst each for raising funds and finally, there is an increasing demand for improved effectiveness and efficiency for both the social sector and nonprofit institutions (Zahra et al., 2009). On the supply side, there are chances and circumstances in favour of alternative approaches in dealing with societal, economical, and environmental problems. First, the increasing concentration of wealth in the private sector is promoting calls for increased corporate social to deal with complex social problems of a society. Second, people are earning fortunes at younger ages than the previous generation. Many of them are devoting their time and resources to philanthropy earlier in life (Reis & Clohesy, 2001). Third, a new group of philanthropists is emerging, a group of young innovators from diverse backgrounds who are challenging old assumptions about charitable giving. Bill Gates, founder of Microsoft, serves as a salient example of this group. He began devoting his life and capital to enhancing healthcare and reducing extreme poverty before he turned forty by creating The Gates Foundation, today the largest private foundation in the world. In particular, this new group of philanthropists argues that traditional philanthropy has focused too much on donor satisfaction and not enough on producing measurable results (Reis & Clohesy, 2001). Finally, organizations are influenced by a strong Corporate Social Responsibility movement, rethinking the assumption that doing social good and making a profit are mutually exclusive (Zahra et al., 2008). Being socially responsible is no longer an exception but has become a mainstream opinion; having a social conscience is also good for business. CONCLUSION The present paper has tried to identify the distinctive domain of Social Entrepreneurship. It has been argued that Social Entrepreneurship differs from other forms of entrepreneurship in that it gives high priority to social value creation by catalyising social change. Social entrepreneurship is not an isolated phenomenon but an integral part of a social system. 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