Understanding Social Entrepreneurship

The Relentless Pursuit of Mission in an Ever Changing World

Jill Kickul, Thomas S. Lyons

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000041545
• Edition: 3
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

Understanding Social Entrepreneurship is the leading textbook that provides students with a comprehensive overview of the field. It brings the mindset, principles, strategies, tools, and techniques of entrepreneurship into the social sector to present innovative solutions to today's vexing social issues.

Kickul and Lyons cover all the key topics relevant to social entrepreneurship, including a detailed examination of each of the steps in the entrepreneurial process. This third edition includes several new features:

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• A process-oriented format, taking students through discovery, design, development, and delivery

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• Two new chapters: one on lean start-up and design thinking for social entrepreneurship, and another on unconventional approaches from developing countries

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• Updated and new case studies, with improved global coverage

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• "Voices from the Field" sections that explore evidence-based research from the field.

Bringing together a rigorous theoretical foundation and a strong practical focus, this is the go-to resource for students of social entrepreneurship at undergraduate and postgraduate levels.

A companion website includes an instructor's manual, PowerPoint slides, a test bank, and other tools to provide additional support for students and instructors.

Chapter 1
Introduction

AIM/PURPOSE

This chapter offers an introduction to the field of social entrepreneurship and a discussion of its importance to society. In addition, it lists online resources to help the student begin her or his journey of understanding.

LEARNING OBJECTIVES FOR THIS CHAPTER

1. To understand the economic considerations, particularly market failures, that make social entrepreneurship desirable and necessary.
2. To recognize why governments are sometimes unable to solve social and/or environmental problems.
3. To understand why private businesses are sometimes unwilling to address social and/or environmental problems.
4. To become familiar with the relatively recent developments that make social entrepreneurship possible.
5. To understand the characteristics of social entrepreneurship that position it as a powerful force for solving society’s problems.

In Chapter 2 of this book we will explore in some detail what is meant by the term “social entrepreneurship.” However, it is useful to have a working definition of this term as we examine its origins and importance. Put very simply, social entrepreneurship is the application of the mindset, processes, tools, and techniques of business entrepreneurship to the pursuit of a social and/or environmental mission. Thus, social entrepreneurship brings to bear the passion, ingenuity, innovativeness, perseverance, planning, bootstrapping abilities, and focus on growth characteristic of business entrepreneurs on the work of meeting our society’s most pressing challenges. This is not intended as a complete definition but as a relatively easily understood place to start.

While social entrepreneurship as a field of study is relatively new, much has already been written on the subject (see Dees, Emerson, & Economy, 2001; Mair & Noboa, 2006; Wei-Skillern, Austin, Leonard, & Stevenson, 2007; Brooks, 2008; Elkington, Hartigan, & Schwab, 2008; Light, 2008; Nicholls, 2008; Welch, 2008; Bornstein & Davis, 2010, to name but a few). This is a direct reflection of the excitement it generates and the promise it is perceived to hold. Social entrepreneurs have captured our collective imagination with remarkable stories of their social innovations. These stories are uplifting and inspiring. Throughout this book, these social innovators are introduced and their innovations are explored. However, it is tempting to focus on the outcomes of social entrepreneurship and avoid thinking about why these innovations were needed in the first place and why social entrepreneurs are the logical providers of this service to society.

This chapter aims to lay this essential groundwork. In doing so, it ventures into territory that some people might find contentious; however, it is out of this very contentiousness that social entrepreneurship was forged.

We are a society that is frustrated by an overall lack of progress toward solving our most pressing social and environmental problems. Our governments and our private sector have disappointed us with their seeming inability or unwillingness to effectively address poverty, hunger, illiteracy, child abuse, domestic violence, teen pregnancy, global climate change, energy conservation, and many other challenges ( Bornstein, 2007 ). We are eager for someone to step into the breach and meet these challenges head-on. Might that someone be the social entrepreneur?

Social entrepreneurs ha ve been touted as the real-life superheroes of our society. Why? Why can’t governments solve these problems? Why won’t the private sector address them? Why entrepreneurship? The answers to these initial questions can help us to understand why the study of social entrepreneurship is important and worthwhile.

THE PUBLIC AND PRIVATE SECTORS AND OUR VEXING SOCIAL PROBLEMS

Many of the societal problems that we face have been with us for decades, if not centuries. While there has been an ebb and flow in our success in addressing these problems, the effect is that we have made surprisingly little net progress considering the time over which we have been working on them. Over the course of history, we have wavered between relying on private actors and relying on the government to help us to solve these problems. Neither sector has been consistently successful.

Despite the claims of neoclassical economists, markets are far from perfect. Adam Smith’s “invisible hand”—the idea that if free markets are allowed to operate without interference, they will self-correct and benefit all members of society—has proven arthritic when it comes to addressing all segments of the economy. Market failures abound. They can be seen in situations where profits are insufficient to cause private developers to generate housing for low-income households; where banks refuse to invest in certain neighborhoods because of perceived risk, called redlining; where people go hungry in some parts of the world, while in other regions surplus food is destroyed or land is kept out of agricultural production; and where one community’s pursuit of economic well-being pollutes the environment, thereby diminishing the ability of another community to provide for its residents. These are but a few examples. They are not isolated incidents. In fact, they are widespread and they are repeated on a regular basis around the world. Private markets help to create these problems and, if left to their own devices, have no incentive to reverse them.

Government, which is created to represent the interests of society as a whole and is in a position to address these issues, has not consistently been able to do so. This is due, in part, to inadequate resources; however, there are other factors at play as well. Politics is one of these.

There is too often a general lack of political will to sustain efforts to address societal problems. In democracies, short election cycles, term limits, and the propensity of newly elected officials to eschew the programs of their predecessors in favor of leaving their own mark tend to foster disjointed policy. Warring ideologies cause pendulum swings in attitudes and approaches as one regime replaces another, causing governments to “do and undo” their efforts rather than make steady forward progress. The well-documented breakdown in civil society ( Milich, 2001; Putnam, 2001; Weiss & Gilani, 2001) has exacerbated this problem by radicalizing ideology and polarizing society. Because no ideology has a monopoly on truth, opportunities for the cross-pollination of ideas are being lost.

Authoritarian governments are no more successful at solving their society’s problems, but for different reasons. One ideology dominates and eventually, and inevitably, reaches its point of diminishing returns for producing positive change. There are no checks on power, so corruption is common and counterproductive relative to focusing attention and resources on meeting the needs of the populace. Changes in government are often violent and the resulting instability creates still more social problems.

If our institutions are incapable of solving our social and environmental problems, then we must ask who, or what, is. How can we perfect imperfect markets without unintentionally destroying them? How can we circumvent the unproductive aspects of politics? How can we blend the best of the private and public sectors to address societal challenges? One seemingly viable answer to these questions is social entrepreneurship.

WHY THE TIME IS RIPE FOR SOCIAL ENTREPRENEURSHIP

While dissatisfaction with the relative inability of the public and private sectors to deal with society’s problems helps to explain why social entrepreneurship represents an attractive option, it does not shed light on why this phenomenon is enjoying such a high level of popularity at this particular time in history. Bornstein ( 2007) makes a compelling case that major transformational changes worldwide over the past several decades have made it both possible and increasingly likely that citizens will take the lead in addressing social and environmental challenges.

Bornstein identifies several key changes that have made the social entrepreneurship phenomenon possible. One of these is the global increase in prosperity that brought the rise of the middle class and an increase in wealth that can be used to finance social ventures. Another is an increase in the number of democratic and semi-democratic societies, which has given citizens the freedom to pursue the correction of social and environmental wrongs outside of government and the business sector. A third is the proliferation of new communications technology that has increased people’s level of awareness of global societal problems and their impacts. Fourth is the increased availability of formal education in general and the growth in the number of college-educated individuals in particular, which enhances wealth and heightens awareness as well. The final factor is the removal of many obstacles to the active participation of women and certain subjugated groups in societal affairs. As Bornstein (2007, p. 7) puts it, “To sum up, more people today have the freedom, time, wealth, health, exposure, social mobility, and confidence to address social problems in bold new ways.”

SOCIAL ENTREPRENEURSHIP'S UNIQUE QUALIFICATIONS

Social entrepreneurship represents the best of the private and public sectors, while filtering out the limiting factors already discussed in ways that will be examined in this section. On the one hand, it embodies the enterprising spirit of the private sector and uses the power of economic markets to generate and deliver solutions to problems. On the other hand, it strives to intervene in broken markets in an effort to repair them and places the public interest ahead of private interests (Dees, 1998). As was noted at the beginning of this chapter, it brings the mindset, processes, tools, and techniques of business entrepreneurship to the solution of social and/or environmental problems.

Social entrepreneurship possesses unique qualifi cations that make it an attractive alternative to purely private or purely public approaches to social and environmental problem solving:

• ∎ It is passionate and personal in that the social entrepreneur has chosen the problem to be addressed because it has deep meaning to her or him. Whether that meaning derives from personal experience, second-hand knowledge, or an avocation, it sparks an intense desire to pursue a solution to the identified problem. This is not to suggest that politicians and public officials are not passionate about certain issues, but their passion is often tempered by political realities that preclude a single-minded pursuit of an issue’s resolution. Similarly, commercial entrepreneurs are typically quite passionate about their product or service, but that passion centers around the offering’s ability to satisfy a customer need and thereby generate a profit for the business owner(s).
  Thus, the difference between social entrepreneurs, government officials, and private business people relative to passion is the source of that passion; that is, the values that underlie it. Social entrepreneurship is often referred to as value-based (Cho, 2006; Brooks, 2008). This could be misleading, however. There are values that drive the actions of all three actors; these values merely differ from role to role. For the public official, it may be political expediency. For the commercial business person, it may be profit. For the social entrepreneur, the values are moral in nature, involving empathy for the plight of the beneficiaries of her or his efforts and some kind of judgment regarding the “rightness” of addressing the underlying problem (Mair & Noboa, 2006). Such morally based values have the power to drive the level of passion that is unique to social entrepreneurs.
• ∎ It is not bureaucratic; it is nimble. Unlike governments or large companies, social entrepreneurship is not reactive or bound by cumbersome rules and processes. Like small commercial ventures, social ventures are nimble and strategic. They move quickly and decisively to address problems. Entrepreneurs recognize that there is a “window of opportunity” for capturing any market, which does not remain open indefinitely. Similarly, social entrepreneurs understand that social and environmental solutions have limited periods of effectiveness, which are always changing. This makes agility in adapting to changes crucial.
• ∎ It enables transformation. Most of what is delivered to customers or clients or citizens by private businesses and by governments is conveyed by transaction. Goods and services are exchanged through short-term transactional relationships. This works as far as it goes, but it does not bring long-term change; it does not yield transformation. Social and environmental problems are not solved through transactions. Giving a starving individual food does not end hunger in the world. Some people seem to think that piling up transactions can yield a transformation. However, giving 1,000 hungry individuals food will still not end world hunger. Not until the system that spawns hunger is permanently changed for the better will hunger be ended on a global scale. This kind of systemic change, yielding long-term benefits, is the focus of social entrepreneurs.
• ∎ It builds, maintains, and utilizes social capital. A crucial factor in all entrepreneurship, and social entrepreneurship in particular, is networking. Bringing people and organizations together to focus attention on a problem, to marshal resources from a variety of places to implement solutions, and to effectively communicate outcomes are what gives social entrepreneurship its power. These networks of trust are built on a shared mission and vision for positive change. The public and private sectors are typically focused on adversarial relationships and competition. Political parties compete to control the policy agenda. Warring ideologies bludgeon each other over who is “right.” Important decisions are reached using win–lose mechanisms that work for some and leave others out. Commercial businesses compete with others for market share, with the tacit, if not implicit, goal of putting the competition out of business.
  Social entrepreneurs embrace the concept of “co-opetition” ( Brandenburg...