1.1 The Importance of SE Research
There is growing evidence of increasing inequalities in the developed world (Piketty 2014). Indeed, it has long been felt by some that economic development would worsen inequality in poor countries (Ranis 1977; Stewart 1978). An increase in inequalities may reduce aggregate consumption, and this stops growth. Some established economists have started wondering if free-market capitalism can continue to deliver economic prosperity without a reduction in inequality of opportunity (Stiglitz 2013). Many researchers feel that this is exacerbated by rapid changes in technology and associated increases in productivity, that may mean that commercial enterprises will employ fewer workers and that wage inequalities will increase (Aghion et al. 2002; Moutos 2006; Rifkin 1995; Spencer 2017), leading to many social problems. These inequalities are found to be bad not just sociologically, but also for the environment (Vona and Patriarca 2011). One attempt at solving these social problems is through Social Entrepreneurship (SE). Indeed, using global entrepreneurship monitor data, it has been found that SE at the individual level is higher in countries with high-income inequality, especially if income mobility is low (Pathak and Muralidharan 2018). Therefore, as inequalities increase, we should expect that more social entrepreneurs are going to be required to address these social and environmental problems.
Indeed, it is difficult to solve problems by action at the macro-level alone. Governments have failed to usher in economic development in many parts of the world. First, it was felt that to escape the vicious circle of poverty, financial capital and technical know-how needs to be transferred (Nurkse 1952). Yet neither economic growth nor a broader development was forthcoming from aid and subsidized capital transfers (Erixon 2003; Calderisi 2006; Easterly 2006; Moyo 2009) and gradually emphasis returned to freeing markets and providing appropriate macroinstitutions such as property rights, rules and regulations (De Soto 2000). Second, governments produced formal plans based on complex input-output analysis (Leontief 1986). However, formal macro-planning did not produce any significant results, and it was considered that participatory development was required at the micro-level (Chambers 1986; Mohan 2002). Third, it was felt that human capital in the form of education and health was a prerequisite for development (Becker and Tomes 1986; Schultz 1961). However, in large parts of the world, the government was unable to provide these social goods, and they were often unprofitable to provide by the private sector. Therefore, charities and social entrepreneurs came in to provide what government and private enterprise could not. While people may disagree on their usefulness and their impact is indeed difficult to prove, clearly work by social entrepreneurs is appreciated by many, notably those who would like the State to leave the welfare field free to private initiative (Perren 2018). Yet it could be criticized as âunreasonâ in the sense of Foucault (2003 [1961]), and these critics would therefore want to confine social entrepreneurs to areas where rational, and therefore profit-seeking, entrepreneurs would not seek to go.
Although social enterprises are an increasing part of the formal economy, they are not always successful. Academics, students...