Social Entrepreneurship and Business Ethics

Understanding the Contribution and Normative Ambivalence of Purpose-driven Venturing

Anica Zeyen, Markus Beckmann

• Editorial: Routledge
• Año: 2018
• ISBN:
  9781351626521
• Edición: 1
• Categoría: Negocios y empresa
• Categoría: Ética empresarial

Social entrepreneurs are change makers that aim to solve society's unsolved problems. Not surprisingly, social entrepreneurship has thus created high expectations. To better understand the potential as well as the limitations of social entrepreneurship, however, a more nuanced approach is needed in two ways.

First, social entrepreneurship is a multi-level phenomenon. It spans macro-level questions as well as meso-level questions and, finally, micro-level questions. If we really want to understand social entrepreneurship, we need to bring together all three levels of analysis and see how they are connected.

Second, while social entrepreneurship can certainly produce socially desirable outcomes, we also need a critical perspective to capture potential undesirable effects that social entrepreneurship can cause, often unintendedly, in society, in markets, in organizations, and for individuals. To this end, an ethical perspective can help complement the positive analysis of social entrepreneurship with a discussion of the normative implications of its potential "dark side".

Looking at social entrepreneurship from both a multi-level analysis and an ethical perspective, Social Entrepreneurship and Business Ethics takes the reader on a journey through the "bright side" as well as the potential "dark side" of social entrepreneurship for societies, organizations, and individuals. Highlighting both, this book not only seeks to provoke researchers and students to advance their understanding of social entrepreneurship. It also hopes to help practitioners to better realize the positive contributions of social entrepreneurship for society.

1 Introduction

Why Social Entrepreneurship and Business Ethics?

Where there is much light, there is also shadow.

(Goethe 1773)

1.1. What Is Social Entrepreneurship?

Social entrepreneurs are changemakers who aim to solve society’s unsolved problems. People like Muhammad Yunus from Bangladesh, founder of the Grameen Bank and inventor of modern microcredits, turn societal challenges such as poverty into an opportunity for innovation and positive social change. Around the world, social entrepreneurs use diverse organizational forms and strategies to innovate and implement novel solutions for equally diverse problems and target groups.

In Africa, Katherine Lucey and Neha Misra founded Solar Sisters, a social venture that uses clean technology solutions to empower women through economic opportunity. Having aided thousands of women to become micro-entrepreneurs, Solar Sisters not only creates income but helps shift economic development onto an ecologically sustainable path. In Europe, Danish Thorkil Sonne’s venture Specialisterne builds upon the special skill set often linked to autism (such as attention to detail). By training people on the autism spectrum to become specialized IT business consultants, Specialisterne enables them to become valuable experts in jobs ranging from data entry to software testing. German social entrepreneur Rose Volz-Schmidt, on the other hand, has founded Wellcome. Her nonprofit company helps young families adapt to the disruptive changes that come along when a baby is born. In India, Govindappa Venkataswamy founded Aravind Eye Care System, a network of hospitals and support facilities that revolutionized the provision of urgently needed eye care services. Focusing especially on poor people, Aravind delivered more than six million surgeries to people who would otherwise most likely have gone blind. In Latin America, Brazilian Rodrigo Baggio founded the Center for Digital Inclusion that brings information and communication technology (ICT) into slums, thus creating opportunities for education and local entrepreneurship. In the United States, Wendy Kopp founded Teach for America, which puts smart college seniors in some of the country’s worst high school classrooms. In only a few years, Kopp expanded her idea onto a global scale and by now operates in more than twenty countries. With an even more global scale, Jimmy Wales is the well-known founder of Wikipedia. His idea to use a peer-operated platform transformed the global sharing and verifying of knowledge, thus democratizing the use and access of information.

Social entrepreneurs thus operate on all continents and address diverse issues ranging from education and economic empowerment via health and disability to sustainability and environmental stewardship. In so doing, they use nonprofit organizations (like the Center for Digital Inclusion), for-profit companies (like Specialisterne), nonprofit enterprises (like Wellcome), or foundations (like Wikipedia). At the same time, they can create a positive impact through their product for their direct customers (like Grameen or Aravind), through work opportunities for their employees (like Specialisterne), or for third parties and society at large (like Teach for America). Similarly, their funding may include market income, subsidies, fees, and donations.

Social entrepreneurship is, in short, a diverse (and fascinating!) phenomenon. Yet, despite their diversity, these examples illustrate what social entrepreneurs have in common. As entrepreneurs, they apply the skills, mind-sets, and practices of entrepreneurial venturing to identify opportunities for change, to devise innovative solutions to reap these opportunities, as well as to acquire necessary resources and take risks to implement their innovation. As social entrepreneurs, their primary motivation is not the realization of financial profits but to contribute to positive societal change. Social entrepreneurs are, thus, public-purpose changemakers.

Public-purpose changemakers have existed for a long time (Bornstein 2007). Florence Nightingale, for instance, was a remarkable social entrepreneur in nineteenth-century Britain. She innovated, implemented, and scaled the foundations of modern nursing, thus saving millions of lives through higher medical standards. In the early twentieth century, Maria Montessori founded kindergartens for working families in Italy. Her reform ideas soon transformed education and pedagogy worldwide.

The phenomenon of social entrepreneurship is thus not new. What is of more recent origin, however, is the vibrant discourse about it. A key figure in this regard is Bill Drayton. In 1980, Drayton founded Ashoka, an organization that supports social entrepreneurs. The idea of Ashoka is simple: If social entrepreneurs do an important job for society, they shall try to find, support, and connect these people. Ashoka supports these so-called Ashoka Fellows with a stipend and additional support. Starting in India in 1981, Ashoka soon expanded its work with the nominations of the first Ashoka Fellows in Brazil in 1986 and then Bangladesh, Mexico, and Nepal in 1987. During the 1990s, Ashoka added countries in Asia, Africa, Latin America, and Central and Eastern Europe. It was only during the 2000s that Ashoka expanded its program to the United States, Canada, and Western Europe (as of 2005). In this book, we will frequently draw on example social entrepreneurs who are Ashoka Fellows.

The systematic emergence of the social entrepreneurship movement thus started primarily with a focus on the Global South and was driven largely by practitioners and activists like Bill Drayton. Around the turn of the new millennium, however, this dynamic changed when both journalists and academics in the Global North discovered social entrepreneurship as an inspiring phenomenon. On the one hand, researchers started an academic discussion about the meaning of social entrepreneurship (Dees 1998) or its new business models (Seelos and Mair 2005), thus increasingly exploring social entrepreneurship research as a “source of explanation, prediction, and delight” (Mair and Martí 2006). On the other hand, a number of popular science books promoted the idea to a broader public (Leadbeater 1997; Bornstein 2007; Elkington and Hartigan 2008).

This increasing attention for social entrepreneurship has various reasons. With regard to the demand for social entrepreneurship, there is an increasing awareness that innovative solutions are urgently needed in light of pressing social and environmental challenges (Nicholls 2006). Although capitalist markets, public-sector institutions, and welfare organizations provide many people on this planet with a high standard of living (Rosling, Rönnlund, and Rosling 2018), many others are left behind—not only in the developing world but in industrialized countries as well. At the same time, climate change, loss of biodiversity, soil erosion, or air and water pollution are just a few problems in the ecological domain. In fact, the world is in many domains in very unsustainable equilibriums, thus creating the need for entrepreneurial solutions to creatively destroy the unsustainable status quo and pave the way for a better world (Schaltegger, Beckmann, and Hockerts 2018). With regard to the supply side, on the other hand, a number of developments ranging from the fall of the Iron Curtain via new means of information and communication to rising levels of affluence and education allow more and more individuals to engage in social entrepreneurship. As summed up by Bornstein (2007, 7), “more people today have the freedom, time, wealth, health, exposure, social mobility, and confidence to address social problems in bold new ways.”

Against this background, the past two decades have witnessed the rapid emergence of ever more encompassing ecosystems for social entrepreneurs. Organizations like Ashoka, Schwab, Skoll, or Synergos identify, award, support, and connect promising social entrepreneurs. In the field of finance, venture philanthropy organization and their platforms like the European Venture Philanthropy Association (EVPA) promote and provide specific forms of funding for social entrepreneurs (Manuel et al. 2006). Closely linked, new approaches have emerged to measure the impact of social ventures (Nicholls 2005, 2009). At the same time, universities and schools have begun to integrate social entrepreneurship into their curricula, thus opening up the ever broader field of social entrepreneurship education (Tracey and Phillips 2007).

Though the research on social entrepreneurship is still fairly young, it has seen a highly productive and rapid development (Dees, Emerson, and Economy 2002; Seelos and Mair 2009; Hockerts, Mair, and Robinson 2006; Dacin, Dacin, and Matear 2010; Seelos and Mair 2005; Nicholls 2006). In fact, in academia, in addition to social entrepreneurship scholarship published in established journals, new journals have emerged with an explicit dedication to the issue such as the Journal of Social Entrepreneurship, the Social Enterprise Journal, or the Stanford Social Innovation Review. This research has yielded exciting findings and can, by now, fill entire libraries. So why do we think that there is not only room but arguably the need for yet another book on social entrepreneurship?

1.2. Bringing Together Social Entrepreneurship and Business Ethics

This book seeks to bring together the fascinating field of social entrepreneurship with a business ethics perspective. At first sight, the value of this linkage is not obvious. After all, social entrepreneurship and business ethics seem to be only remotely related. Business ethics focuses traditionally on conventional for-profit businesses. It then looks at potential conflicts between profit-seeking and societal interests, discussing the social responsibility of capitalist firms (Crane and Matten 2016). In contrast, social entrepreneurship, as just discussed, does not primarily focus on profit maximization but takes societal interests as the key objective for economic venturing. As a consequence, both perspectives seem to look into different directions (Beckmann 2011; Zeyen, Beckmann, and Akhavan 2014). In fact, so far there is little overlap between both discourses, both in the academic debate and the practitioner’s world (for an exception see Chell et al. 2016; Dey and Steyaert 2016).

Upon closer inspection, however, the picture becomes more complicated. After all, ethical scandals and crises have occurred in social entrepreneurship as well. To illustrate, take the case of microcredits shortly introduced at the very beginning of this chapter. After this poster case of social entrepreneurship received abundant appraisal (including the Nobel Peace Prize), the diffusion of microcredits led to a borrowing crisis among various communities. With thousands of people overly indebted, a high number of them ended up committing suicide (Ashta, Khan, and Otto 2011; Seremani 2013). An innovative idea with noble intentions thus ended up creating misery instead of positive change. Cases like this one drastically underline that ethical problems are obviously not limited to for-profit venturing (Bouckaert and Vandenhove 1998).

We suggest that applying a business ethics perspective can add a valuable contribution for social entrepreneurship theory and practice. However, many business ethics approaches differ in their conceptual perspective. Some conceptual perspectives evaluate the moral quality of a behavior, decision, or phenomenon based on the underlying intentions (Crane and Matten 2016). From this perspective, the other-regarding, prosocial intentions of social entrepreneurs would obviously seem praiseworthy. The case of microcredits, however, illustrates that even well-intended ideas can lead to highly questionable results. How can ethics help understand this problem and improve these outcomes?

Against this background, this book builds upon a perspective that looks not at intentions but consequences. The starting point for our business ethics approach is to focus on the unintended ethical challenges that can emerge as the result of intentional behavior (Pies, Beckmann, and Hielscher 2014, 7), no matter whether the intentions for the latter are driven by profit or nonfinancial motives. A key insight from the business ethics literature is that not only intentions (such as the profit motive) but many other phenomena (such as competition or self-interest) are neither inherently good nor inherently bad. Instead, profit-seeking or competition are normatively ambivalent: Depending on the situational conditions, they can lead to socially highly desirable or highly undesirable consequences (Pies, Hielscher, and Beckmann 2009). This particular business ethics perspective thus shifts the attention toward analyzing the situational context to investigate under which conditions a self-interest, altruism, profit-seeking, or a phenomenon like social entrepreneurship lead to desirable or undesirable outcomes (Beckmann 2012).

We believe that such a business ethics perspective offers fruitful insights for the social entrepreneurship debate. Given its many fascinating examples, the literature often embraces social entrepreneurship as an inherently positive phenomenon with “univocally positive effects” (Dey 2006, 121). Social entrepreneurs are heralded as “as the real-life superheroes of our society” (Kickul and Lyons 2016, 2). Similarly, Yunus sees “social business entrepreneurs [as] the solution” to build the “future of capitalism” (Yunus 2013, 2009). By the same token, many elements of social entrepreneurship such as innovation or social mission orientation as well as many practices of social entrepreneurship such as scaling or the use of impact measurement are often presented as inherently desirable (see Seelos and Mair (2012) for a critical comment on the tendency to see innovation as inherently desirable).

What our business ethics perspective can contribute to this debate is to show that not only profit-seeking or good intentions but also most issues discussed in social entrepreneurship are normatively ambivalent. To use a metaphor, we suggest to view social entrepreneurship as a tool—an instrument to solve certain problems (Beckmann 2012). In everyday life, nobody would claim that a hammer or a knife is inherently good. It rather depends on the situation—how you use the tool. Although a knife can help a surgeon to save a life, it can also take a life. By analogy, we suggest viewing not only the very phenomenon of social entrepreneurship but also many of its features (mission orientation, innovation, entrepreneurial agency) and related practices (hybrid business models, scaling, measurement) as a tool: Depending on the context and how well they are used, they can lead to both desirable and undesirable consequences.

A key benefit of this conceptual perspective is not only that it can guide us toward a more balanced understanding of the contribution and limitations—the bright and dark side so to speak—of social entrepreneurship. Moreover, the concept of normative ambivalence shifts the focus toward the conditions for managing these tensions constructively, that is, how to improve the usage of the social entrepreneurship tools.

The purpose of this book is thus twofold. First, although social entrepreneurship can certainly produce socially desirable outcomes, we want to capture potential undesirable effects that social entrepreneurship can cause, often unintendedly, thus advancing critical perspectives in the field (Dey and Steyaert 2018).

Second, because our ethical perspective highlights the importance of situational conditions, this book seeks to analyze social entrepreneurship in context. Social entrepreneurship, however, is a multi-level phenomenon. It spans macro-level questions (which role does social entrepreneurship play in society, and how does it interact with the institutions of the market, the state, and civil society?) as well as meso-level questions (what are the implications of social entrepreneurship for organizing, business models, and management?) and micro-level questions (what are the effects on individuals in social entrepreneurship...