Social Entrepreneurship

Introduction to Social Entrepreneurship

•Muhammad Yunus, Grameen Bank, and Micro-lending
•Lack of access to credit
•Margins and the removal of the middleman
•“increasing” margins and their impact on sustainability and venture
growth
 New Venture undertaking requirements
(Grameen Bank’s Impact)
– On Resources- funds, expertise, and energy
– Bank’s vision - Low adverse risk in borrowers
 Why was credit not otherwise available?

– Concept of collateral
– Cultural/Gender bias
– Location - accessibility to banking
– Perceived Risk of default
 What is Social Entrepreneurship?
“from the French”- entreprendre, - to undertake.

• Traditional model of entrepreneurship– as a

“commercial” enterprise
– labor mental and physical effort –(Tangible)
– physical capital -plant and equipment –T
– human capital –knowledge and expertise –T
– Managerial Skill – (Intangible)
– Risk willingness – IT
 Entrepreneurship models are “process” focused

* Opportunity recognition – From idea into

opportunity
• Concept development – translation of opportunity
into Enterprise concept
• Resource development and acquisition
• Launch and venture growth
• Harvest/grow the venture
 Social Entrepreneurship (SE) uses the “enterprise” process, but
seeks different ends/rewards – adding social value

• Pursues/Addresses social problems or needs unmet by private markets or

governments
• Social entrepreneurship is motivated primarily by social benefit
• Social entrepreneurship generally works “with” – not “against” market
forces -a balancing act between “moral imperatives” and “profit motives”
• Social entrepreneurs combine innovation, entrepreneurship, and social
purpose and seek to be financially sustainable by generating revenue
from trading
• The primary difference between Commercial Entrepreneurship and Social
Entrepreneurship is not the entrepreneurial process, but the
denomination of the rewards (from the created value) sought
• Exhibit heightened sense of accountability to those served for outcomes
and their impact
 Social Entrepreneurship Mission – To create
and sustain “social” value –

– freed from profit as the reward ,the SE can generate

opportunities from failure
– unmet social need may be in the form of unfilled
demand or ‘latent’ demand
– opportunity can lead to development of an enterprise
concept that is denominated in its value in three
ways: 1. identifiable, 2. defensible, and 3. measurable.
• Note: Failure to identify and denominate social returns and
set clear, specific goals at this stage is a key reason for many
social enterprise failures.
Resources needed are determined and acquired

– Financial needs
– Human resource needs
– Human capital needs (knowledge and expertise)
– Political and negotiation savvy
 Launch and growth

– Follow a tangible business strategy with a plan

– Needs a growth strategy, explicit and transparent
– Must cover plans for removing obstacles (plan B)
and measuring progress thru regular, appropriate
monitoring
Goal attainment is a critical point of decision

– Shut down
– Redefine
– Stabilize and continue
– Integrate into another venture with purpose
 Social Entrepreneurship Origins

• Environment—latent condition in the

population
• Resources—availability of resources for new
ventures (societal or organizational slack)
• Displacement – structural dislocations in an
existing social structure or system
• Personal traits – “Entrepreneurial personality”
• Preparation – learning and experience
 Who are most likely to become Social
Entrepreneurs?
• Immigrants --(Innate attribute)
• Women -- Innate
• Personal life trauma people --Innate
• Community awareness and social concern –
social-psych
• Persons who value compassion, justice,
equality, and liberty –(Social-Psychological)
• (continued on next slide)
 (cont.)Who are most likely to become Social
Entrepreneurs?
• Innovators –(Psychological attribute)
• Achievement oriented –Psych
• Independent –Psych
• Inner-directed --Psych
• Tolerant of risk --Psych
• Tolerant of ambiguity --Psych
 Combining Risk Aversion and Innovativeness to Trigger
Entrepreneurship

• High innovativeness and low risk aversion

= Entrepreneur
• Non-innovative and low risk aversion =
Gambler
• High innovativeness and high risk aversion
= Dreamer
Social Entrepreneurship and Leadership characteristics

• Social Entrepreneur (SE) recognizes a social problem and all its

complexity and binds the problem with a vision that has the
potential to reshape the situation directly and change public
attitudes that perpetuated the original problem
• SE holds significant personal credibility (referent power) which
allows them to tap critical resources and actually build the
necessary network of participating persons and organizations
• SE generates followers’ commitment to a project by framing the
project in term of important social values, rather than purely
economic terms. This results in a sense of collective purpose
between and among the social entrepreneur and those who
join the effort.
Common ‘Myths’ about Social and Commercial
Entrepreneurship
• SEs are anti-business – rather collaboration for
alignment and mutual benefit
• Difference between SE and Commercial
Entrepreneurship (CE) is ‘GREED’ – many SEs are
also CEs.
• SEs run non-profits – social entrepreneurship
process can occur in any sector and with any
legal status
• (continued on next slide)
 (Continued ) -
Common ‘Myths’

• SEs are born, not made – people can grow and learn to be comfortable
with risk and ambiguity, as well as have their level of community
awareness elevated. Ethical maturity, following Kolb’s theory of moral
development, can be instrumental in SE creation.
• SEs are misfits – They value different goals, but certainly are anything
but
• SEs usually fail – while slightly less than 50% of CEs actually fail, an
even smaller percentage of SEs actually fail (<30%)[Cordes, et.al.,
2001].
• SEs love risk – there is little empirical evidence for this claim, rather all
successful entrepreneurs utilize “well thought out risk taking. By
thinking, analyzing, and planning well, they mitigate risk and function
under calculated risk paradigm.
 Social Entrepreneurship Today
• Two excellent, creative examples of Social
Entrepreneurship in action can be found at the
following web sites: http://www.path.org/ and
http://www.DonorsChoose.org/ .
• Both can be used by students to gain a “feel” of
Social Entrepreneurship in the real world.
• mcamarata@semo.edu or mcamarata@aol.com
for more information!