Social Entrepreneurship: A Critical Reviewof Literature

I.ABSTRACT

This study attempted to undertake a preliminary critical review of literature on Social Entrepreneurship from five distinct aspects, namely; Concepts and Definitions, Contrast of Values and Characteristics between Commercial and Social Entrepreneurship, Historical Development and Evolution of Social Entrepreneurship, Trends in Social Entrepreneurship and Selected Theoretical Foundation ofSocial Entrepreneurship using several journal and article sources on the subject matter.

The study showed that the various concepts and definitions of Social Entrepreneurship converge into its ultimate goal, which is social change and transformation of the poor constituencies it serves. While in terms of its unique characteristics, Social Entrepreneurs are driven by its social mission and its values are dominated by social transcendence, universalism and social transformation.

Further studies are recommended in the analyzing the evolution of Social Entrepreneurship in the Philippine setting.

KeyWords: Social Entrepreneurs, Commercial Entrepreneurs, Social Transformation, Social Wealth, Social Mission,Value Creation, Value Appropriation.

II. INTRODUCTION

The urgent importance of Social Entrepreneurship has been increasingly highlighted as a unique solution to address the highly deplorable state of global poverty, where an average of 40% to a high of 68% of the world’s total population as in the case of Madagascar fall under the poverty line (World Bank, 2013). In the case of the Philippines, one-quarter (27.9%) of the total population are in poverty for the first semester of 2012 (NSCB, 2013).

Unlike a decade ago where the concepts of Social Entrepreneurship were rarely discussed, Social Entrepreneurship is now making amazing breakthrough both in the U.S. as well as in the EU countries , particularly in the Netherlands. It is likewise attracting significant interests in East Asia and LatinAmerica (Defourny & Nyssens, 2006). In the academic space in the 1990s, Social Entrepreneurship met significant positive response, e.g. the Social Initiative Program of the Harvard Business School, the GK Enchanted Farm Village University in the

Philippines which will expose students from all sorts of disciplines to start social enterprises from the ground up (Gawad Kalinga, 2013).

It is in this light that this study aims to achieve the following objectives:

1)To describe the evolution of Social Entrepreneurship concepts, theories and development.

2)To provide some contrasting characteristics betweenSocial Entrepreneurship and Commercial Entrepreneurship.

3)To initiate the foundation for developing a proposed theoretical framework of Social Entrepreneurship.

III. CONCEPTS AND VARIOUS DEFINITIONS OF SOCIAL ENTREPRENEURSHIP

Social Entrepreneurship has, over recent times, undergone several definitions and conceptual understanding as proffered by various authors as shown below:

SOURCE DEFINITION OF A SOCIAL CORE CHARACTERISTICS ENTREPRENEUR

Leadbeater,C. An Entrepreneurial innovator, Manager, leader, (1997) transformatory leader, social change agent.

visionary opportunist, visionary opportunist and alliance builder. Manages alliance builder. a venture to make a social change.

Bornstein, D. A path breaker with powerful Visionary, creative & (1998) new idea who combines visionary realist problem-solver. & real world problem-solving highly ethical & creativity and has strong ethical social change motivated. fiber & totally possessed with vision for social change.Dees, J.G. A change agent in social sector by: Social change creator, (1998) -adopting mission to create/ relentless opportunity sustain social change. pursuer, highly -recognizing/relentless pursuit of accountable to served new opportunities to serve that constituencies, social mission. dedicated & socially-

-engaging in a process of continuous alert. Innovation, adaptation & learnings. -acting boldly without being limited to current resources at hand. -exhibiting heightened sense of accountabilities to constituencies served for outcomes created.Thompson, et. al. A person who realizes some opportunity Social value creator, (2000) to satisfy some unmet social needs that alliance builder, State will not/ can not meet and gathers emotionally-charged necessary resources( generally people volunteers, money, premises) & use them to make a social difference. La Barre & Individuals who are dedicated innovators Dedicated Fishman determined to tackle some of society’s innovators, (2001) deepest challenges by embracing ideas Deep concern for

from business. society’s challengesAlvord, S. et. al. Someone who combines commercialsocial problem- (2004) enterprises with social impact/purpose. focused. Agent of social transformation. mobilizer/ asset builder of poor constituencies servedPeredo, A. & A person who aims to exclusively or in Innovator, risk- McLean, M. some prominent way create social value, tolerant, resource (2005) recognizes/ exploits opportunities to access creative create this value, employ innovation, social value creator. tolerant of risk & declines to accept limitation in availablecurrent resourcesMartin, R. & Someone who signals the imperative to Highly driven to createOsberg, S. drive social change with its lasting lasting transforma- (2007) potential payoff of transformational tional societal change, benefit to society. Out-of- the-box

thinker. Zahra et al. An individual who undertakes activities Innovator, manager, (2008) & processes, discovers, defines & social wealth creator, exploits opportunities toenhance social venture creator, wealth by creating new ventures or opportunist. managing existing organization in an innovative manner.Kickul, J. & A person who pursues entrepreneurial Entrepreneurial, Bacq,S. opportunities with the primary goal of Social benefit- driven (2012) creating social benefits.

The above concepts and varied definitions of social entrepreneurship are seen by different authors from slightly different vistas, although there lie some commonalities, namely; 1) Social change/ transformation goal 2) Deep-emotional motivation, 3) Social value creation 4)Creative innovation 5) Risk-tolerance 6) High accountability to poor constituencies served 6)Alliance builder and 7) Persistence despite limited current resources.

IV. CONTRASTING CHARACTERISTICS OF SOCIAL AND COMMERICAL ENTREPRENEURS

For sometime now, there has been some questions on the differences between Social and Commercial Entrepreneurship (Austin, J & Stevenson, H., 2006). To this end, this paper tries to offer some of these contrasting characteristics as illustrated below: Unique to Unique to Common to Commercial Entrepreneurs Social Entrepreneurs Both -High Achiever -MissionLeader -Innovator -Risk Bearer -Emotionally-Charged -Dedicated -Organizer -Change Agent -Initiative-Taker -Strategic Thinker -Opinion/Thought -Leader -Value Creator Leader -Opportunity-Alert -Holistic -Social Value Creator -Persistent -Arbitrageur -Socially-Alert -Committed -Manager -Visionary -Highly Accountable

As shown from the above table, Social Entrepreneurs are motivated by their social mission, while Commercial Entrepreneurs are driven by their

quest for personal profit gains or as Santos (2009) calls Value Appropriation as contrasted to Value Creation. Furthermore, the Social Entrepreneurs are highly accountable to the poor constituencies they served, while the Commercial Entrepreneurs are only accountable to himself. The common strand, however,is that both have are t Dedicated, Persistent and Committed as well as possessing Innovative, Out-of- the- box perspective.

In terms of the Typology of Values contrasting Commercial Entrepreneurs and Social Entrepreneurs, the table below shows the following as adapted from Kichul & Bacq(2012) and Schwartz(1998):

Commercial Entrepreneurs Social EntrepreneursDominant Value Hedonism Universalism Type Value Type Self-Enhancement Self-Transcendence DimensionMotivational Profit-Seeking Activism, Social Change GoalsVenture Economic Social GoalsEntrepreneur Serial Entrepreneur Social Entrepreneur Prototype

V. HISTORICAL EVOLUTION OF SOCIAL ENTREPRENEURSHIP

The succeeding table shows an overview of the historical evolution of Social Entrepreneurship as adapted from the Institute for Social Entrepreneurs(2008) as follows:

Period Key Concepts Prior to the 1800s During the early period saw, among others, the era of the Monasteries involved in the trading of wine and cheesecommodities as well as the Missionaries working in the marketplaces to support themselves (tentmaking).The 18th and 19th

Centuries This era saw the evolution of the Carnegie Model calledthe Arm’s length Philanthropy based on the philosophy “Make your fortune first, then give it back” as well as the Rosenwald Model (Sears Roebuck& Co.) inventing and investing in organizations that support agricultural communities.

The 20th and 21st

Centuries This saw the eraof the Morris Model ( Control Data Corp) addressing the unmet social needs as a profitable opportunity, The Mondragon Corporacion Cooperative, the world’s largest Social Enterprise as well as the foundingof Ashoka, Innovators for the Public with programsin more than 60 countries worldwide and funded not by government, but by individuals, foundations and business enterprises around the globe.

VI. TRENDS IN SOCIAL ENTREPRENEURSHIP

Eight notable trends are occurring in the field of Social Entrepreneurship according to Schweitzer (2011). These are:

1)More Creative Funding Solutions for Social Entrepreneurs. Social Enterprises are getting more resourceful in terms of funding using a combination of different sources of capital- seedfunds, impact investments, grants, corporate fundraising to create largest social impact.

2)Improvement of Metrics & Increased Adoption Rate.Greater funding pipeline results to greater pressure to provide metrics for determining impact of investments beyond just financial returns.

3)Formation of International Community of Social Entrepreneurs. Much of the work of Social Entrepreneurs has taken place in a global scale, but up until recently, not much discussions/partnerships with social entrepreneurs counterparts have happened outsidethe US. Recently, however, more US-based organizations have realized the potential synergyfrom teaming with like-minded organizations in Europe, e.g. 1st International Conference with European members in the Netherlands.

4)Closing the Gap between For-Profit and Non-Profit. Much debate has happened around the For-Profit and Non-Profit Divide among Social Entrepreneurs. However, bridges are now being built for both these camps and the trend is for these two to find ways to collaborate and form partnership instead of competing with each other.

5)The Democratization of the Movement. According to Amy Clark of Ashoka, Entrepreneurship is just one avenue by which social change can be achieved. She continued and argued that we have entered a time of democratization where everyone is involved in advancing social change. Ashoka

operates based on a citizen community where contribution and innovation of all kinds necessary for creating large social impact, seeking out ideas and innovation from all fields,sectors and skills sets are occuring.

6)The Evolution of a Meta Profession. In the academic space, taking of a cross-university approach rather than focusing solely on Entrepreneurship and Business skills is now evolving, e.g. NYU Social Entrepreneurship Program, as the greatest amount of Change and Innovation will happen when multiple skills work together and collaborate.

7)Growth of the Youth Constituency. While Social Entrepreneurship is not more prevalent among one generation or another, increasingly, the millennial generation is taking action. Social Entrepreneurship , because of a greater bend towards leading a life of meaning and significance, is hitting a sweet spot, particularly, among the millennia and Y generation.

8)More product-driven ideas. According to Galinsky,many ideas emerging from social innovation space are now focused around products that will advancechange. There is a growing trend on product-basedsocial enterprises than service-based models and an increasing trend to develop product-based

solutions to help alleviate broader social problems

VII. COMPARISON OF SELECTED THEORETICAL FOUNDATION OF SOCIAL ENTREPRENEURSHIP

The following illustrates some selected theoretical foundation on Social Entrepreneurship whichcan form some initial basis for a proposed theoretical model of Social Entrepreneurship, particularly, the Positive Theory of Social Entrepreneurship.

Source Theory Key Concepts Davidsson, P.& Theory of Human capital(network) as predictor Honig, B. Nascent of who becomes nascent (2003) Entrepreneurship entrepreneurs up to start-up. Value of assistance program for nascent entrepreneurs. Bloom,P. & Scalar Theory Increasing the impact of social Smith, B. of Social purpose organization produces (2010) Entrepreneurship better match for the magnitude of the social need or problem it seeks to address, using the 7 drivers for

social impact scale. Santos, F. Positive Theory Highlight of the Holistic Concept (2009) of Social of Value & the key trade-off Entrepreneurship between Value Creation & Value Appropriation.

Eisenhardt,K Resource-Based Underlying logic of alliance formation & Schoonhoven, C. View Theory is strategic need and social opportuni- (1996) ties. Alliances are formed when firms are in vulnerable strategic position either because they are competing in an emergent market as in social entrepreneurship or in highly competitive industry or attempting pioneering strategies.

VIII. CONCLUSION The paper tried to undertake a descriptive presentation of the various concepts of Social

Entrepreneurship from the perspective of various authors, the historical evolution of Social Entrepreneurship from the periods prior to the 18th centuries, 18th and 19th centuries and the 20th and the 21st centuries, the trends in Social Entrepreneurship aswell as some contrasting characteristics of Social vs.Commercial Entrepreneurship and some selected theoretical foundations.The converging concept of Social Entrepreneurship tendsto fall in its ultimate goal of effecting social transformation of the poor constituencies it is meant to served. These findings hope to form the basis for developing a proposed theoretical model on Social Entrepreneurship. Further studies are suggested to replicate the development of Social Entrepreneurship inthe Philippine setting.

IX. REFERENCES:

Abu-Saifan, S. (2012). Social Entrepreneurship : Definition and Boundaries. Technology Innovation Management Review. Alvord, S. et. al. (2009). Social Entrepreneurship & Societal

Applied Behavioral Science, Sage Publication. Austin, J. (2006). Social & Commercial Entrepreneurship: Same, Different or Both. Entrepreneurship Theory & Practice, Vol 30(1), January 2006Issue. Bloom, P. & Smith, B. (2010). Identifying the Drivers of Social Entrepreneurial Impact, Theoretical Development & Exploratory Empirical Test of Scaler. Journal of Social Entrepreneurs, Vol 1 (1) 126-145. Borstein, D. (1998). Changing the World on a Shoe String.The Atlantic Monthly Company Online, Vol 281(1)14-39. Boschee, J. & McClurg,J(2003).Toward a better understanding of Social Entrepreneurship: Some Important Distinctions. Davidsson, P. & Honig, B. (2003).The Role of Social & Human Capital Among Nascent Enterprises. Journal of Business Venturing, Vol 8 (3) 301-331. Dees, J. (1998). The Meaning of Social Entrepreneurship.Graduate School Of Business, Stanford University, California, USA. Defourny,R. & Nyssens, M. (2010). At the Crossroads of Market,Public Polcies & Third Sector. Policy & Society, Vol 29(3). 231-42. Drucker, P. (1989).Innovation & Entrepreneurship: Practice & Principles. Elsevier Ltd. 2007. Eisenhardt, K. & Schoonhoven, C. (1996). Resource-Based View of

Strategic Alliance Formation, Strategic & Social Effects In Entrepreneurial Firms. Organization Science Vol 7(2). El Ebrashi, R. (2011). Social Entrepreneurship Theory and Sustainable Social Impact. Social Responsibility Journal, Vol 9(2) 188-209. Gawad Kalinga (2013). Institute for Social Entrepreneurs (2008).Evolution of the Social Enterprise Industry: A Chronology of Events. Leadbeater, C. (1997).The Rise of the Social Entrepreneur.Demos,UK. Mair, J. & Marti, I. (2006).Social Entrepreneurship Research: Asource of explanation, prediction & delight. Journal of World Business, Vol 41(1), February 2006 Issue. Philippine National Statistical Coordinating Board (2013).

Santos, F. (2009). A Positive Theory of Social Entrepreneurship. Social Innovation Centre, InseadBusiness School, Fontainebleau, France. Schweitzer T.(2011).Eight Trends in Social Entrepreneurship to watch for in 2011. Dowser, Canada.Zahra, S. et al. (2009).A Typology of Social Entrepreneurs: Motives, Search Processes & Ethical Challenges. Journal of Business Venturing , 2009 pp 519-532. World Bank Country Poverty Report (2013).

SOCIAL ENTREPRENEURSHIP: A CRITICAL REVIEW OF LITERATURE Submitted by:

Teodoro S. Ocampo 11184817

To: Dr. Divina Edralin DLSU Doctoral in Business Administration Program De La Salle University Manila, Philippines

In Partial Fulfilment of the Course Requirement

in Entrepreneurship DBA 840D

November 6, 2013