ISSUES IN SOCIAL ENTREPRENUERSHIP
Entrepreneurship is the process of starting a business or other organization. The entrepreneur chooses/develops a business model, acquires the human and other required resources and is fully responsible for its success or failure. Entrepreneurship operates within an entrepreneurship ecosystem.
First used in 1723, today the term entrepreneur implies qualities of leadership, initiative and innovation in business. Economist Robert Reich has called team-building, leadership, and management ability essential qualities for the entrepreneur.
A entrepreneur is a factor in microeconomics, and the study of entrepreneurship reaches back to the work in the late 17th and early 18th centuries of Richard Cantillon and Adam Smith, which was foundational to classical economics.
In the 20th century, entrepreneurship was studied by Joseph Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. The term “entrepreneurship” was coined around the 1920s, while the loan from French of the word entrepreneur dates to the 1850s.
Social entrepreneurship is the process of pursuing innovative solutions to social problems. More specifically, social entrepreneurs adopt a mission to create and sustain social value. They draw upon appropriate thinking in both the business and nonprofit worlds and operate in a variety of organizations: large and small; new and old; religious and secular; nonprofit, for-profit, and hybrid.
Business entrepreneurs typically measure performance in profit and return, but social entrepreneurs also take into account a positive return to society. Social entrepreneurship typically furthers broad social, cultural, and environmental goals and is commonly associated with the voluntary and not-for-profit sectors. Profit can at times also be a consideration for certain companies or other social enterprises.
Social entrepreneurship practiced in a world or international context is called international social entrepreneurship.
ISSUES IN ENTREPRENUEURSHIP
Initially, economists made the first attempt to study the entrepreneurship concept in depth Richard Cantillon (1680-1734) considered the entrepreneur to be a risk taker who deliberately allocates resources to exploit opportunities in order to maximize the financial return. Cantillon emphasized the willingness of the entrepreneur to assume risk and to deal with uncertainty. Thus, he draws attention to the function of the entrepreneur, and distinguishes clearly between the function of the entrepreneur and the owner who provides the money.
Alfred Marshall viewed the entrepreneur as a multi-tasking capitalist. He observed that in the equilibrium of a completely competitive market, there was no spot for “entrepreneurs” as an economic activity creator.
Social entrepreneurship is distinct from the concept of entrepreneurship itself, yet still shares several similarities with the classic concept. Jean-Baptiste Say, a French economist, defined an entrepreneur as a person who “undertakes” an idea and shifts perspectives in a way that it alters the effect that an idea has on society. However, the difference between “entrepreneurship” and “social entrepreneurship” stems from the purpose of a creation. Social entrepreneurs seek to transform societies at large, rather than transforming their profit margin like classic entrepreneurs typically seek to do.
The concept of “social entrepreneurship” is not a novel idea, but it has recently become more popular among society and academic research, notably after the publication of “The Rise of the Social Entrepreneur” by Charles Leadbeater. Many activities related to community development and higher social purpose fall within the modern definition of social entrepreneurship. Despite the established definition nowadays, social entrepreneurship is a difficult concept to define, since it can be manifested in multiple forms. A broad definition of the concept allows interdisciplinary research efforts to further understand and constantly challenge the notion behind social entrepreneurship. No matter which sector of society certain organizations are in (i.e. corporations or unincorporated associations and societies), social entrepreneurship focuses on the social impact that an endeavor carries. Whether social entrepreneurship is altruistic or not is less important than the effect it has on society.
The terms social entrepreneur and social entrepreneurship were used first in the literature on social change in the 1960s and 1970s. The terms came into widespread use in the 1980s and 1990s, promoted by Bill Drayton the founder of Ashoka: Innovators for the Public, and others such as Charles Leadbeater. From the 1950s to the 1990s Michael Young was a leading promoter of social entrepreneurship and in the 1980s was described by Professor Daniel Bell at Harvard as ‘the world’s most successful entrepreneur of social enterprises’ because of his role in creating more than sixty new organizations worldwide, including the School for Social Entrepreneurs (SSE) which exists in the UK, Australia and Canada and which supports individuals to realize their potential and to establish, scale and sustain, social enterprises and social businesses. Another notable British social entrepreneur is Andrew Mawson OBE, who was given a peerage in 2007 because of his regeneration work including the Bromley by Bow Centre in East London.
Although the terms are relatively new, social entrepreneurs and social entrepreneurship can be found throughout history. A list of a few noteworthy people whose work exemplifies the modern definition of “social entrepreneurship” includes Florence Nightingale, founder of the first nursing school and developer of modern nursing practices; Robert Owen, founder of the cooperative movement; and Vinoba Bhave, founder of India’s Land Gift Movement. During the nineteenth and twentieth centuries some of the most successful social entrepreneurs effectively straddled the civic, governmental, and business worlds. Such pioneers promoted ideas that were taken up by mainstream public services in welfare, schools, and health care.
CURRENT PRACTICE IN SOCIAL ENTREPRENEURSHIP
Groups focused on social entrepreneurship can be divided into several categories: community-based enterprises, socially responsible enterprises, social services industry professionals, and socio-economic enterprises. Community-based enterprises are based on the social ventures of an entire community that uses its culture and capital to empower itself as an entire enterprise. Socially responsible enterprises focus on being creating sustainable development through its initiatives that focus mostly on societal gains. Social service industry professionals work specifically in the sector of social services to expand social capitol for different individuals, communities, and organizations. Socio-economic enterprises include corporations that balance earning profits and non-profit social change for communities.
One well-known contemporary social entrepreneur is Muhammad Yunus, founder and manager of Grameen Bank and its growing family of social venture businesses. He is known as the “father of microcredit,” and established the microfinance revolution in helping millions of people in global rural communities access small loans. For his work, he was awarded a Nobel Peace Prize in 2006. The work that Yunus did through Grameen Bank echoes a theme among modern day social entrepreneurs that emphasizes the enormous synergies and benefits that arise when business principles are unified with social ventures. Larger countries in Europe and South America have tended to work more closely with public organizations at both the national and local level.
The George Foundation’s Women’s Empowerment program empowers women by providing education, cooperative farming, vocational training, savings planning, and business development. In 2006 the cooperative farming program, Baldev Farms, was the second largest banana grower in South India with 250 acres (1.0 km2) under cultivation. Profits from the farm are used for improving the economic status of the workers and for running the other charitable activities of the foundation.
Some have created for-profit and for-a-difference organizations. A recent example is Vikram Akula, the McKinsey & Company alumnus who started a microcredit venture, SKS Microfinance, in villages of Indian state of Andhra Pradesh. Although this venture is for profit, it has initiated a sharp social change amongst poor women from villages. For example, a Ramanujan Bose Awardee, Dr. Akash S. Rajpal was the founder of Ekohealth. He serves as an example of a social entrepreneur in healthcare. He has been working in India in the field of healthcare against fee splitting and creating a unique ethical facilitation and aggregation services for healthcare providers and price comparison services for patients and help them reduce health care costs.
TYPES OF SOCIAL ENTREPRENEURSHIP
At the heart of social entrepreneurship is the innovation of novel social capital to create more community-based agency for obtaining assets in individual lives. Private corporations focused solely on profit and nonprofit organizations (NGOs) that are focused solely on social impact are two extremes in the nuanced spectrum of social entrepreneurship, when in actuality there is several types of social entrepreneurs with different visions for their enterprises exist. This can range from individuals seeking to allow solely for society to profit even at a profit loss, to individuals that focus on simultaneously profiting both themselves and society. In either case, individuals are at risk for personal profit loss. There is a trend in organizations, especially private organizations that combine traditional interest in corporate profit gain with a desire to create social enterprises that have meaningful social impacts that are innovative in society. The complexity of defining the type of social entrepreneurship can also increase when boundaries cross. For example, certain non-profit organizations may have initiatives that generate revenue but only for the purpose of their social enterprise. Additionally, for-profit organizations may be focused primarily on gaining profit, but arrange some of their profits for socially impactful activities.
Since social entrepreneurship has only recently started to gain momentum, current social entrepreneurs are actively encouraging social advocates and activists to step up as innovative social entrepreneurs. Increasing the scope of social entrepreneurship naturally increases the likelihood of an efficient, sustainable, and effective initiative. Increased participation draws more attention, especially from policymakers and privately owned corporations that can help shape social entrepreneurs through policy changes, training programs, and leadership development focused on developing social entrepreneurs.
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