Module 1: What Is Social Entrepreneurship?

What is an Entrepreneur?

A common misconception is that any businessman, or anyone who starts a business, is an entrepreneur. But starting a business, according to economists Say and Schumpeter, is not the main component of entrepreneurship. Rather, entrepreneurship is concerned with stimulating economic progress through innovation and action.(1) In the early 19th century, the French economist Jean Baptiste Say described entrepreneurs as “the venturesome individuals who stimulated economic progress by finding new and better ways of doing things.”(2) In other words, entrepreneurs optimize the allocation and use of resources to generate maximal profits.

In order to achieve his economic objectives, the entrepreneur’s mindset must be innovative, creative and goal-oriented. In the words of 20th century economist Joseph Schumpeter,

“the function of entrepreneurs is to reform or revolutionize the pattern of production…by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on.”(3)

Moreover, the entrepreneur thrives on problems and is motivated by the idea of altering an unpleasant situation. Rather than waiting for instructions, the entrepreneur initiates direct action. If the entrepreneur sees a more effective method of doing things, he or she will not hesitate to do away with existing systems in favor of a whole new approach to a problem. The entrepreneur has the courage to take calculated risks, sometimes even doing “things that others think are unwise, or even undoable.” (4) The entrepreneur also carries projects through to completion and is uninhibited by occasional setbacks or challenges. (5)

What is a Social Entrepreneur?

The social entrepreneur harnesses entrepreneurship skills to do social good. According to J.Gregory Dees, social entrepreneurship “combines the passion of a social mission with an image of business-like discipline, innovation, and determination commonly associated with, for instance, the high-tech pioneers of Silicon Valley.”(6) The social entrepreneur’s philanthropic energies are channeled into business ventures, creating value in business so that consumers are willing to pay for the goods and services, and by doing so, the social entrepreneur earns a profit which is invested in the social ventures.(7) According to Martin & Osberg, “the Social Entrepreneur aims for value in the form of large-scale, transformational benefit that accrues either to a significant segment of society or to society at large.”(8) Moreover, the social entrepreneur targets its programs at the “underserved, neglected, or highly disadvantaged population that lacks the financial means or political clout to achieve the transformative benefit on its own.”(9) Social entrepreneurs are builders of a better world.  

A Case in Point: Victoria Hale

A few years ago, Victoria Hale realized that vital drugs were not getting to the poor because profit-driven drug companies were unwilling to develop drugs for the poor, who could not afford to pay for them. Determined to challenge this unjust status quo, Hale founded the Institute for OneWorld Health, a nonprofit pharmaceutical company that works to ensure that the poor have access to vital drugs for infectious diseases regardless of their ability to pay. The Institute for OneWorld Health is the first of its kind. Recently, it obtained permission from the Indian government to use a drug, paromomycin, which cures visceral leishmaniasis, a disease that kills more than 200,000 people each year.(10) Victoria hopes that her pharmaceutical model will provide enduring benefits for the disadvantaged.

What is the difference between entrepreneurship and social entrepreneurship?

The entrepreneur’s final objective is wealth creation. However, for the social entrepreneur, wealth creation is simply a means to an end. The social entrepreneur participates in profit-seeking business ventures if only to use the profits generated to create valuable social programs for the whole community.

Why is there a growing need for Social Entrepreneurs?

In the current economic crisis, financial pressures are exacerbating existing social problems such as poverty and unemployment.(11) According to J. Gregory Dees, social entrepreneurship is necessary to mitigate the financial repercussions on the most vulnerable in society:

“Fewer people will receive adequate health care. Because of the financial burden that formal education can place on parents, fewer children will attend school. Tensions and violence may increase as the poor compete for jobs and income opportunities…Progress will be lost, as families that have been successful in moving out of poverty fall back into it…As government, business, and household budgets tighten, costly environmental protection and clean-up efforts are in jeopardy…Because many social and environmental issues are time sensitive, failure to recognize the importance of social entrepreneurship and provide adequate support for such efforts during this downturn would be a serious mistake.”(12)

Go To Module 2: What Makes A Social Entrepreneur >>

Footnotes

(1) Davis, Susan. "Social Entrepreneurship:Towards an Entrepreneurial Culture for Social and Economic Development." (2002) (8 June 2009).

(2) Ibid.

(3) Ibid.

(4) Martin, Roger L., and Sally Osberg. "Social Entrepreneurship: The Case for Definition." Stanford Social Innovation Review (2007): 28-39. (8 June 2009), 33.

(5) Ibid.

(6) Dees, J.Gregory. "The Meaning of "Social Entrepreneurship".” (8 June 2009),1.

(7) Ibid.,3

(8) Martin, Roger L., and Sally Osberg. "Social Entrepreneurship: The Case for Definition." Stanford Social Innovation Review (2007): 28-39. (8 June 2009), 34-35.

(9) Ibid.

(10) Ibid., 36.

(11) Dees, J. Gregory. "Social Ventures as Learning Laboratories." Innovations (2009): 11-15. (8 June 2009), 12.

(12) Ibid.