What is Social Entrepreneurship?

Tulane students at a social entrepreneurship event talking about environmental issues

Interest in “social” entrepreneurship continues to soar. The number of conferences and business plan competitions on social entrepreneurship are growing rapidly, the number of courses offered on university campuses is expanding, and social entrepreneurship is getting a lot of press. So, what differentiates a social entrepreneur from a plain old vanilla entrepreneur? I must say that it isn’t clear to me….

“A company certainly does not have to be a not-for-profit to be socially responsible.”To loosely quote Carl Schramm, president and CEO of the Kauffman Foundation, “All entrepreneurship is ‘social’ because at a minimum it generates jobs and stimulates the economy.” Given that as a baseline, companies can be socially responsible in an endless number of ways. If a company has family friendly policies, it is socially responsible. If a company recycles used materials and installs solar panels on the roof, it is socially responsible. If a company makes medical products that save lives, it is socially responsible. If a company makes energy efficient cars, it is socially responsible. A company certainly does not have to be a not-for-profit to be socially responsible.

I would argue that people use the term “social” entrepreneurship because they don’t always know what entrepreneurship is. The way we teach it, entrepreneurship is about identifying problems and solving them by leveraging scarce resources. It means creating value, where value can be measured in a wide range of ways. To quote John Doerr, “Entrepreneurs do more than anyone thinks possible with less than anyone thinks possible.” This can happen in any arena.

For many years, I have been an advisor to a large student group at Stanford, called BASES, that runs the campus-wide business plan competition. Several years ago they started a parallel competition for “social” business plans. The number of submissions were small and the prizes were much smaller than for the traditional business plan competition. Over the past few years, the number of submissions for the Social E-Challenge has grown until now there are as many submissions as the E-Challenge.

“I would argue that people use the term “social” entrepreneurship because they don’t always know what entrepreneurship is.”There has always been healthy debate about whether a plan can be entered in both competitions at the same time. My fantasy is that some day the winner of the Social E-Challenge will also be the winner of the E-Challenge. It will demonstrate that a company that is attractive using traditional metrics can also have a powerful social agenda.

Below is a video clip featuring Guy Kawasaki, one of the most popular speakers on STVP’s Entrepreneurship Corner website. Over the years, Guy has shared his insights on everything from principles of startup success to tips on how to build enduring brands. Here he talks about the importance of having the goal of making meaning for your company as opposed to making money. He argues that if you make meaning, you are more likely to make money; but if your major goal is to make money, then you are unlikely to make either.

22 Comments

  1. ABC says:

    Tina please read more about Social entrepreneurship, had there been no difference the term wouldn’t had been there itself. A business whose main motivation is to serve people or work for betterment of society is social entrepreneurship. Whereas the business which is say Laxmi Mittals business, it didn’t serve human or planet an was started purely to manufacture steel products is entrepreneurship. Please read some books on the topic before writing on it.

    Reply
    • Tina Seelig says:

      I wrote this post to be provocative, and because there is clearly a gray area between traditional entrepreneurs and social entrepreneurs. From my point of view, there are many entrepreneurs who are motivated to “work for the betterment of society,” but don’t define themselves as social entrepreneurs. This includes those who start green tech, med tech ventures, and education ventures. I worry that the term social entrepreneurship implies that traditional entrepreneurs do not benefit society, which is just not true.

      Reply
      • Claire says:

        I don’t think the term “social entrepreneurship” implies that other entrepreneurs do not benefit society. It means that tackling a social problem is the main purpose of the company. It probably means there is a higher use of resources from sociology, social psychology, and other social sciences. It doesn’t need to be any more controversial than the term “tech entrepreneurship” which has a range and can also have a debate over what is included. And they can overlap, like “green tech” or “social tech”.

        In your post, you gave several examples of socially responsible behavior by companies but “socially responsible” is not the same as “social entrepreneurship”. If a company recycles, that isn’t social entrepreneurship, just as using a computer doesn’t make a company tech entrepreneurship.

        All entrepreneurs create jobs but job creation is not the purpose. They are not “job creation entrepreneurs”. Hiring and firing is secondary to the primary product or service which is also secondary to maximizing profits and shareholder value for public companies.

        Reply
  2. Hi Tina,

    I enjoyed this post. Our organization struggled with this definition when we launched a “social entrepreneurship” initiative in Alberta earlier this year. For us, we slightly modified the wording to be: ‘socially minded entrepreneurship’ rather than ‘social entrepreneurship.’ When we use this definition, the type of businesses that it includes is two-fold:
    1) Those that started a business based on a social need in the community; for instance, http://www.DeliverGood.org would be an example of such a CYBF company in Alberta. We view these companies as ones that identified a social need – and for all intents and purposes could have started a non-profit to address the organization – but realized that “profit” isn’t a bad word – that they could start a business, make a profit AND support the community. I like to say that they have a “head for business and a heart for the community.”
    2) The second, slightly more vague stream of entrepreneurs, are the ones that have a strong CSR focus from the very onset of their business and that is fully integrated into their business operations from the planning stage. Not the people that say, “oh, and I’ll give 10% of my profits to charity” but the ones that really think about what issues they’d like to support based on the values of their organization and etc.

    Thoughts?

    Reply
  3. Thanks for sharing….you have explained the word “Social Entrepreneurship” so nicely.. Most of the persons are still confusing the words. Social entrepreneurs aims behind the mission of world wide wealth for better flow of fortune.

    Reply
  4. Darla Donaldson says:

    Another point of differentiation would be accountability. Is the business legally accountable to maximize their shareholders’ wealth or can social impact be maximized making profit just being a business necessity?

    In addition, Corner and Ho (2010) noted that opportunity development in social entrepreneurship differs from that of general entrepreneurship. Social entrepreneurship develops more through effectuation via opportunities made than through a rational/economic approach via opportunities discovered.

    Reply
  5. Tony Wang says:

    Hi Tina,

    Thanks for the provocative post. I agree that many entrepreneurs are motivated by the same ideals as social entrepreneurs and many social entrepreneurs could afford to adopt business models that could compete with traditional entrepreneurs. As a former finalist in the BASES Social Entrepreneurs Challenge and former MS&E major and Entrepreneurial Thought Leaders (ETL) junkie, I definitely see the benefit of both sectors.

    However, I emphatically believe there is a good reason why we have a separate term called “social entrepreneurship.” Traditional entrepreneurship, and business more generally, is primarily focused on profit maximization. Intro level Econ courses at Stanford, which are required for the MS&E degree, teach students how organizations maximize profit. On the other hand, social entrepreneurship begins with the premise that profit maximization does not always lead to optimal outcomes and instead teaches students how to develop strategies for maximizing social impact. Sometimes profitable strategies and high growth are not the primary focus in social entrepreneurship; in traditional entrepreneurship, valuations and exits always are.

    I don’t think this debate is just about semantics. The differences between entrepreneurship and social entrepreneurship in the real world have real differences. Social entrepreneurs implement different strategies and social investors have different goals and use different metrics to hold social entrepreneurs accountable. Even the lawyers that support social entrepreneurs have to deal with different legal issues than those that support traditional entrepreneurs. Although the motivations of entrepreneurs and social entrepreneurs may sometimes overlap, the different emphasis on the role of profit and social impact matters significantly.

    Cheers,
    Tony ’07

    Reply
  6. Jonny Dorsey says:

    Thanks for writing this, Tina!

    I have a few quick thoughts:

    1. We should look at the entire impact of an organization. All companies have positive impact because they create jobs. And many have other positive impact through their services and products. Some also have positive impact through additional perks. The important question, I’d argue, is not whether companies have positive impact, but what the net impact of an organization is. For example, we must look at both jobs and cancer created by Phillip Morris. We must look at how facebook is used by liberation fighters and hateful actors alike. We must look at the philanthropic dollars invested in a nonprofit and its total impact. We must avoid simply shining a light on the best impact of an organization and instead look at the entire impact it has on society.

    2. Impact is not created equal. A ring tone company may be able to generate as much profit as a company creating inexpensive infant incubators. Both provide services people are willing to pay for. One company may change the way 1,000,000 phones ring, while the other may save 100,000 lives. No matter how good the child care policy is at the ring tone company, its social impact will never match the impact of the incubator company.

    3. Inspire our top talent to tackle our biggest problems. We should mobilize our most promising entrepreneurs to save 100,000 lives, rather than change 1,000,000 ring tones. While a ring tone venture and an infant incubator venture will both have positive impact on society, all else being equal, the entrepreneur building the incubator will likely have much, much more positive impact. We should praise both for performing work that creates unique and real value, but we should try hard to inspire our best talent to tackle the more important problems, and create as much social value as possible. That’s where the real value of the term “social entrepreneurship” comes in. It helps us label organizations like Embrace (embraceglobal.org), and entrepreneurs like Jane Chen and Rahul Panicker (Embrace Founders), that place their social mission first. This, in turn, creates an aspirational title/role for those who seek to devote their organizations and lives to maximizing positive impact on society.
    Thanks again for furthering this conversation!

    Jonny Dorsey

    Note:
    - I recommend you check out Greg Dee’s article on the distinction between entrepreneurship and social entrepreneurship: http://www.fntc.info/files/documents/The%20meaning%20of%20Social%20Entreneurship.pdf
    - I borrowed the ring tone comparison from the great founder of Change.org, Ben Rattray: http://news.change.org/stories/changeorg-founder-ben-rattray-on-why-we-need-you-to-change-the-world
    - Josh Nesbit wrote an excellent blog related to this topic that’s worth a read: http://globalpublicsquare.blogs.cnn.com/2011/06/06/a-message-to-millennials/

    Reply
  7. Matt Nash says:

    Thanks for raising this interesting topic, Tina! Always a fun issue to debate.

    I must say that I agree whole-heartedly with Jonny’s comments above.

    I will add that, both as a field of practice and as a field of academic inquiry, it can be instructive to draw a distinction between social entrepreneurship and commercial entrepreneurship, though both can have positive impact on society and the environment, as argued above.

    When considering social entrepreneurship, if we are to promote widespread, sustainable social impact, we must also give special consideration of the social entrepreneur’s primary intent to achieve said impact; the need to articulate a well-crafted, robust social impact theory (or theory of change) that links the social venture and its activities with positive outcomes and the intended impact; and the responsibility for measuring the actual outcomes and impact (and taking corrective action / adjusting plans as required).

    Moreover, we need to understand that social entrepreneurs face capital markets that operate differently from traditional capital markets for commercial ventures (though the latter may also be sources of capital for social ventures). We also need to give careful consideration to the appropriateness/feasibility of scaling the social impact of a social venture and the variety of strategies that may be employed in this scaling, from direct strategies (such as organic growth, affiliation/partnering) to indirect strategies such as dissemination of models, etc.

    All told, there are many reasons why it is helpful to pay special attention to social entrepreneurship as a unique and important field. As Sally Osberg of the Skoll Foundation is fond of pointing out, the differences between social entrepreneurs and commercial entrepreneurs remind her of Ginger Rogers and Fred Astaire… Ginger had to do everything Fred could do, but dancing backwards and in high heels! :-)

    For more discussion along these lines, see our report, “Developing the Field of Social Entrepreneurship” at http://www.caseatduke.org/documents/CASE_Field-Building_Report_June08.pdf

    See also the revised version of my colleague Greg Dees’s essay, “The Meaning of Social Entrepreneurship,” at http://www.caseatduke.org/documents/dees_sedef.pdf (Jonny’s link points to an earlier version)

    Best wishes to all,

    Matt Nash
    Center for the Advancement of Social Entrepreneurship (CASE)
    Duke’s Fuqua School of Business
    http://www.CASEatDuke.org

    Follow us on Twitter at @CASEatDuke

    Reply
  8. Rob Beckett says:

    Hi – Just joining the discussion here – I am still not convinced that all social media is right for all businesses. I think its horses for courses. Our litho print business has no place on facebook for example but I do find linked in useful for finding prospects – does that make me a social entrepreneur – I don’t think so – its simply basic marketing – putting myself in front of customers.

    Thanks for sharing -Rob

    Reply
  9. I think so it is very important for every educator, student, scholars, every one. Due to this, every student can easily start its own business. in social entrepreneur every student must want to know about social marketing.

    Reply
  10. Sanjay Bhowmick says:

    Hi

    With the present understanding of “entrepreneurship” as it is, “social entrepreneurship” is an unfortunate juxtaposition of opposing terms.
    We have created this confusion by naming all social cause venturing (SCV) “social entrepreneurship” before understanding or examining the SCV activity, by insisting that SCV has to be some kind of ‘entrepreneurship’. We continue to conflate the two (practitioners as well as scholars have admitted to the confusion: see Anand Shah of Sarvajal India and Gregory Dees of Harvard) by arguing that all entrepreneurship brings social benefits, nay, all commerce brings social benefits – a dangerous argument for understanding SCV.

    It is impossible to equate an activity doing some social good to some people as a by-product of self interested action, with action pursuing social change as its objective, when you examine the agent’s motive for action. Equally, the fact that a social cause venture has to be sustained in terms of resources cannot equate it to commercial venturing. In fact, resources (mainly thought of as financial) will not make a venture pursue a social cause, whereas a venture with that uncompromising cause / mission will always find resources (“Find purpose, the means will follow” as Gandhi said , and as can be seen all around). So, the conflation disappears if one looks at the direction of cause-to-resources/viability vector in a venture.

    A social cause venture needs to be a non-loss venture for sustenance (Yunus), if you must have an economics based definition, but it is not today’s economics that will help us understand this field, it is perhaps the psychology of other-regarding sentiments of humans so far rejected by economics that will. Individual opportunity pursuit, the basis for understanding entrepreneurship, cannot explain the field of SCV (unless we change the definition of entrepreneurship to include other-regardedness in which case it loses its basic theoretical platform). SCV is not the same as (commercial) entrepreneurship because the sponsor has the opposite motive in SCV, ie, to give to / empower others.

    Reply
  11. James Soto says:

    Social Media seem to be the way to go these days. Social Entrepreneurs are emerging almost everywhere. Great post thank you

    Reply
  12. Peter Frost says:

    Thank you for the link to the youtube video.
    I totally agree – if you create somthing meaningful to others which supports core values than you will be successful.

    Success is not measurable only in monetarily thinking but in being a supporter to others.

    BR

    Peter

    Reply
  13. Mike Gardner says:

    I think you have generated some powerful thoughts and possibly some controversy of thought.
    I have myself made money with the sole intent to make money, and I believe many people have made money with the sole intent to make money. I think your point should be centered on fulfillment and the greater potential of success by the means you have outlined.

    Reply
  14. Excellent post and a good video. Thanks a lot Tina!

    Reply
  15. DaisyD says:

    We have created this confusion by naming all social cause venturing (SCV) “social entrepreneurship” before understanding or examining the SCV activity, by insisting that SCV has to be some kind of ‘entrepreneurship’. We continue to conflate the two (practitioners as well as scholars have admitted to the confusion: see Anand Shah of Sarvajal India and Gregory Dees of Harvard) by arguing that all entrepreneurship brings social benefits, nay, all commerce brings social benefits – a dangerous argument for understanding SCV.

    Reply
    • Sanjay Bhowmick says:

      Hi DaisyD – Did you want to add or say something about what I wrote, or simply reiterate it? Reiteration is fine too. Cheers

      Reply
  16. Adrian says:

    Always refreshing to hear Guy Kawasaki’s perspective on matters of business and ethics. Good watch, indeed.

    Reply

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