Social Entrepreneures: Playing the Role of Change Agent in Society
posted on Thursday, October 25, 2007 12:22 PM
Ian MacMillan, director of Wharton’s Sol C. Snider Entrepreneurial Research Center, defines social entrepreneurship this way: “It’s a process whereby the creation of new business enterprise leads to social wealth enhancement so that both society and the entrepreneur benefit.” These benefits, according to MacMillan, include the creation of jobs, increased productivity, enhanced national competitiveness – “as in Africa desperately trying to participate in the world economy” – and better quality of life.
“There is no reason why imaginative entrepreneurs can’t enhance social wealth and also generate fortunes for themselves,” MacMillan notes, adding that he sees social entrepreneurship in many cases as “an alternative to governments undertaking the task of solving societal problems.”
Weighing in from India on the issue of definition, Harpreet Singh from New Delhi suggests that “defining social entrepreneurship is tricky, because a wide range of opinions exist over the matter. The literature in this area is so new that little consensus has emerged on the topic … The term encompasses a rather broad range of activities and initiatives.”
Nevertheless, Singh, who has plans to start a venture providing services to small- and medium-sized companies in India, goes on to describe social entrepreneurship as “melding the enterprise and innovation often associated with the private sector with the grassroots accountability necessary to sustain solutions in the public sector. Social entrepreneurship strives to combine the heart of business with the heart of the community through the creativity of the individual.”
Social entrepreneurs, he adds, “play the role of change agents in the social sector.”
Robin Sparks, executive director of the Community Ministry of Northern Virginia, offers a definition of social entrepreneurship taken from The Cathedral Within: Transforming Your Life by Giving Something Back, by William Shore. Shore, founder of a national non-profit group called Share Our Strength, says that “being an entrepreneur, social or otherwise, requires something more [than being passionate about one’s cause and/or running it like a business]. It must be defined as doing things in ways that have not been done before.”
For Noelle Lim, an accountant in Malaysia, social entrepreneurship “involves combining commercial aims with social objectives to reap strategic or competitive benefits.” In her country, social entrepreneurship is still in its infant stage, “so infant that the term is hardly mentioned here or amongst corporations, NGOs or charitable organizations … Some companies in Malaysia engage in corporate philanthropy work but I think more can be done intellectually to include such activities as part of their competitive strategy and not just for PR/do-good purposes.” For example, Lim says, retailers could sell greeting cards made by members of the Malaysian Association of the Blind.
Progress, however, is slow. “There are some organizations dedicated to raising funds but the involvement of communities-in-need is still minimal,” she notes. “So it is a scenario of constantly giving the fish and not teaching people how to fish. There is no sustainable benefit accruing to these communities.”
Pamela Hartigan, managing director of the Schwab Foundation for Social Entrepreneurship in Geneva, offers this definition. A social entrepreneur “is a different kind of social leader” who, among other things, “applies practical solutions to social problems by combining innovation, resourcefulness and opportunity; innovates by finding a new product, service or approach to a social problem; focuses foremost on social value creation, whether legally constituted as a for-profit or not-for-profit; and is fully accountable to the constituencies he or she serves.”
The Foundation’s biggest challenge, she says, is “to define for others what social entrepreneurship is and is not.” (It is not, for example, the same thing as philanthropy or charity.) And its ultimate goal is to “showcase how successful social entrepreneurship can advance sustainable development and enhance the lives of today’s poor and excluded populations.”
Baking Bread, Taking Photographs
Social entrepreneurship is clearly not defined by such measures as size or sales figures. It ranges from the work being done by large organizations like Hartigan’s to the successes that come from projects undertaken in small communities and even by individuals.
Consider Lijjat Papad, a women’s co-operative in Mumbai, India, which makes a crispy bread called papad and is owned by more than 40,000 low-income Indian women. An article in the Financial Times last December noted that the co-op has “become a symbol of women’s economic enfranchisement in India.” The members of Lijjat Papad “pledge allegiance to common values of responsibility, equality and rejection of charity … Making a profit is seen as essential,” the article says.
Or consider a recent book of photographs and stories called African Journal: A Child’s Continent, written and published by an American woman named Chellie Kew. While living in Johannesburg, South Africa, during the late 1990s, Kew photographed hundreds of children orphaned by AIDS and living alone in villages where few adults remained to provide care. The result is a book and a website called The Q Fund. Kew plans to donate money from the sale of African Journal to improving the lives of these children.
Social entrepreneurship flourishes on the local level as well, defined, in Merrian Fuller’s case, as the Philadelphia area. Fuller, coordinator for the Sustainable Business Network of Greater Philadelphia (www.sbnphiladelphia.org), says social entrepreneurs “create enterprises that are able to sustain themselves financially, and at the same time further some social or environmental cause. We refer to businesses that have a triple bottom line of ‘people, planet and profit’ instead of the traditional single bottom line.”
Fuller offers several examples of Philadelphia-area social entrepreneurs: North Creek Nurseries provides non-toxic landscaping and native plants that are not detrimental to local ecosystems; Jubilee Chocolates uses Fair Trade chocolate and ingredients procured from the community and pays a living wage to its employees.
Green Village markets environmentally-preferable cleaners to the janitorial market, employs local residents at a living wage and offers a profit sharing program; Community Energy is a for-profit corporation founded by national leaders in wind-energy marketing to expand the market for clean energy; and Urban Works is a local, minority-owned contract cleaning company that provides training and employment for economically disadvantaged workers.
“I studied international relations in school and kept coming back to the idea that it is local and daily choices that matter and that there is immense untapped strength in local economies to address many social and environmental problems.” says Fuller. ‘I also am aware that business is probably the most powerful force in the world today.”
Knowledge@Wharton was also alerted to a number of companies that donate all or a portion of their profits to charitable causes, ranging from the well-known Newman’s Own salad dressing, which donates 100% of its after-tax profits for educational and charitable purposes, to Stonyfield Farms, which gives 10% of its profits to environmental causes. Another is Keeper Springs, a privately-held for-profit water company that gives all after-tax profits from the sale of its products to the Waterkeep Alliance, which is dedicated to preserving America’s waterways.
One reader wrote in asking if social entrepreneurship included things like a start-up that is trying to increase giving at the parish level in the Catholic church. Another asked about the impact that social entrepreneurship can have on the under-represented business community of entrepreneurial African-Americans. “Many black business people complain about being locked out of opportunities to obtain venture capital,” she wrote. “Is social entrepreneurship via community development venture capital groups one way to bring some of this cash” to the black community?
An emailer from Singapore told us about AAvishkaar, a for-profit social venture capital fund “with a belief that over time, helping to create opportunities and remove poverty could be a good business.” The group is founded “on the fundamental belief that people with the least resources often are the most innovative. However, their creativity remains untapped as they lack access to capital and business skills.”
Speaking to that absence of access, a journalist from Bangalore responded to this special section by describing a “paradox” in the Indian economy: “While banks line up to offer car and home loans at 8%-10%, rickshaw pullers and street vendors would be lucky if they can land loans at 20%.” That situation led to him consider a number of ideas, including a “microcredit-meets-venture capital” social venture fund, and a portal for charities where people could make donations online “and dividends could be in the form of reports on the work done by the charities chosen …
“I had always dismissed such ideas from my head as esoteric, lonely and unworkable,” the writer concluded. “I would be interested to know if such things exist.”