Dimitar Dimitrov
Word Count – 1939/PIN – 10331
How to Enhance the Importance of the Social Entrepreneurship: Five Areas of Concern for the Social Enterprises?
Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship
Dimitar Dimitrov
The model I would like to introduce to all of you is that of five vital areas of concern which should be improved in order to further increase the importance and significance of the social entrepreneurship in order to enhance the stands for the benefits that are created for all shareholders, not only for the stakeholders.
To advance and present why the social
entrepreneurship is important I am going to briefly overview its historical development and later on will try to distinguish between entrepreneurship and social entrepreneurship. Later on, I will present my five areas of concern – lack of performance accountability, lack of standardization, lack of legal framework to sustain the social enterprises, lack of financial protection of the social oriented businesses, and lack of an easy to recognize marking of the social enterprises.
I would conclude arguing that only having those five areas fixed we can
assure the presence of successful and profitable social enterprises that will have a positive impact beyond their shareholders’ interests and will cause positive social changes.
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Dimitar Dimitrov
Brief History of Social Entrepreneurship
The term social entrepreneurship first appeared in the social science literature of 1960s and 1970s in relation to the concept of the social change.
However, it owes its current
wide-spread popularity to the rising role and the rising number of non-governmental organizations in the last two decades of twentieth century.
This change has had to do with
the crisis and failure of the welfare systems in countries with advanced economies, the increased competition within the nonprofit sector as a result of the association revolution, changes in the structures of philanthropic giving, and political shifts that relate to the advancement of the globalization.1
The necessary pressure for the social sector to develop
and reinvent itself had come up and entrepreneurship discovered its “social face”.
Moreover,
that “social face” of the business entrepreneurship pursued actively not only by business, but also by governments, academia and public policy in the recent years.
It gained further
momentum when in 2006 the Bangladeshi Muhummad Yunus received a Nobel Prize for his work in microfinance.
He, being a social entrepreneur, set his goals to find ways to resolve
social problems by the application of an entrepreneurship approach in order to create social value.
But what have caused the growing interest towards the social entrepreneurship among the common people?
I believe It could be argued that we are living in a schizophrenic society, where on one hand 1 Frederick Teufel (2008), “Social Entreprenuership: Understanding a Phenomenon and its Nexus with Current Changes in Philanthropy”, Diploma Thesis, GRIN Verlag, 2008, pages 5-22
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innovation, speed and globalization and wealth creation are pursued, and on the other hand people are desperate to have more meaning, purpose in their lives and more control over what is going on in rapidly accelerating society.
So, there is this need to reconcile success and
significance and sense of interdependence and that is found in the social entrepreneurship.
What is entrepreneurship?
In order to present my vision on what a social entrepreneurship it is, I would firstly define what an entrepreneurship is in my understanding, to distinguish between both subjects. There are different conceptions and definitions on entrepreneurship dealing with creation of value, or innovation, or exploitation of opportunities presented to you, or availability of resources etc.2
However, I consider entrepreneurship is mostly a state of mind. It is a state of
mind about how to create things that people have not envisioned before, how to combine and distribute the resources and how to motivate people, and execute against a particular vision. It does not necessarily mean that you have to start your own business. I think this state of mind of entrepreneurship can happen at the smallest companies and the largest companies.
So, Then What is Social Entrepreneurship?
With the rising number of institutions engaged in the promotion of the social entrepreneurship, the definition of what exactly is a social entrepreneurship is slightly problematic.
Its rising
J. Gregory Dees, Jed Emerson, Peter Economy (2001), “Enterprising Nonprofits: A Toolkit for Social Entrepreneurs�, John Wiley and Sons, 2001, pages 1 – 251 2
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Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship
Dimitar Dimitrov
importance could be linked with the rising role of the corporations in societies to deliver social development, and with the business entrepreneurship.
In the very basics of the term,
social entrepreneurship deals with application of the power of business and a very entrepreneurial approach to making a systemic change to deliver social value and/or to enhance social conditions.
I believe it is safe to say that social entrepreneurship is a result of
the obvious shift of corporations’ interest from shareholders’ profit maximization towards maximizing their overall importance and recognition among the society stakeholders.
What Kind of Issues the Social Entrepreneurs do face?
After having said the difference between ordinary and social entrepreneurship, I would like to focus on the practical application of the social entrepreneurship as a means to maximize the above-mentioned attempt of the corporations to maximize their importance and recognition among the societal members.
In next couple of pages I am going to list the five most urgent
issues facing the social entrepreneurship and social enterprises, in order after having realized them businesses and policy makers to know what they should improve in order to enhance the significance of the social entrepreneurship.
1) Lack of performance accountability
Corporations should be held accountable according a comprehensive set of environmental and social performance standards before being labeled as social entrepreneurs.
That is
necessarily because, right now everybody in the world can pick up a magazine, a newspaper 4
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or switch on the TV set and would see at least a half a dozen of advertisements that are with a big sunrise in the background, or are with some narrow hands holding soil falling between, or with distinctively clean water flowing.
And the truth is that we do not know what everyone
is doing right now, what everyone considers as a social entrepreneurship.
It is incredibly
difficult to figure out who is green, who is charitable, who is responsible, and who is sustainable, and more those words, less those mean.
So, the first thing which should be
pointed out as a problem for social enterprises is the lack of performance accountability which allows to clearly differentiate between a good company and just a good marketing.
2) Lack of standardization
There have been a great number of attempts to do certification of social entrepreneurship that have failed, either because those are meant to be applied to fairly unscaleable products, or because the narrowness of their focus limits their market capacity.
For example, if all you
do is to certificate green tea, you might find all green tea in the world but that will be just still green tea, whereas standardization should be placed through every sector of the economy.
Among the currently famous kinds of social-entrepreneurship measurement methods are energy star, fair trade and etc.
However, those methods are with a limited focus – they are
either process-centered or product-centered, and they fail to describe the entire structure of the company, economic sector and etc.
So first and foremost, the whole company rather the
individual product and practice should be taken into consideration in case of standardization. What is necessary here is a comprehensive set of standardization factors accounting for the company’s impact on its environment, its employees, its consumers set, its community, and its 5
Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship
Dimitar Dimitrov
leadership qualities.
It is necessary to find a way to expend the responsibilities of the corporations to include more than just shareholders that day on day an organization must take into consideration a broader set – the abovementioned groups – employees, environment etc.
Those elements are
completely different from any other certification, because they are applying accountability not only to meet those standards, but a company can also be held accountable to those standards.
3) Lack of legal framework to sustain the social enterprises
After establishment of a standardization scheme, a legal structure is necessary as a precondition to reflect the intentions of these purpose-driven entrepreneurs and social investors.
It is necessary because those entrepreneurs have actually amended their leading
principles in their corporations to extend that responsibility of corporations to include not only the interest of their shareholders, but also the interest of their employees, suppliers, community and environment.
In such a case, a legal framework is needed to protect the
socially oriented enterprises.
The only logical loophole would be how to make a global not
only local set of legal regulations in order to claim that a corporation A is social enterprises not only let’s say in USA but also in Argentina too with the same quality of standards achieved and maintained everywhere.
4) Lack of financial protection of the social oriented businesses
It is hard for mission oriented business to grow profit, raise capital, even taking care of 6
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liquidity decisions in an environment where they realize that both from legal and financial prospective is going to be to create a shareholder value as quickly as possible.
This is due to the fact that we do live in financial market environment, where there is a tremendous amount of capital but almost no one invests its own capital. intermediary for someone else, layered upon layer and layer.
Everyone is an
And as a result of that most
people act according to most standards set of financier duties, which are all important in point of maximizing the shareholder value. And what it does mean is that for most companies that want to grow they have a decision between sort of losing their connection to their roots, or risking that someone would get over their business and would say that is nice but let’s focus on what is really important. Therefore, putting that sense of the mission in the very DNA of a business with the legal and financial work and by with having those standards that create comparable metrics across the business in terms of social environmental performance, then allows investors who care about those kind of things to make decisions and to put their capital where their values are.
5) Lack of an easy to recognize marking of the social enterprises
To supplement the standardization of the social enterprises and their financial and legal , they need a common logo or a letter or a sign in their company logo in order to be easily recognized as social responsible actors not only by their clients but also by their peers in the business community.
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Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship
Dimitar Dimitrov
Conclusion
That paper has presented a historical overview of development of the social entrepreneurship and why it has gained such a momentum right now, has tried to made clear what the difference between entrepreneurship and social entrepreneurship, trying to redefine them and has tried to present five major areas of concern which would make to further enhance the importance and significance of social entrepreneurship.
Those five areas of concern are part
necessary because if we are up to figure out a way to create a social progress that needs to come through how to make private sector work more effectively.
And having an impact in
the private sector requires standards and a different kind of standards, legal structure and a capital market that allows capital to come to ideas that can be profitable and can create positive social impact.
Having them we will surely have not only a successful and growing
social concerned enterprise but also a social enterprise which will be able to influence a broad set of companies beyond its individual.
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