DOCENCIA E INVESTIGACIÓN

The present chapter suggests that any discussion of social entrepreneurship must begin by understanding the concept and the boundaries of the phenomenon. It presents an approach to understand what social entrepreneurship entails by analysing the spectrum of its categories. It can be summarised that social entrepreneurship in the strict sense shows three constitutive elements – sociality, innovation and market orientation.

2.7.1 Sociality

“For social entrepreneurs the social mission is explicit and central. This obviously affects how social entrepreneurs perceive and assess opportunities. Mission-related impact becomes the central criterion, not wealth creation” (Dees, 1998a: 2).

Social entrepreneurs creatively combine resources to address unmet social needs or a new social value creation opportunity (Thompson et al., 2000). The analysis of several successful cases of social entrepreneurship reveals commonalities in the objectives, for example the provision of goods and services which the market or public sector is unwilling or unable to provide, the creation of employment and the integration of socially excluded people (Smallbone et al., 2001). The creative combination of resources to address social problems is also significant in the second key characteristic of social entrepreneurship: innovation.

2.7.2 Innovation

Thinking about entrepreneurship as innovation suggests that the creation of new models and techniques, as Schumpeter pointed out, is a critical driver of social change (Schumpeter, 1950). Social entrepreneurs dynamically evolve in the social contexts that produce them and which they seek to influence through new concepts. Innovation creates social value by allowing people to achieve more for less, or to solve problems that otherwise would be insoluble (Young, 2006). Some social innovations are based on new concepts, others are driven by novel applications and combinations of old concepts. In social entrepreneurship literature, most articles state the existence of numerous loci of social innovation (Mair &

Marti, 2004). On the one hand, the business concept of social ventures can be innovative per

se since the major aim of most social enterprises is the creation of innovative approaches to address critical social needs (Dees & Anderson, 2006). On the other hand, the aspect of innovation becomes obvious when mobilising resources. Social entrepreneurs creatively combine resources – resources that they themselves often do not possess – to address pressing social problems and in the process change existing social structures (Mair & Marti, 2004).

2.7.3 Market orientation

Market orientation is the third feature that distinguishes social enterprises from other social organisations and it is defined as “the dimension of entrepreneurship that entails rationalising strategic operations in response to exogenous variables traditionally conceived as competitive market pressures.” (Nicholls & Cho, 2006: 107). Many social purpose organisations operate in non-existent or dysfunctional markets, whereas social entrepreneurs are market oriented in order to achieve the most effective deployment of resources towards achieving social targets (Nicholls & Cho, 2006). All definitions of social entrepreneurship that describe a “double or triple bottom line”, “some-cost or full-cost recovery” (Yunus, 2006: 40)²⁶, or the development of independent profit making ventures are associated with market orientation. Market orientation implicitly focuses on efficiency when effectively using resources. Therefore, it distinguishes many social enterprises from traditional models of non-profits, as well as from much of the public sector (Nicholls & Cho, 2006).

According to Bartlett & Le Grand (1993), market orientation can resolve many problems associated with traditional social service delivery operations by encouraging accountability, economy and innovation (Bartlett & LeGrand, 1993). But even in the case of a “monological social agenda setting” (Nicholls & Cho, 2006: 107), market orientation should not be left out. Particularly in the case of social enterprises with a mixed social and economic strategic agenda, focussing on creating economic as well as social value can prevent conflicts with other final social goals (e.g. Dart, 2004; Foster & Bradach, 2005).

26 According to Yunus (2006), some social entrepreneurs use money to achieve their objectives; some just give away their time, labour, talent, skill, or such other contributions that are useful to others. Those who use money may or may not try to recover part or all of the money they put into their work by charging a fee or a price.

Yunus classifies social entrepreneurs who use money into four types: 1. No cost recovery, 2. Some cost recovery, 3. Full cost recovery, 4. More than full cost recovery.

2.7.4 Working Definition

While being aware of the conceptual diversity of social entrepreneurship, the working definition of this thesis will be derived on the basis of the listed key aspects of social entrepreneurship in sensu stricto.

Working Definition:

Social enterprises are defined as hybrid organisations which strive to create positive social change. They have a social mission and insodoing act entrepreneurially, i.e. they generate revenue through selling products or services in the market. Social entrepreneurship can occur within or across the public, private, and civil society sector. Thus, social entrepreneurship is not defined by a legal form as it can be pursued through various organisational forms.

Social Entrepreneurship is the process of using entrepreneurial and business skills to create innovative approaches to generate social value by addressing areas of unmet social need or by creating social opportunities that the public or private sector has failed to deliver. This goes hand in hand with social innovation processes, aimed at promoting social change. The defining purpose of social enterprises, regardless of the financial model, is to effect change by altering the social, economic and political realities (Mair, 2010). The key to social entrepreneurship is therefore an explicit or implicit theory of change, e.g. manifested in strategies such as the configuration of resources and activities (Mair, 2010).

Examples of social entrepreneurs are the Grameen Bank, founded by Nobel Peace Prize winner Yunus in 2006, The Big Issue Foundation, founded by Gordon and Bird in 1991 or Ashoka, founded by Drayton in 1980. Due to the variety of terms used in the literature when describing the concept of social entrepreneurship, it is important to stress that all notions of social enterprises within this study only refer to the working definition as adopted in this chapter.

CHAPTER III. OUTLINING THE DRIVERS OF SOCIAL ENTERPRISE GROWTH