The literature on SE offers a useful framework for approaching the assessment of entrepreneurs in New Orleans and their impact on regional sustainability. However, the concept should be integrated with insights from several other frameworks. To that end, I will briefly review the concepts of social entrepreneurship, corporate social responsibility, shared value, and sustainable value chains.
Social Entrepreneurship
The first framework that strengthens SE is the literature on social entrepreneurship. In many ways, social entrepreneurship is the precursor of SE as the first consideration of entrepreneurs in their broader role in community development.
Many SE authors city social entrepreneurship literature as the foundational concept on which the idea of sustainability entrepreneurs is built (Tilley & Young, 2009; Dyllick &
Hockerts, 2002; O’Neill et al., 2006).
The most common theme in social entrepreneurship is the redefining of an entrepreneur’s role in society into one of a powerful agent of social change with a clear mission of community benefit. Austin, Stevenson, & Wei-Skillern (2006) define it as
“entrepreneurial activity with an embedded social purpose” (p. 1). As opposed to creating private profit, like most entrepreneurs, these individuals have the goal of creating social value, especially by benefiting low-income communities and individuals.
Social enterprises commonly pursue missions such as employing workers with barriers to employment, providing services overlooked by the market, and enhancing local ownership and control of economic development (Canadian Community Economic Development Network, 2009). A Canadian Community Economic Development Network (CCEDN) report on social enterprise in Winnipeg, MB revealed seventeen social entrepreneurs in that city with goals such as employing barriered workers and promoting environmental sustainability through a range of organizational models (2009). In this way, entrepreneurs overlap into many roles traditionally filled by non-profit organizations.
Dees (1998) outlines four common characteristics of social enterprise:
o “Adopting a mission to create and sustain social value (not just private value), o Recognizing and relentlessly pursuing new opportunities to serve that mission, o Engaging in a process of continuous innovation, adaptation, and learning,
o Acting boldly without being limited by resources currently in hand, and
o Exhibiting a heightened sense of accountability to the constituencies served and
for the outcomes created” (p. 4).
These characteristics reveal another common feature of social entrepreneurs:
their use of innovative approaches to meet social needs. The focus on entrepreneurship emphasises the use of the same shrewd decision-making, innovation, and discipline required in the business world but applied to the agency’s social mission (Dees, 1998).
Social entrepreneurs are motivated by the social problem or population to which they are dedicated, but remain flexible and ready to mobilize any resource or technique that is effective to meet that need (Austin et al., 2006). This dexterity often calls for experience with business, requiring social entrepreneurs to be comfortable “applying business expertise and market-based skills in the non-profit sector such as when non-profit organizations develop innovative approaches to earn income” (Austin et al., 2006, p. 2).
However social entrepreneurs need not adhere to any single organizational model. The final theme of social entrepreneurship is the blending of organizational model to fulfill social missions at the intersection of community, market and state actors.
Social entrepreneurs can take on many forms in non-profit, private, and governmental sectors, but have been most commonly organized as commercial enterprises with a social mission, corporate social responsibility, non-profit organizations, and hybrid actors not clearly fitting into one approach (Austin et al., 2006). CCEDN defines social enterprise as “a revenue-generating business with primarily social objectives whose surpluses are reinvested for that purpose in the business or in the community” (2009, p.
6). This and other definitions employ concepts of business, social investment, and a range of characteristics borrowed from different organizational models. In this way, social enterprises blend and blur the boundaries of these divisions and create a new model for how to meet community needs (Dees, 1998). Often, this hybrid nature comes as a response to gaps in services or needs that have been left in communities by the failure of more conventional institutions. In many urban areas with high unemployment and skills deficits, social entrepreneurs have replaced receding social services and work opportunities, as in Winnipeg (CCEDN, 2009). In this way, social entrepreneurship represents a community-driven response to market and state failures and a powerful
Corporate Social Responsibility
The second framework that can supplement the literature on SE is the concept of corporate social responsibility (CSR). According to the Dutch Social and Economic Council (2000, as cited in Dagevos & Evers, 2008), CSR is defined as “the conscious focusing of the activities of the business on long-term value creation in three dimensions-profit, people, planet—and thus on the contribution to social living standards in the longer term [whereby businesses] maintain a relationship with the various stakeholders on the basis of transparency and dialogue”. In other words, CSR is the extent to which business activity contributes to the realization of long-term sustainable development goals that comprise the vision for local or regional sustainability (Dagevos
& Evers, 2008).
CSR is not only a focus of scholarship, but is becoming an increasingly important business priority (Porter & Kramer, 2006). Over 360 corporations have official CSR policies, and hundreds more are adopting them (Porter & Kramer, 2006). However, CSR has different meaning for each company, determined by factors such as the company’s goals and values, markets where the company operates, production processes, and the expectations of stakeholders that are affected by the company (Dagevos & Evers, 2008).
CSR goes beyond the minimum requirements of regulations, making deep societal impacts (Dagevos & Evers, 2008). CSR also often considers ecological impacts of corporate activities, as well as a broad range of additional priorities. Businesses that live up to this vision of CSR “think through the external and long-term impact of all the processes within the business” and “limit the negative external effects of their own actions” (Dagevos & Evers, 2008, p. 15).
Despite this idealized vision of CSR, the concept has emerged from a history of adversarial relations between corporations and community advocates. The original impetus for CSR for many businesses was not an internal vision, but external pressure from public interest groups. Often in the history of a business, the public has criticized some aspect of its operation and, through campaigns, has brought attention to a business responsibility that the company had previously ignored (Porter & Kramer, 2006). These outcries have arisen over corporate practices like Nike’s poor working conditions in Indonesia or Shell’s improper disposal of oil rigs, and resulted in the public,
led by activist organizations, forcing new priorities and responsibilities onto the business agenda (Porter & Kramer, 2006). As a result, a great deal of the corporate sustainability and social welfare initiatives has arisen in a very reactive manner out of the assumption that CSR is “a cost, a constraint, or a charitable deed” (Porter & Kramer, 2006, p. 2).
This reactivity often leads to the adoption of cosmetic reforms to show to the media and public that the business is taking action about a given problem but, in truth, usually doing the bare minimum to quiet public dissent (Porter & Kramer, 2006).
In contrast, a more constructive approach to CSR can be achieved based on mutual interdependence. Though many corporate decisions are made without social or environmental concerns in mind, business and society are in fact highly interdependent (Dagevos & Evers, 2008). Favourable social and ecological conditions are preferable to businesses, which need a healthy and prosperous community in which to operate and a stable environment to depend on (Porter & Kramer, 2006). Porter & Kramer (2006) argue that businesses need adequate education and healthcare in communities where they operate just as much as they need to maximize efficient use of natural resources.
Societies with a high living standard are able to consume more products and services.
Vice versa, society could never replace all of the benefits that businesses provide communities, from employment to innovation and a variety of goods and services.
It is clear that both business and community are interdependent. But how can this reality lead to a deeper sense of corporate responsibility to society and the environment? What is needed is an integration of business and community interests, whereby the overlap of benefit between business and society is the starting point of corporate social and environmental responsibility (Porter & Kramer, 2006). Ironically, this goal can be achieved if businesses approach CSR the way they make other decisions, in a strategic calculus. If corporations can benefit society while improving their own competitive advantage, then CSR becomes not an external cost but an essential business priority rooted in profit but ensuring community benefit (Porter & Kramer, 2006). However, the most beneficial community business partners are likely to be smaller, locally owned firms rather than multinational corporations whose ownership and local accountability, no matter how ethically inclined, are not oriented toward
community-businesses bring community concerns into their strategic decision- making, so that what is good for business is actually good for social and ecological concerns as well.
Shared Value
Another concept that adds to the discussion of SE is shared value. Porter &
Kramer (2011) introduce the concept of shared value to add to the understanding of CSR, drawing on the economic concept of value creation but arguing that companies should not focus solely on creating private economic value, but should also operate in order to produce value for the broader community and help to meet social needs.
According to Porter & Kramer (2011), “shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center” (p. 4). The authors posit that the mainstream definition of value creation disregards the forms of capital that are essential to both business and communities (Porter & Kramer, 2011). Businesses have ignored forms of value outside of private profit and left them to government, which often creates an adversarial paradigm in which the public good and private enterprise are seen as a zero sum game (Porter & Kramer, 2011). However, societal welfare is what underscores and enables markets, just as social problems often create costs that firms incur (Porter & Kramer, 2011). Similar to the concept of CSR, shared value represents the area of mutual benefit between corporate and community actors.
This new form of shared value creation implies a radically different relationship between business and society. Similar to the CSR perspective, shared value highlights the interdependence of both and encourages both to better understand each other’s interests in the pursuit of a greater common welfare. Shared value need not be created by radically changing the values of businesspeople or redistributing wealth, but by reinforcing decision making that is interested in expanding common resources (Porter &
Kramer, 2011). This implies that businesses pursue “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates” (Porter &
Kramer, 2011, p. 6). There are several practical strategies that can be pursued to create shared value, including rethinking markets and the products sold in those markets, redefining how productivity works in the greater chain of value, and strengthening the
growth of local clusters (Porter & Kramer, 2011). The shared value concept offers a new vision of a classic business priority in a way that reinforces the goals of SE and expands on the theme of interdependence and mutual benefit exposed by the CSR literature. This concept also helps expose how value is created in a chain of business activities.
Sustainable Value Chains
The final framework that adds to the understanding of SE and its contribution to a better society is the concept of value chains. Value chain analysis (VCA) is a method of analysing and improving the impacts of businesses on communities by paying attention to their actions across a chain of their activities (Fearne et al., 2012). A value chain is essentially a depiction of all of a company’s activities in terms of their positive and negative social impacts across temporal phases of company activity (Porter & Kramer, 2006; Fearne et al., 2012). Value chains can be thought of as an inventory of challenges and opportunities for corporate sustainability, highlighting ways that the business currently adds to social and environmental well-being while bringing attention to areas for improvement (Porter & Kramer, 2006). The ideal is to create shared value at each point along the value chain and minimise negative impacts that detract from community value, as shown in Figure 5.
Figure 5. The Corporate Value Chain.
Source: Porter, 1985.
The objectives of value-chain thinking are to add value to society via activities that also enhance profitability and help companies differentiate their products and improve quality (Fearne et al., 2012). These opportunities exist across all phases of business activities, including inbound logistics, operations, outbound logistics, marketing and sales, and after-sales services (Fearne et al., 2012). Companies should focus on creating positive impacts at every point on their value chain (Porter & Kramer, 2006). For example, during inbound logistics, a company has the opportunity to source more of its supplies locally, while during marketing and sales it may choose to improve honesty in advertising or determine fair pricing policies. Value chain thinking is an inherently context-specific activity that spurs each business to consider its specific strengths and weaknesses and the strategies it can take to reduce negative impacts. For a company, the key to minimising its negative impacts is to study the chain of impacts that occur across its value chain and locate areas where their goals do not align with outcomes (Fearne et al., 2012). However, companies should also approach value chain changes in a strategic way that draws on their strengths and opportunities (Porter & Kramer, 2006).
Value chain thinking gives a useful and practical framework for approaching the impacts of entrepreneurs on various aspects of sustainable development. The visual representation of business activities across a timeline allows the more abstract concepts of CSR and shared value to be placed into the specific context of a business or organization.