Social Entrepreneurship: Why We Should Care

When I think of this two words it comes to my mind that any person who works to improve their society by correcting they’re the wrong thoughts, solving social problems such as poverty, a lack of education and famine. But What is a social entrepreneur(1)? Social entrepreneurs are individuals who try to tackle society’s most pressing problems and attempt to drive social innovation in fields such as healthcare, agriculture, education, environment, and human rights, using new approaches and products and more rigorous applications of known technologies or strategies. The way they pursue these goals is what makes them distinctive. Similar to a business entrepreneur, a social entrepreneur operates with entrepreneurial determination and business methods to create financially-sustainable organizations that often have an income-generating stream built into the business model. A couple of keywords that are applicable to social entrepreneurs are Innovation, Sustainability, Reach and Social Impact. Social enterprises are often confused with Non-Governmental Organisations (NGOs).

However, the main difference here is the revenue model. Whereas NGOs rely primarily on charitable contributions and public funding, social enterprises aim to generate enough revenue to sustain themselves financially; they have a steady stream of income, take out loans or grants, search for investors, form partnerships and more. The business approach is just one among many ways to create social value. Therefore, NGOs and social enterprises complement each other, rather than stand in each other’s way. Different schools of social enterprise (2): Social enterprise emerged, approximatively, at the same period of time on both sides of the Atlantic, although without any connection between them until the mid-2000s (Defourny, Nyssens, 2010). In the US, the Social Enterprise Initiative was launched in 1993 by the Harvard Business School, followed by large universities and foundations that developed support programmes to social entrepreneurs. Various entrepreneurial initiatives with a social mission emerged in the US in the 1980s, mainly within the nonprofit sector but it was not until the 1990s that they were put together within the concept of “social entrepreneurship”.

In Europe, its emergence is associated with the development of social cooperatives in Italy, recognized by a specific law in 1991, and with the work of the EMES (Emergence des Entreprises Sociales) European Research Network during the 1990s. Since then, the notion of social enterprise has been developed by different schools that are usually separated into two groups by scholars, although not all works on social entrepreneurship can be fitted exclusively within one of the schools (Borzaga, Defourny, 2001; Dees, Anderson, 2006; Defourny, Nyssens, 2010). We build the following description of these two schools upon the work done by Defourny and Nyssens (2010). History(1): Social entrepreneurship is a relatively new term, but the underlying concept can be traced back much earlier. Before the term social entrepreneurship was coined, there were already many entrepreneurs who worked for children’s rights, women’s empowerment, socio-economic development, environmental issues and more. Two noteworthy entrepreneurs who established social ventures as early as the 19th century are Robert Owen (1771-1858), the founder of the cooperative movement and Florence Nightingale (1820-1910), who founded the first nursing school and developed various modern nursing practices.

The term “social entrepreneurship” has been tossed around since the 1960s, but it is thanks to 2006 Nobel Prize winner Muhammed Yunus that it has gained its place in the spotlight. In 1976, Yunus founded the Grameen Bank, an institution in Bangladesh that provides microcredit loans to low-income earners to encourage economic growth at the grassroots level and foster financial self-sufficiency. Yunus’ Nobel Prize-winning enterprise has proven to be hugely successful and helped a great deal in bringing social ventures to the fore. Nowadays, the concept of social entrepreneurship is widely used and supported. Organisations such as the Skoll Foundation, the Schwab Foundation, Ashoka: Innovators for the Public, Echoing Green and Omidyar Network were established to enhance and encourage social entrepreneurship. These organizations identify, highlight and (financially) support social enterprises all over the world, creating networks in which social entrepreneurs can exchange insights, strategies, form partnerships and learn how to improve their ventures.