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Exploring the Motivations Behind
Social Entrepreneurship
Integrating Social Enterprise with Nonprofit
Organizations
1. Embedded
1.1. The social enterprise and social program are one and the same. 1.2. The creation of the business has client service at its heart.
2. Integrated
2.1. The business activities overlap with the social programs. 2.2. The business acts as a funding mechanism and helps in the expansion and enhancement of the mission of the organization.
3. External
3.1. The business and social activities are separate, and they are usually not related to the mission of the organization. 3.2. The business is created to fund and support the social activities.
9 Types of Business Models for Social
Enterprises
1. The Entrepreneur Support Model
Sells business support services directly to the target population of entrepreneurs. Helps entrepreneurs get their business off the ground. Support can come in the form of consulting services, training, micro- financing, and technical support. Organizations that belong to this category may include economic development organizations, business development service organizations, and micro-finance institutions. Key success factors: appropriate training for entrepreneurs.
2. Market Intermediary Model (Fixers)
Helps clients by marketing or selling their products or services for them. Example: an organization that helps struggling small farmers by marketing and selling their crops.
Supply cooperatives like Fair Trade, Agriculture, and Handicraft organizations. Key success factors: low startup cost and allowing clients to stay and work in their community.
3. Employment Model
Provides clients with job opportunities and job training. Revenue generated by those jobs pays the social entrepreneur's expenses and follows back into the service provided for those in need. Many youth and disabilities organizations adopt this model. Proving work opportunities in areas like landscaping, cafes, and minting. Key success factors: job training and commercial viability.
4. Fee-for-Service Model
One of the most commonly adopted social entrepreneur business models. The social enterprise charges the customer directly for the socially beneficial services it provides. Organizations such as hospitals, schools, museums, and membership organizations. How it works: selling social services directly to clients or through third- party payers. Key success factor: establishing the appropriate fee structure vis-à-vis the benefits.
5. The Low-Income Client Model
Generally offers social services directly (as in the fee-for-service model) while focusing on hospitals and healthcare services for low-income patients. How it works: similar to fee-for-service in terms of offering services to clients but focuses on providing access to those who couldn't otherwise afford it. Example: utility programs. Key success factors: creative distribution systems, lower production, marketing cost, and high operating efficiencies.
6. The Cooperative Model
One of the most recognized categories of social enterprises. Generally a fee-based membership organization that provides member services to a group that shares a common need or goal. Owned and operated by its members, who both run the cooperative and receive the benefits of its success. Two of the most well-known types are credit unions. How it works: provides members with benefits through collective service.
Discovering Opportunities for Social
Entrepreneurship
Entrepreneurs play important roles in creating new businesses that fuel progress in societies worldwide. They use innovation and technology to foster positive impact and activity in all facets of life. The capable entrepreneur learns to identify, select, describe, and communicate the essence of an opportunity that has attractive potential to become a successful venture. The entrepreneur is able to describe the valuable contributions of a venture and create the design of a business model that can be sustained by a competitive advantage. The venture team creates a roadmap (strategy) that can, with a good chance, effectively lead to the commercialization of the new product or service in the marketplace with a sustainable competitive advantage.
The key term in entrepreneurship is the ability to see a gap in the market and to transform it into a viable venture. Entrepreneurs are different from inventors, dreamers, and spectators. The key to entrepreneurial success is the ability to find the right opportunities.
Opportunities for new ventures to gain a competitive advantage can come from being better than existing firms or through flawless execution. The lack of finding opportunities is one of the disadvantages social enterprises face. A conventional business can use its balance sheets and business plan to offer different combinations of risk and return to many different types of investors, such as equity investors, banks, bond funds, and venture capitalists.
An increasing number of social entrepreneurs and investors are coming to realize that social enterprises can also generate financial returns that will make them attractive to the right investor, which increases the amount of capital available to these organizations.
4 Ways to Identify More Business
Opportunities
Listen to your potential clients and past leads: Listen to their needs, wants, challenges, and frustrations. Question possible products in the market: Have they used similar products and services before? What did they like and dislike? Why did they come to you? What are their objections to your products or services?
This will help you develop more tailored products and services, hone- enlarge your target market, and identify and overcome objections.
Listen to buyers:
Listen to what they are saying about your industry, products, and services.
Frequently asked questions, experiences, frustrations, what they are doing right, and what makes customers go to them over you.
Analyzing your competitors helps to identify key opportunities to expand your market reach and develop your products/services.
Look at industry trends and insights:
Subscribe to industry publications, join relevant associations, set Google alerts for key industry terms, and follow other industry experts on social media.
Absorb yourself in your industry and continually educate yourself on the latest techniques and trends.
Ensure market characteristics, business principles and value, diversification, and entrepreneurship are the focus of a successful social enterprise.
The Business with Blended Returns
For-profit and providing social value are the purpose of social enterprises. The social value of providing poor people with affordable health, basic food, and safe cleaning products. Social enterprises survive through government subsidies, charitable institutions, and a handful of high net worth individuals who will make donations or accept lower financial returns on their investments in social projects.
The key to entrepreneurial success is the ability to find the right opportunities. Opportunities for new ventures to gain a competitive advantage can come from being better than existing firms or through flawless execution. The lack of finding opportunities is one of the disadvantages social enterprises face.
Effective Business Models for Social
Enterprises
An effective business model is the spine of a successful social enterprise. A business model is a structure, design, or framework that a business follows to bring value to its customers and clients. There are three measures of the success of a business model:
Its ability to generate profit for its owners (traditional for-profit companies). Its ability to generate positive change in the world (traditional charities). Its ability to achieve a balance of profit and positive change (social enterprises).
2.1 Compassion as a Determinant of Social Entrepreneurship
Compassion acts as a prosocial motivator of cognitive and affective processes, including:
Integrative thinking Prosocial judgments regarding the costs and benefits of social entrepreneurship Commitment to alleviate others' suffering
Compassion motivates social entrepreneurial activity through four mechanisms:
It directs one's attention from self-concern to concern for others and their suffering. It increases one's belief in the significance of others' suffering and one's understanding of the issues contributing to it. It encourages a concerted response for the benefit of others. It can make others' suffering personally relevant and generalize such concerns to others.
However, some scholars have questioned the role of compassion in creating social ventures, arguing that it is a poorly distinguished concept from other concepts like empathy and that it can have negative consequences.
3. Moral Engagement and Social Entrepreneurship
The use of the concept of moral engagement to explain why social entrepreneurs act the way they do is derived from Bandura's Theory of Moral Disengagement.
3.1 Bandura's Theory of Moral Disengagement
The theory of Moral Disengagement explains why people engage in cruel and inhumane acts. There are two forms of moral disengagement:
The inhibitive form is manifested in the power to refrain from behaving inhumanely. The proactive form is expressed in the power to behave humanely.
Moral disengagement centers on the following aspects:
The reconstrues of the conduct itself so that it is not viewed as immoral. The operation of the agency of action so that perpetrators can minimize their role in causing harm. The consequences that flow from actions. How the victims of maltreatment are regarded by devaluing them as human beings and blaming them for what is being done to them.
3.2 The Model of Moral Engagement
The model of Moral Engagement is based on the concept of moral mandate, which is a selective self-expressive stand on a specific issue, not a generalized orientation toward the world.
The model suggests that a moral engagement response influences the creation of social ventures. Moral engagement motivates a social entrepreneur to act and serves both as a motive and as a justification for action.
The model assumes that the existence of unmet social needs triggers feelings of the violation of personal moral standards, which creates the motivation to engage in social entrepreneurship activities. Moral engagement conveys the intention that addressing a particular social problem is 'the right thing' to do and emphasizes the sense of duty.
The model has two components:
Inner-directed moral engagement : Refers to the extent to which the person is morally obligated to fulfill his/her own goals and objectives. Outer-directed moral engagement : Refers to the extent to which the person feels obligated to live up to others' expectations.
The intensity of moral engagement, which refers to the strength of an individual's moral commitment and determination to act, is a key factor in determining the likelihood of an individual creating social ventures.
4. Social Justice as a Motivator of Social Entrepreneurship
The text does not provide any information about social justice as a motivator of social entrepreneurship. The document focuses on entrepreneurial motivations, compassion, and moral engagement as drivers of social entrepreneurship.
The Model of Social Entrepreneurs' Moral
Engagement
Social Justice and Social Entrepreneurship
Unmet social needs could be perceived as a social injustice. Perceptions of social injustices lead to social entrepreneurship. Perceptions of social injustice could trigger a moral response. Perceptions of social injustice trigger a deontic response, a moral obligation to act.
Social Justice as a Motivator of Social Entrepreneurship
Do people engage in social entrepreneurship in order to correct or address what they perceive as a social injustice?
Joseph Schumpeter defined entrepreneurs as "innovators who drive the 'creative destruction' process and their function is to reform or revolutionize the pattern of production". Entrepreneurship can be commercial or social, and it is about value- addition to an activity that may already exist, including social activities that have social value.
1.2 Defining Social Entrepreneurship
There is no universally accepted definition of Social Entrepreneurship as the field is still evolving. Some argue that Social Entrepreneurship is simply the application of commercial (or for-profit) entrepreneurship concepts to the social sector. Any definition of Social Entrepreneurship must have the following four elements: Address a particular social need Be centered on the creation of social value Emphasize social impact Acknowledge that the means to attain the social mission can include purely philanthropic, hybrid, or market-orientated mechanisms.
1.3 Typology of Social Ventures
1.3.1 Purely Philanthropic Social Ventures
Rely on external sources for funding, such as gifts and grants, to provide services to people in need. Examples include Physicians for Human Rights and Médecins Sans Frontières.
1.3.2 Purely Commercial (for-profit) Social Ventures
Run or managed like a for-profit business, but the profit earned is used to address social needs. They have a dual purpose: (1) earn a profit, and (2) address a social need using the profit earned. An example is TOMS Shoes, which sells shoes for profit and also donates shoes to children in poor countries.
1.3.3 Hybrid Social Ventures
Lie between the purely philanthropic and purely commercial type ventures. Engage in both making a profit and doing charity. Examples include the One WorldHealth Institute and the Aravind Eye Hospital in India.
1.3.4 Corporate Social Entrepreneurship
Corporate social ventures are created by for-profit organizations using their resources and capabilities to create economic and social value. Corporate social entrepreneurship is not another form of social responsibility but represents a process for advancing the development of corporate social responsibility.
Comparing Commercial and Social Entrepreneurship
For social entrepreneurship, wealth creation (profit-making) is only a means to an end - to address a social need, whereas for-profit businesses, it is the end. For social entrepreneurship, creating social value is the primary objective, the purpose or mission of the social venture; whereas social value creation is a by-product of the activities of a for-profit venture.
Social Entrepreneurship: A Global Phenomenon
The concept of Social Entrepreneurship varies from country to country in meaning, practice, and governance.
Social Entrepreneurship: A Diverse and
Evolving Landscape
Understanding Social Entrepreneurship
Social Entrepreneurship (SE) is an emerging field of entrepreneurship that focuses on creating ventures with the primary goal of addressing social needs, rather than solely pursuing economic value as in traditional business entrepreneurship. This concept has taken different forms across various countries and regions:
In Europe, SE is often referred to as "third-sector, non-profit ventures" such as cooperatives, associations, and foundations, typically financed by government agencies. In the UK, SE encompasses independent-sector for-profit or non-profit ventures that utilize quasi-market mechanisms to enhance service efficiency. In the United States, SE encompasses a wide range of organizations, from for-profit businesses to hybrid organizations and philanthropic organizations with a social purpose.
Despite these differences in terminology and governance, the unifying factor across all countries is the social purpose or mission of SE. Whether purely philanthropic, purely commercial, or a hybrid of the two, the overarching goal of SE is to address social needs.
