Social Entrepreneurship: Definition, History, Relevance

What Is Social Entrepreneurship?

The definition of social entrepreneurship has become quite controversial in recent years because it covers a wide spectrum and people in different branches of social entrepreneurship see it from their own point of view.

However difficult it may seem, we have to define social entrepreneurship in a way that is all-encompassing yet pays attention to the work that various segments of the movement are doing.

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Consequently, it can be defined as an activity that involves creating solutions and products that are aimed at solving problems and bridging gaps that exist in society.

Typically, social entrepreneurs employ entrepreneurial principles to identify issues and gaps in society, develop a plan to solve the problem, fund the development of the solution, and implement solutions that will help better society.

To further separate social entrepreneurship from other forms of entrepreneurship, we must note that for an entrepreneur to qualify as a social entrepreneur, they must prioritise the effects that their business will have on society over their drive for profit. While no business can survive for long without profit, the social entrepreneur should balance profit-making and societal impact.

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The Four Pillars Of Social Entrepreneurship

For an organisation to fit into the social entrepreneurship sphere, it has to tilt towards two or more of the four pillars of social entrepreneurship. So, what are the four pillars?

The Project Must Have Economic Viability

This is where social entrepreneurship differs from non-profit organisations. Social entrepreneurship outfits must have economic viability. This is because the social entrepreneur cannot depend on grants and donations to make an impact on society. Therefore, social entrepreneurs must make sure that whatever solution they are building is economically viable and able to make profits

The Project Must Have Social/Environmental Value

For an entrepreneur to qualify as a social entrepreneur, they must make sure that their products and solutions have societal value. If your company does not ultimately transform social capital for the better, then you might not qualify as a social enterprise.

Profit Redistribution

Profit redistribution is also a core part of social enterprises. This means that you must put aside a part of your profit to redistribute it to your community and the society at large. Nowadays, most businesses use part of their profits to engage in corporate social responsibility (CSR) projects. While doing CSR projects alone does not qualify an organisation to be a social enterprise, it is however a huge part of social entrepreneurship.

Governance

Governance here refers to the way that social entrepreneurs run their organisations. It is important that all stakeholders participate in important decisions. Stakeholders should include management, staff, end-users, community leaders, and even political leaders.

If you want to build products and solutions that will affect people in society, then you have to put a feedback mechanism in place with which you measure your impact.

The History Of Social Entrepreneurship

Social entrepreneurship and social entrepreneurs have existed throughout history, but the terms were first used by the American Economist, Howard Bowen in his 1953 book Social Responsibilities of The Businessman. Following this, the terms came into popular use in the 1980s and 1990s with major voices like Charles Leadbeater, William “Bill” Drayton, and British politician Michael Young.

Additionally, in the 1980s many businesses became interested in a trend called cause-related marketing. Businesses were engaging in cause-related marketing because customers were now aware and cared about social issues.

So, many businesses in America and other countries were supporting social issues as a means to an end. They understood that supporting social causes was a way to attract new customers that care about the same issues, as well as increase customer loyalty among existing customers.

One very unique example that had resounding success was when American Express pledged to donate money to the Statue of Liberty Restoration Fund whenever a new customer opened an account with them, and also whenever customers made a purchase with American Express cards. As a result of this, the company saw a 45 percent increase in new card applications as well as a 28 percent increase in card usage in the first month of their campaign.

The success of the American Express experiment saw many companies quickly following the example with organisations supporting causes in health, education, the environment, and many other sectors giving way to further advancements in the field of social entrepreneurship.

Although these companies were more interested in the profits they amassed from supporting a cause, their resounding success paved way for the new generation of social entrepreneurs who are more interested in bettering society than making profits.

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Importance Of Social Entrepreneurship?

Social Entrepreneurship Helps Bring About Development

The main remit of social entrepreneurs is to identify problems and issues in society, then work to build solutions that will help resolve the issues. As a result of innovative strategies thought up by social entrepreneurs, we have continued to see massive developmental strides in society that will not exist otherwise.

For example, social entrepreneurs in the banking and finance sector have grown the sector by creating microfinance banks that provide banking and loan services for people from communities that are both underserved and underprivileged.

Additionally, fintech companies in developing countries are constantly building products and services that help grow financial literacy, financial democracy and provide platforms to bridge the gap between people in rural communities and urban centres.

Social Entrepreneurship Helps Address Societal Problems

The government cannot solve all of society’s problems alone. Therefore, there is a need for people to look for creative ways to help answer the questions posed by society. And who is better positioned to tackle societal ills than social entrepreneurs?
Social entrepreneurship provides an avenue for well-meaning individuals to help identify and tackle society’s problems.

Social Entrepreneurship Brings About Social Inclusion

A core aspect of social entrepreneurship is social inclusion. As a result, entrepreneurs work hard to build solutions that bridge the gap between the rich and the poor, the educated and the uneducated, the served and the underserved, the privileged and the underprivileged, etc.

Apart from that, gender inclusion is another target of social enterprises. This is why organisations like She Leads Africa are committed to bridging the divide caused by gender inequality across the African continent.

Social Entrepreneurship Brings About Job Creation

Like other forms of entrepreneurship, social entrepreneurship provides a very important service to society, it helps to create jobs. As entrepreneurs found and grow social enterprises, they need hands on deck to help them achieve their goals, therefore, providing jobs for people in the community.

Additionally, there are some social entrepreneurs that have created solutions to help address the unemployment problems in developing countries. That is another way through which social entrepreneurship helps drive job creation.

Social Entrepreneurship Helps Spur And Drive Social Innovation

Social innovation simply means the ideas and processes through which social value is created. And if social entrepreneurship is about creating social value, then it follows that social entereprises drives social innovation. All over the world, entrepreneurs are constantly innovating on ways to help make society better and this social innovation might not be in existence without social entrepreneurship. Therefore, social entrepreneurship drives social innovation.

See Also: What Is Entrepreneurship About? Definition, Importance, And Values Of Entrepreneurship

List Of Top Social Entrepreneurs In The World

Frequently Asked Questions About Social Entrepreneurship

What Are The Objectives Of Social Entrepreneurship?

The core objective of social entrepreneurship is to make society better. This means that it aims to make society better for males, females, animals, the environment, culture, and everything in between. Basically, it aims to help develop society by creating solutions that are strong enough to make money on their own rather than rely on grants and donations.

What Is The Difference Between Social Entrepreneurship And Corporate Social Responsibility?

Corporate Social Responsibility(CSR) initiatives do a lot of good for society but they are very different from social enterprises. This is because social entrepreneurship is proactive in that it sets out to identify and solve a problem, while CSR is reactive in that businesses start out majorly for profit, and only does initiatives to either look good or give back to society.

What Are Some Good Ideas For Social Entrepreneurship?

• Online Loans
• Efficient Energy
• Alternative Power
• Workspaces
• Incubation Centres
• Clean Water Initiatives
• Combating Fake Drugs in Developing Countries and Least Developed Countries
• Resolving Unemployment Issues
• Microfinance Banking
• Agricultural Supply Chain
• Fintech

What Are Some Examples Of Social Entrepreneurship Companies?

• Good Eggs
• Helpsy
• Bangs Shoes
• Indiegogo
• Wize Monkey
• Sanergy
• Lost Empire Herbs
• Warby Parker.
• Melioria Cleaning Products
• GoldieBlox.
• Klean Kanteen
• Uncommon Goods
• Lunapads & Nestworks
• Lush
• Amplio Recruiting

Conclusion

Social entrepreneurship is an amazing field of endeavour. It helps to address society’s problems while helping social entrepreneurs and their teams make a living.

This, therefore, means that to be classified as a social entrepreneur, you need to put the impact you are trying to have on society above the need to make a profit. Hence, it is almost a given that it is not a field for the faint-hearted. Only venture into it if you have a strong conviction about your idea.

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