10 Social Entrepreneurship
Shivani Mahajan
1. Learning Outcome
After completing this module students will be able to:
i. Understand the concept of Social Entrepreneurship.
ii. Understand the History of Social Entrepreneurship
iii. Know the Challenges of Social entrepreneurship.
iv. Understands the role of Government for Social entrepreneurship.
2. Introduction
Social entrepreneurship is an approach that bridges an important gap between business and benevolence; it is an application of entrepreneurship in the social sphere. As a field, social entrepreneurship is at a stirring stage of infancy, little developed on theory and definition but far above the ground on motivation and passion. The challenge for academia is to turn an intrinsically experiment-led quest into a more precise and objective discipline. The dare for practitioners is to increase more awareness, support and participation. To overcome the situation of challenges there is a need for a simple definition that generates focus and boosts understanding and thereby builds integrity and stimulates further query.
Social entrepreneurship is defined as a theoretical and realistic model based on a particular circumstances, characteristics and outcomes. The entrepreneurial perspective means identifying the social factors that decide and maintain poverty, marginalization and exclusion; entrepreneurial characteristics means a direct action started by a social entrepreneur in the type of new solutions (innovation) for the target population, perspective or purpose; the entrepreneurial result is a noticeable and quantifiable social change that can be either small-scale (local) or large-scale (systemic). While social entrepreneurship initiates at an individual level, the social enterprise starts as an organizational movement that applies market mechanisms in order to attain social change. (Ioan POPOVICIU, 2011)
As social enterprise begins at an organisational level, the social enterprises need the organizational commitment that uses strategies to achieve social change. In other words, social enterprises are private organizations that use the method of market economy to accomplish their purposes by generating social capital. Social enterprises should be self-sustaining and therefore entrepreneurial in their endeavors, and if the definition of entrepreneurship includes the creation of social and economic value it can be applied to both private, entrepreneurial ventures as well as social enterprises (Chell, 2007). The primary motivation of social enterprises is a rising consciousness that the problems we are in front of today cannot be resolve by the traditional nonprofit approach. Social enterprises take up the challenge and combine the market mechanisms with the social purpose to achieve sustainable social solutions through a self-sustaining organization.
Social entrepreneurship is the action of starting up new business enterprises to achieve social change. The business uses creativity and innovation to foster financial, educational, social, service or other community benefits. (Talbot, Tregilgas & Harrison, 2002)
Social enterprises are not charitable trust or welfare agencies. They are private businesses developed by entrepreneurs by highlighting on human values rather than just profit. These enterprises focus on functioning with and enhancing the social capital within the society by encouraging participation, inclusion and utilising a bottom-up approach to achieve social change.
Perspectives on Entrepreneurship
3. History of Social Entrepreneurship
An understanding of Social Entrepreneurship history discloses that the social Entrepreneur is typically an innovative individual who works for the society rather than making profits.
Social Entrepreneurs in the 19th Century
1. Robert Owen (1771-1858)
2. Florence Nightingale (1820-1910)
3. Henry Durant (1829-1910)
4. William Booth (1829-1912)
5. Frederick Law Olmstead (1822-1903)
Social Entrepreneurs in the 20th Century
1. Dr. Maria Montessori (1870-1952)
2. John Muir (1838-1914)
3. Franklin Delano (1882-1945)
Leading Social Entrepreneurship in India and in the world
- Vinoba Bhave (India): Founder and Leader of ―Land Gift Movement‖.
- Ela Bhatt (India): Founder of ―Self-Employed Women‘s Association‖ (SEWA) and the SEWA Cooperative Bank in Gujarat.
- Susan B. Anthony (U.S): Fought for Women‘s Rights in United States.
- Dr. Maria Montessori (Italy): Developed the Montessori approach to early childhood education.
- Florence Nightingale (U.K): Founder of Modern Nursing for improves Hospital condition.
- Margaret Sanger (U.S): Founder of the Planned Parenthood Federation of America.
- Dr. Abraham M. George (India): Founder of the George Foundation (TGF).
- Bill Drayton (U.S): Founded Ashoka, Youth Venture, and Get America Working!
- Dr. Verghese Kurien (India): Founder of the AMUL Dairy Project.
- Sri Sri Ravi Shankar (India): Founded Art of Living Foundation and International Association for Human Values.
- Muhammad Yunus (Bangladesh): Founder of Microcredit and the Grameen Bank. He was awarded the 2006 Nobel Peace Prize.
- Alan Khazei (U.S): Co-Founder of City Year, a leading national service program.
Types of Social Entrepreneurship:
Following are the types of social entrepreneurship:
1. The Leveraged Non-Profit: This business paradigm leverages resources in order to give solutions to social needs. Leveraged non-profits make creative use of existing funds to fulfill the needs. These leveraged non-profits are long-established ways of dealing with the problems, but are renowned by their creative approaches.
2. The Hybrid Non-Profit: This organizational pattern can be of different forms, but is distinguished because the hybrid non-profit is ready to use profit to continue its operations. Hybrid non-profits are often formed to deal with government or market failures, as they create profits to continue the operation other than of loans, grants, and other forms of traditional funding.
3. The Social Business Venture: These paradigms are set up as enterprises planned to bring change through social means. Social business enterprises developed through a short of funding—social entrepreneurs in this situation were forced to become for-profit enterprises.
4. Elements of Social Enterprise
Three core elements:
- It is build to provide benefits for a community.
- It helps in creating opportunities so that people can help themselves and the others.
- It make use of the best commercial business practices to ensure its existence i.e. the business will naturally maintain and support environmental sustainability as well as ethical considerations.
5. Functions of Social Entrepreneurship
- It helps in creating a stable level of employment opportunities.
- It helps in creating jobs and provides support to economically weaker groups.
- It helps in development of the entrepreneurial skills.
- Social Entrepreneurs build social innovation and bring change in different areas, including education, health, environment and business development.
- It helps in reducing poverty in the country.
6. Difference between Social & Business Entrepreneurship
- Commercial Entrepreneurship represents the recognition, growth, and utilization of opportunities that helps in generating Profits.
- Social Entrepreneurship refers to the recognition, growth, and utilization of opportunities that helps in bringing change in the society.
- Commercial Entrepreneur may bring change in the society but the main purpose is to earn profits.
- Social Entrepreneur may generate profits but the main aim is to bring change in the society and work for the social well being.
- Another important difference between the Social and the Commercial Entrepreneur is in the meaning of wealth creation.
For the Commercial Entrepreneur, ‘wealth’ is same as profit.
For the Social Entrepreneur, however, wealth also includes formation of the social and environmental capital.
7. Social entrepreneurs
Social entrepreneurs are the one who question the traditional methods and combines visionary and real world problem solving creativity to break the path with the powerful ideas. They help in combining local practicality with the professional skills. They see the opportunities where there are unvalued resources and unemployable people. There prime objective is to bring change in the society and for that they may use market mechanisms and thus helps in reducing the various social problems by abolishing poverty and bringing employment opportunities.
8. The Characteristics of a Social Entrepreneur are:
- Uses a creative approach to resolve social issues.
- Transforms society by bringing change.
- Is not confined by society norms or traditions.
- Is not bound by barriers that exist in the path of their goals.
- Expands new paradigms and finds new methods to facilitate them to overcome obstacles.
9. Where do you find social enterprises?
Social entrepreneurs are found mainly in economic sectors. The expansion areas for social enterprises are recognized as:
- Housing
- Information services
- Financial services
- Training and business development
- Environmental
- Manufacturing
- Public services
- Food and agriculture
- Health and care
8.1 Typical sectors of investment of social enterprises
Affordable Healthcare: The affordable healthcare sector in India is at a budding stage. Affordable healthcare providers bring down the cost of service delivery through innovative operating models. In India, more than 60 per cent of the population is in villages and small towns while 70 per cent of medium-to-large hospitals are located in metros and large towns. In addition, 80 per cent of the demand is for primary or secondary care and only 30 per cent of hospitals provide these. Thus availability and affordability remain a key concern in healthcare coverage.
Affordable housing: There is a large gap in the urban housing market and it is impossible for the economically weaker section to afford proper housing. So, affordable housing developers‘ helps in building affordable housing by minimizing the construction cost and completion time by creating innovative methods as a part of social entrepreneurship in India.
Water and Sanitation: Water sector can mainly be divided into three areas: water harvesting and storage, water supply and distribution, and piping and waste management. Social entrepreneurs are usually concerned with point-of-use filtration, rain-water harvesting, community water treatment, and small-scale water networks. Usual working models for sanitation management are household toilets, pay-and-use community toilets and ‗ecosan‘ toilets where toilet waste is used to create biofuel.
Agriculture: Agriculture and allied activities are the chief occupation in rural India and provide income to more than 70 per cent of the rural population in India. Social enterprises working in this sector make profitable and social value by removing inefficiencies from the existing value chains. These enterprises are mostly categorized as: those sustaining the value chain pre-harvest or post-harvest market links as well as those occupied in the dairy production and market linkage.
Energy: Social entrepreneurs help in giving access to environmentally friendly and inexpensive energy. They try to improve the standard of living and living conditions of the rural population and thus provide best possible energy sources to the rural households. Roof-top solar lighting and low smoke cook stoves are some of the projects in this field.
Education: It is projected that 4 per cent of children never start school, 58 per cent do not complete primary school education because of reasons varying from insufficient infrastructure to lack of motivation, and poverty. Social enterprises plays a key role in providing education to the under privileged and economically weak children. They work around these challenges through sponsorship and capability enhancing solutions. These enterprises furnish from early childhood to adulthood and are present in formats such as pre-schools and after-school classes, e-learning and vocational and skill development institutes.
Livelihood promotion: Social entrepreneurs are generally classified into two categories: individuals that encourage living and those that assist in skill development. In majority of livelihood ventures, the producers or artisans hold greater part of the ownership. Entrepreneurs in the skill development sector are mostly structured as for-profit entities, but with low or subsidised or free education to the beneficiary.
Financial Inclusion: There is a large need of micro finance in the country and only 10% of the micro finance needs are met by the micro finance institutions which act as financial intermediary to serve the economically weaker section of the society. So to meet the social needs RBI has developed a Self Help Group Linkage Program to promote financial dealings between commercial banks and self-help groups (SHGs).
10. Challenges for Social Entrepreneurship
Social entrepreneurs face many challenges in India which hamper the entrance of new entrepreneurs in India. Following are the challenges faced by the social entrepreneurs:
- Lack of Education in Entrepreneurship: Education is the important source of encouraging entrepreneurship in India but the Indian education system is still works on the traditional lines. It still lacks a specific curriculum for promotion of entrepreneurship and is restricted only to the few business schools and that too lack in promoting social entrepreneurship. Due to the gap in the education system, India is still struggling in the entrepreneurship sector and therefore is major challenge for social entrepreneurship.
- Lack of skilled manpower: Social Entrepreneurs requires different types of the skilled manpower for the achievement of the organizational goals but to fulfill the mission of social entrepreneurship, owners have to hire the individuals from the deprived sector of the country who are unskilled. So, entrepreneurs have to incur extra costs for their trainings and therefore pose a challenge for the social entrepreneurship.
- Lack of Financial assistance: Lack of Financial resources is also one of the major challenge for the social entrepreneurs as they start their business with their own money or from taking loan from the local money lenders who lent at a very high interest rates. This is because financial institutions do not easily provide loans to the social entrepreneurs due to the high risk factor.
- Social and Cultural effect: In India, people are not aware of the Social entrepreneurship and this lack of knowledge sometimes becomes a challenge for the social entrepreneurs. People are not able to find the difference between the profitable and non profitable business and therefore, are doubtful about the activities of social entrepreneurs.
- Comparative disadvantages to business: The social entrepreneurs work for the welfare of the society and thus find the low cost solutions to the societal problems by investing their own money and when they start earning profits then new entrepreneurs peep in and create competition in the market.
- Lack of Government support: Government does not take much initiative to support social entrepreneurs. The Government policies for the entrepreneurs are very strict and complex which at the times proved to a challenge for the social entrepreneurship.
11. Social Entrepreneurship in India
Social entrepreneurs are individuals or groups of people or organisations that provide time and solutions to reduce the society‘s millions of problems and long existing issues that stay unsettled by the institutional and government sector. As in other countries, in India too, social entrepreneurs are a emerging occurrence bringing positive alteration to several social areas ranging from education to healthcare, renewable energy, waste management, e-learning and e-business, housing and slum development, water and sanitation, violence against women, other issues related to women, children and the elderly etc. The main aim of these Social enterprises is to bring in sustainable and noble living to the under privileged and the marginalized citizens of India.
10.1 Role of government in the social entrepreneurship landscape
The Government has started many public-private partnerships in the important development sectors. The National Innovation Council, in joint venture with the Ministry of Micro, Small and Medium Enterprises (MSME) has begin the India Inclusive Innovation Fund (IIIF), an impact investment fund with a amount on Rs. 5,000 crore that will invest in enterprises catering to the country’s economically weaker sections.
10.2 Budget 2014 initiatives
- In order to build an encouraging eco-system for venture capital in the MSME sector, it is planned to set up a Rs. 10,000 crore fund for drawing private capital by way of providing equity, quasi equity, soft loans and other risk capital for start-up companies
- Scheme to allocate Rs. 200 crore to encourage innovation, entrepreneurship and agro-industry
- Suggestion to set-up a ‗Start Up Village Entrepreneurship Programme‘ for encouraging rural youth to start up local entrepreneurship programmes and offering an initial sum of Rs. 100 crore for this.
12. Summary
India is full of opportunities and challenges. India is growing at a rapid pace and is seeing drastic revolutions since Liberalisation, Privatisation and Globalisation in 1991. With the growth the social problems of the country is rising at the same rate. Therefore, there is a dire need of social entrepreneurship in India. Social entrepreneurs are coming up and providing low cost solutions to the various problems but there is large number of challenges for the social entrepreneurship in India. These challenges can be minimized by the constant support of the Government. Moreover social entrepreneurs should help the higher education institutes in framing curriculum which develops the spirit of social entrepreneurship among the youth. Various NGO‘s and Government agencies should come together to minimize the challenges and for providing healthy environment for the social entrepreneurs in India.