Bill Drayton is an American social entrepreneur. He is responsible for the rise of the phrase “social entrepreneurship”, a concept first found in print in 1972. Drayton is the founder and current chair of Ashoka: Innovators for the Public dedicated to finding and fostering social entrepreneurs worldwide.
But what is even social entrepreneurship? According to Oxford’s Dictionary of Business and Management (6 Ed.), social entrepreneurship is a form of entrepreneurship in which a company or organization is established to further a defined social goal rather than to pursue maximum profit.
In today’s blog, we will take you through a very interesting research from the Journal of Management Studies that talks about understanding the social role of entrepreneurship. One of the authors, Shaker A. Zahra, is a Chair of Entrepreneurship and Professor of Strategy and Entrepreneurship at the University of Minnesota. The second author, Mike Wright, was a Professor of Entrepreneurship and the Head of the Department of Innovation and Entrepreneurship at Imperial College Business School (U.K.), and a Visiting Professor at the University of Ghent (Belgium). In their article, they develop five themes and five pillars on which the evolving social role of entrepreneurship can rest and have its impact. Let’s dive into it!
The five themes of social entrepreneurship
1. Who does entrepreneurship involve?
This question is important due to the increasing number of diverse participants in the entrepreneurial environment. Institutions and other companies, whether new or already established, play a crucial role in initiating and fostering entrepreneurship. The authors of the article “Understanding the Social Role of Entrepreneurship” emphasize how new companies, for example, in the energy-related industry, have to deal with various institutions, existing and emerging companies, and diverse stakeholders with different interests. Consequently, the diversity of groups and their needs influences new ventures and shapes the development of the ecosystem.
2. What does entrepreneurial behavior involve?
This question explores various types of activities that entrepreneurs can undertake, which may be beneficial, less beneficial, or even problematic. It is noted that a portion of entrepreneurial activities may be limited in productivity or economic benefits, such as “petty self-employment.” Although these activities may help individuals who might otherwise struggle to find employment, there arises a question about the overall contribution of entrepreneurship. It is necessary to contemplate the importance of entrepreneurial activities and what actions can be taken to bring them to fruition.
3. What format does entrepreneurship take?
Previous research has largely focused on formal forms of entrepreneurship, such as independent startups or the establishment of new companies within existing enterprises. However, Shaker and Wright emphasize that entrepreneurship can also be informal. In other words, it takes place outside formal structures and rules. Informal activities can be present in developed economies as well as those that are emerging or underdeveloped. They provide legal employment and satisfy specific social and economic needs.
4. Where is the impact of entrepreneurship felt?
Namely, entrepreneurship is not only about creating money for individuals and companies but greatly impacts wider social and economic aspects. The work of entrepreneurs can solve important problems such as food and water scarcity, environmental pollution, and sustainability issues, using innovative and affordable technologies.
5. How is the impact of entrepreneurship measured?
The questions are traditionally related to measuring growth and financial performance. However, the role of social influence, such as community development, happiness, and social cohesion, is vital for the further development of social entrepreneurship.
Subsequently, Shaker and Wright build on this and develop five pillars on which the evolving social role of entrepreneurship can rest.
The five pillars of social entrepreneurship
1. Connection with other societal efforts
This means that entrepreneurship is not just a thing in itself, but is connected to other efforts in society that strive to improve people’s lives, achieve progress, and make the world a better place. It is essential to think about how entrepreneurship can contribute to these broader goals.
2. Reducing dysfunctional effects
When we talk about “harmful effects”, it means that some entrepreneurial activities can have a negative impact on people, families, communities, and society. The goal is to find ways to reduce these dysfunctional effects and make entrepreneurship beneficial for everyone.
3. Redefining Scope
This means we should rethink what entrepreneurship encompasses as a field of study. It is not only about how to start a company but about many more things related to society and lifestyle.
4. Social multiplier
Entrepreneurship can create new opportunities and encourage the establishment of new companies in different parts of the economy. Thus, one entrepreneurial idea can inspire others and create even more opportunities.
5. “Blended value”
This speaks to the importance of creating value not only in money but also in social and environmental aspects. Entrepreneurs need to think about how their activities affect people, society, and the environment, not just financial profit.
We can conclude that it is important to connect our motives with social good. The authors also note how entrepreneurs should reduce abuses of resources and the environment while supporting activities that promote the public good. However, it is necessary to focus on “who” and “how”, and not only on what entrepreneurs do. Do you agree with us? In case you want to research more about this topic, take a look at the mentioned article and learn more about social entrepreneurship!
