Social entrepreneurship – ancient phenomenon, new word?

Posted on December 12, 2010


Eradicating extreme poverty continues to be one of the main challenges of our time, and is a major concern of the international community. Ending this scourge will require the combined efforts of all, governments, civil society organizations and the private sector, in the context of a stronger and more effective global partnership for development (United Nations, 2009).

– United Nations Secretary-General Ban Ki-moon

Below you will find a text I have written, perhaps a little heavy for the blogosphere some might say, but I find it fitting to now and then also post some more ‘academic’ pieces. You will get from this text an introduction to social entrepreneurship, some (not too many) useful references, a view on how social entrepreneurship can be seen as institutional change, and it will reveal some of the perspectives or unanswered questions which really intrigues me within the ‘social-change-making’ field. Hopefully it will be useful knowledge to you, and more so, I hope it will make you reflect on what intrigues or puzzles you – what do you really wish you knew more about, what seems ambiguous or fascinating, what doesn’t make sense, and so on. The curiosity is yours and can be a great inspiration to others..


Social Entrepreneurship – An Emergent Field of Research

The past decades have entailed complex political, economic and social changes at all levels of society. There has been a marked “shift away from a social welfare state approach to development and towards a neoliberal approach with an emphasis on market forces as primary mechanisms for the distribution (and redistribution) of resources (Reis, 1999).” One visible consequence of these societal changes has been an exceptional wealth creation but at the same time a growing gap between rich and poor. The United Nations estimates that over 1.4 billion people live in extreme poverty, surviving on less than $1.25 a day. Without question, eradicating extreme poverty remains one of the major social challenges of our time. Other major challenges includes: eradicate hunger, combat diseases, lack of adequate shelter and exclusion, achieve universal primary education, promote gender equality, empowerment of women and basic human rights, promote health, and environmental sustainability (United Nations, 2009).

In light of these societal challenges and mounting public concern about sustainable development, the debate on the responsibility of businesses has received increased attention. This is in stark contrast to Milton Friedman’s (1970) famous claim that “the business of business is business”; a stance which is often presented in debates on the responsibility of businesses as a radical opposition to the notion that businesses owe a larger duty to society. It appears as if the debate on corporate responsibility by and large has moved beyond this point; as few continue to champion Friedman’s position and challenge whether the corporate sector has a social responsibility. Rather, emphasis is given to debating the extent of the social responsibility, and how it is to be manifested. Over the last decade a new field has emerged within this context; that of social entrepreneurship. Taking the notion of responsible business even further, social entrepreneurship proposes that the sole purpose of establishing an organization is to solve specific social problems.

Just as entrepreneurs change the face of business, social entrepreneurs act as the change agents for society, seizing opportunities others miss and improving systems, inventing new approaches, and creating solutions to change society for the better. While a business entrepreneur might create entirely new industries, a social entrepreneur comes up with new solutions to social problems and then implements them on a large-scale (Ashoka, 2009).

Given the urgency of the humanitarian and environmental challenges facing us today, as emphasized in the above statement by the United Nations Secretary-General, the need for sustainable solutions is pressing (United Nation, 2009). Social entrepreneurs, among others, have accepted that challenge. Although social entrepreneurship as an academic field might be new, the phenomenon itself is not. Societies across the globe have had social entrepreneurs for centuries, pioneers working determinedly for the better of their society, even if they were not labeled as such. Muhammad Yunus is, for instance, one of these social entrepreneurs. For several decades he has conducted field work, published books and articles, and generally created awareness and debate surrounding this topic based on his experiences providing financial opportunities to the most marginalized and poor people in our societies. Due to his work, micro-credit as a social innovation has become commonly known world-wide, and it has been widely replicated by other organizations. Micro-credit has catalyzed social and economic developments from the bottom in the communities in which it has been introduced. It is as if the concept of micro-credit has taken on a life of its own, separated from its originator. When Muhammad Yunus was awarded the Nobel Peace Prize in 2006 for his work, banker to the poor, the field of social entrepreneurship gained increasing popularity and credibility, because of the massive media attention, which his work received.

Throughout the past decade practitioners, researchers and policy makers have devoted increasing amounts of attention towards the development and diffusion of social entrepreneurship. These tendencies of rising media attention, a significant increase in the number and impact of social entrepreneurial initiatives, and the fact that the concept has become commonly known, are all reflected by the growing body of literature on the phenomenon. Notwithstanding the increasing interest, many aspects of the phenomenon of social entrepreneurship have yet to be explored in greater depth. While entrepreneurship aimed at economic development has received vast scholarly attention, entrepreneurship as a facilitator of social transformation has only recently become the subject of scholarly attention. One of the more prevalent themes of this increased research is the identification of distinctive entrepreneurial traits, while less attention has been devoted to the understanding social entrepreneurship as a process. Although the former may be relevant, a better understanding of the processes that social entrepreneurship involves is essential for understanding how social change can be instigated. Merely researching the traits of the social entrepreneur will not offer comprehensive answers to how social entrepreneurial activities can provide solutions to societal problems by creating social transformation.

Social Entrepreneurship as Institutional Change

Social entrepreneurship can be understood as “a process that creates innovative solutions to immediate social problems and mobilizes the ideas, capacities, resources, and social arrangements required for sustainable social transformation (Alvord et al., 2004).” Central to the notion of social entrepreneurship is a problem-solving approach to particular social issues. Social change or transformation is the primary mission for organizations engaged in social entrepreneurship.

In some way, social transformation can be understood as institutional change, i.e. as changing taken-for-granted structures, behaviors, and the general perceptions of the ‘way things are done’ (neo-institutional theory). Contemporary social entrepreneurship scholars suggest that this neo-institutional approach offers “a promising way to understand the role of social entrepreneurship in changing or giving birth to norms, institutions and structure (Mair & Marti, 2006).” From this perspective, social entrepreneurship is about creating changes within the institutional environment; either by changing the existing institutions or creating entirely new ones. Simply put, social entrepreneurs engage in alleviating specific social problems in a given local context, because the current ‘way things are done’ are perceived as insufficient and/or undesirable.

What separates the wheat from the chaff?

The story of Muhammad Yunus presented above raises an interesting question; why has his work become so successful? Muhammad Yunus’s concept of micro-credit is one example of a social entrepreneurial initiative which became institutionalized, meaning commonly accepted and widely applied (i.e. diffused). Having become increasingly objectified, his concept has led to social transformation. There are, however, many social entrepreneurial organizations and their impacts vary greatly. Few become widely known, succeed in diffusing their organization idea, or reach a point where structural social transformation is achieved. On that note, it seems intriguing and essential to query what ‘separates the wheat from the chaff’. In other words, what makes some achieve a higher level of ‘success’ or impact than others? While the story of Muhammad Yunus might be an extraordinary example, it does suggest that factors such as gaining organizational legitimacy, expanding the work in size and geography, and finally, succeeding in having others replicate the organizational idea are crucial in order to successfully catalyze social transformation. While many social entrepreneurial organizations succeed in getting established around a specific social cause, and manage to conduct daily work, it seems that the actual ‘weeding out’ takes place in the processes that move a new social innovation beyond this stage. Following a neo-institutionalist point of view, it is likely that the difference between social entrepreneurial organizations in terms of their ability to foster social transformation is linked to their ability to achieve organizational legitimacy, grow in size and impact, and diffuse their organizational ideas. Further, for a social entrepreneurial organization to create institutional change, the reach of the organization must expand to include an increasing amount of people, because structural societal transformation will not occur by simply changing ‘the way things are done’ for a small group of people.

These reflections and the curiosity to understand what it takes to create structural social transformation – institutional change – became the starting point for my master thesis – and it took me to India in the quest of finding some beginning answers.

Now, what intrigues you?