Development

What’s the difference between social entrepreneurship and plain old entrepreneurship?

Hmmm.

The difference between “social entrepreneurship” and “entrepreneurship” can break down quickly. When we’re talking about African students building new web applications to make it easier to send money to families back home, what should we designate that? Entrepreneurship or Social Entrepreneurship? Or does it not matter? Should it perhaps make us wonder if we should instead be holding up that type of work to argue that real entrepreneurship is about the creation of all types of value – not just about financial wealth. In other words, maybe our view should be about the inseparability of “social” from “entrepreneurship,” and perhaps that’s easier to understand in the emerging market context.

At the end of his article on Rwanda and the Infrastructure of the Future, on the excellent Social Entrepreneurship blog at Change.org, Nathanial Whitteman raises an interesting point, namely, at what points do starting a business/ earning money start and stop being social?

A business that sells mosquito nets is providing a product important to the health of his village. But why is this business more social than a woman who sews wedding dresses? Both are providing a necessary service to the community, and both are often marginal (less so in a city). A cybercafe? An accountant? Why is someone who makes and sells artisanal goods to westerners starting a social enterprise, but a thriving dressmaker not?

Is the difference a commitment to non-exploitative labor practices and giving back to the community? If so, most micro and small businesses are social businesses, whether in the developing world or not! They could not continue to exist in their communities if the communities felt exploited.

  • Businesses create employment.
  • Financial stability creates demands for goods and services.
  • B2B services make business easier and more profitable for other businesses.
  • Small businesses mean a rising middle class, which means a higher standard of living.
  • I’d like to add that investors can pressure governments to improve investment and business environments, including reducing corruption, but I actually don’t know if there’s any research on this or not.

The more I hear “social enterprise,” the more I’m convinced that it’s just a more palatable phrase for, “people are willing to pay for goods and services that make their lives better and this market is not being exploited as well as it could be.”

Hmmm.

I’m still not sure what I think about this subject, especially as an entrepreneur in a developping country. I’d love to hear your thoughts on it!создание сайтов раскрутка оптимизация

4 thoughts on “What’s the difference between social entrepreneurship and plain old entrepreneurship?

  1. Well, first you must be missing cheese!

    Are you familiar with the work of David Cooperrider and Prahalad. "Doing well by doing good".?

    Most businesses think there is a tension between doing well and doing good and will use that as the justification for their doing bad. Milton Friedman argued that to focus on anything but doing well was bad because it would reduce the doing well. Adam Smith argued that doing good was a by product of doing well – which it might be – as complexity theory argument before its time.

    I'm persuaded that we have to do good otherwise we destroy the very basis of our business – which is our community. But I also think we have to clarify our 'mission' and separate it from our 'vision'. Sometimes reconciling the two takes hard thinking and moral courage.

    I used to use a film about the death of an Al Jazeera correspondent through 'friendly fire' [US] to illustrate the dilemma students. Younger reporters were outraged (rather than saddened)- at the higher level of vision – by the cavalier attitude of US forces to Arab reporters. Older reporters clarified pointing out that in pursuit of Arab emancipation – for want of a better expression – soldiers play one role, diplomats play another, journalists play another. Our mission is our role in the wider vision that we share with others. It was the duty/virtue of journalists to continue to play their role – to continue to report even when the tragedy was so personal and so outrageous.

    Hope this makes sense. So yes, a business is required to run profitably – so that it survives and delivers a fair/competitive return to its financial stakeholders. We are obliged to stop trading the minute we think we might not be able to cover our financial obligations.

    But that doesn't mean it should act cavalierly towards other stakeholders. That would destroy its wider vision/mission Nor does it mean it should give its products and services away. The discipline of making a profit focuses our minds and helps us be efficient. We are doing our customers and suppliers (and the tax dept) no favours if we go broke and we are doing them no favours if we are just 'fat and sloppy' – we are deskilling ourselves and everyone in the chain. A bit like a farmer who eats up all the food in a good season and is too fat and lazy to plough the next season, or do the hard work of fetcing and carrying water in the following drought.

    I think your students are just experiencing the rich moral fabric of doing something worthwhile. We could argue that we know something is worthwhile when it poses challenging moral questions.

    They are lucky. And luck to have you guiding them which I am sure they will do in due course for others.

    1. I've been thinking about your comment:

      So yes, a business is required to run profitably – so that it survives and delivers a fair/competitive return to its financial stakeholders. We are obliged to stop trading the minute we think we might not be able to cover our financial obligations.

      I think it's important to underline that for non-publicly traded companies, the stakeholders can and do agree on motives other than profit. If a business's owners agree that, while they don't want to operate in the red, they should be respecting X, where X is any number of things, including keeping prices accessible to disadvantaged groups, protecting the environment, or funnelling profits back into the community, businesses are free to do this.

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge