When we speak of the problems of our society we invariably think that the government, aid agencies and the third sector are responsible for finding the solutions. However, this perspective is changing.
“…the difference between a social entrepreneur, civil servants and business entrepreneurs is the source of their passion” (Kickul J. & Lyons T., 2012).
When we speak of the problems of our society we invariably think that the government, aid agencies and the third sector are responsible for finding the solutions. Similarly, we blame to a large extent the economic model and the government that we have for contributing to these social issues by generating a bad distribution of wealth, which leads to poor education, deficient housing, poor diet, pollution, little access to health services, among other factors. However, this perspective is changing.
Society is becoming more aware that waiting is not an option and that it must act (Kickul J. & Lyons Y., 2012). The reality is that neither governments, nor aid agencies or the third sector can solve all the social problems alone. The big problem that these institutions have, according to Michael Porter, is a matter of scale. The institutions that traditionally must resolve social problems do not have sufficient monetary resources to do so (Porter M., 2013).
For his part, Yunus Muhammed, social entrepreneur and the father of microcredit, contends that the problem in itself is not the economic model chosen. Globalization, as a general principal of business, can bring more benefits than any other model in the fight against poverty. However, without proper guidance, it can be very destructive (Muhammed Y., 2007). In addition, Porter explains that now businesses should not only look to generate economic value but they must also look to generate social value. Porter calls this double value creation “shared value” (Porter M., 2013).
Today more and more entrepreneurs are seeking to comply with this double value creation. Among them are social entrepreneurs to whom the creation of social value is, if not above, at least at the same level of importance as the creation of economic value. But what is a social entrepreneur and what are the features that differentiate them from a conventional entrepreneur? What is it that makes a social entrepreneur able to solve problems that neither the public nor private sector can resolve?
Business entrepreneur or social entrepreneur: what is the difference?
Jean Baptiste Say, one of the main exponents of the classical school of economics, defined an entrepreneur in the 19th century as someone who “transfers resources outside an area of lower productivity to one of higher productivity and greater return. (Say J., 1803). In this way, a business entrepreneur seeks to generate economic value covering a need (Porter M., 2013).
According to Martin R., director of the University of Toronto, and Osberg S., researcher at Stanford University, the definition of entrepreneur denotes a special, innate ability to detect and act on opportunities; the ability to combine “thinking outside the box” with a unique brand of determination, to create or produce something new in the world. Entrepreneurship describes the combination of a context in which there is an opportunity, a number of personal characteristics required to identify and pursue it, and the creation of a particular result (Martin, R. & Osberg S., 2007).
A social entrepreneur shares these qualities with business entrepreneurs, however some differences do exist. Sarah Alvord, director at Harvard University, David Brown, executive director at Technology Underwriting Greater Good (TUGG) and Christine Letts, researcher at Harvard University, define social entrepreneurship as follows:
“Social entrepreneurship creates innovative solutions to immediate social problems and mobilizes ideas, skills, resources and social arrangements required for a sustainable social transformation.”
For these authors, the challenge of a social entrepreneur is to resolve a whole range of social problems through the sustainable reduction of issues of health, education, economic development, and political and cultural matters associated with long-term poverty (Alvord, Brown and Lets, 2004).
Unlike business entrepreneurs that are looking to generate economic value, social entrepreneurs are also looking to resolve social problems by creating a change in society.
Why would a social entrepreneur be able to resolve ancient problems that neither the public nor the private sector have been able to resolve?
In the book Understanding Social Entrepreneurship, The Relentless Pursuit of Mission in an Ever Changing World, Jill Kickul and Thomas S. Lyons explain why social entrepreneurs have certain qualities that make them a more attractive alternative to public or private institutions:
Social entrepreneurs are passionate. They have a personal commitment to the problem they are addressing because it has a particular meaning to them. Whether the motivation comes from a personal experience, some second-hand knowledge, or a vocation, they have an intense desire to find a solution to the identified problem. This does not suggest that political or public officials are not passionate about certain topics, but their passion is usually tempered by political realities, which could lead them to fail to focus on resolving a particular problem.
Similarly, business entrepreneurs are generally very passionate about their products or services, but this passion is concentrated in their ability to satisfy the needs of their customers and in generating economic gain. Therefore, the difference between a social entrepreneur, civil servants and business entrepreneurs is found in the origin of this passion. For civil servants the source of that enthusiasm is their political interests; for a business entrepreneur it may originate in the generation of monetary gain; while for the social entrepreneur the source of their passion is the desire to generate a change in society.
Social entrepreneurs are not bureaucratic, they are agile. Unlike governments or large companies, social entrepreneurs are not subject to a large number of rules and procedures. Like small businesses, they are agile and strategic, and they can be mobilized quickly and decisively to resolve a problem. Entrepreneurs recognize a window of opportunity in order to capture a market, which does not remain open indefinitely, and they take it.
At the same time, a social entrepreneur understands that the solutions to social and environmental problems are limited, and that the opportunities to carry them out are constantly changing. This agility to adapt to change is crucial.
The social entrepreneur allows transformations. The majority of the products or services offered by private businesses or by the government are based on transactions. Products and services are exchanged through a relation of short-term operations. Therefore, they provide solutions in the short term, but they do not produce changes in the long term. They do not produce transformations. Social and environmental problems are not solved with transactions. The social entrepreneur seeks to change the system, which produces changes in the long term.
The social entrepreneur uses social capital.They bring together people and organizations to focus on the solution of a problem and use capital from different sources to resolve it. With this network of trust, they implement solutions to create a shared mission and vision that foster a positive change.
They are focused on the mission, not on seeking profit. The social or environmental mission is the most important priority. Social interests are above personal interests.
They are accountable to society, not to investors. They need higher standards of accountability: They must measure their impact, justify their existence and give this information freely.
Social entrepreneurs encourage social and environmental innovation. Governments are constrained by the constant fight between those who want change and those who want to preserve the status quo. Problems require changes to be solved, and to achieve systemic changes, innovation and creativity is needed. The difference with a business entrepreneur is that when considering an innovation, they evaluate its commercial potential, while the social entrepreneur not only evaluates the commercial part, but also the potential that it has to resolve social and environmental problems.
The social entrepreneur skirts around politics. While the government debates the problem, the social entrepreneur is working to resolve it. Not being involved in politics, the social entrepreneur has greater agility to negotiate conflicts between different parties.
Social entrepreneurs facilitate development by providing equity and stability. When working on issues like education, health, poverty reduction, community development, etc. they create opportunities for socioeconomic progress, develop equity and reinforce stability. Private companies do not believe this is their role. Governments can help to ensure fairness and stability, but they are usually limited by the factors mentioned above, which prevents them from facilitating the requirements for transformative change.
How do you know how to identify a social entrepreneur?
In Mexico, there are different organizations that are looking for this type of entrepreneur, but what are their criteria for selection?
IGNIA1 is a company with entrepreneur capital, with headquarters in Monterrey, which supports the founding and expansion of high-impact companies that support the base of the socioeconomic pyramid in Mexico. IGNIA differentiates a social entrepreneur by their characteristics and motivation.
For them, the motivations of a social entrepreneur must go beyond the simple willingness to generate economic benefits. They are driven by a commitment to humanity, they have a decision-making process that includes factors beyond economic ones, and they have a willingness to disrupt the established order. In addition, for IGNIA, a social entrepreneur must have certain characteristics, such as personal honesty, patience, integrity, and analytical and business rigor even more outstanding than a conventional entrepreneur. At the same time, they must have a high degree of resilience. (Serfati F., interview conducted on October 18, 2013).
On the other hand, ASHOKA2, an organization that promotes social entrepreneurship at the global level through support to social entrepreneurs who seek to act as agents of change, has an entire methodology to choose their beneficiaries. The criteria for selection are based on five different points:
Creativity: Social entrepreneurs must be creative, both in their vision and in the definition of goals and the resolution of problems. They act creatively when meeting opportunities and obstacles and offer original solutions.
Entrepreneurial Quality Social entrepreneurs must be deeply committed to their vision and must not stop until it becomes a new rule or a new pattern of behavior in their society (regardless of whether this involves long years of relentless pursuit and the testing of different methods to achieve their goal).
Social impact of the idea: The social entrepreneur’s idea must solve a major problem at the state level or beyond state borders. It must be sufficiently new, practical and useful so that the people who work in the field of action adopt it, once it is approved and proven. The idea should have a significant impact, considering the dimension and meaning of the impact.
Ethical Quality: Social entrepreneurs should be honest people who are trusted instinctively. Their motivations must emanate from a commitment to serve others.
In order to find a solution to the multiple social and environmental problems that we face as a society, social entrepreneurs use the processes, tools and techniques of business entrepreneurs, which go along with their entrepreneurial spirit. However, unlike business entrepreneurs, they will have a defined social mission, regardless of whether the organization is lucrative, non-profit or hybrid.
This struggle to find a defined social impact plays a predominant role in the differentiation with business entrepreneurs, and will be accompanied by certain essential characteristics of social entrepreneurs, which are found in their motivation and personal characteristics, as well as in their innovative approach to various problems.?
Bibliography:
Alvord, H., Brown, D., & Letts, C. (2004). Social Entrepreneurship and Societal Transformation: An Exploratory Study. The Journal of Applied Bahavioral Science, 40, 260-282.
Kickul, J., & Lyons, T. (2012). Understanding social entrepreneurship, the relentless pursuit of mission in an ever changing world. New York, NY: Routledge.
Martin, R., & Osberg, S. (2007). Social entrepreneurship: The case for definition. Stanford Social Innovation Review.
Muhammad, Y. 2007. Creating a world without poverty, social business and the future
of capitalism. Estados Unidos: PublicAffairs TM. P4.
Porter, M (2013). Why business can be good at solving social problems. TEDGlobal
2013. (Visitado el 24-10-2013).
Say, J.-B. (1971), A Treatise on Political Economy or the Production, Distribution and
Consumption of Wealth, A.M. Kelley Publishers, New York (First edition 1803).
What makes the social entrepreneur unique?
MBA ITAM
When we speak of the problems of our society we invariably think that the government, aid agencies and the third sector are responsible for finding the solutions. However, this perspective is changing.
“…the difference between a social entrepreneur, civil servants and business entrepreneurs is the source of their passion” (Kickul J. & Lyons T., 2012).
When we speak of the problems of our society we invariably think that the government, aid agencies and the third sector are responsible for finding the solutions. Similarly, we blame to a large extent the economic model and the government that we have for contributing to these social issues by generating a bad distribution of wealth, which leads to poor education, deficient housing, poor diet, pollution, little access to health services, among other factors. However, this perspective is changing.
Society is becoming more aware that waiting is not an option and that it must act (Kickul J. & Lyons Y., 2012). The reality is that neither governments, nor aid agencies or the third sector can solve all the social problems alone. The big problem that these institutions have, according to Michael Porter, is a matter of scale. The institutions that traditionally must resolve social problems do not have sufficient monetary resources to do so (Porter M., 2013).
For his part, Yunus Muhammed, social entrepreneur and the father of microcredit, contends that the problem in itself is not the economic model chosen. Globalization, as a general principal of business, can bring more benefits than any other model in the fight against poverty. However, without proper guidance, it can be very destructive (Muhammed Y., 2007). In addition, Porter explains that now businesses should not only look to generate economic value but they must also look to generate social value. Porter calls this double value creation “shared value” (Porter M., 2013).
Today more and more entrepreneurs are seeking to comply with this double value creation. Among them are social entrepreneurs to whom the creation of social value is, if not above, at least at the same level of importance as the creation of economic value. But what is a social entrepreneur and what are the features that differentiate them from a conventional entrepreneur? What is it that makes a social entrepreneur able to solve problems that neither the public nor private sector can resolve?
Business entrepreneur or social entrepreneur: what is the difference?
Jean Baptiste Say, one of the main exponents of the classical school of economics, defined an entrepreneur in the 19th century as someone who “transfers resources outside an area of lower productivity to one of higher productivity and greater return. (Say J., 1803). In this way, a business entrepreneur seeks to generate economic value covering a need (Porter M., 2013).
According to Martin R., director of the University of Toronto, and Osberg S., researcher at Stanford University, the definition of entrepreneur denotes a special, innate ability to detect and act on opportunities; the ability to combine “thinking outside the box” with a unique brand of determination, to create or produce something new in the world. Entrepreneurship describes the combination of a context in which there is an opportunity, a number of personal characteristics required to identify and pursue it, and the creation of a particular result (Martin, R. & Osberg S., 2007).
A social entrepreneur shares these qualities with business entrepreneurs, however some differences do exist. Sarah Alvord, director at Harvard University, David Brown, executive director at Technology Underwriting Greater Good (TUGG) and Christine Letts, researcher at Harvard University, define social entrepreneurship as follows:
“Social entrepreneurship creates innovative solutions to immediate social problems and mobilizes ideas, skills, resources and social arrangements required for a sustainable social transformation.”
For these authors, the challenge of a social entrepreneur is to resolve a whole range of social problems through the sustainable reduction of issues of health, education, economic development, and political and cultural matters associated with long-term poverty (Alvord, Brown and Lets, 2004).
Unlike business entrepreneurs that are looking to generate economic value, social entrepreneurs are also looking to resolve social problems by creating a change in society.
Why would a social entrepreneur be able to resolve ancient problems that neither the public nor the private sector have been able to resolve?
In the book Understanding Social Entrepreneurship, The Relentless Pursuit of Mission in an Ever Changing World, Jill Kickul and Thomas S. Lyons explain why social entrepreneurs have certain qualities that make them a more attractive alternative to public or private institutions:
Social entrepreneurs are passionate. They have a personal commitment to the problem they are addressing because it has a particular meaning to them. Whether the motivation comes from a personal experience, some second-hand knowledge, or a vocation, they have an intense desire to find a solution to the identified problem. This does not suggest that political or public officials are not passionate about certain topics, but their passion is usually tempered by political realities, which could lead them to fail to focus on resolving a particular problem.
Similarly, business entrepreneurs are generally very passionate about their products or services, but this passion is concentrated in their ability to satisfy the needs of their customers and in generating economic gain. Therefore, the difference between a social entrepreneur, civil servants and business entrepreneurs is found in the origin of this passion. For civil servants the source of that enthusiasm is their political interests; for a business entrepreneur it may originate in the generation of monetary gain; while for the social entrepreneur the source of their passion is the desire to generate a change in society.
Social entrepreneurs are not bureaucratic, they are agile. Unlike governments or large companies, social entrepreneurs are not subject to a large number of rules and procedures. Like small businesses, they are agile and strategic, and they can be mobilized quickly and decisively to resolve a problem. Entrepreneurs recognize a window of opportunity in order to capture a market, which does not remain open indefinitely, and they take it.
At the same time, a social entrepreneur understands that the solutions to social and environmental problems are limited, and that the opportunities to carry them out are constantly changing. This agility to adapt to change is crucial.
The social entrepreneur allows transformations. The majority of the products or services offered by private businesses or by the government are based on transactions. Products and services are exchanged through a relation of short-term operations. Therefore, they provide solutions in the short term, but they do not produce changes in the long term. They do not produce transformations. Social and environmental problems are not solved with transactions. The social entrepreneur seeks to change the system, which produces changes in the long term.
The social entrepreneur uses social capital.They bring together people and organizations to focus on the solution of a problem and use capital from different sources to resolve it. With this network of trust, they implement solutions to create a shared mission and vision that foster a positive change.
They are focused on the mission, not on seeking profit. The social or environmental mission is the most important priority. Social interests are above personal interests.
They are accountable to society, not to investors. They need higher standards of accountability: They must measure their impact, justify their existence and give this information freely.
Social entrepreneurs encourage social and environmental innovation. Governments are constrained by the constant fight between those who want change and those who want to preserve the status quo. Problems require changes to be solved, and to achieve systemic changes, innovation and creativity is needed. The difference with a business entrepreneur is that when considering an innovation, they evaluate its commercial potential, while the social entrepreneur not only evaluates the commercial part, but also the potential that it has to resolve social and environmental problems.
The social entrepreneur skirts around politics. While the government debates the problem, the social entrepreneur is working to resolve it. Not being involved in politics, the social entrepreneur has greater agility to negotiate conflicts between different parties.
Social entrepreneurs facilitate development by providing equity and stability. When working on issues like education, health, poverty reduction, community development, etc. they create opportunities for socioeconomic progress, develop equity and reinforce stability. Private companies do not believe this is their role. Governments can help to ensure fairness and stability, but they are usually limited by the factors mentioned above, which prevents them from facilitating the requirements for transformative change.
How do you know how to identify a social entrepreneur?
In Mexico, there are different organizations that are looking for this type of entrepreneur, but what are their criteria for selection?
IGNIA1 is a company with entrepreneur capital, with headquarters in Monterrey, which supports the founding and expansion of high-impact companies that support the base of the socioeconomic pyramid in Mexico. IGNIA differentiates a social entrepreneur by their characteristics and motivation.
For them, the motivations of a social entrepreneur must go beyond the simple willingness to generate economic benefits. They are driven by a commitment to humanity, they have a decision-making process that includes factors beyond economic ones, and they have a willingness to disrupt the established order. In addition, for IGNIA, a social entrepreneur must have certain characteristics, such as personal honesty, patience, integrity, and analytical and business rigor even more outstanding than a conventional entrepreneur. At the same time, they must have a high degree of resilience. (Serfati F., interview conducted on October 18, 2013).
On the other hand, ASHOKA2, an organization that promotes social entrepreneurship at the global level through support to social entrepreneurs who seek to act as agents of change, has an entire methodology to choose their beneficiaries. The criteria for selection are based on five different points:
Creativity: Social entrepreneurs must be creative, both in their vision and in the definition of goals and the resolution of problems. They act creatively when meeting opportunities and obstacles and offer original solutions.
Entrepreneurial Quality Social entrepreneurs must be deeply committed to their vision and must not stop until it becomes a new rule or a new pattern of behavior in their society (regardless of whether this involves long years of relentless pursuit and the testing of different methods to achieve their goal).
Social impact of the idea: The social entrepreneur’s idea must solve a major problem at the state level or beyond state borders. It must be sufficiently new, practical and useful so that the people who work in the field of action adopt it, once it is approved and proven. The idea should have a significant impact, considering the dimension and meaning of the impact.
Ethical Quality: Social entrepreneurs should be honest people who are trusted instinctively. Their motivations must emanate from a commitment to serve others.
In order to find a solution to the multiple social and environmental problems that we face as a society, social entrepreneurs use the processes, tools and techniques of business entrepreneurs, which go along with their entrepreneurial spirit. However, unlike business entrepreneurs, they will have a defined social mission, regardless of whether the organization is lucrative, non-profit or hybrid.
This struggle to find a defined social impact plays a predominant role in the differentiation with business entrepreneurs, and will be accompanied by certain essential characteristics of social entrepreneurs, which are found in their motivation and personal characteristics, as well as in their innovative approach to various problems.?
Bibliography:
of capitalism. Estados Unidos: PublicAffairs TM. P4.
2013. (Visitado el 24-10-2013).
Consumption of Wealth, A.M. Kelley Publishers, New York (First edition 1803).