Summary required readings SEE
Week 1 reading 1; Social and commercial entrepreneurship: same,
different, or both?
In the former, social entrepreneurship refers to innovative activity with a social
objective in either the for-profit sector, such as in social-purpose commercial or in
corporate social entrepreneurship, or in the nonprofit sector, or across sectors,
such as hybrid structural forms which mix for-profit and nonprofit approaches .
Under the narrow definition, social entrepreneurship typically refers to the
phenomenon of applying business expertise and market-based skills in the
nonprofit sector such as when nonprofit organizations develop innovative
approaches to earn income.
>> create social value
Driver of social eship = the social problem being addressed. Social eship is not
defined by any legal form.
Specific definition for this paper: We define social entrepreneurship as an
innovative, social value creating activity that can occur within or across the
nonprofit, business, or government sectors.
market failure; social eship engage when here is a social-market failure.
Social needs are not met. The proposition: market failure will create
differing entrepreneurial opportunities for social and commercial eship
mission; it is not the main goal to make profit, it is the goal to create social
value for the public good. This contrast is overstated. The proposition:
Differences in mission will be a fundamental distinguishing feature
between social and commercial entrepreneurship that will manifest itself in
multiple areas of enterprise management and personnel motivation.
Commercial and social dimensions within the enterprise may be a source
of tension.
Resource mobilization; Our proposition is: Human and financial resource
mobilization will be a prevailing difference and will lead to fundamentally
different approaches in managing financial and human resources.
Performance measurement; social entrepreneurs cannot rely on tangible
and quantifiable performance measures like commercial entrepreneurs.
The proposition: Performance measurement of social impact will remain a
fundamental differentiator, complicating accountability and stakeholder
relations.
Three streams of research on eship: impact
and results of eship, phycological and
sociological entrepreneurs & entrepreneurial
management processes.
Framework/model for social eship: people
(=active participants in the venture), context
(=the elements outside control that will
influence success or failure =environment) ,
deal (=substance of the bargain) and
,opportunity (=any activity requiring the investment of scarce resources in hopes
of future return). >> PCDO
Opportunity – requires the investment of a scarce resource with the hope of
financial returns
>> However, in practice, the opportunity dimension of the framework is perhaps
the most distinct owing to fundamental differences in missions and responses to
market failure.
Although the critical contextual factors are analogous in many ways, the impact
of the context on a social entrepreneur differs from that of a commercial
entrepreneur because of the way the interaction of a social venture’s mission and
performance measurement systems influences entrepreneurial behavior.
Failures? In short, market forces neither reward high performance nor punish
poor performance as much, or as readily as for purely commercial organizations.
Context - While organizational survival in the social sector may not always seem
to depend upon responsiveness to the context, a social enterprise that monitors
the context closely on an ongoing basis can develop strategies to minimize the
impacts of adverse mental changes, capitalizing on opportunities that might arise
from favorable trends. The context shapes the opportunities available to the
social entrepreneur. Ultimately, this proactive management approach will best
enable the organization to target the best opportunities and mobilize resources
to achieve the greatest social impact.
People and resources - Despite many similarities, the nature of the human and
financial resources for social entrepreneurship differs in some key respects,
primarily because of difficulties in resource mobilization. Social entrepreneurs
face more constraints than commercial. They must therefore develop a large
network. Additionally, a social entrepreneur must be skilled at managing a wider
diversity of relationships with funders, managers, and staff from a range of
backgrounds, volunteers, board members, and other partners, with fewer
management levers, as financial incentives are less readily available, and
management authority over supporters, volunteer staff, and trustees is rather
limited.
Deals - However, because of the way in which resources must be mobilized and
because of the ambiguities associated with performance measurement, the
terms of the deals are fundamentally different for commercial and social
entrepreneurs. The value transactions in social entrepreneurship differ from
commercial entrepreneurship in kind, consumers, timing, flexibility, and
measurability.
The framework: main differences between social and commercial = market
failure, mission, resource mobilization & performance measurement. + PDCO
, Week 1 reading 2; A Positive Theory of Social Entrepreneurship
Although social entrepreneurs
usually start with small initiatives,
they often target problems that
have a local expression but global
relevance, such as access to
water, promoting small-business
creation, re-integration of
individuals into the work-force or
waste management.
Too many definitions of social
eship - The field of social entrepreneurship has thus become a large tent where
distinct activities find a home under a broad umbrella of ‘‘activities and
processes to enhance social wealth’’ or ‘‘entrepreneurship with a social purpose’’
Goal of the article is to propose a clear positive (not normative) theory/definition;
tautology and subjectivity.
This dichotomy between economic and social value poses several problems for
theory development. First, all economic value creation is inherently social in the
sense that actions that create economic value also improve society’s welfare
through a better allocation of resources. Second, some may argue that economic
value is narrower than social value and only applies to benefits that can be
measured monetarily, while social value includes intangible benefits that defy
measurement. Third, the dichotomy between economic and social value is
problematic for theory development because it requires subjective assessments
about the domain of social entrepreneurship.
Holistic view of value
Value creation from an activity happens when the aggregate utility of society’s
members increases after accounting for the opportunity cost of all the resources
used in that activity. Value capture from an activity happens when the focal actor
is able to appropriate a portion of the value created by the activity after
accounting for the cost of resources that he/she mobilize. Value creation is more
aimed towards increasing consumer surplus and value for society. Value creation
is for the organization/ profits.
