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Research Proposal on Social Enterprise

Title

Social Enterprise A Sustainable Model of Economic and Social Development


Introduction

This research paper suggests exploring the various aspects of social enterprise especially the operation
model and the subsequent impact on economic and social development. Social enterprise evolves
addressing any social issue and to solve it through business where the participants are treated as
stakeholders. The main concern of social enterprise is utilization of profit/ surplus in reinvestment and
further expansion. The research paper aims to find out how a successful social enterprise can be
beneficial to the stakeholders in a sustainable manner. It tries to establish a reliable and easily
accessible platform on which academicians and prospective social entrepreneurs can build on.
Literature Review:
There are numerous definitions of social enterprise and the related concepts of social business and
social entrepreneurship. The debate is particularly lively in Bangladesh. For Professor Mohammed
Yunus, a key element of social business is that investors receive only their original investment back,
without additional dividend or capital return. Professor Rehman Sobhan focuses on ownership of
enterprises, arguing that a significant portion of equity in a social business should be owned by poor
people, in particular employees. BRAC, founded by Sir Fazle Hasan Abed, operates a hybrid model
which combines conventional development, health and education programmes with social enterprises
and more commercial activities such as BRAC Bank4.
Normally when we think about sustainable business we concentrate on corporate social responsibility
(CSR) like energy efficiency, reduction of carbon emission, fair treatment of employees, commitment
to stakeholders and so on. However, social enterprise is more than CRS, it is about ensuring double or
triple bottom line. These are mission-driven companies that are dedicated to being socially
responsible from their inception, unlike most (though not all) corporations that pursue CSR for
marketing purposes or to cut costs and increase profits.
Social Enterprise cares more about the impact on people and environment rather than profit. Yunus
(2007) argued that social businesses are allowed to make profit with the condition that profit stays
with the company; the owners will not take profit beyond the amount equivalent to investment. Social

business is a new category of business. It does not stipulate the end of the existing type of profitmaking business. It widens the market by giving a new option to consumers. It does not intend to
monopolise the market and take the existing option away. It adds to the competition. It brings a new
dimension to the business world, and a new feeling of social awareness among the business
community.
Low (2006) Argues although Social enterprise are a sub set of nonprofit organizations they are more
likely to adopt the stewardship model of governance because of the pressure to remain financially
solvent and self sufficient. Further, researchers have highlighted he challenges of developing social
accountability indicators that are appropriate for social enterprises given that no standard parameters
currently operate (Darby and Jenkins, 2006). Social enterprise meets social demand through their
products and services or through creation of employment for the disadvantaged people. This
distinguishes

them

from

socially

responsible

businesses

(Baum,B.,

Califford,M.,

and

Lawyer,K.1977) which create positive social change indirectly through the practice of corporate social
responsibility (e.g., creating and implementing a philanthropic foundation; paying equitable wages to
their employees; using environmentally friendly raw material; providing volunteers to help with
community projects (Brich,D.L.2006)
It is evident that poor people in developing countries could make excellent supplies, employees and
customers but are often ignored by major business. This omission leads to increased risk, higher cost
and lower sales. Meanwhile, businesses are asked by governments and poverty activities to do more
for economic development, but their exhortations are rarely based on a proper business case. It
bridges the gap by constructing a rigorous profit making agreement for social enterprise to do more
business with the poor (Wilson and Wilson, 2006).
Current literature review exhibit the following efficacy attributes
1. Social businesses are created and managed voluntarily by groups of citizens and are managed by
them to address a social issue, and not directly or indirectly by public authorities or private
companies, even if they may benefit from grants and donations. Their shareholders have the right to
participate, raise voice, and to leave the organization, freedom to leave.
2. Social Enterprise serve the community or a specific group of people. To the same end, they also
promote a sense of social responsibilities. Another important part of social enterprise is sense of
belongingness and ownership.
3. Social enterprise are the result of collective dynamics involving people belonging to a community
or to a group that shares a certain need or aim. They must maintain this dimension in one form or
another.

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4. The users of social enterprises services are represented and participate in their structures. In many
cases one of the objectives is to strengthen democracy at local level through economic activity.
5. Social enterprises include organizations that totally prohibit profit distribution as well as
organizations such as co-operatives, which may distribute their profit only to limited degree, thus
avoiding profit maximizing behavior .Thus social business also embed the following ethics and
values.

Integration of disadvantaged people through work (work integration social enterprises

Provision of social, community and environmental services;

Ethical trading such as fair trade;

Regulatory framework for NGO Governance;

Influence of NGO in Social Enterprise


The influence of NGOs in Bangladesh has been growing since the nation gained its Independence in
1971 and has been playing a vital role in the allocation of resources and providing advocacy for the
poor and oppressed. Especially NGOs involved in areas of microfinance, community empowerment,
human rights, education, health, women empowerment and so on.
Leading NGO like BRAC, Grameen has done tremendous job in developing social enterprise in
Bangladesh. In particular, they provide access to credit, market network, savings, technology and
expertise. Aarong, a BRAC Social Enterprise, is running a unique model in Bangladesh, providing
market access to rural artisans who nearly went out off the scene. At the same time, they are
generating substantial surplus and supporting those artisans through health, education, training and
microfinance. Grameen Danone is another example of success that emphasized on providing nutrition
to the deprived population. The main objective of Grameen Danone is to bring daily health nutrition
to the nutritionally deprived population of the country, especially children and as a result alleviate
poverty through the implementation of a unique proximity based business model (Bangladesh Social
Enterprise Project, Policy Brif, 2010).
NGOs working with marginalized and disadvantaged people see themselves as representing the
interests of such people. Those Social enterprise which are more involved in a particular aspect of
disadvantages or with an issue of affecting the well being of society as a whole see themselves as
representing a cause of some kind rather than a specified group of people. In both cases the
representation will be stronger where the Social Enterprise has a participatory rather than a private
structure.

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But the issues of the accountability and representatives of Social Enterprises are more complex than
the above might suggest. There are a number of ways in which NGOs can improve the quality of their
governance and operations. Many NGOs have already recognized the need for such improvements.

Background and Rationale

Although the term Social Enterprise is relatively new, evidence shows that some great social
entrepreneurs have always existed in the last two centuries. Philanthropy coupled with business sense
has paved way for new opportunities for those who have entrepreneurial skills and want to work for
the betterment of the society. Extraordinary people like Muhammad Yunus (Nobel Peace prize winner
in 2006) came up with brilliant ideas and succeeded at creating revolutionary products and services
dramatically improving human lives (Youssry 2007). As opposed to traditional non-profits, which are
dependant on charitable donations and government subsidies, social enterprises are increasingly selfsufficient and sustainable (Boschee & McClurg 2003).
There are a number of definitions for Social Entrepreneurship at the moment giving broad and narrow
meanings to it. Whatever they are, the underlying truth is that making a social impact is as important
for social entrepreneurs as creating personal and shareholder value, if not more (Austin, Stevenson
and Wei Skillern 2006). Social Entrepreneurship is definitely more than the business or economic
entrepreneurship.
Unlike some commercial/economic organisations that only voice their social concerns through their
Corporate Social Responsibility (CSR) departments, social enterprises treat their social and/or
environmental responsibilities as the prime business cases. The CSR initiatives can change with time
and circumstances, and range from simply organising donations by the employees to international
social/voluntary projects involving millions of pounds, depending on the interests and financial status
of the company. On the contrary, most social entrepreneurs get influenced by local problems with
which they have first-hand experiences and decide to stick to them for a considerable time. They
focus all of their resources and energies thinking about and analysing the social issues and offer direct
and often speedy solutions to the people in need. Due to the stronger, quicker and more transparent
impact the social enterprises make on the society, there is an obligation to create and foster more and
more social entrepreneurs as compared to the CSR solutions from general companies. Baron (2005)
supports this by saying that corporate giving in the form of social entrepreneurship is a better
substitute to personal giving than that of profit-maximising firms. Nonetheless, one should understand
that both CSR and Social Entrepreneurship are not mutually exclusive. They can go hand in hand for
the sake of a healthier society. If CSR is defined as the business contribution to Sustainable

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Development (European Commission 2002), then the individual entrepreneurs contribution to


sustainable development is Social Entrepreneurship (Seelos & Mair 2004).
However, many people still find it difficult to comprehend the marriage between Social service and
Entrepreneurship. It is yet to attract the required attention of the academicians. There is confusion on
who should teach this subject in universities. It is lacking credibility as there is not enough research
done on it.

Scope of Work

It is suggested to focus this academic research on addressing the following points:


1. Practical differences between the tools, techniques, procedures used in various stages of
commercial business and social enterprise
2. Unique challenges, risks and opportunities for a Social Enterprise such as arrangement of
finances, scalability, measurement of success/growth, availability of best practices, etc.
3. Role of social enterprise in economic and social development

Design/Methodology/Approach

In order to solve the research problems the data will be gathered by closely studying the tools,
techniques, processes and procedures adopted in successful social ventures. It is suggested to
carefully divide social enterprises based on pre-decided criteria, choose a number of small to large
successful enterprises in Bangladesh, which fit in these categories, approach the founders & senior
management and conduct interviews with them. Wherever possible, surveys and questionnaires will
be used. Role of technology specifically the use of affordable information technology tools in all the
stages of the life cycle of these social businesses will be thoroughly investigated.
It may not be feasible to analyse different types of varied businesses and derive a clear set of
established practices. Keeping this in view, it is expected to discuss the findings based on the
background, industry and type of the business. Quantitative techniques are considered as well as there
may be a need to combine both quantitative and qualitative methods for more accurate analysis.
It is recommended to include only those ventures that are the brainchildren of one or two
entrepreneurs. In other words, institutional or co-operative social enterprises (Spear 2006) will not be

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approached as the main goal behind conducting this research is mainly to foster visionary social
entrepreneurs.

My Previous Experience of Research & Career Aspirations

References

Alvord S.H., L. David Brown & C.W. Letts. 2004. Social Entrepreneurship and Societal
Transformation: an Exploratory Study. Journal of Applied Behavioural Science: 40: 260-282
Austin, Stevenson & Wei-Skillern. 2006. "Social and Commercial Entrepreneurship: Same, Different,
or Both?" Entrepreneurship Theory and Practice 30, no. 1 (January 2006).
Bangladesh Social Enterprise Project, Policy Brif, 2010.
Baron, David P. 2005. Corporate Social Responsibility and Social Entrepreneurship.
Baum,B.,Califford,M. and Lawyer,K.. How to Organize and Operate Social Business? Washington
-1977.
Boschee, J. & McClurg, J. 2003. Toward a better understanding of social entrepreneurship: Some
important distinctions
Brich, D.L.The Entrepreneurial Environment. Industrial Research, 2006, 7(3), 55-59.
Cramer, J. 2003. Ondernemen met hoofd en hart duurzaam ondernemen: praktijkervaringen. Assen:
Koninklijke van Gorcum.
Darby,L. and Jenkins,H. Applying sustainability indicators to the social enterprise business model.
International Journal of Social Economics, 2006, 33(5/6), 432-445.
Dees, J.Gregory. 1998. The Meaning of Social Entrepreneurship.

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Desa, G. & S. Kotha. 2006. Ownership, Mission and Environment: An Exploratory Analysis into the
Evolution of a Technology Social Venture. In Social Entrepreneurship, ed. Mair J. et al. New York:
Palgrave Macmillan.
Hockerts, K. 2006. "Entrepreneurial opportunity in social purpose business ventures", in Mair, J.,
Robinson, J. & Hockerts, K. (Eds), Social Entrepreneurship, Palgrave Macmillan, Basingstoke.
Ingstad, Eline Synneva Lorentzen. 2008. Social entrepreneurship in academia: Which role can a
university play in pursuing technology based social entrepreneurship?
Leadbeater, C. 1997. The Rise of the Social Entrepreneur.
Low, C. A framework for the governance of social enterprise. International Journal of Social
Economics,2006, 33(5/6), 411-431.
Mair, J. & Martif, I. 2004. Social Entrepreneurship: What are we talking about? A framework for
future research. Working Paper 546. IESE Business school, University of Navarra, Barcelona.
Martin, Roger L. & Osberg Sally. 2007. Social Entrepreneurship: The Case for Definition.
Mulgan, G. 2006. Social Innovation, what it is, why it matters and how it can be accelerated. London:
The Young Foundation.
Pearce, J.M., Grafman, L., Colledge, T. & Legg, R. 2008. Leveraging Information Technology, Social
Entrepreneurship, and Global Collaboration for Just Sustainable Development.
Seelos, C. & Mair, J. 2004. Social Entrepreneurship: The contribution of individual entrepreneurs to
sustainable development
Spear, R. 2006. Social entrepreneurship: a different model? International Journal of Social
Economics Vol. 33 No. 5/6, 2006.
Thompson, John L. 2002. The world of the social entrepreneur.
Wilson, C. and Wilson, P. Make Poverty Business. General Publishing, UK, 2006

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von Hippel, Eric. 2005. "Open source software projects as user innovation networks - no
manufacturer required." in Perspectives on Free and Open Source Software, edited by J. Feller, B.
Fitzgerald, S. Hissam, and K. Lakhani. Cambridge: MIT Press.
Youssry, A. 2007. Social Entrepreneurs and Enterprise Development.
http://www.muhammadyunus.org/index.php/social-business/social-business
http://www.cpdbangladesh.org/about/rs.html
http://www.brac.net/
http://www.bracbank.com/

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Theoretical Framework
Still an emerging field, Social Entrepreneurship is slowly picking up momentum among
researchers. The term Social Entrepreneurship itself is seen as too broad and vague and
hence many people tried to give various definitions to it (Austin, Stevenson and Wei Skillern
2006). According to Martin & Osberg (2007), Social Entrepreneurship is defined as a concept
with the following three components:
(1) identifying a stable but inherently unjust equilibrium that causes the exclusion,
marginalization, or suffering of a segment of humanity that lacks the financial means
or political clout to achieve any transformative benefit on its own;
(2) identifying an opportunity in this unjust equilibrium, developing a social value
proposition, and bringing to bear inspiration, creativity, direct action, courage, and fortitude,
thereby challenging the stable states hegemony; and
(3) forging a new, stable equilibrium that releases trapped potential or alleviates the suffering
of the targeted group, and through imitation and the creation of a stable ecosystem around the
new equilibrium ensuring a better future for the targeted group and even society at large.
A large range of not-for-profit, for-profit and mixed ventures (that have both not-for-profit
and for-profit elements in them) come under the umbrella of Social Entrepreneurship (Dees
1998 & Hockerts 2006). Dees (1998) says that social entrepreneurs are a rare breed with
unique skills and interests. There is a great need to encourage these people and also spread
the awareness, support and guidance in this area to attract others. This has been the
motivation behind Ashoka, founded by Bill Drayton, also called as the Father of Social
Entrepreneurship. In the UK, Lord Young of Dartington, Michael Young was one of the
pioneers in this area. He was responsible for about forty social organisations including a
school for Social Entrepreneurs. History has seen several of such innovative thinkers in
addition to institutions such as the Schwab, the Skoll and the Draper Richards foundations
that clearly understood how just a person like Muhammad Yunus (founder of Grameen bank)
or Vinoba Bhave (founder of the Land Gift movement) can change millions of lives with
simple ideas. The question is whether there exists a common platform in the form of literature
or research to spread the best practices in social entrepreneurship? If yes, how many budding
social entrepreneurs can access and emulate them?
There is still a vacuum in the literature, research and awareness about the factors that lead to
success in the field of Social Entrepreneurship (Alvord et al. 2004; Cramer 2003; Desa and
Kotha 2006; Mulgan 2006). Leadbeater (1997) and Thompson (2002) stress in their
publications the urgent need to foster social entrepreneurs. Mair, Robinson and Hockerts
(2006) expect more research to be done in understanding how values, systems and processes
can affect sustainability of social enterprises.
Technology especially Information Technology (IT) is becoming increasingly important in
eradicating the poverty and other social problems in developing economies. Wise investments
in the relevant technologies can help improve the lives of common people in emerging
countries. Some reputed not-for-profit organisations such as The Bill and Melinda Gates
Foundation, The Open Society Institute and The MacArthur Foundation are focussing on
technology-driven solutions to societal needs. Latest internet based technologies (such as web
2.0 phenomenon and open source projects) democratise the innovation by connecting the
people on a global level (von Hippel 2005).
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However, the literature available in Social Entrepreneurship is yet to address the complete
role of technology in running social ventures (Mair & Martif 2004). Pearce, J.M., Grafman,
L., Colledge, T. & Legg, R. (2008) propose that a network formed with free IT tools, Social
Entrepreneurship and right learning mechanisms can make sustainable development possible
and free many poor people from sufferings. Although Desa & Kotha (2006) did some
research on the life-cycle of technology social ventures (TSV), there is a need to work more
on how technology addresses some of the pressing practical issues faced by social
entrepreneurs.
Beneficiaries
Social Entrepreneurship appeals to most social-conscious people of this generation who
would like to start their own ventures. Carrying out business by directly helping the needy is
the dream of many talented professionals. However, due to lack of awareness, support and
guidance, many enthusiasts are unable to step into this field and therefore fail to utilise their
skills to support the downtrodden. The suggested research will create a good foundation of
best practices for all the stages of business life cycle right from business idea to
entrepreneurs leave from the venture and possibly equip the prospective social entrepreneurs
with a technology tool kit positively influencing their ventures. It will also contribute to the
present body of knowledge of social entrepreneurship opening the doors to further research
opportunities in offering more practical solutions to budding social entrepreneurs.

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