]NSTP 11, CWTS

ENTREPRENEURSHIP – The Meaning of Social Entrepreneurship

Rich history and significant meaning of “entrepreneur”

- Originated in French economics as early as the 17th and 18th centuries
- Means someone who “undertakes” a significant project or activity
- It came to be used to identify the venturesome individuals who stimulated economic
progress by finding new and better ways of doing things
- Around the 19th century, Jean Baptiste Say put it this way”
“the entrepreneur shifts economic resources out of an area of lower and into an
area of higher productivity and greater yield”
- In the 20th century, Joseph Schumpeter described entrepreneurs as the “change
agents in the economy”, by serving new markets or creating new ways of doing things,
they move the economy forward
- Thus, the Say-Schumpeter tradition that identifies entrepreneurs as the catalysts and
innovators behind economic progress has served as the foundation for the
contemporary use of this concept

Current Theories of Entrepreneurship

 Peter Drucker starts with Say’s definition but amplifies it to focus on opportunity:
“this defines entrepreneur and entrepreneurship – the entrepreneur always
searched for change, responds to it, and exploits it as opportunity”. Thus,
entrepreneurs have a mindset that sees the possibilities rather than the problems
created by change.
 Howard Stevenson, a leading theorist of entrepreneurship at Harvard Business School,
suggests defining the heart of entrepreneurial management as “the pursuit of opportunity
without regard to resources currently controlled”. He found that:
1. Entrepreneurs not only see and pursue opportunities that elude
administrative managers;
2. Entrepreneurs do not allow their initial resources endowments to limit their
options; and,
3. Entrepreneurs mobilize the resources of others to achieve their
entrepreneurial objectives.

Defining Social Entrepreneurship

 Which combines an emphasis on discipline and accountability with the notions
of value creation taken from Say, innovation and change agents from
Schumpeter, pursuit of opportunity from Drucker, and resourcefulness from
Stevenson
 An “idealized” definition, hence, the closer a person gets satisfying all these
conditions, the more that person fits the model of a social entrepreneur

A. Change agents in the social sector:

- Reformers and revolutionaries as described by Schumpeter, but with a social
mission;
- Makes fundamental changes in the way things are done in the social sector;
- Their visions are bold, attacking the underlying causes of problems, rather than
simply treating symptoms;
- They often reduce needs rather than just meeting them;
- They seek to create systematic changes and sustainable improvements;

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 - Though they may act locally, their actions have the potential to stimulate global
improvements in their chosen arenas, whether that is education, health care,
economic development, the environment, the arts, or any other social sector field.

B. Adopting a mission to create and sustain social value:

- The core of what distinguished social entrepreneurs from business entrepreneurs
even from socially responsible businesses; for social entrepreneur, the social
mission is fundamental;
- Making a profit, creating wealth, or serving the desires of the customers may be part
of the model, but these are means to a social end, not the end in itself;
- Profit is not the gauge of value creation, nor is customer satisfaction; social impact
is the gauge;
- Considers long-term social return on investment creating lasting improvements,
and;
- Think about sustaining the impact.

C. Recognizing and relentlessly pursuing new opportunities:

- Where others see problems, entrepreneurs see opportunity;
- Not simply driven by the perception of a social need or by their compassion, rather
they have a vision of how to achieve improvement and they are determined to make
their vision work;
- They are persistent;
- The models they develop and approaches they take can, and often do, change, as
the entrepreneurs learn what works and what does not;
- The key element is persistence combined with a willingness to make adjustments
as one goes;
- Rather than giving up when an obstacle is encountered, entrepreneurs ask:
“How can we surmount this obstacle? How can we make this work?”

D. Engaging in a process of continuous innovation, adaptation, and learning:

- Entrepreneurs are innovative; they break new ground, develop new models, and
pioneer new approaches;
- On the funding side, social entrepreneurs look for innovative ways to assure that
their ventures will have access to resources as long as they are creating social
value;
- Not just a one-time burst of creativity but a continuous process of exploring,
learning, and improving;
- Tend to have a high tolerance for ambiguity and learn how to manage risks for
themselves and others;
- They treat failure of a project as a learning experience, not a personal tragedy.

E. Acting boldly without being limited by resources currently in hand:

- Social entrepreneurs do not let their own limited resources keep them from pursuing
their visions;
- Skilled at doing more with less and attracting resources from others;
- Use scarce resources efficiently, and they leverage their limited resources by
drawing in partners and collaborating with others;
- They explore all resources options, from pure philanthropy to the commercial
methods of the business sector;
- Not bound by sector norms or traditions;

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 - Develop resource strategies that are likely to support and reinforce their social
mission
- Take calculated risks and manage the downside, so as to reduce the harm that will
result from failure; and,
- Understand the risk tolerance of their stakeholders and use this to spread the risk to
those who are better prepared to accept it.

F. Exhibiting a heightened sense of accountability to the constituencies served and

for the outcomes created:
- Social entrepreneurs takes steps to assure they are creating value by seeking a
sound understanding of the constituencies they are serving;
- They make sure they have correctly assessed the needs and values of the people
they intend to serve and the communities in which they operate, which in some
cases, requires close connections with these communities;
- They understand the expectations and values of their “investors”, including anyone
who invests money, time, and or expertise to help them;
- They seek to provide real social improvements to their beneficiaries and their
communities, as well as attractive (social and or financing) return to their investors;
- Creating a fit between investor values and community needs is an important part of
the challenge;
- When feasible, social entrepreneurs create market – like feedback mechanisms to
reinforce this accountability; and,
- They assess their progress in terms of social, financial, and managerial outcomes,
not simply in terms of their size, outputs, or processes and using this information to
make course corrections as needed.

Advantages of entrepreneurship
Every successful entrepreneur brings about benefits not only for himself/herself but for
the municipality, region or country as a whole. The benefits that can be derived from
entrepreneurial activities are as follows:

1. Enormous personal financial gain

2. Self-employment, own bossing, offering more job satisfaction and flexibility of the work
force
3. Employment for others, often in better jobs
4. Development of more industries, especially in rural areas or regions disadvantaged by
economic changes, for example due to globalization effects
5. Encouragement of the processing of local materials into finished goods for domestic
consumption as well as for export
6. Income generation and increased economic growth
7. Healthy competition thus encourages higher quality products
8. More goods and services available
9. Development of new markets
10. Promotion of the use of modern technology in small-scale manufacturing to enhance
higher productivity
11. Encouragement of more researches/studies and development of modern machines and
equipment for domestic consumption
12. Development of entrepreneurial qualities and attitudes among potential entrepreneurs to
bring about significant changes in the rural areas
13. Freedom from the dependency on the jobs offered by others
14. Ability to have great accomplishments

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 15. Reduction of the informal economy
16. Immigration of talent may be stopped by a better domestic entrepreneurship climate
17. Serious tax advantages

Seven easy lessons on entrepreneurship

1. Does a journey of a thousand miles begin with the first step?
Entrepreneurship is a journey. No, it doesn’t begin with the first step. It
actually begins with a decision in your mind to undertake this life’s journey, your
journey, whatever it may take and even how long it may take. Napoleon Hill
wrote, “Think and grow rich.”
2. The hardest part of going into business is starting it now.
Take the plunge now and earn while you learn.
3. Adopt a system for your business and make it work for you.
You can always hear people blaming the system. Well, it’s not the system
that doesn’t work but it’s actually the people who don’t make the system work to
their advantage.
4. Get a continuous education.
“Inherently, each one of us has the substance within to achieve whatever
our goals and dreams define. What is missing from each of us is the training,
education, knowledge and insight to utilize what we already have.” – Mark Twain
5. Don’t hesitate to ask for any help from other people.
At least 40% of new businesses fail in the first year. That is because
they’re doing the business by themselves. Seek help or better seek a
mentor/coach. You might be surprised on how many people out there who will
readily lend a hand, their time, resources, referrals, and especially their opinions.
Just don’t abuse them.
6. Network!
Naisbitt stated it simply, “Networks are people talking to each other,
sharing ideas, information, and resources. The important part is not the network,
the finished product, but the process of getting there – the communication that
creates the linkage between people and clusters of people.” – Megatrends
7. Make God your business partner.
If God is for you, it doesn’t matter who is against you.

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