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Kathmandu University School of Management

Balkumari, Lalitpur

“Social Entrepreneurship: what is it and why does it matter”

(In context of Nepal)

A Term Paper submitted to Prof. Rupesh Krishna Shrestha

Faculty (KUSOM)
In partial fulfillment of the requirements for the
Entrepreneurship and Innovation (ENT 601)

Submitted by:

Bindu Gaire Sharma (20328)

MBA (Spring 2020)

December 8, 2020
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ACKNOWLEDGEMENT

First of all, I articulate my sincere gratitude towards Kathmandu University School of Management
for including Entrepreneurship and Innovation as a part of our course.

This Term Paper entitled “Social Entrepreneurship: What is it and why does it matter (in
context of Nepal)” has been conducted to satisfy the partial requirements for the degree of Masters
in Business Administration (MBA) of Kathmandu University.

I would like to thank our faculty Prof. Rupesh Krishna Shrestha Sir for his guidance for this course
and to perform this term paper as part of our course. Your supervision has helped me to complete
my paper successfully. This paper has enhanced my knowledge and competence towards this
subject and field.

I would also like to thank our friends who have helped me with their valuable suggestions and
guidance and have been helpful in various phases of the completion of the term paper.

Lastly, I would like to thank each and everyone who have helped us directly and indirectly to
complete this term paper successfully.
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Table of Contents

CHAPTER 1 INTRODUCTION ................................................................................................. 1

CHAPTER 2 DISCUSSION ...................................................................................................... 3

2.1 Defining Social Entrepreneurship ......................................................................................... 3

2.2 Distinguishing Social Entrepreneurship ................................................................................ 5

2.3 Importance of social entrepreneurship .................................................................................. 6

CHAPTER 3 CONCLUSION ...................................................................................................... 9

References .................................................................................................................................... 10
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CHAPTER 1 INTRODUCTION

Social entrepreneurship is such an emerging concept that it is still not clearly defined. Most
importantly, though, it is not charity. Social entrepreneurship is mainly about improvising systems,
designing new approaches, grabbing the opportunities other missed, and generating solution to
change the society for better. There are hundreds of innovation brought every year by many
socially oriented entrepreneurs. While many of those innovation fail, some of them prove to be
successful in the local context, addressing various social problems and improving the economic
and social conditions of people around them. For the past few years social entrepreneurship has
gained popularity and tremendous growth with more and more companies recognizing their values.
This growing attention paid to social entrepreneurship on a global scale can be explained by several
mutually reinforcing economic, social, and political changes in recent decade (Hoogendoorn, ,
Pennings, & Thurik, 2010).

In simple terms social entrepreneurship can be defines as doing business for a social cause and
social entrepreneurs as someone that wants to fix social problems and possibly make money in the
process. Social entrepreneurs are simply people who use principles of business innovation and
management to create and advance social change by generating their own financial sustainability
and this change could be local, regional, national, or international. Social entrepreneurship is an
approach by start-up companies and entrepreneurs to develop, fund and implement initiative that
has a particularly social, environmental or community objective.

The concept and meaning of social entrepreneurship keeps on changing frequently according to
the economic situation and type of economies prevailing in different countries and society. Even
though the social entrepreneurship culture in Nepal is growing rapidly, the country offers no legal
definition of social entrepreneurship. The ecosystem of social entrepreneurship in Nepal is created
by different organization and institutes advocating, promoting and supporting social enterprise.
Multiple stakeholder that are involved in various activities with an embedded social purpose have
formulated their own meaning of social entrepreneurship in Nepal.

Social entrepreneurship is attracting growing amounts of talent, money, and attention, however along
with its increasing popularity it also has brought less certainty about what exactly a social entrepreneur
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is and does. It means different thing to different people. Many associate social entrepreneurship
exclusively with not-for-profit organizations starting for-profit or earned-income ventures, others
use it to describe anyone who starts a not-for-profit organization. Still others use it to refer to
business owners who integrate social responsibility into their operations

This paper is my attempt to better understand the concept of social entrepreneurship that has
developed over time. In doing so, I will also illustrate how social entrepreneurship differs from the
traditional conceptualization of entrepreneurship and why it is gaining so much of importance in
recent years. The first part of discussion will focus on defining social entrepreneurship, and
understanding the parameters of this rather broadly-used term. The second part will examine the
relevancy of social entrepreneurship (with particular emphasis on the Nepalese context).

Research Questions

The following are the research questions for my term paper:

1. What is social entrepreneurship?

2. How it distinguishes from other commercial entrepreneurship and charity?
3. Why does it matter (in context of Nepal)?

Design/Methodology: This paper derives necessary information from several secondary sources.
The research methodology which is applied during the research study is descriptive in nature.
Various reports and studies, books on social entrepreneurship have been refereed in the present
research. The objective of the research is to find the very basic idea regarding social
entrepreneurship and its importance. For the purposes of this paper, I have included only those
articles and reports that specifically and explicitly state social entrepreneurship as their main
research topic.
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CHAPTER 2 DISCUSSION

2.1 Defining Social Entrepreneurship

Although the use of the term social entrepreneurship is growing rapidly, there is no universally
agreed definition of social entrepreneurship and what its conceptual boundaries are. This is
because social entrepreneurship is a multidimensional phenomenon, which can take a great variety
of forms. Social entrepreneurship often exploit a range of organizational form- from charity to
non-profit to for-profit in order to maximize social value creation as well as they move easily
across sectors often diversifying from their core mission (Nicholls, 2006). Another part is, social
entrepreneurship is comparatively new topic of discussion because of which literature in this area
is so new that little consensus has emerged on the topic. While the concept of doing something to
for societal purpose are not new, the term as it is used in the academic and popular literature
currently enclose a rather broad range of initiatives and activities.

Review of Article

Author Conceptual Orientation

(Peredo, 2006) Social entrepreneurship is exercised when some people or a person

(1) aims either exclusively or in some prominent way to create social
value of some kind and (2) pursue goal through the combination of
recognizing and exploiting opportunities to create this value, (3)
employing innovation and (4) tolerating risk and (5) declining to
accept limitation in the available resources.

(Howaldt, Domanski, & Social entrepreneurship as an action and coordination strategy,

Schwarz, 2015) which uses entrepreneurial principles in order to promote social
innovations.

(Nicholls, 2006) Social entrepreneurship is no longer a marginal activity pigeon-

holed under the headings of ‘not-for-profit management’ or ‘charity
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governance’, but rather a driver of significant social change that is

developing rapidly into an autonomous field of research and
practice. It tends to operates by following mechanism of both for-
profit and non-profit to address social needs of community.

(European Commission, Social entrepreneurship’s main objective is to have a social impact

2011) rather than make a profit for their owners or shareholders. It operates
by providing goods and services for the market in an entrepreneurial
and innovative fashion and uses its profits primarily to achieve social
objectives. It is managed in an open and responsible manner and, in
particular, involves employees, consumers and stakeholders affected
by its commercial activities

(Hoogendoorn, , Economic, social and political developments in the last decades can
Pennings, & Thurik, explain the reason why social entrepreneurship has intrigued
2010) attention worldwide. They distinguish two mutual processes, the first
one being the demand side; the current challenges require innovative
solutions. The second one is the supply side; there is an exponential
increase in the ways that these problems can be solved.

Despite of the varying definitions of social entrepreneurship, one thing is same in almost every
explanation: the ‘problem-solving nature’ of social entrepreneurship is prominent, and the
corresponding emphasis on developing and implementing initiatives that produce measurable
results in the form of changed social impacts. From the various articles and discussion on social
entrepreneurship mentioned above we can conclude that social entrepreneurship can occur within
the public, private or non-profit sectors and can sells products/services; the prime concern of
business focusing as much on social and environmental concerns as they do on profits remains the
pillar; it is hybrid in nature giving innovative solutions to community needs. Thus in the modern
context of social entrepreneurship, people use the principles of enterprise — business principles
and even capitalism itself — to create social change by establishing and managing a venture.
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2.2 Distinguishing Social Entrepreneurship

Social Entrepreneurship vs. Charity

The concepts may sound similar but there are significant differences between social
entrepreneurship and charities. Muhammad Yunus, a Nobel Peace Prize winner for founding
Grameen Bank- a social business, says that charity is that where once money goes out doesn’t
comeback but the social entrepreneurship model means that the money goes to solve a social
problem but then comes back to solve more. One thing that makes social entrepreneurship different
from charity is that social entrepreneurship do not depend on any kind of donation or on private or
public grants to survive and to operate, like any other business, it is self-sustained (Yunus & Karl,
2011). So the main difference between these two concepts is, social entrepreneurship often sell
products or service in order to reinvest their profits.

Social Entrepreneurship vs. Commercial Entrepreneurship.

Social entrepreneurship and commercial entrepreneurship have many aspects in common but there
are many aspects that differentiate. In general, both the concepts of entrepreneurship are strongly
motivated by the opportunity they identify, pursuing that vision relentlessly, and deriving
considerable psychic reward from the process of realizing their ideas.; however, Austin et al.
emphasized that a key difference between two is that commercial entrepreneurship focuses on
economic returns while social entrepreneurship focuses on social returns (Austin, Stevenson , &
Wei–Skillern, 2006). Unlike the commercial entrepreneurship who believe that market can pay for
the innovation, and may even provide substantial profits for investors, the social entrepreneurship
believes on creating and advancing innovation for social change by generating their own financial
sustainability. When commercial entrepreneurs want to invest they are concerned with making a
good investment in terms of profit and sometimes with not harming the society and the
environment; while social entrepreneurs are asking whether the investment made will have the
desired effect on the society and environment and if this will help them generate a financial result
(Crisan-Mitra, Borza, Razvan, & Drule, 2011). Thus, in simple language we can say that what
distinguishes social entrepreneurship is domination of social benefits.
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2.3 Importance of social entrepreneurship (Including its importance in Nepalese Context)

Economists reckon that 60-80% of economic growth comes from innovation and new knowledge.
Past advances in healthcare and the spread of new technologies like the car, electricity or the
internet, depended as much on social innovation as they did on innovation in technology or
business. Today the way enterprises are adapting social problems in the way they do business are
signs that social entrepreneurship is becoming even more important for economic growth. This is
partly because some of the barriers to lasting growth (such as climate change, or ageing
populations) can only be solved with social entrepreneurship, and partly because of rising demands
for growth that enhances human relationships and well-being (Mulgan, Tucker, & Wilkie, 2006).
As per the 2020 Deloitte Global Human Capital survey 50 percent of this year’s respondents,
categorized their organization’s purpose as broadening extensively to include all stakeholders,
including the communities they serve and society at large (Deloitte, 2020). This shows that social
entrepreneurship and the way of doing business socially have become really an important matter in
recent years.

Social entrepreneurship have become a subject of special consideration in recent years because
they are seen to have positive impact on the economic as well as social development in many
society. The potential of social entrepreneurship to find solutions to society’s problem related to
sustainable developments, facilitating social and labor integration, provision of social services and
improving the quality of life have made it an integral part of the civil society and major component
of social economy sector especially for least developed economy like Nepal. Social enterprise
directly addresses a difficult social need and serves the common good, either through its products
and services or through the number of disadvantaged people it employs (Dhungana, 2014).

Various literatures on social entrepreneurship have established a dependence on social

entrepreneurship and sustainable development and suggested social entrepreneurships as the
drivers of sustainable development and inclusive economic growth as they aims to strengthen the
community by focusing on human development and creating wealth and capital within the
community( (Mykolaivna, 2017), (Lubberink, 2019), (Bansal, Garg, & Sharma, 2019) ).
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Following are the reason why social entrepreneurship means a lot in context of Nepal:

1. Social entrepreneurship focuses on that part of society having problems and mostly are focused
on people whose life needs to be improved, Nepal has around 25 percent people living under such
conditions. So social entrepreneurship becomes relevant and is needed for uplifting this section of
people.

2. Social entrepreneurship sees social benefits as primary and profits as secondary. It creates a
shared value. In one way, social entrepreneurship like any other economic activity provides
employment to people having basic skills. They tend to recruit locally and choose people who
struggle to have job or who seek to have job. So, with the increase in number of social
entrepreneurship, the number of unemployed locals is bound to decrease. Similarly, they also
provide skills and independence to these people so that they can do a job or start something on
their own. Hatti Hatti Nepal can be an example in this context as, as they are providing sewing
jobs and trainings to deprived women so they can be financially independent.

3. Social entrepreneurship address the social problems, such problems may include illiteracy, child
abuse, financing, health, potable water etc. Social entrepreneurship helps in meeting these social
problems by capitalizing the local resources and applying entrepreneurial principles. In that case
we need social entrepreneurship that could find out the most innovative solution, so that we can
minimize the impacts the social problems. For example, Miteri Nepal, a social enterprise, working
towards solving some social problems by distributing clothes to the people living in extreme
poverty and also providing reusable sanitary pads to the girls in the western region who are the
victim of superstitious beliefs.

5. One of the most important needs of social entrepreneurship is towards bottom of the pyramid.
This bottom of the pyramid referred to the people who have minimalistic income, but high
acceptance for social innovations. Many social enterprises focus their solution for the upliftment
of living standard of such people. Social entrepreneurship is the only way to fulfil the needs and
demands for bottom of the pyramid, this argument is the strongest for the existence of social
entrepreneurship in Nepal.
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6. Social entrepreneurship work to change the mindset of people as well. By providing a platform
and treating the problematic populations as a partner in their solution, they can bring a positive
change in the way people view these people. For example, Khalisisi in Nepal is working towards
changing the mindset of people towards recyclers who were ill-treated as Kawadiwala. This way
social entrepreneurship also work to create equality in the society by providing stable income to
those typically excluded from the labor market.
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CHAPTER 3 CONCLUSION

Social entrepreneurship has evolved a lot over a little span of time. While there is much debate
regarding the definition, social entrepreneurship seek to fill in the gaps that are either neglected or
ineffectively addressed by the businesses and government. Social entrepreneurs are necessary as
they see the problem that is prevalent in the society find out the causes and through their innovative
ideas and creations remove those problems and most notably earn profit. This paper has tried to
summarize what actually is social entrepreneurship and why does it matter in this modern society,
especially in context of country like Nepal. Social entrepreneurship is increasingly challenging the
traditional idea of doing business just for the sake of profit, and social enterprises are developing
around the world so rapidly, even if in terms of statistics they are still a niche form of business.

These organizations present many opportunities for any community, such as social value creation,
employment generation, enhanced image, economic development, innovation, social and financial
capital formation and most importantly help attain sustainable development. There are
innumerable examples of people who have blended profitability with social cause and made a
difference. They are spread across different sectors-education, energy, healthcare and technology
to name a few. But is it enough? With such a huge gap between the social problems and the effort
made by government and others, we actually need a lot more social entrepreneurship to identify
sustainable solutions. The blurring boundary between non-profit, charity and for-profit caused by
a hybrid model of social entrepreneurship has made the concept of social entrepreneurship
confusing. Nevertheless, we can without doubt say that social entrepreneurship introduces an
effective means to addressing societal concerns, and has left an indelible impact on the way
businesses can operate.
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