The Process of Financing Social Entrepreneurship-Clara Cruz Santos PDF

ACRN Journal of Entrepreneurship Perspectives
Vol. 1, Issue 1, p. 1 – 12, Feb. 2012

ISSN 2224-9729
The process of financing social entrepreneurship:

Tensions between normative
discourse and procedural acting
Clara Cruz Santos1, Cristina Albuquerque2, Helena Neves Almeida3!
1 - 3 Faculdade de Psicologia e de Ciências da Educação da Universidade de Coimbra
Abstract. Three social dimensions of resource provision are engaged social

management of social entrepreneurship projects: (i) the Economical resources
that includes the financing lines and the productivity logics; (ii) the Human
resources, that integrates the stakeholders, their characteristics, training and
innovation potential and the (iii) Social resources derived from social policies,
organizations and social interaction networks. In an ideal context these three
actors would function coherently in terms of intervention goals, constituting the
grounds to the construction of Social entrepreneurship. However, it’s possible to
identify some contradictions, or at least paradoxes, between an innovative
normative rhetoric and the principles inherent to the evaluation and approval of
concrete social entrepreneurship projects for financing in Portugal. So, our
general aim is to understand the links between normative models of social
innovation, the way how these reveal specific socio-political-ideological
guidelines and how they are operationalised.
Keywords. social entrepreneurship; innovation; sustainability; fundraising;

Social policies.
Introduction
Portugal, as others European countries, faces a time of economic recession with

serious impact on the lives of thousands of unemployed families who are struggling to
manage their minimum capital to survive. This social and economic situation has, also, an
important impact on the lives of young people who are looking for their first job in a saturated
market on the way to insolvency. The new reality reflects the diffusion of new settings called
of "atypical" employment with flexibility in contractual terms, time, space and status.
According to Kovacs (2005), these new configurations are designed of "atypical employment"
by some, and of “flexible forms of employment” by others. Nevertheless whatever its
designation remains a neo-liberal market perspective with a growing trend for its flexibility
which fails to accomplish the social integration function transforming itself into something
intermittent and diffuse, "failing to provide a consistent life narrative for the life projects
which are grounded on it" (Caleiras,2008:32).
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The process of financing social entrepreneurship: Tensions between normative
This reality is a concern of National and European Governance who, according to the
"National Strategy for Sustainable Development”1, prepare Portugal to fight against poverty
and defends that its prevention must be a collective task requiring the observance of measures
which mainly seeks the innovation and the qualification of Portuguese citizens or with legal
residence in Portugal (immigrants) by developing personal and social skills, academic and
vocational skills in order to permit or facilitate their integration into the labor market. By
joining the idea of innovation, is focused on entrepreneurship as a strong investment in terms
of training and insertion in the labor market.
In the discourse of the market enters now and for the first time in debating the role of the third
sector, also known as the sector of the Solidarity Economy. In this context the European
Agenda 2020 argues that the perception of the economy is not just solidarity: it is economy,
being urgent to support a stronger social economy, entrepreneurial and qualifying,
encouraging innovative initiatives and turning them, as far as possible, in economic projects,
that’s to say, fomenting social entrepreneurship. However the conception of entrepreneurship
as it is offered in the regulatory documents is not consensual.
A careful reading of these documents reveals that its concept moves away from a design of
social entrepreneurship towards a conception of social management. These two constructs are
not antagonistic but they are not equal to the funding programs designed to create
entrepreneurial initiatives remitting the organizations for an empty technical interpretation,
whose logics are crisscrossed and where the target for assessing projects submitted in
application sometimes moves away from action principles proposed in the same regulatory
document.
Involved in creative and even political consequences of this conceptual emptiness that
National and European programs present us, we organized this article analyzing, in a first
moment, the European logics and policies for combating economic and social instability, to
encourage employment and social entrepreneurship, for in a second moment, to position
ourselves on the terminological concept of entrepreneurship and social management.
At last with a more empirical approach we present the document analysis produced to the two
funding programs, namely the PROGRESS having as reference the critical stance described.
Ruptures in search of the Way: The normative discourses.
The contemporary societies are still anchored around labor and production so by what
in the existence of work rupture and in the failure of short /medium term alternatives we
witnessed what Castel(1998) describes as processes of "disaffiliation", the rupture with links,
social and professional networks that endow the individual's social identity.
Within the Luxembourg Cyme in 1997 and in the Lisbon Cyme in 2000 it was possible to
identify a number of issues relating to the problem of employment in Europe where was
delineate a set of strategies for social inclusion based on the assumption of "return to work”2
which materialized in a range of documents as the National Action Plan for Inclusion, the
National Employment Plan and the EQUAL Program outlined for a favorable socio-economic
sustainability and looking for initiatives targeted to vulnerable groups in society.
In this regard the appeal, including the third sector as an important resource to explore, the
design of innovative socio-economic responses, revalues the potential of nonprofit agents in
the production of goods and services oriented for the common good and for the reconstitution
1
Council Presidency of Ministers, the National Strategy for Sustainable Development -NSSD 2015.
2
The acts of the 2000 Lisbon Summit.
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ISSN 2224-9729
and consolidation of social cohesion. For instance, the possibility of creating jobs for the
unemployed (especially long and of very long duration) and other vulnerable public became
actually a basic element in the political assessment of the social and economic importance of
the third sector. Such importance has been recognized since the European Employment
Strategy.
More recently the European Commission launches a new Political Agenda (the Agenda 2020)
which prioritizes the EU guidelines for achieving economic and social renewal. From this
new Agenda, the Commission establishes three priorities which mutually reinforce itselfes: (i)
smart growth in order to develop an economy based on knowledge and on innovation; (ii)
sustainable growth which seeks to promote a more efficient economy with respect to the use
of resources, ecological and more competitive and (iii) inclusive growth promoting an
economy with high employment levels, capable of ensuring social and territorial cohesion.
One of the instruments capable of overcome the economic crisis and promote the attainment
of the objectives listed above, was presented by the Economic and Social Committee (2011)
as the "Creativity and Entrepreneurship”. According to the same document (2011, section
1.1.) "Entrepreneurship in Europe is usually understood as the creation of companies, SMEs,
the private business and social sector," defining entrepreneurship as "the ability of an
individual to put ideas into action"(ibid.), thus creating value for society.
Entrepreneurship emerges in an economic and social dimension, in the sense not only to
identify and create opportunities in business, but also as a concern with the introduction of
specific European national and regional programmes, promoting creativity and
entrepreneurship with particular attention to disadvantaged groups in order to eliminate social
inequalities.
In fact, according to several authors, social entrepreneurship is increasingly seen as an
innovative way of renewing the social and political intervention, to create alternative forms of
management of social and economic, to create conditions for social inclusion and
employment as well as a mechanisms for greater social and democratic participation. Thus
involves a high potential of innovation and entrepreneurship in the socio-economic domain,
anchoring on assumptions of efficiency, social and human development and environmental,
cultural and economic sustainability. The potential of systemic change and reform that some
authors shows (Dees, 2001), are presented in the assumptions of social entrepreneurship
reflected as well in different aspects: of the ability to create change in the way that a particular
sector is organized, in the prioritization of action into the causes and not on symptoms,
reducing the needs rather than its mere satisfaction. We can also see this in the creation of
holistic and sustainable changes, in the ability of acting locally as also in the ability of
simultaneous global influence and disseminate knowledge, actions and principles.
These premises corroborate what Vasconcellos & Franco (2011) nominate by "Innovation
Union" which advocates an expanded notion of the concept of innovation in the field not only
intrinsically business, but also in response to major societal challenges such as climate
change, energy and food security, health and aging. According to these authors is necessary to
create new markets and develop new opportunities in terms of employment with importance
in the economy which in their opinion are exactly related to these areas. On this taking
entrepreneurship is intrinsically linked to the creation of wealth on the belief that this is one of
the most viable ways to draw away Europe's current crisis. The creation of wealth, according
to the Official Journal of the European Union (2011), will support investment in education,
employment, health and social conditions being creativity and entrepreneurship the key
instruments for the progress of society.
Our reading of the normative guidelines of the European Union is that whatever form of
entrepreneurship (business or social) the main purpose is, undoubtedly, an economic purpose:
"creating something that makes money" either directly or on a way to sustain initiatives
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relating to social conditions:, education, social welfare, employment, among others. However
the definition of European social economy identifies a set of principles that are not consistent
with this view, in particular:
“1) Purpose of service to their members or community more than to obtain profit, 2) Autonomy in
terms of managing, 3) Democracy in the decision process, in which the membership and their
participation in decisions is not dependent on capital which owns, and finally 3) Priority for the
people and for the work in the distribution of income."(Defourny et al., 1999:38-39)
Despite the complementarity between the market economy and the social economy there are
differences in their characteristics referring to the first matters related to the structure and
operation, and to the second matters related to principles and values (Ferreira, 2011). Even
though the characteristics of the current solidary economy, by reference to traditional non-
profit organizations shows, according to the European study carried out by Borzaga and
Santuari (2003), greater autonomy (economic and management) and capacity for initiative
and innovation. In fact, research supports the conclusion that: (i) material resources are of
multiple origins, demonstrating more autonomy by reference to the State; (ii) there is an
increased orientation in the area of job creation, particularly for vulnerable groups; (iii)
acquires relevance further cooperation with commercial companies with evidence of an
increase in what concerns to innovation with regard to the types of goods and services
produced, to the methods of responding to the social needs, to the target groups and to the
active accountability of the various collaborators in terms of production, both with regard to
management shared of the organization.
In the quest of this idea many of the European and National objectives are diffuse being
inherent the need of implementing initiatives in the field of social entrepreneurship that have a
real impact (we refer to visible results, measurability rates of economic and social integration)
in the living conditions of social vulnerable groups, but paradoxically "masked" with cohesion
and social solidarity objectives relating to systems of support more targeted, in rhetorical
terms, to social cohesion than to economic growth. This invisibility of the real objectives
leads the professionals of the third sector or of the social economy to an analytical limbus
address to the way they have to choose.
It will be important to note that the two dimensions are different, but it is also important to
social entrepreneur to create sustainability in order not to depend on either philanthropy or
government support. But that in opposite of the market logic, he has to take into account also
the logic of social demand. So as opposed to the rationality inherent in the market where a
product, service or idea that doesn’t produce or does not have clients or profitability can lead
to insolvency of the organization, being, often necessary to eradicate it. In the social market is
not possible to eliminate an initiative just because this is unprofitable, especially when it
reveals of extreme social need, putting to social entrepreneur the urgency of finding ways of
funding and revenue sources to cover the real cost of this initiative without expectations of
profit, but trying to reach a financial balance.
In this sense when we speak of social entrepreneurs, we speak also of managers. But the
detailed analysis of the EU normative documents brings us to some entanglement of the two
concepts that, although, complementary, are different.
The Walkers: Social Entrepreneurs Vs Social Managers.
When we compare the concept of Social Manager with the concept of Social
Entrepreneurship the first assumption that occurs is that both are social managers. However,
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ISSN 2224-9729
the social manager might not be able to be a social entrepreneur and a social entrepreneur may
not have the appropriate skills to an effective and efficient management of social enterprises.
Under the concept of entrepreneurship that appears in the opinion prepared by the Thematic
Network "Local Development and Entrepreneurship" "Green Paper on Entrepreneurship in
Europe", prepared by DG Enterprise, European Commission (Equal, np-b: a cit in Ferreira,
2011) the
"Entrepreneurship (...) goes further than the mere reference to social manager (...). It is the will
and capacity to be active, to design and implement a structured initiative, based on a project,
defining goals and objectives, identifying and mobilizing allies and resources, scheduling and
budgeting, and then managing and evaluating processes and outcomes.(...). Indeed, such attitude,
and the inherent skills, knowledge and competencies not only apply in order to «transform an idea
into a successful experience»"
There is related to the concept of a social entrepreneur the concept of innovation and social
change and in this context Alonso (2011) like other authors (Dornelas, 2001; Drucker, 1987;
Greatti and Senhorini, 2000) distinguish also some personal traits of the social entrepreneur.
To these authors (ibid.) the social entrepreneur is a visionary person, creative, practical and
pragmatic, who knows how to overcome obstacles to produce significant social change with a
positive social impact in the region or where he operates and with equal ability to spread those
ideas to national and /or international level. We observe in these authors a shared belief that
entrepreneur ability is an innate skill, something related to our personality. However more
recent studies have come to contradict this static view of social entrepreneur for a more
dynamic one.
Ferreira (2011) conducted a study in Portugal using privileged informants and "taking into
consideration a criteria of the diversity in a universe of organizations that revealed important
dynamic community in which they inhere" (idem, 2011: np). From the conclusions we
highlight the following: Apart from the activities that occupy within organizations closely
related to the decision-making, a constant relationship between the internal and external
stakeholders and a permanent monitoring and supervision of these projects, there is 1) the
existence of a strong parallel between the path of the entrepreneur and the organization where
he is inserted by following , in some cases, his participation in the movement that has given
rise to the organization, 2) most of these entrepreneurs realized on their path a personal
journey traversed with forms of activism or in social associations with a deep awareness of
the collective benefit and community development, 3) have a strong working knowledge and
are also well known in the region where the organization is inserted, having access to
informal social networks that allow them to exercise some influence, 4) as sources of
formation, they have a plurality of areas , most with academic training, but not being the
whole.
In this respect and in favor of the emergence of the movement we are seeing at present time,
in order to foster in the educational curricula of basic and higher courses, disciplines geared
for entrepreneurship, seems to us that the social entrepreneur can obviously have some
important personal characteristics but his skills were acquired in a processual path towards his
life that enabled them to acquire basic social competencies as well as experience in the
recognition of opportunities and he uses it in favor of a collective project to which he
identifies and produce value.
This process is not visible in the current framework of the management of social equipments,
since on the same institutional space coexist volunteers managers (with no training in
management and without a strategic vision of organizational development), and hired
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professionals for management or administration of a particular social department or service

and that although commune with social entrepreneurs the same management features, they do
not share the same internal missionary and visionary features, as the first ones.
For social management we understand all the processes and methods undertaken by the social
manager in order to optimize the functionality of organization with reference to its objectives.
In this context their role in the organization is related not only to the management of human
resources (some authors emphasizing the importance of leadership in social management,
Lawler & Bilson, 2010) but also with project management, which is part of the team
supervision, monitoring and evaluation of social projects. His function in the design of
projects and intervention programs may be secondary. However, his development is part of a
strategy of organizational improvement and provision of quality services for well-defined
target audiences in a participatory way. A social entrepreneur manager includes in his daily
life a coordinated and network and human and material resources, drives the creation of social
value, and bases his action on autonomy and responsibility of his employees, concerned with
empowerment, not merely of the public target of the project but also of the professionals
involved in action
In a schematic way we may, illustrate the possible connection between the characteristics of
two actors: Social Entrepreneurs and Social Managers in the production of a functional profile
of Managers Social Entrepreneurs
Social Entrepreneurs Social Managers Social Managers Entrepreneurs
Functional Integrated in a team or as Organizational Hierarchy Horizontal Management,

Framework managers Dependence Democratic leadership
Control Decentralized Centralized Autonomy and Functional

Individual and Collective Responsibility
Empowerment Citizen Participation
Individual and Collective
Empowerment
Focus of the The best for the The best for the Organization
Function/ Action client/Community – Articulation between the best for
Production of social value Program Focus the organization and the best for
Competencies Focus the client/ community.
Focus in the acquisition and
valorization of the stakeholders
competencies.
Work Scope Work targeted by objectives
Work targeted by mission, and results evaluation. Strategic Conception of the
vision, objectives, evaluation Project and team supervision.
and processes Network work
Work targeted by mission, vision,
objectives, evaluation, processes
and results.
Source: Synthesis done by the authors.

Figure 1 – Analytical synthesis for the construction of comparative functional profile of Social Entrepreneurs and Social
Managers.
Whatever the form, managing a social project, in the area of social economy, involves the
efficient management of political and human resources available in the context as a way of
ensuring its implementation and development, as well as its sustainability. Three social
dimensions of resource provision are engaged in this process: (i) the Economical resources
that includes the financing lines and the productivity logics; (ii) the Human resources, that
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integrates the stakeholders, their characteristics, training and innovation potential and the (iii)
Social resources derived from social policies, organizations and social interaction networks.
In an ideal context these three actors would function coherently in terms of intervention goals,
constituting the grounds to the construction of Social entrepreneurship.
However, we find criss-crossed logics in the political and economical agenda of the financing
lines that support the social emergence of entrepreneurial projects and the evaluation
framework (the guide-lines of the program) used by the central and executive departments
that, in Portugal, evaluate the same projects.
In this assumption we intend to discuss, in a broad way, the “grammar” underlying the appeal
to social innovation in Portugal and effective practices/ projects financed, translating a
specific political and social construction of intervention which relays on normative models
and specific socio-political-ideological guidelines
The Roads: Programs, rationalities and tensions on the support of

entrepreneurship.
The program analyzed corresponds to a European program –The PROGRESS.

PROGRESS is the European Union employment and social solidarity program, set up to
provide financial support for attainment of European Union’s objectives in employment,
social affairs and equal opportunities as set out in Social Agenda, as well as in objectives of
the Europe 2020 Strategy. This new strategy, which has a strong social dimension, aims at
turning the EU into a smart, sustainable and inclusive economy delivering high levels of
employment, productivity and social cohesion. The European Union needs coherent and
complementary contributions from different policy strands, methods and instruments,
including the PROGRESS program, to support the Member States in delivering on the Europe
2020’s goals.
The Progress in May of 2011 has opened a line of funding designated “call for proposals n°
VP/2011/010, budget line 04-04-01-01 -“projects contributing to exchange of good
practices” with the next purposes:
1. Developing early-warning and forecasting systems to improve the matching of skills

supply and demand;
2. Supporting the development and exchange between public employment services,
education and training providers and companies on lifelong learning and guidance to
help people make choices regarding careers as well as education & training;
3. Close involvement of social partners both at EU and national level, in actions that can
help equip people for employment with the right skills and help employers to find the
skills they need
4. Supporting the strategic dialogue with private and third-sector employment services
on strategies addressing skills development.
We highlight two axes which we would take into account as applicants in the analysis of the
program: a) a strong concern in the development of skills of unemployed citizens, particularly
with regard to competencies, training and b) emphasis on concerted action between the public
and the private as a strategy for sustainability of actions.
In this sense and taking into account both the application form of the present action and the
global objectives of PROGRESS Program seems to us important to define a project
combining an action research and a direct social intervention with the target groups, already
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defined on the same document. In this way we were able to observe, describe and analyze
comparatively the different measures, employment and social policies of the countries with
whom we held the European consortium, and at the same time, develop a set of initiatives for
unemployed citizens capable of promoting their skills and professional training in order to
make them more competitive in the labor market. On the other hand, the line of funding in
question requires a strong territorial action so that organizations connected to the local
government that have a strong working knowledge of the strengths and weaknesses of its
territory will be privileged because they can develop appropriate responses. These initiatives
could establish potential actions to develop entrepreneurial skills in the citizens and promote
the emergence of new entrepreneurial focus in the knowledge acquired by the target group
and the emergence of new markets related to what PROGRESS designate as a strong link
between supply and demand.
This rationale fits into the logic of development of "Creativity and Entrepreneurship" as
defined in the Official Journal of the European Union (2011) in its social dimension to the
business activities included in the daily life in the same text defines it as follows :
“Social inclusion and poverty relief are supported by the entrepreneurship because society is at
the heart of innovation, as it changes its practices and institutions"(4.5, idem, 2011).
But if until now all the guide evidence in the organization of an application within the logic of
entrepreneurship, job creation and social innovation could make sense to the reader's Manual
PROGRESS, quickly we are faced with a number of priority actions little consonant with a
pro-active attitude in terms of creativity and value creation, as well as the definition of the
entities by the same program that can be financed. We describe:
“Priority areas for co-operation for both domains: Among priority areas for cooperation are
activities mentioned (the below list is not exhaustive):
– Workshops on benchmarks, supporting good practices on equipping people with the right skills
for employment addressing different aspects of policy formulation, decision making and policy
execution;
– Organisation of seminars, round-table events, study visits, staff exchange and communication
activities to publicize the results of sharing of experiences in the policy fields covered by this call;
Focused information campaigns and awareness raising efforts targeting key stakeholders and
other relevant groups;
– Reinforcing existing or new networks devoted to the advancement of the targeted policy issues
and practices.
These activities may possibly be combined with the following:
– Small-scale studies in order to gain greater knowledge on improving the first transition from
education to work for young people and supporting good practices on equipping people with the
right skills for employment;
– literature and desk reviews in the policy fields covered by this call, where such are not
already available.” (Call for proposals n° VP/2011/010: p 5-6)
The reader will certainly have trouble to understand how the objectives are and the results
suggested in the first presentation part of the program may be feasible with the actions
considered eligible. This contradiction results in difficulty in understanding (i) what is the true
purpose of the program (action - research and debate or research and social intervention?), (ii)
how we (with the implementation of the activities suggested and considered eligible), can
achieve the initial objectives of the program? (iii) Which is the determining direction? Since
the same appear as requests "double-bind", i.e, any solution presented will never be
satisfactory for a component of the project.
The methodological inconsistency regarding to the conception of funding lines leads the
entrepreneur to one kind of functional "Russian roulette".
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On the same program and respecting to eligible entities despite the call to territoriality, the
local and regional organizations only can be eligible entities that have at least consolidated
experience of at least three years at the level of management and implementation of projects
previously funded by European Union (the new and innovative initiatives will have many
difficulties in entering in this financial market) and should also provide economic stability
that can prove who hold "cash" with the same amount for which it seeks funding. Again the
new initiatives and local initiatives that work in a logical "bottom-up" stay sidelined because
they can not compete with entities that are structurally solids and continuously access to
structural funds and will reproduce the same logic of action that although theoretically
legitimacy are being challenged by the guidelines contained in normative documents.
Well, as we already noted the Agenda 2020 has a key instrument to combat economic
recession that has haunted Europe the consolidation of one smart, innovative and sustainable
economy where the strategies considered as fundamental refers to the Creativity and
Entrepreneurship. However the financing lines (as the “VP/2011/010”) have regulatory
guidelines which move away from the concept of entrepreneurship and innovation (in its
business or social dimension) and go close to traditional and establish old forms of social and
economic intervention.
Considering the above and since the self-sustainability of social entrepreneurship is still in a
very early stage, the professionals are faced with operationally diffuse funding lines, making
it difficult one consistent emergence of social entrepreneurship in Portugal and in Europe.
Brief Final Considerations
The Official Journal of the European Union (2011) presents this parable to illustrate
the importance of innovation, creativity and entrepreneurship in Europe, it designates the
"European value investing in entrepreneurship:

If you give me 1 € and I give 1€, each has 1€
If you give me one idea and I give you one idea, each has two ideas.
Entrepreneurship in Europe = 500 million people + 500 million ideas + 500 million actions.
How many of these ideas make us overcome the crisis? “ (Idem, 2011: 48/46).
This interesting parabola reflects the European concept of entrepreneurship as one privileged
way to overcome the current economic downturn and is based in our view, in the
entrepreneurial and creative role that each citizen should have to renewing the social and
political intervention, anchoring in the assumption of individual potential reformer. To
achieve this, the European Commission recommends the tools to access funding as
PROGRESS (analyzed by us), ESF, JASMINE, among others that in their opinion bring
advantages not only for business but also for the sustainability of initiatives to assist
communities and development especially with regard to NGOs.
With respect to Social Entrepreneurship the appeal to the intervention of third sector revalues
the potential of nonprofit agents for the production of goods and services for the common
benefit. However, in the normative discourse of the state and in this case in the European
Union, the ultimate goal of any form of entrepreneurship should be to create wealth, clearly
demonstrating the economic value of social goods becoming contradictory with the current
concept of economics solidarity that can not directly create wealth, but providing social
development in terms of job creation and working in social intervention by social and
professional inclusion of disadvantaged social groups.
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This ambiguity regarding the policy objectives for social entrepreneurship reveals, equally, in
the instruments which produce for fostering entrepreneurship and programs of employment
promotion and social development. Despite concerns about sustainability and social reform
initiatives of the third sector in creating new solutions and new social responses, the weight of
neo-liberal market logic is present in the very programs that put at the disposal of the
solidarity economy. But, it seems important to the sustainability of social initiatives, the
current economic climate of job insecurity acts as a powerful brake on the ability to develop
as quickly as desired, social entrepreneurship initiatives capable of immediate integration and
socio-professional insertion of the large number unemployed in Europe, as well as an
effective fight against poverty through self sustained actions with full financial independence
of the state.
In this sense, we think important one clearer position from the normative guidelines of the
European Union. It means that creating tools for social and professional integration as
PROGRESS objectives and eligible actions which come, sometimes, in contradiction, is not
the solution. On the contrary, it tends to contribute to the difficulty of translation by
professionals who deal daily with target population, of the grammar or hidden writing in a
paradoxical way in these same documents.
So we must clearly assume that there are two forms of entrepreneurship, both are
complementary and should co-exist and reinforce each other, but require policy measures and
policy instruments as the distinct paths to explore are necessarily different.
The parable with which we began the final considerations of this article makes us much sense,
it´s a possibility to strength a national reform in poverty. However their capacity for
mobilization is still too weak and targeted to achieve a minimum guarantee for survival.
Therefore, the development of skills and social abilities of citizens in conjunction with an
intervention assurance the minimum living standards will be unequivocally more beneficial
than acting only on the dimensions of one social problem because it will allows, on the one
hand to obtain the desired results in terms of its potential to mobilize and perhaps became an
entrepreneur, and on the other, will allow the resolution of one of the most serious social
problems that Europe faces today, poverty and unemployment.
This concern is well grounded in current political thinking but its discourse must have to be
revealed, also, in the instruments and resources available to social entrepreneurs and social
managers so they can be able to fulfill the dual task and not getting caught in widespread
indications that compromise, also, their performance and long-term social effectiveness of
social entrepreneurship.
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empresário social em Portugal. Coimbra: Centro de Estudos Sociais. Available in
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2011.
Greatti, Li & Senhorini, V.(2000) Empreendedorismo: uma visão comportamentalista. In:
EGEPE – Encontro de Estudos Sobre Empreendedorismo e Gestão de Pequenas
Empresas, 1. Anais… Maringá- PR, out.2000.
Kovacs,I (org) (2005). Flexibilidade de Emprego: Riscos e Oportunidades. Oeiras: Celta
Editora
Lawler, J & Billson, A (2010) Social Work Management and Leadership: Managing
Complexity with Creativity. London: Rutledge
Limpkin, G & DESS, G. (1996) Clarifying the entrepreneurial orientation construct and
linking it to performance. The Academy of Management Review, v.21, n.1, p.135-172.
Mintzberg, H.; Ahlstrand B.; Lampel, J. (2000).Safari de Estratégia: um roteiro pela selva do
planejamento estratégico. Porto Alegre : Bookman.
Morais, C. (2000). Atitudes de Empreendedores: os surpreendentes segredos dos
empreendedores de êxito. Rio de Janeiro : Qualitymark, ABRH-Nacional, 2000.
Oliveira, E (2004). Empreendedorismo Social no Brasil: fundamentos e estratégias. 2004.
Tese de Doutoramento em Serviço Social, Programa de Pós-Graduação em Serviço
Social, Faculdade de Serviço Social, UNESP, Franca-SP
Olivo, S. (2003) Como Entender o Mundo dos Negócios: o empreendedor, a empresa, o
mercado. Brasília :SEBRAE.
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Vasconcelos, D & Franco, J (2011) Inovação e Empreendedorismo. Mais Sociedade in

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Founding or Transforming? Social Intrapreneurship in

three German Christian-based NPOs
Björn Schmitz1 and Thomas Scheuerle2

1, 2
University of Heidelberg, Centre for Social Investment, Germany.
Bjoern.Schmitz@csi.uni-heidelberg.de, Thomas.Scheuerle@csi.uni-heidelberg.de
Abstract. In the increased discussions among scholars about social

entrepreneurship, the definitions strongly emphasize innovation, social change
and social value creation by using economic means. Although researchers´
definitions of social entrepreneurship do not couple social entrepreneurship to the
founding of new organizations, empirical research overemphasizes those leaders
that have started a new venture not long ago, often just studying those
organizations or persons that have been selected by one of the practitioner groups
or fellowship organizations. The effect is a vast neglect of social entrepreneurship
within traditional organizations, what is usually called social intrapreneurship.
Here we present three German Christian-based NPOs operating in the field of
social integration and social services. The paper showcases that there is a vivid,
promising and innovative potential within NPOs that is worth being investigated.
We would like to contribute to a view that refocuses on well-established
organizations as social change agents with high leverage power, high experience
(of practices and markets) and a reasonable acquaintance with risk. A research
agenda will be presented based on these findings.
Keywords: Social Entrepreneurship, Social Intrapreneurship, Non-profit

organizations, Innovation, Risk
Intrapreneurship – An almost neglected perspective in the

discourse on social entrepreneurship
Social entrepreneurship currently attracts a lot of attention among scholars of various

disciplines (Drayton 2002 and 2005, Bornstein 2004, Bishop 2006, Nicholls 2006, Mair et al.
2006, Mair & Martí 2006). But still there is no agreement a common definition (e.g. Mair &
Martí 2006, Hill et al. 2010). There is a wide range of criteria, including innovation, social
change, social value creation, social problem solving or opportunity recognition, but they are
used with different emphasis. When having a look at the definitions, most scholars do not
constrain social entrepreneurship to start-ups. Most researchers are open to both start-ups and
transformations in entrenched organizations; the latter is called social intrapreneurship (Mair
& Martí 2006). In addition, the rise of the social entrepreneur started with research on
13
Founding or Transforming? - Social Intrapreneurship in three German Christian based NPOs
marketization processes within existing nonprofits (e.g. Emerson & Twersky 1996, Weisbrod
1998, Dees 1998).
However, the empirical research overemphasizes leaders that have started a new venture in
the recent past. Also in the social sector it seams like „everybody loves an entrepreneur. The
intrapreneur (the corporate entrepreneur) is not so well known”, as Joel E. Ross (1987:22)
stated for private sector corporations. Moreover the selection of social entrepreneurship cases
for investigation is focussed on those organizations or persons that have been selected by one
of the practitioner groups or fellowship organizations like Ashoka or Schwab, as this is a very
easy and convenient way to find cases. The search for intrapreneurship cases obviously
requires more time. Additionally the founding act is often seen as an innovation itself (Casson
1982); hence start-ups are attractive units of academic investigation. Another reason for
overemphasizing newly founded organizations might be the visibility and engagement of
organizations like Ashoka, the Skoll Foundation or the Schwab Foundation and the selected
fellows of those organizations. As a result of this, there is a vast neglect of social
entrepreneurship activities and innovativeness within entrenched organizations.
According to this shift towards the massive investigation of start-ups, nonprofits still are
considered to be inefficient, ineffective and unresponsive (Dees 2001). Social entrepreneurs
then are the source of new ways to efficiently serve the customer and market needs. As
Drayton (2002) stated: “[nonprofits should become] as entrepreneurial and competitive as
business”. But whether they do so is not investigated properly. Zimmermann (1999)
concludes that the innovativeness – and he emphasises social intrapreneurship activities – of
nonprofit organizations is a field that has not been researched appropriately. And this is not
only true for social purpose organizations. Also for commercial enterprises, the study of
intrapreneurship has been almost neglected (see Seshadri/Tripathy 2006). But most likely
there is an interrelation between start-up activities and social intrapreneurship. As one
interviewee, who is a start-up social entrepreneur, puts it:
„No, they should do that, I just want to say that I do not advocate this form of hysterical
competition, but I believe that a competition, which is constructive at a societal level, contains the
biggest innovation-content we can imagine. I believe if social entrepreneurs – whether social
entrepreneurs recognize the markets in which they are active as such and see for example
charities or governmental organizations as coequal actors -, I believe that they then do better, they
themselves do better. But first of all I believe – because 97 or 98 percent of all social services are
run by the governmental and charities and a maximum of two percent, I presume, are run by
social entrepreneurs -, that social entrepreneurs generate a tremendous pressure towards change,
an innovation pressure on the governmental organizations and the charities. So I believe that if
social entrepreneurs take on that competition, that they contribute best to society. And the goal
should not be: On the one side are those that state that their model is right and the others have to
be destroyed or conquered; and I believe that social entrepreneurs-- because they arise due to the
development of an innovation and an innovation pressure -- they carry the innovation into specific
structures. […] I see it at many places where social entrepreneurs are very active. Then
governmental organizations and charities begin not only to copy, but to outplay them.”
Here we find an interesting gap that leads to two research questions. First: Can we find social
intrapreneurship within entrenched organizations and is it different from social
entrepreneurship start-ups? Second: What is the relationship between social start-ups and the
innovativeness of entrenched organizations? To sum up, shall the research focus just on
founding or on transforming or on both with respect to their relationship to each other? Our
main intention here is to showcase that, especially in Christian organizations, where one
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ISSN 2224-9729
would not expect flexibility or a high degree of avant-gardism, social intrapreneurship is

detectable.
The paper is structured as follows. We start with an overview of different approaches to a

definition of social entrepreneurship to come closer to the core of the construct. The main
criterion is seen as innovativeness. Then we derive a conception of social intrapreneurship
from existing literature. This conception is the baseline for our investigation of three cases of
very old and big Christian-based nonprofits in Germany. The results in the discussion section
reveal that the cases chosen show strong characteristics regarding the social intrapreneurship
dimensions, namely innovativeness, proactiveness and risk. Finally, implications for further
research are given in the conclusions.
Social Entrepreneurship – A contested concept
At present there is no clear definition of social entrepreneurship (see e.g. Mair & Martí
2006, Hill et al. 2010), which is a combination of entrepreneurship with the prefix social. In
traditional definitions of entrepreneurship we find a variety of different elements. First,
Richard Cantillon defined an entrepreneur as follows: “Without an assurance of the profits he
will derive from his enterprise” (Cantillon 1964). Cantillon emphasizes value creation in a
capitalist society. Like Jean Baptiste Say (1803, 1829), he points to the risk-taking character
of an entrepreneur. For Say the coordination of production factors and the implementation of
new and better procedures are essential to an entrepreneur. Efficiency and effectiveness are
also guiding features.
Apart from these two authors, the most powerful and influential definition of entrepreneurship
comes from Joseph Schumpeter (1993). For him an entrepreneur is someone who makes
knowledge and dreams vivid in reality, while not necessarily being an inventor. He is an
innovator in the sense that he destroys and at the same time renews processes and structures.
The term creative destruction is often used by authors referring to Schumpeter.
Contemporary approaches add different elements to these traditional definitions. Peter

Drucker (1993) values an entrepreneur as someone who sees and uses opportunities given.
Entrepreneurship for Drucker is characterized as economic value creation where there was
nothing before. This inventor perspective is being used in many understandings of social
entrepreneurship. Imagination and creativity as well as implementation are seen as essential
criteria to distinguish entrepreneurial management from classical management.
Hans Jobst Pleitner (2001) gives a list of characteristics being found in the various
entrepreneurship definitions, including the use of opportunities, taking risks, coordination of
resources, generation of jobs, development and exploiting of innovations, and value creation.
Pleitner is one of the few who defines entrepreneurs as founders of new organizations. Even if
the concept of entrepreneurship does not necessarily refer to the founding of new ventures,
the term intrapreneurship was introduced to express the necessity of innovations in older
organizations due to keep up with the speed of change in modern societies.
When turning to social entrepreneurship, the literature refers to these authors in search of
defining features of the entrepreneurial part of the term (Dees 1998). Proactiveness and
opportunity-seeking, innovativeness and acting boldly are identified by Dees as the central
15
features. The social part of the definition is added because of the social mission an
organization has and the accountability to the constituencies being served (Dees 1998). But
the definitional work on social entrepreneurship is everything but clear. Many schools of
thought can be differentiated.
Dees & Anderson (2006) distinguish between two schools and call for a clear dividing line
between the two. First, the social enterprise school emphasizes earned-income strategies to
serve a social mission. Second, the social innovation school focuses on “establishing new and
better ways to address social problems or meet social needs” (ibid: 41). Dees (2003) and also
Martin and Osberg (2007) criticize a dilution of the concept of social entrepreneurship.
Innovation and social impact are claimed as the central point of social entrepreneurship and
not earned income (Dees 2003). By contrast, Defourny & Nyssens (2010) have argued that
there is more convergence between these two schools of thought and less divergence. Thus
the schools of thought have much more in common than expected, and the dividing lines
between them are not that clear at all.
A conclusion we draw so far is that social entrepreneurship is still a highly contested concept
among scholars, but it is also contested among practitioners in the field. This is because each
of them has its own agenda and goal, which makes them see social entrepreneurship in a
specific light (see Nicholls 2010). This might also be due to the fact that the literature used for
grouping the concepts are often highly divergent, and there is little overlap.
As the criteria used for social entrepreneurship definition are very diverse and the relation
between them remains unclear, we try to filter the core characteristics of social
entrepreneurship and intrapreneurship here by analyzing key criteria of given definitions in
existing conceptual papers of the leading scholars and practitioners in the field, which are
most often referred to in the academic discussion. Here we just focus on the basic definitions
of the authors. This approach is justified by the presumption that the criteria given in the very
core definition - within only one to three sentences - include the essential ones. All other
criteria and constructs used in the texts are seen as peripheral and are used for explanatory
purposes. Table 1 shows the result of our analysis of 30 of the most relevant references.
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Diffusion and Scaling
Double bottom line

Sustainability and
Social goal, social
pattern breaking
Entrepreneurial
Entrepreneurial
Mobilization of
Innovativeness
Improvements
Efficiency and
Social change,
value creation
spirit (traits)
durableness
resources
means
Waddock & Post (1991) √ √
Leadbeater (1997) √ √ √ √ √ √ √
Prabhu (1999) √ √ √ √
Brinckerhoff (2000) √ √ √ √ √ √
Fowler (2000) √ √ √
Thomspon, Alvy & Lees
√ √
(2000)
Dees (2001) √ √ √ √ √ √ √
Alvord, Brown & Letts
√ √ √ √ √
(2002)
Hibbert, Hogg & Quinn
√ √ √
(2002)
Boschee & McClurg
√ √
(2003)
Caloia (2003) √ √
Mair & Noboa (2003) √ √ √ √
Mort, Weerawardena &
√ √ √ √ √
Carnegie (2003)
Barendsen & Gardner
√ √ √
(2004)
Bornstein (2004) √ √ √ √ √
Fueglistaller, Müller &
√ √ √ √
Volery (2004)
Drayton (2005) √ √ √
Kramer (2005) √ √ √ √ √
Mair & Martí (2005) √ √ √ √
Light (2005) √ √ √ √
Austin, Stevenson &
√ √
Wei-Skillern (2006)
Cho (2006) √ √
Nicholls (2006) √ √ √ √ √ √
Perrini & Vurro (2006) √ √ √ √ √
Robinson (2006) √ √ √ √
Achleitner, Pöllath &
√ √
Stahl (2007)
Martin & Osberg (2007) √ √ √
Zahra, Gedajlovic,
Neubaum & Shulman √ √ √
(2009)
Ashoka (2010) √ √ √ √ √
Hill (2010) √ √ √ √
9 9 7 17 10 7 7 27 15 9
Table 1: Overview of definition criteria on social entrepreneurship of various authors
17
The table reveals a strong emphasis on social goals or social value creation being an
important part of 27 of the 30 definitions analyzed. Innovativeness has 17 counts followed by
15 counts for social change or pattern-breaking ideas, which are also related to innovations.
We have left aside some criteria that had only a marginal number of counts. Astonishingly,
only two authors mentioned risk-taking being a core criterion of social entrepreneurship. As
we can expect entrenched nonprofit organizations to strive to reach social goals, we especially
focus on innovativeness in the cases presented below because innovation is to be seen as the
centre of most social entrepreneurship approaches.
Social Intrapreneurship – Entrepreneurship within Nonprofits
Tom Peters and Robert Waterman (2004) wrote in their book In Search of Excellence
that one of the most discouraging facts of big corporations is that they have lost what got
them big: innovation. This is due to the fact that complexity grows when an organization gets
bigger, and along with that process it becomes more bureaucratic. There are several barriers to
innovativeness within entrenched organizations like size, lack of communication, internal
competition, high costs of failures, idleness or hierarchies (see Malek & Ibach 2004).
Organizational stages models are based on this assumption, too. Larry E. Greiner (1972,
1998) and Cuno Pümpin and Jürgen Prange (1991) argue that organizations lose their
flexibility and innovativeness when they grow and age.
However, for Greiner (1972: 44) the fifth phase in evolutionary organizational development
leads to a “heavy pressure for innovative solutions”. “When Giants Learn to Dance” by
Rosebeth M. Kanter (1989) describes this innovativeness in organizations that were big and in
which therefore no flexibility and dynamic within these organizations was expected or even
thought to be possible. Big corporations can become innovative again when fostering
intrapreneurship and the supporting organizational culture (Ross 1987).
The concept of intrapreneurship can be traced back to an article published by Norman Macrae
(1976) in The Economist. Originally the idea was to express competition structures within
organizations and how to foster innovations (Nielsen et al. 1985). Intrapreneurship then has
been conceptualized as a cause of innovativeness (OĆonnor & Rice 2001; Gapp & Fisher
2007; Pinchot 1983, Rodriguez-Pomeda et al. 2003, Kuratko 1993), competitiveness
(Jennings et al. 1994; Pinchot 1985), and organizational renewal (Brunaker & Kurvinen 2006;
Duncan et al. 1988, Kenney & Mujtaba 2007) and as a way to survive hard economic phases
(Singh 2006).
The main advantage of intrapreneurs is the possible usage of resources and infrastructure of
the existing organization for innovation purposes. Entrenched organizations often can better
balance the risk that goes along with innovativeness. Both things are closely related to each
other, while a higher degree of innovativeness is related to the potential growth. Furthermore
the organizational risk is increasing (Malek & Ibach 2004).
Research has shown that some organizational features like organizational culture,
organizational structure and the leadership of an organization can foster an intrapreneurial
process (Colvin & Slevin 1991; Horsby et al. 1993; Ireland, Covin & Kuratko 2009). Hornsby
et al. (1993) describe intrapreneurship as a process that focuses on an individual actor and is
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the result of organizational and individual characteristics. Organizational characteristics are

management support, autonomy and work discretion, rewards and reinforcement, time
availability, and organizational boundaries. Individual characteristics are risk-taking
propensity, desire for autonomy, need for achievement, goal orientation, and internal locus of
control (ibid.). In a volatile and uncertain market environment building an intrapreneurial
organization can serve as a strategy to survive (Kao 1991).
These studies are written from a business perspective, aiming at identifying factors that help
explain what makes organizations most successful in business terms (e.g. Kuratko et al. 1990,
Zahra 1991, Carrier 1994, Carrier 1996). As the success of organizations in the social sphere
is expressed in different and more complex social terms like well-being, satisfaction or
increased recognition of marginalized groups, the applicability of these business concepts to
the social sphere lacks validation and has not been attempted by scholars yet.
But nonprofits are also acting in increasing uncertainty. A body of research is reflecting
changes in entrenched nonprofits. Here the discourse is connected to managerialism,
marketization or commercialization (Emerson & Twersky 1996, Weisbrod 1998, Dees 1998,
Young & Salamon 2003, Dart 2004). Social intrapreneurship, understood as social
entrepreneurship in entrenched organizations, often refers to not-for-profit initiatives that aim
at searching for alternative funding strategies (Austin et al. 2006, Boschee 1988). One
definition characterizes social intrapreneurship as individuals working within a bigger and
already established corporation or organization and developing practical solutions to social or
environmental challenges. As well, people who apply the principles of social entrepreneurship
which we have listed in table 1 within an existing organization are known as social
intrapreneurs (SustainAbility 2008). Those actors can use and leverage existing
infrastructures and organizational capabilities (Brenneke & Spitzeck 2010).
Mair and Martí (2006) state that there is no clear dividing line between social entrepreneurs
and social intrapreneurs. Both concepts refer to traits and/or innovative processes and
solutions to social problems. Entrepreneurs and intrapreneurs are defined by “applying an
entrepreneurial skill-set such as being innovative, proactive, action-oriented, creative, and
courageous to bring about an innovation. Also as they have to facilitate communication and
interaction with sponsors, employees, customers and other stakeholders, social skills such as
networking, emotional intelligence, working across sectors, boundary-spanning and
leadership have been attributed to them” (Brenneke/Spitzeck 2010; see also Hemingway
2005; Moore & Westley 2009).
To sum up, the literature reveals a huge amount of features of entrepreneurship and
intrapreneurship in the business sector; so does social entrepreneurship and social
intrapreneurship literature. For our analysis of social intrapreneurship in Christian-based
nonprofits, we see five features most recognized in the literature. First, there needs to be a
social goal that qualifies organizations as socially active. Second, there is a structural
entrepreneurship feature related to earned-income strategies. Third, there are three
behavioural entrepreneurship characteristics, namely innovativeness, risk-taking and
proactiveness. Innovativeness can be described as the introduction of new ideas for products,
services or processes. Risk-taking is the willingness to carry the risk and accountability for
failures. Proactiveness is the ability and drive to search and exploit opportunities (Lumpkin &
Dess 1996). We included risk-taking here, even if it is not often mentioned in the definitions
of social entrepreneurship. But risk-taking is especially stressed in the literature on business
entrepreneurship and can be seen as an important feature of the concept of social
19
intrapreneurship. We speak of intrapreneurship instead of entrepreneurship in cases where the

organization is not at an early organizational development stage. Instead the organization is
mature and faces the obstacles deriving from growth and age.
Figure 1: Social Intrapreneurship Analytical Framework
Method
Our underlying data base consists of three in-depth interviews that have been
conducted in all of Germany in 2010 and the first half of 2011. They belong to a universe of
45 interviews with founders and chief executives of social enterprises and hybrid
organizations. Besides the interviews, we conducted desktop research on the respective
organizations.
The organizations have been selected through various methods of purposeful sampling (see
Patton 2002). This popular method in qualitative research is often used in an exploratory
research approach. We focused on two specific types of purposeful sampling, the maximum
variation sampling and the homogeneous sampling. In terms of the maximum variation
sampling the organizations´ legal status encompasses associations, foundations, “non profit
limited companies (gGmbH)”, corporations, cooperatives and even a for-profit company.
Other cases, including the three organizations presented in this article, were chosen by using
the homogeneous sampling method. In the overall sample they make up a small group on their
own but nevertheless have a strong influence in the discourse on social entrepreneurship as
they challenge the hypothesis that “in recent years social entrepreneurship has emerged as a
global phenomenon” (Nicholls 2006: 2). The organizations in question were founded between
the 2nd half of the 19th century and the 1st decade of the 20th century, so they have been in
existence for more than 100 years.
In recent years the acceptance of a rather inductive research approach has gained in
prominence, closely intertwined with the emerging focus on qualitative data during the last
decades. Several authors emphasize the valuable contribution that case studies can provide for
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ISSN 2224-9729
comparative and exploratory research (Eisenhardt 1989, Flyvbjerg 2011). Especially Flyvberg
underlines the complementary character of case studies as their strengths consist of empirical
depth, a high conceptual validity and a better understanding of both the context and the
reasons for a phenomenon (see Flyvbjerg 2011). So the assertions drawn from case study
research can be considered to be as meaningful as quantitative data, and sometimes they even
help to sharpen or correct theoretical assumptions.
What is more, the development of grounded theory methodology (for the beginning see
Glaser / Strauss 1967) has especially contributed to an increased analysis of qualitative social
research and a closer involvement of the relation between theory and empirical data. The
founding fathers Glaser and Strauss “argue (…) for grounding theory in social research itself
– for generating it from the data” (Glaser / Strauss 1967: VII), as this approach is especially
suitable for an exploratory research design within a slightly known area and depicts a mutual
oscillating process between extrapolating empirical data and theoretical reflection.
Based on this condition the approach and methods used are well defined for exploring the
fuzzy landscape and discourse of social entrepreneurship and, likewise, intrapreneurship
organizations.
Three Case Studies of Christian-based Nonprofit Organizations
Stiftung Liebenau
The Stiftung Liebenau was founded in 1870 by Chaplain Adolf Aich with the intention
to give refuge to people with severe hardship, especially those with mental diseases, but also
elderly people and younger people with special educational needs. The spectrum of tasks
varies widely but is arranged around the pillars of housing, education and jobs close to the
residence of the target groups, as well as health care. Today approximately 6000 people work
for the Stiftung Liebenau. A total revenue of more than 257 million Euros was generated in
2010. The Stiftung Liebenau was restructured as a holding company in 1995 with 2500
employees at that time.
Stiftung Liebenau offers a very broad spectrum of services. One of the biggest challenges for
the foundation is that, for some new service ideas, there is no public funding existing.
Moreover this has forced some adaptation of legal forms of the subunits belonging to the
Stiftung Liebenau; while some can be run as a for-profit, limited liability company, others
have to be run as charitable non-profits. Innovativeness was needed for the foundation to find
an appropriate fit between the needs of disadvantaged people and the legal framework
offering funding for specific services.
“[…] we work very refined and not every service, let’s say it that way, is mapped with a
refinancing, by the social funds, payers, welfare agencies. That means we had to fit new offerings
– of which we have seen the need for – into the existing service agreements.”
Often that had led to creating a new service type. For example, a parents-and-child house was
opened up to also treat the parents of a child in need. That issue arose in response to the need
to keep children close to their families. Other examples are forms of transgenerational
21
housing. Since there is no governmental funding for this service, these housing forms are
financed by cross-subsidization.
As a rule, the organization refuses to cross-subsidize, but in some cases it does it on purpose.
To avoid cross-subsidization each subunit is operating independently; a temporary loss will be
compensated but a permanent loss in some cases has led to a shutdown of units. Capital
preservation is central to the foundation to keep its autonomy and acting capabilities. In some
cases the cross-subsidization is done for at minimum two reasons. First, there are services that
are very closely related to the mission of the organization. Because they represent an
important part of the organization’s identity, they will not be given up, even if there is no
refinancing structure available and will never be. Second, some cross-subsidizing is intended
for a defined episode, e.g. social engagement in Bulgaria. The intention in this case is to
influence local social politics maybe to that extent that social funds will be provided for the
services offered by the network of organizations the Stiftung Liebenau is involved with. This
could lead to additional funds in the future.
The size and degree of internationalization helps to generate and transfer local and practical
knowledge. Additionally it helps to work across fields and to build bridges between them, e.g.
to bring together nursing homes and disabled people care. A bigger organization is able to
cope with complexities that go along with the organizational size and to find a way through
this mess of institutions and decision makers; at least it is able to build bridges between these
entities.
The organization characterizes itself as being very innovative but self-reflexive and self-
critical in whatever it does. As one of the commercial executives puts it:
“By far we do not do everything right. I believe we make many things very properly, but we are
truly very adaptable also.”
To gain a climate of innovativeness within the organization, the degree of independence has
been emphasized. Also important are the employee selection process and an organizational
culture advocating a climate for generating and testing new ideas. Unconventional thinking is
more than allowed, and new ideas – whether from the governing board or not – are tested at
small scale. The employees - especially managers - are given a far-reaching freedom; they are
supported by coaching, advanced training and staff development meetings. The organizational
climate was termed as “appreciation culture” and “recognition culture”. “…[G]ood ideas are
given the chance to be implemented.” Sometimes new ideas fail, but more often trying out
innovations helps the Stiftung Liebenau to stay flexible and self-reflexive, reacting to market
changes and adapting proactively and as early as possible as well as creating social change
itself.
To initiate new projects and organizations, the foundation often runs a network approach. A
project is funded and run together with other organizations. Here the sharing of project costs
is an important argument that also leverages the risks for each of the members being involved.
Furthermore these networks are creating some kind of pressure for each partner that helps to
strengthen the commitment to the project. Also networks with partners are used to open up the
door into new markets. Often there is no chance for the organization to run a new project or
organization – especially abroad – without local partners. In some cases where other
organizations tried exactly that, they failed. Often government ministries and social funds
require that a network of several organizations run a service together; otherwise the funds
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would not be given to anyone. As a result new organizational forms will be created then.
These network approaches have changed the structure and processes of the organization.
“Well, from an organizational point of view that means that we have developed ourselves from
‘doing it ourselves’ to ‘doing much within networks’.”
Newly founded social organizations like social enterprises are interesting partners for the
Stiftung Liebenau too. But often a partnership is hard to establish. The foundation could
provide funds and knowledge as well as risk leverage for those young organizations, while the
new organization is flexible and maybe has an innovative idea. But the main constraint and
prejudice of the new organizational leaders is becoming dependent on the Stiftung Liebenau
and that the foundation might take over the smaller organization. Additionally the decision-
making processes within the Stiftung Liebenau take longer than in smaller organizations,
where regularly the leader decides as a single person without asking a supervising board.
Rummelsberger Dienste für Menschen
In 1904 the property Rummelsberg was bought by the Landesverein für Innere
Mission. The work with physically handicapped people started twenty years later. The
Rummelsberger Dienste are a major operator of the Diakonie in Bavaria. Currently 202
services are offered in hospitals, child and youth houses, facilities for assisting persons with
disabilities, nursing homes, schools and training centres. Today the Rummelsberger Dienste
employ more than 5400 people and have revenues of around 200 Million Euros. The
organization faced a severe crisis in 2007 and 2008 due to investigations of the former
executive, who was charged with personal injury and convicted. That has created severe
damage to the organization’s reputation, which is now slowly being regained. Nevertheless
the organization, big as it is, has to meet the challenges of budget cuttings and to find a good
balance between qualified services, efficiency and its own mission and goals. The main
connection is the work according to Biblical principles.
As an organization with a huge spectrum of different services for disabled people of all ages,
the organization is struggling with the variety of social laws that have differing criteria
depending on the age of the person. As a result each phase of an individual’s life has to be
treated differently from a service and funding perspective, even if this does not make sense in
relation to the person’s need. Therefore permanent adaptations and innovative fitting
measurements are needed. The integration of the different fields of services and assistance is
one major challenge. As the executive puts it:
“When we start there where we should operate, i.e. people that come to us, the person has a
problem and it is not of interest to him whether it will be billed according to social law § 4, 5 9,
11, 12 or whatever. We experience that from a historical perspective, like many others also, this
thinking in segments, where an adolescent until eighteen is in the youth care and with eighteenth
birthday gets the chop and is out of the system, whereas his problems still exist, is not suitable.
This person does not have a job, will become a criminal and enters another system that is the
penal system. So we should assist him getting a job, giving him a chance for the future, without
looking at his age. This would be much more efficient for society. Or a disabled person in higher
age. There is no real difference between a handicapped person in the age of 75 and an elder
person in the age of 75, who has, lets say, a mental handicap. Nursery needs the same
qualification, but we differentiate between the segments. In principle this is total nonsense, but
from the refinancing perspective this is required […]. This is also our task that we have, to
facilitate communication and integration between the segments.”
23
To build a bridge between the different segments within the organization, the communication
processes have changed over the past few years. More meetings and conferences were held,
but still the decision making processes take longer also due to the structures within the
Evangelical church. This causes a deep reflection process but decreases the flexibility and
speed of the organization. But apart from these points a big advantage of an organization of
such a size is the possibility of building networks between the segments. On the other hand a
smaller organization that does not have such a range of widespread facilities often has deeper
roots into the community and the political institutions. But the Rummelsberger Dienste
benefit from their size and services being provided at several spots. First, some services like
the youth aid and the work with disadvantaged people cannot be operated on a regional level
only. Also the communication with regional political partners does not help, when the
decision power is one or two levels above. A bigger organization has the ability and power to
search for a dialogue on those levels. Second, ideas and services are more easily transferable
and the possibility of spreading new ideas quickly is given. Furthermore each unit can learn
from the other as long as the communication processes are appropriate. Third, often the
quality cannot be reached by a smaller organization.
“[…] in a centre for mentally disabled people or in a centre for physically disabled people […]
one cannot do it on a small-scale level; you will never get the quality. At the moment there is an
ideology that is called ‘small is beautiful’, but this destroys the bigger social service
organizations, the big entities, but this is not convincing in my eyes.”
As an example for ensuring a high quality standard in all subunits, the Rummelsberger
Dienste employs a central special qualified person for nursing, who is checking all subunits
on a regular basis and gives advice and support. But beneath these advantages the
organizational executives are critical concerning the size of the organization. “Size does call
for a bigger overhead that has to be financed. Well, size is no value in itself.”
But revenues from some units will be reinvested in other services and operations that generate
insufficient revenues to cover costs or no revenues at all. Cross-subsidizing is done
intentionally because such services are closely related to the organization’s mission and
because they are beyond any existing solutions. Often those initiatives have been innovations
in the initiating phase. For example, the Rummelsberger Dienste do refugee work for not
otherwise supervised children under 16. Also prevention measurements like streetwork
programs are covered by revenues from other units up to a specified amount. Like the Stiftung
Liebenau, the Rummelsberger Dienste is testing alternative housing concepts where disabled
and non-disabled people live together in an apartment-sharing community. For those
programs no funds were given from the government, but the results of these approaches are
manifold. Another example is the opening up of a music school. All partners argued against
this service, which was not seen as adequate for modern times and others warned against cost
risks. But the music school runs without deficits, a feat which has not yet been achieved by
any governmental music school.
Stiftung Hephata
Since 1859 the Evangelische Stiftung Hephata has provided living, working and
education opportunities for people with mental disabilities. Today, the foundation is one of
the biggest service and work integration organizations in Germany. Being the first
organization caring for people with mental disabilities, the organization is convinced of the
abilities of such persons and that those often left aside can contribute positively to the
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development of society. From a modern perspective the foundation was very progressive, in
the beginning being supported by several Evangelical entrepreneurs and the Order of Saint
John. The foundation lays great emphasis on education and the support of people with
epilepsy. It went through tough times in over 150 years but remained self-reflexive, stating
that it is not without “Fehl und Tadel” (not perfect in all respects). Still, Hephata is an
organization that grows steadily and pursues an international expansion strategy. Currently
the foundation employs more than 2600 people with handicaps in 27 cities and towns in North
Rhine-Westphalia (Germany). Over 130 agencies offer services in the fields of housing,
working, education and consultancy.
In the mid-1990s the foundation went through a severe crisis of its own making due to
exorbitant overhead. The crisis was a chance for a new beginning; the products and services
were adjusted to new customer needs because the old offerings were not adequate to changed
times and demands. The organization began to turn a profit, which helped for preserving and
investing for further growth. Having learned from this, the foundation today is economically
healthy and still critically reflecting on its actions. The stakeholder engagement according to
the new St. Gallener Management Model is implemented to detect changes in the
environment and new needs that could lead to adjustments of the offerings and also the
development of new products and services.
Among the new services offered are new forms of housing. Instead of keeping people with
mental diseases away from the rest of society, living in active neighbourhoods is the new
model. The clients can live in smaller accommodations. But this is just one example of the
innovativeness of the organization:
“Every 3 to 4 weeks we open up something new. It is like you said before: What is strategy for
others is business as usual to us. New construction or something like that is happening
permanently. And there we have introduced a new development, which has been recognized in
every respect. Not everyone was happy with that; we have crashed with a lot of tenets […].”
In an initiating phase the organization has to be entrepreneurial in the sense that the new
social ventures are operating outside of any state funding structures. Later on, this venture
might cause a change in the system structures so that the venture’s operations become funded
or partly funded by the state with all advantages and disadvantages going along with this. This
entrepreneurial process, which some current and younger social entrepreneurs are facing, has
been experienced by those entrenched organizations many times in their history and are part
of their entrepreneurial self-image. Today Hephata is more entrepreneurial than ever before
while seeking proactively new ideas and markets.
The new approaches of Hephata have irritated what was common sense and general principle
of Diakonie. In a functional way they were dramatically unusual. As a result, Hephata felt it
not well represented by the associations they were traditionally connected to. Therefore new
networks have been developed, especially the Circle of Brussels. Apart from the lobbying
function of this association, the network has helped different social service providers to
exchange information and experiences as well as initiate new joint projects. Due to the focus
on more efficiency and economic metrics, the organization had to constantly build a bridge
between different spheres, internally and also with external partners. This has led to a
different thinking and an entrepreneurial style of running the organization. Instead of shutting
down services that make permanent deficits, Hephata is taking responsibility for the
25
employees by checking the innovation potential that is available within the organization. And
innovations have become a central part of Hephata.
“[…] we live from innovations, we make our money with new offerings. Clearly, if something is
copied by many others, there is a price competition and the conditions diminish. If one can act
with something new, the margins are much comfortable; this is why we always have to be in front,
to keep an advance to the others. Then we have one, two, three years time to earn good money
from it until the others copy this and then we have to have an advance in other fields. […] The
discussion of efficiency is necessary but it doesn´t help out of the ailing system of social aid.
Whether one wants to make a breakthrough, one has to position with really innovative concepts,
totally new ideas that are above the trend.”
For constantly initiating new programs, it helps Hephata to have a solid revenue stream and
significant power due to the size of the organization. Hephata then is an innovator, the creator
of new ideas and the initiator of these ideas in reality. At the same time Hephata is
permanently scanning the social sector for new organizations coming up with innovations.
Sometimes the ideas will be adopted and adjusted and – if successful – disseminated. The
executives see this as a central point in the strategy of Hephata. And the new ideas coming up
are not from the board only. Often normal employees bring forward new project ideas. Often
starting small-scale, projects costs of e.g. 50.000 Euros can be compensated easily. Risk
leveraging is possible for Hephata. One example of a successful innovation is attended
parenthood, where disabled parents who have a child get assistance. A small profit each year
is important to have flexibility in reinvesting in new ideas and in organizational growth. Also
cross-subsidizing is practiced by Hephata. Some fields were financed because of image and
marketing considerations. For example, a curatorive child day-care centre is deployed to
introduce young people as early as possible to the organization. Another service are schools.
These make deficits continuously. This is predominantly due to the law which is
conceptualized in regard to expected losses of schools.
The decision-making processes within Hephata are very quick in comparison to the slowness
expected due to the size of the organization. That helped to transform the organization very
quickly within the last decade and keep the organization acting flexibly. The successes of the
past helped the board to convince internally and externally with new ideas. But this does not
mean that no discussion takes place. Most important to Hephata are good working
relationships that facilitate a climate of constructive dispute.
“[…] even if we are sometimes itching to get to a decision very quickly, we realize that the time we
think we might be saving now will have to be invested later because we have not made the decision
well and do not carry it together.”
Findings and Discussion
The organizations we present here are all classic nonprofit service providers. All of
them have more than 100 years of organizational history. From a development stage
perspective, all of the organizations analyzed belong to the group of mature and also big
organizations in comparison to the normal size of other organizations in the field.
Interestingly, the presented organizations were all structured as a holding company. This has
been promoted by structural changes of the welfare state and the social and charitable law,
tariff and fiscal reasons, and a development towards markets, i.e., offering services that will
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be purchased by third parties to gain independence from volatile and constantly shrinking
governmental funds.
Social Goal Orientation
The cases are social service providers active in the Third Sector. Their social goal is to
foster the inclusion of marginalized groups into society. To pursue this task is becoming
harder in times of shrinking governmental funding. In this respect the cases show increased
features of hybridization in terms of commercialization and earned-income strategies. Cross-
subsidizing for services is a common feature. Loss-making organizational units are supported
by profits from other units when they are closely related to the mission. Sometimes cross-
subsidization can also be expected to be done for the intent of entering and developing new
markets. In sum, these measures help to stabilize the organization.
Earned-Income Strategies and Being Business-like
In recent years the organizations have undertaken considerable effort to find new
opportunities to generate earned-income. New organizational units are often evaluated against
their potential for being funded independent of governmental funding structures. This has
changed the character of the services. Often we find activities that would be classified as
work-integration, generating income from the sales of products and services produced by
disabled people, offering these groups spaces for inclusion and participation. What is more, to
balance social mission with financial monitoring, the managerial board contains a mix of at
least one commercial director and one clerical director. Stiftung Liebenau also employs a
lawyer as a third managerial director. Hence, financial monitoring introduced business styles
into the organizational operations. Sometimes loss-making units are closed, while cross-
subsidizing is limited to specific tasks.
Innovativeness
Changed government funding patterns have hit the organizations analyzed since the mid-
1990s. Furthermore, there was a great pressure to separate charitable and commercial
activities into specific organizational units. These changes forced the entrenched
organizations to be more innovative. And most of the innovations were created with a hybrid
character, combining social goals and commercial and/or economic means. The independence
from the state funding has now somehow turned to greater dependence on volatile markets,
which force the organizations to be more flexible, competition-oriented and customer-
oriented.
A high degree of innovativeness could be detected for all of the cases; but especially the
Stiftung Liebenau and Hephata are avant-garde in their field, while the Rummelsberger
Dienste are struggling with an executive scandal in the recent past. Innovation in those
entrenched organizations seems to be different from innovation of start-ups. The specific
innovative moment is neither the founding act nor the unique idea that led to the
organization’s founding. What we found here is a continuous innovative process.
Proactiveness
The organizations do not wait for new funding cuts to occur or markets to change.
They actively seek out new business opportunities and monitor their environment regarding
27
important changes. The organizations do not stop being innovative, but rather come up with
new ideas and implement them on a regular basis. This is normal business to them and
necessary to survive. Interestingly, new ideas do not come exclusively from board members.
Even more, the organizations have developed an innovative climate to stimulate employees to
come up with new ideas. This is a clever strategy to overcome functional unit thinking and to
increase motivation. A good organization is allocating innovative forces in a decentralized
way.
This proactiveness in searching for money-making strategies is a means to survive and to

generate funds for future investments. Though cross-subsidizing is not a favoured option,
entering new markets is a reason to do so. Most interestingly, new markets are developed
outside of Germany. Although service providers are often viewed as nationally bound,
internationalization is a common strategy for these organizations, at least to leverage the risk
of national legislation changes.
Risk-Taking
What helps most for initiating innovations continuously is a strong financial basis. A
failed innovation or project will not cause the shutdown of the whole organization. As
postulated in the literature, a big organization can use its infrastructure, funds and knowledge
to help reduce the risk of being innovative. As pointed out by one executive, a failed
implementation of a new idea can be compensated for because a successful new idea can be
spread to many sites quickly to generate profits. Anyhow, implementing new ideas and being
continuously innovative increase the risk of causing too many failures which devour the
financial basis piece by piece.
We conclude that the cases presented can be seen as social intrapreneurship, but not focussing
on a single person being the social intrapreneur. Rather the structuring and management style
of those organizations lead to the spread of innovation power among the whole organization.
What astonishes more is the fact that all of these organizations were Christian-based, where
one would not expect innovative decision-making processes being available. Rather one
would think these organizations would be inflexible and deadlocked.
Conclusion
In this paper we presented the cases of three Christian-based non-profit organizations

in the service-providing field to analyze their intrapreneurship power. On the basis of an
extensive literature review, our analytical framework included the following criteria: social
goal orientation, earned-income strategies/business-likeness, innovativeness, proactiveness,
and risk-taking.
It is most important to stress that two innovation drivers could be identified. One is the
challenge of changing government policies and shrinking government funding, which is
acknowledged as a driving force behind turning many nonprofits into more efficient and
earned-income driven corporations, as the early literature on social entrepreneurship has
stated (e.g. Weisbrod 1998, Emerson and Twersky 1996). What is more, we have seen that the
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conceptual dividing line between innovativeness and earned-income models is really thin
(Defourny & Nyssens 2010).
But furthermore we find newly founded organizations to be an innovation driver for

entrenched organizations. Nevertheless, the presented cases show that these organizations do
not wait for innovations to be initiated by other organizations. They become more innovative
in their structures and processes as well as their products and services independent from other
forces. Thus, a proactive innovation climate can be detected in those organizations as well as
a proactive search for market opportunities especially in an international perspective.
Appropriate monitoring instruments are implemented to screen the environment for relevant
changes.
For social entrepreneurship research there are at least two tasks ahead. The first task is to
bring the innovative, flexible behaviour of entrenched organizations (social intrapreneurship)
back into focus and to overcome the speculation that all entrenched organizations are
unresponsive and inflexible (Dees 1998). Second, research needs to find a qualitative value
for innovation. This means differentiating between a stronger type of innovation and a weaker
one. That would mean to differentiate the innovative potential of an organization in regards to
the fulfilment of their social goals. The strength and potential of an organization for social
innovation needs to be measured.
Often these older non-profit organizations do even more than just service provision and
bringing forward new services in the service-providing field. What were also interesting to
see are the advocacy and communication structures internally and externally. This function is
not recognized by social enterprises of a new type. Like Defourny and Nyssens (2010: 45)
said: “…[S]ocial enterprises, unlike some non-profit organizations, are normally neither
engaged in advocacy, at least not as a major goal, nor in the redistribution of financial flows
(as, for example, grant-giving foundations) as their major activity; instead, they are directly
involved in the production of goods or the provision of services on a continuous basis.” The
cases presented here were very active in advocacy work as well as in contributing information
to legislative processes.
Researchers should come up with more cases on social intrapreneurship, and a more
elaborated analytical framework for doing so should be developed. An interesting starting
point for investigation might be our table of definitional criteria and the attempt to analyze
social intrapreneurship in nonprofits regarding earned-income, innovativeness, proactiveness
and risk-taking. Complementary to that, these features should be tested with the same
indicators as start-ups for comparison purposes. This might help to get to a better
understanding of different types of social entrepreneurship.
The use of role models might also be helpful. A starting point here could be Ralph M.
Kramer´s (1981) functional role model. The heterogeneity of the field can be seen better then,
and the dividing lines between different organizational models can be overcome. There is no
reason to overemphasize newly founded organizations. It is more adequate to keep in mind
transformations and the contributions of well-established organizations. Those are the major
players that should not be neglected and should be more portrayed regarding their role in a
broader environment where institutional changes occur permanently. As a result one could
better cluster the field and see the overlap among the roles, and thereby stop underestimating
some organizational forms among others.
29
During this battle, older organizations are in danger of being overlooked in the landscape, but
research has to recognize those players even more as being innovative and draw a broader and
more realistic picture of innovative behaviour. We wanted to show that social intrapreneurial
behaviour of entrenched organizations is available, should not be overlooked, and is worth
investigating.
Therefore we suggest that further research should focus on:

• Strive for clarity on the term social intrapreneurship.
• What does innovation mean in relation to intrapreneurship? Are there other forms of
innovativeness that can be distinguished? Do the different forms of innovation show
coherence? Do they differ in terms of the way they emerge?
• What role does risk-taking play in the field of social innovation? Older organizations
might have an advantage due to risk-leveraging through income streams from other
services.
• What exactly is the relationship between start-ups (founding) and entrenched
organizations (transforming) within the field? What are the important criteria and
dimensions here? Can we find isomorphism within the field and which type or types?
What are the implications for policy makers?
• How strong is the necessity of innovativeness within the third sector? Does innovation
serve as the new buzzword? Where does this lead to? Will we lose sight of some
important functions due to an overemphasis on innovation?
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Biographical notes
Björn Schmitz
Björn Schmitz is working as a Project Director for the Centre for Social Investment
(CSI). He started working for the CSI after studying Business Administration, Sociology,
Philosophy and Psychology in Mannheim and Heidelberg. Mr. Schmitz worked six years for
the software company SAP before starting his research at the CSI. His research topics are,
among others, Social Entrepreneurship, Hybrid Organizations, Social Change and Social
Impact Measurement. Currently, Mr. Schmitz is involved in the project “Entrepreneurship in
the Social Sphere”. Its aim is to find out more about how relevant social enterprises are, what
impact they have and where their limits lie. The project also seeks to find an answer to the
question if and how social enterprises fit together with the welfare state.
Thomas Scheuerle
Thomas Scheuerle works as Research Associate and Consultancy Assistant for the
Centre for Social Investment (CSI). He started working for the CSI after studying Economics,
Media and Communication Science and Sport Management in Mannheim and Heidelberg. His
research topics so far have been the economics of climate change, behavioural economics and
corporate citizenship. Mr. Scheuerle currently works on the interdisciplinary CSI research
project “Entrepreneurship in the Social Sphere”, where he focuses on scaling, governance and
innovation from a meso and a macro perspective. Furthermore he is involved in a consultancy
project on strategic impact for a corporate foundation.
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Business Models of Social Enterprise: A Design Approach

to Hybridity*
Wolfgang Grassl
Professor of Business Administration, St. Norbert College, DePere, wolfgang.grassl@snc.edu
ABSTRACT. Terminological confusion about social entrepreneurship derives

largely from the fact that social enterprises are structurally hybrids in several
dimensions. Hybridity is their essential characteristic, and it fulfills an
indispensable role. An approach is developed that does not rest on dichotomous
distinctions by sectors or profit orientation. On the basis of a reconstruction of the
essential components of entrepreneurship, a generic structure of social
entrepreneurship is proposed which in turn is founded upon an enterprise
ontology. It emphasizes the entrepreneurial nature of such ventures in the sense of
real causation. Through various combinations between the components (among
which are mission, target population, and markets), types of business models can
be distinguished. At an emergent functional level, these design configurations
allow for a typological distinction between various types of strategy. The
proposed design framework allows for a categorization of social entrerprises and
thus for explaining organizational pluralism while being founded on real
distinctions in the social world rather than merely conceptual abstraction.
Keywords: social enterprise, social entrepreneurship, hybrid enterprise, business

models, business design, causality
Introduction
Terminological profusion and confusion, and underlying conceptual vagueness, still

plague the field of social entrepreneurship to a point where different groups of practitioners,
and even more so researchers, have developed their own preferred designations. Terms like
“social enterprise,” “philanthropy,” “non-governmental organizations,” “non-profits,” “cha-
rities,” and “third sector” are often used interchangeably, or with only small differences in
meaning. Yet at a deeper level of underlying social values and economic systems, the
differences can be substantial. The preference for “social entrepreneurship” in the United
States already implies that the solution to social problems is to be found in private (and
usually individual) initiative; non-reciprocal donations are relegated to “philanthropy”. The
European preference for “social enterprise,” on the other hand, leaves questions of profit
*
A first version of this paper was presented at the ACRN Conference on Social Entrepreneurship Perspectives,
August 26-27, 2011, in Linz, Austria.
37
Business Models of Social Enterprise: A Design Approach to Hybridity
status, funding, and corporate governance, open (Kerlin 2006, 2009; Defourny & Nyssens
2010; Van de Gronden 2011; Brouard & Larivet 2011). In Europe, social advocacy, cause
marketing, and coordination of other efforts at a secondary level are typically regarded as
social entrepreneurship (Chalençon & Pache 2006). In the United States, where think-tanks
and lobbying organizations often take charge of such tasks, they are typically not so regarded.
The case becomes even more complex if China or developing countries are added to the mix
(Yu 2011; Defourny & Kim 2011), and confusion is aggravated by the use of different legal
forms around the world, some being reserved for non-profit organizations. This situation in no
small measure explains why no widely accepted definition of social entrepreneurship has yet
emerged; one recent publication in fact lists twenty different definitions, and one year later
another compilation lists twenty-seven (Zahra, Gedajlovic, Neubaum & Shulman 2009: 523;
Brouard & Larivet 2011: 40-44). Despite these attempts, the concept remains poorly defined,
and its boundaries with other fields is of an arbitrary and fuzzy nature (Mari & Marti 2006;
Santos 2009; Mair 2011).
In social science, terminological proliferation is the hallmark of every new field that enjoys
rapid growth. In the case of social entrepreneurship, two facts exacerbate the situation – that
not primarily researchers but managers and entrepreneurs determine the evolution of the field,
with the conceptual bases of these groups rarely converging, and that wide differences exist
worldwide in socio-economic values and systems. In such situations, a rational reconstruction
of the discipline, whether at a conceptual level, within a full-fledged axiomatic framework, or
on the basis of an enterprise ontology, has often helped to unify a field (Munn & Smith 2008;
Smith & Ceusters 2010).
This paper assumes that the essence of entrepreneurship lies in the design of effective
business models of social enterprises (Casadesus-Masanell & Ricart 2007; Brouard & Larivet
2011). In reconstructing what is essential in social entrepreneurship, resorting to a design
approach seems opportune. Enterprise design identifies the components of a business and
their relationships, i.e. its architecture, with regard to its intended functions.
The essential properties of entrepreneurship have, according to the most influential theories,
been located in psychological properties of individuals such as alertness, opportunity
recognition, or acceptance of risk, which are all located in the subjective sphere. This paper,
on the other hand, seeks to develop a model that ties social enterprises to structural and
objective factors of social reality. Entrepreneurship as an indispensable condition for the
success of a business is understood in a realist, and indeed causal, sense as bringing about real
change. This approach seeks to reimplant social entrepreneurship within the scope of
entrepreneurs (from which some streams of research seek to alienate it).
This paper will first describe hybridity as a hallmark of social enterprise. The specific nature
of entrepreneurship must then be described, since entrepreneurs have an essential function in
social enterprise. A generic business model of a social enterprise is subsequently proposed.
Instead of developing a precise enterprise ontology, the less formalistic approach of design
thinking is used, which leads to a typology of social enterprise. The paper confines itself to
the level of business architecture (or structure) without embarking on business process
modeling. The approach taken derives from applied ontology rather than from requirements
engineering or computer science. It is meant to arrive at a number of successful business
models for social enterprise that are able to support its mission of extending values germane
to civil society to the spheres of markets and of the State.
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Phenomenology of Hybrid Businesses
Businesses have traditionally been categorized by ownership and predominant profit

objectives. A typical classification is reflected in the following 2×2 grid (Figure 1):
Primary objective
Commercial Social
Private Enterprises Social Enterprises

Ownership
Private
Public
Public Enterprises Public

Administration
Figure 1: Traditional classification of types of businesses
Such classification divides economic activity neatly into two sectors and assumes two
objectives of business. In analogy to “mixed” economies consisting of private and govern-
ment activities, a limited number of mixed forms are conceivable. However, the development
of economies has shown that tertium datur even though the “third” sector has never been and
perhaps cannot be crisply defined. Several classifications of the “social eco-nomy”, or of non-
profit businesses, have been developed. Demarcation of this sector by the goals businesses
pursue – into groups of for-profit and non-profit organizations – is not straightforward.
Economically the two groups have been converging for some time, and business law is not
effective in drawing distinctions by intended purpose (Dees 1998; Brody 2003; Westall 2009;
Boyd et al. 2009; Billis, 2010). Most classifications use institutional factors as criteria but are
still committed to viewing the “third” sector as a “non-market” sector (Gassler 1986: ch. 3;
Mintzberg et al. 2005; Westall 2009). Even if a 2×2 grid is expanded to a 2×3 grid,
rectangular thinking itself relies on dichotomies, which in turn presuppose crisp divisions in
the object domain (Keidel 2010). The dynamics of modern business defy such categorization
and blur the boundaries between types (Ben-Ner 2002). This development is part of a larger
trend to-ward hybrid institutions in the economy, as has been shown in the case of governance
forms (Makadok & Coff 2009), of microfinance organizations (Battilana & Dorado 2010), of
product and process standards (Bunduchi et al. 2008), and of various technologies (Costabile
& Ancarani 2009). Crisp divisions between markets and states have long collapsed, as in all
countries complex economic systems combine elements of both (Ostrom 2010). Hybrid
enterprise has itself been classified according to several types depending on business models
(Dees 1998; Emerson & Bonini 2003; Aspen Institute 2005; Alter 2006; Nyssens 2006;
Ridley-Duff 2008; Makadok and Coff 2009; Brozek 2009; Landes Foster, Kim &
Christiansen, 2009; Westall, 2009; Ridley-Duff & Bull 2011).
The hybrid nature of social enterprise is not a contingent and empirical fact about this
institution; it is an analytical truth that follows from the composite term itself. Reducing the
multiplicity of types and difficulty of clear classification to the hybridity of this sector is then
an exercise in tautology (Laville & Nyssens 2001; Brandsen, van de Donk & Putters 2005;
Mair & Martí 2006). This has not always been recognized and has undoubtedly contributed to
the rapid growth of literature on the hybrid nature of social enterprise. However, the social
sciences have generally understood hybridity as a simple mixture of characteristics on a
continuum between two opposite poles (Brozek 2009; Makadok & Coff 2009).
39
Hybridity in business can bridge several divides according to the chosen criteria of
classification, notably the following (Grassl 2012):
1. by ultimate ends: for-profit vs. non-profit (Brozek 2009; Boyd et al. 2009);
2. by societal sector: market vs. civil society vs. State (Brandsen, van de Donk &
Putters 2005; Defourny & Nyssens 2010; Billis 2010);
3. by type of integration: external vs. integrated vs. embedded (Alter 2006; Malki 2009);
4. by goods produced: private vs. public (Bruni & Zamagni 2007: 239-45; Becchetti,
Pelloni & Rossetti 2008; Bruni 2010: ch. 7);
5. by product status: goods vs. services (Lusch & Vargo 2011);
6. by agents of value creation: producers vs. consumers (Ramírez 1999; Payne, Stor-
backa & Frow 2008; Lessig 2008);
7. by ownership (corporate governance): private vs. cooperative vs. public (Boyd et al.
2009; Billis 2010).
Most traditional work in business research has investigated hybrids by societal sector, with an
emphasis on cross-overs between “private” and “public” enterprise under the assumption of a
dichotomous model. One focus has been on the interplay of markets and hierarchies as
coordination mechanisms, with networks being a hybrid third (Makadok & Coff 2009).
Business models discussed in this context include public-private partnerships and the
outsourcing of government functions (Préfontaine 2008; Bollecker & Nobre 2010) or
corporate-NGO collaboration (Dahan et al. 2010). Many other studies have limited their
discussions of social enterprise to the field of non-profit management (Dees 1998; Ben-Ner
2001; Dart 2004; Landsberg 2004; Young 2007; Hoffman, Badiane & Haigh 2012). In a
sense, even another dichotomy is bridged – that between the creation and redistribution of
economic value, as social enterprises increasingly move into production and, differently from
many privately held businesses, at the same time are attentive to socially desirable distributive
results (Santos 2009; Becchetti & Borzaga 2010).
Hybridization of business is not restricted to the supply side. One of the most en-trenched
social dichotomies – that of market participants being either consumers or produ-cers
(including intermediaries) – is breaking down as value co-creation allows consumers to
participate in the production of their goods (Ramírez 1999; Plé, Lecoq & Angot 2010; Porter
& Kramer 2011). Consumer cooperatives already have much tradition, but open-source
software, shared online resources such as Wikipedia, and music filesharing networks are
recent phenomena (Giesler 2006; Lessig 2008), and the combination of open-source with
proprietary models in the software industry leads to second-order hybridity (Bonaccorsi,
Giannangeli & Rossi 2006). Better access to information, technology, and greater
transparency of corporate decisions have reduced the asymmetry of information and thus
price-setting power on which tradi-tional forms of consumption and retailing relied. The latest
paradigm to emerge in marketing – the “service-dominant logic” – builds on the idea of
customers becoming co-creators of value (Payne, Storbacka & Frow 2008; Lusch & Vargo
2011). A business landscape is emerging that exhibits some properties of a civil economy and
that often traverses several traditional categories. Consumer movements have created new
models of household production, direct distribution, and quality-conscious consumption. One
may think of the Slow Food movement, which started in Italy and has expanded to much of
the world (Petrini 2007). Out of this movement grew Terra Madre, a worldwide network of
“food communities” which spreads by by-passing the large commercial distribution systems
although it utilizes markets (Petrini 2010). Under the cover term “collaborative consumption”,
various models of sharing, swapping, bartering, trading, and renting, have been invented and
have been facilitated by advances in social media and peer-to-peer online platforms (Botsman
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& Rogers 2010). The transformation of passive consumers into collaborators through social
media harbors the opportunity of creating new human communities (although the quality of
these often still remains to be seen) (Shirky 2010). Influential business thinkers have
recognized the importance of understanding companies as communities (Mintzberg 2009). On
both sides of the market, that of consumers and of producers, the future may lie in sharing
(Gansky 2010).
Not even classification along several continua can easily model the complexity of the social
enterprise sector. It is important to realize that it overlaps but does not coincide with the non-
profit sub-sector (which includes cooperatives, credit unions, and mutual aid societies). Social
enterprises benefit not only their members but also a larger community. They are intentional
communities of persons that are by necessity mission-oriented (Dees 1998). Even hybrid
organizations (at least in the environmental sector) have recently simply been identified as
being mission-driven (Boyd et al. 2009). This illegitimately elevates a necessary to a
sufficient condition. A definition of social enterprises as “autonomous not-for-profit
organizations providing goods or services that explicitly aim to benefit the community”
(Becchetti & Borzaga 2010: 7) is equally ambiguous because the hallmark of social enterprise
lies not in the generation but in the use of profit. Social enterprises pursue projects under the
constraint of efficiency and therefore seek profit for distribution to target groups and
investment into further growth; however, they do not simply maximize profits under some
constraint of social responsibility (Becchetti, Bruni & Zamagni 2010: 314f.). Many non-
profits are also social enterprises, but credit unions, housing cooperatives, or social service
organizations are not; fair trade organizations and micro-finance institutions are social
enterprises without having to be non-profits (Becchetti & Borzaga 2010). Social enterprises
are different from traditional non-profit organizations because their earned income is directly
tied to their social mission. Most of these businesses are financed with private funds and
managed according to commercial principles; some may be in the public sector. The public-
private hybridity thus overlays the other distinctions. Lastly, at a more fundamental level,
most of these businesses can be attributed to the civil economy, i.e. the market economy
under the guidance of civil society (Bruni 2010; Bruni & Zamagni 2007). The fundamental
characteristic of the civil economy is to understand the market as a cooperative rather than a
competitive arena and enterprises as communities pursuing social projects (including those of
producing goods and services for private consumption at market prices) (Becchetti, Bruni &
Zamagni 2010: 312f.). Social entrepreneurship then has a dual goal – at the microeconomic
level to pursue projects that address specific social needs, and at the macroeconomic level to
advance the civil economy within the economy as a whole.
The Essential Role of Entrepreneurship
In hybrid business models, entrepreneurship is the synthesizing agency that makes

disparate elements coalesce. Entrepreneurship is indispensable to social enterprise (Martin &
Osberg 2007). First, the essential features of entrepreneurship must be delineated. Second, the
specific differences of social entrepreneurship must be added (Austin, Stevenson & Wei-
Skillern 2006; Murphy & Coombs 2008; Williams & Nadin 2011).
Entrepreneurs bring about real changes of some magnitude in the world. They are intentional
about it and are therefore not mere bricoleurs who combine elements haphazardly. The
essential difference to commercial entrepreneurship lies in the nature of the intentional
relationship between entrepreneurs and projects, i.e. in motivation. Altruism per se need not
be a motivator; more typical is the creation of value for a target population where this value is
not privately appropriated. If entrepreneurial activity has a social nature, any distinction
41
between creation of economic and of social value then collapses. Positive externalities are
consequently constitutive of social enterprise and demarcate it from mere membership
organizations such as purchasing cooperatives or, in the commercial sector, warehouse clubs.
Social entrepreneurs place a clear emphasis on value creation over value appropriation; they
typically maximize on the creation and satisfice on the appropriation of value (Santos 2009).
Social entrepreneurship must therefore receive a stronger and less arbitrary definition than is
reflected in “the discovery and exploitation of profitable opportunities” (Shane &
Venkataraman 2000: 217) or in similar concptualizations. The discovery of opportunities for
social action is different from the commercial case (Mair & Martí 2006; Murphy & Coombes
2008). It is not the question of deliberate search or serendipitous discovery that is relevant but
– in an Aristotelian formulation – the actualization of a potentiality. Nor is the focus on the
question of constructed or recognized opportunities that has been much discussed in the
literature (Vaghely & Julien 2010) – social entrepreneurs quite obviously recognize
opportunities. Construal of social entrepreneurship from the viewpoint of philosophical
idealism (whether in the form of constructivism, operationalism, or instrumenta-lism) must
fail. Neither do social entrepreneurs provide symbolic value to their beneficia-ries nor are the
latters’ needs anything but real. Rather, social entrepreneurs must be envisaged as being
motivated by a particular vocation and as having certain character traits (i.e., virtues) that
allow them to act on their vocation (Teehanke 2008; Sirico 2010; Bruni & Smerilli 2009;
Bruni 2011). The hallmark of social entrepreneurs (which need not necessarily exist in
managers of social enterprises) is personal commitment to a cause.
Against the background of Aristotelian philosophy, a stronger model of entrepreneurship can
be developed that exhibits a better fit with social enterprise (Dembinski 2006). It is based on
entrepreneurs being causal agents, where for Aristotle, contrary to the presently dominant
view, a cause is not what transforms A into B, but the transformation (or process) itself.
Entrepreneurship rather than instances of entrepreneurs is therefore the explanandum.
Causation in this sense must not be understood as A ⇒ B where A < B (in the sense of
temporal antecedence). Rather, the cause of B lies in its nature (or form), or what today might
be rendered as its explanatory factors; a cause makes something else what it is. There are four
such causes: the form of the object (A is what it is to be B), the matter underlying the object
(A is what B is made out of), the agency that brings about the change (A is what produces B),
and the purpose served by the change (A is what B is for) (Physics II.3, 194b24 ff.). These are
called, respectively, the formal, material, efficient, and final cause (Falcon 2006). Social
entrepreneurship is influenced by all these, together with subjective visions, in a particular
functional form:
entrepreneurship = [ f (vision, motivation, perceived opportunities, institutions)] ⇒ purpose
All of these factors must be present in sufficient quantity and quality for a person to become a
social entrepreneur, and they must be directed at a social purpose. The formal cause may be
economic or social regulations, and the material cause perceived opportunities to address
needs. The motivation may be humanistic or religious, and the process must be guided by a
vision for social entrepreneurship to be effective. The essential difference from commercial
entrepreneurship lies in the nature of the purpose, which translates into a (qualitatively)
different motivation. The entrepreneur is thus a change agent who evaluates the dynamic
interaction between opportunities and resources, holds these against prevalent institutional
and cultural structures, and is willing and motivated to do so by a vision that aims at a
particular final purpose. Thus this end explains behavior always through or by means of one
of Aristotle’s other modes. This model can then be depicted graphically (Figure 2, as an
elaboration of Dembinski 2006: 349):
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Figure 2: A model of entrepreneurship
Entrepreneurship in this view is not simply a function of coordinating resources or of re-

cognizing opportunities and translating them into profitable ventures. It consists in optimi-
zing a system composed of material and immaterial factors by using practical reason to di-rect
the process towards a final purpose recognized to be good. Entrepreneurs are driven by
visions and motivation and judge resources and opportunities as well as institutions and
norms as to their mutual fit. These are real and causal relations on the basis of which new
activities are planned that are directed at a final purpose, which in turn provides motivation.
To make the model more complete, three relations on the “idealist” plane (represented by
broken lines) are also accommodated: subjective visions can influence the choice and ac-
ceptance of the final purpose as well as guide motivation, and available resources and op-
portunities may stimulate the vision of entrepreneurs. New activities can create new resour-
ces and opportunities but also modify institutions and norms, which leads to feedback loops
(represented by dotted lines) and makes entrepreneurship an interative process. The compo-
nents affect entrepreneurs differently, viz. by the four Aristotelian modes of causation.
Entrepreneurship in this sense is an intentional, purpose-driven activity that is based on acts
of judging enhancing and detracting factors, and social entrepreneurship is characterized by a
specific final purpose. So conceived it has a better chance of actually being the synthe-sizing
agent that makes social enterprise possible, which because of its hybrid nature is characterized
by an uneradicable complexity and requires significant energy to coalesce the necessary
components (McKelvey 2004; Goldstein, Hazy & Silberstang 2009, 2010).
43
Design of Business Models
Social entrepreneurship creates new business models. The latter concept is at least as
con-tested as that of social enterprise, and the literature on business models has grown expo-
nentially (Morris, Schindehutte & Allen 2005; Zott & Amit 2010; Zott, Amit & Massa 2010;
Casadesus-Masanell & Ricart 2007, 2010; Seelos 2010; Osterwalder & Pigneur 2010)
including its application to social entrepreneurship. So has the literature on enterprise design,
which is produced by several disciplines (Baldwin & Clark 2002, 2005). It may be expected
that feasible business models have “dominant” design structures, i.e. particular architectures.
To determine these would improve the performance of social entrepreneurs.
The literature on the design of social entrepreneurship models has suggested several
architectures. For example, social enterprise can take four forms (Figure 3):
Figure 3: Social business design according to Dachis Group
A social enterprise must be built as a robust, integrated network of nodes and connections
with the knowledge of who the constituents of the business are and where they can find value
individually and together as a whole (= ecosystem). If such an enterprise can also rely on
collaboration in the workplace which translate into intensified stakeholder contacts, the model
is that of a hive (= hivemind). Businesses differ as to the strength and frequency their
customers send information about changes on markets, for example about the need by
potential beneficiaries of support (= dynamic signal). Lastly, social enterprises must pick up
these signals and process the information efficiently so that it leads to the required social
action (= metafilter). 1 These patterns are design elements that apply cumulatively by
1
Dachis Group at http://www.dachisgroup.com/social-business-design/our-approach/.
44
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emphasizing, respectively, community, culture, collaboration, and content. These seem to be

necessary ingredient of all social business models.
In a yet more general sense, business planning may be understood as occurring at several
levels:
n+2 Tactics
n+1 Strategy
n Business model
n-1 Enterprise ontology (applied and regional)
n-2 Ontology (formal and general)
Business models are developed at the “kitchen table” level n. Strategy is founded on a
business model, and tactics is founded on strategy (Seddon et al. 2004; Casadesus-Masanell &
Ricart 2010). A business model depends on an underlying enterprise ontology, which defines
an enterprise as a system consisting of a composition, structure, environment, and production.
The business of an enterprise is then understood as its function, as characterized by the
products and services that are delivered to the environment. Being ap-plied and regional (i.e.,
specific to enterprises), this level relies on a general (and formally expressed) ontology that
specifies the ingredients of reality and their relations. All levels are emergent with respect to
the lower ones. Analysis of social entrepreneurship considers levels n and n+1 (although
assumptions about lower levels must implicitly be made).
There is a tradition in social science (which includes the sociologist Georg Simmel and the
economists Karl Polanyi and Kenneth Boulding) that demonstrates that a qualitative “phase
transition” in human relationships occurs when one moves from the dyad (which facilitates
opposition) to the triad. Triads are the smallest form of social organization that allow for
social formations to be structured (into subgroups, alliances, families, clubs, etc.). They allow
individuals to maintain their identity and to have control over it by withdrawal; they are likely
to develop a group structure independently of the individuals in it, which makes them the true
building blocks of society (Simmel 1908: ch. 2). At a higher level of aggregation, the
communitarian tradition in social thought has recognized communities as a third agent besides
individuals and government (Wicks 2009).
At all levels ni, configurations should therefore be considered as of a ternary rather than a
binary structure, even apart from the number of agents. Not only the transacting parties but
also the objects of transactions (e.g., meals or medical services) are constitutive of social
relations. The nature of a project determines whether or not to attribute it to social
entrepreneurship. Thus the logical structure of social relations is not R (x, y) but, for example,
H (x, y, L), where H = housing, x = entrepreneur, y = target group, L = loans at sub-market
conditions. This relation is not abstract but concrete and expresses what a project does for a
target group, e.g. providing housing through concessionary loans. Envisioning such a
structure brings social entrepreneurship, despite its market-based characteristics, close to gift-
giving as described by anthropologists (Descombes 1996; Hénaff 2010: 418f.) and to the
“logic of gift” advocated in Pope Benedict XVI’s social encyclical Caritas in Veritate (2009).
Social relationality is “situated” or “embedded” in particular settings. This would imply that
manufacturers of consumer goods should always target specific groups rather than produce
for an “anonymous” mass market, and that social entrepreneurship projects must be
developed by providing specific services for specific beneficiaries. Three components already
allow for constellations that add up to complex business models (Malki 2009).
From a design perspective, a generic business model must as a minimum specify the what, for
whom, and how of production. It must at its essential core identify content, structure, and
governance (Zott & Amit 2010). Content includes a value proposition, which takes the
45
following generic form (Figure 4, adapted from Social Enterprise Knowledge Network 2006:
264f.):
What is our mission?
(X) Who is being Who is our customer?
served? What does our customer need/value?
We will serve (X)
by doing (Y) (Y) How are they Which goods/services are produced?
being served? How do they address customer need?
Figure 4: Value proposition for social enterprise
This, then, suggests a typology of social enterprise that suggests potential business models
(Dees 1998; Alter 2006; Malki 2009). Social enterprises can be classified by their mission
orientation, by the level of integration between non-profit social programs and for-profit
business, and by their intended target markets (Alter 2006). Three stages can be distin-
guished in the process of integration between profit-oriented and non-profit businesses. They
largely correspond to the philanthropic, transactional, and integrative collaboration described
elsewhere (Austin 2000). At the external stage, the relationship is one-sided, as one between a
charitable donor and a recipient; there are no elements of integrated strategies or manage-
ment functions. At the integrated stage, the flow of benefits becomes bilateral as resources are
exchanged and learning becomes mutual, and at the embedded stage, the principles cha-
racteristic of the two types of enterprise have merged at the levels of strategy and execution
such that social programs are managed with the efficiency typical of private business, and for-
profit projects are designed with responsibility and care for others (Figure 5):
Mission motive Profit motive
Mission Mission- Mission- Unrelated

Centric Related to Mission
orientation
Embedded Integrated External
Social
programs Social Social
Type of + programs programs
integration Enterprise
Enter- Enter-
activities
prise prise
Target Population Government Contracts
Target
market ClientThird-Party
= User Payer Client = Government
B2B Commerce
Client ≠ User General Public

Client = Businesses
Any private customer

Figure 5: Micro-typology of social enterprises
If there are three types of mission-orientation, three types of integration between not-for-
profit and for-profit activities, and five types of target markets, there would be 3×3×5 = 45
possible combinations. However, mission-orientation and type of integration are highly cor-
related, and a business unrelated to mission should not count as a social enterprise. This re-
duces conceivable combinations to 2×5 = 10. According to the logical structure of social
relations, H (x, y, L), x = social enterprise, y = target population (or beneficiaries), L = goods
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ISSN 2224-9729
or services transacted on markets on which they are otherwise traded, and H is the specific
model that results from the combinations between the three arguments. The options have been
further consolidated into nine fundamental types of business models for social enterprises
which are feasible and indeed widely implemented (Alter 2006) (Table 1):
Entrepreneur Support Model Market Intermediary Model Employment Model
Fee-for-Service Model Low-Income Client as Market Cooperative Model
Market Linkage Model Service Subsidization Model Organizational Support Model
Table 1: Business models of social enterprise
Examples of these models can readily be identified. There are co-operative move-ments for
farmers, craftsmen, shopkeepers, and consumers, that in some countries have be-come
formidable players on factor and consumer markets (Cooperative Model). They allow smaller
suppliers to bundle their otherwise atomistic market power to compete with multi-national
corporations and thus at least partially to overcome diseconomies of scale. Several
institutional forms have been created ranging from limited partnerships to marketing co-
operatives and consortia based on rules of both efficiency and equity (Grassl 1998). Micro-
lending on the Grameen model has facilitated the emergence of a new class of business
owners in less developed countries (Entrepreneur Support Model). Ethical investment funds
and fair trade organizations complement this trend (Organizational Support Model). Social
enterprises that facilitate the performance of target populations on markets, for example by
providing training or loan guarantees, make up the Market Linkage Model. In the United
States, the Federal National Mortgage Association (Fannie Mae), which is a government-
sponsored and publicly traded company with the purpose of expanding the secondary mort-
gage market by securitizing mortgages in the form of mortgage-backed securities, is an
example (Koppell 2003). The worldwide Economy of Communion as a project of the Foco-
lare Movement is a network of businesses that freely choose to share their profits ac-cording
to three principles of equal importance – to grow their businesses, help people in need, and
spread the culture of giving (Service Subsidization Model) (Gold 2010).
An argument can be made that, underlying the nine possible types, there is an even smaller
number of basic configurations. If a business model is understood as a system, an analogy to
Gibbs’ phase rule in thermodynamics may be suggested: F = C – P + 2, where F = number of
degrees of freedom for a system, C = number of independent components of the system at
equilibrium, and P = number of phases (which in chemistry are solids, liquids, and gases).
The generic business model has three components (C = 3). The number of phases may be
47
assumed as three (P = 3) in accordance with a triadic ontology, e.g. by being either a private,
public, or communally owned and managed enterprise. Under these assumptions, a business
model for social enterprise would have F = 2, with degrees of freedom being the number of
intensive variables which are independent of each other. F expresses in how many ways an
enterprise can “do business.” Gibbs’ rule would predict two such ways – seeking profit or not.
Although there may be degrees of mission-orientation, this basic distinction still holds (and is
usually required under tax law and sometimes and corporate law). If more complex models
are devised (e.g., C > 3), the number of possible variations will increase. Enhanced hybridity
of business allows for a greater number of successful business models though the promising
options will still remain few.
Applying insights of organization design to social entrepreneurship then means discovering
the triadic nature of organizations in the dimensions of strategy, structure, and process, which
are the key determinants of performance. How organizations compete is defined by the triad
of differentiation, economy, and interaction, how they grow by the options of buying, making,
or partnering, and how they organize by decentralization, centralization, or collaboration
(Keidel 2010: 66ff.). These options themselves relate to the three types of social agents in
what in abstract algebra would be called a homomorphic relationship, or (in Thomistic
language) in one of analogy (Figure 6):
Co-operation Civil society Reciprocity Target population
Autonomy Control Market State Efficiency Equity Market Enterprise
(a) (b) (c) (d)
Figure 6: Models of social entrepreneurship (d) mirroring the functions (a) of social agents (b) and their aims (c)
This design perspective holds out a promise for the development of social entrepreneurship
models that are not created in an ad hoc manner but that reflect the basic structure of human
society. An integrated and consistent approach from level n-2 of ontology up to level n+2 of
business tactics seems possible. Social entrepreneurship is then a process of decision-making
at various levels of complexity within a clear hierarchy of cognitive levels (Ross 2009). This
model also mirrors how hybridity in business comes about within networks of complex
interactions that produce novel emergent properties through recombinations. Hybridity is no
longer understood as a mixture of characteristics along a continuum between two opposite
poles but consists of elements of diverse origin that are deeply integrated and yet preserve the
identities of their constituents. The difference between non-profit and for-profit businesses,
like other differences, is then one of degree, not of kind – they are both results of different
admixtures of elements. Social enterprise as a movement may be studied as adaptive
morphogenesis, where forms evolve through combinations to facilitate missing constructive
behavior.
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Towards a Theory of Hybrid Business
Biology distinguishes between hybrid organisms arising from a cross between

cultivars within a species and those that come about as the offspring of members of two
different species. In business, the first case would be represented by joint ventures, by
independent broker-dealers pursuing both a commission-based and a fee-based revenue
model, or by wholesalers which through forward integration of the value chain have acquired
retail operations. Such cases are so common that “hybridization” is an inappropriate category
for them unless the term is rendered meaningless since nearly all businesses would be hybrid.
True hybridization is thus limited to “cross-species” interactions, particularly such that
integrate markets, civil society, and the State. Expanding the scope of activities – from the
regional via the national to the international level – does not cross domains and therefore does
not constitute hybridity. Necessary (if not yet sufficient) conditions of hybridity may then be
defined. Hybrid businesses combine commensurable elements which are typical of disparate
domains of society into an (at least functionally) independent organizational form such that
the merged elements can no longer be separated (without negative impact on the entire entity).
This definition is neutral with regard to the elements being merged – technology, governance
structures, access to consumer markets, financial resources, etc. It requires that these elements
be commensurable (or congruent), since contrary to some literature, the mere addition of
technology to a business yields a more complex business but not a hybrid (Britt 2002). St.
Thomas Aquinas’ notion of connaturality may apply here – elements constituting a hybrid
must resonate with or be attuned to each other (Summa Theologiae I, q.93, a.6, ad 3; see also
I-II, q.26, a.1, ad 3 and a. 2; I-II, q.31, a.8, ad 2, et passim). Organizational theory discusses a
similar requirement of fit under the term “mirroring hypothesis”, and the idea is widely
known in different disciplines (Colver & Baldwin 2010). The marketing orientation of a
media company might be merged with the multi-layer reporting structure of a public-sector
enterprise to produce a hybrid business. This definition implies some degree of stability and
organizational independence although it does not require a legally separate entity. It excludes
strategic alliances and inter-organiza-tional cooperation, for collaboration on factor (and even
on consumer) markets is an old phenomenon (Grassl 1998; Skelcher 2005). Contracting out,
whether within the private or public sector, does not amount to hybridity nor does the
existence of business networks, contrary to some literature (Kenis 2005; Raab and Kenis
2009). In a networked society, assuming this would trivialize hybridity.
According to one theory, organizations can be analyzed with regard to their business
environment, their organization-environment transactions, and their organizational structu-res
and processes (Rainey & Han Chun 2007). A business is then modelled as consisting of
components and relations between these, or a structure, and of processes (which include po-
licies and procedures) (Figure 7). This would represent level n-1 in the hierarchical plan-ning
model and map out options for social entrepreneurs that would then facilitate or constrain
those of business model development at level n: 2
2
In more formal terms, the underlying business ontology is then simply a tuple < BUS [(ComponentsBus,
RelationsBus), Processes], ENVBus > where ENV = business environment. ENV can, for example, be represented
by relevant PESTEL (political, economic, social, technological, ecological, and legal) factors.
49
Business environment
Business Strategy
<Structure,
Pocesses>
Figure 7: Business ontology
The business environment is generally given, even for government agencies. The nature of
interactions with this environment defines the strategy of an enterprise, as relations between a
business and its relevant environments. Hybridity can then emerge through mixture at the
level of structure or processes (organizational hybrids), or through strategy (strategic hybrids).
However, for strategic hybridity to be stable, it must always presuppose some amount of
organizational hybridity. Public-sector welfare offices will not perform like Caritas
Internationalis if they show no similarity in staffing, operational procedures, financing, or
information systems, however many other differences will remain. The strategic fit that
successful strategy requires may again be understood as an instance of connaturality –
strategies must be attuned to the requirements and opportunities of the environment (Agarwal,
Grassl & Pahl 2012).
Based on this ontology, a model may be developed that imports from biology different
options of hybridization (Yao 2003). For simplicity, only two domains A and B (such as the
public and private sector, or the for-profit and non-profit spheres) are assumed as “species”.
By order of increasing adaptation and degree of novelty, at least five forms of hybridization
can then be distinguished (Table 2):
Type of hybridization Domain A Domain B Environments A and B

Mimicry original element new element mirrors element of A same or different
imported element combines with
Grafting original element same
element of B to create a hybrid third
imported element produces new
Transplantation original element different
element in B
Cross-fertilization original element transplantation followed by mimicry different
Mutation original element transplantation followed by grafting same or different
Table 2: Forms of hybridity (descriptive)
Depending on the type of hybridization, enterprises will reflect the natures of their original
components to different degrees. Transplantation, for example, is a very different process than
cross-fertilization. The first case would be that of a market-driven and privately owned
business inserted into the public sector, the second that of elements of public administration,
or civil society, or the market, influencing another domain, as in the conversion of public
railroads into a joint-stock corporation under public ownership or the introduction of an
ombudsman into a private company.
These types can be represented in graphical form (where empty squares signify old and solid
squares new, i.e. transformed, elements, and shaded domains B signify strongly different
conditions in the business environment) (Table 3):
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ISSN 2224-9729
A B A B
□
□ ■ □
Mimicry Grafting
A B A B
□ ■ □ ■
Transplantation Cross-fertilization
A ■ B
□ □
Mutation
Table 3: Forms of hybridity (graphical)
If social entrepreneurship is by its nature hybrid, these forms indicate possible business
models. Transplantation, for example, would be the case of a private-sector for-profit business
that operates under the radically different conditions of the public sector, and cross-
fertilization would be a mutual learning between an NPO and a traditional for-profit
corporation. Forms of hybridity can be related to the nine business models (Table 1), and the
five forms of hybridity (Tables 2 and 3) may suggest an approach to greater naturalness. A
complete theory still awaits elaboration.
Conclusion
Although social enterprise has often been understood as a correction to “profit-

seeking” business, and social entrepreneurs have been distinguished from “traditional” ones,
many studies have in fact found more similarities than differences (Malki 2009; Massetti
2009). Personality characteristics or other subjective factors are not a promising basis for
demarcation. Social entrepreneurship as the driving force behind social enterprise has a more
profound function than is commonly envisaged. It is to foster a fusion of spheres that have
traditionally been regarded as disjoint. The critical distinction of social entrepreneurship lies
in something real – the value proposition itself. Any promising business model for social
enterprise must, in the light of the previous analysis, fulfill these necessary (if not yet
sufficient) conditions:
1. it must be driven by a social mission (i.e., abstain from distributing profit to

shareholders);
2. it must generate for positive externalities (spillovers) for society;
3. it must recognize the centrality of the entrepreneurial function;
4. it must achieve competitiveness on markets through effective planning and
management.
The implications of this reorientation are important. No longer must social enterprise, as
“intermediate bodies”, be attributed to some ill-defined “third sector” nor must they be
identified with “non-profit” business. Creation of economic and of social value must not
diverge, and the latter must not be understood to correct the results of the first (Grassl and
51
Habisch 2011; Grassl 2012). Wholesale solutions can be avoided in favor of a variety of
hybrid models of social enterprise. It is the task of social entrepreneurs to introduce to
markets and to the State gratuitousness, reciprocity, solidarity, trust, and service, and to create
ventures that embed these values deeply in institutions serving the needs of target groups.
However, despite an apparent heterogeneity of social enterprise, the number of fundamental
business models is small. Successful businesses – from Grameen Bank, Sekem and
Mondragón to Aravind Eye Care and 4everyoung – apply one of only few successful models
of value creation to their specific customers. Lastly, there is no need for assimilation to the
American model of sharp borders between markets and the State, and between for-profit
business and philanthropy. Social values and political structures are different in Europe, and
even more on other continents. The tradition of a civil economy has at least partially survived
(Bruni 2010: chs. 10-11). Opportunities for hybridization of enterprise and the impregnation
of market economies by civil society appear to be better there than in the United States, which
is ideologically and institutionally built on the dichotomous model.
Only insignificant (within-species) “hybridization” occurs spontaneously, as marginal
mutations of an organization. To bring about true hybrid structures requires energy, since the
spheres of the market and of the State, of for-profit and non-profit enterprise, or of producers
and consumers, have their own “laws of motion” that make them resistant to penetration and
change. The required energy can be mustered only if social enterprise is of the right type in
terms of business model, strategy, and structure. Certain combinations from among many
possible configurations will succeed because they contain a high degree of naturalness; others
will fail because they cannot meet all requirements simultaneously. Instead of pursuing a
constructivist approach that assumes that any form of social enterprise has the potential to
succeed if only propelled by enough resources, a more modest realist approach is called for. It
sees the affordances and limitations of social enterprise rooted in immutable factors (such as
human nature), and experience as the guide to learn about them. This is the task of the social
entrepreneur as a causal agent who is driven by a vision and motivation, recognizes real
needs, musters resources under institutional constraints and achieves at least partial relief for
an intended target group. Design tools can be used to map out feasible models within an ever
more heterogeneous landscape of hybrid business (Morris, Schindehutte & Allen 2005;
Brown & Wyatt 2010; Casadesus-Masanell & Ricart 2011). Greater complexity of the object
domain of studies demands also a crossing of traditional disciplinary divides. Such an
approach opens up a stream of research on the conditions for creating social value through
creative action that may reposition this field of studies by combining social engagement with
analytical perspicacity.
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Strategies in Social Entrepreneurship: Depicting

entrepreneurial elements and business principles in SEOs
from Germany and Bangladesh
Gorgi Krlev
Centrum für Soziale Investitionen und Innovationen, (Centre for Social Investment),
Ruprecht-Karls-Universität Heidelberg, Germany
gorgi.krlev@csi.uni-heidelberg.de
Abstract. ‘Social Entrepreneurial Organizations’ (SEOs) merge characteristics

usually associated with either civil society or the market in a largely
unprecedented way. Therefore these hybrid organizations are of increasing
interest for interdisciplinary research. The analysis of ten such organizations –
five from Germany and five from Bangladesh – based on conducted in-depth
interviews reveals that the entrepreneurial dimension is prevailing in both the
non-profit and the for-profit elements combined. Additionally business principles
are being incorporated in SEO strategies. Consequently unique strategic setups
can be identified in such organizations unmatched by traditional classifications of
either of the two distinct sectors. Surprisingly strong commonalities can be found
in the SEO’s conception across their different fields of activity as well as the
culturally diverse backgrounds of Germany and Bangladesh. This paper shows
that in both countries innovative models of product or service provision, usually
developed by economic entrepreneurs, and business concepts such as ‘customer
and competitor orientation’ or ‘unique selling propositions’ are as likely to be
found in SEOs as a ‘vanguard role’ in developing social innovation and the
striving for societal change of ‘non-economic entrepreneurs’. The Social
Entrepreneurship Scheme conceptualized in earlier work aims at capturing the
regularly stated ‘blurring of boundaries’ in the light of increasing hybridity of
organizations. In the context of this study it builds the framework for classifying
the interviewed SEOs and serves as guiding reference for the proceeding
discussion.
Keywords: social entrepreneurship, ‘social entrepreneurial organizations’

(SEOs), ‘social entrepreneurship scheme’, hybridity, economic entrepreneurship,
non-economic entrepreneurship, strategy, business principles, (social) innovation,
cross-cultural, cross-sector
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Strategies in Social Entrepreneurship: Depicting entrepreneurial elements and business principles in
SEOs from Germany and Bangladesh
Identifying hybridity, entrepreneurship and business principles in

the social sphere
The current social sphere is significantly influenced by mainly three strong, global
trends: First, the multitude of serious problems leading to social unrest and calls for more
effective solutions to social and ecological disruptions (Bornstein 2007: 6ff.). Second, the
moralization of markets (Stehr 2007) leading to more complex demands towards
organizational governance and behavior. Third, an increasing awareness of state agencies’
limits in social value creation leading to calls for alternative or new organizations to step in
(Defourny 2004: 1f.; Nicholls 2006: 1f.). This does apply to both developing countries and to
industrialized countries. These trends foster a striving for innovative concepts and the
emergence of new organizational forms or organizational change in existing institutions
respectively: More and more Nonprofit Organizations (NPOs) are adopting business
principles and some are even converting to for-profit organizations while pursuing their social
mission (London 2007: 7). In addition to ‘traditional’ nonprofits, a growing number of
organizations from the private business sector as well as civil society start engaging in social
value creation of various kinds. Even classical for-profit firms start moving into social sector
fields and tackle a range of problems from education over developmental assistance to
environmental protection (CASE 2010). This goes in hand with a convergence of nonprofit
and for-profit organizational forms (Brody 1996). Thus, we find forms of socially oriented
business activity and business oriented social activity in place (Dees 2001: 1; Simms &
Robinson 2009: 9).
Many of these developments are associated with the term ‘Social Entrepreneurship’ (SE). It
seems to represent a powerful means in tackling the global social and environmental
challenges in an increasingly innovative or economically sustainable and self-sufficient1 way
– combinations of both are also often to be found. Besides, it is interpreted as being a
particular example for what is referred to as ‘hybridity’ (Evers & Laville 2005; Chew 2008:
23; Pache & Santos 2011). ‘Hybrid organizations’ are said to be merging and applying logics
associated with the theoretical categories of the state, the market and civil society which are
usually treated as distinct spheres. Therefore it is not only the assumed high social impact
potential of SE that makes it so relevant for academic research. It is also its effect on the
predominant tri-sectoral model (Pestoff 1992). SE with all its facets might be additional or
complementary to existing public or nonprofit activities; it might as well be reshaping or
replacing them to a certain extent. Common to both particular traits of ‘Social Entrepreneurial
Organizations’ (SEOs)2, namely parallels to innovation as well as the enhancement of social
and institutional change, is the concept of ‘entrepreneurship’. It thereby seems to serve a
bridging function between the social and the economic. A lot of discussions on SE actually
draw upon some quite common characteristics of ‘classical’ entrepreneurship (see e.g. Dees
2001; Mort et al. 2003; Martin & Osberg 2007). Thereby most of them do however remain on
a very general, theoretical level. An exception, diving deeper into the various categories is a
paper by Austin et al. (2006), which quite broadly compares SE to commercial
entrepreneurship in order to spot differences and commonalities. What many existing papers
have in common is that they remain limited to entrepreneurship in the economic, or even
more narrowly put in the commercial sense. A broader perspective, interpreting
1
See (Boschee & McClurg 2003) for the differences between sustainability and self-sufficiency.
2
Following the reasoning in (Krlev 2011a: 2) the sum of organizations engaged in the field is going to be
referred to as ‘Social Entrepreneurial Organizations’ (SEOs).
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entrepreneurship from a societal perspective as is the case for the contributions in (Steyaert &
Hjorth 2006), is more rarely to be found. At the same time – although it is often pronounced
that SE feeds from for-profit and nonprofit research (which is also reflected in the varying
research focus of scholars examining the phenomenon) – most existing studies do not couple
the element of entrepreneurship to what we might trace of it in existing for-profit and
nonprofit theory in terms of certain roles, functions or practices of organizations. Finally,
despite certain exceptions (O’Connor 2006; Hjorth & Bjerke 2006), there seems to be a lack
of empirical, comparative studies which may give us a more concrete idea of the practical
embodiment of entrepreneurship in SEOs. Hence, the primary goal of this paper is to identify
entrepreneurial elements that might be present in SEOs on a theoretical basis. This shall be
done using a fairly wide perspective on what constitutes entrepreneurship for society as the
underlying rationale. In order to support this effort the paper will draw upon existing
entrepreneurial elements in nonprofit and for-profit literature. These theoretical considerations
shall subsequently be substantiated and backed up with empirical data. The main research
question to be explored therefore is:
1. What does the ‘entrepreneurship’ in ‘Social Entrepreneurship’ refer to exactly?

Which entrepreneurial elements can be depicted in SEOs and in how far do these
reflect findings from existing nonprofit and for-profit research?
In order to examine this question, as just remarked, it is necessary to sketch and discuss the
full range of ‘entrepreneurship’ – covering ‘economic entrepreneurship’ and ‘non-economic
entrepreneurship’. Thereby the element of entrepreneurship shall not be mixed up with
market-like mechanisms that are being discussed in the context of an increasing orientation
towards business principles in organizations engaged in the social sphere (Skloot 2000; Alter
2006). Nonetheless, these are part of the influence of the market on SE and have to be
included in a complete picture of the phenomenon, complementing the aspect of
‘entrepreneurship’. Thus, the examination of business principles builds a valuable additional
component in sketching SEO strategies and leads us to the second question of importance:
2. How are entrepreneurial elements complemented by the influence of business

principles on SEO strategies?
Neighboring concepts to be included in the short review of suitable for-profit and nonprofit
literature are roles of ‘traditional’ NPOs, the Social Business concept, ‘Strategic Corporate
Social Responsibility’ (CSR) practices and ‘Base-of-the-Pyramid’ (BoP) business models.
The second step to be performed is to try approving the initial considerations along practical
examples. For doing so the ‘Social Entrepreneurship Scheme’ conceptualized in (Krlev
2011a) is going to be utilized. It is going to build the grounding framework for the proceeding
empirical analysis of in-depth interviews with ten SEOs.
The overarching dimension of the paper is the cross-cultural perspective brought in by the
fact that five SEOs are from Germany and five SEOs from Bangladesh. This will help
identifying how strong the context specificity of ‘entrepreneurship’ is and in how far SEO
strategies differ across diverse setups. In order to do so, it seems reasonable to pick two
countries with very different socio-economic development status. Germany shall serve as an
example for industrialized countries for mainly two reasons: First, it is remarkable to find a
63
growing number of SEOs tackling social problems in a country that traditionally has a strong
welfare-state. Second, there are a comparatively large number of multinational corporations
that are actively orienting towards Social Business 3 practices by collaborating with
organizations of the Grameen family of companies. This exemplifies another facet of the
appeal social entrepreneurial activity has in Germany and is an indirect connection to the
second country to be examined. Bangladesh as the ‘mother of Social Business’ (Yunus &
Weber 2007) is heavily dependent on private sector and civil society engagement in social
issues. It can therefore be regarded as exemplary for SE in developing countries and has been
subject to a considerable number of scholarly research before (e.g. Seelos & Mair 2007; Mair
& Marti 2009a), which can be extended by introducing new samples of social entrepreneurial
activity.
Consequently this paper is an integrative attempt to bring together current research streams
and in doing so to enhance our understanding of the various notions of ‘entrepreneurship’ and
business principles in the conception of SEOs. Thereby it aims at covering a broad array of
issues and at drawing a rather comprehensive picture, instead of discussing particular aspects
exhaustively. The paper has the purpose of opening a variety of fronts and of providing
impulses for the future direction of empirical studies on SEOs. Covering a multitude of
elements incorporated in such organizations, will allow peers to identify and to examine those
in more detail, which are of particular interest to them. Besides, it is exactly an exploration of
the various facets being combined in SEOs that the paper aims at performing. Since all this
could not be accomplished by an analysis focusing on a few selected elements, the paper’s
wide perspective has deliberately been conceptualized; accepting that the picture sketched
would partly be scattered and vague, due to the magnitude of aspects covered.
Economic and non-economic entrepreneurship
First of all it has to be acknowledged that this paper is not at all capable of resolving
the ‘holy grail’ question of what fundamentally constitutes entrepreneurship and recognizes
the multitude of research streams and emphases with regard to the concept as e.g. illustrated
in (Aldrich & Ruef 2006: 62ff.). Relating to this multitude Grégoire et al. (2006: 361)
constitute that there are trends of convergence in entrepreneurship research and rule out that
the field has to continue being a ‘potpourri’ (Low 2001: 20f.) of research streams – to date
this impression remains to a certain extent. However, this is not to be assessed as a negative
trait, but rather as a sign of an overarching function entrepreneurial acting has within society.
Wiklund et al. (2011), in their introductory article of a special issue of ET&P on the future of
entrepreneurship research, likewise propose this view and in doing so also hint to extensions
of the concept towards the areas of ‘sustainable entrepreneurship’ and ‘social
entrepreneurship’. They put forward “[g]iven that we define our field in terms of a
phenomenon characterized by change, newness, and development that transcends
organizational contexts, it is possible to start addressing a much wider set of important issues”
(Wiklund et al. 2011: 6). Upon this background they propose interpreting entrepreneurship as
a means of human problem solving, which in turn relates back to the motive of ‘driving
(social) change’ inherent to social entrepreneurship. In order to remove ambiguity in the
connection of social change and SE as demanded by the scholars, it seems reasonable to
connect these issues to the motive of (social) innovation (as has been elaborated on more
3
Social Business has been discussed as a subset of Social Entrepreneurship in (Krlev 2011a).
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deeply elsewhere Krlev 2011b). Although it is highly selective, for the purpose of this paper –
namely indicating elements of a wide conception of entrepreneurship within the phenomenon
of SE – it seems sufficient to draw upon one classic of the innovation stream in
entrepreneurship (Aldrich & Ruef 2006: 63) and its contemporary reflection in the light of SE
(see Swedberg’s discussion of Schumpeterian theory below). Swedberg’s contribution does
not only extensively (re)interpret fundamental principles, but establishes a link to social
change. The procedure chosen for the paper at hand may neglect the richness of the vast field
of existing entrepreneurship research, but at the same time seems to be a reasonable and
workable option to enhance existing reflections about the connection of a broad interpretation
of entrepreneurship and SE. Thereby it may contribute to bridging the divide that partly
persists between ‘classical’ entrepreneurship research and SE research according to Wiklund
et al. (2011). Furthermore it represents a context-specific application of notions of
entrepreneurship that still seem to be too weakly developed and therefore have to be enhanced
according to Welter (2011).
The idea of entrepreneurs as drivers of change goes back to Schumpeter. In his definition of
entrepreneurship the element of innovation that is brought in by the entrepreneur through
what he calls ‘new combinations’ plays a major role (1934: 66). By their pushing through of
innovative, new combinations rather than by inventions (1911: 175) entrepreneurs drive a
continuous process of ‘creative destruction’ according to Schumpeter (1994: 81ff.). The
aspect of innovation is often reduced to technological innovation and therefore change is as
often interpreted in economic terms solely as Swedberg (2009: 78) puts forward in a
discussion of Schumpeter’s theories. Swedberg (2006: 33) has worked on differentiating
Schumpeter’s theory and puts forward that, especially in his early work of 1911 elements of
non-economic entrepreneurship are being addressed in terms of dynamic behavior driving
change in areas of the society other than the economic sphere. As Schumpeter’s work on the
non-economic elements is not very precise, Swedberg tries to derive more detailed metrics for
it from the much more elaborated theory on economic entrepreneurship. For the latter he
identifies five central characteristics (2009: 82f.; 92f.): (1) a complex motivation decisively
shaped by ‘the dream to found a private kingdom’, ‘the will to conquer’ and ‘the joy to create’
(Schumpeter 1934: 93f.); (2) the element of pushing through recombinant innovation in the
economic sphere; (3) the necessity to overcome resistance; (4) the striving for commercial
and private profit; (5) the fostering of macro-economic changes by ‘creative destruction’.
Non-economic entrepreneurship is defined in a similar way with certain significant
distinctions (2009: 96f.): The motivation is mainly characterized by the latter two aspects
while the focus one personal wealth is dropped. Recombinant innovation is pushed forward in
e.g. politics, science or social life (Schumpeter 1911: 105ff.) instead of in the economic
sphere. The same accounts for the fostering of macro changes focusing on the just mentioned
fields. While the facets of resistance towards the two forms of entrepreneurship might slightly
differ, considerable commonalities can be expected. However, the concept of ‘profit’ can be
assumed to differ significantly with non-economic entrepreneurship defining profit as the
triggering the emergence of ‘new developments, “new schools”, new parties’ (Schumpeter
1911: 110f.) for instance.
Swedberg (2009: 101ff.) underlines the role of entrepreneurs as ‘recombinateurs’ in any
given perspective after proceeding with integrating both economic and non-economic
elements into a model of Social Entrepreneurship, which in turn might be interpreted as a
distinct recombination of existing models itself. This paper will not draw further on
Swedberg’s conceptualization of Social Entrepreneurship in the context of what he calls
‘Schumpeter’s model of full entrepreneurship’. It regards the given definitions of economic
and non-economic entrepreneurship distinctly applied to be more effective in identifying
exactly these elements in SEOs in order to drive a more profound understanding of the
65
organizations’ nature and effects following Swedberg’s intention, instead of mixing the
elements in a theoretical conception of SE in the first place.
It has to be remarked that entrepreneurship in any sense is not directly linked to start-ups, but
can be performed by established organizations as well, a fact that seems to have rather been
neglected in SE research (Schmitz 2011).
In any case we see that the aspect of innovation is present in both the ‘Social Innovator’
school in terms of social and also societal innovation – as a special subset of non-economic
innovation – and the ‘Social Enterprise’ school in terms of economic innovation, while the
latter is complemented by the integration of business principles that are not necessarily
attached to the concept of economic entrepreneurship as defined by Schumpeter (for a
discussion of the two schools see Dees & Anderson 2006 and Krlev 2011a). The utilization of
the categories of economic and non-economic entrepreneurship therefore seems to be valuable
construct for enhancing an even more differentiated discussion of SE. As remarked earlier
these shall be amended by discussing business principles in the context of SEO strategies.
The influence of business principles on SEO strategies
Since the picture on how businesses usually operate seems much clearer than the
notions of entrepreneurship, this chapter is less about discussing certain business principles
themselves but rather about briefly shedding light upon the question in which particular
aspects we might expect their influence in the context of SEOs. Therefore it seems valuable to
relate to the term ‘market orientation’ used by Nicholls and Cho (2006) as an umbrella term
for market or business like rationales affecting SEOs. It may be applied in the field of SE with
mixed intentions. The usage (1) may refer to business style oriented management aiming at
increased efficiency and effectiveness that is supposed to be applied by many of these
organizations – including performance measurement, human resource management, financial
planning or marketing concepts amongst others (Anheier 2005: 242ff.; Dees et al. 2001). (2)
It might refer to the aspect of earned income generation, e.g. through fees, usually contrasted
with raising donations and receiving government subsidies (Boschee & McClurg 2003). (3) It
can also be limited to the original definition of the term in the for-profit context, namely a
strategy of increased customer and competitor orientation (Narver & Slater 1990). All these
notions shall be discussed in the following based on a review of nonprofit as well as for-profit
literature, after exploring economic and non-economic entrepreneurial elements in the same
way.
Identifying potentially relevant entrepreneurial elements
Entrepreneurship theory sheds some light on the supply side character and commercial
entrepreneurship of nonprofits. Frank (2006) states that there is a tendency among certain
nonprofits, especially newly established ones to address unmet needs with creative models.
Badelt (1997) has also recognized this tendency in his discussion of entrepreneurship
approaches among nonprofit organizations, but he underlines that there used to be directly
opposed tendencies as well. He puts forward the example of organizations engaging in social
work that have formerly taken the entitlement of ‘entrepreneur’ as an affront. This has
changed during the emergence of SE that inherently incorporates the concept of
‘entrepreneurship’, at the latest.
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Following Anheier’s (2005: 164) proposition nonprofits amongst others often have to act like
‘politicians’, since they have to promote their cause among their constituencies. Their work
often has a sociopolitical dimension. Additionally they do not only have to have the eventual
beneficiaries in mind, but require support from their environment. They are furthermore
interpreted to be ‘visionaries and strategists’. They do not only work to bring societal change
according to their vision, but actively work on achieving it through operational strategies. It is
to be supposed that these dimensions play a major role for SEOs too as social goals and even
the creation of societal change are often part of their mission (Waddock & Post 1991; Mair &
Ganly 2010).
Anheier (2005: 174) additionally puts forward the ‘vanguard role’ nonprofits may take. They
can, in a process of experimenting, pioneer new approaches and thereby act as an innovator.
While this seems to be particularly true for SEOs, these add a new dimension. Instead of
having government or commercial businesses taking the lead concerning the practical
implementation and the development of a marketable product based on the innovation, as
Anheier presumes, SEOs usually perform these steps themselves (see e.g. the case studies in
Alvord et al. 2004).
Steinberg and Weisbrod (1998) moreover point out that nonprofits often engage in price
discrimination, which means that they do not charge ‘deserving’ consumers or they charge
them less, while charging less dependent customers higher prices in order to scale their social
impact. This ‘cross-subsidization’ model might obviously also be applied by SEOs. The
Aravind Eyecare hospital in India for instance uses exactly this kind of pricing towards poor
and wealthier customers (GENISIS Institute for Social Business and Impact Strategies 2009:
50f.). By doing so private institutions can start playing a pivotal role in the provision of
originally public goods like healthcare and thereby act as institutional entrepreneurs. SE
actually often aims at closing institutional voids. The role of the social entrepreneurial NGO
BRAC in Bangladesh in terms of e.g. women empowerment is just one example (Mair &
Marti 2009a; Mair & Marti 2009b). Furthermore SEOs usually try to conceptualize their
approach as holistically as possible. Existing research shows that they try to see the targeted
population as customers, beneficiaries and partners simultaneously. Grameen banks’
customers are at the same time its shareholders (Yunus & Weber 2007: 30), BRAC engages in
innumerable interactions with the target population. Sekem, an SEO from Egypt engages in a
similarly holistic approach. The organization started by introducing organic agriculture in a
network of farmers, then developed fair trade practices and later on opened a kindergarten and
a primary school as well as a medical center for the surrounding community (Seelos & Mair
2009: 238).
Nonprofits are often simultaneously preoccupied with advocacy work for their beneficiary
groups. The word ‘simultaneously’ is to be stressed here, since nonprofits seem to be
characterized by a linkage of strategic roles (Anheier 2005: 176). Nonprofits tend to deliver
services or products with a ‘plus’ (Salamon et al. 2000: 23). Furthermore, it can be stated that
nonprofits are “[…] likely to seek out and include the target population for purposes of value
formation, and long-term commitment and loyalty” (Anheier 2005: 213). These particularities
might as well apply to SEOs, because they have a pronounced focus of the social mission.
The aspect becomes even more appealing when taking into account the complementary
findings of BoP scholars. Simanis and Hart (2008), discuss the next generation BoP strategy
which might as well be applicable by the different kinds of SEOs. They base their conclusions
on case studies from Kenya and India. They do more than ever before stress the inclusion of
local partners. In their case, however, it is not existing local organizations, but rather the local
communities themselves that are designated to be able to build business models in
exceptionally close collaboration with companies. The authors literally opt for a merger of the
firm’s project team and local community members, including living field experience in the
67
community for the company staff. The jointly developed business models represents a ‘grass-
roots’ approach which is fairly uncommon to especially MNCs, but is regarded to be
necessary to drive entrepreneurial activity in this environment. The ‘scaling-out’ process shall
replicate the prototype in further communities adapting to local particularities while
maintaining a strong connection to the initial incubator. A growing network of such
community projects is the goal of the approach. London and Hart stress the building of local
capacity in the SE process. It refers to acknowledging and using already existing local
resources and simultaneously sharing knowledge, skills and competencies with local partners.
All three aspects point to a closer interconnection between the private sector, developmental
organizations and local communities (London & Hart 2004: 62f.). ‘Social embeddedness’
(Seelos et al. 2010) enabling a bottom-up development as well as a web of strong connections
to a variety of partner organizations and institutions seems recommendable. Co-production
(Pestoff & Brandsen 2005) consequently plays a major role in SE.
As discussed in (Krlev 2011a: 3) SEOs can also be expected to act entrepreneurially in terms
of resource mobilization. Their complex mission set and challenges in becoming more self-
sufficient while refusing from neglecting ‘unprofitable’ target groups forces to be innovative
in developing new fund raising and income generating models (Oldenburg 2009: 198).
Repeatedly it becomes evident that SE comprises a large spectrum of organizational forms
and works within the intersections of the various sectors. This is illustrated by e.g. the ‘Global
Entrepreneurship Monitor’ (GEM). The GEM 2009 for the first time included an extensive
section on Social Entrepreneurship. The report (Bosma & Levie 2010: 45ff.) illustrates that
SE can take different organizational forms from ‘Not-for-Profit SE’, which is distinguished
from traditional nonprofits (the study uses the term NGO), over ‘Hybrid SE’4 to ‘For Profit
SE’. What is striking in the GEM 2009 is an overlap between reported ‘traditional’
entrepreneurship activity observed for several years and the new Social Entrepreneurship
activity. It shows that some entrepreneurs classified as ‘traditional’ actually provided Social
Entrepreneurship (Bosma & Levie 2010: 45). The same might be true for the description of
the nonprofit sector by Salamon et al. in which SEOs might have been included (2003).
The interconnection of spheres enhances Brody’s (1996: 536f.) analysis that nonprofits and
for-profits are not too distinct from each other. She states that the non-distribution constraint
of NPOs neither guarantees better social performance in the absence of shareholder pressure
nor worse performance due to rising inefficiencies. It is rather e.g. a political, sociological and
psychological dimension that preserves a strong for-profit – nonprofit divide between
organizations, although both might work for the ‘common benefit’. Doing so has usually been
ascribed to NPOs, but it does not need to continue being this way. Brody hypothesizes that
e.g. subsidies might be directed more towards socially worthy outputs than to particular
organizational forms.
As initially proposed it seems that economic as well as non-economic entrepreneurship
driving societal development is present across predefined spheres. This might be considered
in the discussion of possible improvements for the framework surrounding the international
rise of social entrepreneurial activity.
4
The usage of the expression ‘Hybrid SE’ with social enterprises being considered to be hybrid entities
themselves (Aiken 2010) underlines that we are in need of comprehensive and more thorough studies of the field
of hybrid organization as a whole, distinguishing hybrid organizational setups from hybrid purpose organizations
(HPOs).
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Identifying potentially relevant business principles
‘New public management’ has done a lot to introduce business principles in the public
and nonprofit sphere affecting management style, organizational structure and governance
(Hood 1995: 96). Further influences from the business sector have resulted in an increase in
e.g. consumer orientation (Drucker 1990: 37ff.), which is a construct coined by for-profit
scholars – the broader concept being termed ‘market orientation‘ going back to Narver and
Slater (1990). According to the scholars market orientation is mainly made up by two
characteristics, namely ‘customer emphasis’ and ‘competitor emphasis’. Customer orientation
means that the organization identifies potential present and future customers and their wants
and needs. Competitor orientation refers to the necessity for an organization to spot all
existing and potential present and future competitors as well as their short-term and long-term
strengths, weaknesses and strategies (see also Kohli & Jaworski 1990). Narver and Slater
have verified a positive relationship between market orientation and business performance.
This principle has been found to persist robustly even in increasingly competitive
environments (Slater & Narver 1994). Given these research findings signs of market
orientation can be assumed to be found with successfully operating SEOs.
Porter (1996) has extensively elaborated on the aspect of competitive strategy. He underlines
that competitive advantages that emerge from improved operational effectiveness is not
enough to be successful in the long term. The author argues that it is insufficient to do the
same things better than others. Instead he opts for focusing on different activities or doing the
same thing in a different way: “Competitive strategy is about being different. It means
deliberately choosing a different set of activities to deliver a unique mix of value” (1996: 64).
This is related to his demand that organizations should be preoccupied with the creation and
exploitation of ‘distinctive competencies’ (1991: 97). Porter (1996) proceeds by arguing that
organizations should strive for strategic fit in order to enhance sustainability of the
competitive advantage. This means an organization’s products, services and processes should
reinforce each other and thereby increase uniqueness. A network of combined, harmonized
activities is harder to replicate than a single unique selling proposition (USP) and the essence
of strategy itself. The customer value of one activity can be leveraged by a firm’s other
activities. Organizations should strive for extending the uniqueness of their value set while
continuously strengthening their activities’ fit. This goes in hand with Porter and Kramer’s
(2006) demand for strategic CSR that should match, complement and synergize with the
firm’s core competencies. The reasoning might be as relevant for SEO strategies as they are
often enterprising in striving for creating social value.
Method and studied sample
The research design used in this paper is comparative, cross case studies (Eisenhardt
1989) based on data collected through in-depth interviews. Those have been conducted in mid
2010 via telephone, taped and transcribed afterwards.
The interviewed organizations from Germany are all ‘Ashoka fellows’. Although this might
represent a certain degree of bias in the sample, the complex selection process of fellows also
underlines that these organizations show above-average traits of SE. All organizations have
been independently selected and approached by the author, not via Ashoka. While the chosen
organizations, in addition to the element of acting for society, should share an increased
degree of innovativeness and/or self-sufficiency, which are usually ascribed to SE (compare
the discussion in Krlev 2011a), it seemed reasonable to bring heterogeneity into the sample
69
with regard to e.g. their field of operation. The selected sample was conceptualized to be
heterogeneous in this respect in order to either derive considerable differences in the notions
of entrepreneurship and applied business principles across this aspect, or to identify traits that
seem to be rather independent of the organizational setup in terms of the service/product
offered. The same logic has been applied to the organizations working in Bangladesh, while
these tackle more basic issues due to different needs in comparison to Germany. Additionally,
while all initiatives from Germany are rooted in civic engagement, the particular needs in
developing countries seem to offer more opportunities for commercial businesses to engage in
SE. Two prominent examples of such have thus been chosen. Besides, we find a lot of
engagement in terms of development cooperation in countries like Bangladesh. That is why
the sample also contains a public-private partnership of foreign aid that is complemented by
two rather civic initiatives operating in Bangladesh. The heterogeneity with regard to the
initiatives’ background follows the same reasoning as the one with regard to the branches of
operating. A consequence of this approach across both countries is also that we find a variety
of funding models in the organizations. Thus, the method of purposeful sampling mainly
followed the rationale of heterogeneity sampling mixed with a search for information-rich
cases, typical for intensity sampling (Patton 2002: 234f.).
The size of the interview sample is relatively large for qualitative research, so that the validity
(Lincoln & Guba 1985) of the results is increased. This accounts even more because of the
fact just referred to, namely that the present study covers SEOs across different branches,
sector backgrounds and funding models. Consequently we should not only be able to derive
very case specific results, but ones with considerable assignability to the vast area of SE. A
cross-case accumulation of similar experiences, arguments or propositions decreases
suspicion towards context-specificity or personally biased statements by the respondents. The
effort to draw a clear picture of the organizations is supported by a categorization of the
organizations along the developed Social Entrepreneurship Scheme (SE scheme). Readers
will consequently be able to personally judge the findings’ degree of transferability (Merriam
1995) to other SEOs.
All respondents are experienced practitioners in the field of SE and have executive positions
in their organizations. Mostly the interviewee is even the founder or executive director of the
organization. Two limitations are represented by the fact that it was only one person per
organization that has been interviewed and that only the viewpoint of egos, but not of alters
has been included in the study. The semi-structured interviews included guiding questions on
a variety of issues grouped around three building blocks: (I) Some background data on the
organization; the self-assessment of the organization’s mission and the (envisioned) impacts;
the organization’s funding structure. These were aiming at deriving a rather comprehensive
understanding of the organization, at relating the organizations to each other and at assessing
them against the SE scheme. Besides, these aspects feed the second building block. (II)
Questions covering strategies, entrepreneurial behavior and business rationales that have
helped to conceptualize the organization, to overcome outside resistance and to successfully
establish operations. The answers have been analyzed and structured along motives of
economic and non-economic entrepreneurship and business principles that could be
identified. (III) The examination of relations to and the assessment of surrounding (political)
frameworks that have supported or hindered the unfolding of the SEO – some of which might
be related to the applied coping strategies. However, these have mainly been developed into
another paper (Krlev 2011b). Just two of the organizations preferred to have their
organization be anonymized (SICT and PPP). The others are going to be referred to in non-
anonymized form. The interviews with SL, IQC, HI, DiD, EWS, GDFL, BGL and PPP that
were originally conducted in German have been translated by the author of this paper. In case
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of the joint ventures GDFL, BGL and PPP the interview partner was from the private sector
company (see the table below for the respective abbreviation).
Locating the SEOs along the SE scheme
The following table gives a brief impression of the organizations’ activities

(organizations from Germany are found on white background, the ones from Bangladesh on
green background). Details are discussed in the subsequent parts, while the discussion tries to
focus on the most significant statements of the interviewees due to reasons of capacity.
Further, more subtle interpretations of the interview material have been left out. That is why
each organization is not discussed in depth with respect to the elements to be examined.
Organization Mission Services Funding

Science Lab • Improve scientific • Direct training courses for • Investments by
(SL) education for pre-school children corporations and
and primary school • Vocational training for school foundations
children. teachers and kindergarten
teachers
IQ Consult • Start-up assistance for • Start-up consulting • Clients pay services
(IQC) unemployed young people • Microfinance services to themselves
and handicapped people. support start-ups • Service contracts with
government agencies
• Investments by
foundations
Hand In • Social reintegration of • ‘Work and Box’ programs for • Service contracts with
(HI) delinquent young people. reintegration government agencies
• Private donations to
close funding gaps
Dialogue in the • Work integration of blind • Exhibitions with blind guides • Reached full self-
Dark people. • Events (dinners) in the dark sufficiency after 7 years
(DiD) • Leadership trainings for of government funding
companies conceptualized support
around the dark
Elektrizitäts- • Decentralized and • Fostering political and • Full self-sufficiency
werke Schönau democratized renewable ecological change in favor of
(EWS) energy provision. renewable energy production
• Selling electricity
SEO in ICT • Fostering the integration • Various, example: ‘Infoladies’ • Private Donations &
(SICT) of ICT in the context of provide rural communities Venture Philanthropy
economic and societal with information services, • Corporate funding
development for the poor telecommunication devices or (profit sharing)
(mainly through education programs.
leveraging NGO models).
Click Diagnostics • Helping existing NGOs to • Connections between doctors • Private Donations &
(Click) provide improved and remote communities are Venture Philanthropy
healthcare services to the established; digital medical • Corporate funding
poor with the help of patient records are being (profit sharing)
mobile ICT. created.
Grameen Danone • Fight vitamin and mineral • Selling nutritionally fortified • Parent company
Foods Ltd. malnutrition by. yogurts to the poor investments
(GDFL) population. • Aiming at full self-
sufficiency (still in late
start-up phase)
BASF Grameen • Enhancing malaria • Selling long-lasting • Parent company
Ltd. protection. insecticidal nets (LLINs). investments
(BGL) • Aiming at full self-
sufficiency (still in early
start-up phase)
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Organization Mission Services Funding

Public-Private- • Fighting malnutrition by • An appropriate food vehicle, • Parent company and
Partnership establishing national like e.g. oil is fortified with public investments
against fortification programs in a vitamin A by local food • Aiming at full self-
malnutrition multi-stakeholder producers in order to fight sufficiency (still in early
(PPP) dialogue. vitamin A deficiency. start-up phase)
Table 1 Studied SEOs – Mission, Services, Funding
It becomes evident that the studied and interviewed organizations are going to represent a
large variety of types within the SE scheme. This setup is indeed challenging in terms of
finding a common language and formulating interview questions that aim at exploring the
same issue within different contexts. But this ‘multi-site design’ taking into account different
types in several situations with particular backgrounds also increases the possibility of
applying the results to a larger variety of other organizations (Merriam 1995: 58). It also
enables to build the desired link of qualitative research between “[…] a micro perspective of
the data and a macro conceptual/theoretical understanding” (Morse et al. 2002: 18) which is
exactly the purpose of this study. The first effort based on the interviews is the classification
along the SE scheme. According to the answers of the interviewees the organizations can be
located as follows.
Figure 1 Locating the SEOs on the SE scheme Source: according to (Krlev 2011a: 8)
The interviews revealed that the categorization is not always evident. As discussed earlier
(Krlev 2011a: 8f.) it is disputable whether government contracts for services and performance
based payment as is the case for IQC and HI is to be categorized as earned income, or as
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‘external contribution’. Similar accounts for SL. It could be interpreted as being self-
sufficient, because government subsidies are not given at all. The donations received (which
make up 90% of total funding, the remaining 10% are earned income in the classical sense,
since they are paid by private schools and kindergartens directly) are quasi exclusively
provided by companies that want to foster scientific education in “their” region, a measure
that is going to benefit themselves. The link in this case is, however, clearly weaker than if
companies funded scientific education on the university level, because the benefit at this level
is more immediate in terms of the period of time until the company can make use of it.
The organizations have first been categorized according to the conservative interpretation that
this is no earned income, but arrows mark the point where they would have to be located if
interpreted in the opposite way (which is favored in the initial conceptualization of the SE
scheme).
Click and SICT have been categorized according to their present state. Both aim at increasing
their earned income considerably and therefore explore ways that fit in their primary mission.
Hence, both gradually drift to the right. Click aims at reaching self-sufficiency in 2013. A
means for reaching it is data collection for international institutions which is made possible by
the close contact with rural populations.
“In developing countries just relying on patient fees is not going to make the health system sustainable
enough. Therefore it is a necessity to have various funding sources. One service in addition to
leveraging health services is that we can collect a lot of health related data or social behavior related
data. There are a lot of organizations like the WHO (World Health Organization) or the UNFPA
(United Nations Population Fund) who are interested in such kind of data.” (Click)
Another mechanism, that also SICT is using, is to let telecommunication companies

contribute to the funding, since they do directly benefit from the operations of the
organizations.
Is this earned income or a donation? It is to be admitted that the link is much closer in the
latter case than for SL, but the general issue remains. The case of DiD is quite clear. It is
completely self-sufficient at the moment. It is, however, not to be forgotten that the
organization needed significant start-up assistance. Thus, even self-sufficient and successful
organizations, might have needed support in the past to become established.
GDFL, BGL and PPP have been categorized according to their targeted profitability.
Especially in the case of BGL and PPP, where continuous sales have not been established yet,
it is too early to say whether they are going to succeed. However, in case of failing to reach
the targets the organizations are not likely to continue their operations. ‘No loss’ is the
minimum target for all three. The companies do not have the intention to operate the projects
as a form of continuous charity project. The business case is essential for those organizations.
„In my opinion only solid, financially sustainable economic activity leads to social impact that is
a) sustainable in itself and b) significant enough. The business model has to be the driving force.”
(GDFL)
“ PPP follows a model that is based on financial profits. Therefore it can be operated sustainably
and be scaled durably, which is necessary for fundamentally combating malnutrition.” (PPP)
Exactly the same applies to EWS, even though in a very different field and context.
“[…] in the ecological sector it is very important to prove that economic activity can be
financially sustainable.” (EWS)
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While GDFL and BGL are set up as Social Businesses according to the definition of Yunus
(Yunus et al. 2009) containing a non-distribution constraint (1980), PPP and EWS do not
have such a constraint.
While EWS expresses that the political dimension might in some cases also prevent people
from purchasing electricity from them the relation of income and social or environmental
impact is mainly a win-win. This is the case for GDFL, PPP and BGL too. The more yogurts,
fortified oil (in case of PPP this works via domestic food producers) or mosquito nets they sell
the more people are protected or benefit from improved health. PPP regards the business case
as essential for this win-win.
“The prerequisite for this win-win situation is the business case. If we did not operate the model as a
business case and were dependent on donations for example, then there would be a trade-off between
the social impact and our financial interest not to donate until infinity.” (PPP)
IQC offers a service instead of a consumer good, but the underlying principle of the more
people they help to establish their own business out of unemployment or despite a handicap,
the bigger the impact and their revenue becomes. DiD can also hire more blind people, the
more financially successful they are and the more they expand their exhibition, the dinners in
the dark or the training services for companies. Click and SICT on the other hand side do
have to make a trade-off. Serving some customers, especially the poorest of the poor is far
less lucrative than serving people that are still in need, but better off.
“Our income sources are individual and corporate philanthropy in and outside Bangladesh. This
is because our target is also to reach people, who cannot pay for a service. Consequently some
services are free of charge, some require minimal payments and other services are with full
payment.” (SICT)
Similar accounts for HI. Some services are not being refunded by the government, although
they are assessed to be very valuable for the delinquent young people and therefore
nonetheless provided. Although all children are of same importance for SL, the ones coming
from less-advantaged families in terms of income and educational level are in special need of
assistance. The assistance is provided, despite the fact that payment is lower or funding harder
to get. The sample of SEOs therefore includes ‘trade-off’ and ‘win-win’ situations, but no
‘separate bottom line’ model in the sense of having a commercial business that supports
separate, purely charitable activities.
The degree of innovation is sometimes hard to judge, especially in interorganizational
comparison. The positioning is therefore just a rough indication. GDFL and PPP do in any
case follow a new model to fight malnutrition. Existing distributions of vitamin
supplementation pills follow a different model. They are neither food nor market based
approaches and usually take place once or twice in a year free of charge. For GDFL the
engagement in Bangladesh is based on a new model:
“The start was very entrepreneurial, out of the box and driven by the executive board [of Danone],
because we needed someone to approve that we could proceed in developing the model, partly past
existing internal regulations.[…] This was like flying blind. It was a‘ laboratory’ in which we could
experiment and did learn our lessons.[…] The impact within the company has been enormous, because
the model represents an extreme ideological innovation.” (GDFL)
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The target group of DiD has literally not been served before in terms of making blindness a
unique talent indispensible for the job instead of trying to enable people to work despite their
perceived ‘handicap’. Meanwhile there have been predecessors providing the same service or
product as BGL, but the way of providing it is seen to be significantly more sustainable and
complementary to existing ones.
“[…] we believe that the projects run by the ‘national malaria control program’ and the Global
Fund are not going to be sufficient to supply all the people who are at risk of malaria in
Bangladesh with mosquito nets.” (BGL)
HI and SL had predecessors too, but offer unique approaches in this context with a quality
and success rate not met by other providers. EWS had predecessors as well, but has found a
unique way of combining and promoting their political mission by acquiring an electricity
distribution network and thereby providing democratized renewable energy on their own. ICT
has played a role in the development context of Bangladesh before, but SICT and Click
significantly enhance existing organizations’ operations for the poor and underserved in a
systematic and significant way. Finally, IQC did not invent start-up consulting, but was
among the first organizations in Germany to target unemployed young people and
handicapped people with a tailored approach.
“[…] in general start-up assistance did not use to be provided for our target groups. It did neither
matter in the context of regional development or related fields. We have combined these aspects on
ourselves. This is what we based our organization on. This is where we saw a market. There have
not been any predecessors of our kind in Germany.” (IQC)
The positioning is not to be seen as an assessment of quality or in terms of one initiative being
“better” than the other. It is just about indicating to which extent there has been someone
dealing with the issue before or if it is a completely unprecedented approach. Therefore it is
also not an assessment of uniqueness. Literally none of the approaches has been fully met by
competitors yet in terms of quality, performance or the value proposition, which makes all
unique whether there have been somewhat similar predecessors in the field or not.
Depicting entrepreneurial elements
Vanguard roles and institutional entrepreneurs
The preceding discussion on the innovativeness of interventions underlines the

potential ‘vanguard role’ of SEOs sketched previously. As also put forward we see that the
SEOs usually do not only conceptually pioneer new approaches, but operationalize them
autonomously or do at least assist in this matter. Thereby they do foster change of the
institutional structures in their fields of activity and related spheres.
EWS’ strongly present political mission is illustrated by the interviewee’s statement. Their
goals with regard to structures in the energy sector are:
“Nuclear power phase-out, climate protection and decentralization as well as democratization of
energy production. […] Selling renewable energy is hardly termed ‘Social Entrepreneurship’ at
first sight, but EWS does a lot more than a conventional electricity supplier as just indicated.”
(EWS)
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SICT interconnects their operations with a research division. Thereby practical impacts can be
underscored academically and transferred to other contexts and academic research can deliver
impulses for new project approaches in turn. The organization tries to share research findings
with relevant institutions. Click sees a major impact in creating digitized patient records,
which represent a grounding basis for sustainable and reliable medical assistance in poor and
rural areas. BGL stresses the dimension of a multi-stakeholder dialogue and an enabling
framework that is necessary to create national food fortification programs.
“First, we aim at initiating an efficient, activity-oriented multi-stakeholder dialogue. Second, we

want to build technical capacity with the local edible oil producers and third we will support the
creation of an enabling market framework for our intervention.” (PPP)
IQC puts forward that the organization defines a part of their success in establishing common
standards in their field of activity that public agencies consequently build upon in the
conceptualization of new tenders.
“To a certain extent it is to be regarded a success when particular products succeed on the
market, when services that we offer or particular standards that we have developed appear in
public tenders. This is a success for society.” (IQC)
SL mentions that the organization has been involved in the creation of public kindergarten
curricula due to their expertise in early age scientific education.
“Our mission is very clear. We want to change perceptions of scientific education in general, on a
societal level. […] At the kindergarten level this subject had been completely neglected. In
Bavaria for example we participated in developing the curriculum for elementary education, we
wrote the parts of it that focus on natural sciences.” (SL)
DiD concretely aims at bringing handicapped people and non-handicapped people closer
together and wants to build experiences of ‘social learning’ into university curricula.
“We aim at reducing barriers between the sighted people and the so called ‘handicapped’ people.
[…] My idea is that trainings conceptualized around the dark should be institutionalized in the
context of ‘social learning’ , for example in MBA studies. This is our goal that we are working
towards.” (DiD)
In this respect, in addition to the ‘vanguard role’, the interviewed SEOs act as institutional
entrepreneurs influencing social or education standards as well as shaping health care
prevention systems and market environments necessary for leveraging the interventions, a
role that would usually be ascribed to non-economic entrepreneurs.
Fostering societal change
The preceding examples are complemented by the fact that some organizations
explicitly state that they want to foster change in societal attitudes (as can also be recognized
in SL’s and DiD’s statement above).
PPP strives for positioning the topic of nutrition as central to development in developing
countries. HI in turn wants to show that positively influencing the personality of people is
possible and that delinquent people can find their way back into society and the job market.
The change in societal attitudes towards this issue shall be promoted.
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“[…] we want to cause societal effects with our activity. We want to show that positive change in
personalities is possible. It is a primary goal to foster change of societal attitudes in this regard in
an activity-based form – not only in theoretical terms but in action – with measurable results.”
(HI)
The organization’s efforts shall also affect the future of SE.
“Social Enterprises in ten years time will have totally different external conditions as the ones I
had to face. The pioneering work taking place today will have positive effects on attitudes towards
Social Entrepreneurship, but it is also linked to resignation to a certain extent.” (HI)
GDFL has the vision of a permanent engagement of commercial business in SB and sees the
sector in the responsibility to do so and surrounding constituencies to push for it.
“In my opinion the governments globally shall recommend to corporations to do the following in
one way or the other: It should not be worthwhile to strive for a rate of return of e.g. 15 percent.
Economic activity would be more ‘healthy’, if companies generated a rate of return of ‘only’ ten
percent and invested efforts usually dedicated to the other five percent into sustainable, social
impact. […] This would be a massive breakthrough in thinking.” (GDFL)
EWS refers to its high reference power and impact on the public discussion of renewable
energy provision, but underlines that impact, especially in a socioeconomic and political
context is hard to assign to particular organizations.
“A cause-reaction relationship is hard to identify. You start a discussion, then it is continued by

others, you do networking, you do grass-roots work, you do campaigns, then all this spreads and
gets bigger. Others do similar things. Eventually you cannot say: ‘Ah, this is what I achieved’.”
(EWS)
Nevertheless we see that SEOs strive for e.g. lowering cultural barriers between people or for
promoting sustainable developments in energy production. But SEOs do not only affect
developments in their targeted field of activity. They drive change with regard to cultural
attitudes towards engagement in the social sphere and general conditions for it instead – e.g.
in terms of attracting more firms to engage in social business or shaping attitudes towards SE.
Consequently they can be described to act as ‘visionaries and strategists’ as initially
suspected. The reference to a certain resignation by HI hints to the necessity of exploring
existing frameworks for SE and implications for their timely improvement.
Grass-roots activities
Establishment work at the local level is important for SEOs in industrialized countries
as it is in developing countries. GDFL and BGL involve ‘Grameen ladies’ as micro-
entrepreneurs in their distribution network. SICT and Click stress the usage of NGO resources
on the ground. In the struggle of establishing their organization SL also had to choose a
‘grass-roots’ approach. The context is certainly different from the examples in developing
countries, but work on the ground has been as necessary to set up the organization.
“It really has been a kind of grass-roots activity. The first kindergarten teachers who did a
vocational training with us said to their fellows: ‘This is the best thing I ever did during my
career’. These reactions caused a pull and attracted more and more educators.” (SL)
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Thus, spreading of the concept through personal recommendations has been necessary while a
top-down approach backed-up by the responsible ministries e.g. might have been much more
effective in the first place. EWS also had to engage in extensive work on the ground in order
to convince people from their idea of decentralized and democratized ecological energy
production, since politicians have resisted supporting their ideas. Thus, the organizations
engage into this ‘bottom-up’ activity partly because it is necessary to reach the people, to
convince them and to thereby make their intervention more sustainable.
“We have only been able to build our image through the fact that we succeeded in reaching our
goals by our own efforts. Therefore I am not sure whether we could have been successful, if we
had had a lot of ‘external’ support.” (EWS)
This is linked to the subjects of societal awareness raising and acceptability. But the missing
support from the top, namely the government, and missing infrastructure played a major role
in having to engage into this kind of activity too. Missing infrastructure is to be seen in a very
physical dimension in Bangladesh, but it may also be interpreted as a very impermeable
federal educational system or an electricity market highly regulated in favor of formerly state
owned oligopolistic utility companies, which has been the case in Germany until the late
1990s.
There are exceptions to this rule. PPP e.g. approaches the issue rather from the top. This
strategy, however, requires a joint effort of strong, well-established partners. Awareness, trust
and credibility building consequently take place at a different level initially, but are of major
importance in any case.
Empowerment of target groups and surrounding constituencies
Another essential aspect is the empowerment of the target groups or surrounding players.
While GDFL, BGL, PPP and Click primarily still deliver the means to tackle the social
problem themselves, they include local industry, micro-entrepreneurs or health workers in the
provision of the service. Others even make the target group become the immediate problem
solver through providing targeted assistance. SICT e.g. helps farmers to increase their
knowledge base and communicate more easily, but they are the ones using the service to
create economic value. IQC assists in the establishment of a new business, but it has to be run
by the unemployed or handicapped person eventually, who thereby often creates new
employment himself/herself.
“These are people without the adequate education for instance. We want to support them to do
their own thing, to take their fate into their own hands.” (IQC)
SL enables school and kindergarten teachers to transmit their concepts to children and thereby
to multiply it. DiD opens employment opportunities for blind people, but simultaneously
grows with their impulses and competencies:
“This is how it started: […] Our blind chief guide had the idea that we could address companies.
Then we started exploring, asked ourselves some questions: What happens in commercial
business? Which learning targets does a job or leadership training have to have and how can we
create it by making use of the dark? We have developed ourselves further and now we are doing a
great job.” (DiD)
The ‘beneficiaries’ have thereby enabled DiD to develop their business model further.
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Innovative, partnership-based operation models
Engagement in partnerships is a further crucial strategy for SEOs. The focus lies,
however, less on a subsequent evolvement of single partnerships. Many of the interviewed
organizations have been engaged into proper partnership networks in a very early stage of
evolvement. In many respects partnership is even the essence of the SEOs’ business models
and might therefore be interpreted as an example of economic entrepreneurship in terms of
business model innovation. This accounts in particular for SEOs like EWS that actually
emerged from a societal, political movement.
“Being part of a network and thereby increasing one’s own significance is essential especially in
the ecological sector. You become reassured that what you do is supported by many others. Often
you have failures to cope with. In these cases it is important to feel supported by a strong
network.” (EWS)
EWS furthermore underlines the aspect of expertise transfer through partnerships:
“GLS bank is the biggest and oldest, ecological, social and ethical bank in Germany.
Understanding the grounding logics of this kind of banking has been tremendously important for
us, especially in terms of statements on issues of: ‘What to use money for? How to give a meaning
to money?’” (EWS)
HI underlines the necessity of being integrated in a strong network in the area of SE since the
field is very challenging to operate in:
“[…] it is always useful to engage in partnerships in our field of activity, the more the better –
with corporations or other organizations. Both is important. Otherwise you find yourself alone
way to fast.” (HI)
Especially most interviewees on the left hand side of the SE scheme had to establish contacts
to private social impact investors and set up a consulting relation with a long-term
perspective. Partnerships are used as platforms for discussion, expertise transfer and the
possibility of benefitting from increased credibility and mutual learning.
For BASF and Danone a partner like Grameen with standing contacts and local knowledge as
well as experience in reaching the poor was indispensible for engaging in a Social Business
venture.
“Because of the fact that Grameen has a wide and well established network in Bangladesh
reaching the target population is not difficult at all. BASF itself does not have this network! And
we would never be able to build it. […] Our joint goals would almost be incompatible without
having Grameen as a partner.” (BGL)
PPP underscores that the complementary competencies of a private sector company and a
public developmental agency are the foundation for successfully engaging in the field of Food
fortification at all. This has a lot to do with different fields of expertise that have to match as
well as the question of legitimacy towards different stakeholders like the local food producers
in the country on the one hand side and the local authorities on the other. The private sector
company puts forward that engagement in the field is very difficult without a public partner.
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“We [the private firm] have first tried to do it on our own. But we have recognized that we need
the support, the competencies and the connections of our public partner to get access to local
public authorities that can shape the market environment. We [the private firm] can always make
valuable contributions by providing technical input to the local industry, but the contribution
remains incomplete if surrounding conditions do not fit.” (PPP)
International NGOs can also play a decisive role for acquiring legitimacy and credibility just
as local public agencies are necessary to realize the intervention.
“International NGOs are valuable partners in terms of political advocacy and for setting up a
holistic food fortification program. Furthermore you need the commitment and participation of
several national ministries, like the ministry of health that has to decide on fortification levels in
the food.” (PPP)
GDFL names GAIN (Global Alliance of Improved Nutrition), an international NGO engaged
in the field of nutrition, with similar arguments and puts forward that it is willing to be
critically assessed by it.
“GAIN is the best example. GAIN has a high credibility and valuable competencies with regard to
the fortification of food with vitamins and mineral nutrients. We [the joint venture and the private
firm itself] are willing to be critically assessed by the organization.” (GDFL)
SICT and Click fundamentally built their model on cooperation. They engage in leveraging
the existing operations of NGOs by their competencies.
“First, we have been experimenting in order to develop the best model for our purpose. We found
that working with local partners and helping the local organizations increase their capacity is a
more sustainable way than direct intervention from our side. Now, in the second stage we are
supporting more than 100 organizations, which are implementing models developed by us.”
(SICT)
“In Bangladesh there has not been anything comparable before the foundation of Click. There
have been NGOs reaching out to the poor people. But what we are doing is to provide the existing
NGOs with technology. Thereby we significantly increase the interventions’ efficiency. […] What
we aim at is to create models that a variety of economic players can tap into and get economic
benefits out of while creating a lot of social value. This is only possible, if you are partnering with
different kinds of organizations.” (Click)
Click puts forward a concept that comes close to an open source model with the combined
aim of creating private gains and social value. Those two organizations, however, do not
focus on local partnerships exclusively, but maintain connections to international
organizations simultaneously. SICT’s collaboration with an international NGO from Canada
is a practical, successful example of Edwards et al.’s argument that collaboration between
“Northern” and “Southern” organizations should become the rule rather than the exception
with Northern NGOs helping local initiatives to leverage their strengths (Edwards et al. 1999:
131f.) as SICT itself puts forward.
Although most of the organizations are rather young, some of them certainly have passed the
critical start-up phase. Their attitude towards partnerships supports Sharir et al.’s findings that
successful collaboration has a significantly positive effect on the ‘long-term survivability’ of
SEOs (Sharir et al. 2009: 90f.). The discussed SE ventures even seem to have in common that
they are more dependent on combining and merging often very divergent capabilities,
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resources and expertise. This might evolve through the fact that increasingly hybrid demands
have to be fulfilled by the organizations right from the beginning. It might be perceived that
SEOs thereby drive ‘business model’ innovations in the sense of economic entrepreneurship.
For building their coalitions SEOs do not least have to act like ‘politicians’.
Innovative funding practices
As put forward by Oldenburg (2009: 198) SEOs do indeed act entrepreneurially by

tapping into several funding sources in a way distinct from what we might expect in the case
of ‘traditional’ entrepreneurs.
Some are directly targeting end users: GDFL with its yogurts; BGL with its mosquito nets;
EWS by selling electricity; DiD by their exhibition, the dinners and leadership trainings for
companies. Some of them like BGL and IQC – that addresses individuals to a minor extent
but mainly applies for tenders issued by government agencies – try to enable end users to pay
for the services through providing microcredits of different size.
Others are trying to involve third parties, which are direct or indirect beneficiaries of their
model into their funding structure. One beneficiary might be the government as is the case for
IQC that creates employment for and by unemployed people through start-up assistance and
for HI that reintegrates delinquent young people that would otherwise cause costs of
imprisonment.
Further beneficiaries are companies in the case of: PPP that addresses local producers to
fortify food; SL that provides companies with the possibility to enhance education in their
region. The latter accounts also for Click and SICT in particular. They try to raise new
mission related income sources by teaming up with ICT companies that have an own business
interest in the scaling of the SEOs’ model.
“And local corporations are also starting to work with us. For example a few banks and
companies that are involved in green energy or retail or internet service providers. […] [T]he
partnership with us helps them to reach the rural markets in particular.” (SICT)
“If our model grows, their [telecommunication companies’] core business also grows.” (Click)
This enables the organizations to engage in a cross-subsidization model in order not to leave
the ‘hard-to-reach’ and ‘hard-to-serve’ behind (Seelos & Mair 2009: 236).
Depicting business principles
Performance measurement
The initial statements about the impact created by the interviewed SEOs are not only
based on personal perceptions, but have mostly been underlined by performance and impact
measures. IQC e.g. uses an SROI (Emerson et al. 2000) approach and calculates that benefits
created are outweighing costs by a factor of around and above three.
SL engages in conducting surveys among children, their parents and teachers also on a long-
term basis to assess the success of their programs.
“We established the organization without having the interest of benefitting personally from it in
financial terms, but with the intention to act entrepreneurially in any other respect, e.g. with
regard to decision making, quality assurance etc. […] How do we measure it? […] we do surveys
with the parents and the children at the end of each course. Furthermore we do surveys with the
participants of our vocational trainings after each course and once again after two years. Thereby
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we see that 80 percent of the educators who have participated in one of our vocational trainings
are still engaged in these issues and continuously apply our concepts.” (SL)
By doing so SL is able to monitor the impact of their concept, increase credibility or make
necessary adaptions in order not to loose its ‘vanguard role’.
This role can also be ascribed to HI. The organization has a success rate of 80 percent in
terms of bringing delinquent young people into employment sustainably, while public
reintegration programs usually have a recidivism rate of about 80 percent. This has been
triggered by an inherent performance orientation of the organization.
“The stipulation simply is: success orientation. Our goal was the reintegration of at least 70
percent of the people we work with. The success orientation triggered the development of means
and methods that enabled us to realize that success.” (HI)
While GDFL and BGL as well as PPP in particular are just at the beginning of operations in
Bangladesh they have clearly measureable goals, namely the coverage of their products in the
country and the resulting reduction in vitamin deficiency or malaria prevalence. It is,
however, going to take some more years to effectively measure their impact.
Earned income and business practices
Simultaneously the SEOs stressed an orientation towards efforts of increasing self-

sufficiency as part of their mission. As underlined in the classification of the SEOs along the
SE scheme the organizations having emerged on the commercial business side put stronger
stress on this aspect and actually made it a precondition for their engagement (GDFL, BGL,
PPP), while the ones having emerged from civil society are less driven by this aspect (SL;
DiD). Nevertheless, organizations ‘from both sides’ use a common language to underline the
necessity of following business practices.
“You will never be able to run a Social Business sustainably, if you neglect fundamental principles
of economic activity. This is an adjustment to an otherwise socially romanticized approach. The
approach does only work when you apply business practices in a sufficiently ‘cold blooded’
manner.” (GDFL)
“[…] I recommend everybody to apply tools and knowledge from commercial business right from
the beginning. Controlling is crucial as well as business outlooks and liquidity planning – very
classical and also very hard instruments – otherwise the whole thing might degenerate to mere
social romanticism.” (DiD)
The proceeding discussion will show that SE nevertheless adds a special perspective to the
business view.
Market orientation (customer orientation)
Market orientation is of significant importance for the interviewed SEOs. However,

‘customer orientation’ has a more complex meaning for SEOs compared to commercial
businesses. Customers of SEOs are embodied by end users, classical nonprofits, the
government, foundations or individual donors. Most of the SEOs across Germany and
Bangladesh have multiple customers. In consequence it is more demanding to capture their
multi-facetted ‘customer-orientation’ compared to commercial business, which usually either
serve end consumers or other businesses, sometimes a combination of both.
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As already discussed GDFL, BGL and EWS directly sell to the end consumer. SICT and
Click do both primarily work with NGOs which are partners and to a certain extent also
customers simultaneously. Click additionally aims at establishing end user services. PPP
works with local food producers in order to reach end consumers with the fortified food. For
IQC the customer in many cases is both, a government agency paying for the service and the
unemployed or handicapped person aiming to establish an own business simultaneously.
“We have a dual understanding of the ‘customer’, like many other social enterprises. We need
support from foundations or from public agencies. In these cases the foundation or the public
organization is the customer. When we approach a job center and offer them services, then the job
center is our customer. […] Finally we also have the classical ‘end customer’, the jobless people
who want to start their own business.” (IQC)
Similar accounts for HI with its reintegration program for delinquent young people usually
being financed by the government. Demands from both sides eventually have to be met. DiD
targets end users through their exhibitions or ‘dinners in the dark’ as well as companies
through leadership trainings, while the actual beneficiaries are the blind people that the
organization employs to deliver those unique services. SL directly addresses companies or
foundations to pay for services delivered to children or vocational training for teachers. Some
courses are also paid by mostly private schools or kindergartens directly or by the children’s
parents.
Despite the very different ‘customer groups’ the organizations’ strategies are all very similar.
IQC for instance states that the organization acts market-oriented:
“We act with a business manner, which means that we are always oriented towards the market
and try to identify where we see the demand, in our case the demand for ‘social products’. […] We
act like a commercial business with the exception that our service is not a commercial but a social
one.” (IQC)
SICT talks about developing USPs for their customers. Click refers to a significant ‘value
added’ that is realized through the establishment of a permanent connection of patients to a
doctor network. PPP remarks that it is crucial to convince their customers, in this case the
food producers and partly also the government of the effectiveness, the quality and the impact
of the intervention to get them on board. It is furthermore necessary to offer supplementary
services like technical or policy consulting respectively to succeed with the own mission and
striving for sustainable impact. BGL underscores the ‘value added’ of their product (its
insecticidal activity complementing the physical barrier of a mosquito net) that shall convince
consumers to buy it. In their opinion the social mission the organization is following is
worthless with regard to the individual buying decision.
“On the market we differentiate ourselves solely by the characteristics of our product. The product
has a value added [the insecticidal activity] which is reflected in the price. Our net is simply more
costly [than the ones that do only represent a physical barrier]. The customer, however, usually
understands this. Either the customer says: ‘I accept the deal’, or he chooses not to do so.” (BGL)
GDFL stresses customer focus in a similar way, but also pronounces particularities of
customer orientation in the context of SB or SE. The organization stresses that it is important
not to fully rely on previous commercial experiences.
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“You need classical tools, e.g. there has been a thorough market analysis to find out which
product could develop into a mass product in the country. But from my point of view it was also
crucial to leave out or redesign certain management practices.” (GDFL)
For example more thorough exploration of needs and capabilities at the local level is needed
in comparison to commercial businesses. Small scale, decentralized production might be
another necessary aspect to be able to serve customers in developing countries. The necessity
of adaptions to commercial consumer orientation does not only account for developing
countries though. Involving or dealing with blind people, delinquent young people,
unemployed people or children in a targeted way obviously needs more thorough reasoning
on customers needs than ‘ordinary business’. SL states that their approach is designed along
recent pedagogical standards that are not matched by other providers. It does furthermore
stress the continuous advancement of their services that always happens with the well-being
of the children as the primary goal. Similar accounts for HI. The organization refers to the
uniqueness of its approach that emerges from the therapeutic and pedagogical dimension of
the concept. Therefore it is not sufficient to explore which products or services are going to be
successful, but to more thoroughly explore how they have to be shaped to meet the needs of
the target groups.
With regard to consumer orientation EWS adds a further perspective and interestingly
outlines which significant effects the incorporation of the political mission can have on the
customer tie as compared to purely commercial consumer orientation.
“At the beginning EWS was so well known because of the preceding citizens’ decisions, donation
campaigns etc. that the people were happy to be able to buy electricity from us […] [o]ut of the
ecological perspective, but also because we are so rebellious. […] We only do little advertising.
Most new customers are attracted by current customers. […] People often approach me and say:
‘Hey, I am also member at yours now!’ Thereby they do not mean that they have become members
of the cooperative society, but that they buy electricity from us. […] It makes a huge difference
how you deal with customers: ‘Are they only customers or fellow campaigners?’” (EWS)
This statement illustrates identification with the company coming close to establishing a
cohesive community that is probably very rarely found in ‘ordinary business’ and seems
inherent to organizations engaged in SE. These particularities at EWS come in combination
with another, rather classical aspect. The fact of establishing customer oriented services
helped the SEO to attract customers from the big utilities that had cultivated a public
administration like, little customer friendly way of dealing with their clients until the late
1990s. In combination these two elements enabled EWS follow an offensive strategy aiming
at taking three customers away from the big utilities, if they succeeded in attracting one of
theirs.
The last fact can be identified as ‘competitor orientation’, which is also found in other SEOs
and therefore bridges over to the discussion of the second aspect of ‘market orientation’.
Market orientation (competitor orientation)
The statement of EWS exemplifies ‘competitor orientation’ in a very pure form, as

defined earlier. However, in SE there seems to be a certain tendency towards a mixture of
competition and cooperation.
DiD emphasizes that their strong image and the explicit social orientation of the organization
is a useful aspect for differentiating themselves from increasing competition by followers.
Some of them try to replicate the ‘dinner in the dark’ without employing blind guides.
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However, in case followers replicate their approach with a similar intention, DiD assesses it
positively. IQC even occasionally engages in combined efforts with mostly indirect
competitors in case of applications for funding or to be able to offer even more holistic
services.
“[…] when ever it seems recommendable we try to create win-win situations and try to address
foundations in cooperative efforts for instance.” (IQC)
Collaboration in this case leads to a combination of distinct value propositions to an even

more unique combination.
However, if ‘me-too’ providers, who did not have the costs of concept development, try to
drive others out of the market it is to be assessed as problematic. In such cases IQC
differentiates itself through the quality argument of unique selling propositions and driving
innovation even further. By putting forward USPs the statement establishes a link back to the
concept of customer orientation and underlines thereby that the two elements of market
orientation are inherently interconnected.
“[…] we are economically dependent on being able to position and sell the new models that we
develop on the market. […] We always try to avoid price competitions and to succeed by stressing
the quality or ‘unique selling propositions’ of our services.” (IQC)
SICT puts forward that it resigns from fields, where it sees that followers do better.
“[A]t the beginning we have been opening many fronts, because literally nothing was there. Now,
when we see that someone else has entered the field and is doing good work, we are leaving that
field to concentrate on others.” (SICT)
However, this is not just a move driven by business reasoning to exit markets where others
perform better. SICT actually tries to assist followers for the sake of the social impact. In
many cases the organization even proactively works for increasing competition in their field
of activity. Nevertheless the acceptance and support towards competitors is fundamentally
linked to the quality of services they provide, which has to be higher then the own one.
A very similar reasoning applies to SL. The SEO promotes that it has the ultimate goal of
making itself obsolete. The organization works for integrating their activities into the general
school system, which should be providing high quality basic education. SL might then focus
solely on the role of an innovator striving for developing existing standards further.
Consequently the organization also appreciates followers, but has high demands towards the
quality of the ‘me-too’ service.
“The first step should be a cooperation with public administration that leads to increased
interweaving. Our goal eventually is to make ourselves redundant. We have to reach a stadium in
which we are not needed anymore. […] I am glad to see others copying us, but only if the copy is a
good one, if others copy our concept with a high standard of quality. […] You can’t simply send
university students or scientists to the kindergarten, if those have no prior experience in working
with children. This way the course is going to be a lesson for the students or the scientists, but not
for the children.” (SL)
To summarize, we see that in case the quality of competitors’ services is inferior the SEOs
will continue to strive for outperforming them. Consequently this trait is not to be interpreted
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as a weakness, but a striving for concerted manners towards social value creation, which
might be levered but not dominated by the business reasoning applied.
Unique fit of services
A further characteristic of the SEOs is a striving for creating a unique fit of

strategically combined activities. This goes even further than offering ‘value added’ and helps
to create sustainable competitive advantage. Click combines the establishment of digital
connections between patients and doctors with the creation of medical records and the
provision of health related data to international organizations. SICT combines research with
action programs and builds strong connections to existing NGO interventions. The
organization furthermore aims at creating a unique set of competencies by adapting to new
developments. The services offered are thus in continuous flux. PPP combines public
competencies like the provision of policy advice with private business competencies like
technical assistance and thereby is able to provide value that one party alone is not capable of
creating. Since partnership building requires a lot of efforts, it is hard to imitate. The
participation of Grameen in GDFL and BGL, with its exceptional, standing distribution
system gives the organizations a distinct edge complemented by the product expertise of the
private companies. DiD has continuously expanded their offerings. The exhibition and the
dinners in the dark have been complemented by leadership trainings for companies.
“In order to decrease our dependence from external contributions we have tried to substitute them
with new services conceptualized around the dark. We have succeeded in doing so by developing
the job and leadership trainings and the ‘dinner in the dark’.” (DiD)
Services are currently even developed further. First applications in universities have been
introduced. Expertise acquired through the broad range of services makes the organization
unique. IQC in turn directly referred to one of their goals being to provide custom-fit services.
“We always aim at developing tailored services. ‘Better’ for us means ‘tailor-made’.” (IQC)
Besides they neatly complemented their start-up consulting by including handicapped people
as a new target group. For private start-up projects the organization offers special support
through the provision of microcredits.
SL offers trainings for school and kindergarten children as well as trainings for their
instructors. Through this ‘train-the-trainer’ approach the SEO created a possibility to merge
experiences from both sides. HI is currently developing a new work integration program for
delinquent young people complementing their original ‘Work and Box Company’ approach.
Besides, the organization conceptualized a violence prevention program for schools and
thereby expands its competencies and its reach. In the case of EWS it is the unity of economic
activity and political work that has grown over years and significantly contributed to its
success that is hard to achieve by others. Customers are not just regarded as customers by
EWS, but as fellow-campaigners.
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Condensed derivation of strategies in SE
We have seen that strong features of economic and non-economic entrepreneurship as

well as business principles are present in SEOs that can be summarized and condensed in the
following way:
Since SEOs often pioneer radically new, unprecedented approaches or modify and improve
existing approaches to solve social challenges in a ground breaking way – underlined by
efforts of performance management – it can be claimed that they take a ‘vanguard role’. As
they do not do so with primarily commercial goals, we see that the element of innovation
itself inherent to the concept of entrepreneurship according to Schumpeter in this case mainly
relates to its non-economic form. Same accounts for the SEOs’ role as institutional
entrepreneur that shape existing structures by their actions and thereby also drive social
change. The fact that most SEOs seem to be ahead of existing frameworks and societal
attitudes underlines the SEOs function as ‘visionaries and strategists’.
Furthermore, the target groups are empowered and take part in the solution of the problem
rather than benefiting from a provision by others, which is often referred to as a co-production
process both by for-profit and nonprofit scholars. Some SEOs still provide help themselves,
but do not focus on doing so on a free-of-charge basis and involve the target group in added
value creation instead. In other models the target group creates the added value directly with
assistance from the SEOs.
Partnership networks are of special importance in enabling SEOs to strengthen their position
and scale their impact through combined efforts – mostly they are even necessary to get the
organization started in the first place. Some of the studied SEOs are themselves partnerships
between organizations with complementary competencies, often from different sectors. Other
SEOs use partnerships for discussion and exchange, mutual learning and expertise transfer.
‘Social embeddedness’ therefore seems to be of much higher importance for SEOs than for
commercial entrepreneurs – the fact that they have to act as ‘politicians’ when building their
essential partnership coalitions goes beyond entrepreneurial business model innovation. The
issue becomes even more important when taking into account that the SEOs sociopolitical
mission mostly requires a ‘grass-roots’ approach to slowly build up awareness, acceptability,
trust and credibility in direct interaction with the beneficiaries. This does usually happen,
where access from the top will not yield the same effect, is impossible or is being blocked and
is of exceptional importance in fields characterized by personal delicacy, which probably is a
characteristic of most social problems.
What is more, SEOs try to tap into a diverse system of funding sources of which governments
and foundations are essential parts, as is the case for end user fees and company engagement.
Often it is an example of third party involvement that is crucial for establishing viable SEO
models in the first place. It represents a mixture of nonprofit fund raising practices as well as
targeted for-profit efforts of generating income from fees. The combination, however, is
distinct from commercial entrepreneurship in the classical sense. Cross-subsidization is
probably the most obvious distinction and emerges due to the prevalence of the mission of
social value creation even for the ‘hard-to-serve’.
‘Market orientation’ embodied by ‘customer orientation’ and ‘competitor orientation’ is
clearly present in SE too and plays a major role for the success of SEOs. Due to the social
dimension and the aim of working for societal improvements, however, competitors might in
some cases be seen as a complement or partners. Furthermore, clear differences remain
towards commercial business. The target groups require thorough consideration and uniquely
shaped ‘business models’. This accounts especially, with regard to the often found strong
87
socio-political mission being interpreted as a trait of non-economic entrepreneurs, which

might in turn foster an exceptionally strong cohesion of the SEO and its customers. Besides,
SEOs often seem to have multiple customers, a fact that makes serving their needs in an
integrated way more complex compared to facets of this issue in less hybrid organizations.
Another evident aspect is the strive for developing a unique value proposition in so far as the
range of offered services or products represents a complex and highly qualitative combination
of features resulting in a fit that is very hard to imitate. This is done for the sake of the own
target groups, but also to enhance the viability of the own organization. It might serve as a
sustainable competitive advantage in the language of commercial business, while it has to be
remarked that self-preservation is not a primary aim of SEOs.
It has to be remarked that the revealed or confirmed traits have been found not to appear in
isolated form. The studied organizations contained almost all of them across sectors or fields
of activity and across cultures – though to a varying degree. Nevertheless, SEOs seem to be
characterized by a combination of roles and strategies. They seem to be exceptionally well
described by the term ‘recombinateurs’ that Swedberg used with reference to ‘classical’
entrepreneurs. SEOs even appear to extend the scope of recombination by incorporating a
large variety of areas affected by this particularity. SEOs are for instance ‘recombinateurs’
with regard to: sector logic, notions of entrepreneurship, roles & strategies, goal sets,
mobilized resources, the creation of multi-player setups and stakeholder involvement.
The just explained particularities of the SE concept common to both, developing and
industrialized countries, give rise to expectations that SEOs can solve or at least mitigate two
selected defects of the voluntary sector mentioned by Anheier (2005: 130f.). The first one is
referred to as ‘philanthropic insufficiency’. The term suggests that charity of comparatively
few will not be sufficient enough to challenge the broad range of modern society’s needs. The
second defect is called ‘philanthropic amateurism’. It points to the fact that a considerable
amount of human resource input in nonprofits comes from volunteer labor, which is a positive
aspect of civic engagement, but might at the same time lead to a lack of highly qualified,
professional input. Anheier subsequently names governments as complementary partners
making up for nonprofits’ weaknesses. He points to the larger amount of resources of
governments as well as to the possibility of enhancing quality in the nonprofit sector by
introducing standards and benchmarks. The latter measure does, however, try to solve the
problem of ‘philanthropic amateurism’ by giving outside guidance that might hardly change
the generic problem itself. The increasing entrepreneurial practices and business orientation in
SEOs instead might lead to professionalized teams. Greater efficiency and primarily
effectiveness might simplify the compensation of experts and attract them to join SEOs. This
very aspect might additionally scale the reach of social impact activity significantly and
address ‘philanthropic insufficiency’. Even in a scenario where organizations continue to be
dependent on philanthropic or government funding, a more effective, entrepreneurial use of
the resources or development of innovative services or products would serve this purpose.
Additionally taking into account the financial challenges across literally all welfare states and
the particular challenges in developing countries, like corruption or an extreme welfare
disparity, it becomes more than questionable that governments might really compensate
existing weaknesses of the nonprofit sector. SEOs seem to be a valuable complement to the
existing spectrum of governmental and nonprofit social impact activity providers in any case.
However, we have to keep in mind that also in markets there are always losers.
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ISSN 2224-9729
Cultural differences?
The integrated discussion of SEO strategies shows that despite very different cultural setups
prevailing in developing countries and in industrialized countries, SEOs are applying similar
strategies. However, as preceding studies have shown SE is heavily influenced by cultural
attitudes, legal tradition and particular political frameworks, as well as it is capable of
changing those in turn (Kerlin 2009; Bode & Evers 2005; Barraket & Archer 2009). Also it
became obvious that we find a larger variety of SEOs in Bangladesh than in Germany in
terms of their place of emergence. The initial reasoning that SEOs in developing countries are
more likely to start developing from both sides of the continuum between nonprofit and for-
profit than in industrialized countries has been approved by the studied sample.
Therefore context does play a major role. Nevertheless we should cease to lead discussions of
SE and the more general concept of hybridity in isolated form along geographic focuses and
try to draw more cross-cultural comparisons and derive more broad implications where
applicable. This accounts for cross-sector studies to a similar extent.
Conclusion
This paper has contributed to depicting entrepreneurial elements in SEOs. It has done so by
drawing on existing entrepreneurship as well as more general for-profit and nonprofit theory
and by merging it with the empirical analysis of detailed explanations of SEO executives. By
combining findings from ten different SEOs across various branches and two countries the
findings can be suspected to contain a rather high generalizability. In-depth studies of further
SEOs will have to show, if this claim can be maintained. By doing so we might be able to
derive an even clearer picture on how SEOs act as commercial, non-economic/societal and
also institutional entrepreneurs. In this study we have already seen that SEOs combine and
merge entrepreneurial aspects ascribed to both economic entrepreneurship and to non-
economic entrepreneurship in the sense of Schumpeter with a special emphasis on driving
societal change in general. Additionally the paper has shown how business principles applied
by SEOs do complement and support these elements. The fact that SEOs work towards
improving general socioeconomic or sociopolitical patterns clearly illustrates that studying
SEOs requires a multi-disciplinary approach covering all sorts of entrepreneurial elements
and business principles in these organizations. Besides diving deeper into issues of how
exactly SEOs act entrepreneurially and in this respect differ from more ‘traditional’, less
hybrid organizations on the micro and meso level, many related fields remain to be explored.
Concerning organizational particularities one of the most interesting fields seems to be the
exploration of governance mechanisms shaped by or reciprocally shaping these particularities.
Thereby we would not only have to include the desired achieving of hybrid goals, but also
redesigned inputs and processes (as demanded by Glänzel & Schmitz 2010; Glänzel &
Schmitz 2011). Furthermore it is certainly worthwhile to intensify research on the macro level
as well. It is to be explored which effect the created impacts of SEOs have on existing
(public) structures, how they change or complement them and whether entrepreneurial
innovations can be incorporated into those if found to be desirable. Eventually we might ask
how we want to ensure that social entrepreneurial activity itself is going to be governed
effectively by regulative institutions in order to optimize impact while ensuring and
increasing transparency and accountability.
89
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Biographical notes
Gorgi Krlev holds a master’s degree in Business Administration with intercultural

qualification (Anglo-American studies) from the University of Mannheim. He has dealt with
various issues of hybrid organizations – exemplified by ‘professionalized’ nonprofits, social
entrepreneurial organizations, social businesses, (strategic) corporate social responsibility
activities and ‘base-of-the-pyramid’ business models among others – both in academic
research and in practice. His current work at the Centre for Social Investment (CSI) at the
University of Heidelberg focuses on issues of “Governance and Leadership in Hybrid
Organizations”. Simultaneously he is preparing to pursue a PhD.
Gorgi’s main research interests lie in social impact measurement and rating; social
investment; leadership, governance and strategic challenges in hybrid organizations; and
(political) framework analysis in this context. The phenomenon of Social Entrepreneurship –
especially in industrialized countries, but also in an international comparative perspective – is
one of the grounding frameworks for his work.
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ES+ Methodology: Mapping Social Entrepreneurship
Rita Megre1, Miguel Alves Martins2, João Cotter Salvado3

1
Research Associate, Social Entrepreneurship Institute, rita@ies.org.pt
2
Founder and Director, Social Entrepreneurship Institute, miguel@ies.org.pt
3
Research Associate, Social Entrepreneurship Institute, joao@ies.org.pt
Abstract. The Social Entrepreneurship Institute (IES) in Portugal has developed

an innovative methodology called ES+ for the identification and research of
Social Entrepreneurship initiatives at the local and regional level. This
methodology was created as part of an overall policy to identify and support
Social Entrepreneurship initiatives in Portugal, considering Social
Entrepreneurship as a solution to yet unresolved social and environmental issues.
The goal of this methodology is not only to identify innovative solutions that can
be replicated in other regions/countries but also to identify the needs of social
entrepreneurs, allowing for an action plan and for the tailoring of IES services, to
be able to better serve these social entrepreneurs, empowering them for greater
social and environmental impact. In this paper, the ES+ Methodology is
described and presented with application to two contrasting Portuguese regions –
one mostly urban, near the Portuguese capital and the other mostly rural in the
remote Portuguese inland region of Trás-os-Montes.
Keywords: Social Entrepreneurship, Research, Methodology, Mapping,

Identification, Support
INTRODUCTION
Social Entrepreneurship (SE) is a rising field of activity worldwide. Given the

inclusive nature of the field it is sometimes difficult to define it in a rigorous way, and several
definitions have been proposed. We will approach this definition issue later in the next part of
the paper. There are several characteristics that constitute a social entrepreneurship initiative,
yet the growth and maturation of the field requires a systematic and consistent approach to
identify and assess SE initiatives.
The field so far has been focused on identification of the high-impact entrepreneurs through
national competitions and international awards1. However we need to move the field away
from its focus on a few high-impact social entrepreneurs and develop methodologies that
allow us to systematically identify and assess the thousands of initiatives, often at a local
level, that can become the high-impact SE successes of tomorrow. It is to address this need
that the ES+ project was developed and piloted in Portugal in 2008 and 2009.
1
Schwab Foundation, Ashoka and the Skoll Foundation are some of the leaders in this area.
97
The Social Entrepreneurship Institute (IES) in Portugal has developed an innovative

methodology called ES+ for the identification and research of SE initiatives at regional level.
This methodology was created as part of an overall policy to identify and support SE
initiatives in Portugal, considering SE as a solution to yet unresolved social and
environmental issues. The goal of this methodology is not only to identify innovative
solutions that can be replicated in other regions/countries but also to identify the needs of
social entrepreneurs, allowing for an action plan and for the tailoring of IES services, to be
able to better serve these social entrepreneurs, empowering them for greater social and
environmental impact.
IES has started with the pilot development in the municipality of Cascais (coastal region in
Portugal outside of Lisbon, with over 180,000 inhabitants), in 2008-2009, with the aim to
identify and map all initiatives that can fall under social entrepreneurship. The selection
criteria have been defined based on the social mission and the potential impact of the
initiatives, the innovation of their approach, and the potential for scalability and/or
replicability. The ES+ implementation is organized in four different stages explained later in
the paper: Phase I – Identification interviews with local/regional observers; Phase II – Initial
filtering calls with identified initiatives; Phase III – Questionnaire with the selected
initiatives’ leaders; Phase IV – Recognition and Development Plans. The pilot project
finished in 2009 with extremely positive results and IES replicated the methodology in 7
municipalities in Vila Real District (interior North) in 2010 and started to replicate in Oporto
Municipality in the beginning of 2011.
Based on the pilot project and replicas, the ES+ research methodology is confirming the
potential for replicability and the need for support of social entrepreneurs in Portugal. We
believe that this model provides us with a mapping of social entrepreneurship initiatives in
each region, with needs identified, and an opportunity for both the initiative and IES to work
together towards further empowerment. It also provides us with a unique insight into cultural
aspects of each region, and how these play into the start-up and development of initiatives.
We are convinced that this model can be replicated in other regions and countries and we aim
to further replicate the model in Portuguese speaking countries in Africa, Asia and Latin
America.
IES AND SOCIAL ENTREPRENEURSHIP
IES
IES is a membership-based nonprofit organization located in Cascais, Portugal. It was

created in partnership with the Cascais City Council and INSEAD, and is aimed at supporting
individuals and organizations that seek to create social and environmental positive change.
One of IES’ main objectives is to build capacity for greater impact in the Portuguese society
and it has two main areas of intervention (1. Research and Development and 2. Education and
Training). IES aims to be the leader in the referred areas applied to Social Entrepreneurship in
the Community of Portuguese Language Countries. Nowadays IES has 2 Institutional Partners
(Cascais City Council and INSEAD), 4 Premium Members (Águas de Portugal, EDP
Foundation, Redworks and Santander Totta), 6 Base Members (Abreu Advogados, Accenture,
BMW Foundation, Ideiateca Consultores, Portuguese INSEAD Alumni Association Portugal
and Once Upon a Brand), and more than 30 individual members.
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Social Entrepreneurship
As referred previously, Social Entrepreneurship (SE) is a rising field of research and

action all over the world. Specifically, applied research on this field has grown without
precedents in the last years and this implies that it is an emergent and largely under theorized
area of practice and research (Nicholls, 2006; Nicholls and Cho, 2006). Consequently, the
concept of Social Entrepreneurship has been presented in different ways by different authors
such as Dees (2001), Emerson and Economy (2001) Seelos and Mair (2005), Mair and Martì
(2006), Nicholls (2006), Osberg and Martin (2007), Elkington and Hartigan (2008), Zahra et
al. (2008), or London and Morfopoulos (2009) (just to cite some of them). It is not the
objective of this paper to explore in detail the different approaches used by the referred
authors.
Despite the lack of consensus on the definition of Social Entrepreneurship, for the purpose of
this paper, Social Entrepreneurship initiatives have been defined as having: an innovative
approach to solve societal problems, a clear social mission, sustainable, potential for
replication and capacity to produce impact at large scale.
Innovation is a determining factor in understanding entrepreneurship (Vale et al., 2008) and
five types of innovation can be found: new or improved products; new methods of production;
opening to new markets; use of new sources of raw materials; new organizational structures
for an industry. This study will consider as innovative all the initiatives that are pioneering in
the region under research, and that fall within one or more of the above types. Innovation is
always associated to the creation of value for the client (Carlson and Wilmot, 2006). It is
important to mention that innovation must be able to be applied outside of the local context;
therefore the study also aims at identifying initiatives as replicable (geographical expansion) /
scalable (number of people reached) (Dees et al., 2004).
Having a strong social mission is the main element of social entrepreneurship (Dees, 2001),
and what distinguishes from entrepreneurship as a whole. Social entrepreneurs work towards
change (Bornstein, 2006) and the development of human skills that allow for autonomy and
independence of a segment of the population for whom these conditions are not guaranteed.
As referred in Salvado (2011, p. 84), there are a number of ways to define ‘social mission’ in
this context and what seems logical to conclude from the different authors that tried to define
it is that it refers to improving society and creating social value through catalyzing social
change and meeting social needs (Tan et al., 2005, Mair and Martí, 2006; Nicholls, 2006;
Nicholls and Cho 2006).
Empowerment is another characteristic that this study believes essential to accomplish these
goals as it is, as a concept, a deeper understanding of autonomy and individual responsibility
(Fazenda, 2006, p.1) as an historical process towards individual liberation from structures,
conjunctures and social and cultural practices that are oppressive and unfair, through a
process of reflection about human life reality (Pinto, 2001, p.247). It is an approach to the
problem that goes beyond a paternalistic attitude, excessive protection and unilateral decision
making, as a liberating process that allows individuals and groups to be aware, face the need
of change and assume a concrete and active role in it (Freire, 1970). Having a strong mission
and innovative initiative must promote people, organizations and communities participation,
in order to achieve major individual and communitarian control, more political efficacy,
major life quality and social justice (Wallerstein, 1992).
In what empowerment is concerned, the selection criteria of the initiatives will be the
potential for impact, instead of impact itself. This was measured taking into account the rigor
and method of the initiative to face social problems, and how its performance metric is
aligned with the problem the initiative is trying to solve.
99
Sustainability is a broad concept that includes both the continuation of the benefits that result
from certain activities (understood as ‘benefit sustainability’) and the ability of the
organization to continue to exist (understood as ‘organizational sustainability’) (Cannon,
2002). Many factors are seen to influence the sustainability of an organization, including the
operating environment, national and local politics and policies, the activities of other
organizations, the availability of skilled personnel, among others (Araújo et al., 2005;
USAID, 2000; Salvado, 2011). In the ES+ Methodology this criterion is measured holistically
taking into account a set of factors that influence the organizational sustainability. This
criterion is used only in the last stages of the ES+ implementation and it does not count to
select Initiatives in the end.
ES+ METHODOLOGY
ES+ is a strategic and innovative research methodology to identify and map social
entrepreneurship initiatives with high potential of social and environmental transformation
and to design regional strategies to develop locally social entrepreneurial practices and
behaviors.
As referred previously in the discussion around the concept of Social Entrepreneurship, these
initiatives solve neglected social and environmental problems with innovative approaches and
new solutions that transform mentalities and social dynamics. They have high potential to be
replicated and scaled-up and they are based in implementation, development and growth
models which are financially sustainable.
The general goal of this methodology is to promote local and regional development within the
logic of SE and ES+ is a pioneering methodology with this objective. The main objectives of
ES+ are to identify and characterize socio-economic and environmental initiatives and the
individuals that lead them in a specific region, and to understand which social and
environmental initiatives exist in that region and of these how many would fall into a broad
concept of Social Entrepreneurship. The methodology has been designed to help accomplish
these objectives by:
1. Identifying, contextualizing and categorizing the solutions implemented and their

methodologies according to specific social and environmental problems;
2. Identifying innovative processes, their origin, difficulties in the implementation and
categorizing the types of innovation that exist;
3. Identifying models of monitoring of results and evaluation of impact;
4. Identifying strategies and financially sustainable actions, and their relationship with
the community;
5. Identifying strategies and models for replication and/or scalability of the initiatives.
With the creation and communication of this valuable local knowledge, we admit to
contribute to other general aims like the promotion of local and regional development within
the logic of SE, the empowerment of efficient resolution of social and environmental
problems and the development of a more dynamic and entrepreneurial social and
environmental sectors. Actually, after identifying the initiatives according to the selection
criteria we aim at understanding each initiative, in order to design and implement strategies to
capacitate each one according to the real needs within the region.
In order to guarantee the quality and effectiveness of the research methodology, before the
implementation of ES+, certain aspects were defined and guaranteed by a structured Research
Team:
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1. Build a Scientific Board with an interdisciplinary group of people with academic and
professional experience in the social and environmental sector. The main aim of this
Board is to support and monitor the research team during the implementation of ES+
and to select the SE initiatives in the end;
2. The target population is the set of all those initiatives that contribute for social and
environmental transformation within the region in question. This includes initiatives
from the private sector, non-profit and public sectors, individual, and other initiatives
such as cooperatives and museums (Franco et al., 2006).
3. Initiatives selected are assessed based on 4 main criteria: innovation, potential for
replication/scalability, social mission, and potential for social impact. The initiatives
must be implemented and produce results in the region under analysis.
In terms of implementation the process was designed as follows:
Phase I - Identification Interviews:
The first step in the Project is the identification of Privileged Observers (POs), people that
through professional or personal experience have contact with initiatives for social
transformation in the region under analysis. The initial POs are identified by the different
implementation partners in the region and, as they are geographically dispersed, it is ensured
an optimal representativeness in the region where the Project is developed.
Personal interviews are carried out with POs in order to help identify initiatives in each
region, according to the selection criteria and to help identify other POs in a sequential way,
that results in different rounds of interviews and assures regional coverage.
Phase II - Filtering Calls (FC):
Once initiatives are identified by the POs, phone filtering interviews are carried out by the
research team to those initiatives that might fit the selection criteria in order to have enough
information to filter and select those initiatives that best fit the selection criteria.
Phase III - In-Depth Questionnaire:
Initiatives selected in Phase II are further studied through a detailed questionnaire filled by the
representative of the initiative in the presence of a member of the research team. In this Phase,
the research team aims to characterize the initiatives from different perspectives in order to
obtain detailed information for another selection step and also to conceive and implement a
strategy for support and development according to local realities and needs.
Phase IV - Recognition and Development Plans:
Initiatives are selected in Phase III by the Scientific Board (each member of this Board will
give individually his/her vote for each criteria and each initiative and the ones that produce
general consensus are selected) and then are considered Social Entrepreneurship Initiatives
(ES+) and recognized as such publicly. In a participatory way, together with these ES+
initiatives one plan to empower them is designed, and together with the project’s partners and
other regional agents a plan to develop locally the social and environmental sectors is also
designed.
101
After the Phase IV opportunities and priorities for local investment, research and training are
established and developed in order to stimulate and motivate the general social and
environmental ecosystem to become more entrepreneurial.
RESULTS IN CASCAIS AND VILA REAL
Introduction
This project was first implemented in Cascais Municipality (in the coastal area of
Lisbon) with a partnership between IES, the Local Government and the Central Government
institution for Employment and Professional Training. In this Municipality the results were
very encouraging and there was a strong interest from the Civil Government of Vila Real in
partnership with EDP Foundation and 7 Municipalities of this District to replicate this project
in the Vila Real District.
The context of both implementations is very different: In the case of Cascais we are dealing
with just one Municipality and in the other case we are dealing with 7 Municipalities.
Furthermore, the municipality of Cascais is mainly urban territory with 97 km2 and a
population of 183.573 inhabitants with high concentration of population per km2 (INE, 2001).
It is organized into 6 parishes: Alcabideche, Carcavelos, Cascais, Estoril, Parede and São
Domingos de Rana. The 7 municipalities of the Vila Real District (Alijó, Boticas, Mondim de
Basto, Motalegre, Murça, Ribeira de Pena and Sabrosa) are mainly rural territory with 2162
km2 and a population of 60.641 with low concentration of population per km2 (INE, 2001).
Vila Real district is located in the northeast of Portugal and it is one of the poorest regions of
the country and, in contrast, the Municipality of Cascais is located near Lisbon and it is one of
the richest regions of Portugal (Alves, 2009). The context of Vila Real is characterized by
lack of industrial economic activity (the primary sector still prevails), high unemployment
rates, lack of general confidence and initiative of the population and a high rate of old
population. On the other side, Cascais is characterized by high economic activity (mainly in
tertiary sector) and unemployment rates in line with the national rates, generalized confidence
and a majority of young population.
Results and Analysis
Phase I
As referred previously this is the first stage of the implementation of ES+. It is

established a first set of POs that will refer social and environmental initiatives and other POs
that can be useful to identify more initiatives and POs. This is an iterative process that enables
the Research Team to initiate the exploration of the region in question and to begin the
construction of local knowledge around Social Entrepreneurship.
Parish
Round 1 Round 2 Round 3 Round 4 TOTAL
Alcabideche
1 1 1 1 4
Carcavelos
0 1 3 0 4
Cascais
2 0 1 1 4
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Parish
Estoril
4 4 0 0 8
Parede
0 1 1 1 3
São Domingos de Rana
0 1 3 2 6
Municipality
8 6 0 1 15
Other
1 0 0 0 1
TOTAL
16 14 9 6 45
Table 1: POs interviewed per Round and per Parish in Cascais
Municipality
Alijó
3 4 3 0 10
Boticas
1 2 0 0 3
Mondim de Basto
2 3 0 0 5
Montalegre
2 3 1 0 6
Murça
2 6 5 1 14
Ribeira de Pena
2 4 0 0 6
Sabrosa
1 4 1 0 6
District
7 4 2 0 13
Other
0 1 0 0 1
TOTAL
20 31 12 1 64
Table 2: POs interviewed per Round and per Municipality in Vila Real
As presented on Tables 1 and 2, on the Municipality of Cascais there was a total of 45 POs
interviewed and on the 7 Municipalities of Vila Real there was a total of 64 interviews. The
Table 1 and 2 segments these total numbers in terms of the different territorial divisions and
Rounds (as explained previously this is an iterative process beginning with a set of initial POs
that will nominate other POs in sequence). Although the population is higher in Cascais than
in Vila Real, the geographical area of both regions is considerably different (the total area of
Vila Real under study is around 22 times the area of the Municipality of Cascais) and this is
the main reason to have a high number of POs identified and interviewed specifically on the
Round 2. The average number of POs for Vila Real and Cascais (per Parish and per
Municipality) were respectively and 4,8 and 7,1 which confirms what we have just referred.
Furthermore, in Cascais we are concentrating our analysis in just one Municipality with 6
Parishes and, in the Municipalities under study and belonging to Vila Real District we are
dealing with a total of 107 Parishes.
On Tables 3 e 4, we have the total numbers of initiatives identified in the different rounds of
interviews with the POs. As noted, POs identified 163 initiatives in the Municipality of
Cascais and 81 initiatives in the District of Vila Real. The next phase is the Filtering Call in
which each initiative is analyzed through a set of questions that will enable us to find whether
each of them are really social entrepreneurial. If we compare once again these numbers we
find that, on average, each PO referred 3,6 and 1,3 initiatives in Cascais and Vila Real
respectively which mainly has to do with the dynamism of the ecosystem in the social and
environmental sectors and the effect that this fact has in the presence of entrepreneurial
103
practices locally. This can be observed later on when we analyze the next Phases of the
Research.
Parish
Alcabideche
8 1 2 0 11
Carcavelos
5 1 9 0 15
Cascais
4 2 1 1 8
Estoril
31 4 5 0 40
Parede
1 2 3 1 7
São Domingos de Rana
2 3 7 0 12
Municipality
36 5 2 3 46
Other
15 6 3 0 24
TOTAL
102 24 32 5 163
Table 3: Initiatives identified by the POs per Round and per Parish in Cascais
Municipality
Alijó
12 10 0 0 22
Boticas
5 0 3 0 8
Mondim de Basto
5 2 0 0 7
Montalegre
12 0 0 0 12
Murça
7 1 0 0 8
Ribeira de Pena
7 3 0 0 10
Sabrosa
6 0 0 0 6
District
0 0 0 0 0
Other
6 2 0 0 8
TOTAL
60 18 3 0 81
Table 4: Initiatives identified by the POs per Round and per Municipality in Vila Real
Phase II
In this Phase, a set of organized questions is asked to the leader of each initiative
identified previously in order to filter the initiatives referred by the POs according to the
criteria associated with Social Entrepreneurship. Each small set of questions oriented for each
criterion will enable us to select which initiatives can potentially be considered as social
entrepreneurial.
In Cascais, from the 163 initiatives initially identified by the POs in Phase I, only 39
(approximately 24%) were selected in Phase II as potentially fitting the concept of Social
Entrepreneurship as defined in the early stages of the paper. In Vila Real, from the 81
initiatives identified in Phase I, only 10 (approximately 12%) were selected in Phase II.
As the selection ratio was relatively low, it became essential to try to understand what
characteristics were mostly missing in those initiatives in order to be innovative,
replicable/scalable, mission-driven, have social impact and to, ultimately, become effective
agents of social change.
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In the next Table information about the presence of criteria is organized. Each number shows
the percentage of initiatives identified that accomplishes each of the criteria.
• From the four criteria, only Scale/Replica Potential is higher in Vila Real than in
Cascais. Probably the explanation for this fact has to do with the characteristics in
terms of dynamism of both regions. As in Vila Real we found less social and
environmental vivacity the only initiatives that are implemented in this context are per
se replicas from another place in the country;
• In terms of innovation, we observe that this is the least present criterion in the
initiatives under analysis in both contexts. It is only present in 40% of the initiatives in
Cascais and in 30% of the initiatives in Vila Real and this can be explained probably
due to the fact that this sector in Portugal is not intensely oriented towards innovative
practices in general;
• In Vila Real, the presence of Social Mission initiatives is lower than in Cascais.
Probably, this has to do with two main factors: First, the higher social and
environmental dynamism in Cascais which enables the ecosystem to be more worried
with these issues and create more initiatives to tackle them. Second, in Vila Real there
is lower economic activity which motivates individual initiatives to fall more on
economic core activity than on the social or environmental one;
• The Social Impact Potential is generally low in both cases. Although, when we
observe the reality in Cascais and Vila Real (respectively 63,3% and 32,9% of the
initiatives respect this criterion) we can refer that the first context motivates more the
initiatives potential to generate impact. Once again the reason should be the same of
the previous analysis.
Cascais Vila Real Total

Social Mission 87,5% 55,7% 75,8%
Innovation 40,0% 30,0% 36,3%
Social Impact Potential 63,3% 32,9% 52,1%
Scale/Replica Potential 70,0% 84,3% 75,3%
Table 5: Main information from Phase II
Phase III and IV
In Phase III, In-Depth Questionnaires to the selected initiatives’ leaders from Phase II
were carried out. As referred, 39 and 10 questionnaires were carried out respectively in
Cascais and Vila Real. The results of the Questionnaire and the valuable opinion of the
Scientific Board gave us sufficiently information to organize initiatives into two groups:
Group A, where we locate the Social Entrepreneurship Initiatives, and Group B, where we
organize the ones that have some potential to become Social Entrepreneurship Initiatives.
Further analysis was carried out in order to study the main characteristics in each group, their
differences and common points, and to understand the needs to better cater for those in each
group. The next Table shows the main characteristics found in relation to the initiatives
selected in Cascais and Vila Real, and the data for each group. The information is organized
in Table 5.
105
Cascais Vila Real

Main Characteristics
Group B (34) Group A (5) Group B (5) Group A (5)
Women are responsible for the initiative 56% 100% 43% 20%
Initiatives that act on a local level 77% 80% 86% 40%
Capacity
Building, Access to Access to
Access to
Adult Education, Education,
Education,
Most represented sectors Education, Disabilities, Disabilities,
Disabilities,
Access to Capacity Resource
Employment
Education, Building Mobilization
Disabilities
Volunteers,
Children, Youth, Communities,
Elderly,
Most represented targets Students, Disabled, Disabled,
Disabled,
Communities Community Children
Children
Offer a Service 75% 80% 100% 100%
Partnerships with the public sector 74% 80% 100% 100%
Partnerships in general are essential
factor for project implementation and 30% 40% 71% 80%
success
Measure impact 44% 33% 43% 40%
Compares expected results with those
68% 80% 29% 60%
achieved
Do benchmarking 14% 0% 43% 20%
Own generation of financial resources 38% 80% 14% 40%
Willing to grow 79% 100% 71% 100%
Table 6: Main Characteristics identified in Phase III and IV
Some interesting observations can be taken from the previous Table:
• Every Social Entrepreneurship Initiatives in Cascais is led by a woman and the reverse
happens in Vila Real, where only 1 of them is led by a woman. If we observe the
initiatives that have some potential to become Social Entrepreneurship the ratio
between women and men leadership is balanced;
• In Vila Real, most Social Entrepreneurship Initiatives act at a regional level instead of
a more local level. In Cascais we observe exactly the reverse;
• Access to Education and Disabilities are the most represented sector in all the
Initiatives analyzed in this phase for both contexts. As a consequence of this point, the
most represented target population are Children and Disabled people;
• Most of the Initiatives analyzed here offer a Service. In Vila Real, all the Initiatives
offer a Service instead of a Product;
• Partnerships with the public sector are highly persistent in the Initiatives under
analysis and this fact reaches 100% for the context of Vila Real for all of them;
• Partnerships in general are seen as essential for most initiatives in Vila Real but the
reverse is found in Cascais. We can also observe that the Social Entrepreneurship
Initiatives perceive partnerships as more central than the other Initiatives for both
contexts;
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• Impact assessment habits obtain generally low levels for all initiatives. Interestingly,
Social Entrepreneurship Initiatives measure less the impact than the other Initiatives;
• Comparison of expected results with those achieved is higher in Cascais than in Vila
Real. It is also a practice that Social Entrepreneurship Initiatives use more than the
other Initiatives;
• Initiatives in Vila Real apply more Benchmarking than the ones in Cascais.
Unexpectedly, Social Entrepreneurship Initiatives do less Benchmarking than the
others in both contexts of Vila Real and Cascais;
• Social Entrepreneurship Initiatives tend to generate more financial resources from the
market. In Cascais and for both types of Initiatives, the own generation of resources is
higher than in Vila Real;
• Generally, the majority of the Initiatives are willing to grow and the numbers are
similar in both contexts. Every Social Entrepreneurship Initiative in Cascais and Vila
Real want to grow.
The needs identified in this Phase III were organized and summarized in the next Table:
Cascais Vila Real Total

Main Needs
# % # % # %
Access to Funds 12 8% 8 22% 20 11%
Achieve Sustainability 16 11% 4 11% 20 11%
Human Resources 15 10% 5 14% 20 11%
Impact Measurement Tools 19 13% 1 3% 20 11%
Infrastructure 12 8% 3 8% 15 8%
Marketing/Promotion 12 8% 3 8% 15 8%
Investment 8 5% 6 17% 14 8%
Visibility 10 7% 0 0% 10 5%
Business Skills 9 6% 0 0% 9 5%
Legal Support 7 5% 2 6% 9 5%
Coaching 7 5% 0 0% 7 4%
Management Tools 7 5% 0 0% 7 4%
Networking 5 3% 1 3% 6 3%
Advocating with Governmental Bodies 4 3% 1 3% 5 3%
Bridge with Academia 4 3% 1 3% 5 3%
Incubators 2 1% 0 0% 2 1%
Facilitators 1 1% 0 0% 1 1%
Recognition 0 0% 1 3% 1 1%
Credibility 0 0% 0 0% 0 0%
Sharing Knowledge 0 0% 0 0% 0 0%
Table 7: Main Needs identified in Phase III
In Cascais the top three needs are Impact Measurement Tools, Achieve Sustainability and
Human Resources and in the case of Vila Real we found Access to Funds in the first place,
then Investment and to finalize Human Resources.
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CONCLUSIONS
After these two implementations of a novel methodology to identify and assess Social
Entrepreneurship initiatives we believe we are well positioned to address our central goals.
First, we were able to develop a concept of Social Entrepreneurship and observe the dynamics
of the social interventions in two different regions in Portugal, while recognizing the evolving
nature of the concept and the societal needs. This process has been carried out by interviewing
local people and by finding various interesting initiatives and selecting those with the major
potential to create social change in their very own realities. Furthermore, we were able to
meet, know and connect with the entrepreneurs working on the field towards a common
purpose of solving specific social and environmental problems and, with them, establish a
local development strategy for strengthening social entrepreneurship in both regions. On the
other hand, we had the possibility to learn by doing, with the active participation of all the
individuals (POs and entrepreneurs) interviewed (around 350) during the different
implementation phases.
This local or regional project aims to promote, capacitate and increase the number of social
entrepreneurs effectively solving societal problems. In the field, we found very strong and
dedicated people with an enormous will “to do good, doing well”. In fact, the data collected in
the different phases allowed us to quantitatively and qualitatively understand the general
characteristics of these people and the main needs and gaps the must be fulfilled in order to
achieve the IES vision “more social entrepreneurs, more impact, better society”.
The main objective of broader IES strategy is to put social entrepreneurship in the national
agenda by identifying innovative initiatives that provoke positive social change in the
Portuguese reality and that advance the social sector towards a more entrepreneurial and
transformational one. Therefore, the main objectives are to promote innovation, scalability,
create more impact, and to ultimately lead to more sustainable initiatives, and more
sustainable social change.
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Biographical Notes
Rita Megre is Research Associate at IES. She holds a degree from Social Business,
UCAM – Rio de Janeiro, Brazil; INSEAD Social Entrepreneurship Initiative Certificate and a
Masters of Media and Cultural Studies from the Portuguese Catholic University – Lisbon,
Portugal. Rita has worked as social Project consultant at Beyond sustainable ideas (Portugal)
and as Project and Communication Manager at NGO Praticável - Rio de Janeiro, Brazil. She
has experience at volunteering (Rio de Janeiro slums).
Miguel Alves Martins is co-founder and Executive Director of IES. He holds a
Masters in Social Economy (ISCTE), has the Professional Certificate in Non-profit
Management from Kellogg School of Management; Management Acceleration Programme
(MAP) from INSEAD; INSEAD Social Entrepreneurship Initiative Certificate and a Degree
in Social Administration, ISSSL. Miguel was a consultant in several start-up projects in the
Portugal Telecom group, among others and has experience in social projects, helping the
launch of several organizations in Portugal and Mozambique.
João Cotter Salvado is Research Associate at IES. He holds an Undergraduate and
Master Degree in Economics from Universidade Nova de Lisboa (UNL) and a Master Degree
in NonGovernmental Organizations (NGO) Management and Development from London
School of Economics and Political Science (LSE). He was Research Assistant at Autoridade
da Concorrência and Teaching Assistant at Faculdade de Economia of UNL. He was co-
founder and Member of the Board of two international NGOs which work currently in
Mozambique and São Tomé e Príncipe.
Aknowledgement
The research team, in behalf of IES – Social Entrepreneurship Institute – would like to
thank all the people that believed in the first place in the design and implementation of this
innovative research methodology in Portugal:
• The Scientific Board, composed by Filipe Santos, Ricardo Zozimo, Raquel Campos
Franco, and José Paulo Esperança, for their advice, support and commitment since the
early stages of the design and implementation of the pilot project until its replication
(actual stage);
• The Sponsors for their belief in the need, relevance and social change potential of this
research for their territory and economic and social reality: Cascais Municipality and
IEFP (Central Government Institution for Employment and Professional Training), the
Civil Government of Vila Real, EDP Foundation and the Municipalities of Alijó,
Boticas, Mondim de Basto, Motalegre, Murça, Ribeira de Pena and Sabrosa.
This methodology is not applicable without the active participation and collaboration of all
the interviewees from the first to the fourth and final phase of ES+ research. We are very
thankful to all the local Privileged Observers and Representatives of the Identified Initiatives
in all regions, for being so willing to contribute and for being social leaders on their local
realities. It is with them and for them that the ES+ methodology is implemented and validated
each day in the field.
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Professionalization strategies of social work in social

enterprises based on socio-economic ratios
Wolfgang Laskowski1, Rainer Loidl2

1
University of Applied Sciences FH JOANNEUM, Graz, Austria.
2
Professor for Social Research, Department of Social Work and Management, University of
Applied Sciences FH JOANNEUM, Graz, Austria.
Abstract. The mission of a social enterprise is to improve the living conditions of

individuals and to contribute to social-economic welfare, which are traditionally
the agenda of social work. From a sociological theory of profession view and
supported by experiences in six case studies on SROI (Social Return on
Investment) in social enterprises in Austria we discuss the implementation of
socioeconomic performance measurement models as identity-formation and
profession development of Social Work. SROI programmatics and semantics are
understood as a professionalization strategy for the acquisition of societal
acknowledgment. If organizations fail in presenting performances and
effectiveness, their legitimacy is put into question and consequently the
acknowledgment is discredited. In pursuing both economic and social “double-
bottom-lines” social enterprises are challenged to create complex value and
performance measurement models and tools and to “signal” performance,
efficiency and effectiveness. The model SROI takes into account financial and
social value-added-processes and supplies a monetary evaluation of both.
Recognized language-codes serve to represent social work activities as means of
the argumentative logic of efficiency and effectiveness. Through reliability and
efficiency representation social work attempts to demonstrate professionalism.
Keywords. social entrepreneurship, social enterprise, social work, social

management, SROI, performance measurement, cost benefit analysis, profession,
profession theory, professionalism.
The need of value and accountability of social services – current

developments
All human service organizations, but especially the social service sector, are heavily
challenged by socio-demographic and societal changes. The enduring working premises of the
welfare state are becoming increasingly obsolete and organizations in the field have to
legitimize the receipt of public funding. Social purpose enterprises strive for performance,
effectiveness and efficiency. We find internal and external, organizational, professional,
social-demographic, economical, social, political and legal drivers named causing these
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Professionalization strategies of social work in social enterprises based on socio-economic ratios
increased legitimating needs. The following changes are frequently pointed out and can be
observed:
• Since the middle of the 1990´s most professional and vocational fields of human
service organizations have seen a large expansion (Rauschenbach, Schilling 1995:
324f). This development is due to the observable loss of meaning of voluntary work
on the one hand and the more pluralized, differentiated and individualized needs of
people on the other. The starting-point of such a development can be seen in the
decreasing significance of tradition along with an increase of individualization that
characterizes modern western societies (see Habermas 1973; Badelt 2002).
• However, the reform-pressure for social businesses arises not only from external
changes in general framework conditions but from modified normative, prescriptive
and legal conditions as well. On a transnational level the regulations and judgments of
the European Court of Justice open markets for merchandise and services on a cross-
national and a cross-cultural level as well (see European Commission 1989; Olk,
Rauschenbach, Sachße 1995; Tuckman 2000). Within the European Union national
laws enable handing over tasks that were formerly offered by the state, to free non-
governmental and privately run institutions (for Austria: see Dimmel 2005).
• Due to modern information and communication technologies and the mass media,
target groups and clients of human service organizations seem to be better informed
and mature concerning their living conditions, rights and duties (Pfadenhauer 2003a:
175; Kulosa 2003: 10). Their assumption of performance seen as significant changes
in living conditions increases the legitimacy-pressure on these organizations (Merchel,
Schrapper 1996: 8f).
• Organizations, that produce social, individual and personal-related services, also find
themselves confronted with diminishing financial means in view of empty public
treasuries. These organizations are in competition for barely growing public funds and
face the challenge of developing alternative funding-strategies (see Klingebiel 1999;
Weisbrod 2000).
• Moreover public administrations have to legitimize themselves and therefore seek to
control and manage the employment of funds and success. This leads to the
development of quality requirements, target and performance agreements and
performance measurement systems (see Anheier 2000; Schilling 2002).
•
These are developments and conditions under which social businesses and social service
organizations in Austria work and deliver their services. We now want to examine what kind
of consequences these developments have for them and how social service organizations cope
with the problem of demonstrating accountability. First, we start with the definition of what
we understand of “social entrepreneur” and “social enterprise” to examine the social value
chain as well as the concept of “blended value” as the basis for an alternative way of
demonstrating performance later.
Social entrepreneurship
In the emergence of an institutional field and its understanding, the origins of a “term”
for a societal phenomenon could be taken as a symbol. If we follow Alter, “the term “social
enterprise” was coined by U.S. nonprofit professionals who sought to create jobs and training
opportunities for low-income, homeless, and other at-risk individuals by starting businesses.
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Their definition of social enterprises is a nonprofit enterprise, social purpose business, or

revenue-generating venture founded to create jobs or training opportunities for very low-
income individuals while simultaneously operating with reference to the financial bottom
line.” (Alter 2000: 5f; also see Emerson/Twersky 1996). Meanwhile, social enterprises have
seen an extensive increase in academic and political debate and in practice as well.
Social enterprises can be understood as the institutional form, as a mode of
institutionalization. We argue that it is important to distinguish between three domains related
to “social enterprises”, these are the social entrepreneur (person), social entrepreneurship
(thinking and acting mode) and social enterprise (institutional form).
Social Entrepreneurship contains two terms which we think are rather in contrast than of one
meaning. In our day-to-day lives “social” is used for thinking and behavior patterns oriented
to the human being and its needs, whereas “entrepreneurial” often is used synonymously with
“economical” and “productive” – and with that in a very limited way. It is too oversimplified
to say that the success of an entrepreneur, for instance expressed by the “awards for the year´s
most successful entrepreneur”, could then be measured in terms of the turnover of a business
or of the launch of a new business making some hundred percent profit within its first years.
To many people even the idea of gaining profit from a “business” which provides services to
people in need and managing an enterprise in the field of not-for-profit organizations or social
services is idiosyncratic.
If we consider entrepreneurship in its original meaning, it is more than clear that thinking of
entrepreneurship only in “economic” terms is an inappropriate limitation. “To get things
done”, “to do something”, “to be active” – that could be a common ground of the origins
defining entrepreneurship not only in the economy (Schumpeter 1954). If we look further
back, according to Filion (1998:137) its origin can be traced back to the 12th century when
the French “entrepreneur” meant “supporter of squabbles”. Its meaning changed over time
and in the 17th century it was “undertake and manage a military action” or in the 18th century
“formed managing enterprises”.
In defining entrepreneurship we find two standpoints. The economists define it rather as
“innovation”, the behaviorists as “creative and intuitive characteristics”. Filion (1998) further
gives an overview that Cantillon (1755) was the first to offer a clear conception of the
entrepreneurial function as a whole. Jean-Baptiste Say (1816) was the second author referring
entrepreneurship to the “creation and distribution of wealth”. Entrepreneurs were described as
“risk-takers”, who invested their own money, or as “change agents”. It was not before the
1920s and the work of Schumpeter when entrepreneurship was really launched into the field
and clearly associated with innovation. Entrepreneurship has been linked to economic
development ever since.
Max Weber was one of the first authors who described entrepreneurship from a behaviorist´s
view point (Filion 1998). He identified the value system as a fundamental element in
explaining entrepreneurial behavior. Entrepreneurs were “innovators in acting” as
independent people. This tradition was first launched by McClelland in the 1950s, for who an
entrepreneurial personality looks beyond her/his individual benefit in having “control over
production that is not just for his personal consumption” (Filion 1998: 123, in: McClelland
1961: 65). This refers to the element of responsibility of entrepreneurship.
The behaviorist tradition can be found in the school of personality traits and it gives rise to an
essential question: Is it possible to learn and teach entrepreneurship (socially formed) or is it a
personality trait (individual characteristic)? Not deepening this quite essential question, we
take a sociologically oriented standpoint that our thinking and behavior patterns are socially
formed – as we ourselves influence our environment of course.
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Looking over the literature on entrepreneurship we see that entrepreneurship mostly refers to
a high activity-level, a concrete and practice-related knowledge and to specific attitudes like
resource orientation, risk-taking readiness, innovation, leadership, independence, creative
behavior, and energetic, original, optimistic, flexible, and initiative behavior. The definitions
of “entrepreneurship” traditionally combine and refer to – to a different extent of course –
three levels, that is the society or economy (social change and wealth), the enterprise
(creation, resource mobilization, and growth) and the individual (innovation, risk, ownership,
leadership, attitudes and behavior). It is generally accepted that societal aspects play a role in
entrepreneurial motivation, but based on the particular historic value sets even the moral or
ethical definition of entrepreneurship is an open concept.
Filion (1998:138-9) provides the following definitions on entrepreneurial action or
entrepreneurship. Entrepreneurial are “the behaviors of creative people with active
imaginations”. Or, putting the emphasis on the person he gives another definition: “An
entrepreneur is an imaginative person, marked by an ability to set and achieve goals, who
maintains a high level of environmental awareness in order to detect business opportunities.
An entrepreneur who continues to learn about possible business opportunities and to make
moderately risky decisions aimed at innovating will continue to play an entrepreneurial role.”
The short meaning is that: “An entrepreneur is a person who imagines, develops and realizes
visions.” In this understanding, entrepreneurs are persons who are able to have an image of a
future state which is realistic and achievable. Out of their personal view entrepreneurs must
not only define what they have to do, but also what they have to learn to be able to do it.
If we take the definitions on entrepreneurship of Weber, Schumpeter (1954), Swedberg
(2000), Filion (1998) or other authors a first important implication lies in the distinctions
between entrepreneurship, leadership and management. Although some similarities exist and
the meanings overlap, in our view we can summarize the core concepts in the following
sense. The three terms have different reference points which are “innovative action” and
“creation” for entrepreneurship, “power action” and “interests” for leadership and
“instrumental action” and “administration” for management. Secondly, it becomes obvious
that “entrepreneurship” as concept is not limited to a particular (commercial) thinking or
acting; also it implies resource-related behavior. With that, it is also obvious that
entrepreneurship can not only be stretched to any field of activity and organization
independent of its purpose or mission, but furthermore it is an inherent part of any renewal
and development – taught or not taught, intended or not intended.
Social entrepreneurs – Looking for social profit
So Social Entrepreneurship, in use as a term since the mid-1990th, is an open concept.

In practice, a uniform definition of Social Entrepreneurship or Social Enterprises did not exist
in the beginning (Johnson, 2000; OECD, 1999). In the meantime social enterprises have
become more established, both in practice and in academic and political discussions. But, we
still find a variety of real organizations called “Social Enterprise” or of people called “Social
Entrepreneurs”. Over all, for the purpose of systematization we can identify two conventions.
The concept of “Social Entrepreneurship” potentially can address i) the “social” thinking and
behavior of persons doing their commercial business on the one hand and/or ii) the
“entrepreneurial” thinking and behavior of persons doing their “business” in the field of social
services on the other.
First, social entrepreneurship can be defined as the “social-oriented mentality and behavior of
commercial enterprises”. This definition has a long tradition and covers the actions of
commercial enterprises that take into account the needs of their employees and/or customers
and/or the used resources. That is obtaining working conditions, showing concern for personal
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living conditions of the employees, e.g. family-oriented working hours, operating or

supporting childcare, and/or supporting housing for the employees. Also this could be an
extra insurance or another bonus, and, of course, to be added are all kinds of donations
(tangible and/or intangible assets) to social/public services and (disadvantaged) individuals.
More recently, we could identify forms of “ethically” or “ecologically” oriented businesses as
this type, and even very current terms like “corporate social responsibility” mark this type.
Second, social entrepreneurship can be defined as the “entrepreneurial mentality and behavior
of people/organizations operating in the area of social services”. In this context Social
Entrepreneurship refers to the second meaning only, that is the “entrepreneurship in social
services”. Marking this trend, we can find in literature the increasingly used term of
“enterprising non-profits” as well – reduced to putting managing practices into not-for-profit
organizations in many cases. Out of a normative approach Social Entrepreneurship then is an
ideal-type of mentality and behavior in utilization of economic procedures assisting social
purposes. This approach defines Social Entrepreneurship as a certain form of “mentality” that
works like a guideline obtaining the social mission (Brinckerhoff, 2000; Dees, 1998;
Dees/Emerson/ Economy, 2001; Emerson/Twersky, 1996; Johnson, 1998). Firstly, the
enterprises must have a “social” character, a social mission, a social purpose. Normally a
social mission is seen as improvement of economic and social living conditions of
disadvantaged people (target group). Secondly, the enterprise must have an “entrepreneurial”
character. Herein, social entrepreneurs are defined by specific attitudes and behavior. With
reference to Dees, Emerson, and Economy (2001: 5) social entrepreneurs then act as change
agents in certain ways, particularly: 1) adopting a mission to create and sustain social value,
2) recognizing and relentlessly pursuing new opportunities to serve that mission, 3) engaging
in a process of continuous innovation, adaptation, and learning, 4) acting boldly without being
limited to resources currently in hand, 5) exhibiting a heightened sense of accountability to
the constituencies served and for the outcomes created.
Therefore, it seems to be of highest relevance to realize and to negotiate the basic
conceptualization of “entrepreneurship”. The term is open to a variety of interpretations and
goals, not just “monetary profit” (economic growth). In analogy, you could create a meaning
of “social profit” (social growth) – referring to two aspects, at least. That social profit might
lie in the more and better range of support for disadvantaged and/or poor people on a societal
level. On the organizational level it refers to the concept of gaining economic profit and how
this profit/return is used/allocated/shared. That is further related to our understanding of “not-
for-profit” or “nonprofit” and finally to the legal aspects of “charitability” too, which has
often been – and still is – misunderstood. For example, many people still think, that non-
profits or charitable organizations are legally not allowed to make (monetary) profits. Against
this, the definition – and its consequences (e.g. taxation, ownership) is not about making –
even economic – profit, but about distributing it among the owners, shareholders, community
etc.
Social enterprises – Hybrid institutional forms of dual socio-economic architecture
An approach distinguishes between an “institutional” and a “normative” definition of

social enterprises (Loidl-Keil 2005). According to the institutional definition approach, social
enterprises would be understood as employment companies and fulfill an instrumental
function as “program” in the active labor market policy. For instance, the listings in the
studies of the BAG (1997) and – with some limitations – those of the OECD (1999) would
fall into this approach. Essentially, these lists define social enterprises as NPO or NGO or
other organizational forms, which still are not clearly positioned as a market or a state
organization, and which aim to create and protect employment. Birkhölzer and Kramer (2002)
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assume a wider understanding of the institutional character of social enterprises when they list
12 different forms. Here, social enterprises are characterized mainly through a high degree of
service and market orientation. The conceptual definition is marked by the business goal and
order: the creation and / or protection of employment on the one hand (reintegration, care,
company etc.), and the attainment of certain business management goals as well as orders
(economic return generating process and rate) on the other. According to this understanding,
in different countries social enterprises are integration-projects, employment and qualification
companies, social integration-cooperatives, social firms, work-training-centers or social-
economic businesses. We also find even more general applications of the concept of social
enterprises, mostly alternative and synonymous for organizations that are active in the area of
counseling and qualification, i.e. further and (vocational) education projects. Applying the
term “social enterprise” for employment, qualification or counseling companies gives rise to
opinions. If a definition should do what it is created for – define a clearly identifiable entity –
a far too open definition is not useful when the concrete forms and the main fields of
operation then are too heterogeneous. A range of further terms exists, i.e. “health business”,
“education company”, “consulting firms”, or “charitable enterprise” etc., which cover
organizations and their missions and is potentially more appropriate. If, as has recently be the
case, cities and federal states also turn into "businesses", the concept is stretched very far and
is therefore not useful anymore because the term is not distinctive enough. However, it is
impossible to draw an exact border in individual cases in view of the actual activity and
service spectrum of the business of counseling, supervision, qualification and employment.
This approach is useful in the empirical sense; the existing social enterprises can after all be
delimited and differentiated. However, with the regulation of only an activity and service field
– that of the employment company – other organization forms of the "social entrepreneurship"
are excluded per definitionem that act in a very entrepreneurial way and can pursue social
objectives.
In the understanding of a normative approach the social enterprise puts its emphasis on an
ideal type of thinking and acting in order to reconcile social and economic goal setting and
procedures. Consequently, “social enterprise” or “social entrepreneurship” is defined by
certain attitudes, orientations and actions of the people. With that, the normative approach
emphasizes the social entrepreneur (person) and social entrepreneurship (attitude, behavior).
Here, the social enterprise is a commercial business with a social mission: in a broader
understanding this is the improvement of social and economic living conditions of people
(Alter, 2000; Dees, 1998; Emerson, Twersky, 1996). “Social entrepreneurs are different from
business entrepreneurs in many ways. The key difference is that social entrepreneurs set out
with an explicit social mission in mind. (..) Another important difference is that social
entrepreneurs do not receive the same kind of market feedback that business entrepreneurs
get. (..) Social entrepreneurs act as change agents in the social sector (...). Social entrepreneurs
create social enterprises. They are the reformers and revolutionaries of our society today.
They make fundamental changes in the way that things are done in the social sector. Their
visions are bold. They seek out opportunities to improve society, and they take action. They
attack the underlying causes of problems rather than simply treating symptoms.” (Dees/
Emerson/ Economy 2001: 4ff) Brinckerhoff (2000: 1) defines social entrepreneurs as people,
who take risks for other people the organization exists for. Another example is shown by
Ashoka (www.ashoka.org) that originally identified social enterprises along five criteria:
innovation, creation, entrepreneurial quality, social impact of the idea, and the ethical
motivation. The normative approach focuses on the form of “mentality”. The core social
character of the mentality is present in the mission: setting socially relevant goals. The goal
setting itself does not result from political, governmental or philanthropic attitudes or
contracts alone; all variations and combinations are potentially possible. The entrepreneurial
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character, in analogy to commercial enterprises, is composed of the attitudes and actions

described with the creation of social value, a role understanding of “social change making”, a
mission-driven utilization of existing resources and the permanent building of new resources,
an innovative and learning organization, and the openness to and application of (new)
methods of performance measurement. The normative approach gains high plausibility, but
with it comes a general problematical issue. As all ideal types do, the approach lacks
localization and observation of social enterprises in reality. How would we clearly identify
social enterprises? The identification itself would be based on norms again. Therefore, it
becomes quite understandable that a standardized definition of social enterprise is hard to
find. Most approaches answer this in listing of organizations or “types”, for example in
Borzaga and Defourny (2001), pointed out from Birkhölzer and Kramer as well (2002).
In practice and academia we find overlapping definitions. In particular, the employment area,
in which people establish their existence and are socially included in society, is originally
such a bridging point for understanding.
The two-fold definition and understanding characteristic we find for the institutional form and
field of “Social Enterprises” too. These are located between two traditional positions on a
“hybrid spectrum” between traditional non-profit organizations and traditional for-profits
(Alter 2003: 9; Alter 2004). The idea is that social enterprises are a new organizational form
of hybrids somewhere between purely social mission motives, stakeholder accountability, and
income reinvested in social programs or overhead on the one hand and profit-making motives
and shareholder accountability and profit redistributed to shareholders on the other hand.
Social enterprises are characterized by this hybrid organizational goal setting, outlined with
concepts like “double bottom line” or “blended value proposition” (Alter 2003: 7ff). Alter
(2000, 2003, and 2004) has worked on defining social enterprises and distinguishes three
types of social enterprise: mission-centric, mission-related, and unrelated mission. Each is
mostly connected to distinctive realized organizational forms, that are embedded (for mission-
centric social enterprises), integrated (for mission-related), and complementary (for unrelated
mission). Further, Alter systematically defines functional models of social enterprises. The
embedded social enterprise models are the entrepreneurial support model, the market
intermediary model, the employment model, and the fee-for-service model. The integrated
social enterprise models are: service subsidization model, and the market linkage model. The
complementary social enterprise models are: the organizational support model, the private-
sector partnership model, the franchise model, the complex model, and the mixed enterprise
model.
Any institutionalization process starts with people, norms, orientations, attitudes, regulations,
bundles of expectations and actions and finds its way to concrete organizations representing
the orientations. Social enterprises are communicated in the role of preventing social
exclusion, reducing public expenditure, producing social services more extensively and of
higher quality, increasing the "social capital" at best, as well as handling it more
economically. In the framework of the social economy and the third sector, that fill the gap
between market and state, "social enterprises" are seen as an essential element and as an
organizational type. Social enterprises then are economically oriented as well as acting
businesses, that pursue social and/or community referential objectives. They are, as part of the
"civil society", organized by citizens to supply products and services to the market which are
produced only insufficiently (Birkhölzer / Kramer 2002). As already stated, a terminological
change like here can signal, what Salamon and Anheier (2001) accentuated in their large
nonprofit project. New organization forms in this field can be read also as reactions to
changed organization environments; they possibly would be better able to take up changed
conditions or conflicting developments regarding the legitimating bases, expectations, and
attitudes and acting orientation of all involved protagonists.
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We summarize that social enterprises appear in distinctive forms and vary in i) their
graduation of social mission focus, ii) their field of activity and the main target groups, iii)
their legal form, and iv) their functional relations to market and target group / clients.
Whatever the organizational specification looks like, the conceptual and core characteristic of
social enterprises lies in the “dual architecture” of its social mission and social impact on the
one hand, and business administration modality on the other. Social and economic goal
relations vary as well, this means that service and performance relations are distinctive, as are
the value-added-chains and impact chains. Of course, for performance measurement purposes
it remains crucial to distinguish different target groups and stakeholders, different impact
indicators, and to identify different “values”.
Taking the variations of social enterprises into account, for rather empirical reasons we focus
on the “employment model” drawing on Alter (2000) or reformulated as “social integration
enterprise” (see Loidl-Keil 2005). The employment model corresponds to the institutional
definition approach. The social enterprise employs target people and offers its products and
services to the open market. This (ideal) type of social enterprise is the closest institutional
form to the commercial enterprise (Alter 2000: 16). For the Austrian situation we observe 53
social enterprises for the year 1999 (Lechner et.al. 1999) and für 2010 already 103 (AMS
2010). Concerning the six case studies that we analyze for this article we may say that these
organizations meet the definition criteria for social enterprises applying the “employment
model”. Moreover, we can ascertain that these organizations not only follow a pure business
purpose but also a greater social mission that is reflected in a considerable share of social
work and social pedagogy. Therefore we adapt the theory of profession as well as the
experiences made in the process of professionalization of social work to explain the use of
SROI as a professionalization strategy for social entrepreneurs and in the field of social work.
Social value creation – Performance, effectiveness and efficiency in social enterprises
This very special form of organization follows at least two objectives: on the one hand
these organizations have a clear business purpose and can therefore try to optimize structures
and processes under cost-benefit assumptions. Under these conditions we assume more or less
greater liberty and freedom of choice to take entrepreneurial decisions. On the other hand they
follow a (enacted by the Austrian public placement service or the Austrian social welfare
office) social mission and try to integrate jobless persons on the labor market. As a
consequence the social enterprises have a well elaborated reporting system to manage and
control the “business”-part of their organizations (e.g. book keeping, cost-controlling) but do
heavily lack data to demonstrate accountability within the parts of their social mission. The
reasons why social enterprises put their emphasis on administrative data to demonstrate
diligence is that these organizations adjust their reporting system according to data and
figures that stakeholders demand (e.g. placement rate). Among other things this is one reason
for scientists and theorists to justify the semi-professional status of social businesses and the
profession of social work as a whole (Schütze 1992: 146). Following this argument scientists
accuse social businesses of sustaining societal structures of social exclusion (Maeder, Nadai
2004: 147).
However, we can also observe a change in administrative reporting standards putting more
emphasis on quality measurement as well as output or impact assessment (see Dahme,
Wohlfahrt 2010). Social enterprises and human service organizations respond to these
changes by adapting their reporting systems according to the data and figures in question. As
Miller (1994) stated for accounting systems the majority of organizations respond to their
institutional environments when defining measures of rationality and efficiency. This is also
the case within the organizations that took part in the SROI analysis we conducted from 2003
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until now. They offer special working reports that are limited to a one year observation time
and contain output figures as well as placement rates as the major criteria for demonstrating
their performance. This approach misses an entrepreneurial as well as a strategic perspective.
Under these circumstances the human service organizations in question are heavily
confronted with reproaches of neglect of assets as well as politically motivated cost cutting
from one year to another.
Proving effectiveness and efficiency of human service organizations represents their greatest
challenge. Following Perrow (1965: 916), the main problem in providing effectiveness and
efficiency-proof lies in the nature of the service itself. In contrast to commercial companies
and production businesses that are mostly characterized through a high level of
standardization of their work process and of quantifiable measuring criterions, organizations
in the area of human services treat people in order to transfer them into another form of living
conditions. Marks of orientation are ethical and moral principles that contain an autonomous
and authentic lifestyle (see Hasenfeld 1992). Perrow now argues that in the area of human
social services a sufficient knowledge about the causality of the services, its outcome (and
impact) and its effect to the client and about the aimed changes to the people doesn’t exist. He
ascribes this lack of knowledge of causality to the immense variability and complexity of the
human personality as well as social context-factors. For individual-related social services we
realize the multiple, invisible connections existing between the applied impulses and the
actually achieved changes of the behavior and thinking of people (Klatetzki 2010: 12).
Personal changes can only be observed, proved or measured with difficulty. Finally, people
always possess the ability to activate themselves and to steer themselves. Under such
circumstances and assumptions the proof of efficient and effective performance can be
supplied for social service-organizations only with some effort. Luhmann and Schorr (1979)
comprehend human social services as complex cybernetic systems and call the lack of control
over their “work” a technology deficit.
Nevertheless, it can be assumed that social purpose enterprises develop strategies for
providing information and “measures” on their services in order to be recognized as
“effective” and “efficient”. Specifically the representation of professionally produced
performance as a proof of legitimacy is significant (see Pfadenhauer 2003b). Pfadenhauer
(2003b: 84) adheres to this firmly when she says, that: “…symbols, emblems, objectified signs
and representations such as titles, decorations, awards, certificates or reports alike plausibly
certify the existence of performance”. Many times, business management instruments now are
applied that start at and arrange financial figures and financial performance-reports.
According to Pfadenhauer (2003b), this form of (numerical) representation of performance, is
a successful demonstration of performance confirmation in organizational contexts.
Our contribution aims to open the purely business management approach and to expand it to
the dimensions of a social and socio-economic value creation. This widened approach goes
back to the social worker and manager Jed Emerson, who developed the model of a “blended
value”. With this he critically pointed at the difference between a financial net value added on
the one hand and a social engagement and commitment on the other hand (see Emerson
2003). The concept of the "blended value" assumes that every organization – for-profits like
non-profits – generates financial as well as social values. For this purpose, Emerson assumes
a zero-sum-relationship: an increase in an area of value creation leads to a diminution in the
other area. Emerson’s concept, to identify a range of social-economic values in the value-
chain of a social purpose enterprise and then to find a term for those values that are missing in
the conventional business management jargon, represents an attempt to contribute to a better
communication between business management and social work. This open approach to the
value creation within a human service organization also made it possible to develop new
concepts of performance analysis: the blended return on investment.
119
In the meantime, some authors took up and refined this approach (see Kaplan, Norton 1996;
Sawhill 2001; Emerson et al 1999). A database query on June 4th (2011) applying the
parameters “tool“, “method“ (approach), “assessment“ (purpose) and “social impact“,
“economic“ and “social“ (focus) in the data base updated through the Foundation Center
(TRASI; http://trasi.foundationcenter.org ) yielded the result of 83 tools and methods being
available for measurement and presentation of financial and social value creation. All models
widen the financial perspective of quantitative and qualitative aspects of goal setting and
performance measurement. The tools and instruments are applied for control, governance as
well as representation.
The Social Return on Investment (SROI)
The model SROI strongly draws on business evaluation and its background lies in the
corporate assessment world. It aims to make financial as well as social values in social
purpose enterprises more visible and enables the calculation of a “blended” value integrating
both types of value. For this reason we refer to this type of model as “integrative”
socioeconomic value assessment.
Codes, measures and procedures, traditionally known from business administration and in
business management as well production, are adapted and applied to the socioeconomic net
value added and to the requirements of its value creation chain. Measures from business
management are, for example, top-ratios like depths to equity ratio, net profit ratio, cash flow
or return on investment and other similar.
Since the year 2002 we can observe a reinforced discussion on these concepts in Germany
and Austria although applications in Austria are rare. The methodology of SROI and similar
approaches are represented many times in literature (see Emerson et al. 1999, Philips 2002;
REDF 2002; Clark et.al 2004; Loidl-Keil, Laskowski 2004; Laskowski, Loidl-Keil 2005;
Olsen, Nicholls 2005; Scholten 2005; Scholten et.al. 2006; Mook et.al 2007; Loidl-Keil
2008). Furthermore, some internet platforms inform about the SROI approach or better SROI
approaches (e.g. www.redf.org, www.sroi-europe.org, www.neweconomics.org, www.sroi.nl,
www.sroi.at). The previous sample applications and developments of the SROI in the
German-language area are influenced by the following assumptions and place themselves as
follows:
• The SROI model is based on the assumptions and operating mode of the business
valuation and therefore primarily serves as a "tool" in order to help finance-givers,
funders, and donators to come to an investment decision. With that, the focus is on the
level of the individual organization and its (monetized) contribution to public welfare.
All model assumptions are met under the premise of calculating the organizational
financial and social business value. Occasionally this leads to the fact that benefit
aspects for an organization turn into the opposite on the individual level of the target
group person (i.e. client) and balance negatively. The present developments of SROI
are characterized by expansions of the value approach and analysis model that monitor
relations to economy, labor market, local economy as well as society as a whole (see
Puch, Schellberg 2010; Treberhilfe Berlin gGmbH 2009).
• The question for a SROI application was and still is whether the SROI approach and
tool is appropriate for the type of organization and services offered. At the beginning
of the application of the model – starting more frequently in the 1990s – the field of
the “social enterprise” (Alter 2000; 2004), the “social purpose enterprise” (Emerson
et.al. 1999; REDF 2002) and "social integration enterprise" (Loidl-Keil 2005)
solidified as being the specific organizational field (DiMaggio, Powell 1983), for
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which the valuation architecture of SROI was considered to fit best. The “double-
bottom line” (Alter 2000) of the “social mission” (re-integration rates) and
“commercial goal” (return generation) was the decisive attribute closely matching the
SROI approach. In the course of the time, this application focus has been expanded to
other sectors as well, e.g. social geriatrics, psychosocial services, youth welfare
services (see Roos 2005; Netzwerk: Soziales neu gestalten 2009; nef 2009; nef 2011).
• The rationale and logic of action of the SROI models intends being understood as
“tool” at first (see REDF 2002). This tool thinking is based on the belief in, firstly, a
monetization of virtually all (essential) dimensions and, secondly, in the extensive
conceptualization of a ratio transforming social values into monetary equivalents. The
confrontation of calculated returns and investment relationships would then allow the
creation of "benchmarks”. Present SROI models attempt to take up these critical
points through consideration of individual (qualitative) benefit and outcome (or
impact) assessments as well as through sensitivity analyses (see CabinetOffice 2009).
Observations and theses on SROI models
Based on experiences in six SROI studies that we conducted in Austria and taking the
observations and statements of other SROI applications in Europe we conclude theoretical
assumptions, prerequisites for application as well as practical specifications in conducting the
SROI analyses, and selected theses assumptions particularly related to theory of professions.
• The model SROI makes it possible to portray net value added processes in an
organization not only on the basis of qualitative descriptions but to express this in the
form of a ratio. The calculation and representation of the SROI let the social services
step away from the focus of a "pure" donation organization and strengthen the
investment thought into the public interest (see Sprinkel Grace 2002; Brest, Harvey
2008).
• The SROI model delivers a result that is, allegedly, simple to understand and is
therefore seen to be very well-suited for external reporting and “marketing” purposes
of an organization to relevant stakeholders. Further, under the aspect of a
socioeconomic understanding it seems to be a possible strategy in tackling the
problem of the creation of transparency for different stakeholders (Theuvsen 2010:
133). Nevertheless, it cannot not be ignored that a variety of complex (and
scientifically well-founded) assumptions and methods must be applied until
performance ratios can be presented (Anthony, Young 2003: 620).
• By now, most social service deliverers, even smaller social or socioeconomic
enterprises, have the necessary business management and documentation systems
(total revenue figures and accounting systems) at their disposal. However, a vast
majority of organizations lack data on the outcomes and impacts of the services. The
identification and assessment of the effects and the creation and (re-)assembling of the
service impact logic go hand in hand and this step of analysis adds up to a time and
resource consuming factor not to be underestimated.
• Models for performance presentation and measurement simplify reality, more or less
intensively. This leads to the circumstance that in the analysis specific relevant data is
not available (e.g. client data) and other data is disproportionately highly represented
(e.g. cost accounting). With insufficient reflection it may occur that especially relevant
performance and impact factors are (consciously or unconsciously) excluded by the
analysis and therefore form an insufficient basis for decisions making (Webb 2010:
189).
121
• A large part of the service outcomes of a social and socioeconomic enterprise consists
of effects in the subjective life-worlds of the target persons. The organizational
mission or goal lies in making differences in the quality-of-life and the level-of-living
of the target persons. These objectives, i.e. strengthened self-confidence, increased life
satisfaction etc., represent areas that neither allow a simple quantification nor a
monetary value assessment at all.
• The expenditure and the human resource allocation for social work are still taken too
little into account: the previous analyses in the organizations show that the share of
social work within social and socioeconomic enterprises doesn't exceed 25 percent of
the whole labor expenses.
• A still remaining bureaucratic thinking and acting along departmental boundaries in
governmental bodies – e.g. youth welfare system, health system, labor market system
– retards a holistic and more synergetic perspective on social services and social
enterprises and their performances and outcomes as a whole. Experience shows that
the performances and outcomes produced through socioeconomic enterprises gain
effects in different governmental areas. Figuratively, in a systematic approach taking
the social service system as a whole with its own effectiveness and efficiency a
bureaucratic orientation induces a limited system outcome, i.e. basically higher costs
and lower impacts in the over all welfare system (on the discussion about
sociopolitical reciprocity see Bäcker et al 2008: 177).
• The most important effect of using SROI however cannot be derived from the SROI
ratio as such but from the processes that have to be carried out in advance. These
preparations for the SROI calculations contain the shift from a professional working
perspective to a (business) process perspective under the condition of meeting the
requirements of effectiveness and efficiency. The determination of the goal of the
SROI analysis, the search for relevant stakeholder groups, the identification of impacts
and criteria to measure these impacts as well as conducting these measurements and
finally the reporting to relevant stakeholders lead all participants in our case studies to
a more comprehensive understanding of their own business.
Professionalization within social enterprises
Building on these observations to the application and effects of the SROI model in the
social economy we interpret the shown developments and changes as a strategy to
“professionalization” – which represents one of several interpretation alternatives and leads us
to profession theory. Following Freidson (2001: 180) a profession can be characterized by the
following elements:
“…first, a body of knowledge and skill which is officially recognized as one based on abstract
concepts and theories and requiring the exercise of considerable discretion; second, an
occupationally controlled division of labor; third, an occupationally controlled labor market
required training credentials for entry and career mobility; fourth, an occupationally controlled
training program which produces those credentials, schooling that is associated with “higher
learning”, segregated from the ordinary labor market, and provides opportunity for the
development of new knowledge; and fifth, an ideology serving some transcendent value and
asserting greater devotion to doing good work than to economic reward”
The definition shows that a profession is mostly constituted by the control and definitions
power of problems concerning a profession, division of labor and control over training as well
as the definition of what is considered as quality of work, efficiency and effectiveness (see
Langer, Schröer 2011: 11). Schütze (1992) argues that “incompleteness” of most professions
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in human service organization (especially social work) is justified because all the
prerequisites mentioned above cannot be fulfilled by those occupational groups. They
systematically lack practices of diagnosis and intervention, do not have a single constituting
scientific discipline and do heavily depend on other professionals like lawyers, medics or
business managers. Within the discussion of different theories of profession we can
differentiate between a thesis of professionalization and a thesis of de-professionalization by
using management tools. Whereas the thesis of professionalization proceeds with the
assumption that using a management tool helps an occupational group to achieve a certain
position or certain rights (see Pfadenhauer 2003b; Heite 2008; Langer, Schröer 2010), the
thesis of de-professionalization supposes the opposite (Schimank 2005). Both theses assume
that the key element of a profession is the definition power over quality of work and good
performance. The thesis of de-professionalization mostly recognizes other professions as
being responsible for relevant definitions by characterizing working processes, standards,
quality and performance measures (e.g. business administration instead of social work) (Olk
1986). As a synthesis Evetts (2011) has developed two alternative concepts of
professionalization within human service organizations: occupational and organizational
professionalism. Whereas occupational professionalism means the traditional professional
action, the concept of organizational professionalism draws the attention to processes of
management and control. Evetts ascertains two different occupational logics that are
connected with each of the concepts. Organizational professionalism replaces occupational
ethics and values with organizational, bureaucratic, hierarchic or managerial concepts of
control, the constituent’s trust with objectives of the management, occupational efficiency by
cost ratios and financial rationality, occupational self-control with accountability (Langer,
Schröer 2011). Evetts key argument is that different organizational settings demand diverse
aspects of professional action (Evetts 2011).
Professionalization by applying SROI?
For a better understanding of the processes of management within human service

organizations it was necessary to describe a suitable theory of explanation. Finally, we want
to discuss the theses mentioned above reflecting our experiences during SROI application.
The analyzed case studies of social enterprise refer to classic fields of social work: fight
against poverty and long-term unemployment, disabled people and people with psycho-social
handicaps, homelessness, youth welfare etc.. If one looks at the historical development of the
profession of social work, so the predicates of the "undamaged identity" or “complete
profession” is denied to social work. Referring to its “semi-professional status” (Pfaffenberger
2001) social work is discussed in terms of its societal function in society, the disciplinary
localization of social work and its professional knowledge as well as the control and
assessment of goal achievement. Long discussions about profession and discipline of social
work followed and still continue. (see Olk 1986; Bommes, Scherr 2000; Kleve 2000;
Harmsen 2004; Müller 2006).
Speaking with Heite (2008: 172) we assume that identity-formation takes place with the
capability of a profession to show that its actions are reliable, proper and appropriate. SROI as
well as other management tools generally follow the purpose of creating a professional
identity for the different occupational groups involved (in particular social work).
123
Social work fights for recognition and strives to present its services and performances as
unique and stresses that they can not be substituted or performed by other professions or
actors (see Honneth 2003). This line of argumentation and also concerning our experiences
the model SROI represent a possibility to consequently classify the performances of social
work for public discourse on professional recognition and to supplement it with weighty
arguments. The services and effects of social work are constructed, articulated, collectively
shared, accepted, and authentically recognized as being professional by the acknowledgment
of “performance” and its congruent forms of valuation and evaluation methods (see Heite
2008: 172). If socioeconomic enterprises fail in representing their own performances and
effectiveness, the organizational and professional legitimacy and consequently the recognition
are put into question and are finally disallowed (see Grunwald 2001). The model SROI takes
into account financial as well as social value creation and supplies a monetary assessment.
Moreover, the model SROI serves recognized language codes, in order to represent social
work activities in the argumentative logic of efficiency and effectiveness (see Nadai,
Sommerfeld 2005; Pfadenhauer 2003b). From a profession theory view, this representation of
reliability and efficiency constitutes one of the most powerful means of demonstrating ones
own professionalism. Since the SROI model sets up the crucially required linkage to the
welfare and public interest orientation it might be considered as fulfilling the specified
requests (see Pfadenhauer 2003a; Jäger, Hug 2011).
The application of SROI objectives as well as the semantics interconnected can be understood
as a strategy of professionalization of socio-economic enterprises to reach out for societal
recognition. Further, it leads to changes in both perceptions and assessments of services and
outcomes from within and outside the organization. In fact, the professionalization consists in
two sorts of actions: In one it tends to the profession-specific fulfillment of requirements in
the occupation role (see Dreitzel 1962) concerned with the solution of practical problems in
the life course (see Oevermann 1996). In the other, the professionalization consists also of the
adequate performance representation to relevant stakeholders (Pfadenhauer 2003b: 82).
Particularly in reference to the SROI model, this means that the relevant stakeholder groups
consider and understand this organization as being capable of answering the demand for
adequate solutions for satisfying effectiveness, efficiency, and performance transparency
representation. Obviously, the organizations pursue the establishment of SROI as a
recognized methodology for representations of performances and impacts. However, the
model is also applied for strategic purposes, which implies exact knowledge about
performance and outcome dimensions being of highest relevance for the stakeholders. It is
obvious, that higher representation competences and resources for identification creation do
not directly lead to higher service and performance levels. Even more, it might therefore be
assumed that organizations of course possess selfish purposes in designing and applying
SROI-models or alike, and some even call for making these purposes transparent in
applications (CabinettOffice 2009: 20).
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Biographical notes:
Prof. Dr. Rainer Loidl

Doctorate in Sociology (Johannes Kepler University Linz, Austria). 4 years of social-
pedagogic work with youth. Director of IQuA – Institute for experimental research on
vocational education and labor market (1997-1998), Assistant at the Department of Sociology
(1998-2004, JKU Linz), Professorship at the degree program Social Work and Management at
the University of Applied Sciences FH JOANNEUM Graz (2004-present). Research and
teaching visits at universities in Berlin (Germany), Berkeley (USA), Dublin (Ireland),
Warsaw (Poland), Gabrovo (Bulgaria), Baia Mare (Romania). Working fields: Labor Market,
Working Time Management, Vocational Education and professions. Organization,
management, leadership, entrepreneurship. Social economy, social policy, social
entrepreneurship. Performance measurement, Quality Management, impact research in social
services. Youth, family, elderly, people with handicaps. Domestic Violence. Quality of Life
research. Evaluation research, methods in social research.
Mag. Wolfgang Laskowski

Sociologist (Johannes Kepler University Linz, Austria); Assistant at the degree program of
Social Work and Management at the University of Applied Sciences FH JOANNEUM Graz
(2009 – present); Assistant for staff development and further education SOS-Kinderdorf
Austria (2003-2009); Junior Consultant (2001-2003); free-lance researcher, trainer and
consultant (2003 – present); Working fields: Nonprofit research, child welfare, social
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economy, social management, social return on investment, evaluation, theory of profession,

professionalism in social work.
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A Social Entrepreneurial Model from Nigeria
Kemi Ogunyemi
Lecturer, Business Ethics and Anthropology, Department of Strategy and Entrepreneurship,

Lagos Business School, Pan-African University, P.O. Box 73688 Victoria Island, Lagos,
Nigeria, Tel: +234 1 774 0280, email: kogunyemi@lbs.edu.ng
Abstract: Dees (1998) defines entrepreneurship as characteristic of people who

adopt a mission to create and sustain social value; recognize and relentlessly
pursue new opportunities to serve that mission; continuously innovate, adapt, and
learn; act boldly and beyond their resources; and exhibit a high sense of
accountability. He sees it as a solution to social issues left unresolved by
government and philanthropists.
Given the success of the social work carried out by Nike Davies Okundaye, a
female Nigerian artist and entrepreneur, this paper investigates how her brand of
social entrepreneurship measures up beside the extant literature, and whether it is
replicable, especially in developing countries. If it is a good model, then it should
be emulated and funding.
The approach used is phenomenology (Moustakas, 1994), using secondary data

about Nike’s work and parameters synthesized by Dees (1998) and Light (2005)
seven years apart after deep analyses of the work of earlier scholars.
Keywords: social entrepreneurship; social change; value creation; talent
The Social Entrepreneurial World
Having incorporated the extant definitions and descriptions of social entrepreneurship,

Dees (1998) defines it as characteristic of people who adopt a mission to create and sustain
social value (as opposed to just private value); who recognize and relentlessly pursue new
opportunities to serve that mission; who continuously innovate, adapt, and learn; who act
boldly and beyond the resources they possess; and who exhibit a high sense of accountability
for their results to the society.
He also highlights the fact that social entrepreneurs do have a role to play in contributing to
development globally, given that philanthropists and governments to whom this role has
traditionally been ascribed have proven unable to execute the commission entrusted to them
adequately. In Nigeria, as in many other developing nations, this is very true. Social ills
abound and include lack of infrastructure; below optimal levels of literacy and education;
problems with governance and accountability; leadership challenges; high unemployment
indices; and a very high level of corruption; just to mention a few. Even more than in the first
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world countries, the developing economies are in need of social entrepreneurs to contribute to
healing the wounds from lack of good government structures.
Having observed the unprecedented success of the social work carried out by Nike Davies
Okundaye, a female Nigerian artist and entrepreneur, I wanted to investigate how her brand of
social entrepreneurship measures up beside the extant literature, and whether it is replicable.
This is the purport of this paper.
My objective in undertaking its writing is to better understand Nike’s work, to make it better
known as what it is, and to highlight whatever is unique in her model. I would also like to see
if it is replicable in other places in these times, especially in developing countries, and if so,
recommend it as worthy of emulation to prospective social entrepreneurs in these places and
to people who can fund them.
Definitions of Social Entrepreneurship
Schumpeter (1983) proposed an understanding of the social entrepreneur as an engine

of creative destruction whereby a driving market force compels him or her to bring new value
to the system and thereby destroy what existed previously. It is in this way that the advent of
computers destroyed the existing world of typewriters, and the advent of electronic mail and
other forms of data transfer and communication have nigh annihilated the previous world of
telegrams and postal services. There are hardly any phone booths seen in Nigeria any longer.
Yet, not so long ago, they were new and exciting because they were bringing telephony to a
larger number of people, since majority could not afford to have a telephone installed in their
homes, or where it was installed, it almost always did not function. Now, when a university
student needs to have his or her sandal repaired by the shoemaker, a phone call can be placed
from the comfort of his or her room to discuss it, thanks to the era of gsm.
According to Mair, Robinson and Hockarts (2006), social entrepreneurship is value creation.
The convenience of not having to walk down the street to check whether the shoemaker is
there, and to walk back again having wasted time and energy when he turns out not to be
there, is value added to the caller by the possession of a gsm phone. However, not all
entrepreneurs who fit into the category of value creators are social entrepreneurs. Muhammad
Yunus, the founder of the Grameen Bank, distinguished cases in which the value created is
captured back by the entrepreneur and those in which the entrepreneur forgoes part of the
value remuneration and recommends that about one percent could be the return on investment
envisaged by people and or organizations who come together to set up a social undertaking.
He expects that the rest of the profits would be ploughed back into the undertaking in order to
guarantee its survival and growth. Once an entrepreneur gets much more than his or her costs
back as private gain, then the undertaking may cease to be one of social entrepreneurship. As
though to underscore this idea, Farrugia (2007) warns of the blurring of boundaries between
community undertakings (social entrepreneurships) and industrial undertakings (undertakings
for private gain).
Socioeconomic freedom is one of the results of social entrepreneurship as characterized by
Bjornskov and Foss (2008), and Sen (1997). Building on the ideas of Say, Schumpeter,
Drucker and Stevenson as to what an entrepreneur is, Dees (1998) further developed the idea
of a social entrepreneur and also came up with the idea of a social entrepreneurship initiative
as a hybrid organization, partly for-profit and partly not-for-profit. Ten years later, Townsend
and Hart (2008) further developed these ideas. Tracey and Phillips, also emphasizing the
hybrid model and the need to be accountable, to watch the resulting double bottom line and to
maintain their identity, suggest techniques to educate social entrepreneurs to successfully
navigate the oft stormy waters generated by their unique challenges.
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Choi and Gray (2008) recommended that the entrepreneur must look for the most effective
methods to do his work, though this is in fact often found without looking, as it were
unexpectedly. There is a need to understand the process in order to replicate it. This also the
view of Mair et al (2006), Nicholls (2006), Ziegler (2009) and Perrin (2006).
In a brilliant exposé of work done in this field so far, in the executive summary of the first
edition Journal of Ethics and Entrepreneurship, Harris, Sapienza and Bowie (2011) pointed
out some areas for further research. One of those mentioned was the need to study how to
devise and implement bottom of the pyramid (BOP) models. It appears to me that one good
way is to look at models that work and establish their replicability by auditing them and
codifying them both in their general and unique characteristics.
The work of social entrepreneurs benefits the world in many ways, especially their home
countries. Social entrepreneurship aids the construction of a “good society”, (Brenker, 2002).
It helps to distribute wealth and create opportunities for the less privileged. It helps to engage
giving practical reality to many noble ideals – helping the poor, homeless, physically,
psychologically or mentally challenged people, etc. Edwards and Sen (2000) emphasize the
need for individuals to be the prime movers behind social change, basing their observations
on historical experience of how social change happens.
It also enhances the civic involvement of all those who participate in it and often of those who
benefit from it. When someone has helped others free of charge, he sets off a ripple effect in
those who benefit from that help. A number of them become disposed to help others in their
turn. In this way it builds up social capital for the community. People feel kindly towards
other people and towards the state when they have experienced or come close to someone
who has experienced the ‘giving ethos’ of a social entrepreneur.
Looking at Nike’s work, which on the surface of it seems to be flourishing and emancipating
many people, my apriori impressions are that:
1. It is indeed a form of social entrepreneurship and it works.
2. It is replicable.
Methodology
The approach taken in this paper is that of phenomenology, looking at experience in

order to build up a description of what is observed and try to understand its essence
(Moustakas, 1994). Not all realities can be understood with a phenomenological approach that
has no predetermined procedures (van Manen, 1990), but in the present case, this
methodological perspective seemed to be the most appropriate way to approach it. Hence, the
phenomenon of Nike was observed independently of any preconceived framework but
seeking to get to know the underlying reality (Groenewald, 2004). I have visited her gallery
and her school briefly. They exist and they work. To understand how it works, the paper looks
at secondary data, specifically studies conducted by others about Nike’s work. She has
granted a number of interviews and thus there was no special need to ask her more questions
in person. In particular, I referred to the PhD work-in-progress of Henrietta Onwuegbuzie,
who has done a deep study of Nike’s work in the course of doing a dissertation on indigenous
knowledgei and has therefore held many interviews with Nike. I also took information from a
video of an interview with a journalist. With more time available, it would have been
interesting to journey to her nearest workshop, in Oshogbo, one of the cities of Western
Nigeria, in order to look at the records of the school – and perhaps hold interviews with her
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students in order to more deeply grasp how this phenomenon works from their viewpoint.
However, since one of the limitations of phenomenology precisely tends to be an
overabundance of data which could complicate explicitation (Groenewald, 2004), it was also
advisable to work with a manageable quantity.
Once the phenomenon has been described on its own, it is then circumscribed through an
attempt to fit it into a selection of the viewpoints of two social entrepreneurship experts who
have taken into cognisance the fit for the developing world context. Dees studied both the
original and current theories of entrepreneurship and brought them together in analysing what
is social entrepreneurship; while Light made an attempt to broaden the field of social
entrepreneurship and make it as inclusive as possible of all kinds of social entrepreneurs. It is
in the process of this exercise that I expect to also find pointers to the replicability of Nike’s
model.
The two studied the other scholars in the field in depth, seven years apart, and so give a very
good picture of what have been the different views on social entrepreneurship over the years
and where all these views converge. Besides, the two of them espouse seemingly
contradictory views of social entrepreneurs: Dees regards them as a rare breed, while Light
suggests that they may have been mistakenly conceived as being “rare exceptions to the rule”
because of formal definitional constraints. Hence if the two of them converge in giving us
characteristics that fit the Nike phenomenon into the social entrepreneurial mould, then we
can indeed conclude that it belongs there.
Nike’s Model of Social Entrepreneurship
Nike learnt her art at her mother’s kneesii and perfected it in the famous Oshogbo
school. She stood out in several ways in her journey: she realized her professional identity as
a female artist quite early and succeeded in catching the attention of art connoisseurs who
have made her successful with their patronage. She works mostly with indigo dye to create
adire, a traditional painted cloth typical of the Yoruba cultural heritage. She creates the
patterns for clothing uses and also creates paintings and a variety of artworks that have made
her internationally famous. She has held workshops and exhibitions all over the world, for
example in Belgium, Germany, Italy Japan and USA.
Her business has been very profitable, especially given that she started from a very poor
background herself, with the experience of staying some days under a tree hoping for a fruit
to fall in order to have a meal. She lost her mother and grandmother very early and her
childhood was from that point on characterised by great suffering. But Nike, apart from being
driven by natural creativity expected of an artist of her renown, is in addition driven by a
desire to touch lives and to empower people. One of her first successes in this area was to
give her fourteen co-wivesiii a profession. She taught them to make their living through tie-
dyeing and in this way, liberated them financially and enhanced their dignity and self-worth.
Because of having suffered herself, Nike has a high sensitivity to others’ difficulties and
started very early helping the people around her. She saved money from her early sales of her
work to buy land and build a house and a workshop to train people. She separated from her
husbandiv and began to train poor people free of charge in different media: textiles, beads,
carpentry, a dance troupe, metalwork. The training outfit expanded gradually and now she has
three, in Oshogbo, Kogi, and Abuja, and is planning to start a fourth one soon in Lagos, in the
Yaba area where it will be close to the women who need it.
Nike has trained about a thousand people since the time she has opened her first workshop.
She houses and feeds many of her protégés since they often cannot afford to support
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themselves, especially when they come to her from other towns. Her generosity has especially
benefitted women, and she faced a lot of opposition from men who thought she was making
women insubordinate by giving them financial freedom from their husbands. Although in
Nigeria now, many women are educated and professionals in their own right, there are still a
number of traditional areas, villages and small towns, where most of the women have no
education and may not have the skills to make a profession for themselves.
When a new ‘student’ arrives to the school, he or she is taken round all the different segments
of the workshop to find out which of them he or she has an innate affinity for. If someone is
unable to fit into any professional line - beadwork, carpentry, the dance troupe, textile,
metalwork, etc. - the person is given a job as an administrator and so still finds a place within
the set-up. This shows how determined Nike is not to turn back anyone who reaches out to her
for help. When the ‘students’ are declared to have attained the skills and graduate, a good
number of them use the workshops as their studios, since they cannot afford a place of their
own. They come back to execute orders from their clients on Nike’s tables and in Nike’s
yards. For all of them, both students, and graduates, Nike exhibits their work in a wonderful
four-storey gallery she constructed in Lagos, with financial backing from some Nigerian
banks. The gallery opens the market to the work of these people who might otherwise have
found it difficult to get good buyers for their work, since many of them come from places
where the people around are concerned with survival and not with luxury items like works of
art. Some graduates also stay back to help teach new students.
Dees’ Presentation of the Contributions to the Field
In order to establish whether my apriori intuitions are supported by fact in Nike’s

case, it would seem good to first detail the characteristics the experts in social
entrepreneurship expect to find in a social entrepreneurial undertaking, and then measure
Nike’s work by some of them. Thus I have detailed below the characteristics highlighted from
the work of past and current scholars, eight by Dees and seven by Light, in the effort to
identify social entrepreneurs.
For Dees, social entrepreneurs are first and foremost entrepreneurs, a sub-set of the wider
circle. In addition, they have a clear and overriding social mission and face some challenges
unique to them. Thus, Dees’ social entrepreneur has the following eight characteristics:
Say (1803; 1834): New and better ways of doing things: Nike’s is a new way of educating
artisans, and it seems a better way since she is providing for those who cannot afford to
develop their talent or to pay to be apprenticed formally to a master artist to teach them.
Say (1803; 1834): “Shifting economic resources out of an area of lower into an area of higher
productivity and greater yield”: In Nike’s case, she is shifting human resources and art
materials in unique ways in this direction.
Schumpeter (1934, 1983): Moving the economy forward: By transforming people who had
hitherto been unproductive into productive members of the society, Nike is moving the
economy forward.
Schumpeter (1934, 1983): Exploiting an untried technological possibility for producing a new
commodity or producing an old one in a new way: While I shrink from applying the word
commodity here, the sense behind this criterion applies to Nike. She has found a new way of
generating an abundance of creativity, talent and artwork, and the market for it.
Drucker (1985): Mind-set that sees opportunities rather than the problems created by change:
all through her life, Nike has undergone changes that have inspired her to see opportunities to
help other people, starting from her helping her co-wives rather than see them as competition.
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Stevenson (2000): Mobilize resources of others to achieve their entrepreneurial objectives:

When Nike had to take loans to build her schools and the gallery to show and sell the works
of her protégées, she did not hesitate. If she had relied on her resources alone, she would not
have been able to achieve what she has.
Dees (1998): A social mission: This must be explicit and central. Nike’s life has been built
around her mission to help others in need. She spends herself to ensure the achievement of her
mission and has even borrowed money in the same endeavour. She is driven by her
determination to help people develop their talent in a way that makes them financially self-
supporting. The sustainability of her model is indicated by the way it has expanded and
actually helped and continues to help so many.
Dees (1998): Unique challenges: Nike has overcome the initial opposition to her work with
raising the financial status of women who were housewives, but has faced numerous financial
challenges herself in expanding her work. She has had help from overseas grants at times, and
she continues to struggle to pay back the interest on the loans that built the mega-gallery in
Lagos.
Light’s Presentation of the Contributions to the Field
Young (1986): Breaking new ground; innovating: Nike is one of the very few people
in Nigeria involved in this type of social project on this scale.
Waddock and Post (1991): Changes in the public sector agenda and perception of social
changes: Nike’s daring to invest so much to help the poor and provide them professional
skills is definitely a challenge to the public sector to do more. Her commitment has elicited
the same in others who help her whether physically or economically to achieve the aims of
her projects.
Thompson, Alvy and Lees (2001): Gathering resources to satisfy an unmet social need in a
greatly impactful way once the opportunity is seen: Nike has done this and made a difference
to many people, about a thousand whose lives would have been different without her help.
Thompson (2002): More concern with helping than with profit: This fits the case of Nike
beautifully.
Frumkin (2002): Self supporting organizations: In Nike’s case, though to some extent self
supporting, her enterprise could not have grown as it has without the support of loans and
grants.
Alvord, Brown and Letts (2004): Agents for social transformation: Nike saw some flaws in
the structure of society around her and in the fortunes of people who were poor and seemed to
have no way of improving their lot in life. She decided to make a change and set out to do this
by developing their innate abilities and talents. It is in this way that her work was able to
transcend each individual’s unique way of being and help a diverse variety of people in very
different ways. Nike’s being able to locate her workshops in different cities is an indication of
her ability to “bridge diverse stakeholder communities”.
Barendsen and Gardner (2004): a new type of leader. Nike’s belief system which led her to
venture into her social work did indeed originate from her compelling personal history. Her
difficult childhood left on her a mark that disposed her to perceiving suffering in others and
wanting to alleviate it in the way she knew how to: by provoking their creativity and giving
them the means to draw themselves out of poverty.
Analysis and Discussion
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The parameters I have selected to use to assess Nike’s social entrepreneurial

undertaking are those synthesized by Dees (1998) and Light (2005) after their analyses of the
work of the scholars previous to them. The reason is that these two summarize the other
scholars in the field very well and are conveniently seven years apart so as to cover the whole
gamut of studies into social entrepreneurship.
Under the Dees’ social entrepreneurship searchlight, we can see Nike fitting into most if not
all of six parameters set out:
Change agent: Nike acted as a reformer of the social order around her, by giving women a
chance to earn and to feed their children without being totally reliant on her husbands,
especially in cases like hers where her husband really could not care less about whether the
children were fed or not. She also contributes to filling the gaps in the educational system,
which had not enough openings to cater for the artisans that Nike took up. In this way, she has
touched many lives and changed their direction for the better.
Creating and sustaining social value: her social mission is fundamental to her. She has
disregarded and continues to disregard her private benefit in order to invest her own private
gain into achieving her social purpose.
Recognizing and relentlessly pursuing new opportunities: Nike puts in whatever it takes to
make her vision work. The very structure of her workshops supports that, for example, the
way she has reserved the role of administrators for those who do not exhibit talent in any of
the fields of art, so that they also come out with a profession after they have gone through her
oases. She also bears the risk of the financing arrangements she has agreed with the banks,
though the gallery helps not only her private gain from her own artwork but also furthers the
possibilities of exposure of their work which her artist ‘children’ so dearly need.
Continuous innovation, adaptation and learning: Her workshops have come a long way from
her beginnings. She went to the US to learn some techniques and incorporated that into her
own work and her teaching. She has an attitude that constantly opens her up to learning new
things and new ways of doing them, and therefore new ways of helping those that depend on
her.
Boldness, given limitations of resources: She has become extremely savvy in getting the
resources needed for her work. Overseas grants and loans from internal sources have helped
her to scale up what started out as a small outfit.
Accountability: She is closely connected to all the communities in which she works and finds
a way to support their values. In her own hometown in Ogidi, she acted in direct response to
their need. Her other workshops are in Oshogbo and Abuja, and now she is responding to the
need in the more slum-like areas of Lagos. Her assessment of her output is in terms of the
numbers of lives that she has touched and changed.
Light’s synthesis of eight distinguishing marks of the social entrepreneur, he calls them basic
assumptions, are reflected in Nike’s profile as shown in Table 1 below. She fits into his
definition of a social entrepreneur as an individual seeking sustainable and major social
change through pattern-breaking ideas. In her case, she sought, and seeks still, to empower
poor people by developing their innate talents into economically rewarding professional
skills. In this way she contributes to the educational sector and to the generation of new
SMEs. The structures she uses are her free training workshops and as far as resources allow,
she takes in more students and has been able to expand to three locations. She adapts to the
different situations that emerge in the course of her work and overcomes the obstacles as they
present.
Table 1: Light’s Social Entrepreneurial Characteristics
Light’s assumptions Nike’s profile
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Individual or group An individual helped by others’ collaboration

Seeking sustainable and major social change Seeking to empower poor people
Through pattern-breaking idea(s) Through helping them to develop
professional crafts and skills
Not limited to any sector Thereby contributing to education and to
developing SMEs
Using whatever structure is effective Through free training workshops
On a large or small scale Scaling up as resources allow
Within their changing circumstances Adapting to the needs that show up
Facing and hopefully overcoming barriers to And overcoming hostility from society and
success fund-raising problems
In conclusion, we can see that Nike’s work does fit into the categories of social
entrepreneurship. At the same time, it is also important to point out what is unique about
Nike’s work.
Uniqueness of the Model
Her model tends to redistribute income in a very innocuous way. One of the problems
in developing countries is the great and ever-widening gulf between the rich and the poor.
What makes this particularly striking is not just the divide, which is perhaps after all only to
be expected in any human space that is oriented towards capitalism, but the lack of
infrastructural amenities and government accountability. Someone who has access to good
roads, healthcare, power and water, really may not care whether his neighbour has a house ten
times the size of his. However, when the social amenities continue to be lacking, the levels of
frustration in the society are high.
With Nike’s model, poor people are taught a craft that appeals to the tastes and pockets of the
rich. Only a relatively wealthy person can spend on art. The poor man needs first to feed,
shelter and cloth himself. Thus, the beneficiaries of Nike’s social entrepreneurship action
have a market that can pay for their work, and the buyers have talented artists providing a
grand variety of pleasing works of art. It is an arrangement with a permanent win-win
structure.
Also unique to Nike’s work is the way it gives without over-patronising the recipients. Since
the artists’ progress is partly due to the teacher and the provider of materials and other
training resources, and partly due to the talent latent in his or her person, the dignity imparted
by this work is deep and long-lasting. Hence, despite the fact that the beneficiaries get free
schooling, housing and feeding while they are at Nike’s school, they learn happily and the
atmosphere is one of warmth and family. While they are there, everyone gives a hand in
whatever needs to be done. Everything is free but there is little if any incidence of a free-
riding mentality. Very often some of them stay back to help in teaching new aspirants. And
when they have left her, she continues helping them to display and sell their works in her
massive gallery in the Lekki area of Lagos.
Creative construction: Nike’s type of social entrepreneurship differs from those described by
Schumpeterv in that it does come into the middle of chaos to create value but does this
without destroying anything. The old order is not in any way threatened. What these artists
produce is at the moment a luxury good and the market for it is very large.
A Replicable Model
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The advantages of social entrepreneurship work being replicable are many, given its
importance for a country as described above. If it is replicable, it can be shown to be relevant
to development more clearly and concisely. Thus it would be possible to recommend that it
should not exist as a special instance to be looked at from afar. Rather it should be copied by
intending practitioners of social entrepreneurship in their bid to make a difference to the
world around them in their own different ways.
With regard specifically to the replicability of Nike’s work, it seems to me that it is possible
for others to go the Nike way. And it is especially advisable for developing countries to foster
this type of social entrepreneurship and for them to find support from social investors.
It is relatively low cost, and very effective in many ways:
Educational sector: The formal educational sector in Nigeria is currently in bad shape (too
many people for the capacity of the universities and lack of attractiveness, and indeed
effectiveness, of the technical educational institutions) and it is very useful to have alternative
educational systems that empower people to be economically independent.
Labour market: Given the high levels of unemployment in the country which also leads to
increase in the level of criminal activity, any initiative that leads to skill building and
therefore job provision is very welcome.
Economic emancipation: People helped through Nike’s workshops and gallery can now earn a
living and contribute to the economy where they would have otherwise been a drag on it.
Creativity: The creativity of the people is stirred, developed and polished. This is of itself a
great gift to bestow on a fellow human being and on the nation that is thus enriched.
Dignity and self-worth of the beneficiaries: The people are developing talents latent within
them and therefore become more self-confident and find it easier to develop a balanced
personality and to engage with their peers on an equal footing.
Social engagement: the people taken up by Nike are a variety/mix of individuals who
experience something special when under her tutelage. They are engaged socially and build
up a network of relationships that are very beneficial to them both in the short-run and in the
long-run. In one extreme case, when she worked with the Italian government to repatriate
prostitutes, she took on the task of rehabilitating these people and giving them the means to
support themselves financially by developing a skill.
Civic responsibility: The people also come out with more affinity for social issues and more
sympathy for those who do not have, and so they are more likely to in turn be socially-
entrepreneurial. Nike is producing people who can be social change agents like herself,
witness the fact that some of them already stay on with her to help in training newcomers.
Patriotism: Since Nike’s artists are almost always Nigerian artists, their work showcases
Nigerian art, and they get to feel proud of their country and to want to contribute to its
development.
Tourist income to the country: visitors come to Nigeria and stay in Nike’s guest houses to
experience the beauty of her art and be steeped in the traditional lore and culture of western
Nigeria. She receives guests in three locations: Lagos, Ogidi and Oshogbo.
Conclusion and Recommendations
Nike is indeed a social entrepreneur. What is more, her model can be replicated in
different craft and skill industries in Nigeria. For example, welders in Nigeria are almost all
foreigners. And this in an oil and gas country where there is a need for these professionals.
There is need for a school of welding where the skill can be transmitted to others, and as a
social entrepreneurship outfit, it would contribute to poverty alleviation in no mean way. The
145
oil and gas industry presently pays very good salaries to all the people they import to carry
out this function. Other craft and skill industries include the fashion and hairdressing
industries, theatre arts industry and the mechanical repairs industry.
It would be good for governments and private philanthropists in developing countries to
support similar social entrepreneurial ventures because of the incalculable good they do to the
country, especially because her approach involves a genuine bottom of the pyramid model
reaching out to the masses that need economic emancipation.
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Biographical Notes
Kemi Ogunyemi holds a degree in Law from the University of Ibadan, an LLM from
the University of Strathclyde, Glasgow, and an MBA from the Lagos Business School, Pan-
African University, Nigeria. She teaches Business Ethics and Anthropology at the Lagos
Business School, while doing her PhD in Management at the School. Her consulting and
research interests include personal ethos, work-life ethic, social responsibility, sustainability
and governance.
i
"Onwuegbuzie,"Henrietta,"2011."Unpublished"dissertation"work"on"indigenous"knowledge"in"entrepreneurship"
ii
"Her"mother"and"aunts"were"traditional"cloth"weavers"and"dyers"in"Ogidi,"in"the"Western"part"of"Nigeria"
iii
"Nike"was"the"first"of"fifteen"wives"of"Twins"Seven"Seven,"a"renowned"Oshogbo"artist"
147
iv
"Two"of"her"coEwives"left"with"her"and"began"to"also"produce"their"own"artwork"and"exhibit"with"her"as"a"
group"of"three."
"
"
"
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A Case Study: Seeds of Africa - The Flowering of Education

and Entrepreneurship
Christine Farias1, Margaret Sands2

1
Lecturer, Economics and Finance, Zicklin School of Business, Baruch College,
City University of New York, US, Christine.Farias@baruch.cuny.edu
2
Director of Community Development, Seeds of Africa Foundation,
38 Barrow Street, NY 10014, US, Maggie@Seedsofafrica.org
ABSTRACT. Education plays a very important role in alleviating poverty and

providing opportunity for people in developing countries to break out of their
poverty traps. In Ethiopia education is in poor shape. Over three million children
do not attend school and those who do attend have to cope with unacceptable
levels of teacher-student ratios and limited and narrowly defined curriculum.
Ethiopia, one of the world’s poorest nations, also faces an acute shortage of
classrooms. Literacy rates are low in general and even lower among women.
Less than half of primary school age children attend school with completion rates
that are lower than 50%. The situation only gets worse at the secondary school
level. About a quarter of children between the ages of 5 and 14 are in the labor
force.
Our case study focuses on the social enterprise “Seeds of Africa” a community
enhancement and development program that works with children, young adults
and their families in Adama, Ethiopia. Seeds of Africa was founded by a group of
young social activists with the mission of creating long-term self-sustaining
models of education and community-centered development for the impoverished
youth of Ethiopia. They facilitate the process by providing basic needs such as
primary education, tutoring, food supplements and medical care to the students
and their families, upgraded and increased teacher training, building a library
and technology center to enhance the lives of the community at large and
organizing art and theatre programs to enrich the lives of the youth and the
community. Seeds of Africa has embraced a ‘progressive’ project-based
curriculum emphasizing critical thinking, problem-solving and the love of
learning. The youth are considered the “seeds” and with nourishment in terms
of the right kind of education they can grow into plants that if well nurtured and
given hope can give back to their community by flowering into the future as
leaders of change in their communities. A critical aspect of the program is the
integration of microloans to families whose children maintain high levels of
school attendance. These loans are expected to bring financial stability to each
student’s home and will be used to start or expand a business, acting as a vehicle
to generate income and improve the lives of each family involved.
Keywords.Education, Entrepreneurship, Youth, Microloans
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A Case Study: Seeds of Africa - The Flowering of Education and Entrepreneurship
A Case Study: Seeds of Africa - The Flowering of Education and

Entrepreneurship
Before joining Seeds of Africa, Feitya, an inquisitive and insightful 11-year-old, was
struggling to complete the third grade. Due to overcrowded classrooms—Ethiopia’s
pupil/teacher ratio for primary school is one of the highest in Africa at 58—Feitya was not
receiving the one-on-one support she needed (UNESCO, 2004). In addition, Feitya spent
most of her time out of class selling potatoes on the street to support her mother and sister
who had both contracted HIV. But then she joined Seeds of Africa. After receiving the
assistance her family required, Feitya completed the fourth grade at the head of her class. By
supplying the fees and materials needed to stay in school, assisting student household status
with monthly food supplies, and providing a tutorial after-school program, children like
Feitya holistically gain the tools to succeed in and continue their education.
Banchiayehu, an art-loving ten-year old, has demonstrated considerable growth during her
time at Seeds of Africa. When Banchiayehu first joined Seeds, she lacked confidence in her
overall academic ability. Banchiayehu gained the ability to express her individuality after
participating in the arts and music program at the Seeds of Africa Take-Root Center.
Understanding that ‘thinking outside the box’ is valued at the Take-Root Center, Banchiayehu
has acquired a comfort and ease in her project work, enhancing all areas of her academics. In
the past several months, Banchiayehu has been more motivated to work, more eager to learn,
and more willing to participate in the classroom. As evidence of this, her grades at the public
school she attends have increased from an average of 79% during her first year with Seeds to
95% during her second year. It is for stories such as Feitya’s and Banchiayehu’s that Seeds of
Africa is dedicated to supporting the education of underprivileged and high-performing
children of Adama, Ethiopia.
Introduction
The stories above are demonstrative of the potential impact of education on the
economic, social and environmental well-being of an individual. Education, entrepreneurship
and microloans work together to serve as a sustainable bridge to economic growth and
development. Education plays an important role in alleviating poverty, reducing inequality
and providing opportunity for people in developing countries to break out of their poverty
traps. It is only through education that knowledge can be created, applied and spread and, in
the process, uplift societies that account for a large percentage of the world’s poor (Burns,
Mingat and Rakotomalala, 2003). Research shows that the successful completion of primary
education raises self worth, enhances the value of human capital, makes labor more
productive, thus contributing to a healthier, happier and less polluted society (UNESCO,
2011). The United Nations Educational, Scientific and Cultural Organization (UNESCO)
2011 report also notes that primary education provides the basic skills needed to protect the
natural environment by stimulating agricultural innovation and promoting sustainable
development. Further, education helps to prevent the spread of disease such as HIV/AIDS
and reduces the practice of child and teenage labor so prevalent in developing countries. The
productivity of the labor force, the potential for knowledge-driven development, and the
reservoir of human potential from which society can draw are all fundamentally constrained
when a large share of a country’s children do not complete primary education (Bruns, et al.,
2003). The situation in the developing world is particularly worrisome. An adult, on average,
has completed 0.8 years of formal education in Mali and Niger, 1.1 years in Mozambique and
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Ethiopia, 2.0 years in Nepal and 2.5 years in Bangladesh (Barro and Lee, 2000 in Burns et al).
Burns, et al (2003) quote Nobel laureate Amartya Sen (1999), “education provides people
with human capabilities – the essential and individual power to reflect, make better choices,
seek a voice in society, and enjoy a better life.” This goes beyond just contribution to
economic growth; it provides the tools for sustainability.
The poor who struggle to meet their basic necessities find it impossible to pay the price to
educate their children even though they value education. Most developing countries charge
school fees for primary education. Even in countries where primary education is free, there
are other direct costs including books, uniforms, exams, transport, nutrition, health and
hygiene that can account for up to 20% of a family’s income. Therefore, access to easy credit
is crucial if poor children have to get an education. Microloans compensate for the loss in
household income and provide a means to increase income through microenterprise projects
(Holvoet, 2004).
There are many social enterprise initiatives that address the issues of education and poverty
alleviation. Seeds of Africa, based in Adama, Ethiopia is one such private social initiative.
Our paper examines the genesis of Seeds of Africa, its founders, its evolution, its mission, its
outcomes and its vision for the future. We address whether more of such social enterprises in
impoverished Ethiopia will help alleviate the lack of opportunity faced by its underprivileged
youth. We focus on the role of education in resolving the economic, social and environmental
issues that a large section of the population in Ethiopia face.
Why Ethiopia?
Ethiopia is considered one of the poorest nations in the world. With a population of
83 million, 39.3% live below the national poverty line, and 77.6% live on less than two
dollars a day (World Bank, 2010). Ethiopia is faced with a range of problems from lack of
food, high unemployment, poor governance and lack of good quality education (Alemu,
2006). According to the United Nations Statistics Division, the literacy rate of adults aged 15-
49 is 35.9% (UNESCO, 2011). Over 3 million children do not attend school and more than
50% of children in Ethiopia between the ages of 7 and 14 are in the labor force (World Bank,
2010).
Completion rates of students who attend primary school are dangerously low. Less than 60%
of students in Ethiopia who enter Grade 1 will reach Grade 5, and less than 40% will continue
to the last grade of primary education (UNESCO, 2011). The low survival rate is attributed to
various factors, including the cost of schooling, and the poor quality of education, which
results in children not understanding the subject matter and repeating grades (UNESCO,
2011). As noted earlier, those who do attend school have to cope with unacceptable levels of
teacher-student ratios of 58, one of the highest in Africa (World Bank, 2010). Ethiopia also
faces an acute shortage of classrooms and qualified teachers, only 84.5% of teachers at the
primary level have had some educational training (World Bank, 2010).
As with many areas in Africa, households in the Adama community largely finance their own
children’s education (UNESCO, 2011). Families grapple with high costs of sending their
children to school. In addition to the monetary expenses of tuition, they have to bear the
opportunity costs of the loss of income of children attending school in lieu of working, which
can be significant. Students who do attend primary school often spend free hours in the labor
market to bring additional income to the household, a trade-off which encroaches on potential
study time.
An expansion in Ethiopia’s education sector, particularly primary education, has occurred as
part of the United Nations Millennium Development goals. But with a focus on quantitative
expansion, the quality of primary education may have declined. UNESCO’s 2004 EFA
151
report, The Quality Imperative and numerous reports since have acknowledged the need to
improve education quality in Africa. UNESCO’s 2011 report on Financing Education in
Sub-Saharan Africa notes the growing recognition that children can stay in school and not
learn very much, making the completion of primary school a hollow achievement.
According to the recommendations of this report, it is the knowledge and skills acquired by
students rather than the number of years spent in school that are important contributors to
economic growth and development which in turn reduce poverty and build the wealth of the
community (OECD 2010).
Developing countries find themselves trapped in a vicious cycle of poverty (Farias & Farias,
2010). Tarabini (2010), indicates that education plays a key role in the fight against poverty.
Education is a crucial investment for national development and raises the level of national
labor productivity and economic growth. It is believed that one of the main ways for
individuals to be included in the competitive labor market is through an investment in
education. The lack of or limited investment in education leads to the lack of educational
materials, limited or no access to quality primary education, poor health and hygiene, and a
shortage of financial resources. These are some of the reasons children living in poverty tend
to continue to live and grow in the poverty trap.
Topper (2008) reports that Room to Read (www.roomtoread.org) a non profit organization,
has brought about positive change in developing countries. This change has enhanced literacy
levels by creating libraries, and making books more easily accessible to children. In addition
to investment and infrastructure development for education, it is also imperative to address
the content of education and the pedagogy used to deliver it. Goebel (2009) advocates the
application of Howard Gardner’s multiple intelligences that are necessary for the growth and
development of children living in poverty. Gardner’s multiple intelligences include:
“Linguistic intelligence, logical-mathematical intelligence, bodily-kinesthetic intelligence,
spatial intelligence, interpersonal intelligence and intrapersonal intelligence” (Gardner
1999:41-43). Each student learns differently. However students living in poverty,
particularly in urban areas, have financial, emotional, mental and physical needs as well as the
need for a support system and role models. Because these students have a different set of
experiences and need differentiated instruction that acknowledges this diversity, it is
important to ensure that they are taught in a way that is in alignment with their capabilities
and strengths and enhances their understanding of the material being taught.
It is also crucial to address the financial issues that come in the way of education. As noted
earlier, families bear not only the direct costs of tuition and materials, they also bear the
opportunity costs of their children not working. An emerging safety net for the poor are the
several, yet insufficient microlending programs and financial institutions that are being
created in developing countries to fund small to medium entrepreneurs. While noting that
there are several studies that indicate the positive and negative impacts of microlending in
reducing poverty, Alemu (2006) reports the experience in Ethiopia has been positive and has
succeeded in reducing poverty and generating income for the poor. This is an important
factor in the Seeds of Africa story.
Our Case Study
Our case study focuses on the social enterprise Seeds of Africa, a community
enhancement and development program that works with children, young adults and their
families in Adama, Ethiopia. Seeds of Africa (Seeds) was founded by a group of young social
activists with the mission of creating long-term, self-sustaining models of education and
community-centered development for the underprivileged youth of Ethiopia. Seeds facilitates
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the process by providing basic needs such as primary education, tutoring, food supplements
and medical care to the students and their families. They also provide education to teachers to
upgrade and enhance their skills. Seeds has also provided a library and technology center to
improve the lives of people in the community at large. The youth are considered the “seeds”
and with nourishment in terms of the right kind of education they can grow into “plants” that
if well nurtured and given hope can give back to their community by flowering into the future
as leaders of change in their communities (www.seedsofafrica.org). A critical aspect of the
Seeds program is the integration of microloans to families whose children maintain high
levels of school attendance. These loans are expected to bring financial stability to each
student’s home and will be used to start or expand a business, acting as a vehicle to generate
income and improve the lives of each family involved.
Margaret Sands, co-author of this case study and Director of Community Development, is an
integral part of Seeds and plays a key role in developing the services that Seeds offers to the
community. In this case study Margaret Sands is a “participant observer.” This case study is
the story of Seeds from Margaret’s perspective.
Founders Story
Growing up in Adama, Ethiopia, founders Anteneh and Atti Worku were strongly
influenced by their parents’ involvement in the community. At an early age, they realized the
importance of education in their neighborhood—simply put, those with an education had
significantly better lives than those without one. The value of an education was strongly
emphasized in the Worku family and became paramount in their upbringing. Anteneh, an
entrepreneur, who has launched and managed a number of ventures in technology, fashion
and consulting, received a Bachelor of Science in Information Technology from the
University of Texas at Arlington. Atti, graduating from a local college in computer science,
trained in business management, entrepreneurship and computer networking through
organizations such as UN-ECA (United Nations Economic Commission for Africa) and Cisco
Systems. In 2003, Atti began an international career as a model and represented Ethiopia in
the 2005 Miss Universe Pageant. In 2007, recognizing the need and opportunity to inject
energy and inspiration into their home community, Anteneh and Atti consolidated their
values, skills, and experiences into one package—this became the Seeds of Africa
Foundation.
Founded in Dallas, Texas, Seeds of Africa initially aspired to be a summer camp for
adolescents in Ethiopia. This would change as Atti moved to New York City and began
collaborating with several young social activists. One activist and early Seeds of Africa
volunteer, Siena-Antonia von Tscharner Fleming, was completing her Bachelors of Science in
Early Childhood Education at New York University. During this time, Siena-Antonia was re-
examining her own educational values while strengthening her commitment to providing
young children with meaningful and relevant experiences in the classroom. It was during her
two years co-teaching in public and private schools in New York City that Siena-Antonia
recognized the distinction between teaching students not only to learn, but to think. Siena-
Antonia was recruited for the position of Director of Education and would go on to shape the
Seeds of Africa mission significantly. Shawna Hamilton, a Masters of Science student in
Non-Profit Management at the New School, was becoming adept in designing operations and
infrastructural components for NGOs. Shawna assisted in developing the organization in
New York City by lending her competencies to Seeds of Africa as a Director of Operations.
Margaret Sands, an International Relations and Economics student at Baruch College, had
come to the conclusion that aid, though a necessary component in development, is subject to
bureaucracy and substantial red tape, and saw Seeds of Africa as an opportunity to make a
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tremendous difference in the life of an individual. Particularly interested in labor economics,

she observed in Ethiopia high levels of unemployment with little opportunity to enter the
labor market. Margaret would go on to hold the position of Director of Community
Development.
The Seeds of Africa Foundation mission and vision were synergistically constructed in early
2008 with the help of the above mentioned activists as well as several other individuals.
Today, Seeds of Africa is a 501(c)(3) non-profit international organization with offices in
New York City, Dallas, Texas, and Adama, Ethiopia. It maintains a seven-person, paid
program staff in Ethiopia and an all-volunteer staff in New York City, overseen by Atti
Worku, Executive Director.
Seeds of Africa Mission
Seeds of Africa’s mission is to educate and cultivate gifted yet underprivileged

children, young adults, and communities through a framework of innovative curriculum, basic
needs support, and community enhancement. Seeds is focused on creating long-term, self-
sustaining models of education and community-centered development. Beginning in Adama,
Ethiopia’s third largest city, Seeds aspires to provide an effective and long-absent response to
the need for educational support services amongst the urban poor in Ethiopia. By identifying
youth with the aptitude but not the means to develop into effective and influential members of
the community, Seeds of Africa works to support their educational development.
Seeding Education
Seeds of Africa Foundation began operations in 2008 by launching Seeding Education,

a pilot after-school and summer tutoring program that currently supports thirty academically
gifted yet underprivileged students. Students are selected based on their academic
engagement, or enthusiasm, and low socio economic level. This program provides academic
support for two hours after-school and four hours on weekends. Among the fifteen children
initially enrolled in the program, 80% come from single guardian households and more than
half are orphans. The average monthly household income of Seeds families is 250 birr (15
USD), and most parents have not been educated beyond the primary school level. Fifty
percent of the heads of households are unemployed, with the remaining significantly
underemployed, primarily generating their income through entrepreneurial work such as
selling produce along the side of the road. Since all of the children were faced with the
possibility of having to leave school in order to work full-time to support their families, Seeds
offsets the costs of attending school by supplying children and their families with food,
clothing, school supplies, fees, and medical care.
Established in Adama, Seeds is housed in the ‘Take-Root Center’, a gated compound with an
abundance of space and materials for students to learn effectively. For Seeds, creating a
visually stimulating and emotionally secure environment is a crucial component in
encouraging students’ exploration of the world around them. At the Take-Root Center,
Seeds extensively trains teachers and provides individualized academic support for two hours
after-school and four hours on the weekends.
Seeding Education, designed specifically for Seeds and inspired by the Reggio Emilia
Approach, exposes students to a multi-disciplinary curriculum in a child-centered learning
environment. The Seeding Education program consists of two interconnected components,
school-based tutorial and project work. Half of the student’s time spent at the Take-Root
Center is dedicated to school-based tutorials, in which teachers help students keep up with
their lessons in the formal school system and assist them in math, reading, Amharic, and
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English. Emphasizing literacy, critical thinking, and problem-solving, students and educators
also participate in multi-subject projects which often involve the theatre and arts. These
projects are in-depth studies of ideas, concepts and interests, and can last for a week to several
months. Whereas students primarily are ‘lectured at’ during the day while attending their
public school, participation in Projects at the Take-Root center allow for the development of
paramount skills. Skills acquired during Project work include posing questions, addressing
the unknown, formulating an approach to problem solving, following an order of operations,
expressing ideas through drawing, painting, theatre, music and writing, collecting data,
working in small groups and independently, and presenting findings to the class
(www.seedsofafrica.org). Nurturing and strengthening these skills are important in promoting
successful entrepreneurs and sustainable micro enterprises.
As projects unfold, they are carefully documented for student, teacher, and parental use. At
the Take-Root Center, documentation is an important tool in the learning process, and
photographs of children engaged in various activities along with recorded dialogue are
displayed as a graphic representation of their learning. Documentation is posted throughout
the classroom, and students continually refer to them as a guide and as a way of celebrating
and enhancing their thinking process. Documentation is also sent home to parents to allow
for a better understanding of what occurs in their child’s learning when at the Take-Root
Center.
The local context of Adama plays a central role in the classroom through the precedence of an
emergent curriculum: one that builds upon the interests of children. Seeds presents relevant,
applicable-curriculum to their students. Topics for study and Project work are captured
through classroom discussion, community events and cultural experiences. For example,
during a lesson on the parts of the body, the third grade class became especially interested in
the heart. After listening to the heart beat with a stethoscope, a student made the connection
between a heartbeat and a drum beat. Traditional Ethiopian drums were brought in, and
students ‘translated’ their heartbeats into a class drumbeat. This project evolved into a
month-long project in which the drum-heartbeat was recorded and used to compose an
original Seeds of Africa song.
In addition to this structured curriculum, Seeds incorporates interdisciplinary activities in
order to help children build a broad skill set. To date, Seeds has introduced a soccer team, a
creative writing program, and an arts and theater program, for which students write and direct
classroom plays for the Community. Seeds also coordinates regular field trips to cultural,
educational, and recreational institutions, such as Adama University.
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Operations: Seeds Staff and Organizational Structure:
Peer(Mentor(
(Ethiopia)(
Head(of(Opera&ons( Country(Director(
(Ethiopia(Volunteer)( (Ethiopia)(
Teachers((5)(
(Ethiopia)(
Design(and(Produc&on(Manager(
(NY(Volunteer)(
Director(of(Educa&on(
(NY(Volunteer)(
Director(of((Community(
Execu&ve(Director( Development(
(New(York)(
(NY(Volunteer)(
Vice(President(and(Director(of(
Strategy(&(Organiza&onal(
Development(
(NY(Volunteer)(
Director(of(Public(Rela&ons(
(NY(Volunteer)(
Director(of(Finance(
(NY(Volunteer)(
The Take-Root Center in Adama is run by a paid, seven-person staff composed of a Country
Director, five teachers, and a peer mentor. Bogale Tessema supervises all Seeds of Africa
activities in Ethiopia, including hiring and releasing staff, overseeing all purchases for the
Take-Root Center, and working with the Head Tutor to ensure that the curriculum is
implemented. Mr. Tessema has a BA from Asmara University in English Language and
Literature, an MA from Addis Ababa University, and a postgraduate diploma in education
from Indira Gandhi University. Prior to joining Seeds of Africa, Mr. Tessema worked at
Asmara University for 20 years, primarily in teaching and administrative capacities.
Bekele Almu Mekuria, the Head of the Teaching Team and the Science Teacher, works with
the Country Director and the assistant teachers to implement the curriculum. He also writes
bi-monthly memos to the US office on the educational progress of the students. Mr. Mekuria
has thirty years of experience in both teaching and administrative positions, which has
prepared him to lead Seeds’ skilled team of teachers in implementing its innovative
curriculum.
Additionally, Genet Damtew acts as the Head of Operations in a volunteer capacity (she is
also the mother of Atti Worku, Seeds’ Executive Director). Ms. Damtew is responsible for
managing all of Seeds’ activities in Ethiopia, from general management to finances to
implementation of the curriculum. She plays a key role in carrying out and furthering the
vision of Seeds of Africa.
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New York City Staff
The direct-service staff in Ethiopia is supported by an Operations Team based in New

York City. Ms. Worku, the Executive Director, leads a small all-volunteer staff that oversees
fundraising, program development, marketing, and communication.
In the past year, Seeds has also been able to bring in expert talent to fill a variety of much-
needed services. In doing so, it has demonstrated a tremendous ability to attract pro-bono
talent. As it develops, Seeds will utilize this ability to create a strong, sustainable pro-bono
support base and ultimately a competent, professional, permanent staff and Board of
Directors.
Financing Seeds
Seeds of Africa programs are directly supported through online solicitations from the
website, major gifts, and fundraising events in New York City, Dallas, and Chicago. As of
2011, Seeds has expanded this strategy to include a greater emphasis on institutional grants,
corporate sponsorship, and a Global Giving Campaign in conjunction with globalgiving.org.
In addition, Seeds has been supported by the receipt of a no-expiration Google Grant since
2009, which provides free advertising services on Google sites and has enabled Seeds to
maintain a strong web presence. In the long term, Seeds aims to develop sustainable business
activities to support its programs, focusing on the marketing of Ethiopian-influenced products
and services around the world.
What’s Next
To date, Seeding Education has provided more than 1500 hours of academic
enrichment to impoverished youth in Adama. To increase its impact, Seeds of Africa began
an expansion in June 2011. For current students participating in Seeding Education, the after-
school curriculum was extended from two to four hours every weekday. Through the
introduction of a Pre-School Program, Seeds of Africa will recruit 20 additional students, and
increase the number of students served from 30 to 50. The expansion entailed recruiting a
first phase of 15 students aged 4 to 6 into a pre-school program which started in June 2011,
followed by a second phase of 20 additional pre-school children in September 2011. In
addition, parental outreach and the Community Enhancement Initiatives would begin in
September 2011.
Pre-School Program
Developed by Seeds’ Director of Education, the pre-school class is based on the

Reggio Emilia philosophy, a cross-cultural, early childhood education model that endeavors
to create conditions of learning that enhance and facilitate each child’s construction of “his or
her own powers of thinking through the synthesis of all the expressive, communicative, and
cognitive languages ” (Edwards, Gandini, and Foreman 1998). The teaching philosophy for
the after-school program is also inspired by the Reggio Emilia method, but has been adjusted
to conform to local needs. For instance, it is guided by state requirements (through the use of
exam materials), but also includes interest-based projects. Within the Reggio Emilia
philosophy, the Seeds’ pre-school program implemented a curriculum that includes such
components as arts and creativity, along with music and movement, language, and literacy.
157
Community Enhancement Initiative
In the long term, Seeds’ goal is to convert the Take-Root Center into a comprehensive
education and community development center. One of the first steps of carrying out that
mission is the launch of the Community Enhancement Initiative. As students participate in
Seeding Education a mere few hours per day, it is integral to the Seeds vision that families act
as partners in the education of their children. The community enhancement initiative serves
as an opportunity for children’s parents and guardians to receive the necessary tools to bring
financial stability to a student’s home.
Since the start of Seeding Education, the NYC and Adama office have conducted interviews
with the surrounding Seeds of Africa Community. The community defined their needs to
include saving and income generating opportunities, microcredit facilities, and skill
development and training. In Winter 2011, in response to the needs of the community, Seeds
will offer microloan opportunities to the parents of children enrolled in Seeding Education.
This will enable Seeds families to develop their own entrepreneurial initiatives and enhance
their economic, social and environmental well-being.
To prepare for the distribution of microloans, adult literacy and entrepreneurial courses will
be offered in September 2011. Courses will include topics such as thinking proactively about
new markets, record keeping, separating money between business and household, reinvesting
profit, and how to write a business plan. Courses are given with the assumption that basic
entrepreneurship training leads to improved managerial decisions, and thus higher profits.
Evaluation
Seeds of Africa uses several methods to evaluate both the strengths and the areas for
improvement in Seeding Education’s after-school and pre-school programs, as well as the
overall progress of the students. Seeds Standards are used to organize students’ progress in
developing certain skills, while creating continual goals for them. Students are assessed on
Creative Initiative (the ability to express individuality), Innovation (the ability to devise
solutions independently), Investigation Tactics (the ability to take risks and create
hypotheses), Thoughtful Argument (the ability to organize information and problem-solve),
and Listening Skills (the ability to listen to new information and instruction), and Respect (the
ability to be a constructive member of the learning community). Teachers meet weekly as a
team to discuss each student. Once a teacher is able to describe a specific instance in which a
student has met one of these standards, the staff then create a new goal for the student in that
category.
In addition, Seeds periodically collects tests, grades and assessments from the students’ local
school. Currently, Seeds students all rank within the 70th - 99th percentile range, a dramatic
increase in progress since the program began. Monthly student exams are conducted for
after-school program students to assess their progress, particularly in English and math.
These tests broadly reflect current lessons, both in the formal school system and the Seeds
curriculum.
Discussion
Kindergarten is not a public good in Ethiopia; it is excludable and rival, available only
to those children of families that have money. There is hope. Education in Ethiopia is being
revolutionized by social entrepreneurs. Non-profit organizations in Ethiopia, particularly in
Addis Ababa are dedicated to creating educational opportunities for children of low income
families. One such non-profit organization is The Fregenet Foundation located in Addis
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Ababa, Ethiopia (www.fregenetfoundation.org). One of the goals of the Fregenet Foundation

is to provide the underprivileged youth of Ethiopia with high quality early education as a
means to overcome poverty, improve health and reduce gender inequality. Founded in 2004
with a total of 31 students, the Fregenet Foundation currently provides education to 215
impoverished children in Ethiopia.
Using innovative approaches to education, Bruktawit Tigabu who is a co-creator of a
children’s TV show, uses puppets and animation to teach health lessons in the local language,
Amharic. Through this TV show Tigabu reaches 5 million children in Ethiopia providing
them with important information on health issues and empowering young minds to rediscover
themselves and their world. Tigabu believes that concentrating on education and children,
will provide for a better Ethiopia, a better Africa and a better world. “It is important to invest
in a young mind, provide children with quality education and motivate young people to serve
humanity with the best knowledge they have and equip them with that knowledge so that they
can be empowered to take action in everyday struggles.” (McCarthy, 2011).
An Ethiopian teacher Muday Mitiku, opened a school in the year 2000 when she realized that
most of the children in her neighborhood around Addis Ababa spent their days on the streets
unwashed, unfed and unschooled.
‘Fresh and Green Academy’ is the only school in the area. The parents of the children are
either beggars or prostitutes. A large number of children are orphans. The school engages the
mothers of the children to prepare the meals and clean the school. They also help the mothers
make crafts which are sold to generate income for their families (Wither, 2011).
The above are just a few examples of the non government organizations engaged in providing
quality primary education to the underprivileged youth in Ethiopia. Even though there are
several other organizations in Ethiopia that are focusing on primary education for poor and
underprivileged children, many more such organizations are required if Ethiopia has to
educate its young population and promote entrepreneurship.
Development Footprint measures the impact of Seeds of Africa on the local community by
quantifying the number of people affected by Seeds’ programs. Almost all of the resources
needed to operate the Take-Root Center are purchased locally, supporting countless
merchants and vendors who provide school supplies, uniforms, food, and furniture. As a
result, Seeds invests approximately $20,000 every year into Adama’s economy and expects
this to increase to $40,000 annually, beginning in late 2011. In addition to the 30 students and
families it currently supports, Seeds also pays a salary to seven employees who support
themselves and their families. At present Seeds is estimated to directly support over 150
people in Adama.
Seeds is also committed to continually improving its performance metrics and evaluation
methods. In the near future, it hopes to partner with a university in either the United States or
Ethiopia to develop an even more comprehensive performance assessment of Seeding
Education.
Seeds of Africa is dedicated to supporting the education of underprivileged and potentially
high-performing children in Adama in order to foster their development as leaders -today, in
the classroom, and tomorrow, as contributing members of both the local and global
community. It is evident from the progress to date at Seeds, that education, entrepreneurship
and microloans are essential ingredients in reducing poverty, promoting economic growth and
building healthier, more peaceful and happier societies. With more organizations like Seeds
in Adama and around Ethiopia, the Ethiopian youth of today have a chance to be leaders of
tomorrow.
159
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World Bank. (2010). World Development Indicators 2010. World Bank Data Bank.
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from-impoverished-backgrounds?_s=PM:WORLD on 30 May 2011.
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The role of teaching institutions to prepare and promote

Social Entrepreneurs
P. Santos1, A. Guedes2, M. Fonseca3

1
P. Santos, PhD, Teacher, psantos@estgl.ipv.pt
2
A. Guedes, PhD Student, Teacher, aguedes@estgl.ipv.pt
3
M. Fonseca, PhD Student, Teacher, mfonseca@estgl.ipv.pt1
1-3 Department of Social Sciences, School of Technology and Management of Lamego, Portugal
Abstract. This research intends to analyse how Universities must have an

important role in social entrepreneurship promotion and in the regional and
social sustainable development itself. In fact, it's our opinion that students must be
advised how can they start up their professional careers in social area and how
they can be competitive in the professional world. Thus, academic curricula and
teaching methodologies must give them the basic tools so they can have
entrepreneurial spirit and to develop innovative programmes/organizations as
well as, at the same time, to contribute for a more inclusive society.
Keywords. social entrepreneurship, universities, teaching methodologies,

inclusive society.
Introduction
“The notion of situated learning now appears to be a transitory concept, a bridge, between a view
according to which cognitive processes (and thus learning) are primary and a according to which
social practice is the primary, generative phenomenon, and learning is one of these
characteristics.”
(Lave and Wenger, 1991)
As an institution, the school falls within a society in constant transformation. Recent

decades have put us on the Information Society, in a Globalized World and onto a permanent
need of change on teaching and learning methodologies.
Nowadays, teaching in higher schools means being aware of the challenges that future
professionals will face in the labour market due to competition, competitiveness and general
difficulty relating to employment. In fact, despite the different policies of cooperation and
partnership in Europe (EU and non-EU countries), we still have major challenges to which it
is urgent to respond efficiently – employability, development of social responsibility and
improvement in the third sector (Santos, Silva & Guedes, 2011).
This new reality requires differentiated knowledge, which includes new ways to create,
produce and manage new methods of work organization, sources of knowledge and learning
styles (Carneiro, 2003). Higher education and bachelor curricula must, therefore, bring
together all these concerns and be able to promote entrepreneurial spirit on the future
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The role of teaching institutions to prepare and promote Social Entrepreneurs
professionals, by showing technical, professional, social, organizational and cognitive skills

towards a competitive and inclusive society. We understand inclusive society as an
opportunity of sustainable growth: people's life chances are maximised, because they have
access to the services and facilities they need; the needs of specific groups are achieved and
people have a sense of belonging to the community by interacting with others and be able to
use community resources for the collective well-being.
In other words, the welfare State of the future demands that the citizens must be proactive in
sustainable society’s development, instead of this role being only assigned to public
administration and government. Private initiative can introduce innovative management tools
to make third sector a competitive and successful area, without losing its scope of promoting
inclusive societies and spread peoples’ wellbeing.
That is the reason why higher education must be able to promote social entrepreneurship with
the help of innovative tools and different teaching methodologies. The role of high education
institutions must pass through the ability of making students believe in a new and successful
way of welfare State, based on competence, skills and professional differentiation.
So, we believe that we don’t need more organizations working in the third sector. What we
need is people with entrepreneurial spirit, with great management skills that are available to
take risks and allow these organizations being sustainable in financial, social, economic and
organizational areas, even though their main goal keeps to be “having a social mission to
answer a social problem” (Martins & Frazão, in Azevedo et. al., 2010, p. 128).
Social entrepreneurship must be faced as a way to develop the existing organizations and their
human and technical resources, to allow the effective value creation and to potentiate them as
a catalyser of social sustainable development.
Teaching and learning
Higher education institutions have a key role in the social competitiveness challenge,
either by offering high-quality training, appropriated to labour market and to the socio-
economic environment needs (specific to each region/country), either by the preparation of
professionals who can address the real needs of public or private organizations, through the
ability to mobilize their scientific/technical knowledge to any situation, at the right time and
with discernment (Santos & Bonito, 2010).
In this new teaching and learning paradigm, the individual also takes an increasingly
important role and responsibility in managing its own career (Arnold, 1997), but he must be
prepared and advised during its bachelor’s/academic studies, with teaching methodologies
that drag out their ability to be a proactive element on the inclusive society building
(Carvalho, 2011).
Qualified people have to be prepared to find a job or to create business/professional
opportunities, where they can be entrepreneurial and become a proactive element on the
organizational positioning. Generally, people look for organizations that can meet their career
motivations and needs, but organizations, otherwise, are looking for workers that are able to
bring any competitive advantage. Thus, if the value of work or the importance that work has
in individuals’ life affects their behaviour on their career choice management, the
organization must also have a greater concern in terms of systemic (Feijó, Whithey, Peiro and
Taris, 1995; Nabi, 2000), innovative and competitive view.
The construction of knowledge can then be considered as a continuous process, involving
moments of abstract and decontextualized knowledge learning that will be framed by other
experiences beyond the school's physical space, allowing learning to occur according to the
activity, the context or culture. Therefore, learners should become active participants in the
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ISSN 2224-9729
educational process. From this proposition it clearly follows that in learning from their own
experience, students become, in a sense, their own teachers. The changed role of the learner
has, in turn, implications for that of the teacher. Instead of the source of knowledge, teachers
become facilitators of the learning process; that is, their role is to create the set of conditions
under which students can best learn from their experiences. Furthermore, teachers can fulfill
this role only by becoming learners themselves, and a primary source of their learning must
be their students. In a simpler way, teachers who learn become better teachers, and learners
who teach become better learners.
In this sense, the learning process, according to nowadays demands, must necessarily be seen
as a collaborative process of sharing and interaction, where all players feel really motivated to
participate: in higher education, teacher has to hand on his knowledge through interactive
methodologies and be able to interact simultaneously with different shapes and speeds of
learning. Student, in return, must be motivated to accept the theoretical and conceptual
knowledge to be able to solve and manage any situation (theoretical or real, in academic or
professional context).
All this interaction between teacher and student is seen as a team work, where the
empowerment is a constant reality, and where all members share values and principles in an
ethic and good governance basis, promoting best practices and citizenship deepening itself
(Santos & Bonito, 2010).
Teaching methodologies promoting entrepreneurship
Higher education contributes, in our perspective, to promote inclusive society through

the promotion of general entrepreneurship spirit in students. In fact, citizens will be more
proactive in society if they believe in their qualifications potential and if they can clearly
identify its role for social development. Thus, curricula must show its ability to enhance the
main scientific and technical competences required by their students to be competitive in the
future. In other words, it’s obvious that future professionals have to show their ability of
being constantly proactive and entrepreneurial, even though they aren´t the organization
owners. Only this way can lead us to Europe’s competitiveness regarding the rest of the
world.
Figure 1 - education for social entrepreneurship/responsability
163
According to the above illustration, high education schools have to provide and ensure that
students are prepared to intervene as experts in a specific area, gathering the scientific and
academic knowledge with the technical know-how to determine the right solution for each
situation. This role of schools can be facilitated by some teaching methodologies.
The first of them we want to emphasize is the collaborative learning. The ability to show
students their proactive role in their learning process (and consequently on their professional
future) is central to the success of collaborative learning – with this methodology, students
become aware of their responsibility in shaping their own training path, trying to maximize
the resources at their disposal and becoming active of their knowledge and developing a
greater capacity of critical thinking. Moreover, with the promotion of that awareness and
proactive posture, the students will be even more interested in getting involved in their
surrounding community, developing tasks and projects that promote the region itself.
Moreover, collaborative learning also implies the active participation of the stakeholders in all
education process: future employers, public administration, company managers, and experts
of different scientific areas, among others. It is important that school brings all these partners
so they can feel involved in the future professionals’ training, giving their example, telling
their real needs (so these needs can be used in the curricula organization) and assessing tasks
that students can develop as volunteers in those entities.
Besides the collaborative education, we believe in the importance of three more
methodologies: volunteering work, development of entrepreneurial projects (where students
learn how to do competitive and innovative projects) and the participation of students as
academic researchers in their field of academic studies.
The possibility of doing entrepreneurship projects to conclude their bachelor is another way
of helping and preparing students to the labour market. In our Superior School, students can
choose in the last semester the development of an entrepreneurship project, which includes a
business plan, a marketing plan, a market study and the organization of a business idea that
can be implemented. All this work is permanently accompanied by different teachers of
different academic areas. This final Project allows students to relate the acquired knowledge
in school with professional know-how, as well as it shows the relation between the contents of
the several curricular units.
In fact, we believe that preparing students to work as a team, developing critical thinking and
be able to face new and complex situations and solve problems are the major challenges of
education, but the consolidation of these skills will ensure, not only the incentive to research
and the development of metacognitive processes in students (project), but it also will promote
their ability to face the professional world and real situations (voluntary work) where they can
apply their acquired knowledge with a greater social responsibility and acknowledgement of
the region/community.
We use volunteering as another teaching methodology. It is an experience for students in real
learning environments for limited periods, in which they are in professional/social spaces,
consolidating scientific knowledge and testing hypotheses, reflecting on the actions taken,
which allows all stakeholders an effective and continuous capacity to evaluate the results
obtained in training (collaborative and traditional education) and in the voluntary service.
In addition, it also implies a planned and focused intervention, not only in terms of results, but
also respecting different steps to be undertaken by volunteers. In other words, the volunteers
do not replace, nor should replace the performing tasks receivers, but should engage
themselves in activities that contribute to the development of the community. The volunteer
must, above all, create organizational synergies.
Volunteering has gained an increasing importance in the last years and it was recognized by
the European Union as a great socioeconomic value to the regions, contributing to the
deepening of citizenship and social responsibility. According to the document of the
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Vol. 1, Issue 1, p. 161 – 167, Feb. 2012
ISSN 2224-9729
Committee for Regional Development (2007), about the contribution of volunteering to

economic and social cohesion of the EU, volunteering is understood as a free activity,
voluntarily undertaken, consciously, that brings benefit to others and is open to all.
In addition to the Volunteering Project, according to the training areas of the School, we
believe that the community intervention must be reinforced by other measures that combine
training to strengthen the competitiveness of human beings, also achieved through a proactive
approach to an active citizenship and volunteering.
Volunteering cannot be seen simply as an activity of goodwill, primarily focused on social
life in the community, not even as an isolated and / or alienated from our professional skills.
In our view, this tool is still under-exploited and has the ability to combine social inclusion
and sustainable competitive growth of each community and region. Most of the challenges of
contemporary society are global and therefore require concerted responses based on broad
systemic visions. In the European case, this possibility becomes even more viable for all the
available mechanisms for consultation, cooperation and sharing of best practices.
At long last, volunteering is still a potential tool of the parameters of excellence in the training
/ higher education:
Finally, the last methodology we would like to illustrate as it contributes for the promotion of
social entrepreneurship is the participation of students in the elaboration of scientific surveys,
studies and social diagnosis, always guided by teachers. Higher education needs to ally
permanently their teachers’ scientific research capacity, trying to update their knowledge,
finding new ways of doing things and understanding continuously how the society changes. In
this sense, making students an active participant in research is another tool that potentiates
their training, because in the end they can understand more clearly the society where they
belong and identify more easily the main weaknesses and how they can be solved or
minimized.
With all these methodologies, students can be more prepared:
→ to decide in which area they want to work and how they want to work (employer or employee, in a
public or private organization);
→ to identify social needs in any society, targeting the business possibilities and defining a competitive
implementation strategy;
→ to analyze the financial sustainability of any project they want to implement, identifying the best region
to do it;
→ to help the organization they work for to improve the ability to get better resources;
→ to understand the market changes and to maximize their ability to use them as a differentiating factor
facing competitors;
→ to develop assertive communication plans, targeting the most important publics;
→ to accept to be a proactive citizen, helping the social development of each community;
→ to implement the social responsibility in every organization, as primary and essential element of
competitiveness.
165
Conclusions
By the available indicators we analysed, we believe that the methodologies we

presented: collaborative learning, connected with volunteering, entrepreneurship projects,
research projects and other conventional methods, can enhance the period of attendance in
higher education institutions by students, enabling integrated training of each individual. To
bet on a proximity-based teaching skills development (specific and transversal) is to focus on
future professionals’ qualifications and efficiency. To ally the certified qualification (see Rey
et al., 2005) to human resource awareness and social responsibility also enables the
reinforcement of citizenship itself. To ally higher education to the world of work is definitely
to bet on increasing competitiveness, sustainable development and wealth creation of the
regions.
With the application of this new teaching/learning paradigm students, as future qualified
professionals, will be more prepared to be entrepreneurial in their lives and at their work
organizations, by defining innovative procedures to maximize all available resources. As an
example, some students that left our Scholl in the last year (2009-2010 – students of the Post
Graduate certificate in Third Sector Management) already put their projects in action. Two
students created a company of social help for senior people and two other projects were
bought by the City Council of Lamego to be implemented in the social area.
Moreover, students are also better prepared to identify the financial sustainability of business
ideas and to look for partnerships possibilities that can bring more stability and visibility to
their projects.
!
inclusive)society)
emploiability!/!!!!!!!!!!!!
social!responsability!
entrepreneurial!spirit!
qualified!professionals!
Figure 2 - expected results of the new teaching paradigm
If higher education institutions could promote professionals better prepared for business
competition, in the future they will bet on their responsibility in society development and try
to be a proactive citizen for an effective inclusive society. Inclusive society can only be real in
democratic countries if citizens have real opportunities to compete and develop a spirit of
excellence and quality.
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ACRN Journal of Entrepreneurship Perspectives

Vol. 1, Issue 1, p. 1 – 12, Feb. 2012

The process of financing social entrepreneurship:

Clara Cruz Santos1, Cristina Albuquerque2, Helena Neves Almeida3!

1 - 3 Faculdade de Psicologia e de Ciências da Educação da Universidade de Coimbra

Abstract. Three social dimensions of resource provision are engaged social

Keywords. social entrepreneurship; innovation; sustainability; fundraising;

Portugal, as others European countries, faces a time of economic recession with

Ruptures in search of the Way: The normative discourses.

The Walkers: Social Entrepreneurs Vs Social Managers.

professionals for management or administration of a particular social department or service

Social Entrepreneurs Social Managers Social Managers Entrepreneurs

Functional Integrated in a team or as Organizational Hierarchy Horizontal Management,

Control Decentralized Centralized Autonomy and Functional

Source: Synthesis done by the authors.

The Roads: Programs, rationalities and tensions on the support of

The program analyzed corresponds to a European program –The PROGRESS.

1. Developing early-warning and forecasting systems to improve the matching of skills

Brief Final Considerations

"European value investing in entrepreneurship:

Alonso, R (2011) Empreendedorismo social visualised on 10 th July 2011 in

Comunicação da Comissão Europeia (2010). Estratégias para um Crescimento Inteligente,

Vasconcelos, D & Franco, J (2011) Inovação e Empreendedorismo. Mais Sociedade in

Founding or Transforming? Social Intrapreneurship in

Björn Schmitz1 and Thomas Scheuerle2

Abstract. In the increased discussions among scholars about social

Keywords: Social Entrepreneurship, Social Intrapreneurship, Non-profit

Intrapreneurship – An almost neglected perspective in the

Social entrepreneurship currently attracts a lot of attention among scholars of various

would not expect flexibility or a high degree of avant-gardism, social intrapreneurship is

The paper is structured as follows. We start with an overview of different approaches to a

Social Entrepreneurship – A contested concept

Contemporary approaches add different elements to these traditional definitions. Peter

Diffusion and Scaling

Double bottom line

Social goal, social

Social Intrapreneurship – Entrepreneurship within Nonprofits

the result of organizational and individual characteristics. Organizational characteristics are

intrapreneurship. We speak of intrapreneurship instead of entrepreneurship in cases where the

Figure 1: Social Intrapreneurship Analytical Framework

Three Case Studies of Christian-based Nonprofit Organizations

Rummelsberger Dienste für Menschen

Findings and Discussion

Social Goal Orientation

Earned-Income Strategies and Being Business-like

This proactiveness in searching for money-making strategies is a means to survive and to

In this paper we presented the cases of three Christian-based non-profit organizations

But furthermore we find newly founded organizations to be an innovation driver for

Therefore we suggest that further research should focus on:

Achleitner, A.-K., Pöllath, R. & Stahl, E. (Eds.) (2007). Finanzierung von

Brenneke, M. & Spitzeck, H.: Social Intrapreneurship. Online:

Eisenhardt, K. M. (1989). Building Theories from Case Study research. Academy of

Kramer, R.M. (2005). Measuring Innovation: Evaluation in the Field of Social

Business Models of Social Enterprise: A Design Approach

Professor of Business Administration, St. Norbert College, DePere, wolfgang.grassl@snc.edu

ABSTRACT. Terminological confusion about social entrepreneurship derives

Keywords: social enterprise, social entrepreneurship, hybrid enterprise, business

Terminological profusion and confusion, and underlying conceptual vagueness, still

Phenomenology of Hybrid Businesses

Businesses have traditionally been categorized by ownership and predominant profit

Private Enterprises Social Enterprises

Public Enterprises Public