SOCIAL ENTREPRENEURSHIP: THE BEHAVIORAL

APPROACH

A Business Report
Prepared by:

MIA KRIS ZHEL M. PASAGUI

July 01, 2023

 TABLE OF CONTENTS

Title Page

Introduction 1

 The Theory of Social Entrepreneurship 1- 2

 NEMI Teas Company 2

 NEMI Teas Company and the 4 (main) 3- 5

Characteristics of Social Enterprise

1. Social Support
2. Trading Activity
3. Full Cost Recovery
4. Profits Reinvested

 Conclusion 6

References 7
 1

INTRODUCTION
Entrepreneurship theories are based on economics, psychology,
sociology, anthropology, and management research (Simpeh, K. N., 2001).
However, let us root the general idea, such as entrepreneurship in a business
context means starting a business. According to the Merriam-Webster
Dictionary, an entrepreneur is someone who organizes, manages, and
assumes the risks of a company or enterprise. On the other hand, a different
historical approach defines entrepreneurship as any type of self-employment
(Drescher, S., 2023).
Austin, Stevenson, and Wei-Skillern (2006) define as "entrepreneurial
activity with an embedded social purpose," has emerged as a significant
economic phenomenon on a global scale (Mair & Marti, 2006; Zahra,
Rawhouser, Bhawe, Neubaum, & Hayton, 2008). Although social
entrepreneurs typically begin with small, local efforts, they frequently target
problems with a local expression but global significance, such as access to
water, encouraging small-business creation, or waste management.
Innovative solutions validated by social entrepreneurs in their local context are
frequently replicated in other geographies and can spawn new global
industries (Zahra et al., 2008). One example is the global expansion of the
microfinance industry (Seelos et al., 2005). Thus, social entrepreneurship has
far-reaching economic implications: spawning new industries, validating new
business models, and allocating resources to underserved societal issues.

The Theory of Social Entrepreneurship

This idea is anchored in the theory of the Behavioral Theory of Social
Entrepreneurship stated in the article of (Ebrashi, R.E., 2013) . The behavioral
theory of social entrepreneurship explores the underlying organization
dynamics and structures and how these typologies quantify the social effect,
mobilize resources, and effect long-lasting social change.
In the current study, social entrepreneurs are frequently and
redundantly described as business people with social missions and
entrepreneurial actions with a social purpose inherent in them (Dees, 2001;
Martin & Osberg, 2007). (2007) Austin et al. Social entrepreneurship is the
pursuit of economic, social, and environmental objectives simultaneously
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through innovative initiatives (Haugh, 2007). In one approach, social

entrepreneurs are portrayed as social sector change-makers in a more
idealized manner (Dees, 2001). The method by which firms create revenue
while pursuing social aims is how most practical definitions of social
entrepreneurship define it (Boschee, 2001).
Indeed, many other forms of business organizations have various
governance structures in contemporary economies, including publicly traded
companies, family-run firms, partnerships, and cooperatives. But, despite their
variations (ownership structure, profit vs. non-profit), all of these
organizational forms have one thing in common: they are all managed to
protect the interests of the dominant corporate coalition, whether those are
shareholders, own managers, partners, or members. In contrast, those
involved in social entrepreneurship efforts don't seem to be acting in the
dominant coalition's best interests; instead, they seem to work in the interests
of a specific group of users or the general welfare of society.

NEMI TEAS COMPANY

The goal of behavioral theory is to better understand how psychological,
cognitive, and emotional biases influence economic actors across a range of
institutions, markets, and societal levels. A noteworthy example of a firm that
implements social entrepreneurship based on behavioral science is NEMI
Teas, a tea and inspirational company with its headquarters in London. The
firm sells a range of tea blends, including loose-leaf, teabags, and chai syrup.
They make teabags without plastic, packaging that decomposes, and their
teas are organically certified. Providing refugees with jobs will also provide
them with the local work experience and job-ready skills they need to join the
UK labor force and integrate into society more broadly.
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NEMI Teas Company and the 4 (four) Main Characteristics

of Social Enterprise

Characteristics NEMI Teas concept

The firm does well because it gives
economic migrants and refugees the
ability to plan their trips, providing
them the chance to become
Social Support productive members of society with a
respectable standard of living. By
offering refugees jobs, they enable
them to gain practical work
experience, develop their
employability skills, and integrate into
wider society in the UK.
In both the mixes that consumers
may boil at home and all of the teas
served at the booths, fairtrade tea is
utilized. NEMI firmly supports the
Fairtrade movement and thinks it can
restore power to the people. Fairtrade
tea purchases provide several
advantages to both producers and
workers. From better working
Trading Activity conditions to instruction on how to
manage their environment and farm
more sustainably to the chance to
enhance local healthcare and
education, there are many benefits to
be had. In commercial positions like
sales and marketing, events,
packaging, and distribution, they hire
refugees. The business provides
online shopping options.
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The Covid-19 epidemic had a

significant impact on NEMI Teas,
forcing them to close their store and
expand their online offering while
already having a strong business
activity as part of a complete cost
recovery. NEMI Teas allocates 20%
of their budget towards employment,
retraining, and skill upgrading of
refugees. The program, according to
Full Cost Recovery its proponents, has so far helped two-
thirds of the refugees enrolled find
permanent part- and full-time
employment by providing them with
employment opportunities. The firm
has a five-year lifespan, a cost-capital
ratio of 9.5%, a £70,000 annual
revenue, an investment of £50,000
through SITR, and a blended
financing product type.

They reinvest more than half of their

revenues to assist accomplish social
impact goals and generate
Profits Reinvested opportunities for refugees. The Covid-
19 epidemic has provided them with
an opportunity to evaluate their
impact matrix, revenue model, and
company strategy.
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NEMI Teas appear to function in the interests of a certain group of

users or the general welfare of society; they appear to work in the interests of
a specific group of users or the general welfare of society. To compare,
consider the Warby Parker company, an eyewear company that cares about
social and community problems by providing free eye medical checkups, free
eyeglasses with every purchase, or having a very affordable price that many
people in need can easily access (University of San Diego, 2023). NEMI is a
social enterprise that aims to improve refugee lives by providing job
opportunities in the UK.
Trading activity is a noticeable feature of financial markets.
French (2008) and Chakravarty, Panchapagesan, and Wood (2005), for
example, believe that institutional commissions have reduced over time,
and bid-ask spreads have also fallen significantly (e.g., Chordia, Roll,
and Subrahmanyam, 2001). Furthermore, technological advancements
have made it simpler for institutions to undertake automated
algorithmic trading (Hendershott, Jones, and Menkveld, 2008), while
online brokerage accounts have made trading more accessible to
regular investors. Lower trading costs have increased demand for
trading activity, and the advancement of technology has made it
simpler for exchanges to accommodate big trading volumes. In this way,
NEMI Teas mirrored a fairtrade movement while simultaneously
pioneering online store promotion. Dhar and Zhu (Citation2006) provide
empirical evidence that trading experience helps investors to reduce certain
behavioural biases and that investors’ trading improves over time.
According to Sharma (2022), the cost recovery technique of revenue
recognition is an accounting concept that refers to a way in which a firm does
not record profit associated with a sale until the cash received exceeds the
cost of the item or service supplied. In other words, earnings are recorded
using this approach only when cash payments have repaid the seller's cost.
Shiny Clothes Ltd. is a retail shop that recently bought $100,000 in goods.
The retail store sells its merchandise to various consumers for a total
transaction price of $130,000, suggesting a $30,000 profit. Shiny Clothes Ltd.
does not know the recovery rate of its client sales. To recognize revenue, the
organization chooses the cost recovery method. In NEMI Teas' case, the
company's length term is 5 years, with a cost capital of 9.5% and a revenue of
£70,000, an investment of £50,000 through SITR, and finally a product type of
blended financing. They double sales by the amount they invested.
Furthermore, NEMI Teas dedicates 20% of its budget to the employment,
training, and upskilling of refugees. They claim that by empowering refugees
with work, the initiative has so far helped 2/3 of those enrolled to acquire
permanent part-time and full-time jobs.
Every savvy entrepreneur understands that after covering essential
needs, it should reinvest in the business. When it comes to investing in the
future of a small-to-medium-sized firm (SME), there are no rules. Some
investing approaches may fit some firms but not others.Investing in venture is
a wonderful method to remain out of debt while ensuring the long-term
stability and profitability of the firm. When it comes to financing small
businesses, the two most prevalent alternatives are debt and equity capital.
Reinvesting is a type of equity finance that allows to make changes to the
company without incurring debt. Other companies use the 50-30-20 approach.
This approach was taken from the 50-30-30 personal finance model. It advises
company owners to set aside 50% of their profits for self-employment, 30% for
taxes, and 20% for reinvestment in the firm. In NEMI Teas' case, they reinvest
more than half of their revenues back into the company to assist fulfill social
impact goals and provide chances for refugees, and they set aside 20% of their
budget for employing, training, and upskilling refugees. This strategy provides a
decent amount of money for business owners to enjoy while also preparing them
for future tax shocks (KRIYA, 2022).
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Conclusion

NEMI Teas was a huge success. They satisfy the 4 (four) primary
features of social entrepreneurship. They are firm believers in the power of
business to effect positive change, and they employ refugees to assist them
assimilate into the UK. The brand's plan to grow sales by influencing social
behavior benefitted everyone. NEMI, a social company, allows migrants to
focus on reconstructing their lives. They're doing this by generating jobs in
London by selling a range of teas and chai syrup. This social enterprise
addressed the issue of refugee unemployment. They hope to expand their
social venture into a franchise model of refugee-run and-owned kiosks across
London and Europe. To achieve their social impact goals, they also reinvest
more than half of their revenues. Refugees can gain confidence and gain
useful skills by working at NEMI tea stands. As a consequence, they will be
better equipped to find work and integrate into society.
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El Ebrashi, R. (2013).Social Entrepreneurship theory and sustainable social

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KRIYA (2022). Here’s how much to reinvest in your business. retrieved at

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Mishra, C., & Zachary, R. (2015).The Theory of Entrepreneurship. From the

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Levers.Retrieved at https://hbr.org/2012/11/change-consumer-
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