Part I

The Entrepreneurial Mind-Set

in the 21st Century

Chapter 4
Social Entrepreneurship
and the Global
Environment for
Entrepreneurship

PowerPoint Presentation by Charlie Cook

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a

publicly accessible website, in whole or in part.
 Learning Objectives
1. To introduce the social entrepreneurship movement
2. To examine who would be a social entrepreneur
3. To delve into the concept of shared value
4. To discuss the challenges of social enterprise
5. To introduce the global opportunities and challenges for
social entrepreneurs
6. To present the newest developments that have
expanded the global marketplace
7. To examine methods of entering the international arena
8. To set forth the key steps for entrepreneurs seeking
global markets
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 The Social Entrepreneurship Movement
• Social Entrepreneurship
➢ Entrepreneurship that is a form that exhibits
characteristics of non-profits, governments, and
businesses.
➢ Combination of private-sector focus on innovation,
risk-taking, and large-scale transformation with social
problem solving.
• The Social Entrepreneurship Process
➢ Recognition of a perceived social opportunity
translated into an enterprise concept.
➢ Resources are acquired to execute the enterprise’s
goals.
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 Defining the Social Entrepreneur
• Social Entrepreneurs
➢ A person or small group of individuals who founds
and/or leads an organization or initiative engaged in
social entrepreneurship.
➢ Also referred to as “public entrepreneurs,” “civic
entrepreneurs,” or “social innovators.”
➢ Creative thinkers continuously striving for innovation
in technologies, supply sources, distribution outlets, or
methods of production.
➢ Change agents who create large-scale change using
pattern-breaking ideas to address the root causes of
social problems.

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 Defining the Social Enterprise
• Driven by social goals
➢ Challenges are presented regarding the boundaries of
what is and what isn’t a social enterprise.
➢ Social causes can be based on personal goals.
➢ General agreement that there is the desire to benefit
society in some way.
➢ Arguments can begin over the location of the social
goals and with the purposes of the social goals.

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 Social Enterprise and Sustainability
• Sustainable Entrepreneurship
➢ Focus on the preservation of nature, life support, and
community.
➢ Pursuing opportunities to bring into existence future
products, processes, and services for gain, including
economic and noneconomic gains to individuals, the
economy, and society.

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Table
4.1 Examples of Social Enterprise Obligations

Environment Pollution control

Restoration or protection of environment
Conservation of natural resources
Recycling efforts

Energy Conservation of energy in production and marketing operations

Efforts to increase the energy efficiency of products
Other energy-saving programs (e.g., company-sponsored car pools)

Fair Business Practices Employment and advancement of women and minorities

Employment and advancement of disadvantaged individuals (disabled, Vietnam veterans,
ex-offenders, former drug addicts, mentally retarded, and hardcore unemployed)
Support for minority-owned businesses

Human Resources Promotion of employee health and safety

Employee training and development
Remedial education programs for disadvantaged employees; alcohol and drug counseling programs
Career counseling
Child day-care facilities for working parents
Employee physical fitness and stress management programs

Community Involvement Donations of cash, products, services, or employee time

Sponsorship of public health projects
Support of education and the arts
Support of community recreation programs
Cooperation in community projects (recycling centers, disaster assistance, and urban renewal)

Products Enhancement of product safety

Sponsorship of product safety education programs
Reduction of polluting potential of products
Improvement in nutritional value of products
Improvement in packaging and labeling

Source: Richard M. Hodgetts and Donald F. Kuratko, Management, 3rd ed. (San Diego, CA: Harcourt Brace Jovanovich, 1991), 670

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 Forms of Sustainable Entrepreneurship

Social Corporate Social

Ecopreneurship
Entrepreneurship Responsibility

Environmental Activities and processes Actions that appear to

entrepreneurship with undertaken to discover, further some social good,
entrepreneurial actions define, and exploit beyond the interests of
contributing to preserving opportunities in order to the firm and that which is
the natural environment, enhance social wealth by required by law and often
including the Earth, creating new ventures or denotes societal
biodiversity, and managing existing engagement of
ecosystems. organizations in an organizations
innovative manner

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 Ecopreneurship
• Ecovision
➢ A leadership style that encourages open and flexible
structures that encompass the employees, the
organization, and the environment, with attention to
evolving social demands.
• Environmental Movement
➢ Initiated primarily by values rather than by design.
➢ Developed by a plan to create sustainable future.

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 Ecopreneurship (cont’d)
• Key Steps in an Environmental Strategy
1. Eliminate the concept of waste.
2. Restore accountability.
3. Make prices reflect costs.
4. Promote diversity.
5. Make conservation profitable.
6. Insist on accountability of nations.

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 Shared Value and the Triple Bottom Line
• Shared Value
➢ An approach to creating economic value that also
creates value for society by addressing its needs and
challenges.
➢ Transforms business thinking by addressing issues
through innovation and methods.
• Triple Bottom Line (TBL)
➢ An accounting framework that goes beyond the
traditional measures of profit, return on investment,
and shareholder value to include environmental and
social dimensions.

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 Triple Bottom Line Measures

Economic Environmental Social

Performance Performance Performance

• Personal income • Hazardous chemical • Unemployment rate

• Cost of underemployment concentrations • Median household income
• Establishment sizes • Selected priority pollutants • Relative poverty
• Job growth • Electricity consumption • Percentage of population
• Employment distribution by • Fossil fuel consumption with a post-secondary
sector • Solid waste management degree or certificate

• Percentage of firms in • Hazardous waste • Average commute time

each sector management • Violent crimes per capita
• Revenue by sector • Change in land use/land • Health-adjusted life
contributing to gross state cover expectancy
product.

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 Promoting Sustainable Enterprises

• Benefit Corporation
1. Purpose: To create a material positive impact on
society and the environment.
2. Accountability: To have a fiduciary duty to consider
the interests of workers, the community, and the
environment.
3. Transparency: To report annually to the public on
overall social and environmental performance with a
credible and transparent third-party standard.

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 The Global Marketplace
• Global Entrepreneurs
➢ Opportunity-minded and open-minded global thinkers
able to see different points of view and weld them into
a unified focus.
➢ Rise above nationalistic differences to see the big
picture of global competition without abdicating their
own nationalities.
➢ Have a core language plus working knowledge of
others.
➢ Confront the learning difficulties of language barriers
head-on, recognizing the barriers such ignorance can
generate.

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 The Global Marketplace (cont’d)
• Global Thinking
➢ Entrepreneurs who expand into foreign markets think
about how to design and adopt strategies for different
countries.
• Diaspora Networks
➢ Global networks of relationships among ethnic groups
that share cultural and social norms.
➢ Advantages of Diaspora Networks
• They speed the flow of information across borders.
• They create a bond of trust.
• They create connections that help entrepreneurs collaborate
within a country and across ethnicities.

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 The Global Marketplace (cont’d)
• Global Organizations and Agreements
➢ Organizations, unifications, and trade agreements are
some of the vehicles that have developed.
• World Trade Organization (WTO)
➢ Umbrella organization that overseas and administers
WTO trade agreements
➢ Handles trade negotiations or trade disputes
➢ Monitors national trade policies
➢ Provides technical assistance and training for
developing countries

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 The Global Marketplace (cont’d)
• The North American Free Trade Agreement
(NAFTA)
➢ International agreement among Canada, Mexico, and
the United States that eliminates trade barriers among
the three nations.
➢ Created the world’s largest free trade area, linking 444
million people and producing $17 trillion in goods and
services annually.

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Table
4.2 Top Ten Countries with Which the U.S. Trades

The largest U.S. partners with their total trade (sum of imports and exports) in billions of U.S. dollars as of 2015:

Rank Country Exports Imports Total Trade

1 Canada 261.8 290.6 552.5

2 China 99.6 384.0 483.6
3 Mexico 201.7 246.1 447.8
4 Japan 56.1 111.9 168.0
5 Germany 41.7 102.5 144.2
6 Korea, South 37.2 57.3 94.5
7 United Kingdom 45.0 44.9 89.9
8 France 26.4 39.2 65.6
9 Brazil 36.1 25.1 61.2
10 Taiwan 22.3 34.2 56.4

Source: U.S. Census Bureau, Washington DC, 2015.

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 The Global Marketplace (cont’d)
• The European Union (EU)
➢ European Economic Community including 27 member
states which are located primarily in Europe.
• Objectives of the EU
1. Elimination of custom duties among member states.
2. Free flow of goods and services among all members.
3. Creation of common trade policies toward all countries
outside the EU.
4. Free movement of capital and personnel within the
EU.
5. Encouragement of economic development in the EU.
6. Monetary and fiscal coordination among all members.
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 The Global Marketplace (cont’d)
• Venturing Abroad
➢ Opportunities to expand internationally.

• Gradual Internationalization
➢ Step-by-step progress toward internationalization as
risk and commitment increase and entrepreneurs
acquire more knowledge through experience.
• Learning Curve Concept
➢ Increased sales from exports will lead to greater
efficiencies along the firm’s cost curve, which in turn
will lead to increased overall profits as the firm
expands into overseas markets.

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 The Competitive Advantage of Nations
• Resource-Rich Countries
➢ Have extractive assets
➢ The OPEC nations and many parts of Africa

• Labor-Rich Countries
➢ Have vast pools of available labor
➢ Brazil, India, the Philippines, and select countries in
South and Central America
• Market-Rich Countries
➢ Have large purchasing power
➢ Europe, Brazil, Mexico, India, China, and the United
States

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 International at Inception
• Characteristics of “Born Global” Firms
1. Global vision from inception
2. Internationally experienced management
3. Strong international business network
4. Preemptive technology or marketing
5. Unique intangible asset
6. Linked product or service
7. Tight organizational coordination worldwide

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 Methods of Going International
• Importing
➢ Buying and shipping foreign-produced goods for
domestic consumption.
• Exporting
➢ The shipping of a domestically produced good to a
foreign destination for consumption.
• International Alliances
➢ Agreements between companies from two or more
countries; not legally binding.

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Table
4.3 Types of International Alliances

Alliance Degree of Ease of Legal

Type Involvement Dissolution Entity

Informal international Limited in scope and Easy and convenient for None
cooperative alliance time either side

Formal international Deeper involvement; More difficult to dissolve None

cooperative alliance exchange of proprietary due to legal obligations
knowledge and commitment

Internal joint venture Deep involvement; Most difficult to dissolve Separate

requires exchange of due to the significant company
financial information, investment of both
proprietary knowledge, companies and the
and resources existence of a legal entity

Source: Adapted from John B. Cullen and K. Praveen Parboteeah, Multinational Management:
A Strategic Approach, 5th ed. (Mason, OH: Cengage/South-Western, 2011), p. 352.

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 Joint Ventures
• Advantages • Disadvantages
➢ Immediate intimate ➢ Fragmented
knowledge of the local management control
conditions and of the venture’s
government operations
➢ Use of the resources ➢ Differences of opinion
of the other firms that reflect different
involved in the venture nationalities
➢ Initial capital outlay ➢ Unanticipated
and overall risk are withdrawal of a
lower participating firm

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 Direct Foreign Investment
• Direct Foreign Investment
➢ Is a domestically controlled foreign production facility
that results from a foreign firm:
• Acquiring an interest in an ongoing foreign
operation.
• Obtaining a majority interest in a foreign company.
• Purchasing part of the assets of a foreign concern
in order to establish a direct investment.
• Building a facility in a foreign country.

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 Direct Foreign Investment (cont’d)
• Licensing
➢ A business arrangement in which a manufacturer of a
product (or a firm with proprietary rights over certain
technology or trademarks) grants permission to some
other group or individual to manufacture that product
in return for specified royalties or other payments.
• Types of Licensing
➢ Patents
➢ Trademarks
➢ Technical Know-How

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 Entering the International Marketplace

Draw up
Prepare a Secure File the
Conduct and
feasibility adequate proper
research implement
study financing documents
the plan

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 Researching Foreign Markets

Government
regulations

Local customs Political

and culture climate

Market
Research
Market size Parameters Infrastructure

Distribution
Competition
channels

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 Researching Foreign Markets (cont’d)
• Foreign Market Dangers:
➢ Ignorance and uncertainty
➢ Lack of experience
➢ Lack of information
➢ Imposed restrictions (demands and red tape)

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 International Threats and Risks

Political Risks Economic Risks Social Risks

Unstable governments, Changes in tax laws, Antagonism among

disruptions caused by rapid rises in costs, classes, religious conflict,
territorial conflicts, wars, strikes, sudden increases unequal income
regionalism, illegal in raw materials, and distribution, union
occupation, and political cyclical/ dramatic shifts in militancy, civil war, and
ideological differences GNP. riots.

Financial Risks

Fluctuating exchange
rates, repatriation of
profits and capital, and
seasonal cash flows

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 Key Questions and Resources

Why is the company

What does the foreign-market interested in going
assessment reveal about the international?
nature and functioning of the
markets under investigation?

What specific market

strategy is needed to
tap the potential of this
market?

Internationalization
Strategic Decisions
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 Key Terms and Concepts
• B corporation • licensing
• benefit corporation • market-rich countries
• diaspora networks • North American Free Trade
• ecopreneurship Agreement (NAFTA)
• ecovision • political risks
• European Union (EU) • resource-rich countries
• exporting • shared value
• global entrepreneurs • social entrepreneurship
• importing • Social impact investing
• international alliances • social value
• joint venture • sustainable entrepreneurship
• learning curve concept • triple bottom line (TBL)
• World Trade Organization (WTO)

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