What is Social Entrepreneurship?
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Pinning down a definition for the term “Social Entrepreneurship” (SE) has proven troublesome for many. For several examples of attempts, read Sinha’s article. He has tried to neatly string various definitions of SE together to bring his readers to a simple and comprehensive understanding (similar to Bornstein’s book). Sinha thinks “The reason why it’s important to clear out some of the misconception around social entrepreneurship is because a lot of nonprofits and social activists tend to call themselves social entrepreneurs, without realizing that they aren’t one.” He doesn’t want companies claiming a right to this space when they don’t ‘deserve’ it. However, with so many definitions out there, it can still be hard to tell a social entrepreneur from a typical business entrepreneur. Let me propose that some simple questions to ask in order to determine if an entrepreneur is a social entrepreneur include: “How do you measure success?” and “How do your operations effect people at the base of your socioeconomic sphere?”
Sometimes a typical entrepreneur, working to maximize profits through various activities, will have a great impact on the base of the pyramid. Take Steve Jobs, founder of Apple, which employs hundreds of thousands of Chinese, providing income many of them would otherwise not have. Compare Jobs and Apple to Muhammad Yunus and his organization, Grameen Bank, which has provided loans to millions of the poor, who were otherwise without means of obtaining substantial capital to employ themselves. Both companies have had significant impacts on the impoverished of the world, which we could even measure and compare to find favor for one or the other.
In answer to the aforementioned questions, I believe Apple and Grameen Bank have very different answers. Apple measures success in profits and products sold; Grameen Bank measures success in people it’s loaned. Impoverished people are unable to afford the products and services of Apple; Grameen Bank only deals with the poor. Looking to the future, will Apple always employ impoverished Chinese people, or will streamlined processes and robots replace those employees when Apple finds more efficient production possibilities? Will Grameen Bank always loan to poor, even when more profitable avenues appear? The answers to these questions define whether these organizations are founded on principles of SE or not, perhaps more than any textbook definition we can come up with.
Furthermore, asking about the founder’s purpose when an enterprise started can be telling as to whether they are a social entrepreneur or not. How is Steve Jobs founding story fundamentally different than Muhammad Yunus’ start of Grameen Bank?
Questions like these can help us assess where we can group ourselves, uniting behind the various causes for the betterment of the world. Whether the cause is creating high-quality computing technology for the modern world, or delivering credit to those deemed untrustworthy by the finance industy, there is a place for all of us to contribute; how we label that contribution may prove difficult at times. In the end, let me define SE in the logic of tautology: Social Entrepreneurship is the work of social entrepreneurs.
Tell me your thoughts, comment below: Are those two questions always revealing of an organization’s purpose? Am I missing something? I think Apple and Grameen Bank are easy to distinguish – where does the line get fuzzy?