The Emergence And Growth Of Social Entrepreneurship

Social Entrepreneurship as the concept was coined long ago but has been in the corporate parlance in just the recent past. Traditionally, entrepreneurship has been associated with profit making individuals who aim high and achieve a lot for themselves in the world of tough competition. And the success of enterprise was and is being judged on parameters like ROI and Net Income margins. But, with the empowerment and awareness of the citizens of the developing world, a new revolution has started, particularly among the youth of the world. This revolution is the growth of Social Entrepreneurship – the form of entrepreneurship where profits are not the end result, but just the means to achieve the end result of social upliftment and further empowerment.

Initially, the concept of social entrepreneurship used to be associated with the Corporate Social Responsibility of the corporate houses that provided funds to the charitable institutions to run the philanthropic organizations at a small scale. These institutions or organizations did not have any business model of their own and largely operated with the funds from government or donations from the donors. Globally, non-profit organizations like SOS Children’s Village, however large they are, are funded completely by the donors who are the charitable trusts, individuals, governments or corporates. Though the objectives are noble and the achievements are incredible, the business model of these organizations is to be judged on two very important parameters: Sustainability and Scalability.

Can these non-profit organizations sustain on their own if the external funding from them are unplugged? Can this model be applied to other sectors successfully? As explained by CK Prahalad through his book “The Fortune at the Bottom of the Pyramid”, social cause has always been considered a moral obligation that cannot be fulfilled by means of business. But the paradigm shift took place when the entrepreneurs realized the potential of the untapped markets that could generate profits for them and provide a better way of life to citizens of the society at the same time. The biggest boost was given by the Nobel Prize winner Dr. Mohammad Yunus when his brain-child Grameen Bank became so successful in one of the so-called least developed countries, Bangladesh. It was soon realized that profits can be made along with serving the society, provided you treat profits as a means and not the end result.

Subsequently, initiatives like Casas Bahia and CEMEX in Brazil, and ITC e-choupal and Aravind Eye Care sprung up in India. Most of these initiatives are well into their second-generation, in business terms. In India, various other organizations like SEWA, AWAKE, Nandi Foundation and Jaipur Foot have been started by the awakened and empowered citizens of India. But as they say, Entrepreneurship is contagious and so is Social Entrepreneurship. This sector, called the “third sector” in the book “The Emergence of Social Enterprise”, has been growing at a very high pace even through the current economic downturn. Definition of social entrepreneurship has changed over time. From corporate philanthropy to non-profit and now to self-sustainability, Social Entrepreneurship has evolved and will keep evolving with time and needs of the world.

But the major challenge that Social Entrepreneurship faces today is the definition of the goals and the objectives. Unlike the corporate sector where the achievements are clearly defined and roles identified, it’s seldom to be seen in the social sector. Organizations like SEWA are content to provide employment to the women in downtrodden areas of India, but do not have any goals in terms of the number of employed women or the average salaries, if these parameters can be justified as relevant goals in the first place. Nevertheless, this challenge doesn’t hamper the progress of the third sector but infact makes it more challenging for the entrepreneurs to explore.

The above flow of thoughts can be summarized by approving the fact that intention is a critical parameter to distinguish between the two forms of entrepreneurship – Social and Business.

(Originally published at Youth Ki Awaaz, http://www.youthkiawaaz.com/2010/01/emergence-and-growth-of-social.html)