Dees presents a now-classic definition of a social entrepreneur and the creates clarifying distinctions between entrepreneurship itself and the purpose of social entrepreneurship.
Dees, J.G., The Meaning of “Social Entrepreneurship”. 2001
A social entrepreneur “combines the passion of a social mission with an image of business-like discipline, innovation, and determination”
Background Reasoning: Why do we need for social entrepreneurship?
- “Many governmental and philanthropic efforts have fallen far short of our expectations” and are viewed as “inefficient, ineffective, and unresponsive”
- The term and language is new but concept is not. The new language and growing trend “implies a blurring of sector boundaries”
An Historic Perspective on the Word ``Entrepreneur``
- The term entrepreneur originated in French economics as early as the 17th and 18th centuries.
- In French, it means someone who undertakes
- Seem as venturesome individuals who stimulated economic progress by finding new and better ways of doing things.
- According to Jean Baptiste Say: The entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield. Therefore – Entrepreneurs create value.
- According to Joseph Schumpeter: The function of entrepreneurs is to reform or revolutionize the pattern of production.
– “By exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on.”
– Schumpeters entrepreneurs are the change agents in the economy. By serving new markets or creating new ways of doing things, they move the economy forward.
Current Theories on the Word ``Entrepreneur``
- Starts with Say’s definition, but amplifies it to focus on opportunity. The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.
- Entrepreneurs have a mind-set that sees the possibilities rather than the problems created by change.
- For Drucker, starting a business is neither necessary nor sufficient for entrepreneurship
- Drucker also makes it clear that entrepreneurship does not require a profit motive
- Adds an element of resourcefulness
- The pursuit of opportunity without regard to resources currently controlled.
- The entrepreneur’s reach exceeds their grasp
Entrepreneur vs. Social Entrepreneur
- social entrepreneurs are one species in the genus entrepreneur
- social entrepreneurs are entrepreneurs with a social mission
Key Concept: Measuring Social Value
- “Value is created in business when customers are willing to pay more than it costs to produce the good or service being sold. The profit (rev minus cost) that a venture generates is a reasonably good indicator of the value it has created”
- Example: If a manufacturer takes $25 worth of raw materials, applies $50 worth of labor and creates a product that is sold for $200, it could be said that $125 of value was created
- “Firms that create the most economic value have the cash to attract the resources needed to grow”
- Example: If the company consistently creates $125 worth of value, they will have an easy time hiring more staff or obtaining loans to grow.
- “Markets do not do a good job of valuing social improvements, public goods and harms, and benefits for people who cannot afford to pay”
- Example: How do we measure the value of an improved education or a reduction in poverty? Not impossible but clearly harder than a product.
- “Much harder to determine whether a social entrepreneur is creating sufficient social value to justify the resources used in creating that value”
- Example: If the social entrepreneur cannot measure, it is hard to secure additional resources to keep doing the work.
- “Even when improvements can be measured, it is often difficult to attribute them to a specific intervention”
- Example: Even IF we can say education is better, was it the result of a specific action or a complex web of different factors?
- “To offset this value-capture problem, social entrepreneurs rely on subsidies, donations, and volunteers”
- Example: The “value-capture problem” forces a reliance on altruism.
The Social Entrepreneur's Role as a Change Agent
- Attack the underlying causes of the problems, rather than simply treating the symptoms
- Adopt a mission to create and sustain social value (not just private value),
Profit is not the gauge of value creation; nor is customer satisfaction; social impact is the gauge.
- Recognize and relentlessly pursue new opportunities to serve that mission,
Engage in a process of continuous innovation, adaptation, and learning,
- Willingness to innovate
- Treat failure of a project as a learning experience, not a personal tragedy.
- Act boldly without being limited by resources currently in hand
- Explore all resource options
- Understand the risk tolerances of their stakeholders and use this to spread the risk to those who are better prepared to accept it.
- Exhibit heightened accountability to the constituencies served and for the outcomes created.
- When feasible, social entrepreneurs create market-like feedback mechanisms to reinforce this accountability. They assess their progress in terms of social, financial, and managerial outcomes