Overview

Dees presents a now-classic definition of a social entrepreneur and the creates clarifying distinctions between entrepreneurship itself and the purpose of social entrepreneurship.

Source

Dees, J.G., The Meaning of “Social Entrepreneurship””. 2001
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Key Definition

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.””
    – Schumpeter’s 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``

Peter Drucker

  • 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

Howard Stevenson

  • 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

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