Social Entrepreneurship

1. ABDM4233 ENTREPRENEURSHIP
From Ideas to Social
Enterprise
by
Stephen Ong
Principal Lecturer (Specialist)
Visiting Professor, Shenzhen University

2. Social
Entrepreneurship
1-2

3. Grameen : Empowering
People. Changing Lives.
 His observations in a village in 1974:
Craftspeople were skilled, but returns to those
skills were limited by credit availability
 The opportunity he saw: Micro-loans, with no
collateral and low interest. This would boost the
return to craftspeople
 The results: Very high loan repayment; Creation
of the Grameen Bank; Nationwide adoption
 The recognition: Professor Yunus won the 2006
Nobel Peace Prize.
 Grameen is a famous model of SOCIAL
ENTREPRENEURSHIP (“SE”)
2-3

4. Persistent SE concepts
 SE addresses social problems or needs
not met by private markets or
government
 Innovative solutions, unmet needs, private
action
 SE is motivated primarily by social
benefit
 Social mission + entrepreneurial behavior
 SE generally works with market forces
 Combining social purpose with financial
sustainability
2- 4

5. Process steps in
entrepreneurship (1)
 Social entrepreneurs recognize
opportunities to create social value
 Seeing opportunity where others see only
threats and tragedies
 Addressing present or latent demand
 Opportunity leads an enterprise
concept
 Identify new products or markets
 Identify and define desired social rewards
and how they are to be measured
2-5

6. Process steps in
entrepreneurship (2)
 Resource needs are determined and
necessary resources acquired
 Financial resources, human resources
(labour), and human capital (expertise)
 Launch and grow the social venture
 Follow a strategy tied to metrics of
success
 Goal attainment and beyond
 What to do after success is attained
 Shut down, redefine service, continue, or
merge
 Figure 1.1 portrays this process
2- 6

7. Figure 1.1 The process of Social
Entrepreneurship
Opportunity recognition
• Social problems
• Unmet needs
Concept development
• Identification of social
rewards
• New products or markets
Resource determination and acquisition
• Financial resources
• Human resources
• Human capital
Launch and venture growth
• Measurement of returns
• Expansion and change
Goal attainment
• Succeed in mission and shut down
• Succeed in mission and find new
opportunity
• Attain a stable service equilibrium
• Integrate into another venture
2- 7

8. The landscape of SE
 Significant growth of the nonprofit
sector
 3% annual growth in number of nonprofits
from 1996 to 2004
 Growth is higher in public charities and
private foundations than for nonprofits in
general
 Figure 1.2 portrays this growth
2-8

9. Figure 1.2 Social Venture Growth
1996 - 2004
8%
7%
Average annual growth rate, 1996-2004
7%
6% 6%
5%
4%
3%
3%
2%
1%
0%
All nonprofits Public charities Private foundations
2-9

10. Categories of social
venture/SE
1. Start a new product or service
2. Expand an existing product or service
3. Expand an existing activity for a new group
of people
4. Expand an existing activity to a new
geographic area
5. Acquire an existing business
6. Partner or merge with an existing business
Source: Brinckerhoff, Peter C. (2000). Social Entrepreneurship: The Arts of Mission-Based Venture
Development. New York: Wiley, pp. 16-21
2 - 10

11. Explaining entrepreneurship
(1)
 Environment
 Entrepreneurship is stimulated by a
conducive environment
 Resources
 Resource availability (financial, human
resources, human capital) stimulates
entrepreneurship
 Perturbation
 Entrepreneurship occurs when people are
displaced from their routines
2 - 11

12. Explaining entrepreneurship
(2)
 Personal traits
 Entrepreneurship occurs because of
entrepreneurial personalities and types
 Preparation
 Entrepreneurship can be taught and
learned through education and experience
2 - 12

13. Applying entrepreneurship
theory to SE
 These theories apply very well to SE
 Environment, resources and
perturbation are primarily external
forces
 Personal traits and preparation are
primarily internal forces
 This theory helps to explain SE, predict
where it will occur, and suggest how to
increase it
 Figure 1.3 portrays these forces
2 - 13

14. Figure 1.3 The forces on social
entrepreneurship
External forces
Environmental factors Perturbation of the environment
• Social climate conducive to social
entrepreneurship
Availability of financial and • Political change
nonfinancial resources • Cultural change
• Political climate that facilitates
• Economic change
social innovation
Social entrepreneurship
process begins
Entrepreneurial Preparation to exploit
personality traits opportunities
• Education
• Experience
Internal forces
2 - 14

15. Characteristics of social
entrepreneurs
 Dees (2001): “Change agents in the
social sector,” characterized by …
 Mission orientation
 Pursuing opportunities
 Continuous innovation, adaptation,
learning
 Bold action regardless of resource limits
 Heightened accountability to constituents
 Various potential impacts of
demographics, gender, personal
experience
 But do these innate traits explain SE?
2 - 15

16. Psychological characteristics of
entrepreneurs
 Innovativeness
 Achievement orientation
 Independence
 Sense of control over destiny
 Low aversion to risk (i.e., willing to accept
risk)
 Tolerance for ambiguity
 For social entrepreneurs, community
orientation and social concern are important
psychological characteristics
2 - 16

17. Figure 1.4 The characteristics of
a social entrepreneur
Innate characteristics
Education and experience
Innovativeness
Entrepreneurial
Achievement orientation
orientation
Socially-entrepreneurial
Independence
orientation
Sense of control over destiny Community awareness
And social concern
Low risk aversion
Tolerance for ambiguity
2 - 17

18. Social entrepreneurs as …
 Leaders
 Shape a vision that change public
attitudes
 Have significant personal credibility
 Generate commitment in terms of values
to achieve collective purpose
 Personalities
 Achievers
 Super-salesman
 Real Manager
 Expert idea generator
2- 18

19. Myths about SE (1)
 Social entrepreneurs are against
business
 Many social entrepreneurs come from
business and have succeeded in business
 The difference between commercial
and social entrepreneurship is greed
 Assumes that all commercial
entrepreneurs are greedy, and that none
are philanthropic
2- 19

20. Myths about SE (2)
 Social entrepreneurs run nonprofits.
 Some do, some don’t – many legal forms
support SE
 Social entrepreneurs are born, not made
 Implies no role at all for nurture, that only
innate traits determine who does what
 Myths for which there is no evidence
 Social entrepreneurs are misfits
 Social entrepreneurs usually fail
 Social entrepreneurs love risk
2 - 20

21. One Peace at a Time
http://www.youtube.com/watch?v=Z4UfvjMLwaA
Video
by
The Nobelity Project
1 - 21

22. World Income Distribution
22

23. People Living in Poverty, 1981-2002
7.81% of Malaysian pop<$2
vs
KLCC cost of RM1.8B
in 2004
23

24. The 12 Most and Least Populated Countries
and Their Per Capita Income, 2005
Malaysia 28m $7,760 in 2010
Singapore 5m $40,070 Botswana 2m
$6,740 24

25. UN Millennium Development Goals 2015
25

26. UN Millennium Development Goals 2015
(continued)
26

27. Income and Happiness: Comparing Countries
27

28. Further Reading
 Scarborough, Norman, M. 2011. Essentials of
Entrepreneurship and Small Business
Management. 6th edition. Pearson.
 Brooks, Arthur C. (2006) Social Entrepreneurship :
A Modern Approach to Social Value Creation.
Pearson
 Barringer, Bruce R. & Ireland, R. Duane, 2011
Entrepreneurship – Successfully launching new
ventures 4th edition, Pearson.
 Schaper, M., Volery, T., Weber, P. & Lewis, K. 2011.
Entrepreneurship and Small Business. 3rd Asia
Pacific edition. John Wiley.