Social entrepreneurship is, in its simplest terms, the utilization of business practices to fundamentally change the most intractable issues of our time. Having said that, I feel like I should quickly add, “But wait! There’s more!”
In recent years, entrepreneurs of all types have profoundly altered the marketplace. Companies like Dropbox, Airbnb and Red Hat have transformed their industries. What if we could utilize the incredible power of startups to permanently change the landscape of social and environmental issues such as climate change, food security and access to clean water? That’s what social entrepreneurship does.
Definition of Social Entrepreneurship
Bill Drayton, Ashoka founder and CEO seems to have coined the term social entrepreneur. According to Bill,
“Social entrepreneurs are individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change.
Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to move in different directions.“
A Refined Definition of Social Entrepreneurship
Other thought leaders have since further defined the field. In 2007, Roger L. Martin of the Martin Prosperity Institute and Sally Osberg of the Skoll Foundation wrote a piece for the Stanford Social Innovation Review called “Social Entrepreneurship: The Case for Definition.” In 2015 they expanded on their ideas in the great book Getting Beyond Better: How Social Entrepreneurship Works. I recommend it. They point out that social entrepreneurs take direct action and they seek to transform the existing system. According to Martin and Osberg, there are three characteristics that define social entrepreneurship:
- The entrepreneur identifies a persistent but inherently unjust equilibrium
- They implement equilibrium-shifting solutions
- They forge a new, transformed equilibrium.
Social Entrepreneurs Transform the Landscape
Bill Drayton also points out that social entrepreneurship goes beyond ameliorating suffering, to fundamentally transform the system. He said,
“Social entrepreneurs are not content just to give a fish, or teach how to fish. They will not rest until they have revolutionized the fishing industry.”
The companies run by social entrepreneurs are often referred to as social enterprises. Social enterprises can be at any level of maturity from startup to large organizations. There are for-profit social enterprises and nonprofit organizations. Their legal structure can vary widely, especially from country to country. They can be 501c3 organizations, S-Corps, C-Corps, LLCs or, increasingly often, Benefit Corporations (BCorps).
Benefit Corporations (BCorps)
A benefit corporation or BCorp is a legal structure that allows companies to create public benefits, even at the expense of maximizing shareholder return or profitability. Some BCorps are certified by the B-Lab.
Impact Investing
One of the most interesting developments in the social entrepreneurship space is Impact Investing. Impact investors look for companies that are doing social good, for a profit and are scalable. Impact investors invest in companies, organizations, and funds with the intention to generate social and environmental impact along with a financial return.
Social Entrepreneurship Resources
I would be remiss in my duties as a business owner if I did not point out that one of the best way to learn about social entrepreneurship is to subscribe to the podcast, Social Entrepreneur. You can also grab this infographic, What is a Social Entrepreneur? If you are really interested in this space, you might also enjoy reading the eBook 5 Key Traits of Successful Social Entrepreneurs.
