Conceptualizing the International for Profit Social Entrepreneur

Conceptualizing the International

For-Profit Social Entrepreneur R. Scott Marshall

ABSTRACT. This article looks at social entrepreneurs

that operate for-profit and internationally, offering that

international for-profit social entrepreneurs (IFPSE) are

of a unique type. Initially, this article utilizes the entre-

preneurship, social entrepreneurship, and international

entrepreneurship literatures to develop a definition of the

IFPSE. Next, a proposed model of the IFPSE is built

utilizing the dimensions of mindset, opportunity recog-

nition, social networks, and outcomes. Case studies of

three IFPSE are then used to examine the proposed

model. In the final section, findings from the case studies

are used to examine the proposed model and more fully

elucidate the dimensions of the IFPSE.

KEY WORDS: social entrepreneurship, international,

for-profit, case studies

Introduction

Recent research provides substantive progress in

critiquing previous and developing refined concep-

tualizations of social entrepreneurship (SE). From

this study, it is increasingly clear that SE ‘‘is not a

tidy concept’’ (Peredo and McClean, 2006) such

that boundaries are easily set and agreed upon by

scholars and practitioners. Agreement, however, is

generally achieved that identifies the ‘‘aim(s) of

creating social value, either exclusively or in a

prominent way’’ (Peredo and McClean, 2006, p. 64)

as a critical aspect of SE. There is also an emerging

debate that SE manifests in multiple forms – not-for-

profit, for-profit, and ‘‘hybrid’’ or cross-sector (Mair

and Marti, 2006; Murphy and Coombes, 2009;

Peredo and McClean, 2006; Weerawarden and

Mort, 2006). The majority of SE research to-date

examines not-for-profit and/or ‘‘hybrid’’ forms. The

paucity of research to consider for-profit SE may be

due to the perceived incongruence between for-

profit status and social mission primacy. One of the

two primary objectives of this study is to look at the

for-profit approach of social entrepreneurs. In par-

ticular, this research explores the distinguishing

characteristics of for-profit social entrepreneurs

regarding markets as arenas for confronting chal-

lenging social issues.

It is also common in previous literature to study

SEs that are community, regional, and, in some

cases, national in scope. Weerawarden and Mort

(2006) look at SE in Australia; Sharir and Lerner

(2006) study SE in Israel; Koresec (2006) examines

municipalities in the U.S.; and, the examples cited in

Austin et al. (2006) are generally community-based

organizations. Yet there is a growing number of SEs

that span across national boundaries. International

SEs are arising in complement to or, in some cases

perhaps as replacement for, efforts undertaken under

the auspices of major foreign aid programs and

international non-governmental organizations. Simi-

lar to a traditional firm, when an SE crosses borders,

it confronts unique challenges; cultural and language

differences, geographic distance, and economic and

educational disparities likely complicate the design

and effective management of an international social

enterprise. Given that SEs inherently confront com-

plex environments (Dart, 2005; Manfredi, 2005),

adding an international dimension only engenders

greater complexity. The second objective of this

study, therefore, is to gain a better understanding of

the particular expertise needed by and challenges

presented to international for-profit SEs.

In order to achieve these objectives, the next section

reviews the traditional, social, and international entre-

preneurship literatures to originate a concise definition

of international for-profit SE. Following the definition

building, a more elaborate concept development pro-

cess leads to a proposed model of for-profit interna-

tional SE. Next, case studies of three international for-

profit SEs, based on open-ended questionnaires and

Journal of Business Ethics (2011) 98:183–198 � Springer 2010DOI 10.1007/s10551-010-0545-7

interviews as well as archival data, are provided. These

case studies are used to examine the proposed model of

international for-profit SE. In the final section, findings

from the case studies are used to consider the model to

more fully elucidate the attributes of international for-

profit SE. Through this study, it is the intention of this

study to provide an important step forward in under-

standing the emerging phenomenon of international

for-profit SE.

Defining ‘‘international for-profit social

entrepreneur’’

Entrepreneurs create new organizations through

context-dependent, social and economic perspec-

tives and processes (Morris et al., 2002; Thornton,

1999). Adding social to entrepreneur maintains the

idea of organizational founding steeped in contextual

processes; it adds important differences in motiva-

tion, knowledge, and outcome measures. Dees

(1998) is often credited with developing the first

theoretically based enunciation of SE. He suggests

that the entrepreneurship component of SE includes:

• Recognition and pursuit of new opportuni-

ties to create social value,

• Continuous engagement in innovation and

modification, and

• Bold action taken without accepting per-

ceived extant resource limitations.

Building to a significant degree from Dees’ (1998)

discussion, Sullivan Mort et al. (2003) provide a

definition of a social entrepreneur composed of four

dimensions:

• ‘‘the virtuousness of their mission to create

better social value;

• unity of purpose and action in the face of

complexity;

• an ability to recognize opportunities to cre-

ate better social value for their clients; and

• their propensity for risk-taking, pro-active-

ness and innovativeness in decision-making’’

(p. 82).

The refinement of the definitional character of

SE has not necessarily resolved a dialectic center-

ing on whether an entrepreneur can seek social

change while simultaneously seeking monetary gain

(Thompson, 2002; Thompson et al., 2000). While

not resolving the debate, Dart (2005) sheds light on

the role of distinct institutional environments in

permitting a shift of social enterprise to include

commercial, pro-market political, and ideological

values. Peredo and McClean (2006) endeavor to

resolve some of the debate focused on sectoral

boundaries of SE. They remark that ‘‘what makes an

undertaking an example of social entrepreneurship is

the presence of social goals in the purposes of that

undertaking’’ (italics from original authors) (p. 63).

These authors provide a continuum of SE based on

the primacy of social goals vis-a-vis other goals (e.g.,

profitability). Accordingly, social goals may range

from exclusive focus, in which there is no com-

mercial exchange, to subordinate, in which com-

mercial exchange predominates over social goals.

The legitimacy of each form may, in fact, be largely

determined by the institutional environment in

which entrepreneurial efforts are undertaken and the

socio-cultural emphases on ethics, social benefi-

cence, and profit-motivation (Cheung and King,

2004; Dart, 2005). In this article, the focus is on the

two mid-range categorizations provided by Peredo

and McLean such that the social mission and com-

mercial exchange goals co-exist and the social mis-

sion is either predominant or at parity to commercial

exchange goals. Convergence on these two catego-

rizations (1) ensures relevance for the for-profit

aspect while (2) maintaining the sanctity of the social

mission as a primary objective (Dees, 1998; Sullivan

Mort et al., 2003).

Within these boundaries, for-profit SE may

maintain broad ranging geographic scopes of opera-

tions – from community to regional, to national, and

to international. International entrepreneurship has

been defined as the process of creatively discovering

and exploiting opportunities that lie outside a firm’s

domestic market in pursuit of competitive advantage

(Zahra and George, 2002). Oviatt and McDougall

(2005) define international entrepreneurs as ‘‘(a)ctors

(organizations, groups, or individuals) who discover,

enact, evaluate, or exploit opportunities to create

future goods or services and who cross national

borders to do so are internationally entrepreneurial

actors’’ (p. 540). As mentioned earlier, this research

looks at for-profit SE in which the commercial

exchange transpires across national borders. More

184 R. Scott Marshall

specifically, it considers for-profit SEs who (1) craft a

service and/or product in the source country that

assists social mission achievement in the source

country and (2) deliver the service and/or product in

the recipient country to obtain monetary benefits.

Table I clarifies this particular positioning of the

international for-profit SE by utilizing the dimen-

sions of mission primacy (commercial and social) and

geographic scope (domestic and international) and

provides explanations in each quadrant.

Based on this definition as well as the preceding

discussion of SE, an international for-profit social entre-

preneur can be defined as ‘‘an individual or group

who discover, enact, evaluate and exploit opportu-

nities to create social value through the commercial

exchange of future goods and services across national

borders.’’ This definition captures each key element

of the SE of concern in this article: the fundamental

attributes of the entrepreneur are delineated; the

social mission obtains primacy (or at the very least,

parity) with other goals; and, profitability through

commercial transactions and the conduct of trade

across borders are explicit. The next section builds

from this definition to propose unique characteristics

of the international for-profit social entrepreneur

(hereinafter referred to as IFPSE).

Conceptualizing the international for-profit

social entrepreneur

In this section, a conceptualization of the IFPSE is

undertaken. This conceptualization process develops

the proposed model shown in Figure 1. Based on

the entrepreneur literature that focuses on entre-

preneurial personality as well as the context and

processes of entrepreneurialism, the model considers

and builds from (1) mindset, (2) opportunity rec-

ognition, (3) social networks, and (4) outcomes (or

performance) (Bateman and Crant, 1993; Bouchikhi,

1993; Christensen et al. 1989; Kickul and Gundry,

2002; Kirzner, 1973; Morris et al., 2002; Palich and

Bagby, 1995).

Mindset – beyond risk-taking

New ventures often are born from a confluence of

an entrepreneurial idea and a motivation to see

‘‘something’’ done differently (Jack and Anderson,

2002). Through a complex interaction between the

entrepreneur, the environment, chance events, and

prior experience, the idea–motivation admixture

becomes activated (Bouchikhi, 1993). Activation for

the entrepreneur calls for a mindset that comprises a

willingness to take risks or at least view risks more

optimistically (Palich and Bagby, 1995); risk-taking

may be simply characterized as a willingness to

commit one’s resources to an activity amidst

resource scarcity. Herein lies the common charac-

terization of entrepreneurs as willing to undertake

bold action without necessarily being fully aware of

or concerned for the resource constraints.

In the case of the IFPSE, there are multiple

operating environments and increased probability

of influential chance events. Beyond a proclivity

TABLE I

Dimensions of for-profit entrepreneurship: commercial–social and domestic–international

Geographic scopeMission primacy

Domestic International

Commercial All commercial transactions occur within the

borders of one country. Success measured

primarily by profitability of the firm

Some portion of the commercial transactions

occurs between at least two countries. Success

measured primarily by the profitability of the firm

Social All commercial transactions occur within the

borders of one country. Mission to alleviate a

social and/or environmental challenge –

considered above or at parity with profit-

ability of the firm

Some portion of the commercial transactions

occurs between at least two countries. Mission to

alleviate a social and/or environmental challenge

– considered above or at parity with profitability

of the firm

185Conceptualizing the International For-Profit Social Entrepreneur

toward, or at least willingness to engage in, risk, a

particular challenge for the IFPSE is the heightened

complexity of attempting to enact social change in

one or more source countries and delivering a novel

service and/or product concept in one or more

recipient countries. Social problems broadly defined –

poverty, illiteracy, deforestation, and disease – are

made up from complex, systemic interactions of

history, geography, culture, politics, and economy.

IFPSE strive to achieve a moral objective that serves

the ‘‘recognized social need’’ (Hemingway, 2005)

and ‘‘discover novel means to achieve constructive

social change’’ (Murphy and Coombes, 2009, p. 326);

that is, IFPSE engage in bold action with oftentimes

limited resources with a resolute commitment to

addressing a seemingly intractable social issue.

This effort occurs in the midst of added com-

plexity presented by multiplicity of cultural, social,

political, and economics systems within which they

conduct the commercial exchange. Based on cultural

and social values held in IFPSEs’ institutional envi-

ronment, they may possess a worldview that holds

high the potential for market mechanisms and

consumer choice to be transformative (Dart, 2005).

A conscious choice to address a persistent social

or environmental problem with market-driven

solutions, rather than initiating civil society- or

governmental-based programs, may be driven by

fundamental beliefs in the capacity to work within

markets to address the persistent social and/or

environmental issue. In summary, the mindset of the

for-profit social entrepreneur is founded on a risk-

taking approach, a commitment to a social issue, and

a fundamental belief in market-based approaches.

Opportunity recognition – connecting need

to consciousness

Entrepreneurs generally possess an ability to identify

gaps in extant marketplace offerings. Efforts of

international entrepreneurs call for market knowl-

edge of the recipient country or countries to detect

competitive opportunities not yet sufficiently met by

current product and services (Oviatt and McDougall,

2005). Social entrepreneurs are motivated to address

an issue in which markets ineffectively value social

improvements and public goods (Dorado, 2006)

and/or to which non-market agents are seemingly

unable to effect improvements (Hemingway, 2005).

Bringing this discussion together, IFPSEs recognize

that recipient country market(s) do not effectively

Opportunity Recognition

Social Networks

Outcomes

Risk-taking and Proactive

Belief in communicating

source country social mission to recipient country consumers

Knowledge of cultural, social and

economic systems of source country

Collaborative mindset to fulfill social mission in course country

Seek to resolve social issue

through social mission driven market-based

entrepreneurship

Commitment to global social

issues

Belief in market-based approaches

Social & For-Profit Motives:

Belief in markets to exchange

goods/services, obtain profits, and confront persistent

social/environmental

issues

Attributes of EntrepreneurAttributes of Social For-

Profit Entrepreneur Attributes of International Social For-Profit

Entrepreneur

Figure 1. Proposed model of international for-profit social entrepreneurs.


evaluate the public goods component of products/

services developed in the source country, and local,

regional, and international governments and non-

governmental organizations are unwilling or unable

to resolve the social issue. Most particular to the case

of the IFPSE, an ‘‘international’’ social problem may

exist such that recipient country consumers do not

effectively appraise the public goods components of

source country products/services.

Often consumers are constrained in their abilities

to internalize social and environmental costs through

their purchasing behavior; consequently, trade in

goods and services frequently and negatively impacts

future generations, those living beyond close prox-

imity and the natural environment (McGregor,

2003). For the IFPSE, a worldview of markets as

having transformative potential is likely to be tightly

coupled with an indefatigable pursuit of a social

mission. Deriving from this coupling, IFPSEs may be

inclined to consider the systemic nature of persistent

social challenges and identify the potential for new

types of ‘‘citizen-consumer’’ responses. IFPSEs may

seek to overcome market structures and consumptive

behavior that fail to capture long-term social impli-

cations of current behavior by connecting to citizens

in the form of conscious or ethical consumerism

(Doherty and Meehan, 2006); for the IFPSE, the

opportunity recognition may come in the form of a

globally informed and aware ethical consumerism.

Capacity to resolve, or at least reduce, the potential

tension between social and profit objectives may exist

in part in the connection to consumers who posi-

tively engage with ethical consumerism. As suggested

in Figure 1, the IFPSE may seek to connect a con-

suming populace in one country to the disadvantaged

social circumstances in another country. The

embedded social mission of the SE provides the

means for communicating to, engaging with and

even motivating purchases in the recipient country

market (Doherty and Meehan, 2006).

Social networks, knowledge, and partnerships

Entrepreneurship scholars have looked fairly exten-

sively at the role of network ties in the founding and

expansion of new ventures. Network ties can en-

hance the ability of entrepreneurs to more fully

elaborate opportunities (Ardichvili, 2003), acquire

resources (Batjargal, 2003), and gain legitimacy

(Aldrich and Fiol, 1994). For international entre-

preneurs, Freeman and Cavusgil (2007) found that

those who create ‘‘born-global’’ ventures often

consider network relationships as essential to over-

coming institutional limitations, such as lack of new

market knowledge.

For IFPSE, focusing on the dual social and

financial objectives, operating across and within

distinct cultures, and building market bridges across

these cultures, brings significant complexity to

international enterprise. Thus, it is likely that net-

work relationships will be viewed as an important

component of their international venture. In pursuit

of their social missions, social entrepreneurs gener-

ally possess in-depth understanding of the needs,

values, and circumstances of the individuals they

seek to serve (Murphy and Coombes, 2009). Thus,

IFPSEs need to possess significant knowledge of

social, cultural, and economic systems of the coun-

tries in which they are attempting to resolve pressing

social issues. To this point, Figure 1 suggests that

one important attribute of an IFPSE is knowledge of

cultural, social, and economic systems of the source

country in which the entrepreneurial initiative fo-

cuses to resolve a social issue.

Furthermore, Fowler (2000) suggests that social

entrepreneurs look to ‘‘cultural and civic norms of

mutuality and reciprocity’’ (p. 647) as guiding

principles, and Hemingway (2005) offers that social

entrepreneurs may be guided by a collectivistic

(rather than individualistic) sensibility. IFPSEs may

hold worldviews that highly value collaboration and

consensus-building. In order to achieve their social

and for-profit objectives, IFPSEs likely possess the

normative principles of collaboration and hold as

important certain relationships to overcome cross-

border operational complexity; thus, they may

believe that collaborative partnerships with similarly

minded organizations across public, private, and not-

for-profit sectors are necessary to gain in-depth

insights to the cultural and social contexts of an

enduring social challenge and operationalize their

enterprises’ strategies effectively. Thus, social net-

works and collaborative partnerships in the social

mission-focused source country may serve important

empowering roles for IFPSEs to gain requisite

intellectual capital, local networks, additional

capacity, and necessary skill sets.


Outcomes

A general understanding is that an entrepreneur’s

goals are economic; the successful outcome of an

entrepreneurial undertaking is the survival and

growth of the organization (Churchill and Lewis,

1983). Further, the accumulation of personal and

organizational wealth are often as much or more

highly valued outcomes than the long-term viability

of the organization (Timmons, 1978). However,

Bird (1988, p. 444) suggests that ‘‘the founder’s

intentions determine the form and direction of an

organization at its inception. Subsequent organiza-

tional success, development (including written

plans), growth, and change are based on these inten-

tions, which are modified, elaborated, embodied, or

transformed.’’ As noted in the earlier definition

process, a social entrepreneur holds achievement of a

social mission above or at parity with financial suc-

cess. There are two important suppositions that

come from this founding intention of the IFPSE.

First, they may perceive the growth of the enterprise

as a positive outcome, if and only if the enterprise

finds continued success in ameliorating the social

problem. As the social purpose is the raison d’etre of

the enterprise, value contribution to society is the

priority outcome (Murphy and Coombes, 2009).

Second, in cases where a social issue may seem re-

solved, the IFPSE may not find continuation of the

enterprise necessary. The insertion of social mission

and entrepreneurial intentions emphasizes a funda-

mental difference of sought-after outcomes between

traditional commercial and for-profit social entre-

preneurs.

Case studies

The following three case studies of IFPSEs are used

to examine the model provided in Figure 1. The

selection of enterprises for this study is based on

convenience sampling. Through the professional

relationships of the author, access was gained to the

founders for interviews and collection of archival

document. Together the three case studies provide a

relatively rich investigation of IFPSE. Table II pro-

vides basic profiles of the IFPSE in this study.

The three case study organizations differ in

product/service offering (language tutorial services,

tropical hardwood furniture, and caffeinated bever-

age) and operate in different international commu-

nities (Guatemala, Indonesia, and Argentina/Brazil).

They all meet the definition of international entre-

preneurial organizations as each conducts commer-

cial transactions across national borders in the pursuit

of competitive advantage (Zahra and George, 2002).

As illustrated in Table II, each organization sources

product and/or service in international market(s),

imports those products and/or services to the

domestic market and, in some cases, to other mar-

kets, and employs people in international and

domestic markets. Thus, although the sampling

was based on convenience, the author deliberately

selected IFPSEs operating in distinct industries and

TABLE II

Case study profiles

Company Founder Citizenship

of founder(s)

Product/

service

Source

country(ies)

Import

market(s)

Employee base

Speak Shop Clay Cooper

Cindy Cooper

U.S.

U.S./Brazil

On-line Span-

ish tutoring

service

Guatemala and

Nicaragua

Primarily U.S. 3 in U.S., 9 in

Guatemala,

2 in Nicaragua

Tropical Salvage Tim O’Brien U.S. Hardwood

furniture man-

ufacturing

Indonesia U.S. and

Canada

2 in U.S., 85

in Indonesia

Guayaki Alex Pryor

David Karr

Argentina

U.S.

Yerba mate

beverages

Paraguay,

Brazil and

Argentina

Primarily U.S. 33 in U.S.,

4 in Argentina


source countries to provide exploratory data that

permitted a certain degree of generalizability for

examining the proposed model.

Speak Shop: Guatemalan Spanish language tutors via

the web

Speak Shop was co-founded by Clay and Cindy

Cooper. Clay and Cindy met while attending

Thunderbird Graduate School of International

Management. In order to meet the language

requirement for graduation, Clay traveled to Gua-

temala for the summer in 1998 to work with a tutor.

‘‘My tutor Pablo invited me to his home, and it was

then that I realized he was living in impoverished

conditions,’’ Clay said. ‘‘Here was a man who went

to university, was very bright, worked hard and was

doing all the right things, yet he was struggling day

in and out. When I realized he was getting paid the

equivalent of $1 to $2 an hour, it just didn’t seem

fair.’’ The Coopers established Speak Shop with a

clear mission – to improve the lives of language

tutors and students and to foster intercultural

understanding and respect.

The context

Guatemala suffers from highly skewed distributions

of income. The wealthiest 10% of the population

receives almost one-half of all income; the top 20%

receives two-thirds. As a result, about 80% of the

population lives in poverty, and two-thirds of that

number – or 7.6 million people – live in extreme

poverty (BWHA, 2007).

Despite the low income received by its inhabit-

ants, Guatemala is a common destination for Spanish

language immersion programs. There are at least 30

organizations providing formal immersion programs

in Guatemala – most of which are conducted in the

capital city of Antigua. However, the existence of

such programs does not equal economic stability for

the tutors providing the service. In Guatemala, the

average service sector salary, which makes up about

35% of the labor force, is $3.85 per day (USTR,

2005). It is unusual for Spanish language tutors

involved in the immersion programs to earn at

this official average rate; reflecting Clay’s experience

with Pablo, they are more likely to receive the

equivalent of between US$2 and $2.40 per day for

their services.

Language immersion programs in Guatemala are

most often operated by US-based organizations.

These organizations design full-service week-long

programs, such that daily intensive language study is

packaged with a homestay with a local family (i.e.,

lodging and food). Exclusive of roundtrip airfare,

these programs generally cost the participant around

US$200. After overhead and other administrative

charges, the tutors and homestay family generally

share between US$50–$75. Although in some cases,

this income may supplement other sources of in-

come, it is highly variable, peeking during common

vacation times in the U.S. and dropping significantly

during other times of the year.

Mindset

The Coopers make their social and economic beliefs

clear in every aspect of their operation. Cindy states,

‘‘We believe that market forces are the most pow-

erful systems for creating not only economic, but

also social value. Aid and philanthropy are crucial

stop-gaps in addressing dire social issues. However,

for an issue such as poverty, fundamental change

requires sustainable economic opportunity. We are

only beginning to tap into the huge potential of

addressing world problems through markets.’’

Speak Shop’s business model incorporates this

worldview in many aspects. Tutors become micro-

entrepreneurs, setting their own rates and hours and

selling tutoring services to prospective students.

Tutors are able to teach online year-round at hourly

rates markedly higher than they were previously able

to charge. Speak Shop’s model has increased the

earning capacity of their tutors and, importantly,

reduced the variability in income that has been en-

demic in this industry. Generally, the tutors have

positively engaged with the Speak Shop model. One

tutor stated ‘‘it has been a great help and benefit

because it has improved my earnings, thereby giving

me greater economic security in managing my home

expenses.’’

The Coopers believe that this social enterprise

model provides a solid platform for creating job

opportunities in poverty-ridden communities as well

as connecting people across cultures. Speak Shop

is a ‘‘fair trade’’ enterprise, such that the income


levels of the tutors ensure a stable and ‘‘livable’’

wage. Further, they are unambiguous regarding

their fundamental beliefs about the importance of

market-driven approaches. Cindy adds, ‘‘Poverty

can be eradicated through market opportunity. By

eliminating barriers to trade and information, the

web democratizes access to markets and education.’’

Opportunity recognition

Cindy and Clay both possessed significant experi-

ence in Guatemala and other Latin American cul-

tures prior to launching Speak Shop. Cindy grew up

in Brazil and is bi-lingual in Portuguese and English.

She graduated from Claremont McKenna College

with a BA in Psychology and Spanish. Prior to Speak

Shop, Cindy worked as a tutor in Spanish and

translator in Portuguese and conducted business in

Latin America with Nike Inc. and The Capital

Group. Thus, to this new venture, Cindy brought

knowledge of Latin American social, cultural, and

economic systems gained in college and graduate

school, as well as from living in and working with

people in Latin America.

Clay gained knowledge of the Guatemalan

immersion tutoring industry and the country’s cul-

tural and economic systems while studying Spanish

there for 4 months. He also possessed academic

knowledge of cultural, social, and economic systems

in Latin America from graduate school. Both Cindy

and Clay were able to communicate in Spanish at

advanced levels at the time they began formulating

the business plan for Speak Shop.

Clay and Cindy attended Thunderbird at a time

when a notable portion of course content was being

navigated to Internet and Intranet interfaces. The

technology provided a means for communicating

course syllabi, delivering reading materials, submit-

ting assignments, and facilitating student-to-faculty

and student-to-student conversations. After his

experience with Pablo, Clay saw a great opportunity

to build a technology platform, similar to the ones

used at Thunderbird, to deliver Spanish language

tutoring to U.S. citizens, who could learn in the

comfort of their own homes. Advances in voice-

over-internet protocol (VOIP) and web-interface

technologies as well as significant increases in the

bandwidth available to U.S. households during the

late 1990s and early 2000s were key developments

that made feasible Speak Shop’s delivery platform.

Social networks

Clay and Cindy believe that it was essential to de-

velop a partnership with a local organization or

organizations that could facilitate several processes

on its behalf. ‘‘For example, we needed a partner to

help train tutors and provide them with tutoring

facilities, since tutors could not afford computers and

Internet at home’’, states Cindy. To this end, Speak

Shop formed a partnership with PROBIGUA

(Proyecto Bibliotecas Guatemala), a non-profit

organization in Antigua. PROBIGUA’s two primary

goals are to provide Spanish language training and,

through revenue generated in the training programs,

fund the establishment and maintenance of libraries

in rural villages in Guatemala. This partnership

permits PROBIGUA to select and train the tutors

who work with Speak Shop.

However, the Coopers are clear that Speak Shop

partners need not necessarily be for-profit or not-

for-profit. They believe that a market-based incen-

tive for collaboration has been and will continue to

be the fastest and easiest solution to solidifying a

partnership. Cindy states that ‘‘market-based incen-

tives fit within our vision of social change. At the

same time, having a partner that supported the social

mission was equally important.’’

Outcomes

The business model built by the Coopers placed the

Spanish language tutors in the position of individual

entrepreneurs and the technology platform as the

‘‘channel of distribution.’’ Tutors are provided with

initial and on-going technology training from the

Coopers; however, the tutors are responsible for

designing curriculum, setting prices, and scheduling

lessons. People interested in learning Spanish register

on Speak Shop’s website, review tutor profiles, select

a tutor and schedule, and pay for and take one-on-

one lessons via webcam. This model provides the

tutors the ability to stabilize their income over the

year – ameliorating the seasonal demand fluctuations

of the immersion programs – and eliminates the

significant administrative charges of a US-based

agency – raising tutors’ income gained from each

client. Thus, the Speak Shop business model, as

designed and implemented by the Coopers, centered

on the social objective of empowering individuals

in developing countries through new economic

opportunities.


Tropical Salvage: old Indonesian hardwood, new

value-added uses

Tropical Salvage was founded in 2006 by Tim

O’Brien after he spent 9 years living and working in

Indonesia. During his time in Indonesia, Tim be-

came acutely aware of the devastating effects of high

deforestation rates – in terms of negative environ-

mental, social, and economic impacts. Tim started

Tropical Salvage based on a conviction that a rea-

sonable and promising market-oriented strategy can

contribute to positive change in ‘‘a part of the world

beset by extraordinary challenges.’’

The context

Indonesia is endowed with some of the most

extensive and biologically diverse tropical forests in

the world. Tens of millions of Indonesians depend

directly on these forests for their livelihoods, whe-

ther gathering forest products for their daily needs or

working in the wood-processing sectors of the

economy (The World Factbook, 2007). Indonesia

was still densely forested as recently as 1950; in the

following 50 years 40% of the forests were cleared

(FWI/GFW, 2002).

Devastation of Indonesia’s forests could make

extinct wild orangutans, sun bears, and clouded

leopards in 10–20 years, as well as countless other

species (Clifford et al., 2003). Furthermore, logging

and wood products industry employees may end up

unemployed as the forest land may no longer sustain

commercial forestry. Some western companies have

responded to the deforestation by either minimizing

or completely eliminating sourcing from Indonesia.

Home Depot cut its purchases of lumber from

Indonesia by more than three-quarters since 2000.

And Ikea requires that all of its tropical hardwoods

be harvested from forests certified by the Forest

Stewardship Council. In October 2001, due to

illegal logging practices, Ikea cut off Indonesian teak

purchases (Clifford et al., 2003). Overall, the

deforestation of Indonesia has lead to tremendous

environmental, social, and economic disruptions,

and the future impacts are potentially manifold

greater than what has been experienced to date.

Mindset

As the founder of Tropical Salvage, Tim’s strong

conviction is that the only way to solve persistent

economic, social, and environmental issues is

through market-driven mechanisms. Tim argues that

the key to success in SE ventures is to ‘‘imagine,

formulate and implement businesses that include in

their model improving the lot of people and integ-

rity of places.’’ An essential aspect of this model is to

build and maintain respect at the production, ven-

dor, and consumer stages and view this respect as an

enduring asset.

Tim states that ‘‘raising awareness among employ-

ees and the communities where we operate is an

important part of our mission. Tropical Salvage

employees support the company’s conservation

perspective and goals.’’ Tim and other employees of

Tropical Salvage dedicate efforts to raise environ-

mental and cultural awareness, and invest in solu-

tions to the environmental and social problems the

beset Indonesia.


Tim traveled around Indonesia, on and off, since

1997, before starting Tropical Salvage. He possessed

familiarity with the culture and some facility,

although not fluency, with the language. Tim states

that ‘‘having some knowledge of the social, cultural

and economic systems of Indonesia – and specifically

Java – was extremely important to establishing the

business. Learning the language was very important

as, in many areas where Tropical Salvage works, few

people speak English.’’

Tropical Salvage’s product development and

marketing approach is derived out of Indonesia’s

cultural, ecological, and geographical heritages.

Tim’s knowledge of the local social and cul-

tural environments and the company’s business

model generate significant respect from Tropical

Salvage’s Indonesian employees and the surrounding

community.

Tropical Salvage applies four wood salvage strat-

egies: deconstruct old houses, buildings and bridges;

salvage old, wild-growth trees from rivers and lakes;

salvage trees felled by floods and landslides caused by

Indonesia’s annual intense rainy season; and mine

trees from beneath the ground. The salvaged wood is

then turned into tropical hardwood household fur-

nishing by Indonesian woodworkers. The product

line includes dining and occasional tables, chairs,

benches and shelving units, cabinets and buffets,

desks, beds, and armoires. Finished products are


exported to the central warehouse in Portland,

Oregon, and are sold directly at its warehouse, in

retail channels such as 10,000 villages in the U.S. and

Canada, Bazaar de la Paz in New York City, and Fair

World Gallery in Des Moines, Iowa and through

direct on-line sales and shipping. Tim is committed

to maintaining the product line at price parity with

tropical hardwood furnishing offered by competitors.

An important facet of Tropical Salvage’s business

model is to implement its social and environmental

mission objectives in Indonesia. The objectives in-

clude: (1) creating a botanical nursery, garden, and

research station that is open to the public; (2)

availing an environmental education program to area

schools; (3) reforesting denuded areas of the Mount

Muria watershed using a diverse mix of indigenous

species that have known NTFP potentials; and (4)

avoiding further deforestation of remaining primary

stands of forest on Mount Muria.

Social networks

Tropical Salvage initiated its business model without

deliberate attention to partnerships outside of its

supply chain and manufacturing operations. In the

refinement and actualization of its mission, however,

Tropical Salvage has found NGO partnerships to be

a critical resource. NGO partnerships bring expertise

and credibility that have permitted Tropical Salvage,

according to Tim, ‘‘…to hasten development and

expansion of the model.’’

Currently, Tropical Salvage is leading an effort to

create a conservation, education, and reforestation

project in Jepara. In this effort, Tropical Salvage is

collaborating with The Institute for Culture and

Ecology (IFCAE). IFCAE, a 501(c)(3) nonprofit

organization, seeks to improve human and envi-

ronmental conditions through applied research,

education, and community improvement projects.

Through its partnership with IFCAE and the creation

of the Jepara Forest Conservancy, Tropical Salvage is

able to bring to fruition its social mission objectives –

the Conservancy will provide a botanical park for the

community, educational facilities for school children

and community members and a model for alternative

land uses for local landholders. Tropical Salvage does

not have in-house expertise about many of the chal-

lenges raised in developing its mission. Tim firmly

states that ‘‘such collaborations are very important to

TS’s current and future business model.’’

Outcomes

When Tropical Salvage was started, the mission goals

were simply an extension of Tim’s principles to ad-

dress the serious environmental and social degradation

resulting from deforestation in Indonesia. However,

he did not intend for these principles to manifest as a

marketing tool. The focus, rather, was on the high

quality, uniqueness, and price competitiveness of the

product. As the global market has increasingly em-

braced mission-driven business models, Tropical

Salvage has been well positioned to utilize its estab-

lished mission as a source of differentiated advantage.

Tim states that ‘‘(w)e’re well along in implementing

and expanding our mission while many other busi-

nesses are scrambling to find or create a mission with

which to identify their business. Happily, as the mis-

sion aspect of business has added to sales, we’re able to

more quickly and robustly realize our mission goals.’’

Currently, Tropical Salvage’s website, promo-

tional materials, and overall communications strategy

embed the social mission. In-depth explanations of

the methods of hardwood salvage and the Indonesian

furniture craftsmanship populate all conversations

between Tropical Salvage and its consumers. His

conviction to embrace social change through market

forces has turned into strong employee commitment,

significant customer loyalty, and revenue growth.

These outcomes provide the basis for fulfilling Tim’s

intentions toward alleviating deforestation and

underemployment in the woodcrafts sector that

motivated his creation of Tropical Salvage.

Guayaki: market-driven restoration of Amazon rainforest

Alex Pryor and David Karr founded Guayaki Sus-

tainable Rainforest Products in 1997. Through this

enterprise, Alex and David brought a South Amer-

ican rainforest drink to the U.S. called organic yerba

mate. In the process, they are creating enhanced

economic opportunities for indigenous South

American families and reforesting portions of the

Amazonian rainforest. They call their business model

‘‘Market-Driven Restoration.’’ ‘‘Our goal was to

create consumer demand for healthy rainforest


products, providing native people with alternatives

to destructive land use practices,’’ states Karr.

The context

The Amazon region contains approximately 40% of

the world’s remaining tropical rainforest. It plays

vital roles in maintaining biodiversity, regional

hydrology and climate, and terrestrial carbon stor-

age (Laurence, 2001). Significant deforestation of

the Amazon rainforest began in the early 1970s.

Although enormous tracts of rainforest remain intact,

the rate of forest loss is dramatic, especially in the

‘‘arc of deforestation’’ along the southern and eastern

edges. The latest estimate of the deforestation rate

for the Brazilia Amazon during the 2003–2004

period was 26,130 km2 (Barreto et al., 2005). This

deforestation rate is the second highest recorded for

the Brazilian Amazon.

The causes of deforestation of the Amazon rain-

forest are commonly associated with cattle ranching,

logging, subsistence as well as commercial agricul-

ture and speculation (Fearnside, 2005). Market

values for beef, timber, soybeans and other interna-

tionally trade commodities produced on cleared

lands limits the effectiveness of government over-

sight and the efforts of international organizations

and provides incentives for corruption.

Mindset

In order to communicate their mission to customers,

David states, ‘‘our social/ecological mission is

completely embedded in everything we do. It is part

of our company culture to clearly communicate on

every package we sell and every piece of literature

we hand out.’’ Yerba mate is a naturally caffeinated

herb used to prepare a traditional infusion called

‘‘mate,’’ drunk mostly in Argentina, Uruguay, and

Paraguay. Yerba production requires several pro-

cesses, and, in most of producing regions, the

industry is oligopolistic with only a few companies

growing, processing, and selling the product. As

small yerba mate farmers do not own processing

machinery, they generally sell their harvest to large

producers at low commodity-based prices.

Customers who pay a premium price for Gua-

yaki’s product make a conscious decision to support

Guayaki’s mission. David states, ‘‘There is no doubt

that paying a fair, premium price creates an incentive

for farmers to focus on organic quality and to con-

tinue on with sustainable land use that nurtures the

rainforest.’’


Alex Pryor has both experiential and academic

backgrounds critical to understand cultural and

environmental issues surrounding the cultivation of

yerba mate. In addition to being born and raised in

Argentina, his family was engaged in conservation

projects. As a result, Alex is familiar with the cultural

norms in South America as well as being raised with

his family’s conservation knowledge and ideology.

Alex attended college in California. While in

school, he took courses in food sciences and world

food politics. During the summers, he went to

Paraguay where he could see first hand the conse-

quences of deforestation on a daily basis. This

experience both reinforced his conservation back-

ground in addition to exposing him to various global

market failures and potential market opportunities in

the U.S. Alex states that ‘‘having the knowledge on

the health and cultivation aspects of yerba mate and

experiencing the gap found in USA for a healthy

alternative to coffee, allowed me to set the founda-

tions of our business model.’’

In addition to having a great deal of knowledge

about cultivation methods of yerba mate, Alex and

David saw the market opportunity for this product.

David stated in an interview that they ‘‘understood

that the best immediate market for our products was

the United States where there was a large, developed

market for premium goods that were produced

organically, and socially and environmentally

responsible. Furthermore, with the recent boom in

green tea, we felt the market was mature and more

open to a similar drink with even more health

benefits’’.

The organic cultivation of Guayaki’s yerba mate

takes place on the 20,000-acre Guayaki Rainforest

Preserve. Humidity, cool temperatures, and organic

soil in the rainforest permit yerba mate trees to grow

slowly. Guayaki’s mate is grown in this natural area

where shade from the upper canopy protects the

leaves from direct sunlight, which can cause bitter-

ness. Guayaki workers handpick the mate leaves and

stems, which are then flash-heated to protect the

nutritional properties. The mate is wood-dried using

naturally fallen rainforest hardwoods and aged for

12 months in cedar wood chambers. Alex and David


recognized the opportunity to connect traditional

cultivation and production techniques in partnership

with the indigenous groups to the revitalization of

rainforest canopy; further, they connected a product

generated in such a manner to an international

consumer seeking caffeinated beverages.

Social networks

Working with a diverse group of stakeholders is a

key to the success of the Guayaki business model.

This collaborative approach is demonstrated both in

the establishment of the business and in partnerships

with likeminded organizations. Alex describes his

role in the company as the following: ‘‘I act mainly

as a catalyst to nurture the co-participation toward a

‘common good’ between experts in different fields.’’

As a result, both David and Alex believe that finding

partners, consumers, and small farmers with the

‘‘same values’’ as the Guayaki mission has been a

determining factor of success in each stage of the

business.

Guayaki also partners with similar mission-driven

organizations to heighten awareness about its prod-

ucts. For example, David cites that they have formed

a consortium of triple bottom line companies at

trade events to enlarge the company’s presence. As a

result of partnering with likeminded organizations,

he finds ‘‘it is helpful to share information about

sales, marketing, finance, fundraising and valuable

growth opportunities.’’ Many of these small mission-

driven organizations lack the size and resources to

compete with larger organizations. It is to their

advantage to share knowledge with one another to

establish a larger presence in their particular market

niche.

Outcomes

Guayaki’s ‘‘Market-Driven Restoration’’ business

approach generates Fair Trade income for the 34

indigenous families living in the region and creates

revenue for the Reserve. From their founding of

Guayaki, Alex and David have engaged a ‘‘triple

bottom line’’ to measure success, which they frame

as addressing economic viability, social justice, and

environmental stewardship. Alex and David proffer

that Guayaki’s overriding goal is to create economic

models that drive reforestation and provide ‘‘quality-

of-life’’ wages for the indigenous population.

Concluding discussion

This study set out to define and explore the concept

of a unique form of entrepreneur – one that operates

to make a profit and achieve a social mission and

meet these objectives by conducting international

trade. Research in the realm of SE has gained sig-

nificantly more attention over the past half decade;

this heightened interest arrives concomitant with an

increasing number of for-profit organizations com-

mitted to social missions and operating across bor-

ders. Thus, the task for this study is to gain further

conceptual clarity on the for-profit and international

aspects of those individuals characterized as social

entrepreneurs.

Mindset

The case studies demonstrate that all of the entre-

preneurs profiled proactively engaged in relatively

high risk ventures – with limited resources they

initiated unique ‘‘born-global’’ business models

(Freeman and Cavusgil, 2007). They also all pos-

sessed a compelling commitment to a social mission.

The Coopers are driven to improve the quality of

life for Guatemalan Spanish tutors and enhance

cross-cultural understanding; Tim is committed to

finding alternatives to destructive forest practices and

provide work to un- and under-employed craftsmen

in Indonesia; and Alex and David are devoted to

building the capacity of the indigenous peoples to

provide for their own livelihoods while restoring

Amazonian rainforest.

An interesting future research topic from these

observations is to compare the relative success of for-

profit organizations founded on social missions and

those implementing social missions post-founding.

Prieto-Carron (2006) describes the challenges faced

by Chiquita in implementing strong socially driven

practices in the banana supply chain; it was not

necessarily a lack of sincerity of Chiquita’s efforts

that stalled initiatives – the efforts appeared quite

sincere. It seemed, rather, that the presence of

‘‘hidden’’ structural barriers in the industry hindered

success. There is room from much greater investi-

gation into how extant enterprises, founded in the

absence of social missions, can successfully imple-

ment socially inspired programs.



Capacity to resolve, or at least reduce, the potential

tension between social and profit objectives may

exist in part in the connection to consumers who

positively engage with ethical consumerism. It is

suggested herein that the IFPSE seeks to connect a

consuming populace in one country to the disad-

vantaged social circumstances in another country.

From the case studies in this article, a mixture of

findings is obtained. Cindy and Clay established

Speak Shop with a clear mission and from venture

initiation they communicated a message of empow-

erment, improvement of quality of life, and cultural

learning to clients. Tim, on the other hand, founded

Tropical Salvage with a compelling social mission

but made only limited intentional effort to devolve

the mission into consumer-oriented communica-

tions. Such efforts evolved as the market dynamics,

including consumer interest and competitor mes-

saging, pulled the story out of Tim and onto the

front of all of Tropical Salvage’s marketing efforts.

Alex and David’s efforts in this regard fall some-

where between the previous two cases. Social mis-

sion-based messaging to a conscious consumer

started early in their SE; however, the clarity and

sophistication of this messaging evolved and only

after 10 years in operation did the concept of

‘‘Market-Driven Restoration’’ take hold and be-

come principal to Guayaki’s company and product

positioning.

Thus, whether at founding or shortly thereafter,

IFPSE likely will seek to connect to a consumer bloc

that holds in common the social values of the IFPSE

and enacts these values through purchases. Cur-

rently, all the IFPSEs believe in communicating clear

and compelling narratives of their social missions to

their consumers; however, the path to this status was

not common. Again, research opportunities abound

as a result. Competition in the realm of ‘‘socially

inspired’’ enterprise is rising – should messaging of a

social mission await clear evidence of the success of

the business model? Or is connecting the source

country social mission to the recipient country

consumers essential to the success of the business

model? Understanding how IFPSEs can most

effectively utilize their social missions to further their

objectives – both social and profit – is an avenue for

future research.

Social networks

Evidence from the case studies suggests that IFPSEs

hold beliefs about the inherent importance of col-

laboration in implementing and managing their

ventures. Partnerships may provide requisite intel-

lectual capital, local networks, additional capacity,

and necessary skill sets. While all the entrepreneurs

stated collaboration is necessary for future develop-

ment, Speak Shop and Guayaki noted that creating

partnerships with local organizations was a key ele-

ment for implementation of the businesses. Tropical

Salvage started without collaborative partnerships. It

was not until its third year of operation that it sought

an NGO partner to help fulfill its holistic mission to

preserve forestland, educate the local citizenry, and

provide alternative work for those engaged in

destructive forestry practices. It is difficult to draw

certain conclusions from these findings. An imme-

diate question that arises is: what is the optimal time

for an IFPSE to engage in cross-sector partnerships –

in the early planning stages, post-launch, or after the

business model has matured? But this question pre-

sumes a bit too much – that cross-sector partnership

are necessary and that the partnerships need be across

sectors. Can IFPSEs succeed in meeting their social

and profit objectives sans partnerships? In the case

where partners are deemed necessary, might these

partners also operate for-profit?

In pursuit of their social missions, it appears that

IFPSEs need to possess significant knowledge of

social, cultural, and economic systems of the countries

in which they are attempting to resolve pressing social

issues. The exploratory findings from the case studies

provide strong support for this supposition. Cindy

and Clay had personal experience in Guatemala as

well as language and culture training; Tim had spent

9 years in Indonesia, learning its culture, language,

and ecological and economics systems; and Alex is a

native of the region in which Guayaki focuses it mate

growing, harvesting, and drying.

Modern social enterprise is taking many forms and

some of the more heralded success stories, such as

Grameen Bank, are similarly founded by individuals

with intimate and depth knowledge of the local socio-

cultural and economic systems (Muhammad Yunus,

in the case of Grameen Bank). But what happens

when a large multi-national company attempts to

implement a social enterprise? The preliminary


findings from this study suggest that significant

knowledge is a critical ingredient of launching an

international social enterprise. Some research evi-

dence supports this supposition. For example, in her

study of Hewlett–Packard’s i-community in Maga-

lakwena, South Africa, McFalls (2007) finds that the

disconnect between a top-down management

approach and the necessity for entrepreneurial,

capacity-building activities to emerge ground-up

significantly constrained the success of this under-

taking. Limited cognizance of the fundamental needs

of the community, which could have only derived

from cultural and economic experience and expertise,

lead to implementation of an i-community that

lacked the interest of, and therefore usage by, the

indigenous population. To this point, further research

may be able to better illuminate the roles of social

networks and personal experience in gaining the

needed knowledge and expertise to carry out an

entrepreneurial venture that is both socially focused

and international in scope.

Outcomes

The proposed model suggests that IFPSEs will

attribute to markets, and the conduct of trade of

goods and services, an ability to address seemingly

intractable social challenges. Cindy perhaps best

captured this attribution, shared among all the social

entrepreneurs discussed herein, with her statement

that ‘‘we are just beginning to tap into the huge

potential of addressing world problems through

markets.’’ David and Alex embedded this principal

in their descriptive of Guayaki’s mission – ‘‘Market-

Driven Restoration.’’

In terms of the potential tension that may exist

between the social mission and for-profit objective,

Tim offered a critical observation – a for-profit SE

must ‘‘imagine, formulate and implement businesses

that includes in their model improving the lot of

people and integrity of places.’’ The social mission

must be explicit and integrated into the business

model. Further, the IFPSEs generally support the

notion proposed by Hartigan (2006) – that is ‘‘the

best measure of success is not how much profit they

make but the extent to which they generate social

value’’ (p. 1). It is worthwhile to add Tim’s

suggestion that it appears quite challenging for his

for-profit competitors to build social missions into

pre-existing business models. Given the increasing

popularity of SE among large and small, publicly

held and private, companies, future research may

focus on the particular challenges of balancing the

social/for-profit tension. In her study of Hewlett–

Packard’s i-community, McFalls (2007) notes that

pressures for relatively short-term returns based in a

shareholder primacy perspective limited the ability

of the company to invest ‘‘patient’’ capital in the

social enterprise. Further, size may matter. That is,

there may exist significant advantages for entrepre-

neurs to initiate new socially motivated business

models that are near impossible to implement for

large organizations that are bound in established

routines and process.

Final remarks

Undoubtedly much remains to be studied regarding

SEs. This study attempts to shed light on an

emerging class of SEs – those that seek to operate

for-profit and conduct transactions across market

borders. Findings from the case studies suggest that

IFPSEs are (1) committed to a global social issue and

(2) maintain a fundamental belief in the market as a

transformational mechanism to address the social

issue. Three additional characteristics – connection

of social mission to consumers, depth knowledge of

cultural, social and economic systems and collabo-

rative partnerships – were common among the

entrepreneurs but variation in timing and approach

suggests less certainty in the role they play for IFP-

SEs. With much research in the area of IFPSE, and

SE more broadly, yet to be conducted, this study

presents steps forward in conceptualizing the idea

and better understanding its practice.

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Portland State University,

Portland, OR, U.S.A.

E-mail: [email protected]


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Conceptualizing the International for Profit Social Entrepreneur

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