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Transcript of Pitschner Tuncer - Socially Responsible Enterprises
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SOCIALLY RESPONSIBLE ENTERPRISES
INCUBATOR OR TRANQUILLIZER FOR SOCIAL ENTREPRENEURS1
SEBASTIAN PITSCHNER
Berlin Institute of Technology
Chair of Organization and ManagementSekretariat H 73
Strae des 17. Juni 135
10623 Berlin, Germany
Tel: +49 (0)30 314-23873e-mail: [email protected]
DEMET TUNCERBerlin Institute of Technology
Chair of Marketing
Sekretariat WIL-B-3-1
Wilmersdorfer Str. 148
10585 Berlin, Germany
Tel.: +49 (0)30 314-25281e-mail: [email protected]
The authors would like to thank Ramona Posselt for her support in the process of data collection and Nora Thiele for
administrative assistance.
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INTRODUCTION
The phenomenon of social entrepreneurship (SE) is emerging in a time in which the very
basic needs of diverse population groups are increasingly unmet not only in developing
countries but also in the economically leading industrialized countries where the (social
welfare) state traditionally steps into the breach when market forces fail in their role as the
primary mechanism for the (re-)distribution of resources. The governments which have
suffered a severe loss of power are confronted with increased calls for a reduction of tax loads
and no longer consider themselves responsible for providing economic and social relief
(Leadbeater, 1997; Catford, 1998). Their new role is rather that of a mere coordinator and
facilitator of private efforts.
Meanwhile, the number of not-for-profit organizations (NFPs) is growing considerably
(Wing, Pollak and Blackwood, 2008) and the social problems are increasing in size and
complexity in the wake of a soaring globalization. Therefore, the NFPs, which have long been
regarded as the last resort for safeguarding social security, are now operating in a much more
challenging environment. In the face of the first decline in charitable giving in the U.S. since
1987 (Giving USA Foundation, 2009) they currently have to cope with an intense competition
for donors and are even threatened by substantial funding shortages (Pariyar and Ward, 2006;
Roper and Cheney, 2005).
In view of this development, the discussion and solution of social problems recently
entered the sphere of business. To be more precise, it can be observed that private enterprises
assume the former social role of the state in two distinct ways. While charitable activities of
profit-driven companies are far from being a novel phenomenon, the concept of corporate
social responsibility (CSR), firstly addressed by Clark (1916), did not receive broad attention
in the academic literature until the seventies (Carroll, 1999). By now, however, it seemst that
virtually all companies have their own CSR programs, in particular because such programs
constitute the opportunity to maximize a companys (shareholder) value (see, for example,
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Mackey, Mackey and Barney, 2007; Godfrey, Merrill and Hansen, 2009; Orlitzky, Schmidt
and Rynes, 2003). In addition to companies, also individuals who are primarily driven by the
value of justice and the desire to achieve social improvements can tackle specific deficiencies
by means of commercial activities if the problems constitute an entrepreneurial opportunity.
In todays complex environment, such social entrepreneurs frequently complement the
activities of socially responsible enterprises by employing innovative approaches (Johnson,
2000). While there is little doubt that social entrepreneurs constitute an enormous potential
with respect to the effective resolution of pressing social problems (Harris, Sapienza, Bowie,
2009), the questions that have to be answered are where they originally come from, how they
develop, and how they can be incentivized.
CSR exhibits a striking resemblance with SE because both concepts imply economic
viability as well as social beneficence. Given the theoretical proximity of the concepts, we
argue that companies engagement in CSR is likely to affect the ability of their employees to
recognize opportunities for socially entrepreneurial activities, the actual exploitation of such
opportunities, and the long-term survival of the resulting social enterprises. To elaborate on
this hypothesis, we first develop a definition of social entrepreneurship. In doing so, we
consider the widely accepted definitions of commercial entrepreneurship and compare the
various understandings of SE that can be found in the literature. After providing a short
illustration of the term corporate social responsibility we point out the similarities and
differences between the two concepts. In the second part of the paper, we present a theory
positing that potential social entrepreneurs who are working in a socially responsible
enterprise may start an entrepreneurial career only under certain circumstances. If these
conditions are present, however, the venture is likely to be a success. In the third part of the
paper, we analyze the career paths of the social entrepreneurs we identified in the social
entrepreneur application programming interface, which was recently developed and released
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by the nonprofit initiative Social Actions.2
We conclude by bringing together data and
theory in a short summary and by outlining the further research that is needed regarding the
link between CSR and SE.
SOCIAL ENTREPRENEURSHIP
It is needless to point out that every piece of (quality) research requires as a foundation
unambiguos and well justified definitions of the core concepts used. However, in some fields
of study this prerequisite is more important than in others and social entrepreneurship
certainly (still) ranks among the former. It makes no sense to evaluate the theoretical and
practical significance of this concept if a sufficient definition is not provided (Peredo and
McLean, 2005). On the other hand, it also makes no sense to explicitly introduce and define a
new term which is basically congruent with already existing concepts a mistake, we think,
that has repeatedly been made in the field of social entrepreneurship.
Since all sorts of activities are now being called social entrepreneurship (Martin and
Osberg, 2007: 29) we conducted a literature review to see if any consistent pattern of
definition can be identified in the various academic publications. In doing so, we made no
distinction between definitions of entrepreneurship and entrepreneurs because the first term
just denotes what entrepreneurs do; hence, defining either term defines the other (Peredo and
McLean, 2005). One key finding is that many authors see a certain overlap of the concepts of
social entrepreneurship and (traditional) commercial entrepreneurship (see, for instance,
Thake and Zadek, 1997; Fowler, 2000; Massetti, 2008). As Dees (2001) illustrates it, Social
entrepreneurs are one species in the genus entrepreneur. But what is an entrepreneur?
Skipping the concepts early French history of the sixteenth and seventeenth century (cf.
2 The social entrepreneur application programming interface (social entrepreneur API) can be accessed through
http://search.socialentrepreneurapi.org and is hosted by Social Actions. It is an open database containing
information about entrepreneurs who won fellowships or awards from relevant and esteemed organizations. Dataacquisition was conducted on 21.09.2009. On this day, the database contained information about 489 individuals
who were decorated by six different organizations, namely Civic Ventures, Draper Richards Foundation,
ideablob, Poptech, Schwab Foundation for Social Entrepreneurship, Skoll Foundation.
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Sullivan Mort, Weerawardena and Carnegie, 2003), the first major contributions have been
made by Richard Cantillion, Jean-Babtiste Say and Joseph Schumpeter who highligthed that
entrepreneurs are able to bring together and coordinate the different factors of production in
an innovative way while being faced with income uncertainty (Sexton and Bowman, 1985;
Wee, Lim and Lee, 1994). According to Dees (2001), this traditional definition has recently
been complemented by Peter Drucker who stressed that entrepreneurs recognize and exploit
opportunities. Stevenson and Jarillo (1990) argued that entrepreneurs also exhibit a unique
resourcefullness which enables them to pursue such opportunities even in situations in which
their resource endowments are very limited. The exploitation of opportunities is accompanied
by the generation of an entrepreneurial profit (Shane and Venkataraman, 2000) and induces a
systematic change of a society facing major social problems (Drayton, 2002). Incremental
improvements to the efficiency of already existing goods and services are not considered an
entrepreneurial act (Larson, 2000).
As Catford (1998) points out, this basic concept of entrepreneurship can be broadened to
also capture the phenomenon ofsocial entrepreneurship. That is, in order for an activity to be
identified as social entrepreneurship, it has to have the charecteristics specified above and an
additional quality which justifies the use of the supplemental adjective social. In this regard,
Seelos and Mair (2004) note that some authors emphasize the social outcome of an
entrepreneurial activity while others refer to social problems triggering entrepreneurial
behavior. In our opinion, there is no need to explicitly differentiate between these two
approaches, because they are mutually dependent. In order to generate a relevant social
output, a social problem (i.e., an unmet social need) has to be identified first. While all the
definitions we analyzed include the element of a social contribution or social value, the more
difficult question seems to concern the relative weighting of the social and economic
outcomes of social entrepreneurship.
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Two extreme cases can be identified concerning this matter, and we argue that both should
not be examinded under the heading of SE. One case is that of NFPs who, in the face of
decreasing governmental support and private giving, are in search of new sources of funding
(Seelos and Mair, 2004). Within the corresponding enterprise school of social
entrepreneurship, researchers explore how the ideas and tools of the business world can be
used in a sector that, by definition, ultimately does not make any financial profits at all.
(Fulton and Dees, 2006). That a great number of authors treat SE as a not-for-profit concept
(Peredo and McLean, 2005) was recently confirmed by Taylor, Hobbs, Nilsson, OHalloran
and Preisser (2000) who found out that 83% of the articles surveyed by them related social
entrepreneurship to the NFP sector. However, this understanding of SE is hardly conducive
since it does not necessarily imply an innovative way of tackling a social problem. It is
certainly true that NFPs are increasingly transformed into some kind of hybrid organization
(Peredo and McLean, 2005). Yet, the phenomenon of complementary social
entrepreneurship (Fowler, 2000) should not be included in an extended version of the SE
concept, because it merely denotes NFPs adopting business practices to earn money, which
can then be used to finance social causes. As long as the instruments ultimately used to solve
the problems have not changed, that is, as long as relief supply is still shipped to the South
with convoys, we do not see the need for a new field of research.
The other extreme has been identified by Seelos and Mair (2004: 3) as socially
responsible practices of commercial businesses engaged in cross-sector partnerships. This
definition, in our opinion, does not set SE apart from the means-end theory dominating CSR
research (Amaeshi and Adi, 2007) which will be introduced in more detail below. We
absolutely agree with the argument that CSR practices have been refined in the past but in
most cases they are still means to just one single end, namely, the generation of profits. This
is not to deney that businesses frequently do help to solve social problems, but the social
output is often a mere by-product. Therefore, cross-sector partnerships can easily be explained
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by instrumental stakeholder theory (Jones, 1995) as an efficient way to implement CSR
(Seitanidi and Crane, 2009) and to secure the stakeholder contributions needed for
maximizing owner value.
Seelos and Mair (2004) observe that the concept of SE has to be placed alongside the CSR
programs of businesses and the efforts of public and private not-for-profit organizations. The
question that remains, however, is where exactly SE should be classified on the scale between
the two extremes. Given that collections of diverse SE definitions already exist in a sufficient
number (see, for instance, Brouard and Larivet, 2009; Pariyar and Ward, 2006; Johnson,
2000), we confine ourselves to emphasizing those definitional characteristics which help to
answer the question posed above. Peredo and McLean (2005: 63) argue that social
entrepreneurship is exercised where some person or group [] aim(s) at creating social value,
either exclusively or at least in some prominent way. Fowler (2000: 645) argues along the
same lines when he introduces the notion of integrated social entrepreneurship, which
indicates that the economic aspects of an organisation's activities are expressly designed for,
and do generate, positive social outcomes, i.e., the social outcomes are not merely the means
to achieve financial success but constitute an end on their own. Hence, the alleviation of
social problems is superordinate to the generation of profits. This, however, does not mean
that securing a sustainable profit can be neglected by social entrepreneurs. Rather, profits are
a necessary condition for SE, since it is them that distinguish social entrepreneurs from
traditional not-for-profit institutions (Massetti, 2008). Social entrepreneurs employ innovative
approaches to make markets work for people (Catford, 1998), that is, they do not alleviate the
symptoms but try to fight the sources of social problems directly. Insofar, we do not agree
with Dees (2001), who admittedly explains that the social mission is explicit and central to the
social entrepreneur but also argues that for him or her, profits created on the market are just a
means to a social end. We disagree because even (full-time) social entrepreneurs have to
make a living and they are not financed by private donors or governments. Maybe it is just the
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prospect of making a real change without having to give up a reasonable standard of living
what makes SE an attractive option for business school graduates, who rarely intend to pursue
a carrer in nonprofit management (Gentile, 2002).
The concept social entrepreneurship, we believe, should be closely related to the notion of
justice. On the one hand, this implies that social entrepreneurs direct their actions toward the
elimination of an unjust equilibrium that causes the exclusion, marginalization, or suffering
of a segment of humanity that lacks the financial means or political cloud to achieve any
transformative benefit on its own (Martin and Osberg, 2007: 35). On the other hand, social
entrepreneurs also behave justly. They try to assure that their own (economic) outcomes,
relative to their inputs, are in balance with the perceived situation of relevant others (cf.
Homans, 1961).
CORPORATE SOCIAL RESPONSIBILITY
One of the earliest formal definitions of CSR was given by Fitch (1976: 38), Corporate
social responsibility is defined as the serious attempt to solve social problems caused wholly
or in part by the corporation. Carroll (1979: 500), one of the most prominent exponents of
CSR research, later elaborated on the degree to which businesses are responsible for solving
social problems, Before anything else, the business institution is the basic economic unit in
our society. As such, it has responsibility to produce goods and services that society wants
and to sell them at a profit. All other business roles are predicated on this fundamental
assumption. This proposition can be seen as the lynchpin of the subsequent discussion about
whether corporations have any obligations that go beyond maximizing shareholder wealth
production (Barnett, 2007). One side, heavily influenced by Milton Friedmans (1970: 122)
famous statement, The Social Responsibility of Business is to Increase its Profits, argues
that CSR can have practical relevance only if the costs accruing from socially responsible
behavior are lower than the financial benefits associated with it (Barnett, 2007). In addition to
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this economic responsibility and the responsibility to obey the law, Carroll (1979: 500)
identifies two further responsibilities of businesses. The ethical responsibility represents the
kinds of behaviors and ethical norms that society expects business to follow. This
responsibility is clearly instrumental in that it is not much more than a strategic lever for
increasing corporate reputation, market opportunities and ultimately owner wealth (Windsor,
2006). The fourth dimension of responsible behavior identified by Carroll (1979) is the
discretionary, i.e., the philanthropic dimension. This refers to individual managers and
corporations judgments that can not be justified by societal expectations. Empirical studies
show that this dimension plays a relatively small role in managers motivation to act socially
responsible (see, for instance, Pinkston and Carroll, 1996), and it is questionable why
managers would decide to live out their personal agenda of responsibility by the means of a
(conventional) business. If someone wants to be charitable irrespective of market demand,
then a company is certainly not the right place to put this into practice. Therefore, as opposed
to SE, corporate social responsibility implies a long term shareholder value approach (Falck
and Heblich, 2007). Nevertheless, SE and CSR have some characteristics in common which
we will establish in the next part of the paper.
BRINGING SE AND CSR TOGETHER
We have argued above that while profitability is an essentail feature of social
entrepreneurship it is not its main objective and in principle subordinate to the direct solution
of a specific social problem. Critics of this definition will certainly confront us with the
objection that in practice it is almost impossible to determine the actual goal structure of a
business and the motivation underlying socially responsible behavior, respectively. Consider
the case of Ben & Jerrys as it is described in detail by Choi and Gray (2008). Peredo and
McLean (2005) are unsure how to classify the famous ice cream company. It could be just
ice cream with a fashionable dollop of corporate social responsibility (Stephens, 2003: 17) or
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it could be an innovative market solution to a social problem. According to Peredo and
McLean (2005), the former case would be an example of cause branding, that is,
considering social objectives to enhance the fiscal bottom line. Although we agree with their
point of view that the identification of a companys goal structure is a far from being an easy
task, we do not think that the task is impossible and that the identification of those companies
which pursue first and foremost a social agenda would have little practical conesquence.
While the consequences will be addressed in more detail in the last part of this paper we can
illustrate our idea of the definition of SE using the example of Ben & Jerrys. The companys
mission statement (http://www.benjerry.com/activism/mission-statement) does not indicate a
concrete social problem which is solved by an innovative approach. Indeed, the company may
be operated in a way to improve the quality of life, the business practices may respect the
environment, and the company may be operated on a sustainable financial basis. But, as
laudable as this is, Ben & Jerrys still just sells ice cream and they do not provide an
innovative and fundamental solution to, for example, the poverty of small-scale growers in
Africa. We do not intend to criticize companies with an obviously high level of social
responsibility like Ben & Jerrys. Rather, we just emphasize that there is a difference between
them and what we perceive to be social entrepreneurship. Apart from these differences, SE
and CSR also have some characteristics in common. Firstly, CSR, too, can be theorized as an
expression of justice (Aguilera, Rupp, Williams and Ganapathi, 2007; Wettstein, 2009), if, as
Bosse, Phillips and Harrison (2009) show by means of stakeholder theory and the assumption
of reciprocal behavior, just treatment of stakeholders creates an additional rent. Secondly, in
order to do good, irrelevant of the underlying motive, a socially unjust equilibrium (Martin
and Osberg, 2007: 35) has to be identified first. Both in the case of CSR and in the case of SE,
this unjust equilibrium represents an economic opportunity. But while the marketable
elimination of social unjustice is the very raison d'tre of social entrepreneurship, it is a means
to an end for a socially responsible enterprise. By referring to their differences and similarities
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we will now propose a so far unstudied link between the two concepts, namely the function of
socially responsible enterprises as an incubator for social entrepreneurs.
A THEORY OF INCUBATORS FOR SOCIAL ENTREPRENEURS
In order to become an entrepreneur (of any kind) one first of all has to recognize an
opportunity which can be exploited (Shane and Venkataraman, 2000). Yet, opportunities for
social entrepreneurship are obviously of a different nature than opportunities for commercial
entrepreneurship. Namely, they arise out of a condition of social injustice which has so far not
been resolved by the market. Therefore, market imperfections not only contribute to social
(and environmental) problems, they also provide the opportunities for entrepreneurial action
(see Cohen and Winn, 2007, for environmental problems and the respective entrepreneurial
opportunities). But these opportunities will not be recognized and exploited by commercial
entrepreneurs because their objective function is dominated by the financial bottom line. Only
if the implications that new venture creation has for social wealth are considered by the
entrepreneur, does the creation of justice become a worthwhile endeavor. Therefore, social
entrepreneurs have to be led by the deep desire to establish social justice. This value will give
them a different focus of perception. They see opportunities where others only see empty
buildings, unemployable people and unvalued resources (Catford, 1998: 96). We argue that
this flair may not be completely inborn but can in fact be trained. The practice field could be
either a socially responsible enterprise or a company characterized by clearly unfair business
practices. Rodrigo and Arenas (2008) have found empirical support for the former case. Their
study revealed that CSR programs have a positive effect on the sense of justice of employees.
This can be explained by the influence of personal experiences which lead employees to
identify with persons who have been marginalized, exploited, or even socially oppressed
(Rodrigo and Arenas, 2008: 274) We thus relate the development of social entrepreneurs to
the concept of incubator organizations which is widely-used in entrepreneurship research (see,
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for example, Cooper and Park, 2008; Cooper and Dunkelberg, 1986). Indeed, the relevant
literature concentrates on commercial entrepreneurship in the field of high technology but we
argue that the theory can well be adopted for social entrepreneurship. Commercial
entrepreneurs recognise opportunities through social and contextual learning, identifying
possibilities and unmet demands which can be re-framed as opportunities (Rae, 2004: 198)
and we do not see why this should be different in the case of business opportunities arising
out of a social need which is not satisfied by either the market or NFPs and the state (Seelos
and Mair, 2004). If individuals are unobservant and fail to question the things around them
they cannot identify actually existing opportunities (Thompson, Alvy and Lees, 2000). But the
employees of a socially responsible enterprise are likely to engage in a process of contextual
learning which includes learning through deep, situated experiences within the industry or
community. The outcome of this process exclusive to socially responsible enterprises is the
ability to recognize and act on emergent market opportunities (Rae, 2004). The potential
entrepreneurs attention can further be attracted by interaction with others. This interaction
can help them make sense of own experiences (Jones, Latham and Betta, 2008). With respect
to the aforementioned example of Ben & Jerrys it is, for example, conceivable that
employees in certain positions will learn about the social problems related to the purchasing
of commodities like vanilla, cocoa, and macadamia nuts from developing countries while
being involved with the production and selling of the respective products. Particularly if the
responsible behavior of a company is extensively promoted through marketing campaigns,
also the consumers may be aware of social issues related to a product, but it is assumed that
they will not learn about the roots and the specific circumstances of the social problems.
However, a deep and situated knowledge of the cultural context and the needs of the target
group are probably necessary to identify and being able to act on socially entrepreneurial
opportunities (Rae, 2004).
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Once an opportunity is identified by latent entrepreneurs (Thompson et al., 2000)
currently employed by a company, they have to decide whether to take action and leave the
company or to stay in their current position. Cooper and Dunkelberg (1986) indicate that
research attaches great importance to displacements and pushes as triggers for quitting the job
and starting an entrepreneurial career. We believe that such displacements can primarily be
found on the level of values. In this regard, Hemingway (2005) has presented an interesting
approach. She argues that there may be a conflict between the values of the individual
employees and the corporate environment in which these employees work. The employees
values may either signalize a high concern for others (collectivistic personal values) or a
personal focus (individualistic personal values). Considering that values are seen as
important drivers of behavior (see, for instance, Agle and Caldwell, 1999), it is reasonable to
assume that employees may leave a company if the corporate culture is unsupportive of
collectivistic attitudes. However, Hemingway (2005) does not explicitly account for this
reaction and instead assumes that the potential entrepreneurs will behave morally mute,
engage in cognitive adjustments or operate entrepreneurially under the radar inside the
company. She also addresses the case of socially responsible enterprises and argues that
individuals with collectivist personal values will pursue a CSR agenda within these
organizations. Rodrigo and Arenas (2008) are supportive of this argument and explain that
employees of companies extensively engaging in CSR will feel proud. More precisely, the
individual employees will feel, that his or her contribution to society has a smaller impact
compared with the social contribution that the organization can make, and so the employees
wish to make a social contribution is satisfied through the organization (Rodrigo and Arenas,
2008: 271) and they will see no need to quit their job and become an social entrepreneur.
Another branch of the existing literature seems to be insightful with regard to our research
question, namely, the analysis of the link between CSR and organizational commitment.
Evans and Davis (2008) hold that individual perceptions of CSR will influence the
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attractiveness of an organization to its employees. Collier and Esteban (2007) as well as
Peterson (2004) substantiate this claim by referring to social identity theory, which implies
that the ways in which employees think about their organization shape their behaviour.
Therefore, means-end approaches of CSR are likely to elicit a strong commitment of
employees with collectivistic personal values. Commitment, in turn, is related to
organizational outcomes like work performance, absenteeism, and turnover (Peterson, 2004).
This implies that the identity of an organization characterized by a tendency towards inequity
may have negative connotations for the employees and may ultimately trigger quitting the job.
Individuals who have quitted their jobs are then on their own and may decide to start an
entrepreneurial career. Research in the field of commercial entrepreneurship has shown that
the succes of such a career is to a large extent dependent on the human capital of the
entrepreneur (see, for instance, Davidsson and Honig, 2003; Diochon, Menzies, Gasse, 2008).
Therefore, for the ventures of social entrepreneurs to be economically successful, the ability
to recognize opportunities must be accompanied by certain abilities. More precisely, to
successfully create and manage a venture which is economically sustainable (i.e., profitable),
the entrepreneur firstly needs to be equipped with general and specific competencies (Baum,
Locke and Smith, 2001). While general competencies are abilities, which are not exclusively
related to management and include, inter alia, oral presentation skills, decision-making ability,
and conceptualization ability (Boyatzis, 1982; Herron and Robinson, 1990), specific
competencies can only be applied in a business context and are emphasized by the
management school of entrepreneurship (Cunningham and Lischeron, 1991). This stream of
research suggests that being proficient in at least the basic techniques of business
administration is a must for the individual (social) entrepreneur to be successful (Chandler
and Jansen, 1992; Brown, 2007; Lussier, 1995). Although the pure enactor-entrepreneur
might sometimes be able to delegate tasks which require extensive managerial skills to an
enabler (Thompson et al., 2000) the enactor will mostly be on her or his own when it comes
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to economically relevant decisions in the early stages of the venture life cycle (Sambasivan,
Abdul and Yusop, 2009; see Webster, 1977; Kazanjian and Drazin, 1990 for examples of life
cycle models). In their meta-analysis of the relationship between human capital and different
success indicators Unger, Rauch, Frese and Rosenbusch (2009) found out that human capital
investments have a considerably weaker effect on entrepreneurial success than human capital
conceptualized as outcomes of human capital investments. Furthermore, correlations with
success were found to be higher for specific task-related competencies than for general
competencies and abilities. In our opinion, this supports the argument that a socially
responsible business is a good place for potential social entrepreneurs to learn the special
abilities constituting the foundation for subsequent entrepreneurial success.
Besides human capital, research has identified social capital as another important variable
influencing the success of entrepreneurs (Davidsson and Honig, 2003). Social capital theory
holds that individuals can extract benefits from social structures and group memberships. For
example, personal relationships and a network of relevant contacts are crucial for the effective
procurement of needed physical and financial capital, the development of trust, visibility, and
credibility (Thompson et al., 2000), and ultimately for the sustainability of innovation and
growth (Larson, 2000). Alvord, Brown and Letts (2004) support the argument brought
forward by Austin, Stevenson and Wie-Skillern (2006), that this relationship is not only valid
in the case of commercial entrepreneurs but also in that of social entrepreneurs. We think that
it is reasonable to assume that a socially responsible company is the best place for potential
social entrepreneurs to socialize and to build effective networks which are a prerequisite for
the succes of entrepreneurial actions targeted at social problems of the respective companys
stakeholders. This argument is in principle consistent with the literature on commercial
entrepreneurship which holds that apart from specific technical and cognitive competencies,
industry knowledge is another important basis for the survival of an entrepreneurial venture
(see, for example, Doutriaux and Simyar, 1987; Shane, 2000; McKelvie and Wiklund, 2004).
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It will most likely be much more difficult to identify the providers of infrastructure and
resources as well as the potential customers for those individuals who do not have the
opportunity to tap the social ressources of an established business in the relevant area.
Through social networks, potential entrepreneurs can in particular get access to tacit industry
knowledge. Mitchell (1997: 124) further explains this by referring to expert information
processing theory. According to him, experts out-perform novices within their speciality
because, on the basis of their unique but common history, they can recognize immediately
that which novices may miss or require great effort to discover: compliance of expertise-
specific circumstances with an expert 'script'.
From our point of view, the bottom line of the preceding discussion turns out to be as
follows. In order to become a successful social entrepreneur, individuals are in need of certain
capabilities. Some of them can possibly be acquired through lectures, seminars, and so forth
while others may be inborn. But study and fate may not be sufficient. Rather, practical
experience in already established enterprises prior to the first entrepreneurial act is likely to be
another important variable. Furthermore, given the theoretical proximity of the concept of
CSR to SE, companies engagement in CSR is likely to affect the ability of employees to
recognize opportunities for socially entrepreneurial activities, the actual exploitation of such
opportunities and the long-term survival of the resulting social enterprises. We make the case
that comprehensive CSR practices could be the hands-on experience with social injustice
potential social entrepreneurs need to develop and succeed. However, it is questionable if
these individuals will ever leave their nest given that the values underlying their employers
culture and operations are consistent with their own values. In fact, the absence or mere
superficial acceptance of social responsibility could be the trigger leaving the company and
becoming a social entrepreneur.
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METHOD
Research Approach
In the previous section of this paper we discussed the phenomena of corporate social
responsibility and social entrepreneurship. Indeed, the literature on social entrepreneurship
has grown considerably in the last couple of years and theory formation has begun. Yet,
literature on the link between SE and corporate social responsibility is virtually nonexistent.
With this as a backdrop it seems reasonable to use the research method of directed content
analysis to gain insights. According to Hsieh and Shannon (2005), this approach isappropriate if the goal of research is to validate and extend already existing theoretical
foundations. As a first step of this rather exploratory endevour, we tried to develop sufficient
instrumentations for social responsibility on the institutional level, i.e. CSR, and the value of
social justice on the personal level. Therewith, we aimed at understanding the real meanings
and the patterns of the original phenomena. Our analysis began with a deductive approach
dealing with the theoretical foundations and definitions of CSR and SE (Patton, 1887). In this
phase of research, we already had some expectations and worked on certain specific research
questions. According to Eisenhardt (1989), this approach is definitely promising since it helps
to limit the flood of information and to focus the research. However, during the analysis our
data began to speak up for itself and it became inevitable to also take an inductive approach
and to look for some originally unconsidered patterns.
We decided to select a qualitative case study approach from the various inquiry methods
because it offers the possibility to capture and report individualized outcomes as well as
organizational level impacts Patton (1987). Social entrepreneurs are generally individuals who
strive for the solution of social problems by means of new venture creation. However, the
individual manifestations of entrepreneurship vary significantly. Our aim was to analyze these
individual paths and to identify common patterns as well as salient discrepancies. The concept
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of social responsibility, for example, is probably not understood equally in different countries,
cultures, communities, and firms.
Sample and Research Instrument
As the unit of empirical analysis we have used cases of social entrepreneurship. We
concentrated on evaluating individualized outcomes that are justifiably reluctant to generate
standardized criteria and scales against which all values can be compared (Patton, 2002). Each
case delivers a certain outcome story consisting of descriptive information about the life and
especially the career of the respective individual subsequent to the decision to become a social
entrepreneur. We chose our sample purposefully and reached a case number of 42 through 3
sampling stages:
Stage I: Extreme Sampling. After a first acquaintance with the Social Entrepreneur API,
we decided to start with the 489 social entrepreneurs who were awarded for their
contributions to social change and became fellows of various supporting organizations. We
used the awarding of prices and fellowships as a criterion for success since research has not
yet identified a single best practice for measuring the performance of neither commercial
entrepreneurs (Murphy, Trailer and Hill, 1996) nor NFPs (see Sawhill and Williamson, 2001)
Stage II: Criterion Sampling. We then defined our own selection criteria to narrow down
our focus on certain issues. Namely, we decided to concentrate on the entrepreneurial
processes and decisions (see Table I). Thereby, we identified 113 social entrepreneurs.
..
Insert Table 1 about here
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Stage III: Intense Sampling. In the end, we decided to use 42 information-rich cases that
manifest the phenomenon of social entrepreneurship thoroughly. Therewith, we hoped to
reduce redundancy and to enhance case heterogeneity.
In order to be able to identify cross-case patterns (Eisenhardt, 1989) and we structured the
cases by means of a table consisting of five criteria:
- Career and personal background of the social entrepreneur
- Experience with corporate social responsibility
- Recognition of an opportunity based on social injustice
- Decision to become a social entrepreneur
- Resources used in the process of venture creation
RESEARCH FINDINGS
Career and personal background of the social entrepreneur
We feel that the data supports one of our main theoretical arguments, namely that
individuals who are driven by the value of social justice and start a social venture benefit from
practical experience as an employee and are likely to survive in the market. Actually, the
business concepts of social entrepreneurs are mostly directly related to the entrepreneurs
professional careers, particularly with regard to
the the business concept itself
the competencies the social entrepreneurs acquired during preceding employments
the target group
the access to resources (social capital, human capital, financial capital) gained through
a prior employer
the business partners (who were often former colleagues)
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Experience with corporate social responsibility
We found out that references to social responsibility in the job definitions/assignments of
the employees often indicate the direct exposure to specific social problems like exclusion,
violence, disease or discrimination which are in turn realizations on injustice. Having faced
with these problems, the employees notice that
the issue is different, i.e. more (invisible) factors are relevant and the roots of the
problem deeper than assumed from a certain distance
the issue needs a more flexible solution which can only be provided by individuals and
not by large and cumbersome (bureaucratic) organization
real social responsibility can only be assumed on the local level where individuals
can actually experience the social problems for themselves
Recognition of an opportunity based on social injustice
Social Entrepreneurs develop hands-on-approaches to deal with the real social
responsibility instead of the theoretically developed solutions for a problem seen from a
distance. They develop contacts with the target population, other organisations and market
participants involved in the social issue on the local level. Target population needs to learn
how to help themselves they dont want an opinion leader telling them all the time what has
to be done according to a theoretical model. They need someone who is an expert and who
can see the world through the eyes of the target population in need and who share the same
bread with them as a human being. All of the entrepreneurs are responsible against their
target populations but social entrepreneurs having built their business concepts directly on the
promise of bringing social justice, have to understand the roots of the social issue clearly and
develop a certain common understanding with the target population. It is very difficult to
make the target population believe in the solution and too easy to lose their trust it is more
personal and delicate than normal entrepreneurship.
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Decision to become a social entrepreneur
After defining the real responsibility, Social Entrepreneur must suggest a way that
supplies a self-sufficient & interactive system in which the target population would be
part of the processes like decision making, work force development etc.
is convincing in the eye of the target population (seen mostly as a pull factor)
would be a better solution to the problem than the ones till now (through personal
initiative, flexibility, empathy etc.)
would change the destiny of the target population in the long term.
During our analysis we were able to observe the institutional influence on the design,
positioning and customer retention processes of the newly formed entrepreneurial systems
through the experience of the entrepreneur. We have more expectancy about this issue and in
the second stage of our research process; we are hoping to receive more insights about this
influence interviewing the chosen social entrepreneurs so that we can analyse it further: in
which aspects, how and to what extent.
Resources used in the process of venture creation
Our findings show that the resources reached through on the institutional experience play
an important role. The availability of the resources for a social entrepreneur are influenced by:
The reputation of the institution and Social Entrepreneur
Partnership with the former institution
Support coming directly from the institution (in a monetary or non-monetary way)
Human Capital acquired in the institution business & management skills from
practice
Social Capital (contacts with the other participants of the markets)
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Induction from the practice: Personal Experience with Social Injustice
As we began our research, we knew that the level of personal involvement would be
higher than the normal entrepreneur as a result of his philanthropic approach but we did not
reckon a personal experience with social injustice. According to our findings, this experience
can be made in one of the entrepreneurs life cycles at any time: in his childhood or even
during his experience coping with the social responsibility and it can be the result of
immigration, health disease, aging, gender issues, family issues, community issues, inequity
issues, education, and unemployment among others. Having had such an experience is firstly
a very strong motivation to find out the real responsibility. Secondly it accelerates the act of
entrepreneurship. These findings show a striking resemblance with women entrepreneurship
and immigrant entrepreneurship phenomena.
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RESEARCH MODEL
Getting in touch with the target population
Observing the core/real problem issues
Recognizing the need for more social justice
Defin
Meeting with social responsibility
on the institutional level
-Government
-NGO
-Companies
-Dachverbnde
-Other
-Im
-H
-A
-G
-F-C
-In
-E
-U
-O
Experience with Social Injustice
on personal level
personal experience &
level of involvement
New Re
personproce
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DISCUSSION
Our research shows that institutions are playing a pioneer role in social entrepreneurship that has
until now stayed in shadow. The move of social responsibility from the institutional level to the
entrepreneurial level is essential for better solutions of social justice for communities & societies
which can just be developed through a hands-on-approach and the support both direct &
indirect- of the institution is essential for the establishment and survival of a newly firmed
organisation in the market. According to our findings, we can consider it as a preparation phase
for the social entrepreneur. This paper being the first step of a trilogy, we are planning to go
further dealing with this link through the following steps in Table 2 in accordance with the phase
model of Lazarsfeld (Diekmann, 2007).
..
Insert Table 2 about here
CONCLUSION
With our research we tried to shed light to an important link which could at the same time
be defined as one of the success factors for the social entrepreneurship phenomenon. During our
analysis we recognized the need for more in-depth research using multi-method qualitative
approach to define and demarcate the phenomenon with its antecedents and socio-economic
impact. Diversity and integration issues in various societies would be appropriate to be
considered for further research in social entrepreneurship. Analysing the social responsibility
taken by the women entrepreneurs who work mostly with socially excluded groups and by
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immigrant entrepreneurs who work for a better standard of living on the community level could
also lead us to different links and facts.
FIGURES
Table I : Selection Criteria
a. Entrepreneurial Emphasis:
Entrepreneurship definitions
Entrepreneurial processes
(Opp. Recognition, Competitive Advantage etc.)
Formation of a new & independent (or
promising to be) organisation/body
Business idea/ Business plan
b. Social Responsibility Emphasis:
Target population in need/excluded
Social Inclusion
Direct Interference with the business plan
Table 2: Steps of the Research
Step IQualitative Case StudyAnalysis of 42 purposefully chosen cases
for the first insights
Step IIQualitative Interviewswith narrative and problem oriented characterincluding 15 social entrepreneurs to model thephenomenon and to bring it to a measurable level
Step IIIQuantitative Research
with a scale developed both deductively and
inductively for measurement, defining the causal
relationships between constructed variables
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26
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