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The Importance of Social Entrepreneurship for Development

Especially since Muhammad Yunus, founder of the Grameen Bank and a renowned example of a social

enterprise, won the Nobel Peace Price in 2006 there is increasing interest in social entrepreneurship for

development yet the current academic literature does not provide is a sufficient link between social

entrepreneurship and economic development policies. How important are social entrepreneurs for economic

development? What value is created by social entrepreneurship?

To answer these questions I researched the work of over 20 authors from Bornstein, Schumpeter, the

OECD, the World Bank and many others for a paper for the UNSW. My findings conclude that the social

entrepreneur sector is increasingly important for economic (and social) development because it creates

social and economic values:

1. Employment Development

The first major economic value that social entrepreneurship creates is the most obvious one because it is

shared with entrepreneurs and businesses alike: job and employment creation. Estimates ranges from one

to seven percent of people employed in the social entrepreneurship sector. Secondly, social enterprises

provide employment opportunities and job training to segments of society at an employment disadvantage

(long-term unemployed, disabled, homeless, at-risk youth and gender-discriminated women). In the case of

Grameen the economic situation of six million disadvantaged women micro-entrepreneurs were improved.

2. Innovation / New Goods and Services

Social enterprises develop and apply innovation important to social and economic development and develop

new goods and services. Issues addressed include some of the biggest societal problems such as HIV,

mental ill-health, illiteracy, crime and drug abuse which, importantly, are confronted in innovative ways. An

example showing that these new approaches in some cases are transferable to the public sector is the

Brazilian social entrepreneur Veronica Khosa, who developed a home-based care model for AIDS patients

which later changed government health policy.

3. Social Capital

Next to economic capital one of the most important values created by social entrepreneurship is social

capital (usually understood as the resources which are linked to possession of a durable network of ...

relationships of mutual acquaintance and recognition"). Examples are the success of the German and

Japanese economies, which have their roots in long-term relationships and the ethics of cooperation, in both

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essential innovation and industrial development. The World Bank also sees social capital as critical for

poverty alleviation and sustainable human and economic development. Investments in social capital can

start a virtuous cycle (for more explanation see my PDF below):

4. Equity Promotion

Social entrepreneurship fosters a more equitable society by addressing social issues and trying to achieve

ongoing sustainable impact through their social mission rather than purely profit-maximization. In Yunuss

example, the Grameen Bank supports disadvantaged women. Another case is the American social

entrepreneur J.B. Schramm who has helped thousands of low-income high-school students to get into

tertiary education.

To sum up, social enterprises should be seen as a positive force, as change agents providing leading-edge

innovation to unmet social needs. Social entrepreneurship is not a panacea because it works within the

overall social and economic framework, but as it starts at the grassroots level it is often overlooked and

deserves much more attention from academic theorists as well as policy makers. This is especially important

in developing countries and welfare states facing increasing financial stress.

The Concept and Process of Social Entrepreneurship

y Defining Social Entrepreneurshipy The Process of Social Entrepreneurship

y Social Entrepreneurship Theory and Research

Defining Social Entrepreneurship

Social Entrepreneurship is About Innovation and Impact, Not Income: This article originally appeared on The SkollFoundations Social Edge in September 2003. In it, Greg Dees argues from both a practical and theoreticalperspective for an innovation-based, rather than nonprofit income generation-focused, definition of socialentrepreneurship.

The Meaning of Social Entrepreneurship: A seminal white paper written by CASE Faculty Director Greg Dees in 1998and revised in 2001, this 5-page definition of social entrepreneurship is available on numerous websites and hasbeen translated into several foreign languages. Developed with support from the Kauffman Foundation anddistributed freely at their request.

Social Enterprise: Private Initiatives for the Common Good: This note identifies six dimensions that are useful forunderstanding the differences between private social-purpose organizations (nonprofit and for-profit) and traditionalbusiness firms. It also discusses the role of social enterprise in society and trends creating opportunities for socialentrepreneurship. (Harvard Business School Publishing, 9-395-116, 1994.)

Social Entrepreneurship: Greg Dees and Peter Economy draw on entrepreneurship theory and their experience withsocial entrepreneurs to define social entrepreneurship, address why it is important to nonprofit leaders, and identifykey factors important to entrepreneurial success.

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Chapter 1 in Enterprising Nonprofits: A Toolkit for Social Entrepreneurs, Dees, Emerson, & Economy (eds.),John Wiley & Sons, 2001.

The Process of Social Entrepreneurship

The Process of Social Entrepreneurship: Creating Opportunities Worthy of Serious Pursuit: Published by CASE in2002, this note provides a framework to guide social entrepreneurs through the process of creating a worthwhileopportunity. Written for classroom use, it is designed to help increase the chances of success for anyone

contemplating the journey of social entrepreneurship, and it may also be helpful for those considering investing innew social ventures.

Mastering the Art of Innovation: Greg Dees offers practical advice for nonprofit leaders about how to identifyinnovative opportunities, manage the tensions inherent to the innovation process, and build an innovative, adaptiveorganization.Chapter 7 in Enterprising Nonprofits: A Toolkit for Social Entrepreneurs, Dees, Emerson, & Economy (eds.), JohnWiley & Sons, 2001.

Responding to Market Failures: This note broadly defines the concept of market failure and explores options forresponding to it, paying particular attention to the role of business leaders in addressing market deficiencies.(Harvard Business School Publishing, 9-396-344, 1996.)

Note on Starting a Nonprofit Venture: This note provides anyone considering starting a nonprofit organization with abasic understanding of the nature of nonprofit status, tax and regulatory issues for nonprofits, and the distinctivemanagement challenges associated with a nonprofit start-up.(Harvard Business School Publishing, 9-391-096.)

Social Entrepreneurship Theory and Research

Social Ventures as Learning LaboratoriesIn this article, Greg Dees argues that, in the wake of the financial crisis, we need entrepreneurship that createsgreater long-term value while drawing on fewer resources and generating fewer destructive consequences.Financial pressures cause social problems to become even more pressing, and social entrepreneurs can help put usback on a path to inclusive prosperity. Dees argues that social entrepreneurs serve as learning laboratories forsociety they develop, test, and refine innovative solutions in ways that established organizations (with inherentbiases, bureaucracy, cultures and commitments) cannot do as effectively. This publication was originally written for aspecial edition ofInnovations distributed at the 2009 World Economic Forum meeting but was recently updated andre-published in Tennessees Business (Vol 20, No 1, May 2011).

Framing a Theory of Social Entrepreneurship: Building on Two Schools of Practice and Thought: Greg Deesand Beth Anderson trace the evolution of two primary schools of thought and practice that have defined the field ofsocial entrepreneurship, arguing that the most promising arena for academic inquiry lies at the intersection of the"Social Enterprise" and "Social Innovation" schools, around "enterprising social innovation."Research on Social Entrepreneurship: Understanding and Contributing to an Emerging Field, a special volume fromtheAssociation for Research on Nonprofit Organizations and Voluntary Action (ARNOVA), funded by the UPSFoundation

Rhetoric, Research, and Reality: Building a Solid Foundation for the Practice of Social Entrepreneurship: BethAnderson and Greg Dees raise questions about some of the rhetoric around earned income strategies in arguingthat the nascent field of social entrepreneurship needs to build a strong foundation of rigorous, yet practically-oriented, research, particularly by engaging business school researchers. Chapter 7 in the forthcoming book SocialEntrepreneurship: New Paradigms of Sustainable Social Change, Alex Nicholls (ed.), Oxford University Press.

Social Entrepreneurs and Education:Greg Dees responds to articles in a special issue of the journal CurrentIssues in Comparative Education, in which the contributors were asked to respond to his earlier piece on TheMeaning of Social Entrepreneurship. CurrentIssues in Comparative Education, vol. 8 no. 1, December 1, 2005