Introduction
Developing and underdeveloped economies make up more than 80 percent of the world's population. Most people living in these economies are at the bottom of the socio-economic pyramid (Esposito, 2012), often called the Base of the Pyramid (BoP). Of the nearly five billion people in this category, approximately 60 percent of the population are poor by any measure, live and function in an informal market ecosystem, and earn less than $8 per person per day. The BoP segment faces persistent poverty and a huge demand-supply gap in the formal market ecosystem for the fulfillment of its basic needs.
Unfortunately, the initiatives undertaken by the traditional institutional constructs like government agencies, non-government organizations (NGOs), non-profit organizations, and socially motivated corporate entities have achieved limited success in bridging the socio-economic gap or in generating the desired level of social impact, scalability, and reach for the BoP. These limitations have led to the evolution of social entrepreneurship as an emerging market-based alternative for having a scalable socio-economic impact on the BoP. Social entrepreneurship involves a social entrepreneur as a change agent and a social enterprise as an organizational entity that considers the BoP segment as its primary stakeholder or customer. These enterprises are driven by the philosophy of "Serve and Survive at the BoP."
To emphasize a point made earlier, we are faced with numerous threats and systemic challenges of global proportions today, including the degradation of the quality and accessibility of our education system; escalating race and gender inequality; worsening poverty; a serious public health crisis; the deterioration of the supply of clean water; climate change and other threats to our environmental sustainability; numerous human rights issues; and the potentially negative societal impacts of the technology revolution, including generative AI, if left uncontrolled, unmanaged, and unregulated. In addition to the global economic, social, and material progress required, the individual transition from knowledge to wisdom, attained from greater focus on self-inquiry and intellectual growth, connecton with nature, living a healthy lifestyle, and advancing collective welfare, is essential for human and societal evolution. Governments and corporations have largely ignored many of these challenges. Therefore, enterprises have emerged to provide scalable and replicable solutions to help address the world's biggest challenges. This development signals the need for more and perhaps a different breed of social entrepreneurs and enterprises to tackle these global and systemic issues.
Having experienced and observed some of these challenges firsthand, social entrepreneurs undoubtedly face numerous challenges in launching and operating a social enterprise. Meeting these challenges requires a great deal of agility, creativity, resilience, and tenacity in managing and mitigating the obstacles and addressing the various tensions and trade-offs that result from it. Oftentimes, these challenges can become insurmountable, or the social entrepreneur may simply not be equipped to deal with them, resulting in the failure of the social entrepreneur and/or the social enterprise. Before we begin to explore these topics further, it is important to first understand the meaning of social entrepreneurship.
The field of social entrepreneurship has sparked a great deal interest over the past decade, although much of the research has often been skewed towards the non-profit and public policy sectors. However, the concept of social entrepreneurship encompasses a wide range of activities, including socially conscious individuals and entrepreneurs committed to having a positive impact in society; socially motivated business ventures focused on creating shareholder value while also creating social value in the communities they serve; non-profit organizations applying lessons learned from the business world to cultivate and forge partnerships to have a stronger and scalable social impact; and high net worth individuals supporting a specific social cause or causes through their own foundation or through other social platforms.
Social Entrepreneurship Defined
The terms social entrepreneur and social entrepreneurship were first used by H. Bowen in 1953 in his book Social Responsibilities of the Businessman, which introduced business ethics and social responsibility as foundational for businesses and business leaders. The term social entrepreneurship was later popularized in the 1980s by Bill Drayton, founder and CEO of Ashoka, who is often referred to as the Father of Social Entrepreneurship (by the way, I was thrilled to have Bill as one of the interviewees for my research and will expand on our discussion in a later chapter). The definition of social entrepreneurship has evolved further over the past few decades through various research studies. The term has become more expansive, in that it includes innovative activities that create social value that can occur within or across the non-profit, business, and public sectors (Austin, Stevenson, & Wei-Skillern, 2006). Mair and Marti (2006) expanded on the definition of social entrepreneurship as a means to catalyze social change and address social problems by combining resources and applying creativity and innovation in pursuit of social reform. Social enterprises that operate as non-profit organizations are considered tax-exempt or charitable, meaning they do not pay income tax on the money that they receive or the revenue they generate. Typically, they reinvest all donations and net earnings back into the organization to promote social change.
As recently as a decade ago, social entrepreneurship was considered a new phenomenon; however, social entrepreneurial and non-profit organizations have become important structures that deliver services to parts of society that governments fail to reach and that markets choose to ignore (Salamon & Anheier, 1998). They attempt to drive societal transformations by identifying social issues and then galvanizing the community, like-minded partners, industry leaders, and the government sector to address systemic issues.
A social enterprise can operate in various forms, the most prevalent being (1) building the capacity to solve a broad set of social issues; (2) developing products or services to tackle specific social problems; and/or (3) championing advocacy to tackle a specific topic of public interest in order to change policy. To appreciate the framework and construct of a social enterprise, it is helpful to understand where it intersects with other forms of business ventures.
As Figure 1 illustrates, between the two primary forms of business ventures - traditional for-profit and traditional non-profit businesses - there are hybrid business ventures that include non-profit social enterprises and for-profit social enterprises. Social entrepreneurship is a form of business venture that may include for-profit businesses with a social mission as well as social non-profit businesses that may partially rely on their own revenue stream to fund their programs and platforms. Hence, a social enterprise can operate in various forms, with the primary goal of creating social value and having an impact through activities that include building the capacity to solve a broad set of social issues; developing products or services to tackle specific social problems; and advocacy to tackle a specific topic or set of topics of public interest in order to affect policy change.
Figure 1. Forms of Business Ventures
In the current business environment, with enhanced social and environmental awareness, firms are expected to increase shareholder value through profits while also increasing social value by promoting corporate social responsibility. When an enterprise is formed as a social entrepreneurial firm, a deliberate decision is made to integrate social consciousness into the business model, incorporating the goals of revenue generation, social awareness, and impact, with environmental considerations.
Whether the emergence of the social entrepreneurial model results from personal consciousness to pursue social responsibility or increased public awareness and pressure to demand social and environmental responsibilities from corporations, social entrepreneurship has been viewed as a business model with a continuum of objectives ranging from a purely social mission through combinations of social and profit motives. Clearly, the definition of social entrepreneurship has evolved over time. I personally like the definition put forth by Austin, Stevenson, and Wei-Skillern (2006), who defined social entrepreneurship as innovative social value creating activities that can occur within or across the non-profit, business, and public sectors. However, social entrepreneurship is best enabled by the innovative and pattern-breaking individuals that comprise them. This is why I feel it is also important to understand the leadership characteristics of a social entrepreneur that extend beyond those of the traditional entrepreneur. Social entrepreneurs embody greater empathy, emotional intelligence, and selflessness, and are driven by a stronger moral compass and sense of obligation to serve society and humanity at large. More on this in Chapters 15-21.
Social entrepreneurs and enterprises play an important role in the social change framework, as shown in Figure 2, which places global and social needs and opportunities at its center....
