Definition of Social Entrepreneurship
Social entrepreneurship is a new and evolving concept. It refers to a a specific corporate and business model that intends to yield social and charitable benefits besides pursuing the maximization of profits.
Breaking Down Social Entrepreneurship
There are many discussions and theories around this term. While some regard as social entrepreneurs owners of for-profit companies as well as CEOs of charities and nonprofit, others strongly disagree. The latter, on the other hand, firmly believe that the very meaning of S.E. is more related to a for profit and corporation dimension. That is, it’s a concept that defines the mission of those companies that provide innovative and useful goods or services with a social value. Moreover, such a business usually relies on a modern and revolutionary organizational model that nourished and cherishes values such as employee engagement, environment, community. Moreover, it develops a sustainable production processes and methodology meant to reduce emissions, waste etc.
An example that illustrate this abstract concept could be a company that produce solar panels. They meet all the requirements of a social business:
- The status of a for-profit company
- Substantial capital investment in R&D for the development of new technologies
- A productive process that minimize costs, waste, pollution
- A whole new supply chain management
- A core business that relies on the capitalism concept of “commercial exchange”
- A core business that focuses on delivering a social and beneficial impact
Advantages and Disadvantages of Social Businesses
Social entrepreneurs usually develop innovative goods and processes that can benefit the community. Therefore, this bring about a sort of blend between profit maximization and social welfare.
There are may advantages coming from embarking in this market. First, you can generate and supply a large demand for a brand new product that doesn’t suffer from competitive ties. Secondly, developing innovative strategies and processes that minimizes waste and costs can allow you to aim at a long-term sustainability that many other for-profit companies will barely achieve.
However, it’s still a sector that strive to emerge and stand out. The reason is mainly finacial: shareholders and investors are indeed reluctant to give up on high dividends and market value growth (in the short-term) for the pursuit of ROS (return on SOCIETY). That is, this kind of companies usually have a hard time finding capitals to start their business.
Strictly related to the issue aforementioned is the phenomenon of ethical investment. More and more investors nowadays feels the need to deliver an impact with their money. That is, they are willing to invest in companies that perhaps offer an above-average return but a high return on society.
This financial operations doesn’t represent the norm yet, but rather the exception, due to the demand of short-term, easy and fast capital gain and a culture and tradition of speculation. Nevertheless, we are veering to an era where this practice will grow as more ordinary.
In summarize, while still subject to intense debate, the rise of social entrepreneurship doesn’t seem to stop any soon. Analyst and industry expert seems to place more importance on the topic. Moreover, stakeholders nowadays regard as urgent and pressing the question concerning CSR. Companies that show a genuine interest and commitment to social causes will outperform those who don’t. In the long term, they will attract investors and gain competitive advantage and sustainability.