Enterprise and Small Business Principles

The entrepreneurial dimension

The entrepreneurial dimension of social entrepreneurship is often articulated in terms of the established conceptualisation of the commercial, private-sector entrepreneur. Research into the latter has typically focused on two analytic fields: the character­istics and personal traits of the entrepreneurial individual (‘who the entrepreneur is’ (McClelland, 1961; Brockhaus, 1980)); and the entrepreneurial activities of an indi­vidual, group or venture (‘what the entrepreneur does’ (Gartner, 1988; Kent et al., 1982)). The two approaches are sometimes united in an entrepreneurial paradigm centred on unexpected opportunity recognition and its creative exploitation (e. g. Shane and Venkataraman, 2000: 18; also see Drucker, 1985).

At the individual level of analysis, there has been much written about the entre­preneur as a uniquely skilled leader and innovator - something of a ‘business hero’ - with outstanding personal traits (Venkataraman, 1997; Gartner, 1988) (see Chapter 8 for a discussion of entrepreneurial traits). Casson (1982: 23) defined the entrepreneur as ‘someone who specialises in taking judgemental decisions about the co-ordination of scarce resources’ and who has ‘imagination and foresight and skill in organising and delegating work’. Much work to date on social entrepreneurship has also focused on the individual social entrepreneur as ‘hero’ via, at times, somewhat hagiographic biographical accounts of their life and works, often in case study format (Leadbeater, 1997; Alter, 2002; Boschee, 2001a; Bornstein, 2004). Drayton (2002) located the spe­cial creativity found in many social entrepreneurs at the level of personal traits, while other writers have highlighted their unique leadership skills (Henton et al., 1997; Thompson et al., 2000). Furthermore, two important support and connecting mechan­isms for social entrepreneurs, Ashoka and the Schwab Foundation, also reinforce this individual level of focus by their international activities centred on identifying out­standing social leaders to join their networks as publicly celebrated ‘fellows’.

Despite the socially entrepreneurial individual or group sharing much in common with the conventional paradigm, particularly leadership, vision, drive and opportun­ism, a focus on the individual social entrepreneur’s traits reveals greater complexity. The most significant issue here is the inclusion a priori of a ‘socio-moral motivation’ or social mission focus in the entrepreneurial activity and ambition (Casson, 1994: 3). Emerson and Twersky (1996: 2-3) noted: ‘Social entrepreneurs have their roots in the history of community service and development. This history of commitment to social justice and economic empowerment is what feeds their passion for the creation of social purpose business ventures.’

The presence of an over-riding mission focus is, therefore, the critical differenti­ator between conventional, commercial, models of entrepreneurship and social entre­preneurship. Bornstein (1998) highlighted the social entrepreneur’s particular ethical make-up and passionate mission zeal as being key (see also Boschee, 1995). Catford (1998) also identified a strong commitment to social justice as being a defining char­acteristic. Finally, Dees (1998a) stressed the central importance of a social mission as the driving force behind social entrepreneurship. The boundaries of this social com­ponent are considered in more detail in the next section.

In the spirit of the second level of analysis of the commercial entrepreneur (the opera­tional), there is also some literature that takes a more process-oriented approach to interpreting the socially entrepreneurial paradigm (Dees, 1998a; Dees and Elias, 1998; Dees et al., 2001, 2002; Dees and Battle Anderson, 2002; Dees et al., 2004; Alter, 2000; Boschee et al., 2000; Thompson et al., 2000). For example, Dees’s (1998a) ana­lysis specifically drew upon existing economic conventions of entrepreneurial activity to frame his research in operational terms. Thus, where Say (2001) noted that a suc­cessful entrepreneur often creates new value by shifting economic resources out of an area of lower yield and into an area of higher productivity and greater yield, Dees sug­gested that social entrepreneurs also create new (social) value by marshalling resources effectively to address key issues. This also reflects Osbourne and Gaebler’s (1992: xix) assertion that ‘an entrepreneur. . . uses resources in new ways to maximise product­ivity and effectiveness’. Similarly, where Schumpeter (1980) identified innovation as being central to the entrepreneurial approach, declaring that the function of entre­preneurs was, above all, to reform or revolutionise the patterns of production, Dees pointed out that social entrepreneurs relentlessly search for new and better ways of delivering social value. Finally, where Drucker (1985) believed that an entrepreneur typically acts as a catalyst for change searching for new paradigms and exploiting them as new opportunities, it is clear that many social entrepreneurs also generate systemic social change in order to ensure the sustainability of their innovative interventions (e. g. micro-credit).

In what is perhaps the most widely quoted definition of social entrepreneurship, Dees (1998a: 4) drew on both established approaches to entrepreneurship (the indi­vidual and the operational) when he combined a focus on process achievements and an individual level of analysis centred on the priority given to special mission. Thus, he summed up the research in these terms: Social entrepreneurs play the role of change agents in the social sector, by:

■ adopting a mission to create and sustain social value (not just private value);

■ recognising and relentlessly pursuing new opportunities to serve that mission;

■ engaging in a process of continuous innovation, adaptation and learning;

■ acting boldly without being limited by resources currently in hand;

■ exhibiting a heightened sense of accountability to the constituencies served and for

the outcomes created.

Finally, a limited amount of work to date has specifically addressed the issue of oppor­tunity creation and recognition in social entrepreneurship (Austin et al., 2003; Dees and Battle Anderson, 2002; Dees et al., 2004; Sullivan Mort et al., 2003; Thompson, 2002) - see Chapter 7 for a fuller discussion of opportunity creation and recognition. Much of this work has developed new theoretical models that bring together multiple contextual elements to provide frameworks for strategic growth planning in a social setting. For example, Austin et al. (2003) focused on an analysis of the key differences between commercial and social entrepreneurship across four components behind suc­cessful growth: people; context; deals; opportunities. Guclu et al. (2002), on the other hand, developed a two-stage model of opportunity creation for social ventures that combined personal factors (defined as individual ‘social assets’) with operational issues (namely, developing a viable operating model, a convincing social impact theory, and an effective resource strategy).

However, despite this useful work to date, the true nature of the social ‘virtuous’ entrepreneur is not so easily captured (e. g. Sullivan Mort et al., 2003). The limits of the language and terminology of business when applied to social sector actors are revealed here. By attempting to adapt existing models of entrepreneurship to the new paradigm of social innovation, key features are sometimes left unexplored. For example, the per­vasive neo-liberal conceptualisation of the ‘market’ often fails appropriately to capture the negotiated and democratic structures of a properly functioning civil society (see, for example, Spinosa et al., 1997). Furthermore, theoretical approaches such as con­ventions theory (Wilkinson, 1997; Renard, 2002) and actor network analysis (Callon, 1986, 1999; Latour, 1993) have also challenged and reconfigured the economic mar­ket paradigm in a sociological context. Consequently, it is no surprise that established entrepreneurial models are only partial guides to understanding social entrepreneur­ship. Several key omissions can be seen.

First, while both commercial and social entrepreneurs are relentless networkers, highly skilled at building partnerships and valuable connections, the latter exploit net­works in a far broader range of contexts (Dennis, 2000; Blundel and Smith, 2001; BarNir and Smith, 2002) (see Chapter 16 for a fuller discussion of entrepreneurial networking). Social entrepreneurs engage with network activity not only to leverage resources and strengthen their own venture but also to deliver impact and create new social value. Key to this mind-set is a stakeholder world-view that prioritises max­imising positive impact across the web of external and internal actors connected to a social venture ahead of traditional strategic objectives such as organisational growth and maintaining competitive advantage. A deeper understanding of network models often informs social venture development, since effective mechanisms for social impact creation are rarely linear and purely transactional processes. A good example is Fair Trade where building social connections across a reconfigured value chain has delivered both a new trading model and a new consumption and marketing paradigm to deliver innovative social value (see Nicholls and Opal, 2005).

Secondly, social entrepreneurs operate in a more diverse and dynamic strategic land­scape than conventional businesses (see Chapter 21). While aiming never to compromise social mission, social entrepreneurs will look for alliances and sources of resources wherever they may be found most easily. Thus, many engage simultaneously with government, philanthropic institutions, the voluntary sector and banks, as well as the commercial market, to secure funding and other support where necessary. Similarly, social entrepreneurs will often exploit a range of organisational forms from charity to not-for-profit to commercial venture to maximise social value creation. For a social entrepreneur efficient social impact is the central strategic issue not the delivery mechan­ism. As a result, social entrepreneurs often view growth in a strategically different light from conventional entrepreneurs. For example, since they are focused primarily on social impact, rather than profit maximisation, the drive to scale may not always be relevant: maximum impact may best be achieved by staying small and local, deepening rather than broadening activities. Social entrepreneurs also move easily across sectors, often diversifying from their core mission to expand overall social value and increase resource flows. For example, the Furniture Resource Centre in Liverpool began as a furniture recycling, removal, and employment training social venture engaged with ‘social’ landlords, but diversified into community waste collection and recycling (Bulky Bob’s), retailing (among other things, partnering with Ben and Jerry’s ice cream), and finally - as its profile grew - into social sector consultancy (Cat’s Pyjamas).

Finally, in the spirit of Schumpeter, social entrepreneurs often search out the cre­ative destruction that will change the terms of engagement with respect to social issues for the better. They seek out the social spaces that the conventional commercial and welfare markets have failed to address and create new formulations of social capital through institutional change and innovation. Social entrepreneurs are, therefore, highly political in outlook (though not necessarily aligned party-politically) and are effective activists, campaigners and catalysts of wider change. The urge to change the terms of engagement within their own sectors, not for their own benefit, but for the benefit of their stakeholders, marks social entrepreneurs out again as quite distinct from their commercial corollaries. Indeed, the ultimate (though often unattainable) aim of many social ventures is to be so successful in addressing a social need that they effectively put themselves out of business. For example, if, in an ideal world, Oxfam could end global poverty it would no longer have a raison d’etre.