Enterprise and Small Business Principles

Drivers of social entrepreneurship

A range of diverse drivers behind the rise of social entrepreneurship in its modern form may be discerned (Bornstein, 2004: 6-10). On the demand side, these include a series of global crises ranging from the environment (global warming, mass extinctions and depleted resources) to health (the HIV/AIDS pandemic affecting over 100 million glob­ally by 2010) to the economic (significant increases in inequality with the poorest 50% accounting for 5% of global income). These crises have been further compounded by social market failures that have seen mounting government inefficiencies in public service delivery across the globe at the same time as a strategic retreat from the public sector by many governments in face of free-market ideologies. At the same time there has been a significant increase in the scope of corporate power; for example, by 2003 the top 300 multi-national corporations accounted for 25% of total global assets.

According to Bornstein (2004) there have also been significant changes in the sup­ply side of social entrepreneurship throughout the twentieth century, particularly in northern countries. For example, the century saw a 700% increase in per capita income in developed market economies that led to the emergence of a widespread middle class. Such growth was particularly marked in the 1960s and 1970s when the global eco­nomy grew, on average, at 5% per year. This rise in the spread of wealth combined with relentless technological innovation also increased productive life expectancy for many. In the richer countries, average life expectancy increased by 30 years between 1900 and 2000; in poorer countries the increase was an even more startling 40 years. The combination of these two factors generated significant new resources (i. e. more relatively wealthy people with more free time) to address social issues.

Societal changes across many countries also played an important part. For example, basic education was made available to millions of people in many countries for the first time from the 1970s onwards, such that from 1970 to 1985 adult literacy rates rose from 43% to 60% in developing countries (Salamon, 1994: 118). The number of universities in the world also doubled during this period. Thus, the number of people empowered with the knowledge and training to tackle social problems grew enorm­ously. The rise in availability of affordable information technology and the communica­tions revolution spurred by the Internet have also empowered individuals significantly and greater citizen self-confidence has been the result.

The number of citizens groups working across the public-private sectors has duly expanded dramatically. For example, in a study of eight developed countries, employ­ment in the citizen sector was found to have grown at more than twice the rate of the overall economy between 1990 and 1995 (Salamon and Anheier, 1999). In 2003, the Global Entrepreneurship Monitor study (Harding and Cowling, 2004: 5) suggested that 6.6% of UK adults were engaged with social start-up activity (ahead of the level for commercial, entrepreneurial activity). Indeed, the global aggregate expenditures of the civil society sector amounted to £0.69 trillion by the late 1990s, making it the seventh largest global economy by GDP ahead of Italy in eighth place (Salamon et al., 2003: 13). Whilst many of these NGO and not-for-profit ventures lack the innovation and risk-taking qualities of true social entrepreneurship they act, nevertheless, as a valuable bellwether of the structural shifts across societies that are generating many new social entrepreneurs.

The transfer of wealth from individuals to foundations resultant from the 1990s technology boom centred on Silicon Valley in the US has also played an important role in providing new funding resources for entrepreneurial social ventures. According to The Economist (2004) the number of charitable foundations registered in the US has risen from 22,000 in the early 1980s to 65,000 today. The same article noted that it has been estimated that the value of the wealth to be transferred in the US over the next 50 years will be more than the entire current global GDP (somewhere between £22 trillion and £72 trillion). Furthermore, new foundations such as that set up by Jeff Skoll the co-founder of eBay, often pursue a venture philanthropy approach that views giving as an investment and demands measurable social returns. Such an approach is highly congruent with socially entrepreneurial solutions to social issues.

Finally, there are several important institutional developments that have contributed to the growth in the supply side of social entrepreneurs. The most important of these has been the gradual spread of neo-liberal democracy across the globe. Since the early 1990s, most notably following the seismic shift in Eastern Europe after the collapse of the Soviet Union, there has been a steady increase in the number of democratically elected governments across the world. Whilst not all of these governments have proved to be effective, particularly in terms of economic policies, this shift towards a broad acceptance of the value of democracy has generally allowed social actors the space to operate in freedom and safety. For example, the inchoate Fair Trade movement in the Philippines had to function under severe military persecution throughout the 1970s and 1980s, with many of its organisers being jailed for their actions as ‘subversives’. Today, happily, the movement is thriving in a more democratic, though still far from ideal, environment.

Internationally, the development of social entrepreneurship has also been given other institutional support, most notably by Ashoka, the Schwab Foundation and the Skoll Foundation. An ex-McKinsey and Company consultant, Bill Drayton, started Ashoka in 1982. Ashoka identifies ‘fellows’ around the world and provides a powerful network of supporting opportunities. The venture started in India and has subse­quently expanded to the rest of Asia, Latin America, Africa and, more recently, to the US (in 2000) and in Continental Europe (in 2003). Today, Ashoka supports more than 1,400 fellows in 48 countries. The Schwab Foundation grew out of the World Economic Forum (WEF) in 2001 and aims to publicise social entrepreneurship while offering practical support to social entrepreneurs via a stipend and access to the business and political elite at its annual World Summit in Social Entrepreneurship and the WEF’s annual meeting in Davos, Switzerland. Finally, the Skoll Foundation, based in California, also celebrates social innovation that challenges conventional paradigms to generate social value via a substantial grant programme.

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