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სოციალური მეწარმეობა გრეგორი დი

The idea of ìsocial entrepreneurshipî has struck a  responsive chord. It is a phrase well suited to our  times. It combines the passion of a social mission  with an image of business-like discipline,  innovation, and determination commonly  associated with, for instance, the high-tech  pioneers of Silicon Valley. The time is certainly  ripe for entrepreneurial approaches to social  problems. Many governmental and philanthropic  efforts have fallen far short of our expectations.  Major social sector institutions are often viewed  as inefficient, ineffective, and unresponsive.  Social entrepreneurs are needed to develop new  models for a new century.  

The language of social entrepreneurship may be  new, but the phenomenon is not. We have always  had social entrepreneurs, even if we did not call  them that. They originally built many of the  institutions we now take for granted. However,  the new name is important in that it implies a  blurring of sector boundaries. In addition to  innovative not-for-profit ventures, social  entrepreneurship can include social purpose  business ventures, such as for-profit community  development banks, and hybrid organizations  mixing not-for-profit and for-profit elements, such  as homeless shelters that start businesses to train  and employ their residents. The new language  helps to broaden the playing field. Social  entrepreneurs look for the most effective methods  of serving their social missions.  

Though the concept of ìsocial entrepreneurshipî  is gaining popularity, it means different things to  different people. This can be confusing. Many  associate social entrepreneurship exclusively with  not-for-profit organizations starting for-profit or  earned-income ventures. Others use it to describe  anyone who starts a not-for-profit organization.  Still others use it to refer to business owners who  integrate social responsibility into their  operations. What does ìsocial entrepreneurshipî  really mean? What does it take to be a social  entrepreneur? To answer these questions, we  should start by looking into the roots of the term  ìentrepreneur.î  

Origins of the Word ìEntrepreneurî  

In common parlance, being an entrepreneur is  associated with starting a business, but this is a  very loose application of a term that has a rich  history and a much more significant meaning.  The term ìentrepreneurî originated in French  economics as early as the 17th and 18th  centuries. In French, it means someone who  ìundertakes,î not an ìundertakerî in the sense of  a funeral director, but someone who undertakes a  significant project or activity. More specifically,  it came to be used to identify the venturesome  individuals who stimulated economic progress by  finding new and better ways of doing things. The  French economist most commonly credited with  giving the term this particular meaning is Jean  Baptiste Say. Writing around the turn of the 19th century, Say put it this way, ìThe entrepreneur  shifts economic resources out of an area of lower  and into an area of higher productivity and  greater yield.î Entrepreneurs create value.  

In the 20th century, the economist most closely  associated with the term was Joseph Schumpeter.  He described entrepreneurs as the innovators who  drive the ìcreative-destructiveî process of  capitalism. In his words, ìthe function of  entrepreneurs is to reform or revolutionize the  pattern of production.î They can do this in many  ways: ìby exploiting an invention or, more  generally, an untried technological possibility for  producing a new commodity or producing an old  one in a new way, by opening up a new source of  supply of materials or a new outlet for products,  by reorganizing an industry and so on.î  Schumpeterís entrepreneurs are the change  agents in the economy. By serving new markets  or creating new ways of doing things, they move  the economy forward.  

It is true that many of the entrepreneurs that Say  and Schumpeter have in mind serve their function  by starting new, profit-seeking business ventures,  but starting a business is not the essence of  entrepreneurship. Though other economists may  have used the term with various nuances, the  Say-Schumpeter tradition that identifies 

entrepreneurs as the catalysts and innovators  behind economic progress has served as the  foundation for the contemporary use of this  concept.  

Current Theories of Entrepreneurship  

Contemporary writers in management and  business have presented a wide range of theories  of entrepreneurship. Many of the leading thinkers  remain true to the Say-Schumpeter tradition while  offering variations on the theme. For instance, in  his attempt to get at what is special about  entrepreneurs, Peter Drucker starts with Sayís  definition, but amplifies it to focus on  opportunity. Drucker does not require  entrepreneurs to cause change, but sees them as  exploiting the opportunities that change (in  technology, consumer preferences, social norms,  etc.) creates. He says, ìthis defines entrepreneur  and entrepreneurshipóthe entrepreneur always  searches for change, responds to it, and exploits it  as an opportunity.î The notion of ìopportunityî  has come to be central to many current definitions  of entrepreneurship. It is the way todayís  management theorists capture Sayís notion of  shifting resources to areas of higher yield. An  opportunity, presumably, means an opportunity to  create value in this way. Entrepreneurs have a  mind-set that sees the possibilities rather than the  problems created by change.  

For Drucker, starting a business is neither  necessary nor sufficient for entrepreneurship. He  explicitly comments, ìNot every new small  business is entrepreneurial or represents  entrepreneurship.î He cites the example of a  ìhusband and wife who open another delicatessen  store or another Mexican restaurant in the  American suburbî as a case in point. There is  nothing especially innovative or change-oriented  in this. The same would be true of new not-for profit organizations. Not every new organization  would be entrepreneurial. Drucker also makes it  clear that entrepreneurship does not require a  profit motive. Early in his book on Innovation and  Entrepreneurship, Drucker asserts, ìNo better text  for a History of Entrepreneurship could be found  than the creation of the modern university, and  especially the modern American university.î He  then explains what a major innovation this was at  

the time. Later in the book, he devotes a chapter to  entrepreneurship in public service institutions.  

Howard Stevenson, a leading theorist of  entrepreneurship at Harvard Business School,  added an element of resourcefulness to the  opportunity-oriented definition based on research  he conducted to determine what distinguishes  entrepreneurial management from more common  forms of ìadministrativeî management. After  identifying several dimensions of difference, he  suggests defining the heart of entrepreneurial  management as ìthe pursuit of opportunity  without regard to resources currently controlled.î  He found that entrepreneurs not only see and  pursue opportunities that elude administrative  managers; entrepreneurs do not allow their own  initial resource endowments to limit their options.  To borrow a metaphor from Elizabeth Barrett  Browning, their reach exceeds their grasp.  Entrepreneurs mobilize the resources of others to  achieve their entrepreneurial objectives.  Administrators allow their existing resources and  their job descriptions to constrain their visions and  actions. Once again, we have a definition of  entrepreneurship that is not limited to business  start-ups.  

Differences between Business and Social  Entrepreneurs  

The ideas of Say, Schumpeter, Drucker, and  Stevenson are attractive because they can be as  easily applied in the social sector as the business  sector. They describe a mind-set and a kind of  behavior that can be manifest anywhere. In a  world in which sector boundaries are blurring, this  is an advantage. We should build our  understanding of social entrepreneurship on this  strong tradition of entrepreneurship theory and  research. Social entrepreneurs are one species in  the genus entrepreneur. They are entrepreneurs  with a social mission. However, because of this  mission, they face some distinctive challenges and  any definition ought to reflect this.  

For social entrepreneurs, the social mission is  explicit and central. This obviously affects how  social entrepreneurs perceive and assess  opportunities. Mission-related impact becomes the  central criterion, not wealth creation. Wealth is 

just a means to an end for social entrepreneurs.  With business entrepreneurs, wealth creation is a  way of measuring value creation. This is because  business entrepreneurs are subject to market  discipline, which determines in large part whether  they are creating value. If they do not shift  resources to more economically productive uses,  they tend to be driven out of business.  

Markets are not perfect, but over the long haul,  they work reasonably well as a test of private  value creation, specifically the creation of value  for customers who are willing and able to pay. An  entrepreneurís ability to attract resources (capital,  labor, equipment, etc.) in a competitive  marketplace is a reasonably good indication that  the venture represents a more productive use of  these resources than the alternatives it is  competing against. The logic is simple.  Entrepreneurs who can pay the most for resources  are typically the ones who can put the resources to  higher valued uses, as determined in the  marketplace. Value is created in business when  customers are willing to pay more than it costs to  produce the good or service being sold. The profit  (revenue minus costs) that a venture generates is a  reasonably good indicator of the value it has  created. If an entrepreneur cannot convince a  sufficient number of customers to pay an adequate  price to generate a profit, this is a strong  indication that insufficient value is being created  to justify this use of resources. A re-deployment  of the resources happens naturally because firms  that fail to create value cannot purchase sufficient  resources or raise capital. They go out of business.  Firms that create the most economic value have  the cash to attract the resources needed to grow.  

Markets do not work as well for social  entrepreneurs. In particular, markets do not do a  good job of valuing social improvements, public  goods and harms, and benefits for people who  cannot afford to pay. These elements are often  essential to social entrepreneurship. That is what  makes it social entrepreneurship. As a result, it is  much harder to determine whether a social  entrepreneur is creating sufficient social value to  justify the resources used in creating that value.  The survival or growth of a social enterprise is not  proof of its efficiency or effectiveness in  

improving social conditions. It is only a weak  indicator, at best.  

Social entrepreneurs operate in markets, but these  markets often do not provide the right discipline.  Many social-purpose organizations charge fees for  some of their services. They also compete for  donations, volunteers, and other kinds of support.  But the discipline of these ìmarketsî is frequently  not closely aligned with the social entrepreneurís  mission. It depends on who is paying the fees or  providing the resources, what their motivations  are, and how well they can assess the social value  created by the venture. It is inherently difficult to  measure social value creation. How much social  value is created by reducing pollution in a given  stream, by saving the spotted owl, or by providing  companionship to the elderly? The calculations  are not only hard but also contentious. Even when  improvements can be measured, it is often  difficult to attribute an them to a specific  intervention. Are the lower crime rates in an area  due to the Block Watch, new policing techniques,  or just a better economy? Even when  improvements can be measured and attributed to a  given intervention, social entrepreneurs often  cannot capture the value they have created in an  economic form to pay for the resources they use.  Whom do they charge for cleaning the stream or  running the Block Watch? How do they get  everyone who benefits to pay? To offset this  value-capture problem, social entrepreneurs rely  on subsidies, donations, and volunteers, but this  further muddies the waters of market discipline.  The ability to attract these philanthropic resources  may provide some indication of value creation in  the eyes of the resource providers, but it is not a  very reliable indicator. The psychic income  people get from giving or volunteering is likely to  be only loosely connected with actual social  impact, if it is connected at all.  

Defining Social Entrepreneurship  

Any definition of social entrepreneurship should  reflect the need for a substitute for the market  discipline that works for business entrepreneurs.  We cannot assume that market discipline will  automatically weed out social ventures that are  not effectively and efficiently utilizing resources.  The following definition combines an emphasis 

on discipline and accountability with the notions  of value creation taken from Say, innovation and  change agents from Schumpeter, pursuit of  opportunity from Drucker, and resourcefulness  from Stevenson. In brief, this definition can be  stated as follows:  

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),  

• Recognizing 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, and  

• Exhibiting heightened accountability to the  constituencies served and for the outcomes  created.  

This is clearly an ìidealizedî definition. Social  sector leaders will exemplify these characteristics  in different ways and to different degrees. The  closer a person gets to satisfying all these  conditions, the more that person fits the model of  a social entrepreneur. Those who are more  innovative in their work and who create more  significant social improvements will naturally be  seen as more entrepreneurial. Those who are truly  Schumpeterian will reform or revolutionize their  industries. Each element in this brief definition  deserves some further elaboration. Letís consider  each one in turn.  

Change agents in the social sector: Social  entrepreneurs are reformers and revolutionaries,  as described by Schumpeter, but with a social  mission. They make fundamental changes in the  way things are done in the social sector. Their  visions are bold. They attack the underlying  causes of problems, rather than simply treating  symptoms. They often reduce needs rather than  just meeting them. They seek to create systemic  changes and sustainable improvements. Though  they may act locally, their actions have the  potential to stimulate global improvements in  their chosen arenas, whether that is education,  health care, economic development, the  environment, the arts, or any other social field.  

Adopting a mission to create and sustain social  value: This is the core of what distinguishes social  entrepreneurs from business entrepreneurs even  from socially responsible businesses. For a social  entrepreneur, the social mission is fundamental.  This is a mission of social improvement that  cannot be reduced to creating private benefits  (financial returns or consumption benefits) for  individuals. Making a profit, creating wealth, or  serving the desires of customers may be part of  the model, but these are means to a social end, not  the end in itself. Profit is not the gauge of value  creation; nor is customer satisfaction; social  impact is the gauge. Social entrepreneurs look for  a long-term social return on investment. Social  entrepreneurs want more than a quick hit; they  want to create lasting improvements. They think  about sustaining the impact.  

  

Recognizing and relentlessly pursuing new  opportunities: Where others see problems, social  entrepreneurs see opportunity. They are not  simply driven by the perception of a social need  or by their compassion, rather they have a vision  of how to achieve improvement and they are  determined to make their vision work. They are  persistent. The models they develop and the  approaches they take can, and often do, change, as  the entrepreneurs learn about what works and  what does not work. The key element is  persistence combined with a willingness to make  adjustments as one goes. Rather than giving up  when an obstacle is encountered, entrepreneurs  ask, ìHow can we surmount this obstacle? How  can we make this work?î  

Engaging in a process of continuous innovation,  adaptation, and learning: Entrepreneurs are  innovative. They break new ground, develop new  models, and pioneer new approaches. However, as  Schumpeter notes, innovation can take many  forms. It does not require inventing something  wholly new; it can simply involve applying an  existing idea in a new way or to a new situation.  Entrepreneurs need not be inventors. They simply  need to be creative in applying what others have  invented. Their innovations may appear in how  they structure their core programs or in how they  assemble the resources and fund their work. On  the funding side, social entrepreneurs look for  innovative ways to assure that their ventures will 

have access to resources as long as they are  creating social value. This willingness to innovate  is part of the modus operandi of entrepreneurs. It  is not just a one-time burst of creativity. It is a  continuous process of exploring, learning, and  improving. Of course, with innovation comes  uncertainty and risk of failure. Entrepreneurs tend  to have a high tolerance for ambiguity and learn  how to manage risks for themselves and others.  They treat failure of a project as a learning  experience, not a personal tragedy.  

Acting boldly without being limited by resources  currently in hand: Social entrepreneurs do not let  their own limited resources keep them from  pursuing their visions. They are skilled at doing  more with less and at attracting resources from  others. They use scarce resources efficiently, and  they leverage their limited resources by drawing  in partners and collaborating with others. They  explore all resource options, from pure  philanthropy to the commercial methods of the  business sector. They are not bound by sector  norms or traditions. They develop resource  strategies that are likely to support and reinforce  their social missions. They take calculated risks  and manage the downside, so as to reduce the  harm that will result from failure. They  understand the risk tolerances of their  stakeholders and use this to spread the risk to  those who are better prepared to accept it.  

Exhibiting a heightened sense of accountability to  the constituencies served and for the outcomes  created: Because market discipline does not  automatically weed out inefficient or ineffective  social ventures, social entrepreneurs take steps to  assure they are creating value. This means that  they seek a sound understanding of the  constituencies they are serving. They make sure  they have correctly assessed the needs and values  of the people they intend to serve and the  communities in which they operate. In some  cases, this requires close connections with those  communities. They understand the expectations  and values of their ìinvestors,î including anyone  who invests money, time, and/or expertise to help  them. They seek to provide real social  improvements to their beneficiaries and their  communities, as well as attractive (social and/or  financial) return to their investors. Creating a fit  

between investor values and community needs is  an important part of the challenge. When feasible,  social entrepreneurs create market-like feedback  mechanisms to reinforce this accountability. They  assess their progress in terms of social, financial,  and managerial outcomes, not simply in terms of  their size, outputs, or processes. They use this  information to make course corrections as needed.  

Social Entrepreneurs: A Rare Breed  

Social entrepreneurship describes a set of  behaviors that are exceptional. These behaviors  should be encouraged and rewarded in those who  have the capabilities and temperament for this  kind of work. We could use many more of them.  Should everyone aspire to be a social  entrepreneur? No. Not every social sector leader is  well suited to being entrepreneurial. The same is  true in business. Not every business leader is an  entrepreneur in the sense that Say, Schumpeter,  Drucker, and Stevenson had in mind. While we  might wish for more entrepreneurial behavior in  both sectors, society has a need for different  leadership types and styles. Social entrepreneurs  are one special breed of leader, and they should be  recognized as such. This definition preserves  their distinctive status and assures that social  entrepreneurship is not treated lightly. We need  social entrepreneurs to help us find new avenues  toward social improvement as we enter the next  century.  

Note: Professor Dees is the Faculty Director of  the Center for the Advancement of Social  Entrepreneurship at Duke Universityís Fuqua  School of Business. At the time this was written,  he was the Miriam and Peter Haas Centennial  Professor in Public Service at Stanfordís  Graduate School of Business and an  Entrepreneur-In-Residence with the Kauffman  Center for Entrepreneurial Leadership.  

The Kauffman Foundation provided the funding  for this paper. The paper benefited tremendously  from comments and suggestions by the members  of the Social Entrepreneurship Funders Working  

Group, particularly Suzanne Aisenberg, Morgan  Binswanger, Jed Emerson, Jim Pitofsky, Tom  Reis, and Steve Roling.