Wei-Skilleren, J. C., Austin, J. E., Leonard, H. B., & Stevenson, H. H. (2007). Entrepreneurship in the social sector. Thousand Oaks: Sage Publications.
Overview: Entrepreneurship in the social sector
Social Entrepreneurship is a rapidly emerging field that has extended the concept of entrepreneurship by including (and in some cases emphasizing) the “social dimension” of entrepreneurial ventures. Although this concept is not new, relatively little has been written about social entrepreneurship as a theoretical concept. There has been a surge in interest in this field since Muhammad Yunus and the Gramin Bank of Bangladesh were awarded the Nobel Prize in 2006 for their efforts to create economic and social development from the bottom up. To my knowledge, “Entrepreneurship in the Social Sector” is the first comprehensive textbook that provides an analytical framework and case studies that mostly focus on examples from the USA. To produce efficient, effective, and sustainable social ventures, this book presents a broad conceptual framework by defining social entrepreneurship as “an innovative, social value-creating activity that can occur within or across the non-profit, business, or government sectors” (p. 4).
The book covers a wide range of topics such as the definition of social entrepreneurship, the social entrepreneurial process, financial sustainability of social entrepreneurial projects, creation of alliances in social entrepreneurial ventures, managing growth of social entrepreneurial ventures, assessing the impact of social entrepreneurial ventures. From a practitioner perspective, it can be regarded as a comprehensive collection of all the possible topics in the field of social entrepreneurship. However, the book is disproportionately oriented to practitioners and professionals, and can thus be aptly described as a practical guide for social entrepreneurs. Alter (2004) has touched upon all of the above-mentioned topics in more detail than in this book. Other researchers (for example, Henton et al., 1997; Thompson, 2002; Dees, Anderson, & Wei-Skillern, 2002) have written specifically and in considerably more detail about some of the aforementioned topics (e.g., definition, framework, and performance measurement). Thus when compared to the current state of the field of social entrepreneurship as an area for theoretical and empirical research, the authors neither add any new concepts nor extend any concepts in the existing literature.
Caveats
Additionally, there are two major caveats in the book that requires special mention that pertain to the definition and conceptual framework of social entrepreneurship. Firstly, the authors define social entrepreneurship as a social value-creating activity. Interestingly, they never define “social value”. This leaves the gate for interpretation wide open. One may then ask how we can distinguish a commercial organization generating social value (either directly or indirectly) from a non-profit organization whose motive is not profit. Can a pharmaceutical company be considered a social enterprise because of the life-saving drugs they develop, even though the drugs it produces are only available to those who can afford them? This lack of clarity in the meaning of “social value” permits almost any commercial organization to call itself a “social enterprise” even though there is nothing social about it.
Secondly, throughout the book, the authors use the concept of “social value” to be interchangeable with the concepts of “social change”, “social mission”, “social impact”, and “social returns”. Whereas there may be some relationship between these concepts, in most cases these concepts do not overlap considerably. For example, the Delancey Street Foundation is a residential education center where drug addicts, criminals, and the homeless learn to lead productive, crime-free lives. The organization has a high social impact on the lives of the people they serve, but they find it extremely difficult to create “social change” whereby these individuals are treated equally by the rest of the society. Moreover, “social change” may not be the same in all contexts. It can either be coercive or internalized. Such conceptual concerns weaken the foundational premises of the book.
In Chapter 2, the authors propose a new framework for social entrepreneurship (SE) adapted from William Sahlman’s framework of commercial entrepreneurship that stresses the fit between people, context, deal, and opportunity. However, there are considerable differences between the components of commercial entrepreneurship and SE (e.g., opportunity, people, capital, external context) and it is not clear whether such an adaption is fruitful. For instance, the authors identify opportunity, people, and capital as the key components of their SE framework to create social value. However, they undermine the new framework when they argue that social entrepreneurs are not bound by opportunity since they can pursue opportunities whether economically viable or not. Thompson (2002) argues that social entrepreneurs are generally not so strategic in evaluating their options. They are rather on a “voyage of self-discovery” and often have limited resources. They are driven by a cause or a need they have spotted rather than simply perceiving an opportunity in the system. If an opportunity were to be given such careful attention, it would be impossible for a social entrepreneur to intervene in the community or system where producing results are extremely challenging. The inability of non-profits and non-governmental organizations to produce quick results to demonstrate return on investments for funding donor organizations has been a major impediment in the design and implementation of programs to assist the poorest of the poor.
Equally different are the components of capital and people in social entrepreneurial ventures (SEVs). The authors highlight these differences effectively, “ …the cost of fund mobilizing for non-profits is estimated at around 18% versus around 3% for businesses” (p. 67). Similarly, the authors state, “….social entrepreneurs may often need work collaboratively with other non-profit organizations to attain the (human) capital that is critical for organizations” (p. 14). These differences are very interesting and are worth developing further in future research on the topic.
The last point that merits mention pertains to the external context of a SEV. The authors argue that although the context (e.g., interest rates, macroeconomic activities, government regulations, industry activity, labor markets, and socio-political environments) is an important factor for social intervention, social entrepreneurs can achieve some degree of success despite an inhospitable context since the impacts of these contextual factors are often ambiguous. It can be argued, however, that in some instances the presence of distinct contextual circumstances requires social entrepreneurs to be creative in their approach to address the specific need in that specific context. Neglecting or failing to take into account the divergent contextual circumstances can fail the intervention. Thus, context is a very important part of the design and implementation of SEVs and should be considered as one of the key components of the SE framework.
Strategies to navigate the philanthropic market
Chapter 3 highlights some very important strategies to navigate the philanthropic market. This is an excellent chapter that puts into context the financial opportunities available in the philanthropic market. This information is again extremely useful for those SEVs that primarily rely on donations and philanthropy. Some noteworthy strategies for social entrepreneurs mentioned in this chapter are: matching donor profiles to the mission of the organization, understanding the philanthropic market structure, equally benefiting from donations in cash or kind, as well as understanding social venture philanthropy, high engagement philanthropy, and e-philanthropy. The struggle for financial survival can potentially lead to dilution of the original mission of the SEV in cases where the mission or vision must be altered to align itself more with the donor’s profile and expectations. The authors emphasize the building of relationships based on trust and reputation when they say, “…fundraising success comes primarily from building relationships based on trust and reputation which can be completely disconnected from actual performance of the organization, a tactful balance that social entrepreneurs need to maintain” (p. 17).
Financial sustainability
The financial sustainability of the organization is another important topic addressed in chapter 4 of the book. This chapter provides some very interesting insights on portfolio management, the creation of entrepreneurial culture, diversification strategies, leveraging key assets, and types of organizational forms and capacities best suited for organizational financial sustainability. Through several examples, the authors stress the importance of being self-sustainable and carefully pricing the organization’s services for fees. These points are valid because the authors blur the boundaries between the aims and purposes of profit and not for profit organizations. However, not all researchers agree. Some researchers have argued that the motive of the organization is very important (e.g., Thompson, 2002) and an organization is only considered a social enterprise if its motive is not profit but the social mission. Such criticism raises serious questions about whether an organization that denies services to those who can not afford it can or should be considered a social enterprise. A critical distinction that may help in resolving this dilemma is defining the target beneficiary population. As long as the earned income activity does not compromise the social mission of the organization that organization may qualify as a social enterprise. That is, the target beneficiary population and the target market for services for fees should be different.
Increasing competition between and within non-profits and social entrepreneurs, demand for quick results, and work efficiency and effectiveness are pushing social enterprises to go for strategic alliances to increase collective capacity. Chapter 5 deals with crafting of such alliances. Human networks, financial networks, knowledge networks, and technological networks can contribute substantially to the achievement of the social mission, resource sharing, and sustainability of organizations. The authors demonstrate that the crafting of alliances can be extremely helpful if understood properly but can be disastrous if participating organizations have different foci and aims. Mismatch of mission and vision, undefined roles, mismatched values, and the inability to understand the short-term and long terms benefits of an alliance can be a serious threat to the organization’s mission. Challenges such as time and resources investment, initial lower return, and potential deviation from the social mission must be weighed to attain ecological depth in the long term. Mutually beneficial alliances are the ones that last the longest and benefit the organization as well as the society.
Growth
The growth of an organization is essential to increase the scale of the social mission. However, to define growth only in terms of expansion of services to other geographical locations as the authors do is somewhat narrow. Social impact can be scaled without growth as defined by the authors. For example, when the social entrepreneur shares his idea for solving a certain socio-environmental problem, the idea can be modified and implemented by others without the entrepreneur having to expand his organization to other locations. The authors also contend that growth is required for the sustainability of the SEV. However, sustainability through growth may not be possible or even desirable for those SEVs whose mission is defined to a narrow geographical boundary or contextual circumstances. Therefore, I believe that the diffusion of the original idea or innovation and helping other organizations to implement it would be the best way to achieve the desired social impact as opposed to geographical expansion by the founding organization. If the ultimate goal of the social entrepreneur is that everyone becomes a change agent then growth strategies such as branching and affiliation could even compromise this goal. Another negative side effect of such regulatory performance or accountability standards designed for larger for-profit organizations is that local nonprofit organizations may not have access to philanthropic capital markets essential for growth and they may find it difficult to meet these standards. One essential question to ask is that do such philosophies of growth and expansion erode the core principles of the voluntary SE sector and, over time, reduce its vitality?
Performance measurement
The last chapter deals with performance measurement or impact assessment of SEVs. Although there is an enormous amount of complexity associated with the measurement of social impact or social change, the authors try to address this issue with respect to the vision of the organization. They ask, “…what activities are responsible for generating the intended result – and through what process(es), what set of cause and effect links?” (p. 325). Any attempt to calibrate the societal impacts associated with SEVs should however consider some ethical questions. For example, will a disproportionate emphasis on impact assessment or performance measurement compromise the social mission of the organization? For example, non-profits frequently opt-out of assisting the very poor because of the inability to provide results for funders within the time-frame. Can we continue to neglect such individuals and communities as we have done in the past to meet arbitrary performance criteria? Moreover, how can the impact of SEVs be measured in cases where the social or political environment is not supportive of the intervention? What about cases in which the community served itself does not perceive any impact at least in the short term (e.g., several SEVs require a considerable amount of groundwork before they can address the problem)? Such questions and concerns are not addressed in the book and remain unanswered by the field of social entrepreneurship in general.
Although this book is written purely from a management perspective and does not incorporate distinct disciplinary orientations, it is the first effort toward consolidation and organization of the field of social entrepreneurship. Despite the theoretical shortcomings, it provides advanced management students with a great overview of the concepts, strategies, and organizational structures for SEVs supported by many case studies.
References:
Alter, K. (2004). Social enterprise typology. Retrieved November 21, 2008, from http://www.virtueventures.com/setypology/index.php
Dees, J. G, Anderson, B. B, & Wei-Skillern, J. (2002). Pathways to social impact: Strategies for scaling out successful social innovations, CASE Working Paper Series, 3, Fuqua School of Business, Duke Univ. Retrieved January 19, 2021, from
Henton, D, Melville J, and Walesh, K. (1997). The age of the civic entrepreneur: Restoring civil society and building economic community. National Civic Review, 86(2), 149-156.
Thompson, J. L. (2002). The world of the social entrepreneur. The International Journal of Public Sector Management, 15(5), 412-431.
Cite this article (APA)
Trivedi, C. (2021, January 20). Book review: Entrepreneurship in the social sector. Conceptshacked. Retrieved from https://conceptshacked.com/entrepreneurship-in-the-social-sector/
