Entrepreneurship plays an important role for economic growth. (Schaper and Volery 2004, 2007) Individuals who see new opportunities and convert them to products/services that is marketable by taking a high risk of ones own, especially financially are known as entrepreneurs. Such individuals operate in uncertain conditions managing supply and demand in the respective markets with the expectation of high returns. Characteristics of this nature intersect with leadership qualities. Therefore we could relate entrepreneurship with Responsible Leadership (RL), focusing more on strategic alignment for different situations and leadership that divide responsibility without forgetting accountability which are important traits of entrepreneurs.
With these basic concepts in mind a critical comparison between Commercial entrepreneurship and Social entrepreneurship is carried out using dimensions of RL. The dimensions considered in this analysis are,
Higher order strategy concerned with,
decision making and
acting in an appropriate manner.
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A key aspect of RL is the notion of
observing community obligation,
managing negative impacts of the work process and
The outcome of a successful business and its growth, expansion of the social sector is driven by being visionary and entrepreneurship. Therefore strategic thinking and a high- order strategy is a must. Having a vision, mission, planning and executing is the strategy of leadership (Hoffman 2006). Strategic thinking helps leaders adapt, influence and foresee changes in the environment and allow opportunities for innovation and creativity.
The strategic entrepreneurial mindset model
Exhibit : 1
The main difference between the views of a Commercial entrepreneur and Social entrepreneur is the intended mission. Therefore a higher-order strategy will have a productive impact on a Commercial entrepreneur in terms of seizing opportunities and maximizing profits, whereas a Social entrepreneur would efficiently utilize resources to address identified social problems.
The viability and performance of Social entrepreneurs are more challenging than the Commercial entrepreneurs who could rely on mostly tangible and quantifiable measurements of performance such as key performance indicators like, profits, market share, customer satisfaction etc. Further social entrepreneurial organization's beneficiaries would receive services without any payments, whereas commercial entrepreneurial organization's beneficiaries would require to pay for their services. In addition Social entrepreneurs would receive and rely on charitable donations where as commercial entrepreneurs would get funding from shareholders with high expectations on their return on investment.
Hybrid Models of Social Entrepreneurship
For - profit, primarily achieving economic goals.
For - profit, primarily achieving social goals.
For - profit, equally emphasizing social and economic goals.
Not for profit, serving a social mission
Exhibit 2 : (Source: Bygrave and Zacharakis 2010, p. 420)
Accountability could be considered as responsibility for actions and being answerable in every aspect for both Commercial & Social entrepreneurship.
Ethics are moral values that help identify behavior of human beings that are considered to be accepted norms.
Business ethics, which incorporate values of Commercial entrepreneurial behavior or activity is not possible without the different links with people and is not intended for working alone. Therefore an organization would consider the environment as a silent stakeholder. On the other hand as Social entrepreneurs work in a diverse social structure it is important to ensure all activities are carried out within the ethical framework.
One main characteristic entrepreneurs poses, is the ability to make decisions which include high risk (Nichols 2007). Successful Commercial & Social entrepreneurship is to empower staff to take decisions on their own which will create a sense of belonging and loyalty towards the organization.
Behavior or conduct of a leader can be discussed as follows,
Transformational, which speaks of employees rallying around a common vision being motivated to raise the organization's wellbeing above their own,
Transactional, which rewards employees on their performance, and
Servant, basis of a wish to serve and encourage "trust, listening, and the ethical use of power."
When considering Social entrepreneurship, for a leader to act in an appropriate manner, would be to avoid transactional behavior and adopt transformational and servant conduct. Transformational behavior will lead to more volunteers joining the organization and its productivity increasing. This in turn will also lead to sustainability.
Always on Time
Marked to Standard
In Commercial entrepreneurship transactional behavior will play a vital role as rewards will motivate employees to perform better and be more productively resulting in greater profits and sustainability. (CPA Journal 2010)
If one is to look at a non-profit organization's mission versus a for-profit organization's mission, the mission of the non-profit organization would be social regardless of the market demand and consequences. However a for-profit organization's mission will focus on the social aspects through Corporate Social Responsibility (CSR) whilst ensuring its profitability and economical growth. The constant demand of all stake holders and facilitation of change to improve the lifestyle of society are key responsibilities of both Commercial & Social entrepreneurs. Businesses that conduct CSR work have an impact on the community in which it operates although CSR is not the core part of the business model. (Bygrave and Zacharakis 2010) Eg: Starbucks builds relationships with local farmers by extending credit facilities and paying fair market prices.
Corporate Social Responsibility versus Social Entrepreneurship
CSR Social Entrepreneurship
Peripheral to mission Core to mission
Side show Main event
A department The entire organization
Seeks to reduce harm Measures social impact
Feel and look good Do good
Stake holder is the observer Stake holder is the customer
Consequence driven Purpose driven
Image motivated Opportunity motivated
Exhibit 4: (Source: Bygrave and Zacharakis 2010, p. 422)
The integrity aspect of responsible leadership plays a vital role in Commercial entrepreneurship. When an organization's leadership is built on integrity, a great trust is created between the relationships of employees this will motivate the workers too to follow in the leader's footsteps. When considering social entrepreneurship, integrity plays the pivotal role in building the public's confidence in the organization and its services. With a work force of volunteers, motivation is a key ingredient for the company's success that can be enhanced with a leadership based on integrity.
Fair treatment as a responsible leader show little variation when considering Social entrepreneurship and Commercial entrepreneurship. The only significant difference will be due to the difference in company objectives and the work force orientation to achieve such objectives. Considering Social entrepreneurship, the objective is to bring about a social change and the work force includes volunteers as well. Fair treatment will be a highly motivating factor to such a work force. This will lead to greater acceptance and trust between the organization and the customer, especially in the case of delicate and sensitive social issues.
Considering Commercial entrepreneurship, fair treatment among individuals of the organization and other external parties concerned such as customers, suppliers etc will directly influence the company's performance. Equality in treatment amongst employers of the same capacity will lead to a more dedicated work force. A greater trust and healthy relationship would develop between piers and the subordinate. Such relationships will directly contribute to the performance of the organization.
Organizations are created of groups of people, and within these groups conflicts are inevitable. A notion of a responsible leadership is managing negative impacts of the work resulting from conflict. When conflict is managed well, the negative effects on the organization is less and more productive. If not could have several negative effects.
A major negative impact that is applicable to both Social and Commercial entrepreneurship is insubordination. (Root 2010)
Demonstrating humanity is a vital responsible leadership characteristic which could be considered with great importance in social entrepreneurship and commercial entrepreneurship. In commercial entrepreneurship, demonstrating humanity will have a direct impact in motivating employees as long as it is handled carefully without being misused. Demonstrating humanity by the leader would also result in generating more human resources for the company and building a stable customer-base. It will also lead to greater understanding between the organization and its customers.
In social entrepreneurship, demonstrating humanity could lead to greater acceptance of the organization and its services by the public as well as its own employees. This is will contribute to the success of the organization and secure its operations for the future.