Report on Social Entrepreneurship in the United States and United Kingdom


The objective of this study is to explore the term "Social Entrepreneurships" in its all aspects being used in the United States of America and the United Kingdom. The study will encase the various definitions that have existed in different times and areas. The study will contain a critical analysis of the term social entrepreneurship keeping in mind it's prevailing effects over these regions such as the United Kingdom. Intellectuals involved in this particular field have given their interpretations and thus their opinions will be of importance in this paper. A comprehensive understanding of philosophies, identifying the companies which have been classified under the banner of social enterprises, will be discussed briefly.

Executive summary:

The term social entrepreneurship has a broad meaning which can only be explained relative to a context. It varies from person to person and from group to group. Social entrepreneurship can be influenced by differing factors which arise due to the prevailing regional and international situations. United States and United Kingdom are a good exemplification of social entrepreneurship but to assume similar description of SE applicable for both the regions would be a mistake. In case of the United Kingdom, which is a welfare state, the SE is influenced by the affairs of the state. On the contrary in United State corporate giants are in control of the business affairs of the region therefore having a big say in the functioning and direction of social enterprises and entrepreneurship

Entrepreneur and social:

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The term Social entrepreneurship came into existence to describe the entrepreneur activities being executed with a goal of achieving a social purpose. (Austin J., 2006) [1] 

This terminology however went a change under the influence of the changing entrepreneur conditions. As the non-profit sector boomed the term began to be explained from the perspective of both the government and the new rising sector sector. The government bodies struggled to explain their stance against these agencies and their developments in the entrepreneur sector leaning on this specific term for explanation. Therefore SE found its popular utilisation in this era and is being used till now. Though its changing meanings are debatable in the present situation, it will be interesting to observe and compare the differing surveys published by both the government and independent agencies in this context. Intellectuals are intently studying the variation in the utilisation of the term social, entrepreneur and social entrepreneurship as it is being moulded by different groups and coalitions according to their perceptions. The variations multiply as we move are study to different countries. UK will first become the subject of this paper.

It would be meaningless to proceed with the analysis of the term Social Entrepreneurship without understanding the individual words social and entrepreneur forming this broader term SE.

Relative to these words social and entrepreneur, management expert Peter Ferdinand Drucker (2007) 2, sensibly explained their utilization. According to his analysis the term social holds a vast meaning and relates to a broader perspective of human relations. It involves both the existent and the non-existent activities performed by the human beings. As the term was explained, Ferdinand however wasn't able to explain the term to its fullest in its broader perspective as he excluded the essential effecting factors such as the phenomenon of economic recession, globalization, socialism and capitalism in his understanding of the subject. The lack of these terms being explained has left a gaping hole in his study as the intertwining effects of socialism and capitalism are omitted.

Ferdinand further elaborated on the term entrepreneur by saying that the term entrepreneur was inseparable from innovation. It took long for the intellects to realize their interconnection but it was not until the year 1985 when this fact was truly established. Ferdinand believed that entrepreneurs have to be innovative to design genius methods of utilizing resources to generate wealth. Their innovation creates more resources which then is again utilized to create more wealth and more opportunities. One such example of a true entrepreneur was Cyrus McCormick who developed a concept that solved the worries of the farmers of the early 19th century. He came up with the concept of buying in installments that facilitated the farmers in fulfilling their requirements. [2] 

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The fusion of the two words into one broad perspective of social entrepreneurship began to be recognised in 1995 [3] . This term signified an "emergent organizational field" which was later used by individuals and groups to obtain benefits. Some misrepresented the term for their personal benefits while others obtained gains thus glorifying the term.

Social entrepreneurship definition:

Various definitions have been published defining the term social entrepreneurship.

As stated by King and Roberts (1987), social entrepreneur's character in the public sector, influencing state policies constituted of innovation and leadership abilities. [4] 

According to Campbell (1997) it was an endeavour for the achievement of a social purpose generating revenue for those who are unable to do so themselves. He was mainly referring to the health care sector. [5] 

But it was Dees. G (1998a) ,who gave an in depth definition covering the five main dimensions of social entrepreneurship. This theory is still applicable today among the complexities of managerial and economic markets and when the factors separating public and private, national and international sectors are diminishing day after day.

The SE was a sort of a social mission

The SE was a collective endeavour of pursuing new opportunities

The SE's were a process of incessant innovation.

The SE's was an organization acting boldly and standing out in its motives.

The SE's were born with a heightened sense of accountability and responsibility.

SE has been again explained by Borins (2000) as innovative leaders in public sector organisations. [6] 

In 2001, a Canadian Centre for SE studied the affects of globalisation emphasizing the needs of a business to produce social and economic benefits thus arriving to the concept of 'dual bottom line' reporting. [7] 

Non profit (NPO's) and for -profit (FPO's) entrepreneurships were investigated by Smallbone, et al. (2001), in UK coming up to the conclusion that SE's were competitive organisations trading for a social benefit under a specific ownership. [8] 

Further elaboration was provided by Thompson, J.L., (2002), describing the SE as a social enterprise which could exist in the non profit sector (NPO) operating as a business for the achievement of a social purpose. SE was also an opportunity for the addition of new and innovative ideas for the generation of capital for social objectives. [9] 

Mort G.S., et al., (2003), worked on the term SE and came up with a perfected and evolved formation of the term defining the term in the basis of multidimensional models such as:

A model driven and fuelled by a social mission

A model which illustrated a balance in judgement.

A model that distinguished and explored opportunities in order to include or create enhanced social values for its clients

A model that constituted the main ingredients of innovation, proactiveness and risk-taking measures.

As explained by Mort G.S., et al., (2003), the models have summed up practically all the points that are being incorporated on and on by different intellectuals. That is an element of innovation with a view for social benefits keeping in view the competitive environment, urged by the sense of making a change and taking charge of the situation to get results.

Modified and new approaches towards SE's are being adopted to produce improved business ideals based on innovation. Versatile business ventures with creative ideas are being incorporated leading to evolved SE's [10] 

SE's are now directly responsible for influencing government policies through their increasingly acclaimed approach of innovation and reinvention. A multi dimensional model was proposed by 'The Sullivan Mort and Weerawardena' who stated that pure good intentions were not the only sustainable factor behind SE in the todays world. SE's now had to incorporate qualities such as proactiveness, innovativeness and risk management abilities. These abilities will have to overcome constraints of environmental dynamics, organisational sustainability and social objectives to recognise business opportunities nevertheless keeping an eye towards the social values, reacting sensibly and responsibly. [11] 

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Figure 1: Bounded Multidimensional Model of SE 11

The term SE as explained above has undergone changes according to the changing social and economic environment. The words social and entrepreneur have been reflected as such in different periods. Their meaning been integrated into one whole meaning of SE's. The SE's have to incorporate in equivalent intensities the aspects of individualism, consumerism and moral individualism [12] keeping in view the developing social, economic, political situations.

"Triple Bottom Line"

"Triple Bottom Line" is a concept that envelopes the three financial, social and environmental aspects all together in one SE. An enterprise can be classified as an SE when it is able to achieve monetary gains with a social benefit simultaneously acting as an environment friendly organisation.

Enterprises acting on this concept have been tracked for long. Such active organisations will lead to the assessment of their effects on the society. Many groups are involved in keeping a record of such organizations but these groups(including government- associated groups) are acting on their own perception of SE's for the counts. GEM is one such organisation.


GEM (Global Entrepreneurship Monitor) UK (2006) has been carrying out its analysis of such organizations to assess their effects on the social environment and vice versa. Their results have shown that social entrepreneurship has been resisting the forces of macro economics indicating a minimum growth from 3.2% to 3.3% as compared to other businesses. However before we reap any benefits out of their analytical data it is imperative to learn about their criteria of deeming organizations as SE's.

Table 1: UK social entrepreneurship by broad ethnic grouping Source: GEM UK APS 2006

GEM has been classifying individuals and groups under the heading of entrepreneur, but they have also admitted in their website to the fact that, many groups may be registered as entrepreneurs but are unlikely to be so. Groups which are devoid of innovation, may register under the false pretext of entrepreneurs for tax purposes, while some organizations that are specifically involved in entrepreneur activities, have not bothered to register themselves in the government records at all. Government data relies only on registration records and as analysis is usually based on government surveys the results obtained may not be accurate. As actual entrepreneurs maybe excluded from this list and fake entrepreneurs may be affecting the results. It is therefore difficult to assess the effects of entrepreneurs and be able to carry out analytical studies of this magnitude. [13] 

GEM, however has been able to publish the defining characteristics of entrepreneurs to be:

"motivation, innovative activity, and growth orientation for all entrepreneurially active people in the sample."

This survey has also included the operations sector ignoring the fact that it may be far from satisfying any criteria of entrepreneurs.