Theres been an upsurge of interest in concept of social entrepreneurship

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Over the last decade, there has been an upsurge of interest in the concept of social entrepreneurship driven by the changes occurring in the competitive environment faced by private, public and non-profit sectors. Most organisations are concerned about these changes and hence are proposing alternative forms of organised economic activity, hence the development of the socially-driven approach.

Schumpeter (1934) suggested that there is a gap that traditional economic model and framework cannot address and hence the need for the emergency of socially-driven framework. For example, traditional approach of entrepreneurial drives is based on economic reality, agency theory, divorce of ownership from control, the need to optimise economic benefits of the owners/shareholders rather than meeting the social objective of masses and the disadvantaged group.

According to Townsend & Hart (2008), organisations choose to organise their social entrepreneurship ventures under non-profit activities while other may prefer for-profit activities. Ridley-Duff (2008), use the term more than profit to describe the way entrepreneurship aims to combine both the economic and social aspects of it. Elkington and Hartigan (2008) suggested three concepts of social entrepreneurship, the non-profit ventures which deal mainly with non-profit activities, social business ventures encompassing for-profit activities and the hybrid non-profit ventures model where there is a combination of both the non-profit and for-profit activities.

Florence Nightingale is a prominent UK history example of Social Entrepreneurship, one of the pioneers in modern nursing practices. She established the first school for nursing students in 1860 and today she remains an icon for health care workers and professionals. In recent times, philanthropists such as Bill Gates, Warren Buffet, Richard Brandson, Muhammad Yunnus (the founder of Grameen Bank of Bangladesh) just to mention but a few have been "converted" from pursuing economic goals to bringing about social transformation into the life of many (Ahonsi, 2009).

Scope of Literature Review

Studies on social entrepreneurship have attracted many researches from different fields and disciplines. The philosophy fuelling social entrepreneurship is not new development, but it is still considered to be in a stage of infancy, hence little has been widely documented in this area. Although the term social entrepreneurship was originated in the 60's, its definition still remains fuzzy.

The literature review will examine the definition of the two terms of the concept, namely, ''social'' and ''entrepreneurship''. This approach aims to analyse the factors leading to the emergence and development of social entrepreneurship and the essence of social entrepreneurship and explore the potential similarities and differences between socially-driven and commercially-driven entrepreneurships.

What is Social Entrepreneurship?

Bornstein (2005), stated that a social entrepreneur is characterised by intiative, creativity, energy obsessive, focus on results, capacity for self-correction, profound understanding of the market and above all, a deep commitment to building a just and humane world

The concept of social entrepreneurship means different things to different researchers (Dees, 1998). Boschee (1998) referred to social entrepreneurship as not-for-profit initiatives in search of alternative funding strategies, or management schemes to create social value. Mair and Martí (2006) argued that social entrepreneurship refers to a process where resources are used and combined innovatively and opportunities are pursued in order to achieve social change and address social needs.

Thus, socially-driven entrepreneurship has cut beyond the boundaries of economic theory of profit optimisation as the driving force for the purpose of establishing an entity. It explores the subject in interdisciplinary dimension- economics and business management, environmental and ecological management, corporate behaviour with its attendant responsibility.

Emergence of Social Entrepreneurship

In recent times, researchers have moved forward the development of models and have attempted to infuse these various elements and facets with a view to enhancing and emancipating the socially disadvantaged group of the society.

Some writers see marked distinctions between Economic Entrepreneurship and Socially Desirable Entrepreneurship. Alkire believes that the logical progression of approximating development with economic emancipation is that:

Income was the metric that conveyed utility, or value; therefore, a respectable economic strategy was to maximize national income per capita, with some correction for externalities and distribution. (Alkire 2002:182-83)

Some writers believe that these externalities and unequal distribution of wealth underpin the reasons why there are economically disadvantaged group of people in the society and hence the reason for the emerging subject of socially-driven enterprise. Hajer (1995) referred to this as "ecological modernisation theory". Other writers make further division between the economic and socially-driven entrepreneurship. They argued that they expect the liberal economic systems to self check and correct itself (e.g. Beckerman 1994; 2003).

However, Pearce (1988) and Pearce et al (1989), believe sustainable development is a function of economic growth, but suggested that human and technological interventions will be necessary in order to correct market failure.

Writers such as Daly suggested and pointed to the distinction between economic growth and development as follows:

Growth is a quantitative increase in the physical scale of throughput. Qualitative improvement of the use made of a given scale of throughput, resulting either from improved technical knowledge or from a deeper understanding of purpose, is called 'development'. (Daly 1996: 31)

On the other hand, Lutz asserted that "authentic development" is a function of "meeting the basic material human needs of all" (1992:166). Some authors, like human relations school advocates, Abraham Maslow emphasised economic growth and development must be consisted with meeting the fundamental needs of human for food, shelter, sleep, rest, social security and esteem needs of the majority and not the selection of few. Thus, this forms the cornerstone and the emergence of socially-driven enterprise concept.

Rahman (1992:174) argued that the basic human need is to fulfil our creative potential in ever new ways. These views are based on the premises that suggested satisfying human needs will include meeting economics and social objectives. Researchers such as Alkire listed various basic human needs and asserted that human development should be viewed from a multi-dimensional standpoint. He stated that from the most narrow economic to the list with the largest number of human needs included in the idea of improving the experience of human life on earth. (Alkire, 2002)

Holling (2002) emphasised the need for more collaborative, discursive strategies that promote quicker learning, flexibility and diversity.

Some writers and practitioners questioned the wisdom of the emergency of socially driven entrepreneurship and questioned the idea behind the growth and popularity of this concept whether it is a replacement or a complement to free market management (Cho, 2006:51).

Other distinction suggested that socially-driven ventures look out for the welfare of others and uplift social justices whereas economically-driven entrepreneurship is driven by greed. Other widely held views of the drawbacks of socially-driven ventures is that social ventures usually fail due to excessive risk taking, wasteful and lack of commercial competence. Kirchoff (1993) disagreed with this notion. His research showed that over 50% of socially-driven enterprises in the US formed in the late 70's are still functioning into many decades thereafter into the 2000's.

Thus far, various proponents of socially-driven entrepreneur have done much work, albeit less than what had been done in the commercially-driven fields. Hockerts (2006) criticised the broad nature and scope of the subject by asserting that contributions to knowledge may get lost in a "quagmire of definitions"

Arguments for and against

Well, we live in a world filled with various natural and man-made disasters (war in Iraq and Afganistan (2003-2010), flooding in Pakistan (2010), earthquake in Heiti (2009), Tsunami in South East Asia (2006/2007) and the list goes on). Then who look after the victims? Various philanthropists (NGO's, Oxfam, Red Cross and the like of them).

Even in the absence of these man-made and natural disasters, the world's wealth are uneven distributed. Some popular opinion holds that 80% of world's wealth is centred and enjoyed by 20% of the world's population (Barendsen et al, 2004:pp43-50).

Thus, to increase the well being of disadvantaged majority, the use of the free market of which traditional entrepreneurial drive is based on can not meet this objective. The emphasis and emergent on social purpose, social entrepreneurship led to the field focusing primarily on entrepreneurial non-profit management (Thompson, 2002) and community ventures (Haugh, 2007; Haugh and Pardy, 1999). Most of these writers explored the differences, the divergence and convergence of these issues - the similarities and differences between the orthodox and contemporary subject of commercial and socially-driven entrepreneurship.

Sahlman's (1996), Austin et al (2006) and Weerawardena and Mort (2006) emphasised the dangers of pursuing of goal "displacement from organisational maintenance taking over the social mission". This suggests that social goals cannot and should not be pursued exclusively without taking into account the need for the organisation for profit and non-for-profit to survive now and into the strategic terms.


This review discusses the underlying views expressed by various social and economics researchers on the development and emergency of the philosophy of socially-driven entrepreneurial venture. The process begins with the identification of social opportunity, which may be spawned up by the experience or situation of the social venturer(s); it has various facets and forms; it requires similar drive, dedication, creativity and innovative approach just as the traditional economic model of entrepreneurship.

There are many motives for developing and implementing socially-driven enterprises: political changes, occurrence of man-made or natural disasters, a personal desire to fulfil innate social objective, career change such as Bill Gates, Warren Buffet, Muhammad Yunnus and the likes of others.

However, the concept does have its critics. One of such views is that socially-driven venture are at odd with economically driven enterprise which is driven and underpin by financial rewards, and maximisation of shareholders' value. However, the evidence of Mohammad Yunnus, Bill Gates who have moved from financially rewarding ventures to socially driven entities does not support this school of thought.

Thus no one model has been regarded as the most appropriate to address the issue of Social entrepreneurship as it is an approach based on its own set of rules. The development of a theory of social entrepreneurship is important as it differentiate itself from other forms of organisations.