The Role Of Networking For Social Entrepreneurs Commerce Essay

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The purpose of this research is to investigate the role of networking for social entrepreneurs. The research conducts three case studies of Indian social entrepreneurs and investigates the role of networking for these entrepreneurs in executing their businesses. In the study, a literature review combining traditional network theory and entrepreneurship theory with recent research on social entrepreneurship is presented.

The study shows that networking plays a role in enabling the social entrepreneur to take on a multifaceted role set. Hence, the role of networking can be seen as helping the social entrepreneur to be present and active in different roles simultaneously, which helps the social entrepreneur in managing the tension inherent in running a commercial business.

What is social entrepreneurship?

Social entrepreneurship is about recognizing a social problem and using entrepreneurship principles to organize, create, and manage a venture to make social change.

What is social entrepreneur?

A social entrepreneur is defined as the person who takes initiative in carrying a 

"Role in bringing together philanthropic motives and business acumen" (Nordic Innovation Centre, 2009, 

p.  21). 

Social entrepreneurship has caught the eyes of theorists around the world in recent years (Dees, 2001; Leadbeater 1997; Thompson 2002). A lot of research has been done on the social entrepreneurship from both academic and business point of view. Not only has academic research been inspired by Professor Muhammed Yunus by looking into the concept from a development point of view (Mair and Seelos,

2007), but social entrepreneurship has also increasingly caught the eyes of business researchers (Bloom

and Chatterji, 2009; Thompson, 2002). Social entrepreneurship provides an interesting perspective on business research, as it seemingly combines the aspect of commonly known entrepreneurial driving force with an underlying drive to impact society towards the better (Dees, 2001). In modern society, with increasing requirements on companies to 'think globally' and act accordingly (Matten, Palazzo, and Scherer, 2009), these social business initiatives become significantly observable, not the least considering the nature of their social missions, which are often inherently characterized by a global concern (Bamburg, 2006; Bloom and Chatterji, 2009).

Understanding the behavior and driving forces of social entrepreneurs, widely defined as the ones undertaking social entrepreneurship, can deepen the insight into how a modern business can take a simultaneous role of both a profit‐oriented business and a socially responsible actor. A valuable source of inspiration for this research originates from a fact that social entrepreneurs are using networking to promote their product and business,

For eg: Prateek Khandelwal, who initiated a business offering ecologically, produced paper bags in 2006. Specifically highlighted the use of networking to position himself and his business mission: "I tend to transform every social situation - from a wedding to a formal meeting - into a 'working' space. I always grasp the opportunity to discuss and vent my opinions, regardless of the circumstances, and I frequently find myself in debates about entrepreneurship, moral, fashion, and the environment. This is how I connect with people, and it leads to new connections and thoughts, inspiring me to constantly act in new directions. This comment provides an interesting perspective on how a young entrepreneur with a social mission apprehends different social forums as opportunities to develop his business.

1.2 Problem Area

I found it relevant to study a group of market players that has increased in number in a relatively short time period, to see how these players interact with their surroundings to shape their businesses. This is interesting as the social entrepreneurs take on a variable set of role dimensions, including a corporate, a personal, and a socially‐driven role (KK‐stiftelsen, 2009). Existing research points to that the role of networking for entrepreneurs is to extend the individual asset base, relatively little explanation of the function of networking for this group of social entrepreneurs was found. With the relatively new academic field of social entrepreneurship as a starting point, this paper is set out to make three in‐depth case studies of Indian social entrepreneurs and their networking behavior.

1.3 Purposes and Research Question

It has been argued that firms are dependent on relationships with their external environments in order to be able to create competitive advantages in markets, since resources critical to a firm can stretch across the firm's borders (Dyer and Singh, 1998). In their classical provision, No Business is an Island, Håkansson and Snehota (1989; updated version 2006) argue that firms are nothing without their relationships. The purpose of this research is to understand the role of networking for social entrepreneurs in executing their businesses. In order to fulfill that purpose, the study aims to conduct three case studies of Indian social entrepreneurs in order to answer the following research question:

What role does networking play for the three social entrepreneurs included in the study?

1.4 Previous research

Throughout the years, different theories have provided several insights into what constitutes and drives the phenomenon of entrepreneurship. The entrepreneur is typically referred to as a person with the ability to grasp a business opportunity in a context and to turn such an opportunity into a venture with help from significant personal motivation and drive (Shane, 2003), and entrepreneurs are claimed to constitute a major driver of innovation in economies (Drucker, 1985). It is probably no coincidence that the term "social entrepreneur" contains the word entrepreneur, since the social entrepreneur is similarly recognized as a person with a significant driving force and motivation (Dees, 2001).

A main problem confronted with when dealing with research on social entrepreneurs lies in the fact that the field does not consist of much consensus regarding how a social entrepreneur is specifically defined. Researchers seem to agree on that a social entrepreneur in one way or another operates with a certain mission in mind (Dees, 2001; Leadbeater, 1997; Mair and Marti, 2006); such a mission is related to aspects such as the environment, the community, society at large, ethics, etc. However, no consensus regarding the extent to which the mission is central to the social entrepreneur's business has been

reached. Authors saying that there is minimum requirement on what focus on social mission is required for an entrepreneur to qualify as specifically social have questioned the term social entrepreneurship

In a study from 2006, Austin et al compares social and commercial entrepreneurship. In the study, Austin et al (2006) highlight the role of networking for social entrepreneurs especially for mobilizing resources; the reason for this is claimed to be that a social entrepreneur must rely on a strong network of contacts that will provide him with resources since he provides financial incentives to a lesser extent than a commercial entrepreneur. In The world of the social entrepreneur, Thompson (2002) underlines the need of peer networks for social entrepreneurs in order for such actors to be able to exchange ideas and to help each other.

A recent report published on social entrepreneurship in India, has the intention of increasing the number of social entrepreneurial initiatives in the country. Regarding networking, the report states that social entrepreneurship often implies networking and partnership across societal sectors. Especially, the report underlines the role of the public sector for the social entrepreneur, apart from the civil society and the private sector more commonly mentioned in combination with social entrepreneurship. (KK‐stiftelsen, 2009).

A recent master's research from Stockholm University focused on investigating the business conditions for social entrepreneurs in India. One of the conclusions of that study was that the Indian business context offers little access to relevant knowledge and advice to the social entrepreneur for creating ventures. (DeCasas and von Schantz, 2008).

1.5 Contribution made by the research

By combining a network approach to entrepreneurship with empirical data from three Indian social entrepreneurs, this research aims to provide an insight into the role of networking for social entrepreneurs. By shedding light on the role of networking for three selected social entrepreneurs, the intention is to add to academia a new perspective on social entrepreneurship based on qualitative observations of how the social entrepreneurs interact with their surroundings. The authors believe such an addition to be valuable and relevant for several academic disciplines in the discussion of social entrepreneurship.

3. Literature Review

3.1 Introduction to the Literature Review

This section aims to provide the reader with insight into the literature used as a background in analyzing the role of networking for the social entrepreneurs included in the study. By describing fundamental network theory, the aim is to bring forward the role of networking for a social entrepreneur in a network. In addition, by presenting a theoretical view of entrepreneurs' networking, the research also highlights how networks and networking are important for entrepreneurs. This will be followed by a presentation of theory on the fundamental constituents of social entrepreneurship. To round off this section of the research, a description of the function of the literature review for the coming analysis will be given.

3.2 Why Networking?

An appropriate starting point for understanding network behavior is to consider the basic question: why do companies network? There is generally a well‐established answer in theory to this question, which contends "no business is an island" (Håkansson and Snehota, 1989; 2006). The relational view, presented by Dyer and Singh (1998), highlights that "the (dis) advantages of an individual firm are often linked to the (dis) advantages of the network of relationships in which the firm is embedded" (p.

660). This argument is in line with the recognition within business strategy research that the boundaries of the firm are problematic to define (Foss, 2005). Håkansson and Snehota (2006) explain the substance of this boundary problem by arguing that an organization's continuous interaction with other actors in its context adds to the organization with a meaning and role. Gadde et al (2003) further emphasize this proposition: "The basic point of departure for an industrial network approach is that firms operate in the context of interconnected business relationships, forming networks." (p. 357) With these theoretical references as a staring point, it is evident that relationships make sense, as they constitute a source of identification of the network actor, the firm, itself. In this aspect, networking as an activity, conducted with an intention to build and manage such relationships, makes sense as well.

3.3 The Roles of Networks and Networking

3.3.1 The Role of the Network as a Structure

The Actors‐Resources‐Activities (ARA) model, initially presented by Håkansson and Johansson in 1992, presents three variables that constitute a network: actors, resources, and activities. In the model, actors

can be any individuals, groups of individuals, firms, parts of firms or groups of firms (Ibid). Resources include all kinds of assets that can be valuable to an actor (Ibid). Activities refer to actors transferring, exchanging, combining, developing, or creating resources by using other resources (Ibid). Håkansson and Johansson (1992) argue that actors are involved in a network in order to, by performing activities, obtain resources that other actors possess or have control over; thus the activities performed by actors are based on a strive for control over resources. This is agreed upon by Heene and Sanches (1997), who claim that the resources that a firm can take advantage of can be found both within the firm itself but also within other organizations.

Easton and Lenney (2009) have taken this basic network model one step further by adding a fourth dimension, the role of commitments, into the original ARA‐model. By including commitments, the concept of actor purposiveness is incorporated into the model: "Actors are goal driven, goals lead to intentions and finally to actions" (Easton and Lenney, 2009, p. 554). Hence, commitments "provide a crucial link between the goals of actors and their actions" (Easton and Lenney, 2009, p. 557). Introducing commitments can therefore enhance an understanding of network interactions as it takes into consideration the fact that engaging in networks constitutes a commitment, thus incorporating expectations of roles and people into the model. The role of commitments in shaping networks and, particularly, business relationships is further underlined by Araujo and Mouzas (1994), claiming that each business relationship is determined by three elementary forces: domain consensus, goal incompatibility, and interdependent symbiosis. The first of these three refers to the domain in which actors interact and is related to the definition of boundaries, role sets, and expectations in the relationship (Ford, 1978), and the consensus among these actors refer to the degree of agreement over prevailing functions and roles. Mouzas and Naudé (2007) in a recent paper bring another critical dimension into the dynamics behind these types of role structures as they argue that "functions and roles change dynamically over time" (p. 63) which can be seen as "attempts to redefine role‐sets and to redraw the boundaries of the network" (Ibid) in which the actors are embedded.

Networks can provide actors with legality (Aldrich and Fiol, 1994). Meyer and Rowan (1977) discussed the impact of organizations' strive for legitimacy on the structures and strategies chosen by organizations; they identified legitimacy building as a driving force behind decision making regarding organizational structures and strategies. This implies that a reason for an actor to engage in networks is strive for legitimacy. Not only does legitimacy building constitute a reason for joining a network; legitimacy is also crucial for actors when inside a network. Weber (1968) argued for the importance of

legitimacy for actors in social structures. According to Human and Provan (2000), "legitimacy is critical to the evolution of all social systems, whether the focus is on the evolution of interest groups, organizations, or networks" (p. 328), and societal acceptance of an organisation is dependent on the support from relevant actors in the organisation's surroundings (Ruef and Scott, 1998); this implies that organisations are dependent on the acceptance of actors with whom they have some connection. Zeitz and Zimmerman (2002) argue that "legitimacy is an important resource for gaining other resources" (p.

1), implying that legitimacy is required to be able to obtain other resources in a network.

3.3.2 The Role of Networking as an Activity

Networking refers to the activity of building relationships and connecting with other actors for various reasons. Gadde et al (2003) highlight that resources in a network are positioned in a constellation; the authors underline the importance for a firm of using this resource constellation in an efficient way. By saying so, Gadde et al (2003) aims to shed light on the fact that "resources always have 'hidden' and unexploited dimensions that can be explored and developed in interaction with business partners" (p.

360). Therefore, the authors think that continuous interaction with others in the network can bring forward new kinds of resources (Ibid), and from this argument it can be understood that some resources do not exist unless two parties actually interact. Håkansson and Snehota (2006) argue that "the effectiveness of a business firm is not given by the possession of the 'right' set of resources accessed by a 'right' set of relationships at each moment in time" (p. 273), as they first claimed back in 1989, but instead "by the involvement in relevant change processes - the movement, in the context of the company" (Ibid). Håkansson and Snehota (2006) support this argument with prevailing empirical research confirming "the importance of the continuous re‐interpretation of images of the network context" (p. 273). This brings forth an argument that continuous interactions assist firms in understanding the context in which they act, which has major implications for strategic change and business development.

Networking as an activity can also be seen from the perspective of social capital, which can be described as relational resources embedded in personal relationships and ties between people (Burt, 1992; Loury,

1977). Lin (1999) agrees on this resource‐oriented view by referring to social capital as "assets in networks" (p. 1). Lin (1999) furthermore presents three explanations for why embedded resources in networks will add to the outcomes of actors' activities in the network; first, social ties facilitate flow of information; second, social ties have the power to influence actors; third, social ties can function as

certifications of an actor's accessibility to networks and relationships. A broader definition of social

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capital also includes social norms associated with relationships (Coleman, 1990). Granovetter (1992) elaborated on this theme by making a distinction between structural and relational embeddedness in networks; the structural dimension refers to the location of an actor in a network and how specific locations can be specifically advantageous for the actor, whereas the relational dimension refers to how normative aspects, such as trust, impact relationships. In an interview with Professor Björn Axelsson (2009), he touched upon such this aspect when he claimed that people in networks might perform certain tasks as they feel that they are expected to do so by their counterpart in the network. This argument indicate that connections to other actors in a network may mean that actors do not solely act according to their own greed and self‐interest, but rather in ways they are expected to, which is also highlighted by Ghoshal and Tsai (1998) in a discussion on social capital.

From the above theory review, it has been highlighted that firms primarily engage in relationships with other actors in a network in order to obtain, create, exchange and transfer resources by interaction, as well as to build legitimacy. The review has also shown that relationship commitments and social connections can have impact on the outcome of networking since such characteristics of relationships can make actors act not solely by self‐interest. Now, this network discussion will turn to the entrepreneur specifically.

3.4 The Role of Networking for an Entrepreneur

According to Anderson et al (2008), "networks are recognized to contribute to entrepreneurial capacity

by extending the individual's asset base of human, social, market, financial and technical capacity" (p.

125). This argument indicates that engaging in networking is a way for an entrepreneur to access more assets than those he/she possesses. Also, it has been claimed that the actual initiating of entrepreneurship, in terms of opportunity spotting, may be a product of acting in a network (Hills et al,

1997). Not only can the opportunity spotting be a result of networking, but Johannisson and Peterson (1984) argue that networking can also lead to the actual decision to found an enterprise when you identify the resources possessed by others in the network.

According to Dowling and Lechner (2003), the small scale of an entrepreneurial enterprise after a start‐ up lead to that an entrepreneur use his/her social networks in order to build up his/her business. One example is that networking is simply used to create sales (Ibid). Other fundamental motivations for an entrepreneur to engage in networking have been argued; networking provides introductions to business

associates (Birley, 1985); networking generates self‐confidence (Alexanderson et al 1994);

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entrepreneurs can gain motivation, support, and encouragement from networking (Tjosvold and Weicker, 1993). Because of this importance of networking for an entrepreneur, much time is dedicated by an entrepreneur to maintain his/her networks (Greve and Salaff, 2003).

It has been recognised that entrepreneurs are not autonomous actors who act independently of their social contexts, but are rather embedded in such contexts (Granovetter 1985; Aldrich and Zimmer

1986); an entrepreneur has been identified as an actor which is a result of its social environment (Anderson and Miller, 2003). Thus, an entrepreneur's ability to spot opportunities is impacted by social interaction (Ibid). Johannisson (1988) has argued that social contexts can have two impacts on an entrepreneur; they can constrain entrepreneurship and at the same time help entrepreneurs to reach beyond their original boundaries. Interestingly, regarding social contexts, Anderson et al (2008) claim that "exclusion from the mainstream due to social group origins has also long been argued to stimulate

'outsider' entrepreneurship and may also generate specific networked entrepreneurial communities."

(p. 125).

3.5 Social Entrepreneurship

Leadbeater's (1997) contribution to the research area of social entrepreneurship, The Rise of the Social Entrepreneur, was among the first provisions within the field and provides a fundamental theoretical view of the concept of social entrepreneurship. Leadbeater (1997) refers to a social entrepreneur as a person of two relatively balanced dimensions; a social entrepreneur carries specific characteristics that can be derived from the expressions "social" on the one hand and "entrepreneur" on the other hand. From the social perspective, a social entrepreneur promotes well‐being, health, and welfare with social capital as its core asset (Ibid). From an entrepreneurial point of view, Leadbeater (1997) argues that a social entrepreneur is superior in "spotting unmet needs and mobilizing underutilized resources to meet these needs" (p. 11). Furthermore, the author claims that drive and determination characterise a social entrepreneur, but underlines that "social entrepreneurs are driven by a mission, rather than by the pursuit of profit or shareholder value" (p. 11). Leadbeater (1997) identifies a social entrepreneur's sector of activity as the intersection areas between the private, the public, and the voluntary sectors, as

shown by the shaded area in Figure 1.

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Public

Sector

Private

Sector

Voluntary

Sector

The social entrepreneur's area of activity: Shaded intersection areas

Figure 1: Sources of Social Entrepreneurship (Leadbeater, 1997, p. 10)

This view of a social entrepreneur as active in the intersection between sectors is shared by Dees (2001), who argues that the relatively new term social entrepreneurship, that describes a not so new phenomenon, is "important in that it implies a blurring of sector boundaries" (p. 1). In contrast to Leadbeater (1997) however, Dees (2001) specifically speaks of the intersection of the private and the social sectors as the area of activity for a social entrepreneur. Along the lines of Leadbeater's (1997) argument, Dees (2001) also puts forward that "social entrepreneurs look for the most effective methods of serving their social missions" (p. 1) and "mission‐related impact becomes the central criterion, not wealth creation" (p. 2) which, the author claims, "affects how entrepreneurs perceive and assess opportunities" (Ibid).

A social entrepreneur's focus on a social mission is further confirmed by Mair and Marti (2006), who claim that "social entrepreneurship differs from other forms of entrepreneurship in that it gives higher priority to social value creation-by catalyzing social change and/or catering to social needs-than to value capture" (p. 43). This focus on social mission is shared as well as further specified by Thompson (2002), who points to a mission that refers primarily to helping others; a social entrepreneur is someone "with qualities and behaviors that we associate with the business entrepreneur but who operate in the community and /is/ more concerned with caring and helping than with 'making money'" (p. 413).

3.6 The Function of the Literature Review

The literature on the role of networks and networking to actors in general and entrepreneurs in particular is dominated by viewing a commercial actor, primarily building commercial business

relationships for profit‐related purposes by striving for resources in a commercial context.

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The literature review has however presented a social entrepreneur as an actor that carries some sort of social mission and acts across sector boundaries; according to Leadbeater (1997), the sectors constituting a social entrepreneur's playing field are the private, public, and voluntary sectors.

Because of a social entrepreneur's movements across sectors, it is possible to anticipate that this type of actor carries characteristics differing from a commercial entrepreneur and that networking plays an important role for that kind of actor. In order to investigate what role networking plays for the social entrepreneurs included in this study, the function of the literature review is to constitute a background, rather than an analysis foundation or template, when investigating the role of networking for this new group of actors.

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9.2 Internet Sources

Almedalsveckan www.almedalsveckan.se

Anuera www.anuera.nu

Biodynamiska Produkter www.biodynamiskaprodukter.se

Ekobanken www.ekobanken.se Ekologiska Lantbrukarna www.ekolantbruk.se Dem Collective www.demcollective.com Ekolådan www.ekoladan.se

Fair Unlimited www.fairunlimited.se

Grameen Bank www.grameen‐info.org Kulturverkstan www.kulturverkstan.net Nordic Innovation Centre www.nordicinnovation.net Omvärlden www.omvarlden.nu

Rena Kläder www.renaklader.org Rättvisemärkt www.rattvisemarkt.se Social Venture Network www.svnIndia.com Stockholm School of Entrepreneurship www.sses.se

Stiftelsen för Kunskap och Kompetensutv. www.kks.se

Svensk Handel www.svenskhandel.se Svenskt Näringsliv www.svensktnaringsliv.se Watabaran www.watabaran.se

9.3 Interviews with Research Objects

Ekolådan: Anette Dieng and Monica Haglund Taveres; October 16, 2009

Dem Collective: Karin Stenmar; November 2, 2009

Fair Unlimited: Daniel Mensch; October 16, 2009

9.4 Interviews used in Analysis

Axelsson, Björn; November 9, 2009; Professor, Department of Marketing and Strategy; Stockholm School of

Economics.

Zerne, Morgan; November 19, 2009 (by e‐mail); Managing Director; Rättvisemärkt/Fair Trade India.

9.5 Inspirational Interviews

Hockerts, Kai; October 16, 2009 (by telephone); Associate Professor, Center for Corporate Social Responsibility; Copenhagen Business School.

Svensk, Diana; November 17, 2009; CEO of Svensk Fashion.

Wetter, Erik; October 30, 2009; Assistant Professor, Department of Management and Organization; Stockholm

School of Economics.

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