Social Entrepreneurship – The Theory

On this page, you will be given some theoretical input on social entrepreneurship. If you feel as if some important information is missing, please contact us right away – this website is supposed to be continuously evolving by your inputs.

Why do we even need Social Businesses?
Our society is faced with a variety of unsolved social and ecological challenges. Many of the current approaches to these challenges by governments and the third sector are non-satisfactory or not fully sustainable and therefore do not represent the ideal solution. Due to these circumstances, there has been a rise in entrepreneurial activities committed to solving these issues at hand by employing innovative tools and solutions.

What is more, following some ideas of the Economy for the Common Good (Gemeinwohlökonomie) by Christian Felber, we believe that business should be about impact and social good over profit. Money has been invented as a means of trade – by now, for many, it has become the ultimate goal in life. Businesses should be rewarded for doing good, for giving back to the society and the environment, and for contributing to a more equal world for everyone. Social businesses are aligned with that philosophy and are, therefore, desperately needed in order to transform our current economic system.

Definitions,  Definitions.

“Social entrepreneurship is the process of identifying, evaluating and exploiting opportunities aiming at social value creation by means of commercial, market-based activities and the use of a wide range of resources.” -Bacq, S., & Janssen, F. (2011)

So what does that mean in plain English?

In our understanding social entrepreneurship means using innovative tools and business models to create positive social impact while being self-sustaining. Even though the definitions of Social Entrepreneurship are manifold, there seems to be this one factor they all have in common: the social mission. It is the first priority in a social business (or some consider them at least equally prioritised as financial goals). This is also probably the most prominent distinction to conventional for-profit companies.

Numerous divergences arise from the discussion around the goals of social entrepreneurship: Many believe that social businesses engage in activities to improve current conditions, whereas others postulate a more radical approach and see social entrepreneurship as the tool to initiate profound reforms that revolutionize whole industries and systems (“social change”).

“Social entrepreneurs are not content just to give a fish, or teach how to fish. They will not rest until they have revolutionized the fishing industry” – Bill Drayton

Even though Bill Drayton’s perspective also seems very aligned to our understanding as it promotes to watch out for the bigger picture, we at SEF have chosen to perceive social entrepreneurship differently. In particular, we understand it as a sum of several small steps taken by many people in the course of collective action, resulting in a sustainable business, which causes social or ecological problems to diminish. In our understanding, social entrepreneurs are those who promote social change with what they can provide in terms of skills and time, thereby becoming a part of a community, of an organization, of a movement. To us, social entrepreneurs foster social change – may it be by giving fish, teaching how to fish, or by revolutionizing the fishing industry – as long as their business models put the social mission before any profit aims, and as long as their business models are self-sustaining.

The definitions of social entrepreneurship are manyfold, hence there is not the ONE definition we can provide you with. However, we invite you to get your own idea on what it is and what it means for you and come discuss it with us and the rest of the community at one of our future events!

If you want to engage more deeply with this topic, check out our reading suggestions below.

Role Models

To give you some impressions on what a social business can look like, have a look at these extraordinary examples we have picked out for you:

 

“Grameen Bank provides credit to the poorest in Bangladesh, without any collateral. At Grameen Bank , credit is a cost effective weapon to fight poverty and it serves as a catalyst in the over all development of socio-economic conditions of the poor who have been kept outside the banking orbit on the ground that they are poor and hence not bankable .”

“DiD is an exhibition in which there is absolutely nothing to be seen. In small groups (8 people max) our blind and visually impaired guides will take you on a walk through their world, a world of darkness. In the dark you will be guided through everyday situations which turn into little adventures, as we lose one of our most important senses- our sight.”

Refugeeswork.at is an online-platform, that connects refugees and employers in order to make refugees´ potential accessible to the labour market. Refugees can register for free, create an individual profile and apply for listed vacancies. Employers can either list vacancies or search directly  for potential employees („talent search“). Moreover we provide: easy to understand legal information, downloads of all bureaucratic forms incl. help texts and integration concepts to ease the process of integrating refugees into new organisational structures.

social entrepreneurship times

The Guru Only Content

There are different ways social businesses can be organized, varying from country to country. This is to give you an overview on the legal framework in Austria. For information on other countries, check our reading suggestions below. A big portion of social entrepreneurship entities in Austria are organised as an association (Verein), while Limited Liability Companies (GmbHs) and sole proprietors make up for 23%. Contrasting to these numbers are the numbers for NPOs which are organised in associations in more than 90% of the times.

Where does the money come from in social businesses? Research shows that 52% of the yearly budget stems from private sources, 34% from revenues and 14% from public sources, while 60% of the social businesses in Austria do not receive any public resources. Donations, funding from supporting organisations or awards account for about 10% of a social business’ income in Austria. However, there seems to be a strong need and wish from social entrepreneurs to remain independent from public or private funds in the long-run and become self-sustaining.

There are different opinions and approaches, when it comes to profit allocation and distribution within social businesses. Many people argue for the distribution of the profits and payment of dividends to the investors while others argue that profits should remain within the company and should be re-invested in the business’ activities. Muhammad Yunus is a strong advocate of the latter standpoint.

Info-Hub
The practice

Reading Suggestions

Here you can find a variety of references and suggestions on various aspects and topics around social entrepreneurship. Click on the topic that interests you the most to find out who the people are you can learn from!

  • Bacq, S., & Janssen, F. (2011). The multiple faces of social entrepreneurship: A review of definitional issues based on geographical and thematic criteria.Entrepreneurship & Regional Development, 23(5-6), 373-403., 388
  • Dees, J. G., & Economy, P. (2001). Social entrepreneurship. Enterprising Nonprofits: A Toolkit for Social Entrepreneurs. New York: John Wiley & Sons.
  • Felber, C. (2014). Die Gemeinwohl-Ökonomie: Erweiterte Neuausgabe. Paul Zsolnay Verlag.
  • Jensen A., & Scheub U. (2014). Glücksökonomie: Wer teilt, hat mehr vom Leben, oekom verlag.
  • Maier, F., Leitner, J., Meyer, M., & Millner, R. (2009). Managerialismus in Nonprofit Organisationen. Kurswechsel, 4, 94-101.
  • Nicholls, A. (Ed.). (2006). Social entrepreneurship: New models of sustainable social change. OUP Oxford.
  • Schneider, H., & Maier, F. (2013). Social Entrepreneurship in Österreich
  • Seelos, C., & Mair, J. (2005). Social entrepreneurship: Creating new business models to serve the poor. Business horizons, 48(3), 241-246.
  • Vandor, P., Millner, R., Moder, C., Schneider, H., & Meyer, M. (2015). Das Potential von Social Business in Österreich. WU Vienna University of Economics and Business Working Paper.
  • Waddock, S. A., & Post, J. E. (1991). Social entrepreneurs and catalytic change. Public administration review, 393-401.
  • Yunus, M. (2007). Banker to the Poor. Penguin Books India.
  • Yunus, M., & Weber, K. (2011).Building social business: The new kind of capitalism that serves humanity’s most pressing needs. PublicAffairs.

Our sources of inspiration for the content of the info hub

  • Bacq, S., & Janssen, F. (2011). The multiple faces of social entrepreneurship: A review of definitional issues based on geographical and thematic criteria.Entrepreneurship & Regional Development, 23(5-6), 373-403., 388
  • Nicholls, A. (Ed.). (2006). Social entrepreneurship: New models of sustainable social change. OUP Oxford.
  • Schneider, H., & Maier, F. (2013). Social Entrepreneurship in Österreich.
  • Christian, F. (2010). Gemeinwohl-Ökonomie. Das Wirtschaftsmodell der Zukunft, Wien.
  • Neumayr, M., Schneider, U., Meyer, M., & Haider, A. (2007). The non-profit sector in Austria: An economic, legal and political appraisal. na.
  • Schneider, H., & Maier, F. (2013). Social Entrepreneurship in Österreich.