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Entrepreneurship: TheEntrepreneurship: TheBuilding BlocksBuilding Blocks

Michael MorrisMichael MorrisWitting Chair in EntrepreneurshipWitting Chair in Entrepreneurship

Dept. of EntrepreneurshipDept. of EntrepreneurshipWhitman School of ManagementWhitman School of Management

Syracuse UniversitySyracuse University

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Defining EntrepreneurshipDefining Entrepreneurship

Process of creating value by bringingProcess of creating value by bringingtogether a unique package of resources totogether a unique package of resources toexploit an opportunityexploit an opportunity

Pursuit of opportunity without regard toPursuit of opportunity without regard toresources currently controlledresources currently controlled

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Underlying DimensionsUnderlying Dimensions

EntrepreneurialOrientation (EO)

Innovativeness Risk-taking Proactiveness

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The Elements Required forThe Elements Required forEntrepreneurshipEntrepreneurship

The organizationalcontext

Theentrepreneur

The resourcesThe concept

The entrepreneurialprocess

The environment

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5

Entrepreneurship as a ProcessEntrepreneurship as a Process

Identifying an Opportunity

Develop the Concept

Determine the RequiredResources

Acquire the NecessaryResources

Implement and Manage

Harvest the Venture

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What Is SocialWhat Is SocialEntrepreneurship?Entrepreneurship?

Arthur C. BrooksArthur C. BrooksProfessor of Public AdministrationProfessor of Public Administration

Maxwell School of Citizenship and Public AffairsMaxwell School of Citizenship and Public Affairs

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Social Entrepreneurship:Social Entrepreneurship:Definition 1Definition 1

•• Profit-making ventures designedProfit-making ventures designedto provide revenues to nonprofitsto provide revenues to nonprofits

•• ExamplesExamples–– Affinity credit cardsAffinity credit cards–– Cause-related marketingCause-related marketing–– Use of nonprofit facilities forUse of nonprofit facilities for

commercial activitiescommercial activities

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Social Entrepreneurship:Social Entrepreneurship:Definition 2Definition 2

•• The process of pursuingThe process of pursuingopportunities in pursuit of highopportunities in pursuit of highsocialsocial returns returns

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Key Elements of SocialKey Elements of SocialEntrepreneurshipEntrepreneurship

•• Social entrepreneurshipSocial entrepreneurshipaddresses social problems oraddresses social problems orneeds that are unmet by privateneeds that are unmet by privatemarkets or governmentsmarkets or governments

•• Social entrepreneurship isSocial entrepreneurship ismotivated primarily by socialmotivated primarily by socialbenefitbenefit

•• Social entrepreneurship worksSocial entrepreneurship workswithwith——not againstnot against——market forcesmarket forces

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The Process of SocialThe Process of SocialEntrepreneurshipEntrepreneurship

Opportunity recognition･ Social problems･ Unmet needs

Concept development･ Identification of social

rewards･ New products or markets

Resource determination and acquisition･ Financial resources･ Human resources･ Human capital

Launch and venture growth･ Measurement of returns･ Expansion and change

Goal attainment･ Succeed in mission and shut down･ Succeed in mission and find new

opportunity･ Attain a stable service equilibrium･ Integrate into another venture

Opportunity recognition･ Social problems･ Unmet needs

Concept development･ Identification of social

rewards･ New products or markets

Resource determination and acquisition･ Financial resources･ Human resources･ Human capital

Launch and venture growth･ Measurement of returns･ Expansion and change

Goal attainment･ Succeed in mission and shut down･ Succeed in mission and find new

opportunity･ Attain a stable service equilibrium･ Integrate into another venture

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ItIt’’s not All About Start-Upss not All About Start-Ups

•• Social entrepreneurships typesSocial entrepreneurships types–– InnovationInnovation–– AdaptationAdaptation

•• Inside or outside establishedInside or outside establishedorganizationsorganizations–– EntrepreneurshipEntrepreneurship–– IntrapreneurshipIntrapreneurship

•• There are lots of ways to beThere are lots of ways to beentrepreneurialentrepreneurial

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Sources of Opportunity for SocialSources of Opportunity for SocialEntrepreneurshipEntrepreneurship

•• Demographic changesDemographic changes–– Neighborhoods in declineNeighborhoods in decline

•• Public policy shiftsPublic policy shifts–– Changes in public arts fundingChanges in public arts funding

•• Public opinionPublic opinion–– The Mozart EffectThe Mozart Effect

•• Changes in technologyChanges in technology–– MP3sMP3s

•• Changes in tasteChanges in taste–– Sudden interest in BachSudden interest in Bach

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Opportunities vs. ThreatsOpportunities vs. Threats

•• Social entrepreneurs are alwaysSocial entrepreneurs are alwaysscanning the horizon forscanning the horizon foropportunitiesopportunities

•• Opportunities for entrepreneursOpportunities for entrepreneurslook like threats and tragedies tolook like threats and tragedies toothersothers

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Many Good Ideas Are notMany Good Ideas Are notOpportunitiesOpportunities

physiological

safety and security

belongingess

self-esteem

cognitive

aesthetic

self-actualization

self-transcendence

Proper nutrition

School and neighborhood safety

Community programs

Empowermenteem

cognitive

aesthetic

self-actualization

self-transcendence

Proper nutrition

School and neighborhood safety

Community programs

Empowerment programs

Academic programs

The arts

College scholarships

Programs to create mentors

Maslow’s Hierarchy Example enterprises

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Who Are Social Entrepreneurs?Who Are Social Entrepreneurs?

•• Nonprofit executivesNonprofit executives•• High-initiative staff memberHigh-initiative staff member•• Major volunteer or donorMajor volunteer or donor•• Active trusteeActive trustee•• Government officialGovernment official

Ref. Frumkin ch 5 2002

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Characteristics that Predict anCharacteristics that Predict anEntrepreneurial OrientationEntrepreneurial Orientation

Innovativeness

Education and experience

Achievement orientation

Independence

Sense of control over destiny

Low risk aversion

Tolerance for ambiguity

Entrepreneurialorientation

Community awarenessAnd social concern

Socially -entrepreneurialorientation

Innate characteristics

Innovativeness

Education and experience

Achievement orientation

Independence

Sense of control over destiny

Low risk aversion

Tolerance for ambiguity

Entrepreneurialorientation

Community awarenessAnd social concern

Socially -entrepreneurialorientation

Innate characteristics

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Risk Is RealRisk Is Real

Ref. Cordes et al

51%49%

38%36%

29% 28% 27%

0%

10%

20%

30%

40%

50%

60%

Environmental

Religion

Arts and culture

Education

Hum

an services

International

Health

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Threats to SocialThreats to SocialEntrepreneurshipEntrepreneurship

•• Institutional adversity to riskInstitutional adversity to risk•• Institutional intolerance toInstitutional intolerance to

innovationinnovation•• Bad ideas (or at least, ideas thatBad ideas (or at least, ideas that

are before their time)are before their time)

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Measuring ReturnsMeasuring Returns

OUTCOMESOUTCOMES

INPUTSINPUTS

ACTIVITIESACTIVITIESACTIVITIES

OUTPUTSOUTPUTS

IMPACTS

Social value

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Can We Measure SocialCan We Measure SocialReturns in DollarsReturns in Dollars

Enterprise valueFinancial return on investment

Social purpose valueCosts and savings from serving social mission

Blended valueEconomic + socioeconomic value of enterprise

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Case 1: Housing OpportunitiesCase 1: Housing OpportunitiesMade Equal (H.O.M.E.)Made Equal (H.O.M.E.)

•• ServicesServices–– Core services in housing disputes and fairCore services in housing disputes and fair

housing advocacy in Virginiahousing advocacy in Virginia–– Special projects and lawsuitsSpecial projects and lawsuits

•• Opportunity: Educate people on fairOpportunity: Educate people on fairhousing before-the-fact, instead ofhousing before-the-fact, instead offixing situations after-the-factfixing situations after-the-fact

•• Enterprise: Start fair housing trainingEnterprise: Start fair housing trainingInstituteInstitute

•• Returns: More housing for theReturns: More housing for thedisadvantaged, fewer complaintsdisadvantaged, fewer complaints

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Case 2: Boaz & RuthCase 2: Boaz & Ruth

•• ServicesServices–– Revitalizing a blighted neighborhood inRevitalizing a blighted neighborhood in

Richmond, VARichmond, VA–– Skills training for residentsSkills training for residents

•• Opportunity: Underutilized physicalOpportunity: Underutilized physicaland human capitaland human capital

•• Enterprise: Turn a local fire stationEnterprise: Turn a local fire stationinto retail space and traininginto retail space and trainingrestaurantrestaurant

•• Returns: Entrepreneurial skills forReturns: Entrepreneurial skills forresidentsresidents

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The Underlying ChallengesThe Underlying Challenges

Michael MorrisMichael MorrisWitting Chair in EntrepreneurshipWitting Chair in Entrepreneurship

Dept. of EntrepreneurshipDept. of EntrepreneurshipWhitman School of ManagementWhitman School of Management

Syracuse UniversitySyracuse University

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The Logic of E in For-profitsThe Logic of E in For-profits

EntrepreneurshipEntrepreneurship↓↓

New Products/Services/ProcessesNew Products/Services/Processes↓↓

Better Served CustomersBetter Served Customers↓↓

Competitive AdvantageCompetitive Advantage↓↓

ProfitProfit↓↓

Returns to StockholdersReturns to Stockholders↓↓

Career Advancement for InnovatorsCareer Advancement for Innovators

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Complicated Logic of Complicated Logic of NPOsNPOs

Entrepreneurship↓↓

New Process, Services, Products↓↓

Multiple Stakeholders With Conflicting Demands, Some ofWhich May be Served by these Innovations, Others Not

↓↓Alienated Stakeholders Could Withhold Resources

↓↓Enhanced Achievement of Social Mission

↓↓No More Resources Or Financial Returns Necessarily Result

From The Entrepreneurial Behavior

Also: If the innovation fails, resources could be deflectedfrom the core social mission

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Related ChallengesRelated Challenges

• Innovation can compromise basic mission & values, while• Diffusing scarce resources and distracting principals from

the core mission• Managers many have less business-specific skills• Boards play major role• Stakeholder alienation/Change can require consensus• Donors want contributions directed to traditional programs• Demands for transparency/Sanctions for rule-breaking• Stakeholders not diversified– less amenable to risk• Nondistribution constraints/Private inurement doctrine• Conceptualizing innovation• Performance metrics are difficult to quantify• Linkages/implications between innovation and

performance unclear• Risk/failure implications unclear• Sector diversity

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An Open ConversationAn Open Conversation

What are the implications of socialWhat are the implications of socialentrepreneurship for teaching,entrepreneurship for teaching,

research and service at Iowa State?research and service at Iowa State?