Innovation in Social Entrepreneurship (1)

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    Development Economics

    Innovation In SocialEntre reneurshi

    Presented toProfessor Hugo Ruiz

    Prepared by

    Macky ChorgheKatherine Naud

    Theresa Krupka

    April 9, 2014

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    TABLE OF CONTENTS

    1. INTRODUCTION......................................................................................................... 3

    2. CONCEPT OF SOCIAL INNOVATION ................................................................... 4

    2.1PARADIGMS IN DEVELOPMENT COOPERATION........................................................... 4

    2.2SOCIAL ENTREPRENEURSHIP VSOTHER PARADIGMS................................................ 6

    2.3CHALLENGES IN SOCIAL ENTREPRENEURSHIP............................................................ 7

    2.4NEGATIVE CRITICS FOR SOCIAL ENTREPRENEURSHIP.................................................. 8

    3. DIFFERENT OPINIONS IN SOCIAL ENTREPRENEURSHIP ........................... 9

    3.1FOR-PROFIT ANDNOT-FOR-PROFIT:TWO MASTERS? ................................................ 9

    3.2UNCLEAR EXPECTATIONS FOR TRANSPARENCY....................................................... 10

    3.3IMPACT OR CLEVER MARKETING? ........................................................................... 113.4NAIVETY.................................................................................................................. 12

    4. CURRENT TREND IN THE FIELD OF INNOVATION IN SOCIAL

    ENTREPRENEURSHIP ................................................................................................ 14

    4.1EVOLUTION OF SOCIAL ENTREPRENEURSHIP............................................................ 14

    4.2CURRENT PRACTICES............................................................................................... 15

    4.3ROLE OF TECHNOLOGY IN SOCIAL INNOVATION...................................................... 15

    4.4SOCIAL ENTERPRISES AND INNOVATORS.................................................................. 174.4.1 ASHOKA: Innovators for the public formed by Bill Drayton .......................... 17

    4.4.2 Grameen Bank: Muhammad Yunus ................................................................. 18

    4.4.3 TOMS: Blake Mycoskie .................................................................................... 18

    5. CONCLUSION ........................................................................................................... 19

    BIBLIOGRAPHY ............................................................................................................................... 20

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    Innovations in Social Entrepreneurship

    1. Introduction

    We are in a world that is changing: the population is growing, the urban regions are

    taking more space than rural areas, the poverty gap is getting bigger in certain cities and

    we know we will soon or later face the scarcity of natural resources. Social

    entrepreneurship tries to respond to these issues, usually concentrating more on issues

    like lack of education, poverty, hunger, bad health system, etc. through innovation. Social

    entrepreneurship is viewed as a process that catalyzes social change and addresses

    important social needs in a way that is not dominated by direct financial benefits for the

    entrepreneurs (Mair & Marti, 2006). It requires a unique kind of individual; this

    individual must be driven, innovative, creative, resourceful, and inspired by the desire to

    improve their community. The traditional entrepreneur must discover a gap in the

    market for a product or service that its target market desires or will desire. A social

    entrepreneur however, must also do this and, in addition, must seek to fulfill a need that

    is socially fulfilling and that seeks to improve society as a whole. The beauty of social

    entrepreneurship is that it encourages the innovative entrepreneur to tackle the tough

    social problems that the government and other efforts have failed to aid.

    The focus of todays society has shifted into this perspective that we must not work to

    improve our lives, following the survival of the fittest mentality, but rather we should

    consider how our actions might affect others. Small business, as an example, are now

    considering their impact on the environment; many have started to use environmentally

    friendly packaging, encourage recycling by both staff and customers, and support local

    community efforts to improve the areas in society that need the help. This is only the

    beginning of the social entrepreneurship movement. Not only are businesses starting to

    consider their impact on their environment, but also businesses are forming based solely

    on the idea that they must strive to help others. The challenge is not in finding a cause,

    but rather in gaining access to the capital and resources necessary to make a business

    successful, and profitable. For some, this challenge was overcome, and their success is in

    their story. In this document, we will explore more about the concepts of innovation and

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    social entrepreneurship and its evolution, but also see some other types of nonprofit and

    for-profits organizations, challenges that the industry of development cooperation is

    facing, opinions and critics about social entrepreneurship, current trends and what are

    doing the agencies in the field of development.

    2. Concept of social innovation

    What is social innovation? There are as much definitions as people that analyzed its

    concept! Here is one of them: a new idea, product, service or model that simultaneously

    meets social needs and creates new social relationships or collaborations. Social

    innovations are not only important for the new specific solutions to societal needs, but

    they can furthermore impact on society's capacity to innovate. We will later explore

    different examples of social innovations and social entrepreneurship enterprises.

    Interestingly enough,the success of several entrepreneurs shows us that there is a strong

    connection between the concept of seeking for opportunities and creating innovation. In

    the book of John Bessant, Innovation and Entrepreneurship (Page 6), we learn that

    innovation is driven by the ability to see connections to spot opportunities and to take

    advantage of them. The more we seek opportunities, the more we are aware of what the

    market looks like, the more we find new contacts, share ideas and create innovation. This

    definition of Mr. Bessant can also be applied to social entrepreneurship.

    2.1 Paradigms in Development Cooperation

    It might be interesting to take a look at the market of development cooperation, in which

    social entrepreneurship is evolving. We can provide several different types of help when

    it comes to development cooperation. Usually, the origin varies from public initiative to

    markets. First, there is the Official Development Aid, involving institutions like OECD,

    UN, World Bank, national administrations, bilateral aid agencies, etc. They mainly do

    promotion and encourage economic development of developing countries. Trade and

    investment is another paradigm in development cooperation that does not only include

    importations and exportations, but also be made through foreign direct investment.

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    Foreign Direct Investment is an amount of capital invested in the private sector of a

    foreign country. An example of that could be an American multinational enterprise that

    would create a subsidiary in China in the goal of taking advantage of a lower cost of

    labour. A third paradigm is the emigrant remittances, which are an amount of money that

    an emigrant (usually working in a developed country) sends to his family (generally

    located in a developing country) in order to help them to afford basic needs. The numbers

    are impressive: worldwide remittance flows are estimated to have exceeded $414 billion

    in 2009, of which developing countries received $307 billion. More specifically, here is

    a 2009 chart stating top 10 countries that received emigrant remittances, by percentages

    of their GDP:

    FIGURE 1: Top 10 recipients of migrant remittances

    Figure 1. Top 10 recipients of migrant remittance. Adapted from the World Bank. Retrieved fromwww.web.worldbank.org.

    Then, the philanthropy is also a very traditional and popular way to contribute to

    development cooperation; it is also sometimes call social investment. A good example of

    philanthropy is the Bill and Melinda Gates Foundation, where millions of dollars are sent

    every year to developing countries in order to improve health and poverty conditions.

    There is also the Corporate Social Responsibility (CSR), which means how does a

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    company includes the triple bottom line (economy, society and environment) in its

    strategy in order to have a positive impact on society while growing and making profits.

    These companies usually also have to take in account legal constraints, for example:

    making sure they leave the land t