Innovation in Social Entrepreneurship (1)

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<ul><li><p>7/27/2019 Innovation in Social Entrepreneurship (1)</p><p> 1/21</p><p>Development Economics</p><p>Innovation In SocialEntre reneurshi</p><p>Presented toProfessor Hugo Ruiz</p><p>Prepared by</p><p>Macky ChorgheKatherine Naud</p><p>Theresa Krupka</p><p>April 9, 2014</p></li><li><p>7/27/2019 Innovation in Social Entrepreneurship (1)</p><p> 2/21</p><p> 2</p><p>TABLE OF CONTENTS</p><p>1. INTRODUCTION......................................................................................................... 3</p><p>2. CONCEPT OF SOCIAL INNOVATION ................................................................... 4</p><p>2.1PARADIGMS IN DEVELOPMENT COOPERATION........................................................... 4</p><p>2.2SOCIAL ENTREPRENEURSHIP VSOTHER PARADIGMS................................................ 6</p><p>2.3CHALLENGES IN SOCIAL ENTREPRENEURSHIP............................................................ 7</p><p>2.4NEGATIVE CRITICS FOR SOCIAL ENTREPRENEURSHIP.................................................. 8</p><p>3. DIFFERENT OPINIONS IN SOCIAL ENTREPRENEURSHIP ........................... 9</p><p>3.1FOR-PROFIT ANDNOT-FOR-PROFIT:TWO MASTERS? ................................................ 9</p><p>3.2UNCLEAR EXPECTATIONS FOR TRANSPARENCY....................................................... 10</p><p>3.3IMPACT OR CLEVER MARKETING? ........................................................................... 113.4NAIVETY.................................................................................................................. 12</p><p>4. CURRENT TREND IN THE FIELD OF INNOVATION IN SOCIAL</p><p>ENTREPRENEURSHIP ................................................................................................ 14</p><p>4.1EVOLUTION OF SOCIAL ENTREPRENEURSHIP............................................................ 14</p><p>4.2CURRENT PRACTICES............................................................................................... 15</p><p>4.3ROLE OF TECHNOLOGY IN SOCIAL INNOVATION...................................................... 15</p><p>4.4SOCIAL ENTERPRISES AND INNOVATORS.................................................................. 174.4.1 ASHOKA: Innovators for the public formed by Bill Drayton .......................... 17</p><p>4.4.2 Grameen Bank: Muhammad Yunus ................................................................. 18</p><p>4.4.3 TOMS: Blake Mycoskie .................................................................................... 18</p><p>5. CONCLUSION ........................................................................................................... 19</p><p>BIBLIOGRAPHY ............................................................................................................................... 20</p></li><li><p>7/27/2019 Innovation in Social Entrepreneurship (1)</p><p> 3/21</p><p> 3</p><p>Innovations in Social Entrepreneurship</p><p>1. Introduction</p><p>We are in a world that is changing: the population is growing, the urban regions are</p><p>taking more space than rural areas, the poverty gap is getting bigger in certain cities and</p><p>we know we will soon or later face the scarcity of natural resources. Social</p><p>entrepreneurship tries to respond to these issues, usually concentrating more on issues</p><p>like lack of education, poverty, hunger, bad health system, etc. through innovation. Social</p><p>entrepreneurship is viewed as a process that catalyzes social change and addresses</p><p>important social needs in a way that is not dominated by direct financial benefits for the</p><p>entrepreneurs (Mair &amp; Marti, 2006). It requires a unique kind of individual; this</p><p>individual must be driven, innovative, creative, resourceful, and inspired by the desire to</p><p>improve their community. The traditional entrepreneur must discover a gap in the</p><p>market for a product or service that its target market desires or will desire. A social</p><p>entrepreneur however, must also do this and, in addition, must seek to fulfill a need that</p><p>is socially fulfilling and that seeks to improve society as a whole. The beauty of social</p><p>entrepreneurship is that it encourages the innovative entrepreneur to tackle the tough</p><p>social problems that the government and other efforts have failed to aid.</p><p>The focus of todays society has shifted into this perspective that we must not work to</p><p>improve our lives, following the survival of the fittest mentality, but rather we should</p><p>consider how our actions might affect others. Small business, as an example, are now</p><p>considering their impact on the environment; many have started to use environmentally</p><p>friendly packaging, encourage recycling by both staff and customers, and support local</p><p>community efforts to improve the areas in society that need the help. This is only the</p><p>beginning of the social entrepreneurship movement. Not only are businesses starting to</p><p>consider their impact on their environment, but also businesses are forming based solely</p><p>on the idea that they must strive to help others. The challenge is not in finding a cause,</p><p>but rather in gaining access to the capital and resources necessary to make a business</p><p>successful, and profitable. For some, this challenge was overcome, and their success is in</p><p>their story. In this document, we will explore more about the concepts of innovation and</p></li><li><p>7/27/2019 Innovation in Social Entrepreneurship (1)</p><p> 4/21</p><p> 4</p><p>social entrepreneurship and its evolution, but also see some other types of nonprofit and</p><p>for-profits organizations, challenges that the industry of development cooperation is</p><p>facing, opinions and critics about social entrepreneurship, current trends and what are</p><p>doing the agencies in the field of development.</p><p>2. Concept of social innovation</p><p>What is social innovation? There are as much definitions as people that analyzed its</p><p>concept! Here is one of them: a new idea, product, service or model that simultaneously</p><p>meets social needs and creates new social relationships or collaborations. Social</p><p>innovations are not only important for the new specific solutions to societal needs, but</p><p>they can furthermore impact on society's capacity to innovate. We will later explore</p><p>different examples of social innovations and social entrepreneurship enterprises.</p><p>Interestingly enough,the success of several entrepreneurs shows us that there is a strong</p><p>connection between the concept of seeking for opportunities and creating innovation. In</p><p>the book of John Bessant, Innovation and Entrepreneurship (Page 6), we learn that</p><p>innovation is driven by the ability to see connections to spot opportunities and to take</p><p>advantage of them. The more we seek opportunities, the more we are aware of what the</p><p>market looks like, the more we find new contacts, share ideas and create innovation. This</p><p>definition of Mr. Bessant can also be applied to social entrepreneurship.</p><p>2.1 Paradigms in Development Cooperation</p><p>It might be interesting to take a look at the market of development cooperation, in which</p><p>social entrepreneurship is evolving. We can provide several different types of help when</p><p>it comes to development cooperation. Usually, the origin varies from public initiative to</p><p>markets. First, there is the Official Development Aid, involving institutions like OECD,</p><p>UN, World Bank, national administrations, bilateral aid agencies, etc. They mainly do</p><p>promotion and encourage economic development of developing countries. Trade and</p><p>investment is another paradigm in development cooperation that does not only include</p><p>importations and exportations, but also be made through foreign direct investment.</p></li><li><p>7/27/2019 Innovation in Social Entrepreneurship (1)</p><p> 5/21</p><p> 5</p><p>Foreign Direct Investment is an amount of capital invested in the private sector of a</p><p>foreign country. An example of that could be an American multinational enterprise that</p><p>would create a subsidiary in China in the goal of taking advantage of a lower cost of</p><p>labour. A third paradigm is the emigrant remittances, which are an amount of money that</p><p>an emigrant (usually working in a developed country) sends to his family (generally</p><p>located in a developing country) in order to help them to afford basic needs. The numbers</p><p>are impressive: worldwide remittance flows are estimated to have exceeded $414 billion</p><p>in 2009, of which developing countries received $307 billion. More specifically, here is</p><p>a 2009 chart stating top 10 countries that received emigrant remittances, by percentages</p><p>of their GDP:</p><p>FIGURE 1: Top 10 recipients of migrant remittances</p><p>Figure 1. Top 10 recipients of migrant remittance. Adapted from the World Bank. Retrieved fromwww.web.worldbank.org.</p><p>Then, the philanthropy is also a very traditional and popular way to contribute to</p><p>development cooperation; it is also sometimes call social investment. A good example of</p><p>philanthropy is the Bill and Melinda Gates Foundation, where millions of dollars are sent</p><p>every year to developing countries in order to improve health and poverty conditions.</p><p>There is also the Corporate Social Responsibility (CSR), which means how does a</p>http://www.web.worldbank.org/http://www.web.worldbank.org/http://www.web.worldbank.org/</li><li><p>7/27/2019 Innovation in Social Entrepreneurship (1)</p><p> 6/21</p><p> 6</p><p>company includes the triple bottom line (economy, society and environment) in its</p><p>strategy in order to have a positive impact on society while growing and making profits.</p><p>These companies usually also have to take in account legal constraints, for example:</p><p>making sure they leave the land the way it was when they bought it, etc. The Bottom Of</p><p>the Pyramid (BOP) is another interesting paradigm, where we consider a poor person as</p><p>potential consumers. This theory might change the way we do development markets</p><p>because there are over 3 billion people living on less than 2.50 $ per day, which opens a</p><p>larger marker than traditionally. Different well-known companies have already adopted</p><p>this strategy, for example Danone, Unilever, etc. And finally, we have NGOs, also called</p><p>non-profits that are organization that financially depends on public funds and charity in</p><p>order to do projects for developing countries.</p><p>2.2 Social Entrepreneurship VS Other Paradigms</p><p>Even if all these different forms of aid had contributed to improve the conditions in poor</p><p>countries, we could do some critics about them, compared to social entrepreneurship. For</p><p>example, while today's companies engage in corporate social responsibility, they have</p><p>limited flexibility and are often unable to deliver high impact results. Also, corporate</p><p>social responsibility is a lot more accessible to big companies than SMEs. However,</p><p>large corporations primarily contribute by means of philanthropy as opposed to</p><p>sustainable business. Additionally, regarding our current model of philanthropy, while</p><p>having certain uses, has limited impact as compared to social entrepreneurship. And</p><p>finally, NGOs dont create value, they depend on help coming from public funds or</p><p>charity from private sectors, which can vary from a year to another. Social</p><p>entrepreneurship, on the other hand, have long lasting impact as they do not rely on a</p><p>donation model, but actually create their own revenue to sustain the business. Here is an</p><p>interesting chart that put in relation nonprofits and for-profits enterprises, which will be</p><p>explained later in this document.</p></li><li><p>7/27/2019 Innovation in Social Entrepreneurship (1)</p><p> 7/21</p><p> 7</p><p>Figure 2:Profit and Non-Profit view of Social Entrepreneurs</p><p>Figure 2. Profit and Non-Profit view of Social Entrepreneurs. Adapted from Technology InnovationManagement Review by A. Saifan, February 2012.</p><p>2.3 Challenges in Social Entrepreneurship</p><p>When we work in social entrepreneurship, we meet a lot of challenges in every project.</p><p>As we have seen in the project cycle management, there are different steps to follow</p><p>when we do a project and they may involve challenges. First, it is difficult to know the</p><p>market or to have data about for whom the project is for; we call it a hidden population.</p><p>That is the case of drug addicts, sex workers, illegal immigrants, etc. Then, another</p><p>problem for social enterprises is that we also have to make sure the projects meet some</p><p>basic criteria as being effective and efficient, relevant, having an actual impact, etc.</p><p>During the implementation phase, a lot of external constraints are also generally met</p><p>when it is time to implement the project in a developing country: bad governance and</p><p>corruption, poor infrastructures, lack of help on site, etc. One the main challenges,</p><p>according to us, is to make sure the project that is done (or the enterprise that is created)</p><p>is sustainable. After the project has been implemented, the source of money stops coming</p><p>in, but the impact still needs to continue. Finally, another challenge that could meet social</p><p>entrepreneurship is the difficulty to evaluate and audit their impact. In fact, it is difficult</p><p>to measure qualitative data like when it comes to social issues.</p></li><li><p>7/27/2019 Innovation in Social Entrepreneurship (1)</p><p> 8/21</p><p> 8</p><p>2.4 Negative critics for social entrepreneurship</p><p>While social entrepreneurship is a buzzword nowadays and a very popular concept that</p><p>people have a lot of faith in, it is not completely flawless. Mat Despard, teacher of</p><p>nonprofit management at School of Social Work at the University of South Carolina</p><p>(USA), raised few negative critiques about social entrepreneurship that could help us</p><p>pounder. According to him, social entrepreneurship would promote to elevate the</p><p>individual (the entrepreneur) more than the team behind him that worked hard to</p><p>implement the project. The second critic was that there is poor economy of scale,</p><p>generally because social entrepreneurs of often too young and not enough experimented.</p><p>This results in the need to raise unrestricted revenue to build infrastructure book</p><p>keeping/accounting, program evaluation, information systems, etc. albeit with pooreconomies of scale. Energy and resources get diverted from problem solving to</p><p>organization building. The third critic is that, even if the social entrepreneurship</p><p>companies are very innovative, they are not recognized enough and their ideas are not</p><p>heard. He says: I hear about and interact with organizations in developing countries</p><p>with very innovative ideas that routinely go unheard. Another critic is that social</p><p>entrepreneur tends to lack of evidence to prove their ideas, as many of them are largely</p><p>untested. Its great that these ideas represent new approaches to tackling social</p><p>problems, but promotion of these ideas tends to be far out in advance of sufficient</p><p>evidence that they merit promotion as the next big thing. Having a commercial</p><p>assumption would be another critic we could say. According to Mr. Despard, a strong</p><p>bias exists in favor of commercial approaches to addressing social problems, but often</p><p>public or private subsidies are needed to catalyze change. The last critic raised by him is</p><p>that some social entrepreneurship project lack of ethical framework. Because of the</p><p>attention that a social entrepreneur would receive for his ideas, he might be seen as a</p><p>desired activity or way of being, not as a tool (among other tools such as political</p><p>advocacy and grassroots organizing) to be used to advance human rights. These critics</p><p>are a subjective opinion that might help us to pon...</p></li></ul>

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