Social Entrepreneurship and Sustainable Development

ABSTRACT

Rosa Maria Fischer 1 Graziella Maria Comini2

Scope of the Work What could there be in common between three need-driven, barely literate women who migrated over 30 years ago from the Northeast of Brazil to the Rocinha shantytown in Rio de Janeiro, on one hand, and the strategic venture of one of the country’s largest corporate groups, on the other? Or between the survival attempts of small farmers in the semi-arid areas of the state of Bahia and the growth strategy of Brazil’s largest bio-fuel and palm oil processing industry?

At first sight, nothing whatsoever! In a world split between absolute poverty and extravagant wealth, these two extremes would never meet, let alone become acquainted with each other, be placed within close explanatory categories or share the targets and objectives of the same venture.

The goal of this paper, which is currently being prepared, is to discuss the concept and practices of social entrepreneurship researched in Brazil, trying to find out if and how this can help to build local sustained development processes.

In different areas of the world, the entrepreneurship concept has ceased to concern only the creation of capitalist firms and has expanded so as to encompass the competency of generating innovative organizational alternatives. And they are innovative not merely because their models differ from those adopted by firms and corporations throughout the 19th and 20th centuries, but also because they expand firms’ strategic views beyond the market and its limited forms of transaction.

In this expansion, social entrepreneurs’ initiatives extend well beyond the mere commerce of products and services, in an attempt to (i) increase the socio-environmental development of places left behind by capitalist economic growth; (ii) oblige society to include those who were deprived of the physical, social and economic means required to become social actors, whether as people, consumers or citizens; (iii) expand the opportunities for individuals to become emancipated through their own initiative, generating income and being able to freely choose the lifestyle they want to provide their children with; and (iv) ensure that future generations have the right to be born and live in freedom and with access to the natural resources that biodiversity offers man.

Thus, broadly speaking, social entrepreneurship can be defined, according to Nicholls, “as any venture that has been creating social value as its prime strategic objective and which addresses this mission in a creative and innovative fashion3.

Although the 2006 Human Development Report indicated Brazil was an example of improved income distribution, the country’s Gini coefficient stood at 0.580, the 10th most unequal one in a 126-country list. Furthermore, the country was held up as a prime example of inequality in the 2005 Report 4. Poverty and inequality did indeed drop between 2001 and 2004, but they continue to be a striking feature of the country, particularly in the North and Northeast, among blacks and among the rural population. Largely as a result of the Bolsa Familia (Family Grant) program, a government income-transferal mechanism, the 2004 indigence and poverty rates fell to 11.3% (19.8 million people) and 30.1% (52.5 million people) respectively. Despite the income distribution inequality reduction trend, in 2004 the poorest 50% of the population absorbed only 14% of total family income, whereas the richest 10% and top 1% accounted for 45% and 12.8% of it, respectively5.

1 Rosa Maria Fischer is a Full Professor at the School of Economics, Business Administration and Accounting of the University of São Paulo

(FEA/USP) and the Coordinator of CEATS – Center for Social Entrepreneurship and Management in the Third Sector of FIA – the Administration Institute Foundation. In Brazil, she heads SEKN, the Social Enterprise Knowledge Network, which is comprised of 10 Iberian-American business administration schools coordinated by the Harvard Business School. Since 2001, the group has been producing research, publications and teaching material on Social Entrepreneurship, Corporate Responsibility and Cross-Sector Alliances.

2 Graziella Maria Comini is an economist who has a Master’s Degree and a Ph.D. from FEA-USP. She is the Deputy Coordinator of CEATS - Center for Social Entrepreneurship and Management in the Third Sector of FIA – the Administration Institute Foundation, besides teaching Social Entrepreneurship and Management, as well as HR, in FIA’s MBA program. She is also a FIA and a CEATS project coordinator. She was formerly a professor at the Getúlio Vargas Foundation – São Paulo, in the General Administration and Human Resources department.

3 NICHOLLS, Alex – “Playing the field”, Social Entrepreneurship Posting from Oxford, Vol. 1, autumn, 2006. 4 Source: www.pnud.org.br/pobreza_desigualdade/reportagens/index.php?id01=2390&lay=pde. Retrieved on June 1, 2007. 5 IPEA. Radar Social, 2006.

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In this research, we try to work with this concept within the scope of Brazilian reality, characterized by poverty and inequality. In collecting the cases, we focused on those in which the venture encourages income generation, employability and improvement of the social and economic conditions of groups oppressed by poverty and lack of prospects. In other words, the criterion for selecting the empirical situations for the study of the entrepreneurship phenomenon centered on those that try to achieve social transformation results, those in which the rigid economic structures that place social categories in opposition to each other can be made more flexible through a common vision and shared objectives.

The Brazilian study is part of SEKN, the Social Enterprise Knowledge Network research program. This network congregates 10 Iberian-American schools of business administration6 under the coordination of the Harvard Business School. These schools are determined to produce and share practical and academic knowledge about entrepreneurship. Where Brazil and the other Iberian-American associates are concerned, it is fundamental that the research foster the generation of data and means for understanding the essence of social entrepreneurship and support its development, especially with regard to its role in the reduction of exclusion and social inequality.

The challenge underlying this objective is to insert social entrepreneurship into a broader context, namely, local sustained development. This means that in addition to analyzing and prospecting the venture’s sustainability per se, it is necessary to investigate what potentialities and limitations can affect where leveraging local development is concerned, since a development strategy that fosters social transfer presupposes the mobilization of actively involved, mutually strengthening actors, aptitudes and resources7. Research Development For the 2006 to 2009 period, the SEKN program has chosen to study entrepreneurship cases in which low income social groups and people are considered within a range of situations: expanding their access to consumption; creating conditions for improving family income; achieving work conditions; and being a link within a production chain.

Dealing with this theme has become mandatory, as the perception that the world is rigidly split is an outdated model that leads humankind into “cul-de-sacs”, while extending over different regions, economic and business sectors, social classes and militant groups. For some, superseding this model involves a long and complex philosophical discussion, in which ideological postures clash and private and public interests collide. For others, the path is more pragmatic: they try to redesign the organizational structures in the short-term, redefine relationship strategies and create action alternatives. Along the latter line of thought, certain fundaments, such as the need to create structured organizations that demand a legal framework and specific resources to operate, derive from the prior view of the world. Finally, a third group adds innovative elements, of which the institutional articulation competency stands out, i.e., the ability to establish multiple organizational connections that can render alliances, partnerships and networks viable.

We have selected three entrepreneurial initiatives out of these, to be described and analyzed in the paper currently being written.

In the Rocinha shantytown, an urban agglomeration with 50,000 inhabitants, set in the heart of the rich city of Rio de Janeiro, we find Coopa-Roca, an entrepreneurial initiative of Northeastern immigrant and non-employable women, trapped by poverty, social prejudice and the machismo that prevails in their marital and family relationships. Almost 30 years ago, this cooperative was set up not only to provide an opportunity for these housewives to work and earn an income, but also as a means of gaining access to the fashion production chain and developing an awareness of citizenship.

ASMARE is an association of the homeless dedicated to collecting recyclable elements in the garbage of Belo Horizonte, capital of the state of Minas Gerais in Brazil’s Southeastern region. Set up in the 90s, it

6 The business schools that form the SEKN network are: EGADE – Escuela de Graduados en Administración y Dirección de

Empresas / ESADE – Escuela Superior de Administración y Dirección de Empresas / HBS – Harvard Business School / IESA – Instituto de Estudios Superiores de Administración / INCAE – Instituto Centroamericano de Administración de Empresas / PUCCh – Pontifícia Universidad Católica de Chile / UniANDES – Universidad de Los Andes / UP – Universidad del Pacífico / UdeSA – Universidad de San Andrés / USP – Universidade de São Paulo

7 - BROSE, Markus. Redes: breve introdução à arte de tecer Capital Social. Retrieved from: http://www.risolidaria.org.br/util/view_texto.jsp?txt_id=200505200017

- HADDAD P.R. Texto de Referência da Palestra sobre Cultura Local e Associativismo. Belo Horizonte: BNDES seminar on local production arrangement, Oct. 27, 2004.

- LOURENÇO, M. S. M. Trabalho Pleno – Construção do Desenvolvimento Local. Sobral: Edições UVA, 2003.

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consolidated itself as an opportunity for people stigmatized and persecuted by a “hygienic” urban policy to become workers that live with dignity from their activity and that are valued for helping to keep the city clean.

Another association transformed impoverished agricultural workers into the partners of a carpet industry. APAEB, the Association for the Sustainable and Solidary Development of the Sisal Region, was set up in 1980 to mutually strengthen the small growers of the semi-arid part of the state of Bahia, a region punished by long droughts, where only plants capable of resisting the harsh climate, like sisal8, survive. APAEB has 700 members trained not only in planting and collecting, but also in saving, obtaining financing, investing and diversifying their business. Thanks to financial emancipation, APAEB established a plant that produces 650 th sq. m of carpeting and rugs a year, which are exported to many countries, generating 620 direct jobs and average revenues of US$ 6 million.

Two large firms also stand out as social entrepreneurship agents, by implementing expansion strategies that incorporate low-income groups into their production chain:

AGROPALMA, in the North of the country, 150 km away from Belém, capital of the state of Pará, is considered to be Latin America’s largest palm oil producer (5.5 million palms and 120 million tons of dendê palm oil produced a year). In 2001, the group started the Dendê Family Crop Project9 in the towns in which it operated in Pará. As this is a region of glaring socioeconomic inequality, the project has a strong influence on the day-to-day life of the families of the small growers that embraced the firm’s proposal. By making it viable for small family growers to become part of the palm oil production chain as fruit suppliers, Agropalma enabled these people, who were formerly dedicated only to subsistence agriculture, to join the dynamic and modern production of the local economy. In order to achieve this, the firm combined the resources and efforts of the state of Pará government, of the councils of the towns covered by the project and of BASA, the Amazonia bank, the financial institution responsible for fostering economic development in the North of Brazil.

VCP (the pulp and paper production division of the Votorantim group), in Rio Grande do Sul, at the country’s opposite end, is outlining a strategic project that is vital for the firm’s expansion. Contrary to pioneering entrepreneurs that entered the region thanks to the magnitude of their strength and power, VCP tried to establish itself there by developing careful relationship networks with local communities. Seeking agricultural production partners, it also focused on credit and a technical orientation, not only to fulfill its raw material needs, but also to promote sustainable socio-environmental development, so that their presence in the area is a framework for the generation of positive impact. Thus, by now, its programs encompass small growers from 22 towns in the region10.

Both the entrepreneurial initiatives that arose from social movements and NGOs and those set up by firms and private corporations share a cross-sector collaboration paradigm. In other words, in order to develop their underlying ideal and implement it, it is necessary to combine resources and efforts from many sources, such as public bodies able to provide the conditions for expanding their scale of action; the Third Sector, with its miscellany of experiences, methods and technologies for dealing with social problems; and corporate organizations, with their need to make better use of their know-how and management practices in order to ensure their own sustainability as well as that of the parties covered by their relationship network. Social entrepreneurship, therefore, adopts the concept of collaborative work as a basic assumption, since, in this case also, “one swallow does not make a summer”.

Thus, entrepreneurial initiatives are discarding once and for all the concepts of merely assistive action and dependence, and replacing them by those of emancipation and citizenship. This is not only a terminology modernization issue, but a radical change in the values that support social welfare actions. It is not enough to provide help, but rather, it is necessary to equalize social conditions where personal freedom is concerned since this, as was aptly put by Amartya Sen11, is the condition for the existence of any development process.

8 A plant originally from Mexico, whose leaves produce a very strong fiber, used to make a range of handicrafts. In Spanish, it is

called ‘agave’. 9Dendê oil or red palm oil is highly appreciated in Brazilian cookery and is made from the fruit of the dendê palm, i.e. the African oil

palm(Elaeis guineensis). Besides its culinary uses, dendê oil can also replace diesel oil. It is it is used in the manufacturing of soap and candles, the protection of tin plate and steel sheets, the manufacturing of grease and lubricants and in vulcanized articles.

10 The VCP Impact Evaluation and Monitoring System Project is carried out by the CEATS team, under the coordination of Professors Rosa Maria Fischer and João Teixeira Pires.

11 SEN, Amartya Kumar. Desenvolvimento como liberdade. São Paulo: Companhia das Letras, 2000. 409 p. Bibliography; CDU - 330:300; Nº - 184a. ISBN 8571649782.