Upload
aditya-rajagopalan
View
214
Download
0
Embed Size (px)
Citation preview
8/18/2019 Social Entrpreneurship
1/30
Social Responsibility and Social Entrepreneurship DAVID O. RENZ, PH.D.
Aditya Rajagopalan | PA5529 | 22 January, 2016
8/18/2019 Social Entrpreneurship
2/30
Aditya Rajagopalan – Assignment 1
1
PA 5529 – Social Responsibility and Social Entrepreneurship
Assignment -1
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, founder of
Ashoka Changemakers
Social Entrepreneurship – How different it is from the “regular”
The term social refers to an inclusive and holistic approach towards the society.
Generally, social development has been related with promoting the well-being and
progress of the public and the community at large. Human tendency is usually inclined
towards pursuing personal gains over societal benefits. Thus, the processes and the
systems created by us, the humans, to serve the people are often biased. The role of
social development is to check this tendency, bring more balance and protect the larger
interest within the population.
On the other hand, entrepreneurs are talented and risk-taking opportunity seekers
who are committed to finding creative and innovative solutions to challenging problems,
making the best use of the resources and talents at their disposal, thereby creating value
for the society and wealth for himself. Social entrepreneurs are those counterparts of
business entrepreneurs, who work on problems having societal relevance. Apart from
possessing entrepreneurial traits like ambition, passion, creativity and dedication amongst
others, they also have a strong desire to make an impact and act as change agents. The
enormity of the societal and environmental problems, failure of open market policies and
public institutions, lack of political will, corruption, and the inability of the government
to solve such problems have resulted in bringing social entrepreneurship to the limelight
in recent history.
8/18/2019 Social Entrpreneurship
3/30
Aditya Rajagopalan – Assignment 1
2
The focus of social entrepreneurs is to find solutions that have an impact on the
society rather than the bottom line. A social entrepreneur focusses on creating wealth for
the community at large while safeguarding the environment for future generation.
The notion of a Social Enterprise
The process of social entrepreneurship begins with a combination of right people,
resources, and opportunity. Just as in the case of commercial ventures, where the value
proposition of a product or a service is crucial for success, a social value proposition is
very critical in social entrepreneurship. A social value proposition should be defined in a
way that is closely related to the desired outcome or the benefit, addresses the root of
the issue and is easily measurable.
In order to have a unique social value proposition and deliver results, social
entrepreneurs adopt many business and commercial strategies. The biggest challenge for
any social enterprise is to convert an opportunity into a mission, achieve sustainable
results and gain competitive advantage. A social enterprise can choose from various
business models and financing structures, come up with a suitable operational plan and
devise its long time strategy.
The story of AMUL, founded by social entrepreneur Dr. Verghese Kurien, is an
excellent example of a successful social enterprise in India. He not only just ran a
successful social enterprise but also started the White Revolution in India, helping the
small dairy farmers earn a better living. Initially founded to stop the exploitation of
farmers by middlemen. Playing a pioneering role in transforming India from a milk
importing country to the world's largest producer of milk, he famously said
“India's place in the sun would come from the partnership between the wisdom of
its rural people and skill of its professionals”.
http://en.wikipedia.org/wiki/Verghese_Kurienhttp://en.wikipedia.org/wiki/Verghese_Kurien
8/18/2019 Social Entrpreneurship
4/30
Aditya Rajagopalan – Assignment 1
3
AMUL gave the farmers direct access to domestic markets and built an excellent
supply chain management system for milk procurement. AMUL’s three-tier cooperative
structure helped in eliminating competition, achieve economies of scale, develop a
competitive advantage and create an iconic global brand. Backed by some excellent
leadership and management style, AMUL’s success was replicated across the country and
it totally altered the landscape of dairy industry in India.
Social Entrepreneurship – Different perspectives
Just as entrepreneurs change the face of business, social entrepreneurs act as the
change agents for society. The social innovation school of thought emphasizes that
viewing social entrepreneurship is establishing new and effective ways to address societal
problems. Irrespective the method they adopt and the way they function, ultimately the
thing that matters the most is the social value that they create. It is all about innovation
and impact, and not about commercial success or entrepreneurship. Though income
strategies and bottom line are important and are key to sustainability, it can never be
more important than the desired or intended social impact.
Traditionally social have focused on the business side of social engagement. Though
making a profit is not their main aim, these enterprises have to be reasonably profitable
in order to sustain and they may have to depend on investors or donors to support them
in the long run. Social enterprises are committed to solving social needs, bringing social
change, and inducing positive attitude in the community.
But they have an indirect
obligation to have a dual
double bottom line, meaning both social and financial bottom
line.
8/18/2019 Social Entrpreneurship
5/30
Aditya Rajagopalan – Assignment 1
4
On the other hand, social entrepreneurship from an innovation perspective tries to
shift the focus towards revolutionizing value creation. Coming from the social innovation
school of thought, Martin and Osberg argue that social entrepreneurship is all about
identifying a stable but inherently unjust equilibrium, finding an opportunity to create a
social value proposition that challenges the unjust equilibrium and subsequently working
towards forging a new, stable and just equilibrium for the welfare of the society.
Social innovators have a personal obsession to improve people’s lives by looking for
challenging problems and inequalities. Their personal background and the milieu in which
the person was exposed to the social sector are a major influence on their motivation to
work for the society and finding innovative and efficient solutions to address the root
cause of a social problem.
Social Innovation and Enterprise – Key Themes
Many a times, social entrepreneurs’ personal experience, education, work
experiences, and hobbies inspire them and make them uniquely positioned to solve some
of the most demanding social needs. They are driven, passionate and respond to the gaps
present between the existing situation and the desired social equilibrium. Making use of
the existing social assets and resources, they try to bring about a change or get inspired
and ride the change around them in order to bridge the gap between the desirable and
the reality.
The social impact theory articulates the importance of a well-conceived model which
connects the input, process, and the desired impact. The way social entrepreneurs choose
to enterprise their social innovation is a choice left to them and several factors like the
environment and the ecosystem in which they operate play a significant role in their
choice. Key elements of the entrepreneurial venture like an operational plan, resource
8/18/2019 Social Entrpreneurship
6/30
Aditya Rajagopalan – Assignment 1
5
strategy etc. should be designed in such a way that it aids the purpose of delivering social
impact, but never becomes the purpose in itself. Hence, we need to have a healthy and
supportive ecosystem, where the social entrepreneurs could make the best use of their
skills and innovative ideas.
Social Entrepreneurship – Further Learning
With rapid changes and advancements, social entrepreneurship has gained
unprecedented popularity. Some of the interesting areas to explore further in the area of
social entrepreneurship are:
1) The role of our education system in nurturing social entrepreneurs: What
constructive role should our education system play in creating and nurturing more
social entrepreneurs? What key changes needed in our present system?
2) The role of Networks and Coalition in Social Entrepreneurship: To what extent does
a “social” merger or an acquisition work? How important is to have a strong network
for a social entrepreneur to succeed?
3) A Cultural approach to Social Entrepreneurship: At both macro and micro level,
what role does culture play in influencing the entrepreneurial activity?
4) CSR vs Social Entrepreneurship: Would the corporate social responsibility of major
corporates overshadow social entrepreneurship in future? Should corporates have
“social” incubators for social entrepreneurs as part of their CSR?
5) Social Impact Assessment: With the increase in emphasis and demand for measuring
social impact, how to integrate social impact assessment as an internal part of
social entrepreneurship in a cost efficient way?
6) Future challenges and trends: What are the future challenges and trends in social
innovation that a budding social entrepreneur should anticipate?
8/18/2019 Social Entrpreneurship
7/30
Aditya Rajagopalan – Assignment 2
1
PA 5529 – Social Responsibility and Social Entrepreneurship
Assignment - 2
Social Entrepreneurship: Redefined
In the current scenario social entrepreneurs and also investors, to some extent, are
actively looking for opportunities that are sustainable in nature and can directly create a
significant positive social impact. Social entrepreneurs and donors are increasingly moving
away from the notion of donating to a social or environmental cause. There is philanthropy
on one end, where philanthropists focus solely on social return. There is the sustainable
investment on the opposite end, where investors focus on a financial return that is
appropriate to their risk appetite. Social Entrepreneurs, in this new age of social
innovation, are trying to tilt the balance towards the center where the main goal or
objective is to invest in social value based impact investments.
Legal, Financial and Assessment factors
There are a lot of legal, financial and assessment factors that need to be factored
in before starting a social enterprise. It is important to ensure that the vision of the social
enterprise is not lost such factors. The choice of legal or financial structure for a social
enterprise is a key decision to be made. A decision should be made in such a way that the
scale of the entrepreneurial activity, source of funding, types of stakeholders and the
nature of the beneficiaries are taken into consideration. A right legal structure is
important for a social enterprise to succeed and scale up in the future to be able to
address major social issues in the community. While on the other hand, some even the
greatest of an idea can fail if the social enterprise doesn’t have a proper legal structure
in place. Hence, it is critical for an entrepreneur to have to have a clear long term goal
before deciding on the legal structure.
8/18/2019 Social Entrpreneurship
8/30
Aditya Rajagopalan – Assignment 2
2
Both for-profit enterprises, as well as nonprofit structures, have their own merits
and constraints. Ideally, a social enterprise would like to have the advantages of both the
for-profit and nonprofit organization, and hence, a hybrid structure that combines the
goals of both the for-profit and nonprofit organization is gaining prominence. The hybrid
model is a mix of the non-profit and for-profit model, where the non-profit foundations
raise awareness about subjects related to their social objective and the for-profit part of
the foundation provides services that help supplement the social objective while
generating sufficient revenue and profit. Although hybrid structure helps in leveraging the
pros of both the non-profit and for-profit models, it is difficult to maintain focus on both
social and economic objectives.
Autonomy or the extent of control, ownership, funding, personal liability and
governance also play an important role. Exposure to personal liability is the reason why
legal structures like proprietorship and general partnership are not favored. The non–
profit structure goes well for those social enterprises that do not expect to make profits
from their revenues. The major advantage of following a non-profit model is that the
organization becomes tax-exempt. These organizations can accept both public grants and
private charitable donations. Hence, this is ideal for start-ups that work with the sole aim
of social benefits, without any pressure or need to generate income. However, in some
cases, the non-profit corporation can create a for-profit subsidiary that generates profit
to fund the activities of the parent non-profit corporation. But shared control, constant
public scrutiny and limited areas for operation are some of the drawbacks.
The for-profit enterprises have the liberty to compete in a market and sell a
product or a service to consumers. A key benefit of this model is the ability of for-profit
enterprises to attract funding from venture capitalists and easier access to capital
markets. On the flip side, the earnings are taxed at two levels.
8/18/2019 Social Entrpreneurship
9/30
Aditya Rajagopalan – Assignment 2
3
Hence, the pressure to register profits and the liabilit y towards to the shareholders
can cause the enterprise to lose focus on the social objective. There are also adaptations
of the for-profit models like the S corporation, where only the shareholders are taxed at
a personal level. Then there is the low-profit Limited Liability Corporation or L3C. Unlike
nonprofit entities, the L3C is not discouraged from earning a profit. The L3C model
protects social entrepreneurs from personal liability. It also gives entrepreneurs freedom
with respect to governance, regulations, and taxation laws. The L3C model also makes it
possible to receive investments related to the social mission.
Social entrepreneurs have also started to look at various new ways to look for
investments and funding. They are constantly looking for investors who think of social
return on investment. Fundraising methods are influenced by the legal structure of the
entity and the method of fundraising entrepreneurs adopt can have significant effects on
administrative decisions and the functioning of the enterprise. Innovative methods like
social impact bonds and crowdsourcing are also gaining popularity.
Grants, Debt, and equity are the three most common sources of capital. Grants are
sometimes program specific in nature and come with certain restriction. Different types
of debt instruments are also available for all types of entities. Through equity investment,
for-profits can raise capital by selling shares to investors. Alignment of investors’
expectation with that of the social mission is very important.
Social entrepreneurs are usually expected to report the impact they have created
to beneficiaries, investors, and partners. But social impact measurement should also be
seen as a tool to improve and verify the social enterprise model. Proper impact
measurement tools can help them ensure that they are on the right path. Assessment
should be done to study how value creation occurs rather than to just showcase results.
8/18/2019 Social Entrpreneurship
10/30
Aditya Rajagopalan – Assignment 2
4
Though a right form of a legal and financial structure is highly essential for a
successful social enterprise, it is the impact and the outcome of a social enterprise that
validates the underlying model and hence it is the most useful dimension to consider while
evaluating a social enterprise. Efficient resource allocation, making a stronger case to the
stakeholders, and identifying the organization with the industry and the proposed theory
of change are some positive outcomes that can arise out of measuring social impact in a
proper way.
Defining an accurate social value proposition, identifying metrics and parameters
that can be measured to quantify social value and monetizing the value of the social
indicators are the three basic steps in social impact assessment.
Role of Innovation and creativity
Entrepreneurship, in general, is about innovation and innovation is more of a social
or an economic concept. In today's scenario of social entrepreneurship, there is a free
exchange of values and ideas between nonprofit, government, and business sectors and
the boundaries between these sectors have blurred. This has raised the bar in terms of
the expectations out of social enterprises, and hence there is a need to adopt holistic and
innovative ways to create products that are efficient, high on novelty and can transform
an existing domain into a new favorable one.
Innovation, in itself, is comprised of four elements viz. the process of innovating
or generating a novel idea, the invention itself, the diffusion of the innovation and the
value created by the innovation. The final element, when seen as a social value, is the
core of social entrepreneurship. For innovation to occur, nonlinear or disruptive thinking
is required and creativity is nothing but lateral thinking coupled with novelty and newness.
8/18/2019 Social Entrpreneurship
11/30
Aditya Rajagopalan – Assignment 2
5
Creativity is the exploring new thoughts and conceiving new ideas whereas
Innovation is about bringing life to those ideas and designing a measurable solution out of
those ideas. Creativity is about ideation and inspiration, and it is a precursor to
innovation, which is more about implementation and incubation.
Relevance of Risk and concept of scale
Entrepreneurship is characterized by risk. Financial risk, operational risk,
environmental risk, political risk, competitive risk, economic risk and technology risk are
common to all entrepreneurs. But the risk of expectation mismatch or widening of the gap
between expectations and deliverables is very high in case of social entrepreneurship.
Often backed by passionate stories and emotional outreach, the optimism and hype
surrounding a social enterprise is so high that the ramifications of its failure are also
extreme in nature.
It is always better for any entrepreneur to start small enough to prove the theory
of change and then gradually scale if required. Though the success may weigh more at a
bigger scale, the probability of succeeding, however, is naturally lower. By “going to
scale”, optimized and larger social impact are possible only if the theory of change could
be replicated and adapted in accordance with the context, nature of people and the
ecosystem at the bigger level. It is not about just replication, but a whole new process
which involves studying the differences and customizing the existing model. It is also
important that we neither underestimate the risks no overstate the benefits. While it is
great if the “going to approach” succeeds, it is not appropriate to judge the success or
failure of a social enterprise based on its scale. After all, these enterprises are born out
of social innovations that are specifically targeted at a target population and it would be
highly unfair to always expect it to be capable of replication.
8/18/2019 Social Entrpreneurship
12/30
Aditya Rajagopalan – Final Reflection and Integration Paper
1
PA 5529 – Social Responsibility and Social Entrepreneurship
Final Reflection and Integration Paper
Corporate Social Responsibility
“Corporate Social Responsibility is the continuing commitment by business to
behave ethically and contribute to economic development while improving the quality of
life of the workforce and their families as well as of the local community and society at
large” - World Business Council for Sustainable Development
In terms of the relationship between corporates, the government, and the society,
there has been a traditional disconnect and the three entities have been predominantly
operating in isolation. Businesses were seen as pitted against the society. Corporates were
viewing corporate social responsibility (CSR) more as a cost for doing business as their
products and services have an impact on the environment. However, businesses can’t exist
in isolation and focus on profit maximization.
There has to be a transformation of the relationship between the businesses and
the society from a more generic and a philanthropic one to a strategic partnership, where
the joint interests of all the stakeholders are taken care of. Companies are slowly starting
to understand the fact that CSR practices have to move away from charity related work
towards strategic initiatives, so as to gain competitive advantage and ensure continued
relevance and existence.
Generally speaking, some of the main reasons why corporates engage in CSR are a
moral appeal, sustainability, license to operate and reputation of the firm. But t he current
business environment is going through rapid changes due to increased competition and
new business practices that are emerging out of globalization.
8/18/2019 Social Entrpreneurship
13/30
Aditya Rajagopalan – Final Reflection and Integration Paper
2
Companies are evolving in a way to effectively compete in today's competitive
environment that emphasizes the interdependence of business and society. Rather than
just focusing on the bottom line, the focus needs to shift towards the triple bottom line
of economic, social and environmental performance. The focus should shift from
responsive CSR, which is focusing on social issues that are not significantly related to a
company’s operations, to strategic CSR.
Strategic Corporate Social Responsibility
A generic rationale behind CSR that is not linked to the strategy of the company
neither creates a lasting social impact nor helps the firm in distinguishing and
strengthening its position amongst the competition. A business depends on the society and
government to be successful and productive. Good governance, clear regulations and a
healthy society create an expanding environment for a business. Similarly, by creating
jobs, wealth and promoting innovation, companies and businesses play an irreplaceable
role in the development of societies.
Thus, it is important to identify the points of intersection between a company and
society. There are two approaches to identify these points of interaction and map the
social opportunities. The first approach is to look inside out and identify the impacts
caused by the company’s value chain on the environment and society. By understanding
the consequences of the company’s value chain, companies can try to find out solutions
to such problems in the ordinary course of business. By doing so, a company not creates a
social impact, but also protects itself from future legal issues and sets a benchmark for
the competition. By constantly plugging the gaps in the inside out linkages, a company
can preempt its competitors and stay relevant.
8/18/2019 Social Entrpreneurship
14/30
Aditya Rajagopalan – Final Reflection and Integration Paper
3
The second approach would be to look at the outside in linkages. This approach
focusses on the competitive context in which a company operates and the social issues
and the shortcomings in the external environment. These limitations can significantly
impact a company’s performance. Competitive context can broadly be divided into four
areas:
Factor conditions or business inputs: These refer to the availability of specialized and
sophisticated inputs like human capital, infrastructure, technology etc. that can aid in
increasing the productivity
Regulations governing the business environment: Presence of clear and elaborate local
policies and norms that promote businesses, encourage investments and influence
productivity in an open and fair manner.
The sophistication of demand: The size of the local market and the consumption
propensity of customers in the local market is a key to enhancing the region's
competitiveness. A sophisticated market drives the industry towards better quality and
innovative products, and often can also create a new market for future products and
services.
Supporting industries: Presence of sound related and supporting industries and suppliers
that can help in reducing costs, enhance responsiveness and aid in the better exchange of
information and ideas.
By choosing a social issue that falls under one of the four categories described
above, a company not only creates a social impact but can also leverage benefits out of
its own corporate social agenda. By integrating both the approaches, i.e. working on value
chain developments through innovations and addressing inefficiencies and constraints in
the competitive context, the impact of CSR would be even more signifi cant.
8/18/2019 Social Entrpreneurship
15/30
Aditya Rajagopalan – Final Reflection and Integration Paper
4
By adding a social dimension to the value proposition, a company can weave a
corporate strategy where corporate social responsibility seamlessly blends with regular
business activity. Companies could even engage in corporate philanthropy that are
strategic in nature. Corporate philanthropy could help in improving the competitive
context in a given area. By initiating such philanthropy, a company indirectly forces its
competitors to follow suit and thus share the costs. If the corporate philanthropy is
uniquely aligned with a company’s strategy, the company will benefit from the enhanced
context in a better way.
In order to maximize the value of corporate philanthropy, it is important to identify
an effective partner organization who can make the best use of grant and create maximum
social impact. Subsequently, the partner organization could be promoted so that
additional funding could be obtained, thereby eliminating the problem of social free riding
and creating an effective way of resource allocation.
But the role of corporate doesn't end with giving away funds. They should work
closely with the partner organizations to improve their performance. By providing
expertise, research ideas, infrastructure and other forms of support, the corporates can
extract the maximum social return on the grantee’s total budget.
From being defensive and not accepting social responsibility to being compliant
and accepting CSR as a cost of doing business, and then now looking at CSR in a strategic
angle, companies have come a long way along with the evolution of CSR. Going forward,
CSR is bound to develop as a mandatory identity for all corporates, promoting and
enhancing social and economic value creation through collective efforts.
8/18/2019 Social Entrpreneurship
16/30
Aditya Rajagopalan – Final Reflection and Integration Paper
5
Social Entrepreneurship
Social entrepreneurship can be interpreted as a measure to apply practical,
innovative and sustainable approaches to benefit the society as a whole. The measure
would give adequate importance to the downtrodden and sections of the society that are
marginalized. It can be looked at as an approach to solving economic and social problems
which cut across sectors and disciplines. This approach that a social entrepreneur takes,
emerge to be distinct and this sets himself apart from the crowd of other entrepreneurs.
Social entrepreneurs possess an innate capability to strongly pursue an identified
opportunity and turn it into a favorable outcome for the society. They have a driving
passion for making it happen and in the process they also look at the practicality of the
model formulated. They can be called change drivers; they don't wait for something to
happen. A social entrepreneur is a pragmatic visionary whose primary focus is
social/ecological value creation and he tries to optimize it through financial value
creation. The enormity of the societal and environmental problems, failure of open market
policies and public institutions, lack of political will, corruption, and the inability of the
government to solve such problems have resulted in bringing social entrepreneurship to
the limelight in recent history.
Innovation is an important factor of social entrepreneurship. At the same time, the
ability to use the newly found approaches and its impact is also crucial. The difference
between regular entrepreneurs and social entrepreneurs is the way they define and
articulate success. They measure success in different ways. For regular entrepreneurs
financial success and profits define success. Whereas for social entrepreneurs the social
impact that they bring about constitute success. Quantifying the impact in the case of
social entrepreneurship is difficult as it is abstract and it varies across ventures and hence
is not comparable easily.
8/18/2019 Social Entrpreneurship
17/30
Aditya Rajagopalan – Final Reflection and Integration Paper
6
There is philanthropy on one end, where philanthropists focus solely on social
return. There is the sustainable investment on the opposite end, where investors focus on
a financial return that is appropriate to their risk appetite. Social Entrepreneurs, in this
new age of social innovation, are trying to tilt the balance towards the center where the
main goal or objective is to invest in social value based impact investments.
Though a right form of a legal and financial structure is highly essential for a
successful social enterprise, it is the impact and the outcome of a social enterprise that
validates the underlying model and hence it is the most useful dimension to consider while
evaluating a social enterprise. The choice of legal or financial structure for a social
enterprise is a key decision to be made. It is important to ensure that the vision of the
social enterprise is not lost such factors.
Social Value
The underpinning factor for corporate social responsibility and social
entrepreneurship is social value. Economic value is more quantifiable whereas on the
other hand measuring social value is difficult. There are many forms of social value and
there is no standardized way of comparing them. Companies have lately been promising
the triple bottom line approach. This is an approach which creates economic,
environmental and social value.
Can social value be looked at as a benefit to the society or an improvement that
has taken place in the society? The answer is a big ‘NO’. Even technology can be termed
as an improvement for the society but what value has it created for the underprivileged?
Hence such benefits and advancements cannot be said to create social value. Hence social
entrepreneurs and companies that take up corporate social responsibility movements
should exercise caution while defining and measuring social value.
8/18/2019 Social Entrpreneurship
18/30
Aditya Rajagopalan – Final Reflection and Integration Paper
7
Challenging the status quo and creating something new that will alter the social
continuum of the society is what social value is all about. Some instances of social value
creation can be the increase in the literacy rate in a region, increase the life expectancy
rate by improving health care, reduction in the number of infant deaths, reduction of the
number of people below the poverty line etc. The commonality among the above-stated
instances is that there is value creation in the way of living and the status of the people.
Who should be the focus for creating value? How do we identify our target group?
Something that is beneficial for one community need not necessarily be beneficial for the
other. There is tension in the air between companies and its investors as the investors
need a quantifiable measure for social value. This should, hopefully, lead to discoveries
that might bring about standardized measures for social value.
Going to Scale
What can be an appropriate measurement of entrepreneurship? The scale is
definitely not a right measure to judge social entrepreneurship. The context in which a
venture has been established is important. This context varies drastically when the frame
of reference fixed is social value. In the case of social entrepreneurship what works out
well for one community might not necessarily work out well for others too and hence
scaling to various other domains and communities might not provide the desired results.
In a customary view, companies grow much faster and realize profits sooner by making its
business scalable. Scaling, however, makes no sense when there is no unmet demand or
need for a product in a particular region. Therefore, the scale is not an appropriate
measure to judge the level of success of social entrepreneurship. For a social
entrepreneurial venture to be successful, efficient use of the limited available resources
and the desired social impact on the society makes much more sense.
8/18/2019 Social Entrpreneurship
19/30
Aditya Rajagopalan – Final Reflection and Integration Paper
8
The risk is inevitable in any entrepreneurial venture. There are many types of risks
like financial risk, environmental risk, political risk, the risk that arises out of competitive
rivalry etc. Measurement minimization of such risks can also be looked at as a measure of
social entrepreneurship. In the case of social entrepreneurship, the risk of expectation
mismatch or widening of the gap between expectations and deliverables is very high.
Social entrepreneurs should prudently analyze all such caveats before starting to scale an
entrepreneurial venture.
While it is great if the “going to approach” succeeds, it is not appropriate to judge
the success or failure of a social enterprise based on its scale. After all, these enterprises
are born out of social innovations that are specifically targeted at a target population and
it would be highly unfair to always expect it to be capable of replication.
Characteristics of a Social Entrepreneur
It is quoted that “Give a man a fish and you feed him for a day; teach a man to
fish, and you feed him for a lifetime.” A social entrepreneur may not look at the man or
the fish, but he might rather analyze the inherent problem and explore the situation as
to what prevented the man from learning to fish and who are the other men who can’t
fish? Wealth is a measure of success for entrepreneurs while for social entrepreneurs
wealth is only a means to an end, the end being social change. They establish a business
with the goal of solving social problems. Their contributions to society embrace bringing
large-scale social development.
Transformative Action Institute (TAI) have been teaching the curriculum, which
inculcates the skills and competencies that are critical for becoming a social
entrepreneur. Everyone can and should aspire to be a social entrepreneur and the
following are the characteristics, which can be developed with practice.
8/18/2019 Social Entrpreneurship
20/30
Aditya Rajagopalan – Final Reflection and Integration Paper
9
Leadership: People can take initiatives and actions towards resolving problems
instead of complaining about what went wrong.
Grit: A complete commitment and relentless drive to accomplish goals with the
blend of passion, perseverance, and hard work.
Empathy: People should imagine things from other’s perspective, which will enable
them to better understand the needs of the people whom they serve.
Optimism: This deals with developing a strong sense of self-efficacy to achieve a
bold vision, if people have the belief that that have the control to change their
circumstances.
Social Intelligence: This involves strong relationship building qualities and having a
good emotional connect with others.
Creativity: People should start seeing things from an unconventional perspective
and must be keen on exploring opportunities.
Resilience during adversity: Obstacles, Challenges, and failures should never hinder
their progress and they view failures as a stepping stone to success and as a
valuable feedback.
It could also be interesting to see how the Big 5 theory of personality (OCEAN)
namely, openness, conscientiousness, extraversion, agreeableness and neuroticism can be
extrapolated to measure the personality traits of a social entrepreneur namely. In general,
it seems that agreeableness and openness exert a positive influence on social vision and
innovation. Social entrepreneurs are also known for their knack to enable, enact and
envisage transformational changes, despite facing risks and having inadequate resources.
They tend to be focused, opportunistic, passionate, resourceful, persuasive and self -
believing leaders. Thus by focusing on the above behavioral characteristics, one can very
well go on to become a social entrepreneur.
8/18/2019 Social Entrpreneurship
21/30
Aditya Rajagopalan – Final Reflection and Integration Paper
10
Though they seem to share certain behavioral characteristics with the commercial
entrepreneurs such as the ability to detect opportunities, drive to innovate and willingness
to bear the risk, the key difference, however, is their socio-moral motivation to engage
in social activities. They have the ability to formulate ideas with an eye to large scale
that will have a positive impact on society and economic sustainability. They strike a
balance between economic and societal value creation through their creativity and
proficiency. Their success is accomplished in a long haul when there is a long-term
structural change to the cause that is being addressed. In a nutshell, a strong ethical and
social impetus combined with a willingness to break free of established structure to find
innovative solutions would make a social entrepreneur successful.
8/18/2019 Social Entrpreneurship
22/30
Aditya Rajagopalan – Final Reflection and Integration Paper
11
Indego Africa Case Study
Indego Africa (IA), founded by the father-son duo of Matt and Tom Mitro, is a
nonprofit social enterprise operating in Rwanda to alleviate systematic poverty. Having
already proved its business model in Rwanda by providing skills and job access to women,
it has already begun to expand the model in Rwanda. The mission of Indego Africa has
been to make businesswomen in Rwanda self-dependent by imparting long-term skills and
empowering them economically. Its operating model has been to partner with co-
operatives and sells contemporary products created by women artisans through high-end
retailers. Indego Africa believes that economically empowered women could bring
development to the society.
While Indego Africa in itself follows a nonprofit model, it partners with
cooperatives that are independent for-profit businesses employing world class women
artisans in Rwanda. Owing to this hybrid model, it generates revenues from both product
sales of cooperatives and from individual donations and other grants. Over the years,
product sales and donations averaged 25 percent and 75 percent respectively. The hybrid
model is advantageous and suitable for Indego Africa because donations and grants have
compensated for the decline in revenue from product sales if any.
Indego Africa's approach to achieving their mission is backed by their two key
strategies, i.e. guiding strategy, and retail strategy. By following best practices and
employing a high standard of transparency, Indego Africa can achieve better productivity
and visibility. By adhering to strict financial controls and ethics, Indego Africa can attract
better funding from corporate donors. By outsourcing the entire supply chain, they have
focused on a lean structure and avoided taking on additional unused excess capacity. This
gives them the flexibility to scale operations if required.
8/18/2019 Social Entrpreneurship
23/30
Aditya Rajagopalan – Final Reflection and Integration Paper
12
As part of Indego Africa’s strategic model, its thrust on sustainability is worthy of
praise. Keeping long-term goals in mind, the emphasis on harnessing local talent and
providing training programs for the locals would come in handy during expansion. The
development programs targeted at the individuals impart necessary job skills while the
programs aimed at the co-operatives are intended to make the co-operatives profitable
and self-reliant.
Women folk of Rwanda would be an obvious stakeholder whom Indego Africa should
engage. It is very clear that apart from being economically backward, a host of other
issues like lack of health care, the prevalence of HIV, malnourishment, and psychological
trauma have been affecting the Rwanda community. Providing skill based training and
giving access to markets would definitely improve the economic condition. But it is unclear
whether the economic development would translate into social development in the near
future. Hence, it is important to understand from the beneficiaries, their most pressing
need.
Next, Indego Africa should engage the educational institutes and Rwanda’s
university students who play the important role of educating these women. These students
live in the same country, understand the culture in a better way and serve as the vital
link between the community and Indego Africa. This would help them in clearly defining
the training program, its intended benefits and also measuring the progress of the tra ining
program.
Indego Africa should also engage the government and the Rwandan public as a
stakeholder. The government is a stakeholder not just because of the grants and aid it
provides, but because of the constructive role it has to play.
8/18/2019 Social Entrpreneurship
24/30
Aditya Rajagopalan – Final Reflection and Integration Paper
13
By gaining the support of the government and the public, Indego Africa can create
a better and a wider social impact. Also, for the model to be successfully scaled across
the country, the government's help would be very much needed in terms of favorable
policies and regulations. Finally, as 75% of the funding is through donations, Indego Africa
should also engage its donors.
With regards to tracking outcomes over time, Indego Africa should first target the
business results of its partner cooperatives. The success of its social mission is heavily
dependent on the success of its for-profit partners. Indego Africa and its co-operative
partners access the market through retailers on a strict fair trade basis and even the order
fulfillment process is outsourced to Amazon. There should be close monitoring of sales
pattern and order fulfillment data to get the pulse of the market trend. This would help
Indego Africa in staying ahead of competitors and adjust according to market demands.
Also, insights from retail partners can be used to customize products and to market the
products in a better way. Quality controls and production efficiency of the partner co-
operatives are also worthy enough of monitoring so that maximum economic output is
extracted.
Secondly, the effectiveness of the education program needs to be monitored. Since
considerable funds are being spent for training purposes, it would be useful to understand
how exactly the training helping these women in their day to day business. Data and
feedback about the training program could be used to review the program and modify it
accordingly to suit the needs. Apart from meeting business needs, it is important that the
education provided reaches more people and could be used for improving the living
conditions of the people.
8/18/2019 Social Entrpreneurship
25/30
Aditya Rajagopalan – Final Reflection and Integration Paper
14
Finally, it is extremely important to measure the social outcomes out of these
economic activities. Facts show that the daily income of artesian women has increased up
to $2 a day. However, the intention is to use the additional income in a productive way
to improve the status of healthcare, education, housing and hunger. Hence, Indego Africa
should observe and keep track of how the additional income is being spent. Indego Africa
must also track financial security, participation rate and other indicators of quality of life
to see if the empowerment of women leads to empowerment of the entire society.
Indego Africa's baseline approach to measuring social impact is focused on personal
security, education, IT skills and fair trade. The fact that it has a scientifically valid social
impact assessment tool, which is used to access the efficacy of the program, in itself is a
big strength. The instrument or the questionnaire seems to address all major issues, but
it looks like qualitative indicators like self -confidence and perception are not considered.
Given that the history of genocide and trust deficit in the society, it is very important to
ascertain whether any progress is made in this direction.
While the questionnaire does a good job of capturing information from the
beneficiaries, one on one interviews with these women would be helpful in learning more
about the subtle behavioral aspects of their overall development. Also, the scope of the
assessment should be widened to include other stakeholders like the trainers, co-
operative partners and other people who are interact with the beneficiaries in a regular
manner. This would not only help in validating the data provided by the women but could
also throw light on different perspectives about the overall program. Given that Indego
Africa is looking to scale its presence throughout the country, it is better if the target
respondents are chosen in a way that closely resembles the entire society and
demonstrates external validity. The results of the assessment, however, should be
adjusted to eliminate the effects of other externalities, both positive and negative.
8/18/2019 Social Entrpreneurship
26/30
Aditya Rajagopalan – Final Reflection and Integration Paper
15
Indego Africa faces internal challenges and incurs significant costs in terms of
money and human resources in conducting the social impact assessment process. To
overcome the issue of cost, it could consider partnering with like-minded market research
consulting firms. Independent Pro Bono consultants and universities could also be
approached for support. For example, graduate students could work on impact assessment
as part of their empirical or research work. Many institutes would be happy to be
associated with a good cause and outsourcing the assessment process would also bring
more credibility to it.
When it comes to the point of tackling comfort with the questionnaire, it is very
important to build trust with the women right from the beginning. Through workshops and
training programs, women should be made aware of the advantages of an accurate social
impact assessment mechanism. They should be made to feel that by providing relevant
data, they are helping themselves. At the same time, the assessment should be designed
in a way that appeals to all the participants irrespective of their educational and cultural
background.
Being a nonprofit organization that prides itself on being transparent and ethical,
it is only fair that Indego Africa puts constant effort to overcome the challenges faced in
its social impact measurement. As we have seen in this case, a successful combination of
business-minded approach to a social problem has yielded desirable results. As social
entrepreneurs continue to innovate and corporates adopt the idea of strategic corporate
social responsibility, there is a huge potential for the community to benefit from the
shared value of economic and social bottom line. Going forward, it would be interesting
to see how Indego Africa scales its model and achieves the final objective of expanding to
other places and countries.
8/18/2019 Social Entrpreneurship
27/30
Aditya Rajagopalan – Class Discussion Worksheet
1
PA5529: Class Discussion Worksheet
1) What are three of the most important themes that weave through the readings? Why?
Corporate Social Responsibility: Society no longer tolerates companies that damage the
environment or don't care about worker's rights and conditions. Companies are held to a
higher social standard and according to Michael Porter, this has been the key reason behind
the rise of CSR. Companies have started to look at social issues which were previous not
considered as a part of the business responsibility. Business & competition are no longer a
zero sum game.
Defining Social Entrepreneurship: What exactly constitutes social entrepreneurship is
still very much debatable. Porter and Krammer, in their research article, argue that a social
context creates an opportunity that triggers a set of personal characteristics in a social
entrepreneur. Many a times, social entrepreneurs’ personal experience, education, work
experiences, and hobbies inspire them. Just as entrepreneurs change the face of business,
social entrepreneurs act as the change agents for society. A behavioral approach to defining
social entrepreneurship suggests that the action, not the outcome, of a social entrepreneur,
matters the most. In my personal opinion, anyone who even tries to change any unfair
equilibrium in the society is a social entrepreneur.
Scaling: Does a social entrepreneurial venture have to go to scale in order to be
considered social entrepreneurship? Is scale a correct measure of entrepreneurship? These
are pertinent questions for every social entrepreneur. Scale needs to be defined in terms
of the context. Context varies drastically when the frame of reference fixed is social value.
In some cases scale could be geographical while in some it could mean depth of operations.
In the case of social entrepreneurship what works out well for a particular segment might
not necessarily work out well for others. Realizing this fact is very important before we talk
about scaling an enterprise. This was also clearly evident in Finding The Way article.
8/18/2019 Social Entrpreneurship
28/30
Aditya Rajagopalan – Class Discussion Worksheet
2
2) What are their implications for effective strategy and management?
Companies are evolving in a way to effectively compete in today's competitive
environment that emphasizes the interdependence of business and society. Social issues
can no longer be left behind as the responsibility of governments and Non-profits alone.
Earlier, businesses were focused mainly on the bottom line. Now, rather than just focusing
on the bottom line, the focus needs to shift towards the triple bottom line of economic,
social and environmental performance. In today’s world of strategy and management, the
following things are paramount for any business or social enterprise.
Make the social themes an integral part of the company's fabric
Be strategic with your financial, human capital and resources
Communicate both internally and externally regarding your strategy, efforts and results
The evolution of the idea of social value is significant and is increasingly becoming a
part of strategy and management. The underpinning factor for corporate social
responsibility and social entrepreneurship is social value. These concepts are dynamically
changing and are all interconnected with strategy and decision making.
The current business environment is going through rapid changes due to increased
competition and new business practices that are emerging out of globalization. Owing to
globalization and readily available sophisticated information, there has been a tremendous
change in the way society and business have been functioning. Through digital and social
media, people have quick and easy access to information about anything and everything
that they would like to know. The society has become more inclusive in terms of caring for
the environment and the underprivileged. With growing awareness among the people, there
has also been an increase in the expectations from businesses in terms of their
accountability and contribution to the community and environment. Thus, the themes
discussed above have far stretching implications on leaders and their management team.
8/18/2019 Social Entrpreneurship
29/30
Aditya Rajagopalan – Class Discussion Worksheet
3
3) What does it mean for a corporation to practice "strategic corporate social
responsibility”? What are the key elements central to an effective approach to CSR?
Michael Porter and Mark Krammer argue that CSR can much more than a cost or a
charitable deed and companies can develop a competitive advantage by aligning their CSR
activities with the business. The fact that both the company and the community are
interdependent makes it easier to understand that the relationships a company builds with
the community can turn out to be a strategic partnership. There has to be a transformation
of the relationship between the businesses and the society from a more generic and a
philanthropic one to a strategic partnership, where the joint interests of all the stakeholders
are taken care of.
Simon Zadek also explains how a company can take a strategic position, wherein it treats
a societal issue and CSR as an integral part of business strategy, in contrast to a defensive
position that shies away from taking responsibility for societal issues. In making a transition
from a defensive approach to a strategic one, organizations may go through the stages of
“compliance”, where companies accept CSR as a cost of doing business and be compliant
to norms, and “managerial”, where managers take responsibility for mitigation of the
problem.
Thus, it is important to identify the points of intersection between a company and
society. By finding out the ways in which the organization affects the community and the
various limitations that are imposed by the society on a firm’s competitiveness, companies
can choose to address social issues that add a social dimension to its value proposition.
Thus, a company not only creates a social impact but can also leverage benefits out of its
own corporate social agenda. By moving along the spectrum from responsive CSR to
strategic CSR, a company can gain the maximum competitive advantage by weaving a
corporate strategy where social responsibility blends with regular business activity.
8/18/2019 Social Entrpreneurship
30/30
Aditya Rajagopalan – Class Discussion Worksheet
4) Finding The Way: Case Discussion
Firstly the organization as a whole has to sit down and create a structured program
document that codifies all the processes followed so far. The organization should have a clear
and well-defined mission statement. How exactly is it differentiated from the other non-profits
working for the same cause? Knowing this would help the organization fine tune its process and
modify accordingly. Is there anything that is strikingly similar among the twenty-odd felons who
have been rehabilitated? If yes, that should be the organization's basis for targeting and
selecting future convicted felons. By answering the two questions above, we could arrive at a
well-positioned mission statement and clear target beneficiaries.
The present strength of the organization is good enough to serve only 12 to 15 young men.
The first focus would be to add members who could be mentored by the existing team. Slowly,
the organization can think of expanding the support to more convicted felons. The organization
has been operating on a limited budget of $235,000 that too entirely based on donations. This
is not a sustainable model for the long-term. Efforts must be made to involve community
members other than members of the church. Can we involve companies who could be potential
employers of these felons? The team can work on creating customized training programs that
could benefit the participating companies.
The idea of scaling this program nationwide could turn out to be disastrous. The grant of
500,000 would be sufficient enough to expand the services in Kansas City alone. The idea of
serving convicted felons in all states is impossible. There is still a lot of ground to be covered
in Kansas City itself as the organization is just three years old. The organization should also
exercise caution while accepting grants. The current board is comprised of like-minded people
and by accepting grants, there should not be any compromise on authority and decision making.
To conclude, the organization should certainly scale, but in terms of depth and quality of
operations in Kansas City and not in terms of geographical area.