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Skip to 0 minutes and 9 seconds In 2006, Muhammad Yunus received the Nobel Peace Prize. Yunus showed that with tiny loans, the poor women of Bangladesh were able to lift themselves from poverty. With a sewing machine, they could manufacture clothes, repay the loan, buy food, and educate their children. Grameen Bank, the first microfinance institution, created a business by charging interest on these loans and recycling the funds to the poor. Such small loans have helped millions of people around the globe to improve their lives and the vitality of their communities. Muhammad Yunus provides a classic example of social entrepreneurship. Social entrepreneurship is increasingly recognised as a distinct form of entrepreneurship. Social entrepreneurship seems to be the best of both worlds.

Skip to 1 minute and 8 seconds However, if too many activities are included in the definition, the construct may lose its attraction. In this lecture, we first define what social entrepreneurship is. Second, we address what it is not. And third, we discuss what drives a social entrepreneur. Any definition of social entrepreneurship starts with entrepreneurship. The prefix “social” modifies entrepreneurship. Entrepreneurship is associated with opportunity recognition, development, and exploitation. Where others are impressed by the associated uncertainty and complexity, entrepreneurs take action, create solutions, and accept uncertainty. Like others, Mohamed Yunus recognised the flaws of traditional banking not able to provide loans to the poor, leaving them no other option than to turn to loan sharks or to beg for money on the streets.

Skip to 2 minutes and 25 seconds Unlike others, Mohammad Yunus turned the threat of social deprivation into an opportunity for value creation. Extending the value creation logic to social issues represents the core of social entrepreneurship. Social entrepreneurship encompasses all activities undertaken to discover, define, and exploit opportunities to enhance social wealth by creating new ventures or managing organisations in an innovative manner. The prefix “social” focuses on the creation of social wealth as a goal, whereas “entrepreneurship” emphasises the creation of new business models and solutions. All companies, be it Apple, Samsung, create social value. However, the tipping point for a social enterprise is whether social outcomes are prioritised over financial ones.

Skip to 3 minutes and 31 seconds For instance, for the Dutch company Tony’s Chocolonely’s the main objective is 100% slave-free chocolate, and this has priority over profitability. Now, social entrepreneurship is defined. Let’s demarcate it from what it is not. The priority given to social wealth distinguishes social entrepreneurship from other entrepreneurial activities. The emphasis on entrepreneurial activities distinguishes social entrepreneurship from social service provision and social activists’ attempts to create social change by influencing others. Following this logic, organisations pursuing profits as their main objective fall outside the domain of social entrepreneurship. This includes for profit firms engaged in socially responsible activities. Also, not-for-profit organisations ignoring economic implications of their operations lie outside the boundaries of social entrepreneurship. Social entrepreneurs pursue multiple objectives.

Skip to 4 minutes and 50 seconds Zara and others claim that social entrepreneurship offers an excellent example of how diverse motives inspire individuals to conceive, build, and operate organisations that address personally important issues. This builds on Side and Mark’s observation that entrepreneurs have multiple personal motives, reflecting economic and non-economic objectives. The drivers of social entrepreneurship reflect both social and economic considerations. Zara et al. therefore propose the concept of total wealth as a standard to evaluate those opportunities and organisational processes related to social entrepreneurship. Total wealth includes economic wealth plus social wealth, and has tangible formats, products, sales, or profits generated, and intangible outcomes such as happiness, equity, and human well-being. All entrepreneurs pursue total wealth.

Skip to 6 minutes and 12 seconds Yet for commercial entrepreneurs, the emphasis is on economic wealth, whereas for social entrepreneurs, the emphasis is on social wealth. In conclusion, social entrepreneurship has sparked ongoing discussion and debate. In this lecture, the aim has been to define the concept of social entrepreneurship and to embed it in the concept of entrepreneurship itself. In addition, the driver of social entrepreneurship is outlined as the pursuit of social wealth over economic wealth. Finally, it can be mentioned that the conceptual development in social entrepreneurship provides a unique context for integrating strategy management and entrepreneurship research.

Introducing social entrepreneurship

Hans van Ees is Professor and the Dean of the University College Groningen.

In this video lecture he defines what social entrepreneurship is and what drives a social entrepreneur.

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Decision Making in a Complex and Uncertain World

University of Groningen

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