2.1 value by bringing together a unique package

2.1 Defining the term “Entrepreneurship”

 

 To better understand what social
enterprises do, and what social entrepreneurship is, it helps to start with
defining the broad term “Entrepreneurship.” Entrepreneurship can be defined as
“the  process  of  creating  value  by  bringing
 together  a  unique  package  of  resources
 to   exploit  an  opportunity.” (Forbat, 2007)

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2.2 Various definitions of Social Enterprises

 

This
section briefly analyzes the origins of various Social Enterprise-based
terminologies like:

                     
i.           
Social
Entrepreneurship

                   
ii.           
Social Economy

                 
iii.           
Social
and Solidarity Economy

                 
iv.           
Social
Business

 

A social enterprise has generally been defined as an
organization that applies commercial strategies to pursue social and/or
environmental ends. This may include maximizing improvements in human and environmental
well-being alongside profits for external shareholders.

“Social
entrepreneurship” primarily focuses on the role of
‘social entrepreneurs’, who are often presented as change makers, the role of
change agents in their sectors. This term leads to an emphasis on success
stories and draws from several existing narratives around commercial
entrepreneurs and their achievements – for instance, those from Silicon Valley
in the United States of America. Although the term originated in the United
States, it has now spread worldwide, and is supported by multiple influential
foundations and fellowship organizations.

In contrast, the term “social economy”,
which is rooted within a European discourse, focuses on collective enterprises
such as co-operatives and group-based initiatives that are established primarily
for the attainment of social and economic objectives, emphasizing democratic
values and ensuring inclusion and equality principles.

The term “social and solidarity economy”
originated in Latin America in the 1980s and mainly refers to a model of
political and socio-economic development based on principles of solidarity,
participation, cooperation and reciprocity, as opposed to neoliberal
development approaches and economic models centered on self-interest, profit maximization
and consumerism. (Razeto,
2000; Coraggio, 2011, as cited in Calvo &     Pachon,
2014) These
terms have since taken diverse forms, embracing both older and newer types of organizations
and enterprises, including indigenous collective practices and other
associations of the popular economy.

The term “social enterprise”
has thus far been promoted by practitioners and policy makers in the United
Kingdom; it refers to the use of commercial logic and strategies to achieve
social and/or environmental aims by building social partnerships between the
public- social and business sectors and applying various business models and idealogies
to achieve both financial returns and social impact. (www.futurelearn.com)

The term “social business”
is a term introduced by Muhammad Yunus, who is the founder of Grameen Bank. It refers
to a business in which the social entrepreneur does not want to make money for themselves,
but instead wants to solve a problem with the business model. This term, according
to Yunus, is different from social entrepreneurship because a social
entrepreneur may not be involved in a business at all- they could just be
developing a new way to help a neighborhood or to improve healthcare and
sanitation, for example.

All of these terms are often
used synonymously around the world to refer to social enterprises,
despite the fact that they portray a variety of discourses and
traditions.

 

2.3.
Types of Social Enterprise Models

The
category of social enterprise models is one that includes several different
types of businesses and organizations, providing for different, relevant
financing needs and support. This section briefly outlines the various types
and provides examples of each.

2.3.1       
Credit
union

 A finance co-operative that helps people save and borrow money,
and also provide access to community finance initiatives.

An example of a credit union would
be CO-OP Financial Services, which is an interbank network that connects the
ATMs in the United States, with additional locations in Canada and certain US
Navy bases overseas. CO-OP Financial Services is the largest owned interbank
network in the United States.

 

2.3.2       
Community-based
organization

This is an organization with a
strong geographical definition and focus on local markets and services.
Community-based organizations are organizations with earned-income activities
which are set up, owned and controlled by the local community and which aim to
be a focus for local development. Their ultimate goal is to create
self-supporting jobs for local people.

An example of a community based
organization in Latin America is “The Recycled Orchestra”. It is a project
developed in one of the poorest slums in Cautera (Asuncion, Paraguay). The aim
of this organization is to develop the area and provide opportunities for the
local community. Since the commencement of the project, they have set up a
music school and a youth orchestra that performs internationally.

 

2.3.3       
Non-Governmental
Organizations with commercial arms

This non-profit organization does
not rely on grants and donations, but instead earns income through selling
goods and services.

The BRAC, an international
organization in Bangladesh, works with isolated people in poverty by finding
practical ways to increase their access to resources, support their
entrepreneurship ventures and empower them to become agents of change.

 

2.3.4       
Social
firms

Social
firms are
businesses set up to create employment for those most severely disadvantaged in
the labor market.

“Fifteen” is the name of a chain of
restaurants founded in 2004 by Jamie Oliver, a popular British chef. These
restaurants employ disadvantaged youth, including those with drug or alcohol
problems, the unemployed and the homeless, and ultimately train them to become
chefs.

 

2.3.5       
Cooperative

A Cooperative is association of
people who work together to meet common economic and social needs through
jointly owned enterprises. Cooperatives are organized by and for their members,
who are united to provide a shared service from which they all benefit.

The Seikatsu Consumers’ Club Co-op
(SC) is a Japanese organization formed in 1965 with headquarters in Tokyo,
which is owned by the members (around 307,000), most of them women, and is
concerned with food safety. They buy organic food and shun genetically modified
organisms (GMOs) and produce their own milk and biodegradable soap.

 

2.3.6       
Fairtrade

A fair-trade is an organized social
movement that helps producers in developing nations achieve better trading
conditions and promote sustainability. A fair-trade organization advocates for
higher prices for exporters as well as higher social and environmental
standards.

“Divine Chocolate” is an organization
established in the UK in 1998 as a company limited by shares owned by the Kuapa
kokoo cocoa farmers’ co-operative, the Fairtrade NGO Twin Trading and the Body
Shop. Their main aim is to continue delivering chocolate and promote a social
business model that supports local cocoa farmers.

 

2.3.7       
Microfinance

Micro-financing
is a form of financial service for
entrepreneurs and small businesses that lack access to banking and related
services. Two main ways of delivering these financial services to such clients
are relationship-based banking for individual entrepreneurs and small
businesses, and group-based models, where several entrepreneurs come together
to apply for loans and other services as a group.

An example of a micro financing
service is Mibanco- a Peruvian bank that provides finance to SMEs. It was
founded in 1998 in Lima on behalf of an NGO, Acción Comunitaria del Peru.

 

2.4      The
Ecosystem of a Social Enterprise

 

A social enterprise often has a
complex network of several interdependent systems, institutions, and networks
that enables it to flourish. Some components of this ecosystem that can be
outlined are:

                            
i.           
The Beneficiaries and Customers

                          
ii.           
Governments

                        
iii.           
Funding Sources

                        
iv.           
Academic Institutions

                          
v.           
Peer Organizations

Beneficiaries and
customers form an extremely crucial group within the social enterprise
ecosystem, as they use the services that social businesses and nonprofits
provide. Customers pay for a good or service, while beneficiaries seek help
from an organization. In some social enterprises these two groups may be the
same, whereas, in other models, they may be different. Both customers and
beneficiaries provide indispensable feedback that helps shape the ways in which
social enterprises devise and refine their models and aims to suit the needs of
their target society better.

Governments
play a key role in outlining collective priorities for addressing social needs.
They also provide funding and other support for innovations and initiatives
that meet those needs. Government policies may either allow expansion of, or
limit the available options for social enterprises – for example, by
determining how certain types of these organizations are taxed and regulated.

Funding sources
are another extremely crucial element of the ecosystem because they enable social
enterprises to start up, and scale up their innovations. These sources of
funding include angel investors- wealthy individuals interested in making
investments, seed funding firms – companies that invest small amounts of
early-stage capital in startups, venture capital firms- companies that pool and
invest large amounts of money in emerging businesses, impact investors-
who seek both, financial and social returns, as well as foundations
and other philanthropic organizations that provide grants to nonprofit social
enterprises. The flexibility, availability, and funding conditions may
determine which organizations grow and survive, and which fail to get past the
initial idea phase due to lack of funding.

Academic Institutions like universities, independent research organizations,
and other institutions help support social enterprises by evaluating the impact
of different models and analyzing relevant research findings. These institutions
work as enabling organizations, opening new channels of communication
and collaboration. They also help provide a platform for these social
enterprises to spread word about their ideas.

Peer organizations
are also an indispensable part of the social enterprise ecosystem. While
several enterprises do compete for funding or customers with one another or
with other nonprofits or businesses, some share their information and best
practices and collaborate to support complementary initiatives, thus
establishing a supportive peer environment.