The social entrepreneur – a sustainable business model?

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Making a better world. All citizens should contribute to improve the welfare of society. This is no longer an idealist point of view anymore but a new perspective that many people support, as Muhammad Yunus remind us. This new thought current denotes a strong critic vis-à-vis the individualization tendency in our society. Happiness is not always correlated with individual amount of money accumulated but more with impact of individuals on their environment, according to the Nobel Peace Price winner. Happiness is about sharing and contributing to a community’s welfare.

Social entrepreneurs prove today that new business models exist to adapt one pillar of human interaction, our economy, to societal gaps. They are showing the world that basing our economic models on self-centred action, also named the homo economicus principle, is only partially true. Prof. Ernst Fehr explained in fact that today’s fairness in business becomes a predominant norm. Social entrepreneurs are thus the fundamental agents of change pushing social issue solving through the creation of profit making businesses.

We should, however, consider two important critics against this emerging trend of social entrepreneurship (SE). First, a considerable number of these initiatives are supported by the state or by charities. Secondly, many projects have small potential impact in comparison with the impact felt by changes in corporate policies.

To answer the first issue, it is necessary to have a contextual outlook. Historically, social issues were, in many societies, state concerns. Therefore, it appears more logical that the state supports today’s social entrepreneurs since such entrepreneurs support the state in solving social issues and in return, the state helps them, providing benefits like seed funding or favourable taxation. Such subsidies are legitimatised by the positive actions of social entrepreneurs on society welfare. Ideally, the state and charities enact more as kick-starters than long-run financiers. The new business approach focuses more on the human side, but social entrepreneurs recognize that the commercial aspect is also essential for the sustainability of the system. It is therefore important to differentiate charity from social entrepreneurship. A revenue driven structure allows them more rationality in the investment decision process and thus, a commercial approach is recognized as an important organizational characteristic for sustainable impact.

Is the low scalability potential of many social enterprises problematic for the SE business model? Several arguments answer the question with a clear no. First of all, it is important to be aware of the differences among corporate world, and small and medium enterprises (SME). The small size of many social enterprises makes them more adept at  testing the market with creative ideas. On the other hand, a well-established corporation would usually consider more carefully creative ideas because of the repercussions of potential failure in a broader environment.

Small enterprises act also as agents of change: when a SME launches successfully a creative business model, a corporation will rapidly try to identify the success factor to implement it at larger scale in his organization. Small social enterprises create therefore the first step for bigger changes.

Then, we can also consider a worldwide replication of social initiatives. Today, small and local projects could be replicated all over the word through number of small individual and local organizations. Sharing one local successful project over the globalised information network makes the replication easier and could allow one social business idea to have important impact quite on the other side of the world. A small and successful organization can thus affect positively many other small businesses through a multiplication effect. The challenge of social entrepreneurs then becomes about information sharing and thinking in community.

Communities of social entrepreneurs are springing up across the world. Dynamic and creative people share their solutions to make the world a better place. We can name the international fellowship programs of Ashoka, Echoing Green, Draper Richard Foundation, Skoll Foundation, the Hub, or Acumen. All try to create supportive community of people involved in social entrepreneurship. As Lara Galinsky, Vice-President of Echoing Green, explains on her blog: It is important today to expose all the social entrepreneurial ecosystem and not only the social entrepreneur himself. In fact, social entrepreneurs are successful because of their community. They need development directors, communication experts, volunteers, artistes, and supporters who can change policies. It is only with the support of the community that social entrepreneurship can start their revolution.

Social entrepreneurs are change makers. They undertake private actions to solve public problems. They have a sustainable impact on the society by inspiring the community. They show that private initiatives could set up step-by-step idealist ideas of private social initiatives into common reality. With more support from the state or charities, these success stories would become more frequent. But it is only with the growth of the SE eco-environment that these businesses will have real impact and that SE business model would prove to be sustainable. Making a better world would then hopefully become the norm, rather than the exception. .

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