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Understanding the Fundamentals and Dynamics of Social Entrepreneurship

Social Entrepreneurship is a relatively contemporary field of study that emerged in the early 1980s. Since then, the field has gained its significance in creating social transformation. To define Social Entrepreneurship in a single line, it can be called as a ‘dynamic engagement between the principles of non-profit organizations and business organizations’ in other words it is a ‘double-edged sword.’

Social enterprise creates a socio-economic value by the generation of both economic and social value in a continuum. However, it is essential to note that a social enterprise embarks on the social transformation of society by addressing social problems existing in the society. It uses economic value creation through income generating activities to create social impact.

As we are confronted by the varied challenges in the society due to emerging socio-economic crises and social problems social enterprise view social change as a part of its mission and integrates Social Transformational Entrepreneurial Ventures (STEVs) to create a positive social change. It is essential to note that in any social enterprise social value creation should be prioritized over generation of profit. With this understanding of social entrepreneurship and social value creation, let us explore it further.

Social enterprises are indeed a ‘marriage between non-profit (third-sector) organizations and business organizations’ and emerged to tackle social challenges. The principles of management and non-profit practice are used in social enterprises. With growing complex social issues, social enterprise acts as a vehicle for employment generation alongside economic development and social impact

If anyone is aiming to start a social enterprise, the following are the key indicators to be presented in the start-up proposal in a step-wise manner (The illustrated concepts of social and economic value are reflected in the steps given below):

  1. List out the social problems in the society. 
  2. Analyze how these social problems have impacted the society. 
  3. Analyze how these social problems socially construct different vulnerable communities at large. 
  4. List out the several products and services that business organizations engage (think income-generating activities)
  5. Identify any one product/service that can be created by you as a social entrepreneur for the social good of any community and to address the complexity of a social problem. 
  6. It is important to note that the community engaged in your proposed organization need not always be the community affected by the social problem that is being addressed in the start-up proposal. It can vary. 

Social enterprises promote social responsibility and their main aim is to serve the communities. The collective dimension is to address the social problems existing in the society and to create social change. Social enterprises looking for social innovation mobilize existing assets to generate socio-economic value for positive social change. Hence, we can view the emergence of social enterprise as a socio-economic phenomenon primarily because of the socio-economic impact that these organizations make on the communities. The significance is in establishing both social and economic value. 

The social value is built on the foundations of the economic value. The socio-economic value supports the vulnerable communities by promoting socio-economic and environmental sustainability. Also, social enterprises evolve, transform and revitalize based on the changing nuances of creativity and innovation. Creativity and innovation enable ideation, curation and implementation of social entrepreneurial ventures.


Social enterprises function on the premise of innovation and creativity. Innovation and creativity can be integrated in the income-generating economic aspects of the enterprise to drive the social value. In our society, all complex social issues have the potential of disrupting the social equilibrium of the society. A socio-economic crisis can be short-term or persistent. Hence, it requires strategic management through practical solutions to address social issues. This will contribute to socio-economic development of any region or country and social improvement of the lives of the marginalized or vulnerable communities. This is the primary factor attributing to the conceptualization of ‘Social Entrepreneurship as a Socio-Economic Phenomenon’.

“Social innovation is the process of developing and deploying effective solutions to challenging and often systemic social and environmental issues in support of social progress”.

Stanford Graduate School of Business

According to The International Handbook on Social Innovation, social innovation “means fostering inclusion and wellbeing though improving social relations and empowerment processes: imagining and pursuing a world, a nation, a region, a locality, a community that would grant universal rights and be more socially inclusive.”


Creativity is a major driver of social innovation as it entails the use of ideas to creation of values such as economic or social value.

Capital, in various forms, is another major driver of social innovation. Types of capital can include:

  • Social Capital (i.e., social networks),
  • Financial Capital (i.e., money and economic infrastructure),
  • Human Capital (i.e., net economic worth of the labour force based on skills, experience and expertise), and
  • Cultural Capital (i.e., the symbolic elements of skills, tastes, clothing, aesthetics, material belongings etc of a particular individual or a group that act as assets).

Social Enterprises looking for social innovation mobilize existing assets to generate socio-economic value for positive social change.


Schumpeterian School of Social Innovation

Novel ideas and implementation are the key dimensions in the Schumpeterian School of Social Innovation perspective. This perspective has been embraced by several thinkers—namely, Swedberg and Zahra to name a couple. This perspective focuses on the change at the systemic level so as to replace the existing structures with new ones. ‘Pushing through’ innovation is essential in the market dynamics of any product or service.

In this school, Swedberg says social innovation involves institutionalization of a particular innovation so that it becomes the accepted ways of doing things in any system or organization. Social innovation by individuals and organizations is usually faced by resistive factors that challenge the change. Mostly these resistive forces will be internal institutional barriers and external institutional barriers. The process of any idea, norm or belief becoming integrated or made part of the organizational culture is known as institutionalization.

Institutionalization in the process of Social Innovation is achieved through the following steps as follows:

Institutionalization of learning within organizations indicates the processes through which knowledge is embedded in the organizational level for its organizations. This can be practiced in following ways:

  • commitment to listening
  • institute systems and guidelines for listening to their clients as they are also the stakeholders of the organizations.

Mathew Miles proposed three stages in organizational improvement namely initiation, implementation and institutionalization where institutionalization is the last stage of organizational improvement.

1. Initiation

During initiation, one embarks on a new innovation by developing a strong commitment towards the process. The innovation in this stage occurs through assessment of a local need to advocate or support the innovation. There is mostly a strong commitment to integrate innovation in this stage.

2. Implementation

The implementation stage involves attempted use of innovation involving action plans, checking progress and overcoming problems. It is orchestrated through a leader who sets goals for the process through sustained commitment.

3. Institutionalization

In the institutionalization phase, innovation and change stop being regarded as something new and become a part of the organization.

Below are a few examples of institutionalized social innovation:

  1. ChildLine credo conduct open houses with street children. The meetings are organized, and children make key decisions. (Participatory Management)
  2. Sharing the things seems to be the idea of the food bank in Poland. Wojciech got the idea of exchange where farmers of Poland donate food and in return their kids will be taken to show the parliament, royal palace in urban centres. These trips were called potato-trips. School volunteers in Warsaw manage itenaries. This form of rural-urban exchange is a great way to reinforce institutionalization of learning (Cross-Subsidy)
  3. People with disabilities from urban settings teaching computer courses to youth from rural areas. (Cross-Cultural Synergy).

Given the complexity of the following problems—namely, environmental degradation, climate change, declining birth rates, high levels of immigration, the rising costs of healthcare, the increasing number of elderly people, rising costs of healthcare, poverty and social exclusion, security of the citizenry, and protection of critical infrastructures against terrorist attacks among others—it is essential to constantly innovate for the survival of social enterprise.

Dees and Battle Anderson School of Social Innovation

The Dees and Battle Anderson School of Social Innovation suggests improvement in the ways in which social needs can be addressed. These theorists suggest ‘enterprising social innovations’ that blend ideas, practices and techniques from the world of business and third-sector for a positive social change.

For instance, intergenerational care centers as social enterprises can be set up where aging couples and single individuals provide care services for the new-born babies. An element of business strategy is tied to this venture because most couples today are parents in full time work positions. This initiative targets such couples thereby maintaining a strong market-dynamics in the field of care work. This is a typical case example of inter-generational exchange and solidarity.

Social enterprises develop and apply innovation to create new opportunities and new products, goods and services. Issues addressed include some of the biggest societal problems such as HIV, mental health, illiteracy, crime, and drug use. An example showing that these new approaches in some cases are transferable to the public sector is the Brazilian social entrepreneur Veronica Khosa, who developed a home-based care model for AIDS patients which later changed government health policy. In another case-example of Equisol (France), we observe how Equisol provides investment funding solutions for social enterprises.

Establishing Synergistic Partnerships for Social Enterprise Management and Social Constraints faced by Social Entrepreneurs:

In typical business enterprises, the term synergistic partnerships refer to the merging of organizations or departments to achieve the common expected outcome. Synergy in business is a strategic technique of collaboration that focusses on achievement of a project or an assignment which would not have been possible if existing as single entity organizations. For example, mergers and acquisitions. This principle is applied in social enterprise management and refers to the achievement of social enterprise partnerships with other organizations namely NGOs/NPOs, business organizations, the public sector, and other social enterprises.


In developing economies, social enterprises largely define the nature of development by alleviating different facets of marginalization and vulnerabilities. Also, the nature of functioning in social enterprises facilitates addressing the social pathos through pragmatic social interventions. Hence, social enterprises have the potential of eliminating lopsided development and contributes to fair development that meets the needs of the people through an integrated institutional commitment and collaborative stakeholder management.


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Maria Aishwarya B

Maria Aishwarya is currently pursuing Doctoral research in Christ University, Department of Sociology and Social Work, Bengaluru, Karnataka, India. She has published research papers in international journals. Her areas of research interests are women and marginality, women and work, gender and organizations, women and religion. She is working as an Assistant Professor in the Department of Sociology, Stella Maris College, Chennai, Tamil Nadu, India.