What is Social Entrepreneurship?

The Business Of Creating Sustainable Social Impact

Social entrepreneurship is not a recent phenomenon, just as the desire to “do good” by society is not a recent thought. History is replete with examples of activists who have single-handedly architected impressive social change. India too has had its share of social entrepreneurs in the past. Vinoba Bhave’s “bhoodan” movement, for instance, is often cited as a paragon of social entrepreneurship. Modern day social entrepreneurship appends to the innovative spirit of erstwhile social initiatives the acuity and discipline of modern business practices. This business-like approach to tackling social issues ensures that the social entrepreneurs of today have a wider range of capital and other resources at their disposal and are not restricted to depending only on the government or a select few organizations. More importantly, the “entrepreneurization” of social enterprise ensures that there is always a growing pool of change-makers to address the wide base of social issues that beleaguer today’s society.

The conventional view of capitalism is one that ascribes maximal importance to the individual(s) profit-making motive. Within this context, it would seem that a social mission is incompatible with most businesses’ ideology. Yet, a large number of businesses today are cognizant of their social responsibilities, evinced by the growing number of Corporate Social Responsibility programs. It is this growing sense of social responsibilities amongst corporate houses that serves as the guiding beacon for modern-day social entrepreneurship.

But what exactly is the “optimal” business model for social entrepreneurship? While purists might advocate a not-for-profit model, a growing breed of social entrepreneurs are increasingly becoming sensitized to the legitimacy (and perhaps necessity) of profits in social enterprises. In most cases, the profits are not accrued to any individual(s) but plowed back into the enterprise to ensure the sustainability of the cause. Narayana Hrudayalaya with its model of cross-subsidized healthcare for the masses is a perfect example of how a profit motive can actually be synergistic to a social mission. In fact, in this case, the social mission has actually allowed Narayana Hrudayalaya to improve its overall service capabilities. It is easy to see how the intrinsic profits of a social enterprise could, by reducing the reliance on external donations, allow for the development of long-term and sustainable models of social change.

A more recent business model for social entrepreneurship is one that not only advocates a profit motive for social enterprises but also allows for some of these profits to make their way back to investors and shareholders. Such a  model, allows for the creation of social business enterprises that provide for “token” dividends to stockholders and even envisages a market where stocks of such social businesses can be traded. Of course, the social motive still remains the primary driver for such an enterprise and stakeholders of such an enterprise are more likely to be driven more by their social responsibilities than financial incentives. Yet, such a business model might be exactly the kind of approach that is needed to stimulate a wider penetration of social entrepreneurship in the modern-day marketplace.

While there might exist multiple schools of thought regarding the appropriate business models for social entrepreneurship, one common thread is the necessity of support infrastructure for social enterprises in their early-stages. Irrespective of the underlying business model, initial fundraising will continue to play a crucial role in the overall success of the enterprise. It is here that business competitions, entrepreneur networks and startup incubators play a crucial role.

The TATA Social Enterprise Challenge, a joint initiative of Indian Institute of Management Calcutta (IIMC) and the TATA group, aims to create such a support system for social enterprises in India, with the overarching goal of promoting sustainable and measurable social impact.