The concept of social entrepreneurship is often misunderstood. Yet, it is an important concept to consider. Social entrepreneurship to many is defined as a business that is helpful to society, with little or no regard to profit. The authors of this article contend that there are four basic considerations in the definition of social entrepreneurship. These are:
The four aforementioned considerations provide the conceptual framework of social entrepreneurship that is the theoretical foundation for three interrelated projects that are proposed in this paper: social entrepreneurship contests for high school students, incubator for aspiring social entrepreneurs, and most importantly, an invitation to all readers to participate in the development of a free, peer reviewed social entrepreneurial journal in cyberspace: the Social Entrepreneurship Quarterly Review (SEQR).
The concept of social entrepreneurship is recognized to be beneficial in reducing hunger and poverty, promoting good governance, promoting sustainable development, and creating wealth for investors. This concept is a "win-win" strategy, and it has been generally referred to as doing well (financially) while doing good (for society). This paper is designed to: (a) explore the development of international social entrepreneurship contests for high school students, who devise projects that are realistic and affordable to produce and purchase. In addition, they must be profitable and above all, good for society, with partial and full scholarships to contest winners; (b) mentoring of aspiring social entrepreneurs to develop meaningful and effective business and marketing plans; (c) create a networking center where business plans devised by aspiring social entrepreneurs and other stakeholders are showcased for potential investors; and (d) propose a scholarly, jointly edited social entrepreneurship journal.
The approach will therefore be three pronged. First, social entrepreneurship contests will be held that will allow college students and/or practitioners, who are already social entrepreneurs showcase their ideas. Second, a social entrepreneurship-mentoring program will be established so that aspiring or well-established entrepreneurs can seek advice, guidance, and monetary support for their ideas so that they may come to fruition. Lastly, an online journal will be initiated that will provide a platform where a variety of social entrepreneurship endeavors will be introduced.
There already exist many social entrepreneurship contests that are either exclusively for college-age students or practitioners, who are already engaged in social entrepreneurship activities. An Internet search, in fact, reveals a plethora of such contests sponsored by colleges. For the purposes of this paper, three will be touched upon. The three contests discussed below are representative of the most familiar. The authors contend that contests such as these should be uniformly judged according to the conceptual framework of social entrepreneurship that was described in the beginning of this paper. By having uniformity in judging criteria, the authors assert that a standardization of measurement would result in the further legitimization of the social entrepreneurship field since there would be a common means of evaluating the merits of proposed/actual social ventures.
Firstly, on April 11th, 2006 Purdue University (purdue.edu) reported that social entrepreneurs presented new products at a national contest for student entrepreneurs. Winners included socially beneficial products to purify water as well as a device that would help the physically disabled to remember to swallow. These products were then showcased at the 2006 National Idea-to-Product Competition for Engineering in Community Service (EPICS). EPICS was founded by Perdue University in 1995. The winners of the EPICS contest were awarded a $15,000 cash prize for their efforts.
Secondly, in 2005, Tamil Nadu from THE HINDU, an on-line edition of India’s national newspaper, reported that a four-member team of students from Crescent Engineering College, Vandalur, impressed the judges at the Tsunami challenge. The Tsunami challenge was a business plan competition organized by Tata Consultancy Services, IIT Madras and Stanford University. There were over 101 entries from colleges all over India. Proposals were judged on the basis of their social impact, the team’s expertise, feasibility, and financial sustainability (Nadu, 2005).
Finally, the Global Social Venture Competition (GSVC), arguably the most widely recognized social entrepreneurship contest sponsored by post secondary institutions, is supported by the Haas School of Business, Columbia Business School, the London Business School, and The Goldman Sachs Foundation. The purpose of the GSVC is to actively encourage and expand the establishment of successful worldwide social ventures. As defined by GSVC, a social venture is "an enterprise that has both financial and social goals integral to its purpose". (Global Business Center, 2006), Through its annual business plan competition, GSVC aims to increase the awareness as well as the quality/quantity of new undertakings (Global Business Center, 2006). Those endeavors that show the most promise in achieving both their social and financial undertakings are rewarded (Global Business Center, 2006).
Social entrepreneurship contests are not limited to college students. In fact, many are aimed at practitioners, who are aspiring social entrepreneurs. One example of such a contest is the World Challenge. Sponsored by BBC World and Newsweek, in association with Shell, the contest seeks out nominations for projects that make a real difference for local communities. Another example, perhaps the highest profile social entrepreneurship contest in cyberspace, is Ashoka’s Changemakers-Citizen Base Initiative Competition (ashoka.org, 2/25/05, Arlington, VA). Five winners of the first Changemakers.net Innovation awards were chosen from organizations of current social entrepreneurs who were judged to present the most "innovative, compelling, and globally replicable ideas for generating the money and other resources needed to sustain an organization-from a citizen base of support (ashoka.org)". According to Ashoka, the winners are leading examples of how citizen sector organizations (CSO) create strategies to build two-way relationships with their "citizenry". Ashoka’ competitions showcase current social entrepreneurs in action who are in need of additional funds to further the effectiveness of their initiatives.
With the development of the field of social entrepreneurship comes the emergence of high school social entrepreneurship contests as well. One example is the Junior Achievement/Deloitte Essay Contest. In this contest, Maria Monks, age 17 from Hazleton, Pennsylvania, won a $5,000 scholarship by responding to an ethical dilemma of a teenage girl who runs her own lawn care business and is possibly overpaid by her customers. This contest is part of a $ 1,000,000 effort by JA (Junior Achievement) Worldwide and Deloitte to promote education initiatives for youth (CSRwire, Colorado Springs, Colo.).
Another example of a social entrepreneurship contest for high school students that can more readily be defined as such (as opposed to a business ethics contest) is the USA SAGE (Students for the Advancement of Global Entrepreneurship) and subsequent SAGE World Cup (www.cuschico.edu/sage). In this contest, leaders from business and civic communities judge high school teams based on entrepreneurship and community service. The program links university students from around the world to their surrounding high schools. According to their website, SAGE is, "an international network that links secondary school student organizations to mentors from local universities and businesses. Its purpose is to advance global entrepreneurship in an ethical and socially-responsible manner". www.cuschico.edu/sage
In this section of our analysis, we propose that such participation by high school students and college students as well as practitioners for that matter can be "taken to the next level" in cyberspace. We suggest that an interactive, brainstorming power of a cyber incubator into the equation is what is now needed. Introducing contests based on realistic, actual, socially significant business dilemmas in the form of industry governance scenario planning can do this. Participants would contribute their entries as a form of aggregate brainstorming for solving such issues as the digital divide, recycling, worldwide pharmaceutical costs, and/or the use of solar power as an alternative energy source for under-developed nations.
Let’s examine one such scenario example, Industry Governance. Participants would be presented with an issue such as the digital divide, which refers to the disparity in computer and Internet technology that exists between the "haves" and the "have nots". The challenge would be for the participants to address how an emerging venture would raise seed money to generate a strategic plan that addresses the following dilemma while upholding the principles of realism, affordability, profitability, and what is good for society:
"By the end of 2004, approximately 700 million people worldwide had access to computing and the internet. This is a minuscule proportion of the total global population of 6.5 billion". (Nadar, 2006).
You are to assume that you must:
Participation in such contests promises to add a whole dimension to high school extracurricular activities on the Web. The Internet has tremendous potential as a learning organization for the incubation of socially responsive ideas. It is time that this power is harnessed. Cash prizes and scholarships can be offered from a consortium of colleges participating in the program. Different colleges may wish to offer different scholarships based on the industry governance scenario that is used as a contest in relation to the colleges’ area(s) of expertise and primary field(s) of study.
In the second prong, the social entrepreneurship-mentoring program and the networking center will be united. Let’s define what mentoring means. In a mentoring relationship, an experienced partner teams with a less experienced partner; the former is known as the mentor; the latter is known as the protégé or mentee (Mentoring, 2006). The system of partnering a mentor with a mentee/protégé dates back to the medieval guild system and the Christian disciple system (Mentoring, 2006). In fact, the idea of mentoring is noted in Greek mythology, when in Homer’s The Odyssey, Odysseus has Mentor, an older man, become responsible for his son, Telemachus, who he entrusts with his welfare (Kennesaw State University, 2006). This early relationship set the stage for the mentoring system (Kennesaw State University, 2006).
The idea of mentoring can be extended to business startups via the development of incubators (Incubator, 2006). It is through business incubators, or organizations that guide entrepreneurial efforts, that the success rates of beginning companies are increased (Business Incubator, 2006). Specifically, those companies that have been in the incubation process both abroad and within the United States had a 90% higher success rate after three (3) years than those that were not involved in this process (Business Incubator, 2006). When business incubators select startup companies, it is because they have "feasible projects" that can be "offered a specialized menu of support resources and services" (Business Incubator, 2006). Such support services may include: "provision of physical space, management coaching, help in making an effective business plan, administrative services, technical support, business networking, advice on intellectual property, and sources of financing". (Business Incubator, 2006). These support services are extended anywhere from two (2) to five (5) years (Business Incubator, 2006).
Incubators can either be private or public. The former are comprised of firms that get paid to provide the support services to the startup companies. They receive either equity or fees for their consulting assistance (Business Incubator, 2006). The latter have been born over the past twenty (20) years as a way to help entrepreneurial endeavors (especially in the technological areas) in developing and developed countries (Business Incubator, 2006). In addition, alliances have been forged with colleges, universities, and research sites, in the hopes of encouraging researchers to start a business (Business Incubator, 2006).
In addition, governmental agencies also get involved with the incubator process since it spurs on economic development. As such, the incubators frequently are eligible for grants (Business Incubator, 2006). As a result, many national associations develop so that additional support can be made available to assist startup companies (Business Incubator, 2006).
Let’s not forget that funds are needed as well. As a result, incubators also forge alliances with different investors. For the purpose of this paper, two types of investors will be reviewed: venture capitalists and business angels.
Firstly, most startup companies get their funding from personal sources such as family and friends. Usually, these sources provide between $100,000 and $200,000. When these sources are tapped out, then the next resource available would be the angel investors (Angel investors, 2006).
Business angels or angel investors are comprised of wealthy individuals that provide monies to startup companies in exchange for equity (Angel investors, 2006). While venture capitalists manage money funds, business angels do not do so. Instead, business angels usually join together to create "angel networks or angel groups" (Angel investors, 2006), which allows for capital to be brought together to form a bigger pool of investment funds (Angel investors, 2006). The angel investors provide a means for startup companies to get monies when they cannot arrange loans through personal sources or when the amount that is needed does not exceed more than $1 or $2 million dollars (which venture capitalists would provide) (Angel investors, 2006). Since business angels take great risks, they require a minimum return of 10-20 times return on investment (ROI) within the first five years (Angel investors, 2006). While the payback to these investors is high, they may be the only type of funding available in the beginning stages of a startup company (Angel investors, 2006).
Thirdly, when monies needed are within the $1 to $2 million range or greater, venture capital funds may be provided by venture capitalists. Venture capitalists are usually comprised of executives from companies similar to those that they are partnering with (Venture Capital, 2006). In the U.S., small business investment companies were allowed the ability "to provide financing and management assistance to small entrepreneurial businesses" through the Small Business Administration (SBA) (Venture Capital, 2006). The purpose of Small Business Investment Companies (SBICs) was and continues to be the stimulation of the economy within the U.S. by helping smaller businesses thrive (Venture Capital, 2006). Some sources of venture capital are "pension funds, university endowments, insurance companies, and pooled investment vehicles" (Venture Capital, 2006). Figure 3 is a visual representation of the aforementioned funding source steps.
There are several factors that contribute to an incubator’s success. Firstly, its management must be comprised of skilled individuals that can assist startups in reaching their goals (National Business Incubation Association, 2006). Secondly, its management must realize that customer service is a key in its success (National Business Incubation Association, 2006). In addition, it must have good connections within the community, which will allow it to have access to many different types of resources (National Business Incubation Association, 2006). Finally, they must follow the practices set forth by the National Business Incubation Association (NBIA). Specifically, the business incubator must strive to impact the community’s economy by helping startup companies’ successes. This must be done by an incubation operation that has a track record of maintaining effective business practices (National Business Incubation Association, 2006).
In the mentoring/incubator prong, these authors suggest that a database of socially responsive business and management professors will be built that stores the names of professors from a consortium that is willing to provide advice, whether it be in person, over the phone, or via email to aspiring social entrepreneurs on a worldwide basis. Particular emphasis will be placed on the coaching and reviewing of business plans that aspiring entrepreneurs are in the process of attempting to generate. Priority will be placed on entrepreneurs (or aspiring entrepreneurs) who are developing and promoting a product or service that is realistic, affordable, profitable, and, above all, good for society. This will be a shared endeavor of many different post secondary institutions acting in accordance with a well-coordinated alliance.
In addition, these authors suggest that there is a need for matching up legitimate "angel investors" with worthy social entrepreneurship initiatives that are in need of financial assistance. Several problematic issues must be considered if a hub for social entrepreneurs and their prospective investors is established, such as:
In the third prong of this approach, the remainder of this analysis will focus on the support and participation that the authors seek from fellow scholars. This initiative involves the formation of a free, blind, peer reviewed quarterly cyber journal that will focus exclusively on twelve (12) issues that are directly related to social entrepreneurship. The proposed name of the journal is the Social Entrepreneurship Quarterly Review (SEQR). The authors propose that the following twelve (12) topics be divided into subsets of three (3), which will be presented quarterly. The proposed subsets of topics that are planned for inclusion include:
Since the acceptance of the abstract of this paper, there has emerged a cyber journal from scholars at the Massachusetts Institute of Technology (MIT) entitled "Innovations". This journal touches upon social entrepreneurship issues as they relate to technology. However, to the best of the authors of this article’s knowledge, it is not:
With these points in mind, attention is now turned to two fundamental theoretical as well as practical questions, "Just what exactly is a "social entrepreneur?" and "What is "social entrepreneurship?" How we define these fundamental terms of mutual interest is critical for the development and enhancement of the underlying theory associated with the constructs social entrepreneur as well as its "macro" counterpart, social entrepreneurship.
Social entrepreneurship is a significant concept lacking a fundamental, universal definition in the literature. It is our intentions to do more than just start a journal. The intention at the conclusion of this article is to provide a nomological network for the "micro" construct social entrepreneur, as well as the "macro" construct social entrepreneurship. In doing so, a theoretical framework will be established for developing and building upon the construct validity of these two respective constructs. To review, a construct is a measurable concept (Kerlinger, 1973) that gains its legitimacy through the establishment of an "intersubjective reality" based on the agreed, shared meaning of its users. Construct validity simply refers to the ability to measure what we are supposed to be measuring (Babbie, 2001).
A basic explanation of a nomological network is that it consists of three levels. The focal construct is the first level; this is the central construct that is being studied and defined. In the second level of the nomological network, the focal construct has specific, underlying constructs, which constitutively or conceptually define the focal construct. Kerlinger (1973) uses spatial ability and computational ability as constitutive definitions, which underlie specific dimensions of the focal construct intelligence. These constitutive definitions must each have at least one (and preferably more than one) concrete, observable definition that allows for the measurement of the lower-level construct. Such operational definitions comprise the third and final level of the nomological network. For example, observable ways of defining computational ability can be the proper use of a calculator or the ability to give correct change at a cash register. In this way, a focal construct can be measured. This allows the theory associated with this construct to be scientifically developed. A brief review of the literature is required here that outlines what already has been written about in cyber space relating to the concepts of social entrepreneur and social entrepreneurships.
According to the Schwab Foundation www.schwabfound.org/definition.htm social entrepreneurship describes an approach to a social issue. It is not a field of discourse that can be learned in academia. The Foundation goes on to partially define the social entrepreneur as someone who innovates by finding a new product, a new service, or a new approach to perform actions that are socially responsible. In subtle contrast to the Schwab Foundation’s definition, the authors of this article contend that offering goods or services that are good for society should be considered to be the prerequisite for social entrepreneurship, so long as they go along with the criterion of realism, affordability, and profitability. The Institute of Social Entrepreneurs supports this contention www.socialent.org/beta/definitions.htm. The Institute offers the following definition of "e;double bottom line": "The simultaneous pursuit of financial and social returns on investment- the ultimate benchmark for a social enterprise or a social sector business". www.socialent.org/beta/definitions.htm
The definition of social entrepreneurship that the authors of this article present (realism, affordability, profitability, and good for society) does not necessarily reflect how the term is universally defined in the cyber literature. For example, in the website The New Heroes, it is stated that, "Unlike traditional entrepreneurs, social entrepreneurs primarily seek to generate "social value" rather than profits". www.pbs.org/opb/thenewheroes. Hartigan and Billimoria (2005) also lend support to the notion that social entrepreneurs are not interested in steady profits when they ask the following question as a criterion for not being a social entrepreneur, "Does the thought of not having a regular monthly paycheck drive you to the medicine cabinet in search of a tranquilizer?" In further stating what social entrepreneurs are not, Hartigan and Billimoria (2005) add, "Nor are they business entrepreneurs. However, the two are sometimes confused and as such it is useful to draw some distinctions. For a start, social entrepreneurs are committed to social value creation, so finance is a means to an end for them, never the end in itself".
The authors of this article contend that Hartigan and Billimoria’s (2005) definition of social entrepreneurship and social entrepreneur are in fact closer to the definition of altruism. The definition of social entrepreneurship supported in this analysis (realistic, affordable, profitable, and above all, good for society) is also supported by other stakeholders in the field of social entrepreneurship besides The Institute of Social Entrepreneurs. For example, according to Boschee and McClurg (2003), "Only earned income will ever allow a non-profit to become sustainable or self-sufficient...It is one thing to design, develop, and implement a new program--and quite another to sustain it without depending on charitable contributions and public sector subsidies".
Obviously, there are contrasting perspectives of social entrepreneurship existing in the literature, and the authors of this analysis wish to resolve this issue. This can be done based on the shared interpretation of the respective meanings of the terms social entrepreneur and social entrepreneurship of our readers.
With this in mind, the authors will attempt to develop a nomological network for the "micro" construct social entrepreneur and the "macro" construct social entrepreneurship.
This is predicated on the participation of participants since construct validity is an intersubjective reality based on shared meaning. To accomplish this, the authors have devised respective surveys to measure the readers’ notions of the meanings of the terms under review.
The first survey operationalizes Dees’ conceptual framework for the definition of social entrepreneur (1998). This is to determine the micro definition of what are the characteristics of individuals involved in the field of social entrepreneurship.
Answer the following questions in relation to the individual you are considering to define as a social entrepreneur on a scale of 1(Strongly disagree in relation to the definition of social entrepreneur), 2(Disagree), 3 (Indifferent), 4 (Agree), or 5 (Strongly agree).
Examples of individuals who rank 4 or higher would serve as individuals, who operationally define and anchor the "micro" construct of social entrepreneur as presented by Dees in the literature.
Part II deals with providing a nomological network for the "macro" construct social entrepreneurship. This is a construct that is defined according to the authors’ conception of the proper construct validity of the term social entrepreneurship. Some only include non-profit; some focus on social causes. We contend there are four fundamental components to the socially entrepreneurial venture.
Answer the following questions on a scale of 1 (Strongly disagree in relation to the definition of social entrepreneurship), 2 (Disagree), 3 (Indifferent), 4 (Agree), or 5 (Strongly agree).
It is our contention that the construct of social entrepreneurship is not fully reflected unless it is represented by a venture that is realistic, affordable, and profitable, but good for society as well. We provide this survey, which will be distributed, in large part in cyberspace, to either validate or invalidate this point according to the intersubjective reality of the shared meaning of individuals interested or involved in the field of social entrepreneurship. We contend that examples of ventures that do meet these four criterion serve as operational, concrete definitions that anchor the nomological network for social entrepreneurship. Examples of ventures that fall short of reflecting one or more of these four proposed "lower-level constructs" of social entrepreneurship represent incomplete or inaccurate examples of social entrepreneurship. We believe that this conceptual framework should be a standard for the field of social entrepreneurship.
Hypotheses based on this cyber survey can include distinctions between the responses of high school students, undergraduate and graduate students, practitioners, and academicians. Optional demographic data can also serve as a source for further hypotheses (e.g., older respondents are more likely to Strongly Agree that a product or service must be good for society in order to be defined as socially entrepreneurial than younger respondents).
Collection and analysis of empirical data generated from this survey can serve as a foundation for developing the theory for the field of social entrepreneurship. The authors intend to continuously build on this theory while also practically promoting the vision of social entrepreneurship. In doing so, a scientific foundation for the main constructs associated with the Social Entrepreneurship Quarterly Review (SEQR) will be established.
In both past and recent history, there have been scandals that have rocked the business world due to poor ethical behavior. Whether the scandals were due to the manufacturing of faulty products, the pollution of the environment, or the misappropriation of monies, they left an indelible mark on the business world. Profits can still be earned while doing business in a socially responsible manner. If the three guidelines are followed: producing a product or service that is realistic and affordable, profitable, and good for society, the mindset of future entrepreneurs may be changed, which could only minimize or ideally eliminate some of the disgraceful practices that we have all been witness to through the news media.
By challenging younger generations to focus on social entrepreneurial endeavors, we can move forward as a world society. It is our responsibility to find ways to bring forward the good works that are already in place, while providing a platform to assist those interested in such a pursuit.
