14 July 2011, 09:05 BST
According to the venerable source, Wikipedia (there's actually a citation from the 2002 book The World of Social Entrepreneurship by J.L. Thompson), social entrepreneurship is defined as,
"A social entrepreneur recognizes a social problem and uses entrepreneurial principles to organize, create and manage a venture to achieve social change (a social venture). While a business entrepreneur typically measures performance in profit and return, a social entrepreneur focuses on creating social capital."
Sound confusing? Too many "socials" in there? Kind of reminds me of trying to define the term corporate social responsibility (CSR). However, what I've found more interesting than the determining a definition for the term (much like CSR), are the two models that seem to have emerged in terms of the social entrepreneurship framework (for lack of a better term). These two models are as follows.
The first one concerns C.K. Prahalad's now famous phrase, "Base of the Pyramid" which refers to the large class of poor throughout the world who are now considered to be consumers. Depending on who you ask, this can refer to those making under $3,000/yr (PPP) and amounts to around 4 billion people. The goal is to target this obviously extremely cost sensitive group of "consumers" with goods that can make a substantial impact in their daily lives regarding things such as health, money and time - basic human needs (money as a means to achieve some of them anyway). This may include cheap soap, clean burning stoves, solar powered lamps, water pumps, biodigesters and much more. As many products as there are, has been the number of difficulties faced in financing, marketing and scaling them. For someone who lives on a few dollars a day, has done things the same way for generations and is perhaps poorly educated, these products are often looked at (and rightfully so) skeptically. Not only do people need to be educated on the use of these products and shown the benefits, but ultimately, end users must change ingrained behaviors that allow for the adoption of these products in order to create a sustainable market.
The other option is to leverage what is admittedly a much smaller market, but one with far greater wealth and shall we say, a penchant for consuming. That's right, middle to upper class Westerners. This model too, is not without its problems, however it does have two positives going for it. One, there is a market for the right product. If one can develop juice from a fruit grown in a developing country (like Acai for instance) or create jewelry or clothing out of local materials, one can probably market it in the US or Europe. Another key aspect of this model that is neither exclusive nor consistently followed is that successful businesses have the ability to employ and train large groups of people. Obviously this is quite important in adding social value to a developing nation. Plus, increased employment and income can improve the chances that a population can then become "consumers" that may be in a better position to patronize the first model.
The issue isn't so much who the social entrepreneur is - after all, they can be from Asia, Europe, Africa, the US, a resident of the country, from a different country etc - rather the key is who the product is marketed to and what benefit is derived from all those involved in the value chain. It's great to know that some of the world's most intelligent and forward thinking young (and older) people are starting to gravitate towards this realm and that real progress is being made through both the traditional aid community and as a result of improved market access.
Image Credit by Julien Harneis via Flickr under a CC license
Source: Inspired Economist