Social Versus Entrepreneur

Recently it seems there has been a proliferation of social enterprises. Indeed, just last week a good friend of mine enthusiastically told me about a new venture an associate of his is working on. After listening patiently to my friend, then checking out this agency’s website, I asked him “so, what makes this a social enterprise?”

To my chagrin, I have found myself asking this question a lot lately.

Grammatically, the word social modifies entrepreneur, indicating a social entrepreneur is one whose entrepreneurial activity is social in nature. I think about the word social as referring to social welfare, be it poverty alleviation, environmental protection, or any type of intervention that benefits humanity in what has traditionally been thought of as a charitable way.

With so many new ventures founded every day, it is becoming increasingly more difficult for me to decipher what the social purposes of some initiatives are. This is a significant problem for the social enterprise movement.

There is tremendous good will associated with an agency identifying itself as a social enterprise, as well there should be. At its best, social enterprise is the harmonious marriage of free market principles and charitable values. But as social entrepreneurship grows in popularity it is imperative that the concept of social entrepreneurship not get oversaturated and rendered meaningless.

Corporate Social Responsibility (CSR) is great for profit-seeking organizations that choose to augment their profit-based mission with a goal of marginal social impact, or at least a commitment to doing less harm. I have no problem with CSR. But it seems some of these new so-called social enterprises are really just companies like any other with a CSR scheme baked in from the get-go. In my book, a CSR policy does not make a venture a social enterprise.

My approach to social enterprise is heavy on the societal impact. Social entrepreneurship is a strategy to do more good on a large scale on an ongoing basis. It is the social that modifies the entrepreneur, not the other way around.

I am not arguing that social entrepreneurs should not aim to profit from their work. Indeed, profits can be a positive externality of a social enterprise. But for social entrepreneurship to truly be a world changing platform, it is essential that the social enterprise community insist new social ventures provide a clearly discernable public value.

Just as for-profits focus on profit first, a social enterprise must primarily focus on social value. A social enterprise that is profitable but provides dubious social impact is simply a for-profit corporation.

The sustainability and growth potential of free-market corporate financial structures can scale effective social interventions in a way traditional charity models have failed. But as social entrepreneurship continues to grow in popularity, the social enterprise community needs to be wary of the small “s” big “E” companies polluting the social enterprise space, risking sullying the long-term viability of the social enterprise concept and the good will associated with it.

Photo credit: claudiogennari