Can entrepreneurs solve social problems? The kind called social entrepreneurs certainly do so!
While a regular business venture is motivated by earning huge profits, the mission of a social entrepreneur is to address a social challenge. At the heart of any social entrepreneurship endeavor lies the passion for social change.
While the label of social entrepreneurship is new, the concept has always existed, as suggested by research.
In the words of J Gregory Dees, the father of social entrepreneurship education, a social entrepreneur combines the passion for social change with a business-like discipline, innovation, and determination. In short, they use business tactics to address social problems.
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Defining Social Entrepreneurship
What sets social entrepreneurship apart from not-for-profits?
Firstly, not-for-profits raise money to tackle social issues. These could come from donations or through the corporate social responsibility of other business ventures. Social entrepreneurs earn money through selling goods or services and then use that money to solve social problems.
Consider the example of TOMS shoes.
Blake Mycoskie founded TOMS shoes in 2006 after his trip to Argentina. During this trip, he saw numerous children without shoes. When he founded TOMS, he had a social mission in mind! It was to ensure that kids living in extreme poverty were at least able to afford shoes. To achieve this mission, he pioneered the ‘One for One’ model for TOMS, where for every pair of shoes sold, the company donated a pair to a child in need.
The “making a difference” bit was done by TOMS while earning money – and not through donations – which sets a social entrepreneurship venture different from an NGO.
Aravind Eye Hospitals
Another example of social entrepreneurship is the India-based Aravind Eye Care chain of hospitals. It was started as a social venture by G Venkatasamy, a retired eye surgeon, as India is home to over 200 million blind people. His mission was to eradicate blindness and to help those who are barely able to afford such surgeries.
Aravind Eye Care runs two kinds of hospitals. One type offers premium services at premium costs for people who can afford eye surgeries. And, the other kind that offers basic, quality service, free of cost for the underprivileged. Using the profits earned from the well-established patients, the poor patients are treated. Not only that, Aravind uses an assembly line process for eye surgeries with increased efficiency. This enables a single doctor at Aravind to carry out over 2000 surgeries a year, which is much higher than the Indian average of 400.
This two-minute-long video will explain how Aravind Eye Care works!
What Drives Social Entrepreneurship
For the longest time, it was believed that the onus of tackling social challenges fell on charities, non-profit organizations and governments. However, over the years, social challenges either remained as is or worsened.
Charitable, non-profit agencies and voluntary organizations have been criticized as being bureaucratic and resistant to change. The public sector on the other hand becomes overstretched. This is where social entrepreneurship comes in as an innovative way of tackling unmet socio-economic needs.
Consider the example of Grameen Bank in Bangladesh. It was a micro-finance system launched in 1976 by Dr. Mohammed Yunus. Its purpose was to provide micro-credit to the poorest of the poor in Bangladesh without collateral.
The success of the Grameen Bank led to the creation of over 2500 branches. Today, it has 9.38 million members, 97% of whom are women. The impact of Grameen Bank was that it led to widespread borrowing from the poorest of people for setting up small businesses. This helped tackle poverty and unemployment – two of the major problems in Bangladesh.
Why is Social Entrepreneurship Important?
Entrepreneurship has changed the way we live our lives. The world has gone through massive transformations over the past decades, changing the way we live, work and communicate.
However, despite taking big strides in development, the inequalities in the world have increased. Even in the face of the COVID-19 pandemic, the rich have become richer and the poor –poorer. A report by Oxfam suggests that in India, the wealth of billionaires increased by 35% during the lockdown and by 90% since 2009. But, on the other hand, a survey of 37 countries indicated that 3 in 4 households faced declining income since the start of COVID-19.
Social entrepreneurship is essential to achieve sustainable development. This is important so that the benefits of development reach each person on Earth and don’t come at the cost of the environment that sustains us.