Social Entrepreneurship and Social Change
Handbook topic · Social Entrepreneurship — diverse approaches and their role in driving social change through innovation
Markets and governments leave many social and environmental problems unsolved. This week explains how responsible entrepreneurs step into that gap: what counts as social entrepreneurship, social business and ecopreneurship, how social innovation changes the “rules of the game”, and how social ventures cross borders. It also gives you the definitions you need to classify an Ashoka Fellow’s venture in the Learning Diary.
The big question
When the market and the state both fail to solve a problem, how can an entrepreneur create lasting social change — and how do you prove which kind of entrepreneur they are?
By the end of this week you can
- Explain why responsible entrepreneurship acts as society’s “R&D department” alongside the market and the state.
- Define social entrepreneurship (Nicholls, 2006; Dees, 1998) and distinguish the Social Enterprise School from the Social Innovation School.
- Distinguish social entrepreneurship, intrapreneurship, ecopreneurship and international entrepreneurship using the module’s definitions, and argue why a venture is one type and not the others.
- Use Martin and Osberg (2007), the elements of social innovation (Moulaert et al., 2013; Mulgan, 2007) and systems thinking to explain how a venture creates social change.
- Describe what international social entrepreneurs need to succeed abroad and how Ashoka selects and supports its Fellows.
Why society needs responsible entrepreneurs
Before defining social entrepreneurship, the lecture asks a bigger question: which parts of society solve problems, and what happens to the problems they leave unsolved?
Entrepreneurship is about doing something yourself rather than waiting for others, and about innovation. The module’s working definition of innovation comes from Schumpeter: innovation is a new combination of existing elements such as resources, processes, knowledge, products, services and methods. Most social ventures you will study do not invent new technology; they recombine things that already exist in a way that solves a neglected problem.
Responsible entrepreneurship adds a time horizon. The lecture anchors it in the Brundtland definition of sustainable development and in the idea that entrepreneurs find or create opportunities by understanding people’s needs. For responsible entrepreneurs this understanding is even more essential, because the people they serve are often those whose needs nobody else is meeting.
The re-combination of existing elements — resources, processes, knowledge, products, services, methods and so forth.
Development that “meets the needs of the present without compromising the ability of future generations to meet their own needs.”
The lecture separates three independent ways of judging how new an innovation is. Each is a continuum, so an innovation gets a position on all three.
How big the change is: incremental innovation makes small, gradual improvements to existing products, services or processes; radical innovation introduces entirely new products, services or ways of doing business (Week 1 tutorial definitions).
Example — Microcredit without collateral was a large change to who could borrow.
Where the idea is new: an idea copied into a new place is new to that region; an idea no one has used anywhere is new to the world.
Example — A proven social franchise opening in a new country is new to that region.
What it does to the market: sustaining innovations improve established products or services along dimensions mainstream customers already value; disruptive (“game change”) innovations first serve a niche with something simpler, cheaper or more convenient, then move upmarket and displace established competitors (Week 1 tutorial definitions).
“Embracing human-centered design means believing that all problems, even the seemingly intractable ones like poverty, gender equality, and clean water, are solvable. Moreover, it means believing that the people who face those problems every day are the ones who hold the key to their answer.”
Society’s two powerful problem-solving structures
- Solves problems through democratic and bureaucratic competition for solutions.
- Its entrepreneurs are “political entrepreneurs”.
- Competition for solutions is often imperfect, so some problems never get a satisfying answer.
- Solves problems through market-based competition for viable solutions.
- Its entrepreneurs are “commercial entrepreneurs” who solve problems to achieve their own objectives.
- Problems with no paying customer, or with costs that fall on others, tend to be left unsolved.
Families, religious communities and neighbourhoods still solve many problems, but in modern society the state and the market are the two structures that have proved most powerful. As problems become more complex, both need more sophisticated learning processes, and for many problems neither has yet found a satisfying or even “satisficing” solution. Those left-over societal problems are the space in which responsible entrepreneurs work.
Responsible (social) entrepreneurship cannot substitute for either the market or the government. Its value is as a stimulus for innovation: it experiments with solutions that the market and the state can later adopt, scale or regulate. When you analyse a venture, ask what it teaches the market or the state.
What an entrepreneur needs to make things happen
- The entrepreneurial process starts from the entrepreneur’s views (what they want to change) and the entrepreneur’s resources.
- Around them sit five forms of support: emotional support, expert knowledge, networks, ideas and feedback, and funding.
- In the Learning Diary, these supports are a quick checklist for the “who supports the internationalisation” question: name which of them the venture would need in the new market.
Ecopreneurship: entrepreneurship through an environmental lens
Ecopreneurship is the environmental sibling of social entrepreneurship. What sets it apart is that environmental innovation is the core of the business and market success is part of the goal.
“Entrepreneurship through an environmental lens… entrepreneurial activities that are oriented less towards management systems or technical procedures and focused more on the personal initiative and skills of the entrepreneurial person or team to realise market success with environmental innovations.”
Entrepreneurship based on the principles of sustainability.
Three phrases in Schaltegger’s definition do the work. Environmental innovations are the product. Market success is sought, not avoided. And the driver is personal initiative, not a compliance system bolted onto an existing company. That last point is how you separate an ecopreneur from a large firm with a good environmental management department.
Schaltegger (2002) positions environmental actors on two dimensions: how central environmental goals are to the business, and how far its market effect reaches — from an alternative scene, to an eco-niche, to the mass market.
| Actor | Priority of environmental goals | Market reach | What it looks like |
|---|---|---|---|
| Alternative actors | Environmental performance is core to the business | Alternative scene | Driven by conviction, operating outside mainstream markets. |
| Bioneers | Environmental performance is core to the business | Niche market | Pioneers of environmental products serving a green niche. |
| Ecopreneurs | Environmental performance is core to the business | Mass market | Take environmental innovation out of the niche to change the mainstream market. |
| Environmental management | Environmental goals are supplementary to the core business | Established markets | Existing firms that manage environmental impact alongside their main business. |
| Environmental administration | Environmental action is seen as a trustee duty | Established markets | Firms that treat environmental protection as an obligation to administer. |
Only the first three actors treat the environment as the core of the business. Market-reach labels for the last two rows are described in general terms because the slide places them only graphically.
A venture that runs recycling workshops to employ young people is primarily social; the environmental benefit is secondary. A venture whose product is an environmental innovation sold to win market share is ecopreneurship. Decide which goal the venture would refuse to give up — that is its primary purpose.
Telling the four types apart (Learning Diary)
The Learning Diary asks you to say whether your Ashoka venture is social entrepreneurship, intrapreneurship, ecopreneurship or international entrepreneurship — and why it is not the other three. Each type has one decisive test in the module’s definitions.
The four types of entrepreneurship in the module
- Definition: innovative and effective activities that resolve social market failures and add social value systematically to maximise social impact and bring about change (Nicholls, 2006).
- Decisive test: is social improvement pursued over profit (Dees, 1998)?
- Evidence to look for: a social problem left unsolved by market and state; beneficiaries; social impact as the headline goal.
- It is not this type if profit or environmental innovation is the primary aim and social benefit is a by-product.
- Definition: entrepreneurship through an environmental lens, driven by personal initiative to achieve market success with environmental innovations (Schaltegger, 2002); entrepreneurship based on the principles of sustainability (Kirkwood & Walton, 2010).
- Decisive test: is an environmental innovation the core of the offer, pursued for market success?
- Evidence to look for: an environmental product, process or service; customers who pay for it; environmental performance as the reason the venture exists.
- It is not this type if the environment is only a supplementary goal, or the main purpose is social inclusion.
- Definition: “entrepreneurship within an existing organization” (Antoncic & Hisrich, 2003); an employee’s agentic and anticipatory behaviours aimed at creating new businesses for the organisation (venture behaviour) and helping it react to internal and external advancements (strategic renewal behaviour) (Gawke et al., 2017).
- Decisive test: was the venture created by an employee inside an established organisation, for that organisation?
- Evidence to look for: a parent company, university, NGO or public body that owns the initiative; the founder’s role as staff member.
- It is not this type if the founder started an independent organisation — the usual situation for Ashoka Fellows.
- Definition: “the discovery, enactment, evaluation, and exploitation of opportunities — across national borders — to create future goods and services” (Oviatt & McDougall, 2005).
- Decisive test: does the venture already pursue its opportunity across national borders?
- Evidence to look for: operations, partners, franchisees or customers in more than one country.
- It is not this type if it operates in one country only. Your diary’s later plan to internationalise it does not make it international entrepreneurship today.
Use a three-step argument. (1) Claim and evidence: name the type, quote its module definition, and match two or three facts from the Ashoka profile to the words of that definition (for example, “resolving social market failures” → the service reaches people the state and market ignore). (2) Rule out each other type with its decisive test: not intrapreneurship because the founder created an independent organisation rather than acting as an employee within an existing one (Antoncic & Hisrich, 2003); not ecopreneurship because environmental innovation for market success is not the core (Schaltegger, 2002); not international entrepreneurship because it does not yet exploit opportunities across national borders (Oviatt & McDougall, 2005). (3) Handle overlap honestly: if the venture has a secondary environmental or cross-border element, say so, then explain why the primary purpose decides the classification — Dees (1998) gives you the test of social improvement over profit. Rubric note: this is worth 15 marks (Entrepreneurial classification) and supports the 15 for Application of theories.
Worked sequence for one venture
- 1Read the Ashoka profile
Note the problem, the founder’s role, who pays, and every country the venture operates in.
- 2Find the primary purpose
Ask which goal the venture would refuse to give up: social value, environmental innovation, a new business for an employer, or cross-border opportunity.
- 3Apply the decisive tests
Run all four tests from the comparison above and write one sentence of evidence for each result.
- 4Name the school
For social entrepreneurship, add whether it fits the Social Enterprise School (earned income) or the Social Innovation School (new solution, any legal form).
- 5Link forward
Close by noting what would have to change for it to become international entrepreneurship — this sets up your internationalisation section.
Calling a venture “international” because Ashoka is a global network (the network is not the venture); calling it intrapreneurship because the founder works with partner organisations (partnership is not employment); listing all four types as partly true without deciding; and defining the types with sources outside the module. Use the module’s definitions as cited above.
Tutorial activities
Solve a local social problem — and make money doing it
In groups, identify at least one social problem in your home localities and design an innovative way of tackling it that also generates income. Then decide how the solution could be replicated internationally. The tutorial opens with examples of social problems: poverty, lack of safe drinking water, lack of basic healthcare, absence of affordable shelter, landfill methane, deforestation in Sub-Saharan Africa and high unemployment.
- 1.What is the social problem, and why have the market and the state not solved it?
- 2.What is your innovative solution, and which of the ways social entrepreneurs innovate does it use (new product or service, new process, underserved market, new supply, new structure, new labour, new funding model)?
- 3.How does the venture earn income, and does it fit the Social Enterprise School or Yunus’s social business principles?
- 4.How would the solution be replicated in another country, and what would have to change?
Thinking in systems with beer: Lammsbräu
Neumarkter Lammsbräu wanted organic hops, grain, yeast and water at a time when going organic meant higher costs and lower yields for farmers. Work through the two dilemmas on the slides and locate where systems change happened.
- 1.In the trust dilemma, why would farmers refuse to go organic even though both sides could gain?
- 2.How did Lammsbräu’s self-commitment change the farmers’ incentives?
- 3.Why did the farmers still say no, and what does the dilemma between Farmer A and Farmer B show?
- 4.Where do we see systems change? Place each Lammsbräu response on the iceberg.
- 5.Would you classify Lammsbräu as ecopreneurship or social entrepreneurship? Why not the other?
Breaking the poverty trap: Muhammad Yunus and Grameen
Watch the video on Muhammad Yunus (Social Entrepreneurship: Pioneering Social Change) and use the tutorial’s “poverty trap” slide to explain what rule of the banking system Grameen changed.
- 1.Why were the poor locked out of conventional banking?
- 2.What opportunity did Yunus see, and what was new about it?
- 3.Is Grameen social service provision or social entrepreneurship in Martin and Osberg’s (2007) terms?
- 4.Which of the seven principles of social business does Grameen illustrate?
Navigating ambivalence: Ibrahim Abouleish and SEKEM
Tutorial 4 uses Dr Ibrahim Abouleish to introduce a simple model of practical reasoning for decisions where goals seem to pull in different directions.
- 1.What did Abouleish want (normative assumption), and what could he do (positive assumption)?
- 2.What did he conclude he should do?
- 3.Give an example of the normativistic fallacy and of the positivistic fallacy in a social venture’s decisions.
- 4.Is SEKEM best classified as social entrepreneurship or ecopreneurship? Argue both sides, then decide.
Complete an iceberg: Dialogue Social Enterprise
Complete an iceberg for Andreas Heinecke’s Dialogue Social Enterprise, answer the guiding questions, begin a Theory of Change and open the Impact Ladder template.
- 1.What is the societal problem?
- 2.How did the social entrepreneur identify the problem?
- 3.Has this problem already been addressed by the state or the market?
- 4.What is the key idea of this example?
- 5.What is the social or environmental innovation?
- 6.Are there novel institutions or organisations?
- 7.Who benefits from the product or service directly, and how indirectly?
- 8.Are the stimuli for learning in the state or the market?
Is this social entrepreneurship? TOMS
Watch the tutorial video explaining social entrepreneurship through TOMS and test the One for One model against this week’s theory.
- 1.Which way of innovating from the creative destruction list does One for One represent?
- 2.Does TOMS create social value or social change in Martin and Osberg’s (2007) terms?
- 3.Does TOMS meet Dees’s (1998) test of social improvement over profit?
Start your Learning Diary: pick and classify an Ashoka venture
Part 2 of both tutorials introduces Assessment 1. Shortlist two Ashoka Fellows from South America, Africa or Asia and draft the classification paragraph for your preferred one.
- 1.Who is the entrepreneur, what does the venture offer, and in which country does it operate?
- 2.Which of the four types is it, and which facts match the words of the module definition?
- 3.Why is it not each of the other three types?
- 4.Which innovative element might you analyse, and which tutorial case can you compare it with?
Cases
Key terms
- Responsible entrepreneurship
- Entrepreneurship that tackles societal problems left unsolved by the market and the state; it cannot replace them but acts as society’s “R&D department”.
- Social entrepreneurship
- Innovative, effective activities that resolve social market failures and add social value systematically to maximise social impact and bring about change (Nicholls, 2006); social improvement over profit is its distinguishing feature (Dees, 1998).
- Social Enterprise School
- View of social entrepreneurship that focuses on the market income of non-profit organisations — an earned income strategy.
- Social Innovation School
- View of social entrepreneurship that focuses on innovation and societal change, with no restriction on legal form (Dees & Anderson, 2006).
- Social business
- The “extreme” social enterprise: social purpose + no loss + no dividend, governed by the seven Grameen principles (Yunus, 2007; Yunus & Weber, 2010).
- Ecopreneurship
- Entrepreneurship through an environmental lens, driven by personal initiative to achieve market success with environmental innovations (Schaltegger, 2002).
- Intrapreneurship
- Entrepreneurship within an existing organisation (Antoncic & Hisrich, 2003).
- International entrepreneurship
- The discovery, enactment, evaluation and exploitation of opportunities across national borders to create future goods and services (Oviatt & McDougall, 2005).
- Institutions
- Humanly devised formal rules and informal constraints that structure political, economic and social interaction — the rules of the game (North, 1990).
- Social innovation
- Innovation that addresses needs neglected by market or state, creates new institutional relations and empowers people to transform structures (Moulaert et al., 2013).
- Iceberg model
- Systems-thinking tool (Goodman, 2002) with four levels — events, patterns or trends, underlying structures and mental models; solutions aimed only at events or patterns are surface-level.
- International social entrepreneur (ISE)
- A social entrepreneur entering foreign markets to address a social need while staying financially successful; needs local context knowledge, networks, a mission-centred business model and mission-aligned partners.
- Social franchising
- Spreading a proven social enterprise model to other countries through local partners who run it under the same mission and format.
- Ashoka Fellow
- A social entrepreneur selected by Ashoka against five criteria (new idea, creativity, entrepreneurial quality, social impact, ethical fibre); the Learning Diary venture must be run by one.
Check your understanding
According to Dees (1998), what distinguishes social entrepreneurship?
Flashcards
References and sources
As cited in the module materials. Check each against the original before using it in an assignment.
- Antoncic, B. and Hisrich, R.D. (2003) ‘Clarifying the intrapreneurship concept’, Journal of Small Business and Enterprise Development, 10(1), pp. 7–24.
- Beckmann (2009) Cited in Mini-Lecture 1.3 and Tutorial 4 (Lammsbräu case); full details not given in the module materials.
- Brundtland (1987) Cited in Mini-Lecture 4.1; full details not given in the module materials.
- Costales, E. and Zeyen, A. (2023) Cited in Mini-Lecture 4.2 (Social Innovation and Systems Change); full details not given in the module materials.
- Dees, J.G. (1998) The meaning of social entrepreneurship. Fuqua School of Business, Duke University, pp. 1–6.
- Dees and Anderson (2006) Cited in Mini-Lecture 4.1; full details not given in the module materials.
- Defourny and Nyssens (2010) Cited in Mini-Lecture 4.1 (as “Defourney & Nyssens”); full details not given in the module materials.
- Gawke, J.C., Gorgievski, M.J. and Bakker, A.B. (2017) ‘Employee intrapreneurship and work engagement: a latent change score approach’, Journal of Vocational Behavior, 100, pp. 88–100.
- Goodman (2002) Cited in Mini-Lecture 4.2 (iceberg model); full details not given in the module materials.
- IDEO.org (2015) Cited in Mini-Lecture 4.1, p. 9; full details not given in the module materials.
- Kirkwood, J. and Walton, S. (2010) ‘What motivates ecopreneurs to start businesses?’, International Journal of Entrepreneurial Behavior & Research, 16(3), pp. 204–228.
- Martin and Osberg (2007) Cited in Mini-Lecture 4.2 and Tutorial 4; full details not given in the module materials.
- Maslow (1970) Cited in Mini-Lecture 4.1; full details not given in the module materials.
- Moulaert, F., MacCallum, D. and Hillier, J. (2013) ‘Social innovation: intuition, precept, concept’, in The International Handbook on Social Innovation: Collective Action, Social Learning and Transdisciplinary Research, p. 13.
- Mulgan, G. (2007) Social innovation: what it is, why it matters and how it can be accelerated.
- Nicholls, A. (ed.) (2006) Social entrepreneurship: new models of sustainable social change. Oxford: Oxford University Press.
- North (1990, 1992) Cited in Mini-Lecture 4.2 and Tutorial 4; full details not given in the module materials.
- Oviatt, B.M. and McDougall, P.P. (2005) ‘Defining international entrepreneurship and modeling the speed of internationalization’, Entrepreneurship Theory and Practice, 29(5), pp. 537–553.
- Parsons (1960, 2003) Cited in Mini-Lecture 4.2, p. 17; full details not given in the module materials.
- Schaltegger, S. (2002) ‘A framework for ecopreneurship: leading bioneers and environmental managers to ecopreneurship’, Greener Management International, (38), pp. 45–58.
- Schumpeter, J. (1911) The theory of economic development. Harvard Economic Studies, Vol. XLVI.
- Yunus, M. (2007) Cited in Mini-Lecture 4.1; full details not given in the module materials.
- Yunus, M. and Weber (2010) Cited in Mini-Lecture 4.1; full details not given in the module materials.
Written from these course files
External pages used
- Ashoka — Ashoka Fellows (link given in the Tutorial 4 assessment slide)
- Ashoka — Venture: Selecting our Ashoka Fellows (five criteria and selection phases)
- Ashoka — Venture and Fellowship
- Wikipedia — Ashoka (founding by Bill Drayton, Fellow stipend)
- Tutorial video — What is social entrepreneurship?
- Tutorial video — Social entrepreneurship: pioneering social change (Muhammad Yunus)
- Tutorial video — Social entrepreneurship explained (TOMS)
Social entrepreneurship, social enterprise and social business
Social entrepreneurship is defined by its purpose, not by its legal form. The module offers two academic definitions, two schools of thought and one “extreme” version: the social business.
“Innovative and effective activities that focus strategically on resolving social market failures and creating new opportunities to add social value systematically by using a range of resources and organizational formats to maximize social impact and bring about change.”
The pursuit of social improvement over profit is the distinguishing characteristic of social entrepreneurship.
The tutorial puts the same idea in plainer words: social entrepreneurship is the organisation of a business around specific social and environmental causes, and it includes for-profit and non-profit organisations, charities and for-profit social enterprises. What unites them is motive. Social entrepreneurs’ main drive is to make a difference in the world or in their communities — to create social value and social change.
Social entrepreneurs often have personal or vicarious experience of the cause they support, and that experience shapes their mission (the tutorial points to Wonderbly as an example). Muhammad Yunus is the classic case: he saw skilled craftspeople in a Bangladeshi village held back only by lack of credit, and built Grameen Bank around micro-loans without collateral.
Two schools of social entrepreneurship
Social enterprise versus traditional non-profit
A social business is the “extreme” social enterprise: social purpose + no loss + no dividend. It is defined by its source of funding (it must cover its own costs) and by its organisational form (profit stays in the business).
Overcome poverty or one or more problems that threaten people and society (education, health, technology access, environment and so on) — not profit maximisation.
The business must be financially and economically sustainable.
Investors get back their investment amount only; no dividend is paid beyond it.
Once the investment is repaid, profit stays with the company for expansion and improvement.
The business is environmentally conscious.
Employees receive a market wage with better working conditions.
“Do it with joy.”