The click between profits and social entrepreneurship
Bachelor thesis research by Simone van Alphen
In June 2016, Simone van Alphen graduated from the Tilburg School of Economics and Management at Tilburg University. She followed the BSc International Business Administration and wrote her bachelor thesis in the area of social entrepreneurship.
In the ever-changing, competitive entrepreneurial global context, dealing with the rising expectancy of corporate social responsibility and sustainable development has become a reality for many organizations. While the nature of social entrepreneurship is originated in the not-for-profit sector, the hybridity between the social mission of an organization and the economic value, seen as a by-product to the main social goal, is becoming a new source of value creation for social entrepreneurs. In her thesis, van Alphen examines the motivations behind starting a social enterprise. These motivations are considered to be crucial in determining the dual mission of social benefit and financial sustainability.
In these hybrid organizational forms, the social mission is explicit. According to Seelos & Mair (2005), a social enterprise (SE) is an exciting relatively new opportunity for those who not only see financial profit as a goal, but also seek to make a contribution to society. This duality is reflected by the question addressed by the thesis: How does the motivation for social goals fit with making profit in social enterprises?
The problem is approached by conducting a literature review on the motivations behind social goals with regards to also contributing to earning profits in a social enterprise. The motivations of social entrepreneurs are analyzed from both an internal perspective, concerning individual incentives, and from an external perspective, dealing with factors such as community conditions and pressures. As Chand (2009) argues, a SE includes entrepreneurship in the way that it links with business and commerce, but the social component is about values beyond the market.
The findings of this research indicate that, in order to accomplish its dual mission, a SE needs clear standards and targets. Concerning the problem statement, the motivations that drive the entrepreneur vary between business interests and passion. These motivations, both internal and external, create a dynamic fit between the business approach and the motivation to reach a social improvement goal. In a SE, the social goal, although seen as being at its core, need not be exclusive. The economic activity has to be linked to social outcomes. Hence, the priority of a social enterprise should be balancing the social mission with the organizational sustainability, by keeping in mind that the key to a social enterprise is to not neglect its core mission when applying principles from the for-profit market (Pomerantz, 2003). Not social enterprises, but also many institutions, organizations, and businesses have committed to these global goals which integrate social needs through their CSR campaigns.
Lastly, this paper suggests that social enterprises should indeed focus on social change and improvement instead of traditional profit maximization, whilst, at the same time, acting upon achieving a sustainable development.
Chand, V. S. (2009). Beyond Nongovernmental Development Action into Social Entrepreneurship. The Journal of Entrepreneurship, 139-166
Pomerantz, M. (2003). The business of social entrepreneurship in a "down economy". In Business (25), 25-30
Seelos, C., & Mair, J. (2005). Social entrepreneurship: Creating new business models to serve the poor. Business Horizons (48), 241-246