Social Entrepreneurship - simply a business or a self-financed charity?

Yesterday, I had the privilege to give a short presentation at SEIP Ireland's first event with this years cohort of LaunchBox, Tangent's Student Accelerator! and participating in a discussion session after that.



I touched upon the topic of different approaches to social entrepreneurship and I highlighted the EU definition:


A social enterprise is an operator in the social economy whose main objective is to have a social impact rather than make a profit for their owners or shareholders. It operates by providing goods and services for the market in an entrepreneurial and innovative fashion and uses its profits primarily to achieve social objectives. It is managed in an open and responsible manner and, in particular, involves employees, consumers and stakeholders affected by its commercial activities. (https://ec.europa.eu/growth/sectors/social-economy/enterprises_en)


I find this definition very restrictive, reserving the term only for those initiatives that are operating as a non-profit organization excluding business centered approaches. Also worth to recognize that the EU definition comes as a "package" connecting the term to preconditions regarding the way the business supposed to be maintained and relate itself to different stakeholders or the public.


Social entrepreneurship is also an emerging concept outside of the EU, for example in the United States or in Asia where the term is not so obviously tied to these preconditions.


In a study of the Asia Centre for Social Entrepreneurship & Philanthropy of the National University of Singapore ( Landscape of Social Enterprises in Singapore, Social Entrepreneurship in Asia: Working Paper No. 1 https://www.academia.edu/25626319/Landscape_of_Social_Enterprises_in_Singapore ) the definition of social enterprise sounds very different:


"At its core, a social enterprise is simply a business which seeks to create social impact through the trading of goods and services. It uses the business platform to achieve social and/or environmental objectives while simultaneously seeking a financial return."


Apparently, the Singaporean definition of SE is approaching the phenomenon more from a business perspective embracing initiatives that are having measurable social impact and "simultaneously" making profit.


The Singaporean definition is closer to my approach and I have two main reasons why I support this way:


  1. Excluding one of the most effective actors (traditional businesses) from problem solving and value creation is a lost opportunity. The landscape of businesses is changing rapidly and next generation of corporations, startups, SMEs will survive only if they relate themselves to societal and environmental challenges in a sustainable way.

  2. In Eastern-European and Post-Soviet countries where I usually work the connotation of "social" entrepreneurship reflecting in the EU definition is not always good. It sounds something like "second hand" entrepreneurship that belongs more to the welfare sector, and to the movements, activism around left wing political ideologies. And many business minded people try to keep themselves away from this.


Zsolt Bugarszki

founder

Social Entrepreneurship

Incubation Program

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