Social entrepreneurship is where starting a business meets solving a social issue. In social entrepreneurship, founders — also known as social entrepreneurs — use their business savvy and keen sense of opportunity to build a company focused on creating social value. They look at global problems and apply business and commerce solutions to solve those problems.
That’s the elevator pitch version of social entrepreneurship. However, there’s far more to it. Quite literally, the aim of social entrepreneurs is to save the world through business tactics. And a short elevator ride isn’t enough time to solve the entire world’s problems.
We’ve created this definitive guide to social entrepreneurship to help you understand it. Learn how to make an impact in the world with your business degree by understanding the emergent field of social entrepreneurship.
You can also quickly jump down to the infographic that summarizes social entrepreneurship.
What Is Social Entrepreneurship?
The Global Entrepreneurship Monitor launched a study to clearly define social entrepreneurship through empirical data. They found two elements that define social entrepreneurship activity: The organization is driven by social value creation rather than value capture (short-term financial gain) and the organization is market-based rather than non-market-based. This means that the venture needs to function in the private sector, but its missions and decision-making revolves around a social issue, as opposed to the financial bottom line.
This narrowed definition differentiates social entrepreneurship from other business sectors with overlapping characteristics. We’ve broken down the difference between social entrepreneurship and neighboring areas of business:
- The difference between nonprofit work and social enterprise comes down to funding. Nonprofit organizations are funded by the public whereas social entrepreneurial activity relies on generating their own profit.
- The difference between social entrepreneurship and corporate social responsibility comes down to the mission. Social entrepreneurial ventures proactively address a global issue and model their business around that mission. Corporate social responsibility programs focus primarily on their product or service, and incorporate socially responsible practices as a secondary concern.
- The difference between commercial entrepreneurship and social entrepreneurship is innovation. Social entrepreneurs innovate to solve global problems specifically, whereas commercial entrepreneurs innovate around any topic where they see an opportunity gap.
The Origins of Social Entrepreneurship
The term “entrepreneur” originated in French economics as early as the 17th and 18th centuries. While some of those innovators were certainly socially inclined, the spotlight on social entrepreneurship really came with Muhammad Yunus’s founding of Grameen Bank.
Yunus, known as the “Banker to the Poor,” started Grameen Bank in Bangladesh in 1983 with the goal of providing microloans to impoverished people to help them escape from poverty. This approach to solving social problems through business turned heads, and in 2006, Yunus was awarded the Nobel Peace Prize for his work.
Today, social innovation is a valued differentiator. In fact, consumers are four times more likely to trust a brand with a strong purpose.
Not only are consumers more apt to make socially responsible purchases, they’re also looking at the business sector to solve global problems. In a survey by Cone Communications, 78% of people wanted companies to address social justice issues and 63% of American consumers looked to businesses to take the lead on social and environmental change.
Social innovation has transformed from a theory in the early 1980s to a response to social problems, leaving opportunity for you to make an enormous impact with your business degree.
Social Entrepreneurship Examples
Since Yunus’s novel Grameen Bank, hundreds of socially driven companies have emerged. These companies tackle issues such as combating hunger, climate change and poverty. Here’s a list of companies born out of social entrepreneurship:
- TOMS is a shoe brand that made famous the “one for one” business model. For every shoe purchased, they gave a shoe away. Over the past 13 years, they’ve given nearly 100 million pairs of shoes to people in need.
- Misfit Foods aims to fight climate change by combining plant-based food solutions with meat. Their mission is to “meet people where they are by making a veggie-forward product that meat-lovers and meat-reducers can all get on board with.”
- GoldieBlox aims to balance the gender gap in STEM. The media and entertainment company “educates and empowers young girls through engaging content, fun toys and interesting resources on science and technology.”
- Ashoka believes that everyone is a changemaker. Their program “identifies and supports the world’s leading social entrepreneurs to help them realize their business and social impact aspirations.”
- Grameen Bank is the bank for the poor. They give out “suitable microloans” to people in financial need to get out of poverty.
- Better World Books believes in the “power of knowledge.” Every time you purchase a book from Better World Books, the company donates a book to someone in need.
- The Big Issue aims to “dismantle poverty through providing opportunity.” The magazine offers employment opportunities to the homeless.
Social Entrepreneurship Opportunities at Business Schools
Pursuing social entrepreneurship has tremendous payoffs. You can solve some of the world’s most pressing problems and win a Nobel Peace Prize, not to mention grow a tremendous amount of business success along the way. Feeling inspired? Here are some opportunities to pursue social entrepreneurship at business school:
- The Fuqua School of Business offers an MBA program with a concentration in social entrepreneurship through the Center for the Advancement of Social Entrepreneurship. Classes include impact investing and advanced avenues of social impact.
- The Wharton School offers an MBA/MSW partnership program with the Penn School of Social Policy and Practice. The center is home to the Schwartz Family Penn Impact Lab, a one-week program in Costa Rica accompanied by five months at the university for jumpstarting social projects.
- The University of Oxford offers three social entrepreneurship electives that go over international social entrepreneurship, innovation and design and development. It also offers fully-funded scholarships to candidates focused on social innovation. They also have an initiative solely for social innovation called the Skoll Centre for Social Entrepreneurship.
- Yale University offers the Program on Social Enterprise which discusses nonprofits, social enterprises and public sector social entrepreneurship. The program comes with optionality as you can study Global Social Entrepreneurship, Managing Social Enterprises, Urban Poverty and Economic Development.
- University of Michigan offers a number of classes through their Center for Social Impact. Some courses include Corporate Responsibility and Ethics, Advocacy and Social Change, and Social Entrepreneurship and Innovation.
Business is changing for the better. A social consciousness has been inspired in board rooms across the world as social entrepreneurship has gained attention.
So, whether you’re set on abolishing poverty or getting carbon emissions down to net zero, your business degree can provide the education you need to tackle those global challenges.
Infographic sources: Global Entrepreneurship Monitor | Zeno Group Strength of Purpose Study | Interbrand Best Global Brands | TOMS | Microcredit Summit Campaign | Forbes Most Innovative Companies | BetterWorldBooks Impact | Ashoka Impact | Deloitte | Misfit Foods Blog