• Saturday, April 20, 2024
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Social entrepreneurship: The business of solving social problems


An entrepreneur is one who can identify a gap or need within his/her environment or society and innovatively satisfy the needs with products or services, which may be completely new or an improvement on existing features. The entrepreneur is innovative, has an eye for business opportunities, and above all, is a risk-taker. This definition applies to the classical entrepreneur who is motivated by economic interests, profit-making, and at the corporate level, the maximization of shareholder value. The social entrepreneur is all these. The difference is that he/she is driven by a non-pecuniary personal value, the quest to contribute his/her own quota in solving societal needs such as tackling poverty, eradicating diseases, preventing avoidable deaths caused by treatable ailments, and helping those at the “bottom of the pyramid” meet the basic physiological needs of food, clothing, and shelter. The social entrepreneur’s ultimate objective is not the maximization of profit/shareholder wealth but the maximization of impact on society. The classical entrepreneur is working for personal/stakeholder financial gains, and profit-making serves as the primary means to achieve business sustainability. On the other hand, the social entrepreneur is not expecting huge financial profit but is rather driven by the need to achieve significant transformational impact; the target is the less privileged who cannot afford economic and market-driven prices, for goods and services (Reeve, 2018).

According to Bornstein and Davis (2010), “Social entrepreneurship is a process by which citizens build or transform institutions to advance solutions to social problems, such as poverty, illness, environmental destruction, human right abuses, and corruption, in order to make life better for many.” In articulating the role of the social entrepreneur in society, Reeve(2018), stated that the social entrepreneur recognises an unfair, unbalanced situation that excludes and marginalises a segment of society from accessing services that corporate organisations and the government have failed to provide; recognises an opportunity to formulate a “social value proposition” that addresses the unfair situation; and creates a “new equilibrium that ensures a better future for the targeted group and society at large.”

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For-profit or Not for profit

Deciding to operate as a for-profit or not-for-profit can present a daunting challenge to social entrepreneurs/social enterprises. A lot of them make their final decisions based on the wrong reasons. As observed by Leimsider(July 30, 2014), some of the reasons are: Only for-profits use “business discipline”; only for-profits can sell a product or service; only for-profits properly compensate employees; only for-profits have a sustainable revenue model, and non-profits are “old fashioned” and only for-profits earn respect in their sectors. These appear to be bad reasons for a social entrepreneur to choose a for-profit model. Conversely, there are good reasons why the for-profit model should be used. They include when the local laws require so; if equity investment is the best way to get start-up capital; and where there is a need to send a signal to key partners or others about the role of for-profit markets.

Bringing business practices to social enterprises would turn “beneficiaries” into “customers” and can redirect the priorities of the organisation from its own needs to those of its clients.

According to Bornstein and Davis (2010), in the last 20 years, an increasing number of social enterprises have resorted to the strategies used by traditional businesses, to solve problems and generate revenue. However, the debate continues between those who argue that bringing business into social enterprises would compromise their core values thus reducing human values to mere financials and those who are convinced that businesses trying to solve social problems would not be able to compete well. Furthermore, profit-seeking investors get driven away on hearing that a business organisation is seeking social returns while donors and financiers of NGOs are worried to hear those soliciting financial grants and donations talk about profit, even when the reasons are genuine. Be that as it may, it is common knowledge that businesses respond to the needs of their customers in a way that NGOs do not since there is no compulsion to do so. Bringing business practices to social enterprises would turn “beneficiaries” into “customers” and can redirect the priorities of the organisation from its own needs to those of its clients. As more and more organisations navigate through the not-yet-clear coast of the marriage of businesses and social enterprises, there will be the need for new financing opportunities/tools that cut across philanthropy, business, and the public sector. Interestingly, both entrepreneurs and investors are gradually getting more knowledge of how to combine all available financing options such as grants, equity, soft loans, commercial debt, etc. for maximum benefit to society.

Nigeria and other countries of the Sub-Sahara contend with a plethora of social problems. From the shortage of potable water to deficits in housing needs; from gross lack of social facilities like public toilets, rehabilitation homes for drug addicts, to environmental pollution occasioned by poor refuse disposals and indiscriminate use of plastics, Nigeria has a huge opportunity for social entrepreneurs. Clearly, government alone cannot provide all the needs of society. But it can create a conducive atmosphere for entrepreneurship. If the classical entrepreneur flourishes and creates jobs and the social entrepreneur solves social problems using business approaches that generate income while creating employment, the country will be on a fast track to sustainable socio-economic development.