What Is Social Entrepreneurship? A Guide

Key takeaways

Social entrepreneurship is an innovative business venture that influences change and advances a social cause.

• Social entrepreneurs work within the structures of the business world to influence change in areas such as progress, development, and innovation.

• Examples of companies known for social entrepreneurship include Grameen Bank, TOMS, and Warby Parker.

• You can identify businesses that are social entrepreneurs by examining whether they exhibit characteristics of social entrepreneurship, such as being mission-driven, socially focused, collaborative with related businesses, directly linked to social issues, and focused on sustainable social impact.

Learn more about what social entrepreneurship is by exploring how it compares to regular entrepreneurship and why it’s important. Plus, get inspired by real-world case studies showing how businesses incorporate social entrepreneurship into their models. To learn more about how you can develop business strategies for social impact, enroll in the Business Strategies for a Better World Specialization. In as little as four weeks, you’ll have the opportunity to analyze information about global trends and understand the role of corruption in societies to help you make more informed business decisions. 

What is social entrepreneurship?

Broadly speaking, social entrepreneurship is an innovative business venture that influences change. It applies the principles and guidance used by start-up founders and entrepreneurs to a business that directly generates social change or advances a social cause. 

As a social entrepreneur, you typically have a specific cause that you care about and develop a business model to make a positive impact. A social entrepreneur is primarily motivated by a desire to alleviate a systemic social or cultural problem. The main goal is to create lasting social change through business.

Some key areas of interest might include:

• Economic development

• Education

• Gender equality

• Health care

• Agriculture

• Environmental sustainability

• Renewable energy

• Community development

Social entrepreneurship can operate as a nonprofit, for-profit, or hybrid business (also known as a social enterprise), depending on the business model that you prefer and the availability of funding.

Social entrepreneurship companies case study no. 1: Grameen Bank

Grameen Bank is perhaps the most commonly cited example of successful social entrepreneurship. Along with its founder, Muhammad Yunus, the Bangladesh-based microfinance organization won the Nobel Peace Prize in 2006.

Due to predatory lending practices, people in poverty-stricken areas cannot participate in their country’s economic systems. In an effort to build sustainable local economies, Grameen Bank provides small loans to people in rural communities who want to start their own businesses.

These microloans enable borrowers, many of whom are women, to use their skills to generate income and ideally become financially independent. With more capital flowing through these communities, local economies can grow. Thanks to the success of the loan structure, Grameen Bank has expanded its reach to over 2,500 branches [1].

Entrepreneurship vs. social entrepreneurship: How does social entrepreneurship work??

Like entrepreneurs, social entrepreneurs aim to create a sustainable business with staying power. However, whereas an entrepreneur’s goal is to maximize profits, your main concern as a social entrepreneur is impact. Many other differences between the two types of entrepreneurship derive from that focal point.

For a brief overview, consider this side-by-side comparison of the two:

It’s important to note that a business can be concerned with and contribute to social causes without being a social-entrepreneurial venture. Corporate social responsibility is when a business adopts policies that positively impact society, often guided by ethics. For example, a company may donate to charitable organizations or offset its carbon emissions to mitigate environmental harm.

Learn more: Sustainability Reporting: Components, Uses, and Benefits

Social entrepreneurship examples in society

Social entrepreneurship works within the structures of the business world to influence social change. It’s largely associated with progress, development, and innovation. Much like start-up entrepreneurs are disruptors, social entrepreneurs disrupt the status quo of systemic inequality.

As a concept, social entrepreneurship is not new. For example, some experts may consider Florence Nightingale, who created the first nursing school in 1860 and thus reformed the health care industry, to be a social entrepreneur.

However, the term “social entrepreneurship” has only gained popularity in more recent times. As people and scholars continue to examine social entrepreneurship, you can learn more about how different approaches impact society and continue to develop best practices in your business. In the meantime, social entrepreneurs are constantly reworking their business models so that they can meet their main goal of affecting social change.

Social entrepreneurship companies case study no. 2: TOMS

TOMS is another example of social entrepreneurship that iterated its model as needed.

In 2006, TOMS popularized the one-for-one model that many social-entrepreneurial businesses later replicated. For every pair of shoes it sold, the company would donate a pair to a person in need.

This straightforward strategy seemed to both support their ability to run a successful business by selling a product to people who could afford it and directly impact change in communities where there was a need by providing new shoes. However, over time, experts realized that simply donating shoes wasn’t promoting sustainable change, and it may have actually hurt communities if the shoe donations were disrupting local shoe businesses.

In response, TOMS adapted its giving model a few times over the years. Currently, it reserves a portion of its profits for grassroots goods, partnering with community organizations and providing cash grants to support sustainable change.

Other businesses have learned from TOMS’ experience. For example, with Warby Parker’s one-for-one program, for every pair of eyeglasses sold, the company sponsors eye exams and affordable eyewear for people in need.

How social entrepreneurs incorporate their cause into their business

A social cause is at the heart of every social entrepreneur’s business vision, and many social enterprises begin with that cause.

Often, your first step toward social entrepreneurship is recognizing a problem in society and having the desire to solve that problem. As a social entrepreneur, you will learn about the mechanisms that perpetuate the problem and build business models that directly address those mechanisms.

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