Business Models for Social Entrepreneurs

The Importance and Domain of Social Entrepreneurship

A number of factors have contributed toward the birth of social entrepreneurship. These factors include the globalization of products and services provisions and a steady decline in financial aid to organisations associated with international development (NGDOs). It is stated that,

This shows a marginal increase in aid compared to the economic growth experienced by the donor countries to developing countries. Fowler (2000) attributes this decline in aid to pressure from parliaments and tax payers in the developed countries. Leadbetter (1997) argues that the global changes that have promoted privatization and market economies has resulted innone governmental organisations (NGOs) and none profit organisations pressured to fill the gap in terms of the provision of social services. Goerke (2003) supports this view and emphasizes that the NGOs have to grapple with a state of declined traditional funding, therefore new forms of activities financing are imperative for continued social services provisions. Mort, Weerawardena and Carnegie (2003) attribute competition for scarce donor funding to globalization and a shift in governmental role from a strong society oriented participation and provision of social services to a market controlled economy. As a result, the scarce donor funds and competition have forced nonprofit organisations to reinvent themselves to adopt income generating activities as a way of sustaining their mission of extending social services to marginalized communities. Mort et al (2003) assert that the widened space for social services provision has also attracted commercial entities to provide affordable goods and services to poor communities. Social entrepreneurs whose main mission is to satisfy community social needs such as clean water and education are therefore evoked to seize the opportunity to adopt innovative marketing strategiesfor pursuing economic objectives while retaining their main goal of social provision to the community (Swanson & Zang, 2010). However, Dees & Anderson (2003) posit that social entrepreneurs are drawn to adopt for-profit structures “as a way to leverage scarce resources, allowing philanthropic and tax dollars to be directed to where they are most needed” (p. 5). The latter therefore arguing that social entrepreneurs induce efficient use of resources and promoting the equitable distribution of public resources in a way that uplifts of lives to the marginalized members of the community. The pull factors that draw social entrepreneurs to adopt commercial structures for the sustenance of social provisions have been identified as including increased competition for scarce donor funds and a change in government focus from a strong community responsibility approach to a laissez-faire approach in which markets control economic activities. The following sections examine the characteristics that constitute social entrepreneurship and describe the social entrepreneur.