This multiple case study of nine entrepreneurial ventures with social emphasis operating in Colombia, Peru, and Chile identifies vital elements that make these firms impactful in three dimensions: economic, environmental, and social. The results found that the founder's proximity to the social/ecological problem is a trigger to start up a business. The “purpose” is a motivational factor to both start up a business and keep the business during hard times, such as the COVID-19 pandemic. The purpose is the fuel, but it does not guarantee the success of the company. The value proposition is the critical factor for success. These companies are continually re-inventing and changing their value proposition while keeping the purpose of the organization as a keystone. The authors shed light on a model for social entrepreneurship in South America.
TopIntroduction
“A healthy economy should be designed to thrive, not grow”
Kate Raworth
Nowadays, the world is facing extinction-level grand challenges (Pörtner et al., 2019; United Nations, 2015). The COVID-19 pandemic has shifted our economy dramatically in a matter of weeks. Moreover, there is an ever-growing awareness of significant societal challenges, and government and NGOs lack sufficient resources and capabilities to meet these challenges (Porter, 2012). Therefore, the imperative for entrepreneurship for sustainable development and innovative solutions is profound.
Social innovation is on the rise in Latin America (Domanski, Howaldt, & Schröder, 2017), while the phenomenon of social entrepreneurship remains a poorly-understood (Santos, 2012; Sinthupundaja, Kohda, & Chiadamrong, 2020). As crises create new needs and therefore new business opportunities, natural disasters in South American countries boost social innovation. One example is shown by data from the GEM project in Chile. According to the data, during the economic downturn (2007-2010, including the earthquake of February 2010) the entrepreneurial attitude of the Chilean population changed: Entrepreneurial intention increases while fear of failure decreases. This means, that the community became more resilient.
South American countries have historically addressed social impact, mostly with philanthropy and corporate social responsibility. Paternalism, as an action that limits a person's or group's liberty or autonomy and is intended to promote their own good (Dworkin, 2010) has been the colonial root behind these practices. However, high collectivism (as described by the framework based on Geert Hofstede's work) and cooperativism are also valid values nowadays, shared in most Iberoamerican countries. This context makes South America a fertile land for social entrepreneurship and innovation.
“B Corporation” (Sistema B) is a certification for firms with triple impact (social, environment, financial). According to their website, the B movement works “for an economy where success is measured by the well-being of individuals, societies and nature”1. By 2020, B movement has certified 572 B corporations in Latin America (out of 3275 in the world), and joined 5 “+B cities” in South America (out of 7 in the world).
The interest in social innovation is continuously growing in South American countries. The academic community has also shown interest in studying sustainable business models.
For instance, Brillo de Luna, a school that creates shared value creation by recycling glass, and partnering with a glass company nearby (Villalobos Araya, 2020). Another example is Algramo2, a company that goes beyond traditional business models.
“We are continuously challenging our business model… We are not a delivery service, nor a detergent dispenser. We want to become a sustainability solution, we want to take waste out of the equation. We need to change consumer behavior. What a huge challenge”. José Manuel Möller, Algramo CEO, April 2020.
Research Questions and Aim
Is there a particular way of doing sustainable entrepreneurship in South America? Do the perspectives of “shared value creation” and “entrepreneurial context” contribute to the understanding of the sustainable entrepreneurship phenomenon? What is the trigger for starting up a sustainable business? What is the driver? Does the social and/or environmental serve as a survival or as a success factor during hard times?
This exploratory study challenges the prevailing myths such as “social innovation is not profitable” and “social entrepreneurship is not scalable” by identifying and providing with successful entrepreneurial projects with social emphasis that serve as a model for social entrepreneurship in South America.
Theoretical Foundation
This chapter combines two perspectives: shared value and a contextualized perspective of entrepreneurship.
First, shared value creation theory (Porter et al., 2011) challenges organizations to meet the social and environmental problems and State voids (Porter, 2006). According to Porter and Kramer (2011), shared value can be defined as policies and practices that increase the organizational competitiveness by improving the economic and social conditions of the communities where the company is located.