Social Entrepreneurship and Related Concepts: The Path of Opportunity to Foster New Ventures

Social Entrepreneurship and Related Concepts: The Path of Opportunity to Foster New Ventures

Cristina López-Cózar-Navarro, Tiziana Priede-Bergamini
DOI: 10.4018/978-1-7998-4826-4.ch013
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In the past few decades, a new way of responding to social and environmental problems has emerge: the social entrepreneurship. It is presented as a special type of venture, in which the creation of social value prevails over the maximization of profits. Thus, the main objective of these types of ventures is to serve the community and to search for a positive social change. In this chapter, in addition to presenting the concept of social entrepreneurship and its various approaches within the so-called third sector and the emergent fourth sector, the main sources of funding that can be used by social entrepreneurs are also presented, especially business angels and crowdfunding, are detailed. New paradigms such as the collaborative economy and the circular economy are also addressed within social economy, highlighting the relationship with social entrepreneurship and the path of opportunity to foster new ventures in these fields.
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Given the current economic climate, it is increasingly difficult for governments to supply the goods and services of so-called welfare state, and generally to serve a society that gradually demands more support, thereby increasing public spending. In this context, the social enterprise emerges as an organization capable of providing innovative and efficient solutions to social and environmental problems, as a starting point for the creation and consolidation of a more sustainable and balanced social and economic order. Due to the growth of social enterprises around the world in many different sectors of the economy, research and article publication has grown substantially in recent years (Zahra & Wright, 2016; Carmona et al., 2018).

The social entrepreneur, by generating ideas and investing resources, effort and personal commitment, can find solutions to issues such as: fair access to housing, inclusion of vulnerable groups, equal access to employment and training, managing the dependence, etc. Thus, social enterprises allow a different form of development; this is, innovative, inclusive and sustainable; highly necessary for today´s global market. In this economic context, the role of these types of businesses is growing, even considered by the European Commission of great importance, which has led to the implementation of many initiatives and research projects, offering different ways of development. In this regard, the European Commission published in 2011 the Social Business Initiative (SBI), in which eleven key actions to promote the development of social enterprises are presented, grouped around three main intentions: to increase the visibility of social entrepreneurship, to improve the legal environment and to facilitate access to financing (European Commission [COM], 2011).

Although, the visibility of the social enterprise across Europe has risen and there is an honest interest in its development, there is, however, still much work to do to improve awareness, recognition and understanding of its models and value creation. From the European Union it is emphasized that citizens, civil society and social enterprises must be at the heart of European strategies to promote social cohesion, social inclusion and well-being (EESC, 2014). Indeed, recently, the Commission has also developed a five-pillar strategy intended to increased access to funding and to markets, better framework conditions, foster social innovation and internationalization issues (European Commission [COM], 2020).

The issue is clearly of some importance, as these social entrepreneurship ventures may vary in their business models, ownership structures, legal forms and financing (Zahra & Wright, 2016); it is therefore very appropriate to expand the existing knowledge in order to contribute to a better understanding of the concept and to delve into the differentiating aspects of this particular type of organization. Certainly, we consider this work particularly timely, because the current trend in the majority of economies is conceding greater importance to the social economy sector. Thus different countries are developing initiatives in terms of legal forms, new financing sources and other issues to foster the development of new ventures of social entrepreneurship.

The objectives of this chapter are:

  • To know the dimensions of the third sector as a framework for social entrepreneurship.

  • To present the new paradigms related to the social economy.

  • To understand the concept of social entrepreneurship and social enterprise.

  • To identify the financial alternatives available for nascent social entrepreneurs.

  • To understand the relationship between social enterprise and corporate social responsibility.

To achieve these objectives, the chapter is organized as follows: first, the concept of the third sector is presented, distinguishing between the different approaches according to the entities that comprise it and showing the new notions related to the concept. Next, the basis of social entrepreneurship and social enterprise are presented; the financial frameworks are exposed, as well as its relation to corporate social responsibility (CSR). We finish the chapter including solutions and recommendations, future research directions and the main conclusions.

Key Terms in this Chapter

Social Enterprises: Are neither public or charities, nor traditional capitalist companies, with a clear mission of serving the community, operating in the market through resource extraction and the production of goods or services, as well as offering innovative, effective and efficient solutions to social unresolved issues.

Social Economy: Set of entities outside the public sector, with democratic management, and with a special regime of property and distribution of profits.

Collaborative Economy: Business models for the exchange of goods and services through an online platform.

Positive Social Change: Process of transforming patterns of thought, behavior, social relationships, institutions, and social structure to generate beneficial outcomes for individuals, communities, organizations, society, and/or the environment beyond the benefits for the instigators of such transformations.

Fourth Sector: An evolution of the private first sector, the public second sector and the social third sector; creating an intersection were the organizations address social and environmental challenges while, at the same time, provide prosperity to society and not just economic results.

Circular Economy: A productive system in which resources, materials and products are maintained as possible within the business cycle and waste is minimized.

Crowdfunding: Also known as collective or mass-financing, is a new method for financing a range of initiatives such as businesses, cultural activities, social projects, etc. allowing the founders to request funds from many people each who usually provides a relatively limited sum.

Economy for the Common Good: Is a holistic model, which may be a new option over the existing socio-economic systems, understood as an inspiring force for a real global change. It is a new economic, political and social order, with the intention of building—from the ground—a sustainable and more balanced society.

Solidarity Economy: Is clear in its ambition to strengthen cooperation and solidarity among different agents, generally on a voluntary and reciprocity basis.

Third Sector: Is option other than public bodies and traditional capitalist enterprises, in order to meet needs or fill gaps that neither others can address or do it poorly.

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