Social entrepreneurship vs. traditional entrepreneurship

by Dr. Sophie Bacq

In our lat­est research that appeared in the Jour­nal of Social Entre­pre­neur­ship, Chan­tal Har­tog (Panteia/EIM Busi­ness and Pol­icy Research, The Nether­lands), Brigitte Hoogen­doorn (Eras­mus Uni­ver­sity, The Nether­lands) and myself explored the dif­fer­ences between social and com­mer­cial entre­pre­neur­ship from an orga­ni­za­tional per­spec­tive. Indeed, the con­cur­rent social and finan­cial value cre­ation is likely to result from inno­v­a­tive busi­ness mod­els and sus­tain­abil­ity strate­gies that might dif­fer from com­mer­cial ones. How­ever, empir­i­cal stud­ies to date have tended to focus on a given set of (usu­ally suc­cess­ful) social entre­pre­neurs and omit con­trol groups. Indeed, despite grow­ing atten­tion and recog­ni­tion of the social entre­pre­neur­ship phe­nom­e­non, the related research field is still in its infancy, char­ac­ter­ized by a mod­est base for the­ory build­ing and test­ing pur­poses and a lim­ited num­ber of empir­i­cal stud­ies, mostly designed as case studies.

As a con­se­quence, there is a lack of knowl­edge regard­ing the fac­tors that dis­tin­guish social enter­prises from their com­mer­cial coun­ter­parts. In our research, we com­pared com­mer­cial entre­pre­neur­ship and social entre­pre­neur­ship in terms of the age of the orga­ni­za­tion or ini­tia­tive, the num­ber of peo­ple it employs, the type of fund­ing it attracts, and its degree of innovation.

To do so, we used a com­bi­na­tion of exploratory quan­ti­ta­tive analy­ses and qual­i­ta­tive tech­niques. On the one hand, the Global Entre­pre­neur­ship Mon­i­tor (GEM) 2009 sur­vey on social entre­pre­neur­ship, as the largest avail­able quan­ti­ta­tive data source, offers a valu­able oppor­tu­nity to enable social entre­pre­neur­ship research to evolve beyond descrip­tive pur­poses toward more pre­dic­tive pur­poses. How­ever, despite the poten­tial con­tri­bu­tion of large-scale data, the valid­ity and reli­a­bil­ity of mea­sure­ment instru­ments can­not be seen inde­pen­dently from their par­tic­u­lar con­text. There­fore, after hav­ing explored the ten­den­cies among 151 social entre­pre­neurs in Bel­gium and The Nether­lands, we enriched these insights by inter­view­ing a vari­ety of key infor­mants from both coun­tries, with the pur­pose of inter­pret­ing the data in their par­tic­u­lar con­text. Key infor­mants con­sist of national experts in social entre­pre­neur­ship, rep­re­sen­ta­tives of the nonprofit/NGO sec­tor, or the cor­po­rate social respon­si­bil­ity movement.

We found that social orga­ni­za­tions or ini­tia­tives are pre­dom­i­nantly younger than their com­mer­cial coun­ter­parts and are mainly rep­re­sented in the pre-start-up or infancy stage of the entre­pre­neur­ial process, which at first sight could be attrib­uted to the rel­a­tive new­ness of the phe­nom­e­non. How­ever, our analy­ses also sug­gest that, the older the social entre­pre­neur­ship orga­ni­za­tion or ini­tia­tive, the more entre­pre­neur­ial skills the social entre­pre­neur pos­sesses. The lat­ter are thus key to the long-term suc­cess of the social enter­prise. In addi­tion, our research pro­poses that a high involve­ment of gov­ern­ment fund­ing in the social sec­tor, as it is highly the case in West­ern Euro­pean coun­tries such as Bel­gium and The Nether­lands, is related to younger social enter­prises: when the gov­ern­ment grants come to an end, it is fre­quent to see social enter­prises clos­ing their doors. In terms of orga­ni­za­tional size, we also found that social entre­pre­neurs are less ambi­tious to grow their employee basis, com­pared with com­mer­cial entrepreneurs.

Con­trary to what is highly advo­cated in the lit­er­a­ture and pop­u­lar media how­ever, we found that social enter­prises’ earned income is lim­ited and that their fund­ing mix is dom­i­nated by finan­cial sources other than the sale of prod­ucts and ser­vices. Over­all, social enter­prises seem to be as inno­v­a­tive as com­mer­cial ones. We dis­cuss these results thor­oughly in the full paper*.

In addi­tion, we also engaged in a crit­i­cal reflec­tion on issues of mea­sure­ment and for­mu­la­tion of large-scale sur­vey ques­tions inves­ti­gat­ing social entre­pre­neur­ship. As a global ini­tia­tive, GEM’s ambi­tion is to pro­pose a mea­sure­ment instru­ment that cap­tures the dif­fer­ent per­spec­tives that exist across regions and coun­tries. Whereas this is one of the unique mer­its of this dataset, it is not with­out dis­ad­van­tages. Focus­ing on the uni­ver­sal applic­a­bil­ity of the con­cept at the cost of speci­ficity fails, among oth­ers, to rec­og­nize the impor­tance of the sur­round­ing socioe­co­nomic con­text to the nature of social entre­pre­neur­ship activ­i­ties and to the valid­ity and inter­pre­ta­tion of the data. We offer sev­eral avenues for future research deal­ing with these issues.

 

* A free copy of the arti­cle can be accessed through this link:

http://www.tandfonline.com/eprint/Uh85EuIthz2h4NV8jmfi/full

Its full ref­er­ence is as follows:

Bacq, S., Har­tog, C., and Hoogen­doorn, B. 2013. A quan­ti­ta­tive com­par­i­son of social and com­mer­cial entre­pre­neur­ship: Toward a more nuanced under­stand­ing of social entre­pre­neur­ship orga­ni­za­tions in con­text. Jour­nal of Social Entre­pre­neur­ship, 4(1): 40–68.