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.