Social entrepreneurship is a new and innovative business venture that applies the principles and guidance used by start-up founders and entrepreneurs to generate social change or impact a social cause. Social entrepreneurs are primarily motivated by a desire to alleviate systemic social or cultural problems. In this article, we will explore what social entrepreneurship is, compare it with regular entrepreneurship, and examine some successful examples of social entrepreneurship.
What is Social Entrepreneurship?
Social entrepreneurship is a new, innovative business venture that influences change. Social entrepreneurs have a specific cause that they care about, and they develop a business model around making a positive impact. The main goal is to create lasting social change through business. Some key areas of interest for social entrepreneurs include economic development, education, gender equality, healthcare, agriculture, environmental sustainability, renewable energy, and community development.
Social entrepreneurship can operate as a non-profit, for-profit, or hybrid business (also known as a social enterprise), depending on the business model and availability of funding. Social entrepreneurship applies entrepreneurial principles to drive social change and create social value.
Entrepreneurship vs. Social Entrepreneurship: What’s the Difference?
Entrepreneurs and social entrepreneurs both aim to create a sustainable business with staying power. However, while an entrepreneur’s goal is to maximize profits, a social entrepreneur’s main concern is impact. Most differences between the two types of entrepreneurship derive from that focal point.
Entrepreneurs focus on individual consumers, while social entrepreneurs focus on social groups. Entrepreneurs indirectly link to social issues, while social entrepreneurs directly link to social issues. Entrepreneurs are competitive with related businesses, while social entrepreneurs are collaborative with related businesses. Success for entrepreneurs is based on sustainable profits, while success for social entrepreneurs is based on sustainable social impact.
Examples of Social Entrepreneurship
There are many examples of social entrepreneurship, including Grameen Bank, TOMS Shoes, Warby Parker, and Love Your Melon. These companies have developed innovative business models that promote social change and address systemic social or cultural problems.
Grameen Bank
Grameen Bank is perhaps the most commonly cited example of successful social entrepreneurship. Along with its founder, Muhammad Yunus, the Bangladesh-based microfinance organization won the Nobel Peace Prize in 2006.
Grameen Bank provides small loans to people in rural communities who want to start their own business. These microloans enable borrowers—many of whom are women—to use their skills to generate income and ideally become financially independent. With more capital flowing through these communities, local economies can grow. Thanks to the success of the loan structure, Grameen Bank has expanded its reach to over 2,500 branches.
TOMS Shoes
TOMS is another example of social entrepreneurship that iterated its model as needed. In 2006, TOMS popularized the one-for-one model that many social-entrepreneurial businesses later replicated. For every pair of shoes they sold, the company would donate a pair to a person in need.
However, over time, experts realized that simply donating shoes wasn’t promoting sustainable change – and it may have actually hurt communities if the shoe donations were disrupting local shoe businesses. In response, TOMS adapted their giving model a few times over the years. Currently, they reserve a portion of their profits for grassroots goods, partnering with community organizations and providing cash grants to support sustainable change.
Warby Parker
Warby Parker’s one-for-one program is another example of social entrepreneurship. For every pair of eyeglasses sold, the company sponsors eye exams and affordable eyewear for people in need. Warby Parker is committed to making a positive impact on society and has expanded its business model to include social programs that help promote gender equality and promote sustainable development.
Love Your Melon
Love Your Melon is a unique social entrepreneurship example because it initially launched as a 501(c)(3) nonprofit organization in 2012 but transitioned to a for-profit company in 2016. Love Your Melon was founded by Zach Quinn and Brian Keller with the goal of bringing awareness to childhood cancers and improving the quality of life for children battling cancer. The founders were inspired by TOMS and followed the one-for-one social entrepreneurship model in which one beanie was donated to a child battling cancer for every beanie sold. Today, 50% of the company’s net profits are donated to charitable causes to fight pediatric cancer.
How to Incorporate Social Causes into Business
A social cause is at the heart of every social entrepreneur’s business vision, and many social enterprises begin with that cause. Often, the first step toward social entrepreneurship is recognizing a problem in society and having the desire to solve that problem. As social entrepreneurs learn about the mechanisms that perpetuate the problem, they build business models that directly address those mechanisms.
Social entrepreneurship is about creating businesses that can make a difference in the world while still being successful. By incorporating social causes into business, social entrepreneurs can create lasting change while still earning a profit. Social entrepreneurs must be financially savvy to succeed in their cause.
The Impact of Social Entrepreneurship
Social entrepreneurship is a growing trend, alongside socially responsible investing (SRI) and environmental, social, and governance (ESG) investing. It works within the structures of the business world to influence social change, and it’s largely associated with progress, development, and innovation.
Social entrepreneurship is not a new concept. Some experts may consider Florence Nightingale, who created the first nursing school in 1860 and thus reformed the healthcare industry, to be a social entrepreneur. However, the term “social entrepreneurship” has only gained popularity in recent times. As people and scholars continue to examine social entrepreneurship, we’ll learn more about how different approaches impact society and continue to develop best practices.
Social entrepreneurship is a new and innovative business venture that applies the principles and guidance used by start-up founders and entrepreneurs to generate social change or impact a social cause. Social entrepreneurs are primarily motivated by a desire to alleviate systemic social or cultural problems. By incorporating social causes into business, social entrepreneurs can create lasting change while still earning a profit. Social entrepreneurship is a growing trend and works within the structures of the business world to influence social change. With examples like Grameen Bank, TOMS Shoes, Warby Parker, and Love Your Melon, social entrepreneurship is proving that businesses can make a difference in the world while still being successful.
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