Blog: Social Entrepreneurship

Mirjam van Praag on the development of Social Entrepreneurship:

People have always had strong, but shifting, opinions about entrepreneurs and their role in our economy and society. The shift I now see developing is an interesting one to follow. It has to do with social entrepreneurship.

For centuries, entrepreneurs were held in low esteem. No wonder: general opinion was based on Aristoteles’ notion of society´s economy as a ‘zero sum game’. Value creation went unrecognised. One person´s profit was necessarily another person´s loss. Making a profit, which is part and parcel of entrepreneurship, was regarded as theft. This image changed around 1800 when J.B. Say explicitly rejected the rather silly notion of a zero-sum economy. Since then, the contribution of entrepreneurs to both positive and negative value creation has grown.

But what is value creation? What boosts welfare? Again, this changes over time. Today´s citizens and consumers have different priorities to past and future generations. We are fortunate that our most basic needs are met. What has become important is self-realisation and the creation of a sustained and pleasant living environment. Job opportunities for people with a disability, banning harsh labour from the production chain of chocolate or coffee for instance, or reducing energy consumption by using new light sources or cars are typical examples of today´s unfulfilled needs, as are clean air, or creating a fulfilling life as we age. And the list goes on. Negative and positive external effects of production and consumption have become more important in the valuation of products and services of entrepreneurs.

Changes in demand require changes in supply. Moreover, the need to contribute to a better society reflects not only consumption preferences, but the preferences of entrepreneurs also. More and more entrepreneurs demonstrate a strong intrinsic motivation to incorporate into their business targets value creation and destruction associated with externalities. Many of today´s and tomorrow´s entrepreneurs will offer new goods and services. They may offer their entrepreneurial skills to support the government in managing its sheer unmanageable care responsibilities, which has our collective preference. They may halt production to promote an economy with room for swapping and sharing. They may offer alternatives to meat to help reduce animal misery and the burden on the global food chain.

These are the ‘social entrepreneurs’. Social entrepreneurs are a growing group of entrepreneurs who regard solving a social problem as their first priority. Social enterprises fit seamlessly into the trend of increasing awareness among entrepreneurs and their effect on society. We see this reflected in corporate social responsibility and the emergence of the circular economy, for instance. But views on the matter vary, and it may very well have to do with the name; after all, if social entrepreneurship exists, does asocial entrepreneurship also have a place in society? The believers say that social entrepreneurs will save the Netherlands. But sceptics claim that social enterprises are no different from other enterprises and that we shouldn’t pay them too much attention. It´s difficult to categorise social enterprises. The term does not cover all organisations that solve social problems. And because they are not a distinct group, it is difficult to collect data on what exactly social entrepreneurs contribute. Then again, perhaps categorising them isn’t so important.

Are social entrepreneurs the vanguard of a new movement in entrepreneurship that takes on a different role in society, namely solving tough social issues? For one, it’s a movement that is greatly valued, also by other entrepreneurs. Thousands of visitors to this year´s Week of the Entrepreneur event in the Netherlands were asked to name the best Dutch entrepreneur. The award of “Best Entrepreneur” went to Jaap Korteweg of Vegetarische Slager (vegetarian butcher). This entrepreneur wants to change the food chain by making meat redundant. Another entrepreneur in the top ten, selected by a cross-section of thousands of entrepreneurs, was a platform for lending and borrowing goods. Entrepreneurs who make money solving tough social problems are also appreciated by other entrepreneurs. Do social entrepreneurs form the vanguard of a movement of new large-scale entrepreneurship? I hope so. I, for one, will be following them.

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