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Social Entrepreneurship: The Case For Definition: by Roger L. Martin & Sally Osberg
Social Entrepreneurship: The Case For Definition: by Roger L. Martin & Sally Osberg
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ocial entrepreneurship is attracting growing
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THE NASCENT FIELD OF social entrepreneurship is grow- are inclined to argue, however, that this is a flawed assumption
ing rapidly and attracting increased attention from many sec- and a precarious stance.
tors. The term itself shows up frequently in the media, is ref- Social entrepreneurship is an appealing construct precisely
erenced by public officials, has become common on university because it holds such high promise. If that promise is not ful-
campuses, and informs the strategy of several prominent social filled because too many “nonentrepreneurial” efforts are
sector organizations, including Ashoka and the Schwab and Skoll included in the definition, then social entrepreneurship will
foundations. fall into disrepute, and the kernel of true social entrepreneur-
The reasons behind the popularity of social entrepreneur- ship will be lost. Because of this danger, we believe that we need
ship are many. On the most basic level, there’s something inher- a much sharper definition of social entrepreneurship, one that
ently interesting and appealing about entrepreneurs and the sto- enables us to determine the extent to which an activity is and
ries of why and how they do what they do. People are attracted is not “in the tent.” Our goal is not to make an invidious com-
to social entrepreneurs like last year’s Nobel Peace Prize laureate parison between the contributions made by traditional social ser-
Muhammad Yunus for many of the same reasons that they find vice organizations and the results of social entrepreneurship, but
business entrepreneurs like Steve Jobs so compelling – these simply to highlight what differentiates them.
extraordinary people come up with brilliant ideas and against If we can achieve a rigorous definition, then those who
all the odds succeed at creating new products and services that support social entrepreneurship can focus their resources on
dramatically improve people’s lives. building and strengthening a concrete and identifiable field.
But interest in social entrepreneurship transcends the phe- Absent that discipline, proponents of social entrepreneurship
nomenon of popularity and fascination with people. Social run the risk of giving the skeptics an ever-expanding target to
entrepreneurship signals the imperative to drive social change, shoot at, and the cynics even more reason to discount social inno-
and it is that potential payoff, with its lasting, transforma- vation and those who drive it.
tional benefit to society, that sets the field and its practition-
ers apart. Starting With Entrepreneurship
Although the potential benefits offered by social entrepre- Any definition of the term “social entrepreneurship” must
neurship are clear to many of those promoting and funding these start with the word “entrepreneurship.” The word “social” sim-
activities, the actual definition of what social entrepreneurs do ply modifies entrepreneurship. If entrepreneurship doesn’t
to produce this order of magnitude return is less clear. In fact, have a clear meaning, then modifying it with social won’t
we would argue that the definition of social entrepreneurship accomplish much, either.
today is anything but clear. As a result, social entrepreneurship The word entrepreneurship is a mixed blessing. On the
has become so inclusive that it now has an immense tent into positive side, it connotes a special, innate ability to sense and act
which all manner of socially beneficial activities fit. on opportunity, combining out-of-the-box thinking with a
In some respects this inclusiveness could be a good thing. unique brand of determination to create or bring about some-
If plenty of resources are pouring into the social sector, and thing new to the world. On the negative side, entrepreneurship
if many causes that otherwise would not get sufficient fund- is an ex post term, because entrepreneurial activities require a
ing now get support because they are regarded as social entre- passage of time before their true impact is evident.
preneurship, then it may be fine to have a loose definition. We Interestingly, we don’t call someone who exhibits all of the
personal characteristics of an entrepreneur – opportunity sens-
ROGER L. MARTIN has served as dean of the Joseph L. Rotman School ing, out-of-the-box thinking, and determination – yet who
of Management at the University of Toronto since 1998. He is director of failed miserably in his or her venture an entrepreneur; we call
the school’s AIC Institute for Corporate Citizenship and serves on the him or her a business failure. Even someone like Bob Young,
board of the Skoll Foundation. In 2004 Martin received the Marshall of Red Hat Software fame, is called a “serial entrepreneur”
McLuhan Visionary Leadership Award, and in 2005 he was named one of only after his first success; i.e., all of his prior failures are dubbed
Business Week’s seven “Innovation Gurus.” the work of a serial entrepreneur only after the occurrence of
his first success. The problem with ex post definitions is that they
SALLY OSBERG has served as president and CEO of the Skoll Founda- tend to be ill defined. It’s simply harder to get your arms around
tion since 2001. Before joining Skoll, Osberg was executive director for the what’s unproven. An entrepreneur can certainly claim to be one,
Children’s Discovery Museum of San Jose. She sits on the boards of the but without at least one notch on the belt, the self-proclaimed
Oracle Education Foundation and the Children’s Discovery Museum. Her will have a tough time persuading investors to place bets. Those
essay on philanthropy’s changing landscape is included in Social Entre- investors, in turn, must be willing to assume greater risk as they
preneurship: New Models of Sustainable Social Change, published assess the credibility of would-be entrepreneurs and the poten-
in 2006 by Oxford University Press. tial impact of formative ventures.
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P I E R R E O M I DYA R
First there was Sears,
then Wal-Mart, and
most recently eBay.
Each of these companies
Even with these considera- changed the face of
tions, we believe that appropri-
ating entrepreneurship for the
retailing. Amazingly, the
term social entrepreneurship inspiration for the eBay
requires wrestling with what we revolution was Pierre
actually mean by entrepreneur- Omidyar’s desire to make
ship. Is it simply alertness to it easier for his girlfriend
opportunity? Creativity? Deter- to buy and sell Pez
mination? Although these and
other behavioral characteristics
dispensers.
are part of the story and cer-
tainly provide important clues
for prospective investors, they
are not the whole story. Such
descriptors are also used to
describe inventors, artists, cor-
porate executives, and other soci-
etal actors.
Like most students of entrepreneurship, we begin with critical ability.4
French economist Jean-Baptiste Say, who in the early 19th cen- Regardless of whether they cast the entrepreneur as a break-
tury described the entrepreneur as one who “shifts economic through innovator or an early exploiter, theorists universally asso-
resources out of an area of lower and into an area of higher pro- ciate entrepreneurship with opportunity. Entrepreneurs are
ductivity and greater yield,” thereby expanding the literal trans- believed to have an exceptional ability to see and seize upon new
lation from the French, “one who undertakes,” to encompass opportunities, the commitment and drive required to pursue
the concept of value creation.1 them, and an unflinching willingness to bear the inherent risks.
Writing a century later, Austrian economist Joseph Schum- Building from this theoretical base, we believe that entre-
peter built upon this basic concept of value creation, con- preneurship describes the combination of a context in which an
tributing what is arguably the most influential idea about entre- opportunity is situated, a set of personal characteristics required
preneurship. Schumpeter identified in the entrepreneur the to identify and pursue this opportunity, and the creation of a par-
force required to drive economic progress, absent which ticular outcome.
economies would become static, structurally immobilized, and To explore and illustrate our definition of entrepreneurship,
subject to decay. Enter the Unternehmer, Schumpeter’s entre- we will take a close look at a few contemporary American
preneurial spirit, who identifies a commercial opportunity – entrepreneurs (or pairs thereof ): Steve Jobs and Steve Wozniak
whether a material, product, service, or business – and organizes of Apple Computer, Pierre Omidyar and Jeff Skoll of eBay, Ann
a venture to implement it. Successful entrepreneurship, he and Mike Moore of Snugli, and Fred Smith of FedEx.
argues, sets off a chain reaction, encouraging other entrepre-
neurs to iterate upon and ultimately propagate the innovation Entrepreneurial Context
to the point of “creative destruction,” a state at which the new The starting point for entrepreneurship is what we call an entre-
venture and all its related ventures effectively render existing prod- preneurial context. For Steve Jobs and Steve Wozniak, the entre-
ucts, services, and business models obsolete.2 preneurial context was a computing system in which users
Despite casting the dramatis personae in heroic terms, were dependent on mainframe computers controlled by a cen-
Schumpeter’s analysis grounds entrepreneurship within a sys- tral IT staff who guarded the mainframe like a shrine. Users got
tem, ascribing to the entrepreneur’s role a paradoxical impact, their computing tasks done, but only after waiting in line and
PHOTOGRAPH BY KIM KULICH/CORBIS
both disruptive and generative. Schumpeter sees the entrepre- using the software designed by the IT staff. If users wanted a
neur as an agent of change within the larger economy. Peter software program to do something out of the ordinary, they were
Drucker, on the other hand, does not see entrepreneurs as nec- told to wait six months for the programming to be done.
essarily agents of change themselves, but rather as canny and From the users’ perspective, the experience was inefficient
committed exploiters of change. According to Drucker, “the and unsatisfactory. But since the centralized computing model
entrepreneur always searches for change, responds to it, and was the only one available, users put up with it and built the
exploits it as an opportunity,”3 a premise picked up by Israel delays and inefficiencies into their workflow, resulting in an
Kirzner, who identifies “alertness” as the entrepreneur’s most equilibrium, albeit an unsatisfactory one.
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•
J E F F S KO L L
• • • •
Entrepreneurs often
come in pairs. Jeff Skoll
is the other half of the
duo that founded and
led eBay through its
early years. Since
leaving eBay, Skoll has
focused his energies on
social change, creating
the Skoll Foundation
and the film company
Participant Productions.
System dynamicists describe this kind of equilibrium as a while managing chores with the other, or they could plop the
“balanced feedback loop,” because there isn’t a strong force that child in a stroller, buggy, or other container and keep the child
has the likely effect of breaking the system out of its particu- nearby. Either option was less than ideal. Everyone knows that
lar equilibrium. It is similar to a thermostat on an air conditioner: newborns benefit from the bonding that takes place because of
When the temperature rises, the air conditioner comes on and close physical contact with their mothers and fathers, but even
lowers the temperature, and the thermostat eventually turns the the most attentive and devoted parents can’t hold their babies
air conditioner off. continuously. With no other options, parents limped along,
The centralized computing system that users had to endure learning to shift their child from one hip to the other and
was a particular kind of equilibrium: an unsatisfactory one. It becoming adept at “one-armed paper hanging,” or attempting
is as if the thermostat were set five degrees too low so that every- to get their tasks accomplished during naptime.
one in the room was cold. Knowing they have a stable and pre- In the case of Fred Smith, the suboptimal equilibrium he saw
dictable temperature, people simply wear extra sweaters, though was the long-distance courier service. Before FedEx came along,
of course they might wish that they didn’t have to. sending a package across country was anything but simple.
Pierre Omidyar and Jeff Skoll identified an unsatisfactory Local courier services picked up the package and transported
equilibrium in the inability of geographically based markets to it to a common carrier, who flew the package to the remote des-
optimize the interests of both buyers and sellers. Sellers typi- tination city, at which point it was handed over to a third party
cally didn’t know who the best buyer was and buyers typically for final delivery (or perhaps back to the local courier’s opera-
didn’t know who the best (or any) seller was. As a result, the mar- tion in that city if it was a national company). This system was
ket was not optimal for buyers or sellers. People selling used logistically complex, it involved a number of handoffs, and the
household goods, for example, held garage sales that attracted scheduling was dictated by the needs of the common carriers.
PHOTOGRAPH COURTESY OF THE SKOLL FOUNDATION
physically proximate buyers, but probably not the optimal Often something would go wrong, but no one would take
number or types of buyers. People trying to buy obscure goods responsibility for solving the problem. Users learned to live
had no recourse but to search through Yellow Page directories, with a slow, unreliable, and unsatisfactory service – an unpleas-
phoning and phoning to try to track down what they really ant but stable situation because no user could change it.
wanted, often settling for something less than perfect. Because
buyers and sellers couldn’t conceive of a better answer, the sta- Entrepreneurial Characteristics
ble, yet suboptimal, equilibrium prevailed. The entrepreneur is attracted to this suboptimal equilibrium,
Ann and Mike Moore took note of a subpar equilibrium in seeing embedded in it an opportunity to provide a new solution,
parents’ limited options for toting their infants. Parents wish- product, service, or process. The reason that the entrepreneur
ing to keep their babies close while carrying on basic tasks had sees this condition as an opportunity to create something new,
two options: They could learn to juggle offspring in one arm while so many others see it as an inconvenience to be tolerated,
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stems from the unique set of personal characteristics he or she tain huge numbers of aircraft.
brings to the situation – inspiration, creativity, direct action, Finally, entrepreneurs possess the fortitude to drive their cre-
courage, and fortitude. These characteristics are fundamental ative solutions through to fruition and market adoption. No
to the process of innovation. entrepreneurial venture proceeds without setbacks or unex-
The entrepreneur is inspired to alter the unpleasant equi- pected turns, and the entrepreneur needs to be able to find cre-
librium. Entrepreneurs might be motivated to do this because ative ways around the barriers and challenges that arise. Smith
they are frustrated users or because they empathize with frus- had to figure out how to keep investors confident that FedEx
trated users. Sometimes entrepreneurs are so gripped by the would eventually achieve the requisite scale to pay for the huge
opportunity to change things that they possess a burning desire fixed infrastructure of trucks, planes, airport, and IT systems
to demolish the status quo. In the case of eBay, the frustrated required for the new model he was creating. FedEx had to sur-
user was Omidyar’s girlfriend, who collected Pez dispensers. vive hundreds of millions of dollars of losses before it reached
The entrepreneur thinks creatively and develops a new solu- a cash-flow positive state, and without a committed entrepre-
tion that dramatically breaks with the existing one. The entre- neur at the helm, the company would have been liquidated well
preneur doesn’t try to optimize the current system with minor before that point.
adjustments, but instead finds a wholly new way of approach-
ing the problem. Omidyar and Skoll didn’t develop a better way
to promote garage sales. Jobs and Wozniak didn’t develop algo-
rithms to speed custom software development. And Smith did-
n’t invent a way to make the handoffs between courier com-
panies and common carriers more efficient and error-free. Each
found a completely new and utterly creative solution to the prob-
lem at hand.
Once inspired by the opportunity and in possession of a cre-
ative solution, the entrepreneur takes direct action. Rather than
waiting for someone else to intervene or trying to convince
somebody else to solve the problem, the entrepreneur takes
direct action by creating a new product or service and the ven-
ture to advance it. Jobs and Wozniak didn’t campaign against
mainframes or encourage users to rise up and overthrow the
IT department; they invented a personal computer that allowed
users to free themselves from the mainframe. Moore didn’t pub-
lish a book telling mothers how to get more done in less time;
she developed the Snugli, a frameless front- or backpack that
enables parents to carry their babies and still have both hands
free. Of course, entrepreneurs do have to influence others:
first investors, even if just friends and family; then teammates
and employees, to come work with them; and finally cus-
tomers, to buy into their ideas and their innovations. The point
is to differentiate the entrepreneur’s engagement in direct action
from other indirect and supportive actions.
Entrepreneurs demonstrate courage throughout the process
of innovation, bearing the burden of risk and staring failure
PHOTOGRAPH COURTESY OF APPLE COMPUTER
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A N N M OO R E
The Snugli may not seem
like a big deal – unless you’re
a parent. Before Ann Moore
popularized the kid carrier, new world of package delivery that raised
parents were often stuck standards, changed business practices,
holding a crying baby with spawned new competitors, and even cre-
one hand while trying to make ated a new verb: “to FedEx.”
lunch with the other. Now In each case, the delta between the
parents can keep their babies quality of the old equilibrium and the new
one was huge. The new equilibrium
snug and have two hands free. quickly became self-sustaining, and the ini-
tial entrepreneurial venture spawned
numerous imitators. Together these out-
Entrepreneurial Outcome comes ensured that everyone who bene-
What happens when an entrepreneur suc- fited secured the higher ground.
cessfully brings his or her personal char-
acteristics to bear on a suboptimal equi- Shift to Social Entrepreneurship
librium? He or she creates a new stable If these are the key components of entre-
equilibrium, one that provides a meaningfully higher level of sat- preneurship, what distinguishes social entrepreneurship from
isfaction for the participants in the system. To elaborate on Say’s its for-profit cousin? First, we believe that the most useful and
original insight, the entrepreneur engineers a permanent shift informative way to define social entrepreneurship is to estab-
from a lower-quality equilibrium to a higher-quality one. The lish its congruence with entrepreneurship, seeing social entre-
new equilibrium is permanent because it first survives and preneurship as grounded in these same three elements. Anything
then stabilizes, even though some aspects of the original equi- else is confusing and unhelpful.
librium may persist (e.g., expensive and less-efficient courier sys- To understand what differentiates the two sets of entre-
tems, garage sales, and the like). Its survival and success ulti- preneurs from one another, it is important to dispel the notion
mately move beyond the entrepreneur and the original that the difference can be ascribed simply to motivation – with
entrepreneurial venture. It is through mass-market adoption, sig- entrepreneurs spurred on by money and social entrepreneurs
nificant levels of imitation, and the creation of an ecosystem driven by altruism. The truth is that entrepreneurs are rarely
around and within the new equilibrium that it first stabilizes and motivated by the prospect of financial gain, because the odds
then securely persists. of making lots of money are clearly stacked against them.
When Jobs and Wozniak created the personal computer they Instead, both the entrepreneur and the social entrepreneur are
didn’t simply attenuate the users’ dependence on the mainframe strongly motivated by the opportunity they identify, pursuing
– they shattered it, shifting control from the “glass house” to the that vision relentlessly, and deriving considerable psychic reward
desktop. Once the users saw the new equilibrium appearing from the process of realizing their ideas. Regardless of whether
before their eyes, they embraced not only Apple but also the they operate within a market or a not-for-profit context, most
many competitors who leaped into the fray. In relatively short entrepreneurs are never fully compensated for the time, risk,
order, the founders had created an entire ecosystem with effort, and capital that they pour into their venture.
numerous hardware, software, and peripheral suppliers; dis- We believe that the critical distinction between entrepre-
tribution channels and value-added resellers; PC magazines; neurship and social entrepreneurship lies in the value proposi-
trade shows; and so on. tion itself. For the entrepreneur, the value proposition anticipates
Because of this new ecosystem, Apple could have exited from and is organized to serve markets that can comfortably afford
the market within a few years without destabilizing it. The the new product or service, and is thus designed to create finan-
new equilibrium, in other words, did not depend on the creation cial profit. From the outset, the expectation is that the entre-
of a single venture, in this case Apple, but on the appropriation preneur and his or her investors will derive some personal
and replication of the model and the spawning of a host of other financial gain. Profit is sine qua non, essential to any venture’s
related businesses. In Schumpeterian terms, the combined sustainability and the means to its ultimate end in the form of
effect firmly established a new computing order and rendered large-scale market adoption and ultimately a new equilibrium.
PHOTOGRAPH BY MIKE MOORE
the old mainframe-based system obsolete. The social entrepreneur, however, neither anticipates nor
In the case of Omidyar and Skoll, the creation of eBay pro- organizes to create substantial financial profit for his or her
vided a superior way for buyers and sellers to connect, creating investors – philanthropic and government organizations for
a higher equilibrium. Entire new ways of doing business and the most part – or for himself or herself. Instead, the social entre-
new businesses sprang up to create a powerful ecosystem that preneur aims for value in the form of large-scale, transforma-
simply couldn’t be disassembled. Similarly, Smith created a tional benefit that accrues either to a significant segment of soci-
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• • • • •
microcredit as a worldwide industry. tute for OneWorld Health, the first nonprofit pharmaceutical
The well-known actor, director, and producer Robert Red- company whose mission is to ensure that drugs targeting infec-
ford offers a less familiar but also illustrative case of social entre- tious diseases in the developing world get to the people who need
preneurship. In the early 1980s, Redford stepped back from his them, regardless of their ability to pay for the drugs. Hale’s ven-
successful career to reclaim space in the film industry for artists. ture has now moved beyond the proof-of-concept stage. It suc-
Redford was struck by a set of opposing forces in play. He iden- cessfully developed, tested, and secured Indian government
tified an inherently oppressive but stable equilibrium in the regulatory approval for its first drug, paromomycin, which
way Hollywood worked, with its business model increasingly provides a cost-effective cure for visceral leishmaniasis, a disease
driven by financial interests, its productions gravitating to flashy, that kills more than 200,000 people each year.
frequently violent blockbusters, and its studio-dominated sys- Although it is too early to tell whether Hale will succeed in
tem becoming more and more centralized in controlling the way creating a new equilibrium that assures more equitable treat-
films were financed, produced, and distributed. At the same time, ment of diseases afflicting the poor, she clearly meets the cri-
he noted that new technology was emerging – less cumbersome teria of a social entrepreneur. First, Hale has identified a stable
and less expensive video and digital editing equipment – that gave but unjust equilibrium in the pharmaceutical industry; second,
filmmakers the tools they needed to exert more control over she has seen and seized the opportunity to intervene, applying
their work. inspiration, creativity, direct action, and courage in launching
Seeing opportunity, Redford seized the chance to nurture this a new venture to provide options for a disadvantaged popula-
new breed of artist. First, he created the Sundance Institute to tion; and third, she is demonstrating fortitude in proving the
take “money out of the picture” and provide young filmmak- potential of her model with an early success.
ers with space and support for developing their ideas. Next, he Time will tell whether Hale’s innovation inspires others to
created the Sundance Film Festival to showcase independent replicate her efforts, or whether the Institute for OneWorld
filmmakers’ work. From the beginning, Redford’s value propo- Health itself achieves the scale necessary to bring about that per-
sition focused on the emerging independent filmmaker whose manent equilibrium shift. But the signs are promising. Look-
talents were neither recognized nor served by the market stran- ing ahead a decade or more, her investors – the Skoll Founda-
glehold of the Hollywood studio system. tion is one – can imagine the day when Hale’s Institute for
Redford structured Sundance Institute as a nonprofit cor- OneWorld Health will have created a new pharmaceutical par-
poration, tapping his network of directors, actors, writers, and adigm, one with the same enduring social benefits apparent in
others to contribute their experience as volunteer mentors to the now firmly established microcredit and independent film
fledgling filmmakers. He priced the Sundance Film Festival so industries.
that it appealed and was accessible to a broad audience. Twenty-
five years later, Sundance is credited with ushering in the inde- Boundaries of Social Entrepreneurship
pendent film movement, which today ensures that “indie” film- In defining social entrepreneurship, it is also important to estab-
makers can get their work produced and distributed, and that lish boundaries and provide examples of activities that may be
filmgoers have access to a whole host of options – from thought- highly meritorious but do not fit our definition. Failing to iden-
provoking documentaries to edgy international work and play- tify boundaries would leave the term social entrepreneurship
ful animations. A new equilibrium, which even a decade ago felt so wide open as to be essentially meaningless.
tenuous, is now firmly established. There are two primary forms of socially valuable activity that
Victoria Hale is an example of a social entrepreneur whose we believe need to be distinguished from social entrepreneur-
venture is still in its early stages and for whom our criteria ship. The first type of social venture is social service provision.
apply ex ante. Hale is a pharmaceutical scientist who became In this case, a courageous and committed individual identifies
increasingly frustrated by the market forces dominating her an unfortunate stable equilibrium – AIDS orphans in Africa, for
industry. Although big pharmaceutical companies held patents example – and sets up a program to address it – for example, a
for drugs capable of curing any number of infectious diseases, school for the children to ensure that they are cared for and edu-
the drugs went undeveloped for a simple reason: The popula- cated. The new school would certainly help the children it
tions most in need of the drugs were unable to afford them. Dri- serves and may very well enable some of them to break free from
ven by the exigency of generating financial profits for its share- poverty and transform their lives. But unless it is designed to
holders, the pharmaceutical industry was focusing on creating achieve large scale or is so compelling as to launch legions of
and marketing drugs for diseases afflicting the well-off, living imitators and replicators, it is not likely to lead to a new supe-
mostly in developed world markets, who could pay for them. rior equilibrium.
Hale became determined to challenge this stable equilibrium, These types of social service ventures never break out of their
which she saw as unjust and intolerable. She created the Insti- limited frame: Their impact remains constrained, their service
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f i ni tion so cial en tre pre neur ship: the ca
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V I C TO R I A H A L E
area stays confined to a local population, and their scope is deter- edge for all the nation’s cit- Drug companies had
mined by whatever resources they are able to attract. These ven- izens – that anchors his the know-how to cure
tures are inherently vulnerable, which may mean disruption or reputation as a social malaria, black fever, and
loss of service to the populations they serve. Millions of such entrepreneur. other diseases that kill
organizations exist around the world – well intended, noble in A second class of social
purpose, and frequently exemplary in execution – but they venture is social activism. millions a year in the
should not be confused with social entrepreneurship. In this case, the motivator developing world. But
It would be possible to reformulate a school for AIDS of the activity is the same it wasn’t until Victoria
orphans as social entrepreneurship. But that would require a plan – an unfortunate and sta- Hale created the
by which the school itself would spawn an entire network of ble equilibrium. And sev- world’s first nonprofit
schools and secure the basis for its ongoing support. The out- eral aspects of the actor’s drug company that
come would be a stable new equilibrium whereby even if one characteristics are the
school closed, there would be a robust system in place through same – inspiration, cre- meds for these ailments
which AIDS orphans would routinely receive an education. ativity, courage, and forti- began to be developed
The difference between the two types of ventures – one social tude. What is different is in earnest.
entrepreneurship and the other social service – isn’t in the ini- the nature of the actor’s
PHOTOGRAPH BY JONATHAN TORGOVNIK
tial entrepreneurial contexts or in many of the personal char- action orientation. Instead
acteristics of the founders, but rather in the outcomes. Imag- of taking direct action, as the social entrepreneur would, the
ine that Andrew Carnegie had built only one library rather than social activist attempts to create change through indirect action,
conceiving the public library system that today serves untold by influencing others – governments, NGOs, consumers, work-
millions of American citizens. Carnegie’s single library would ers, etc. – to take action. Social activists may or may not create
have clearly benefited the community it served. But it was his ventures or organizations to advance the changes they seek. Suc-
vision of an entire system of libraries creating a permanent new cessful activism can yield substantial improvements to existing
equilibrium – one ensuring access to information and knowl- systems and even result in a new equilibrium, but the strategic
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f i ni tion so cial en tre pre neur ship: the
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a more tactical level can also produce an outcome equivalent change and progress. Social entrepreneurship, we believe, is
to that of social entrepreneurship. Take, for example, a social as vital to the progress of societies as is entrepreneurship to
service provider running a single school for an underprivileged the progress of economies, and it merits more rigorous, seri-
group that creates great outcomes for that small group of stu- ous attention than it has attracted so far.
dents. If the organization uses those outcomes to create a social Clearly, there is much to be learned and understood about
activist movement that campaigns for broad government sup- social entrepreneurship, including why its study may not be
port for the wide adoption of similar programs, then the taken seriously. Our view is that a clearer definition of social
social service provider can produce an overall equilibrium entrepreneurship will aid the development of the field. The
change and have the same effect as a social entrepreneur. social entrepreneur should be understood as someone who tar-
Bill Strickland’s Manchester Bidwell Corporation, a nation- gets an unfortunate but stable equilibrium that causes the
ally renowned inner-city arts education and job-training pro- neglect, marginalization, or suffering of a segment of human-
gram, has launched the National Center for Arts & Technol- ity; who brings to bear on this situation his or her inspiration,
ogy to advance systematically the replication of his direct action, creativity, courage, and fortitude; and who aims
Pittsburgh-based model in other cities. Strickland is spear- for and ultimately affects the establishment of a new stable equi-
heading an advocacy campaign designed to leverage federal librium that secures permanent benefit for the targeted group
support to scale up his model. So far, four new centers are oper- and society at large.
ating across the U.S. and several more are in the pipeline. This definition helps distinguish social entrepreneurship
With a sustainable system of centers in cities across the coun- from social service provision and social activism. That social
try, Strickland will have succeeded in establishing a new equi- service providers, social activists, and social entrepreneurs will
librium. It is because of that campaign that the Skoll Foun- often adapt one another’s strategies and develop hybrid mod-
dation and others are investing in Strickland’s efforts. els is, to our minds, less inherently confusing and more respect-
Why bother to tease out these distinctions between vari- ful than indiscriminate use of these terms. It’s our hope that
ous pure and hybrid models? Because with such definitions in our categorization will help clarify the distinctive value each
hand we are all better equipped to assess distinctive types of approach brings to society and lead ultimately to a better
social activity. Understanding the means by which an endeavor understanding and more informed decision making among
produces its social benefit and the nature of the social bene- those committed to advancing positive social change.
fit it is targeting enables supporters – among whom we count
the Skoll Foundation – to predict the sustainability and extent The authors would like to thank their Skoll Foundation colleagues
of those benefits, to anticipate how an organization may need Richard Fahey, chief operating officer, and Ruth Norris, senior program
to adapt over time, and to make a more reasoned projection officer, who read prior drafts of this essay and contributed important
of the potential for an entrepreneurial outcome. ideas to its evolution.
Why Should We Care? 1 Jean-Baptiste Say, quoted in J. Gregory Dees, “The Meaning of ‘Social Entrepre-
neurship,’” reformatted and revised, May 30, 2001.
Long shunned by economists, whose interests have gravi- http://www.fuqua.duke.edu/centers/case/documents/Dees_SEdef.pdf.
tated toward market-based, price-driven models that submit 2 Joseph A. Schumpeter, Capitalism, Socialism, and Democracy (New York: Harper,
more readily to data-driven interpretation, entrepreneurship 1975): 82-85.
3 Peter F. Drucker, Innovation & Entrepreneurship (New York: Harper Business,
has experienced something of a renaissance of interest in 1995): 28.
recent years. Building on the foundation laid by Schumpeter, 4 Israel Kirzner, quoted in William J. Baumol, “Return of the Invisible Men: The
William Baumol and a handful of other scholars have sought Microeconomic Value Theory of Inventors and Entrepreneurs.”
http://www.aeaweb.org/annual_mtg_papers/2006/0107_1015_0301.pdf.
to restore the entrepreneur’s rightful place in “production 5 Dees, 2.
and distribution” theory, demonstrating in that process the sem- 6 Baumol, 1.
inal role of entrepreneurship.6 According to Carl Schramm, 7 Carl J. Schramm, “Entrepreneurial Capitalism and the End of Bureaucracy:
Reforming the Mutual Dialog of Risk Aversion,” 2.
CEO of the Ewing Marion Kauffman Foundation, entrepre- http://www.aeaweb.org/annual_mtg_papers/2006/0107_1015_0304.pdf.
neurs, “despite being overlooked or explicitly written out of
our economic drama,”7 are the free enterprise system’s essen-
tial ingredient and absolutely indispensable to market
economies.
We are concerned that serious thinkers will also overlook TALK BACK: What are your reactions to
social entrepreneurship, and we fear that the indiscriminate use this article? Post your comments at
of the term may undermine its significance and potential www.ssireview.org.
importance to those seeking to understand how societies
www.ssireview.org s p r i n g 2 0 0 7 / S TA N F O R D S O C I A L I N N O VAT I O N R E V I E W 39