Inspira- Journal of Modern Management & Entrepreneurship 54

ISSN : 2231–167X, Volume 01, No. 02, October, 2011, pp.54-62

The Role of Corporate Social Responsibility

in Social Entrepreneurship

Dr. Bhawani Shankar Sharma

This article emphasizes the meaning of social entrepreneurship and

that of corporate social responsibility and the role held in social value creating
process. There are several opinions regarding the distinctions between social
entrepreneurship and corporate social responsibility considering the
implications, the impact and the stimulus. The debates on the differences
between social enterprises and commercial enterprises are related to task
performance and the way that social mission is accomplished by involved
parties. However, commercial entrepreneurs must pursue both economic and
social issues, but primary mission will be to acquire financial independence by
investing and creating value for stakeholders. Corporate Social Responsibility
has an undeniable effect on both society and businesses, but this practice
depends on the companies’ availability to get involved which is at the
discretion of the managers and shareholders. Corporate social responsibility
and social entrepreneurship have distinct conceptual approach, but both have
an indubitable effect by valorizing social opportunities. This article will point
out our approach regarding Social Entrepreneurship and Corporate Social
Responsibility based on by highlighting their characteristics and the way that
both processes influence the social environment.
Introduction
Corporate Social Responsibility (CSR) brings many benefits being
considered an important lever in supporting social entrepreneurship also,
CSR has a significant role in the social value creation process for both,
businesses and social purpose organizations. The concept of corporate social
responsibility is a broad term being used in various forms such as corporate
citizenship, corporate social involvement or community, corporate
philanthropy. CSR policies help firms to fulfill economic and social
responsibilities ensuring wellbeing and social welfare CSR policies can be
considered as being companies’ commitment to improve society through
business practices. It refers to sustainable economic development working


Assistant Professor, Deptt. of Business Administration, University of Rajasthan, Jaipur
The Role of Corporate Social Responsibility in Social Entrepreneurship 55

with employees and their families, local community and society as a whole, in
order to improve their standard of living.
1. Associate Professor, Department of Business Administration, University
of Rajasthan, Jaipur.
2. Research scholar, Department of Business Administration, University of
Rajasthan, Jaipur.
Corporate social Responsibility and Social Entrepreneurship
Corporate Social Responsibility (CSR) is viewed as a comprehensive
set of policies, practices and programs that are integrated into business
operations, supply chains, and decision-making processes throughout the
organization -- wherever the organization does business -- and includes
responsibility for current and past actions as well as future impacts. CSR
involves addressing the legal, ethical, commercial and other expectations
society has for business, and making decisions that fairly balance the claims of
all key stakeholders. Effective CSR aims at “achieving commercial success in
ways that honor ethical values and respect people, communities, and the
natural environment.” Simply put it means “what you do, how you do it, and
when and what you say.”Several terms have been used interchangeably with
CSR. They include -- business ethics, corporate citizenship, corporate
accountability, sustainability and corporate responsibility. The issues that
represent an organization’s CSR focus vary by size (small, medium and large),
sector (for example, financial institutions, infrastructure providers, textile
manufacturers, agri-producers, supermarket retailers, etc.) and even by
geographic region. In its broadest categories, CSR typically includes issues
related to business ethics, community investment, environment, governance,
human rights, the marketplace and the workplace.
Corporate Social Responsibility and the Way Forward
Today every major company has a CSR policy and not having one is
near blasphemy. Corporate activism and popular issues like climate change
have pushed CSR to be a standard cost of carrying out business. Although
major companies have adopted the CSR policy, many still see it as superficial
spending towards “compliance”. As a result, the recent downturn is being
seen as a threat to the CSR industry, which is perceived as an avoidable
luxury.
In light of this development, companies are rethinking their CSR
strategy and are now partnering with NGOs, the government, other
companies and even competitors. But one of the most promising
developments has been the advent of social entrepreneurship into the gambit
of CSR. These promises to create disruptive change, one which pushes CSR
56 Inspira- Journal of Modern Management & Entrepreneurship : October, 2011

from merely are satisfying in nature to something which is ingrained in a

company’s strategy.
Social Entrepreneurship
In the field of social affairs, researchers have demonstrated the
importance of social entrepreneurs to solve social problems in relation to the
state, having the role to endorse social entrepreneurship (social enterprise,
NGOs with social cause). Social entrepreneurship is defined the way of using
resources to create benefits for the society and the social entrepreneur is the
person who seeks to benefit society through innovation and risk taking. Thus,
social entrepreneurship is the field that allows observation of how social
problems can be solved in a sustainable way. Many approaches to social
entrepreneurship sustain that the emphasis is actually on the individual more
than on a collective model. Thus, social entrepreneurs identify what does not
work inside society, trying systematically to impose change on different social
levels, without giving up before achieving the expected goal. Social
Entrepreneurship arises -when people run by social mission, act better than
competitors driven by the entrepreneurial behavior. Social entrepreneurship
follows the transformation of entrepreneurship in a progressive way. This
definition involves entirely new models, innovative, ingenious ones based on
identifying opportunities. Social entrepreneurship can be seen as a process
met both in private and public sector. Many authors have given various
nuances to the concept (Bornstein 2005, Nicholls 2006, Light 2008,Elkington
and 1994).Social entrepreneurship in the process of individuals or of the
private organizations that have the initiative to identify and solve social
problems, in order to develop new ways of solving social problems. From this
perspective social entrepreneurship identifies opportunities, collaboration and
teamwork, social corporate involvement and the adaptation of business
principles to social issues. The Ministry of Labor, Family and Social Protection
uses for the term social entrepreneurship the notion of social economy, which
refers to a group of people gathered in order to undertake an active economic
role in the process of social inclusion, NGOs (foundations and associations)
and other non-profit organizations that have an important role in social value
creation. Social 65`entrepreneurshi is mainly found as an interaction between
NGO’s and other organizations, through self-sustainable and independent
activities that are constantly changing economic and legal framework within a
country. However, where there is adequate collaboration between the private
sector that has the experience and ability to develop the commercial side of
social organizations several forms of organization can be developed with
different social outcomes.
The Role of Corporate Social Responsibility in Social Entrepreneurship 57

Social Enterprise
A social enterprise is an organization or venture that achieves its
primary social or environmental mission using business methods. The social
needs addressed by social enterprises and the business models they use are as
diverse as human ingenuity. Social enterprises build a more just, sustainable
world by applying market-based strategies to today’s social problems.
How are social enterprises different from other types of business:-
Two distinct characteristics differentiate social enterprises from other
types of businesses, nonprofits and government agencies:
1. Social enterprises directly address social needs through their products
and services or through the numbers of disadvantaged people they
employ. This distinguishes them from “socially responsible
businesses,” which create positive social change indirectly through the
practice of corporate social responsibility (e.g., creating and
implementing a philanthropic foundation; paying equitable wages to
their employees; using environmentally friendly raw materials;
providing volunteers to help with community projects). They are
powerful vehicles for job creation, economic growth and increased
opportunity for people facing barriers including those in low-to-
moderate families and communities.
2. Social enterprises use earned revenue strategies to pursue a double or
triple bottom line, either alone (as a social sector business, in either the
private or the nonprofit sector) or as a significant part of a nonprofit’s
mixed revenue stream that also includes charitable contributions and
public sector subsidies. This distinguishes them from traditional
nonprofits, which rely primarily on philanthropic and government
support.
Social Enterprises and CSR
Many nonprofit organizations see social enterprise as a way to reduce
their dependence on charitable donations and grants while others view the
business itself as the vehicle for social change. Whether structured as
nonprofits or for-profits, social enterprises are simply launched by social
entrepreneurs who want to improve the common good and solve a social
problem in a new, more lasting and effective way than traditional approaches.
They are conceived and operated by visionary entrepreneurs who recognize
potential where others may not see it and who apply discipline, pragmatism,
courage and creativity to pursue their solution in spite of all obstacles, toward
a world that is more abundant, secure and inclusive for all.
58 Inspira- Journal of Modern Management & Entrepreneurship : October, 2011

While the notion of CSR is now relatively well known, people

generally know less about social enterprises. This is partially due to the lack of
a precise definition, but is also the result of small numbers of social enterprises
in Asia (although this is starting to change).
Despite the lack of a universal definition, a social enterprise is
generally described as an organization primarily driven by social objectives or
needs and run as a business entity that generates revenue for self-financing
purposes. To meet social goals, social enterprises develop socially or
environmentally beneficial products or services, or create employment
opportunities for the socially disadvantaged. Social enterprises can be a stand-
alone organizations (like CSR Asia), or they can be formed separately by a
non-profit organization to support the organization’s social programs and
generate funding. They can also be an extension of a for-profit organization –
for example, a subsidiary – that enhances the organization’s social objectives.
Given the combined social and business nature of social enterprises, which fall
between non- and for-profits, this makes it difficult to determine how they
should be classified. In other words, are they businesses or NGOs? (Some
argue that there is no reason to classify them as either.)
A social enterprise is classified as a normal business entity, and does
not receive tax exemptions that NGOs with charitable status do (despite a
social mission being the major driving force behind the establishment of a
social enterprise).
While the distinction between for-profit and non-profit status is
blurred, there are also similarities between social enterprises and businesses
practicing CSR. On the one hand, social enterprises emphasise the importance
of sustainability through providing solutions for social or environmental
problems and using business methods to sustain operations. On the other
hand, socially responsible businesses may do likewise by integratinsocial and
environmental performance into its business operations.
All of which makes it very difficult to draw distinctions between non-
profit organisations, social enterprises, conventional for-profit businesses, and
good corporate citizens. The table below outlines the difficulties:
The Role of Corporate Social Responsibility in Social Entrepreneurship 59

Social Socially Conventional

Non-Profit
Enterprise Responsible For-Profit
Mission or start- Socially-driven Profit-driven with
Socially-driven Profit-driven
up motivation with profit social concern
Multiple Triple-bottom- Revenue,
matrices: profit, line profit and
Impact Impact on
social value, consideration: business-
measurement society
environmental economic, social value
impact and generating
Charitable Self-generated Self-generated Self-
contribution, income, capital income, capital generated
Primary
public funding, investment, investment, income,
funding
foundation loans, loans, capital
grants, partnership, etc partnership, etc investment,
Non- Principally Distribute to Distribute to
profit, income reinvest to owners/ owners/share
Profit generated is operation to shareholders/em holders and
distribution distributed to further social ployees, and to reinvest to
the needy and benefits. A reinvest to business
covers portion may be business operation
Develop or Develop or
promote promote products
Pursue
socially or services to
Develop competitive
beneficial generate income
programs or strategies to
programs, while integrating
campaigns to launch or
products or CSR into core
Core activities elicit donor promote
services that business
participation products or
provide operation, and
and/or financial services to
revenue committed to
support generate
streams. community
income
Directly address development.
social needs Create positive

Looking at the table above, the distinction between a social enterprise

and a socially responsible company is small. This may be because the concepts
of CSR and social entrepreneurship have emerged from the same context
(sustainable development), which is to promote the achievement of social
goals and sustainability through market-based strategies. The key difference is
that a social enterprise directly addresses social/environmental problems or
needs through its services/products offered, or through employment of
socially disadvantaged groups. A good corporate citizen, however, creates
indirect positive social solutions, for example, via implementing fair employee
welfare schemes, creating a philanthropic foundation, providing employee
volunteers for community projects, using energy efficient materials, ensuring
60 Inspira- Journal of Modern Management & Entrepreneurship : October, 2011

an accountable supply chain, or promoting CSR communication. Different

from non-profit organisations (which rely on philanthropic and government
support), social enterprises use a significant part, if not all, of profits earned to
pursue a social mission rather than distribute to shareholders.
Since a social enterprise is established as a business that can generate
profit or revenue, there is a potentially growing societal expectation towards
the CSR performance of a social enterprise, similar to that directed at a for-
profit business. Besides, as there is an increasing demand for sustainability
disclosure from NGOs – as exemplified by the recent development of a Sector
Supplement for GRI reporting for NGOs – a social enterprise may also be
subject to similar societal expectations from NGOs given the social-orientation
of its mission.
Regardless of the organisational nature or whether there are tax
incentives for social enterprises or not, all organisations should strive to
operate with a sense of social responsibility, walk the talk, and provide better
value to stakeholders while generating income for sustainable growth.
The Implications of the CSR in the Process of Social Entrepreneurship
Social involvement of commercial enterprises is a practice that can
start either from the existing theory in this field or from experience of other
companies, however most things are learned from the experience of
conducting business as a result of social responsibility programs. Certainly
social involvement is achieved gradually from initiatives that do not involve
too many resources and may lead in time to sustain social entrepreneurship
through the establishment of organizations developed to work effectively and
to support social causes. Perception of social involvement by citizens is often
marred by mistrust and suspicion which is a challenge for many companies.
Unfortunately the desire to be competitive puts an intense pressure on the
enterprises, considering their social involvement as a resource that consumes
far too much. So when the involvement in projects does not bring a
contribution to enterprise’s development, human and material resources
allocated to social responsibility motivation and effort isminimized or even
eliminated. This situation is somehow justified in the context in which
businesses conducts activities oriented towards profit rather than towards
charities. To support the involvement of social enterprises one must have a
solid economic situation, any social engagement, requiring the mobilization of
resources can be allocated for other purposes affecting business prosperity.
Taking into account the dimensions of social responsibility leading to
competitive advantages such us: risk, efficiency, brand promotion of new
markets (Hokerts,, we have observed that companies avoid social
involvement to reduce risks. Somehow we can say that it is justified in this
context that smaller firms avoid to get involve in social responsible activities
The Role of Corporate Social Responsibility in Social Entrepreneurship 61

because of the lack of the necessary resources. The relationship between social
and financial performance affects the competitive advantage of the company,
arising from the social responsibility programs undertaken. This type of
programs can help companies to gain a competitive advantage.
Companies can sustain social entrepreneurship, being trigger factor of
social entrepreneurship. This can be done through collaborations,
partnerships, or through putting the basis for creating a social mission
organization. Not all organizations that sustain social mission are within the
social entrepreneurship spectrum, only those who really meet the criteria of
social entrepreneurship (Borza et all, 2009). Organizations that promote social
entrepreneurship will get a considerable advantage due to the resources and
the support received to sustain social mission and companies will gain
notoriety and a positive image with good results over economical activities.
Cross sectors collaboration enhance the potential of having a positive effect
over social problem solving process. Collaborations throughout the
organizations and their partners develop long term projects, permit the
change of perspectives, so commercial
organizations become more social oriented and social organizations become
more commercial oriented. Organizations that sustain social entrepreneurship
must recognize the advantages given by commercial activities and therefore
trying to become self-sustainable.
Conclusions
Social entrepreneurship can be a viable alternative in the presented
context; it depends on innovative people, motivated and persistent to share
their desire to promote social value. Social entrepreneurship is known as
social economy and concerns a group of people seeking to assume an active
economical role in the fight against social problems. Social entrepreneurship
can take various forms of organizations, but in our opinion NGOs provide the
best conditions, because of the facilities provided by the regulations.
According to our opinion, in order to promote social entrepreneurship,
organizations must meet the following criteria: social problem, transparency
of the performed work, tracking down the social mission, 65`providing the
skills needed by the promoters of social causes, the need of innovation,
achieving social impact and the performance of self-sustainable activities.
Corporate social responsibility and social entrepreneurship have distinct
conceptual approach, but both have an indubitable effect by valorizing social
opportunities.
62 Inspira- Journal of Modern Management & Entrepreneurship : October, 2011

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