Many leading universities are increasing their involvement with social innovation.  They teach students how to become social entrepreneurs; and use their research to address important social problems.  In this BLOG post I want to highlight one of the seminal articles in the field of social innovation and briefly describe one of the top academic programs on social entrepreneurship (Duke University in Durham, NC) .  This field has grown out the business schools that have pioneered research and teaching about innovation and entrepreneurship more broadly. 
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The article’s author – Gregory Dees is Professor of the Practice of Social Entrepreneurship and co-founder of the Center for the Advancement of Social Entrepreneurship (CASE) at Duke University’s Fuqua School of Business.  A dozen years ago he wrote the seminal paper that is summarized here.  CASE as a recognized thought leader in the field of social entrepreneurship as we seek to provide individuals and organizations with the knowledge and skills they need to pursue social impact entrepreneurially.

Ultimately, CASE strives to help create an entrepreneurial, effective social sector that is led by individuals and organizations that embody the following core values:

  • Focus on Impact
  • Primacy of Mission
  • Private Initiative
  • Blurring of Sector Boundaries
  • Opportunity Orientation
  • Innovation
  • Resourcefulness

Within that sector, CASE seeks to be the leading center for social entrepreneurship education, applied research, and field-building.

The Meaning of “Social Entrepreneurship”
J. Gregory Dees – -October 31, 1998

The idea of “social entrepreneurship” has struck a responsive cord. It is a phrase well suited to our times. It combines the passion of a social mission with an image of business-like discipline, innovation, and determination commonly associated with, for instance, the high-tech pioneers of Silicon Valley. The time is certainly ripe for entrepreneurial approaches to social problems.

Many governmental and philanthropic efforts have fallen far short of our expectations. Major social sector institutions are often viewed as inefficient, ineffective, and unresponsive. Social entrepreneurs are needed to develop new models for a new century.

The language of social entrepreneurship may be new, but the phenomenon is not. We have always had social entrepreneurs, even if we did not call them that. They originally built many of the institutions we now take for granted. However, the new name is important in that it implies a blurring of sector boundaries. … Social entrepreneurs look for the most effective methods of serving their social missions. Though the concept of “social entrepreneurship” is gaining popularity, it means different things to different people. This can be confusing.

The term “entrepreneur” originated in French economics as early as the 17th and 18th centuries. In French, it means someone who undertakes a significant project or activity. More specifically, it came to be used to identify the venturesome individuals who stimulated economic progress by finding new and better ways of doing things. …

Joseph Schumpeter described entrepreneurs as the innovators who drive the “creative-destructive” process of capitalism. In his words, “the function of entrepreneurs is to reform or revolutionize the pattern of production.” They can do this in many ways: “by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on.” Schumpeter’s entrepreneurs are the change agents in the economy. By serving new markets or creating new ways of doing things, they move the economy forward.

Peter Drucker does not require entrepreneurs to cause change, but sees them as exploiting the opportunities that change (in technology, consumer preferences, social norms, etc.) creates. He says, “this defines entrepreneur and entrepreneurship the entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” … Entrepreneurs have a mind-set that sees the possibilities rather than the problems created by change. …

Social entrepreneurs are one species in the genus entrepreneur. They are entrepreneurs with a social mission. However, because of this mission, they face some distinctive challenges and any definition ought to reflect this.  For social entrepreneurs, the social mission is explicit and central. This obviously affects how social entrepreneurs perceive and assess opportunities.  Mission-related impact becomes the central criterion, not wealth creation. …

Markets do not work as well for social entrepreneurs. In particular, markets do not do a good job of valuing social improvements, public goods and harms, and benefits for people who cannot afford to pay. These elements are often essential to social entrepreneurship. That is what makes it social entrepreneurship. As a result, it is much harder to determine whether a social entrepreneur is creating sufficient social value to justify the resources used in creating that value. The survival or growth of a social enterprise is not proof of its efficiency or effectiveness in improving social conditions. It is only a weak indicator, at best. …

It is inherently difficult to measure social value creation. How much social value is created by reducing pollution in a given stream, by saving the spotted owl, or by providing companionship to the elderly? The calculations are not only hard but also contentious. Even when improvements can be measured, it is often difficult to attribute an them to a specific intervention. …

Any definition of social entrepreneurship should reflect the need for a substitute for the market discipline that works for business entrepreneurs. …  In brief, this definition can be stated as follows:

Social entrepreneurs play the role of change agents in the social sector, by:

  • Adopting a mission to create and sustain social value (not just private value),
  • Recognizing and relentlessly pursuing new opportunities to serve that mission,
  • Engaging in a process of continuous innovation, adaptation, and learning,
    Acting boldly without being limited by resources currently in hand, and
  • Exhibiting a heightened sense of accountability to the constituencies served outcomes created. …

Each element in this brief definition deserves some further elaboration:

Change agents in the social sector: Social entrepreneurs are the reformers and revolutionaries described by Schumpeter, but with a social mission. They make fundamental changes in the way things are done in the social sector. Their visions are bold. They attack the underlying causes of problems, rather than simply treating symptoms. They often reduce needs rather than just meeting them. They seek to create systemic changes and sustainable improvements. Though they may act locally, their actions have the potential to stimulate global improvements in their chosen arenas, whether that is education, health care, economic development, the environment, the arts, or any other social sector field.

Adopting a mission to create and sustain social value: This is the core of what distinguishes social entrepreneurs from business entrepreneurs even from socially responsible businesses. For a social entrepreneur, the social mission is fundamental. This is a mission of social improvement that cannot be reduced to creating private benefits (financial returns or consumption benefits) for individuals. … Social impact is the gauge. Social entrepreneurs look for a long-term social return on investment. Social entrepreneurs want more than a quick hit; they want to create lasting improvements. They think about sustaining the impact.

Recognizing and relentlessly pursuing new opportunities: Where others see problems, entrepreneurs see opportunity. Social entrepreneurs are not simply driven by the perception of a social need or by their compassion, rather they have a vision of how to achieve improvement and they are determined to make their vision work. They are persistent. The models they develop and the approaches they take can, and often do, change, as the entrepreneurs learn about what works and what does not work. …

Engaging in a process of continuous innovation, adaptation, and learning: Entrepreneurs are innovative. They break new ground, develop new models, and pioneer new approaches. However, as Schumpeter notes, innovation can take many forms. It does not require inventing something wholly new; it can simply involve applying an existing idea in a new way or to a  new situation. Entrepreneurs need not be inventors. They simply need to be creative in applying what others have invented. … This willingness to innovate is part of the modus operandi of entrepreneurs. It is not just a one-time burst of creativity. It is a continuous process of exploring, learning, and improving. …

Acting boldly without being limited by resources currently in hand: Social entrepreneurs do not let their own limited resources keep them from pursuing their visions. They are skilled at doing more with less and at attracting resources from others. They use scarce resources efficiently, and they leverage their limited resources by drawing in partners and collaborating with others. They explore all resource options, from pure philanthropy to the commercial methods of the business sector. …

Exhibiting a heightened sense of accountability to the constituencies served and for the outcomes created: Because market discipline does not automatically weed out inefficient or ineffective social ventures, social entrepreneurs take steps to assure they are creating value. This means that they seek a sound understanding of the constituencies they are serving. They make sure they have correctly assessed the needs and values of the people they intend to serve and the communities in which they operate. … They seek to provide real social improvements to their beneficiaries and their communities, as well as attractive (social and/or financial) return to their investors. … They assess their progress in terms of social, financial, and managerial outcomes, not simply in terms of their size, outputs, or processes. They use this information to make course corrections as needed.

Social Entrepreneurs are A Rare Breed. Social entrepreneurship describes a set of behaviors that are exceptional. These behaviors should be encouraged and rewarded in those who have the capabilities and temperament for this kind of work. We could use many more of them.  … Social entrepreneurs are one special breed of leader, and they should be recognized as such. This definition preserves their distinctive status and assures that social entrepreneurship is not treated lightly. We need social entrepreneurs to help us find new avenues toward social improvement as we enter the next century.