Social entrepreneurship is a new idea in the international business sector. The dynamics related to this issue have been subject to research by different scholars. Arguably, it is a field that is characterized by the level of innovation in the industry. It is also determined by the social and financial aspects of business. The social factors majorly determine the efficiency and effectiveness of the social sector institutions in the current multifaceted world. However, social entrepreneurship is new in the research field but has been in existence for more than 7 decades. It is the minimum level of concern by the public towards social entrepreneurship that has made the issue new to the current academic sector. Arguably, the impacts of social entrepreneurships to the society are hard to evaluate. This is a challenge that the social entrepreneurships should consider when conducting their practices. They should do this because the social aspect of social entrepreneurship determines the financial outcome for the business. However, this is a factor that poses a challenge to the for-profit entrepreneurships. The social entrepreneurships should then consider the Double Bottom Line evaluation strategy when assessing their growth. This is because both for-profit and not-for-profit social institutions majorly focus on the social development. The financial development is usually the secondary objective of the social entrepreneurships.
This essay aims at thoroughly analyzing the importance of the Double Bottom Line concept in social entrepreneurship. This will be done through assessing the concept in two different perspectives. The essay will explain the relevance and irrelevance of Double Bottom Line in social entrepreneurship. In order to do so, this essay will define major concepts of social entrepreneurship. The essay will further relate the concepts to the Double Bottom Line concept in order to analyze its importance.
According to Dees (2), there is little difference between the traditional and modern definition of Entrepreneurship. Arguably, it is just a little modification that has been added to the classical definitions. For instance Say argued that Entrepreneurship is observed when an individual utilizes economic resources in order to increase productivity in sectors of low productivity (Dees 2). Other economists such as Schumpeter added some information to the theory by claiming that the function of an entrepreneur is to reform the patterns of production (Dees 2). This revolutionary process can be considered to be either destructive or creative. It is worth noting that academic researchers have criticized Say and Schumpeter’s ideologies by arguing that their definitions are inclined to the for-profit businesses.
The neo-economic theorists have presented numerous entrepreneurship theories. However, the highly remarked theorists have based their definitions on the traditional definitions of entrepreneurship. As much as they have integrated the traditional theories with the modern theories, they have provided varying opinions on the theme (Dees 2). According to Drucker entrepreneurship involves identifying change and fully utilizing it as an opportunity (Dees 2). It is worth noting that this definition has included the aspect of opportunity in the discussion of the entrepreneurship theory. An analysis of Drucker’s statement reveals an aspect in the entrepreneurs’ characters. These are individuals who see opportunities brought by change. They do this by adapting to the different conditions. Arguably, the provided theories suggest that entrepreneurship is a multifaceted field. The theories challenge scholars’ rationale since they imply that starting a business does not automatically make the person an entrepreneur. They further stress that it is through being able to adapt to change successfully that makes an individual and entrepreneur (Dees 2). The change in this case might be environmental, economic, or social.
The differences between Social and Business Entrepreneurship
Through a thorough assessment of both the traditional and the modern entrepreneurship theories, it can be concluded that they can all be applied in the business and social sector. Since the sector boundaries are hardly distinctive, the economic researchers should develop an understanding of social entrepreneurship based on the available theories and research (Dees 3). It is worth noting that social entrepreneurs are different from the business entrepreneurs since they are usually driven by their social mission. According to Dees (3), the social mission is usually characterized by some distinctive challenges. Their social mission has an impact on how the social entrepreneurs view business opportunities. The social mission also affects their ability to assess the available opportunities. This is because the mission is usually central and precise. The mission dictates that wealth creation should be the secondary mission in social entrepreneurship (Dees 3). Therefore, the social entrepreneurs should deter from shifting their resources to economic production purposes (Dees 3).
Despite the imperfection of the markets, they usually play a major role in the evaluation of value creation. It is effective when testing value creation in customers who are willing and able to pay. The entrepreneur increases the value creation of a business when he/she attracts resources such as labor, equipment, and capital (Dees 3). This situation is usually visible in competitive markets since they demonstrate effective productivity. The demonstration of productivity is a factor that is evident in economic business sectors rather than social business sectors. Arguably, the social enterprise does not prove its efficiency through maintaining economic growth. According to Dees (3), the survival of a social enterprise is nothing but a weak indicator in the social entrepreneurship sector.
It is worth noting that social entrepreneurships base their operations in markets. However, the markets do not offer the right discipline whatsoever. This is mainly because most social entrepreneurships do not charge customers for a number of their services (Dees 3). With the consideration of such issues it can be argued that the normal market discipline barely concurs with the social entrepreneurship objectives. However, this is a different case with the economic business entrepreneurships which are driven by the market discipline. For the social entrepreneurship, it depends on the investors, their motivations, and their ability to assess the social value created by the business. It is worth noting that it is almost impossible to evaluate the created social value. Dees (3) argues that it is a hard very debatable concept. The author supports his point by posing a rhetoric question on whether one can assess the value of reducing crime rates in a region (Dees 3). This is usually because the social entrepreneurships are usually focused on developing the individuals’ well being through engaging in more than one social activity. This is a factor that makes it hard to evaluate the value created by the social entrepreneurships. This is different from the business entrepreneurship where their value created is measured by the level of economic outcome they have. Therefore, the social enterprises should develop their strategies in order to increase the level of customer satisfaction. Through ensuring this, the social enterprises will be able to attract philanthropic resources. According to Dees (4), the philanthropic resources include the investors, sponsors and volunteers.
This paper has effectively defined and analyzed the basic components of social entrepreneurship. This has been made possible through defining the term entrepreneurship and further differentiating the different sectors of entrepreneurship (Harding 42). In this section, this essay will gather the knowledge gained through analyzing the basic components of social entrepreneurship. The discussed concepts imply that when defining social entrepreneurship, academics should discuss the needs for an alternative market discipline. This is because the market discipline will guide the social entrepreneurships to practicing effective utilization of resources (Dees 4). According to Dees (4), social entrepreneurship involves various factors such as adopting an objective that aims at creating and sustaining social value. Social entrepreneurship also involves identifying and pursuing opportunities with the aim of serving the set objective. It also involves engaging in bold practices without running short of resources. Lastly, social entrepreneurship involves increasing the level of accountability for the regions served and outcomes (Dees 4). The above definition of social entrepreneurship indicates a highly dynamic field. This factor shows why the Double Bottom Line concept is important in social entrepreneurship. According to Dees (4), the definition of social entrepreneurship is more of an idealized definition than a mere descriptive one. The author further argues that the leaders in the social enterprise sector will possibly have differing opinions regarding this diverse field. However, it is worth noting that the social enterprise leaders are able to make changes in the field.
For instance, since the social entrepreneurs are revolutionaries with a social mission, they will be able to make fundamental changes in the social sector. They will change the agents in the sector with an aim of creating and maintaining sustainable improvements (Yunus, et al 315). They will also be able to adopt an objective that aims at creating and sustaining social value. This is because the social mission is essential to the social entrepreneur. It is through their social missions that the entrepreneurs are able to maintain social responsibility. Creating and objective deters the social entrepreneurship from losing focus and following economic outcomes. They are also supposed to pursue opportunities as soon as they identify them. In order to do so, the social entrepreneurs should be focused and persistent. These values stop them from giving up in instances when they meet challenges (Peredo, et al 63). As this essay claimed earlier, social entrepreneurship is a sector full of challenges. The entrepreneurs should know how to deal with certain challenges they meet in their practice. As a social entrepreneur, the individual should always strive towards making procedural advancements. This is to be done through increasing the business’s innovativeness and adaptability (Dees 5). Arguably, through being continuously innovative, the entrepreneurs are able to not only meet the market needs but also mitigate the needs. Through adapting to the situations allows the business to grow since it is able to come up with strategies that help in utilizing resources. This also helps in attracting the investors. Since social entrepreneurship requires the social leader to be able to attract outside resources, the business can be in existence for a long time without running out of resources. This is mainly because they understand the challenges they face in this multifaceted industry. They should also be able to exercise accountability in all of their business practices. This should be done through seeking proper knowledge on every business action they take.
Through analyzing the social entrepreneurship sector, it is evident that social entrepreneurships have both the social and financial aspect (Nicholls, et al 110). It is therefore worth noting that the social aspects are the most relevant factors in the sector. This is because social entrepreneurship focuses on social development rather than economic growth. However, finance still plays a major role since it is one of the most important resources in the sector. This is because finance keeps the business running. Theorists still argue that finance is irrelevant in social entrepreneurship. This is because the finance plays a very small role in the social growth of a social enterprise. Therefore, the above conclusions raise numerous thoughts concerning the importance of the Double Bottom Line Approach in the social enterprises. Through analyzing the background concepts discussed in the essay, it is worth noting that there are contradicting opinions concerning the relevance of Double Bottom Line in this issue. The essay will define and analyze the Double Bottom Line concept and its relevance in social entrepreneurship.
Double Bottom Line
In this developed world, most of the businesses are now practicing what was initially termed as corporate social responsibility. This is the process in which a business considers the social implications of its practices to the future generation, the environment, and the employees among others. However, as much as the business has to consider the social impacts of its activities, it still has to balance its finances. They do this in order to ensure organizational growth. As a result of the mentioned factors, most social entrepreneurships apply the Double Bottom Line concept in the evaluation of their value created. Double Bottom Line concept integrates both the social and financial bottom lines in order to effectively assess and evaluate their performance (Harding 42). This concept allows the entrepreneurs to evaluate both their outcome and customer satisfaction (social appreciation). Double Bottom Line Enterprises majorly focus on achieving the social appreciation before considering the financial growth.
Research shows that Microfinance Institutions are the most recognized Double Bottom Line enterprises. Arguably, not many fields in commerce stress on Double Bottom Line performance as well as Microfinance institutions (Social Enterprise Associates 4). The same research connotes that the value of Microfinance as a development medium has an average growth of 30 percent annually (Social Enterprise Associates 3). Arguably, it is a sector which serves at least 66.7 million people globally. This statistics result indicates the heightened rate of demand. A research by Social Enterprise Associates (3) claims that the demand has outnumbered the supply capacity. This statement implies that the Microfinance sector might be somehow risky for the private investors. It is because of the limited cash flow potential (Social Enterprise Associates 3). The limited cash flow is an indication that the Double Bottom Line concept applied to Microfinance institutions is ineffective in allowing the business to adapt to the change.
According to Social Enterprise Associates (4), the Microfinance sector is experiencing problems which can be solved through managing the Microfinance’s Double Bottom Line. Documenting and evaluating both the social and financial bottom lines assists in the provision of information applicable to marketing, academic research, management choices, and investor decision making. Highlighting the social and financial results provides a market advantage over alternative capital uses (Social Enterprise Associates 4). However, the social gains are more important in the evaluation of the business’s performance. These statements imply that the Double Bottom Line concept is extremely important to different participants of the business sector. This includes academic researchers, investors, entrepreneurs, managers, and the media among others. The Double Bottom Line concept is important to the investors since they are able to make assessment-based decisions before investing in a business (Perrini, et al 76). It is also important to the entrepreneurs since they are able to evaluate their performance and come up with effective and innovative strategies in order to change the less effective practices. The Double Bottom Line concept is also important to the researchers since they become more advanced and can now provide alternative theories that benefit social enterprises. It is also worth noting that the same statements implied the contrary opinion. This is because the social results are the ones which are mostly considered when evaluating the business’s performance (Social Enterprise Associates 4). This statement implies that the use of the social bottom line on its own is enough to complete an effective value creation assessment. In other words, it means that the Double Bottom Line is irrelevant in the social entrepreneurship sector.
According to Social Enterprise Associates (5), the Double Bottom Line concept has some formative stages which are not considered universally. This statement shows that the concept is not important for international businesses. Arguably, that is the reason behind its limited publicity. However, this is a baseless argument since the issue of social entrepreneurship is still new in the academic minds in the business sector. This is because social entrepreneurship has been dismissed by the society until the recent past. This means that the lack of support has been characterized by the lack of information concerning the practice.
The Double Bottom Line improvements must be manager oriented. The manager should assess the value created then come up with effective strategies which will assist in improving the business performance and increasing the social impacts. It is worth noting that it is through evaluating the Double Bottom Line that the managers are able to realize level in which the business is. The concept will also allow the managers to embrace easy to use managerial tools. These tools do not have complete validation. In other words, they are not proved by the social science sector. However, the Double Bottom Line concept consists of both material resource and human resource. These are usually termed as inputs. Additionally, some of the other fundamentals include capital which is also an input. According to the above statement, it can be argued that both the social and financial aspects are both considered in the organizational structure of Double Bottom Line enterprises. This is a factor that makes the concept important in social entrepreneurship. It can also be argued that Double Bottom Line concept is important to the social business since it helps provide more knowledge on the impacts of the current organizational plans. The application of this concept will also help the organization to come up with effective strategies based on the initial observations of the business performance. Additionally, the Double Bottom Line concept positively affects the type of services offered to the customers. This is because main goal in the concept is to gain consumer appreciation.
After thoroughly evaluating the different components of social entrepreneurship, this essay has been able to explain the meaning of entrepreneurship. This was done through integrating the traditional definitions with the modern definitions. This was done in order to create an in-depth understanding of Social entrepreneurship. Arguably, Social entrepreneurship is a field full of dynamics. Since it is a multifaceted field, the entrepreneurs have to apply the Double Bottom line concept in the field. However, the entrepreneurs should realize that it is a concept which may not be totally relevant to the field depending on the situation of the business. This is a concept that benefits the business as well as other individuals. Proper utilization of this concept allows the business to develop effective strategies and policies with the aim of improving both the social and financial status of the business.
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