MGT3960 Entrepreneurship Management Fall 2015

What is the primary driver of the social entrepreneur?

The primary driver for a social entrepreneur is addressing social issues and providing what he believes is a solution.

Should green or cleantech ventures be classified as social enterprises? If so, why?

Yes. Because they are concerned about the environment. And even though their aim might be to make profit, they are still considered a social venture.

 What are some of the negatives of forming the social venture as a nonprofit?

• Expensive
• Time consuming
• Too many legal requirements
• Cannot keep information “private”

Why do stakeholders view the social venture differently from a traditional venture?

Because they tend to always associate social ventures to non-profit not knowing for example that a social venture even though it focuses on societal change, can also be a money making venture.

What are some of the growth challenges of a social venture?

• Not being able to find the funding/convince the investors in order to grow
• Transparency expectations
• Venture goals/ideas not aligned with those of the employees

The differences between Social Entrepreneurship, Corporate Social Responsibility, and Philanthropy

Philanthropy one of the many tools the company can use as part of it’s CSR agenda. Furthermore, philanthropy can be occasional. A company doing a donation to an organization and that’s it. Where CSR tends to focus on the long run.

Social entrepreneurship is completely building the “change” factor into the company’s business model whereas a company CSR is something a company decides to undertake or not.

The differences between Social Entrepreneurship and Business Entrepreneurs

The main difference is the reward. A business entrepreneur tend to see the reward in terms of money (profits) whereas the social entrepreneur focuses on his impact on the community. But probably because there are different factors that influence them. A business entrepreneur might get pressure from the partners/investors/banks whereas someone who puts his money in a social venture would tend to have different motivations than making profit.

1. What is the primary driver of the social entrepreneur?-The primary driver of the social entrepreneur is social need. They are driven to make the world a better place and addressing social issues.
2. Should green or cleantech ventures be classified as social enterprises? If so ,why?-I do believe that they should be classified as social enterprises simply because Draytons definition of a social entrepreneur are those individuals who use innovative solutions to solves societies most pressing social problems, which exactly what green/cleantech ventures strive to accomplish.
3.  What are some of the negatives of forming the social venture as a nonprofit?-Complicated tax and corporate governance issues, inability for founders to participate financially, difficult to sustain over time, inability to attract equal investments, difficult to attract top talent.
4. Why do stakeholders view the social venture differently from a traditional venture? -Social ventures tend to have greater stakeholder issues and challenges than a traditional venture. The emotional components are heightened and everything feels more intense. External stakeholders place a stronger scrutiny on the venture asking more questions seeing that the venture provides accurate information. Internal ventures look at growth and the challenges social ventures are faced with such as hiring and communication.
5. What are some of the growth challenges of a social venture?-One of the biggest growth issue for a social venture are employees. Employees who are on the same page as the social venture are driven by a social mission and considered “followers” rather than employees. They are emotionally committed to a very strong degree. This makes it really easy for those followers to feel betrayed if the venture were to do something out of character or “stray” off the mission. Also it will be a challenge to keep those followers motivated through out the course of the venture. As a social entrepreneur, the biggest problem you’ll be asking yourself here is whether you should hire a regular employee who isnt as committed to the businesses goal or hire a follower who believes in the cause.

• Differences between Social Entrepreneurship, Corporate Social Responsibility and Philanthropy.-Corporate social responsibility mainly focuses on following and adhering to social norms within a business. There is no formal responsibility. Philanthropy is different in the sense that it is just charity work and is done out of the goodness of ones own self. A social entrepreneur draws upon business techniques to find solutions to social problems. It uses the profits as a means of tackling issues in society in hopes of changing for the better.
• Differences between Social entrepreneurship and Business Entrepreneurship.-Both fulfill a need in the market and seek to earn a sustainable amount of profit. However, social entrepreneurs measures their performance on the positive impact its had on society whereas a business entrepreneur is solely focuses on revenue.

What is the primary driver of the social entrepreneur?

The primary driver for a social entrepreneur is change. He or she is concerned with issues such as global warming, pollution, and natural resource conservation. Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to take new leaps.

Should green or cleantech ventures be classified as social enterprises? If so, why?

Yes, they should! Social enterprises are social mission driven organizations, which apply market-based strategies to achieve a social purpose. The movement includes both non-profits that use business models to pursue their mission and for-profits whose primary purposes are social. Their aim is to accomplish targets that are social and/or environmental. Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinctive because their social or environmental purpose remains central to their operation. This brings home my point of why green or cleantech ventures should be classified as social enterprises. Green initiatives often require large changes to existing infrastructure, shifts in human behaviors, etc.; and the fact that they are mostly concerned with the overall well-being of society, classifies it as a social enterprise.

 What are some of the negatives of forming the social venture as a non-profit?

• Creating a nonprofit organization takes time, effort, and money. Because a nonprofit organization is a legal entity under federal, state, and local laws, the use of an attorney, accountant, or other professional may well prove necessary.

• A nonprofit must keep detailed records and submit annual filings to the state and IRS by stated deadlines in order to keep its active and exempt status.

• Although the people who create nonprofits like to shape and control their creations, personal control is limited. A nonprofit organization is subject to laws and regulations, including its own articles of incorporation and bylaws

• A nonprofit is dedicated to the public interest; therefore, its finances are open to public inspection. The public may obtain copies of a nonprofit organization’s state and Federal filings to learn about salaries and other expenditures.

Why do stakeholders view the social venture differently from a traditional venture?

Since the social need being redressed is the primary driver, everything else feels more intense. Stakeholders both external and internal to the venture tend to view the social venture as more than just a company. They view the social venture as a change agent that can impact the world for the better. The primary goal is not to make money, but rather change.

What are some of the growth challenges of a social venture?

1. With growth come the stresses on the ability of the venture to communicate internally
2. It runs the danger of starting to appear to its employees as just another company
3. Keeping the employees motivated and informed about how to keeping the mission alive
4. The conflict of hiring followers or employees who will see themselves as just employees

The differences between Social Entrepreneurship, Corporate Social Responsibility, and Philanthropy: 

Philanthropy and corporate social responsibility are closely related concepts in that philanthropy is a slice of the bigger corporate social responsibility pie. When integrated into a company’s mission and used to guide a company’s actions, corporate social responsibility can benefit the communities it serves, the company itself and its employees.

Corporate social responsibility not only deals with corporate philanthropy, but also other issues that affect the environment, consumers, human rights, supply-chain sustainability and transparency for the greater good of the world at large. Businesses that integrate social responsibility into their missions acknowledge that their business processes have an impact beyond the company. Therefore, they address issues like philanthropy, environmental-impact assessments and providing good working conditions.

Social entrepreneurship is different in the sense that the entrepreneur makes “the change” his or hers primary goal for the business, whereas CSR is just a part of the overall business – usually an expense for the company. Philanthropy is something the company can stress within the company to its employees.

The differences between Social Entrepreneurship and Business Entrepreneurs

Perceptions of Value

For the business entrepreneur, value lies in the profit the entrepreneur and investors expect to reap as the product establishes itself in a market that can afford to purchase it. The business entrepreneur is accountable to shareholders and other investors for generating these profits. To the social entrepreneur, there’s also value in profits, as profits are necessary to support the cause. That said, value for the social entrepreneur lies in the social benefit to a community or transformation of a community that lacks the resources to fulfill its own needs.

Approach to Wealth Creation

Although the business entrepreneur and the social entrepreneur are similarly motivated to change the status quo, their missions differ significantly. The business entrepreneur is driven to innovate within a commercial market, to the ultimate benefit of consumers. To the social entrepreneur, wealth creation is necessary, but not for its own sake. Rather, wealth is simply a tool the entrepreneur uses to effect social change. The degree to which minds are changed, suffering is alleviated or injustice is reversed represents the organization’s success.

Real Case

Volkswagen has been cheating in emission tests by making its cars appear far less polluting than they are. The US Environmental Protection Agency discovered that 482,000 VW diesel cars on American roads were emitting up to 40 times more toxic fumes than permitted – and VW has since admitted the cheat affects 11 million cars worldwide. It means far more harmful Nix emissions, including nitrogen dioxide, have been pumped into the air than was thought – on one analysis, between 250,000 to 1 million extra tonnes every year.

If VW had some sense of CSR, this would never had happened!

• WHAT IS THE PRIMARY DRIVER OF THE SOCIAL ENTREPRENEUR?

I believe that the primary driver of the social entrepreneur is the interest of making a difference and finding innovative solutions to social problems such as global warming, natural resources conservation, pollution, and water or food shortages.

• SHOULD A GREEN OR CLEANTECH VENTURES BE CLASSIFIED AS SOCIAL ENTERPRISE? IF SO, WHY?

I think green or cleantech ventures should be classified as social enterprise as long as they are concerned about social problems and as long as they are doing something about it. Since green ventures do care about social problems such as global warming, pollution and natural resource conversation, I think they should be considered social enterprise; these ventures are trying to minimize and avoid damage to the environment.

• WHAT ARE SOME OF THE NEGATIVES OF FORMING THE SOCIAL VENTURE AS A NONPROFIT?

Some of the negatives of forming the social venture as a nonprofit is that  there is a limited potential that can be developed. The venture unfortunately would have to rely on other sources to perform, if the social venture lacks of these resources (such as volunteering, government help,  etc) it will not be able to support itself unless it is funded by the founder of the venture. Another negative to this is even if the  social entrepreneur is willing to fund and sustain the social venture with his/her own money, unfortunately, he/she wouldn’t be able to benefit or get some money back if the nonprofit  are sold or stops operations because the money from the venture would have to go into another nonprofit.

• WHY DO STAKEHOLDERS VIEW THE SOCIAL VENTURE DIFFERENTLY FROM A TRADITIONAL VENTURE?

I believe that stakeholders view the social venture differently from a traditional venture because the venture is not focused on their own benefit or success but they are focused on finding innovative solutions to society’s most social problems not necessarily on making wealth for them. So, stakeholders view the social venture as a “change agent” that can make a difference and impact the world for better not as a primary way of making a living or money for themselves.

• WHAT ARE SOME OF THE GROWTH CHALLENGES OF A SOCIAL VENTURE?

Some of the growth challenges that a social venture faces is how to manage their team and how to keep them satisfied and motivated.  If the employee feels to be more of a follower than an employee, there is a risk that at some point of the growth period, the employee might feel like the company is losing its mission and the company must make sure that there is good communication and that employees don’t feel betrayed but are aware of the important function they play in the company.  The company have to decide whether it would be better to hire   “passionate employees who are likely to be true believers in the social goal of the venture” or just hire someone who wants the job. The challenge is that the communication must be efficient with all of its members and the mission must keep clear and consistent.