From Ideas to Social Enterprise

1. From Ideas to SocialFrom Ideas to Social
EnterpriseEnterprise
From Ideas to SocialFrom Ideas to Social
EnterpriseEnterprise
ABDM4233 ENTREPRENEURSHIPABDM4233 ENTREPRENEURSHIP
by
Stephen Ong
Principal Lecturer (Specialist)
Visiting Professor, Shenzhen University

2. 1 - 2
SocialSocial
EntrepreneurshipEntrepreneurship

3. 2 - 3
Grameen : EmpoweringGrameen : Empowering
People. Changing Lives.People. Changing Lives.
 His observations in a village in 1974:His observations in a village in 1974:
Craftspeople were skilled, but returns to thoseCraftspeople were skilled, but returns to those
skills were limited by credit availabilityskills were limited by credit availability
 The opportunity he saw: Micro-loans, with noThe opportunity he saw: Micro-loans, with no
collateral and low interest. This would boost thecollateral and low interest. This would boost the
return to craftspeoplereturn to craftspeople
 The results: Very high loan repayment; CreationThe results: Very high loan repayment; Creation
of the Grameen Bank; Nationwide adoptionof the Grameen Bank; Nationwide adoption
 The recognition: Professor Yunus won the 2006The recognition: Professor Yunus won the 2006
Nobel Peace Prize.Nobel Peace Prize.
 Grameen is a famous model ofGrameen is a famous model of SOCIALSOCIAL
ENTREPRENEURSHIP (“SE”)ENTREPRENEURSHIP (“SE”)

4. 2- 4
PersistentPersistent SESE conceptsconcepts
 SE addresses social problems or needsSE addresses social problems or needs
not met by private markets ornot met by private markets or
governmentgovernment
 Innovative solutions, unmet needs, privateInnovative solutions, unmet needs, private
actionaction
 SE is motivated primarily by socialSE is motivated primarily by social
benefitbenefit
 Social mission + entrepreneurial behaviorSocial mission + entrepreneurial behavior
 SE generally works with market forcesSE generally works with market forces
 Combining social purpose with financialCombining social purpose with financial
sustainabilitysustainability

5. 2 - 5
Process steps inProcess steps in
entrepreneurship (1)entrepreneurship (1)
 Social entrepreneurs recognizeSocial entrepreneurs recognize
opportunities to create social valueopportunities to create social value
 Seeing opportunity where others see onlySeeing opportunity where others see only
threats and tragediesthreats and tragedies
 Addressing present or latent demandAddressing present or latent demand
 Opportunity leads an enterpriseOpportunity leads an enterprise
conceptconcept
 Identify new products or marketsIdentify new products or markets
 Identify and define desired social rewardsIdentify and define desired social rewards
and how they are to be measuredand how they are to be measured

6. 2- 6
Process steps inProcess steps in
entrepreneurship (2)entrepreneurship (2)
 Resource needs are determined andResource needs are determined and
necessary resources acquirednecessary resources acquired
 Financial resources, human resourcesFinancial resources, human resources
(labour), and human capital (expertise)(labour), and human capital (expertise)
 Launch and grow the social ventureLaunch and grow the social venture
 Follow a strategy tied to metrics ofFollow a strategy tied to metrics of
successsuccess
 Goal attainment and beyondGoal attainment and beyond
 What to do after success is attainedWhat to do after success is attained
 Shut down, redefine service, continue, orShut down, redefine service, continue, or
mergemerge
 Figure 1.1 portrays this processFigure 1.1 portrays this process

7. 2- 7
Figure 1.1 The process of SocialFigure 1.1 The process of Social
EntrepreneurshipEntrepreneurship
Opportunity recognition
• Social problems
• Unmet needs
Concept development
• Identification of social
rewards
• New products or markets
Resource determination and acquisition
• Financial resources
• Human resources
• Human capital
Launch and venture growth
• Measurement of returns
• Expansion and change
Goal attainment
• Succeed in mission and shut down
• Succeed in mission and find new
opportunity
• Attain a stable service equilibrium
• Integrate into another venture
Opportunity recognition
• Social problems
• Unmet needs
Concept development
• Identification of social
rewards
• New products or markets
Resource determination and acquisition
• Financial resources
• Human resources
• Human capital
Launch and venture growth
• Measurement of returns
• Expansion and change
Goal attainment
• Succeed in mission and shut down
• Succeed in mission and find new
opportunity
• Attain a stable service equilibrium
• Integrate into another venture

8. 2 - 8
The landscape of SEThe landscape of SE
 Significant growth of the nonprofitSignificant growth of the nonprofit
sectorsector
 3% annual growth in number of nonprofits3% annual growth in number of nonprofits
from 1996 to 2004from 1996 to 2004
 Growth is higher in public charities andGrowth is higher in public charities and
private foundations than for nonprofits inprivate foundations than for nonprofits in
generalgeneral
 Figure 1.2 portrays this growthFigure 1.2 portrays this growth

9. 2 - 9
Figure 1.2 Social Venture GrowthFigure 1.2 Social Venture Growth
1996 - 20041996 - 2004
3%
6%
7%
0%
1%
2%
3%
4%
5%
6%
7%
8%
All nonprofits Public charities Private foundations
Averageannualgrowthrate,1996-2004

10. 2 - 10
Categories of socialCategories of social
venture/SEventure/SE
1.1. Start a new product or serviceStart a new product or service
2.2. Expand an existing product or serviceExpand an existing product or service
3.3. Expand an existing activity for a new groupExpand an existing activity for a new group
of peopleof people
4.4. Expand an existing activity to a newExpand an existing activity to a new
geographic areageographic area
5.5. Acquire an existing businessAcquire an existing business
6.6. Partner or merge with an existing businessPartner or merge with an existing business
Source: Brinckerhoff, Peter C. (2000). Social Entrepreneurship: The Arts of Mission-Based VentureSource: Brinckerhoff, Peter C. (2000). Social Entrepreneurship: The Arts of Mission-Based Venture
Development. New York: Wiley, pp. 16-21Development. New York: Wiley, pp. 16-21

11. 2 - 11
Explaining entrepreneurshipExplaining entrepreneurship
(1)(1)
 EnvironmentEnvironment
 Entrepreneurship is stimulated by aEntrepreneurship is stimulated by a
conducive environmentconducive environment
 ResourcesResources
 Resource availability (financial, humanResource availability (financial, human
resources, human capital) stimulatesresources, human capital) stimulates
entrepreneurshipentrepreneurship
 PerturbationPerturbation
 Entrepreneurship occurs when people areEntrepreneurship occurs when people are
displaced from their routinesdisplaced from their routines

12. 2 - 12
Explaining entrepreneurshipExplaining entrepreneurship
(2)(2)
 Personal traitsPersonal traits
 Entrepreneurship occurs because ofEntrepreneurship occurs because of
entrepreneurial personalities and typesentrepreneurial personalities and types
 PreparationPreparation
 Entrepreneurship can be taught andEntrepreneurship can be taught and
learned through education and experiencelearned through education and experience

13. 2 - 13
Applying entrepreneurshipApplying entrepreneurship
theory to SEtheory to SE
 These theories apply very well to SEThese theories apply very well to SE
 Environment, resources andEnvironment, resources and
perturbation are primarily externalperturbation are primarily external
forcesforces
 Personal traits and preparation arePersonal traits and preparation are
primarily internal forcesprimarily internal forces
 This theory helps to explain SE, predictThis theory helps to explain SE, predict
where it will occur, and suggest how towhere it will occur, and suggest how to
increase itincrease it
 Figure 1.3 portrays these forcesFigure 1.3 portrays these forces

14. 2 - 14
Figure 1.3 The forces on socialFigure 1.3 The forces on social
entrepreneurshipentrepreneurship
Environmental factors
• Social climate conducive to social
entrepreneurship
• Political climate that facilitates
social innovation
Availability of financial and
nonfinancial resources
Perturbation of the environment
• Political change
• Cultural change
• Economic change
Entrepreneurial
personality traits
Preparation to exploit
opportunities
• Education
• Experience
Social entrepreneurship
process begins
External forces
Internal forces
Environmental factors
• Social climate conducive to social
entrepreneurship
• Political climate that facilitates
social innovation
Availability of financial and
nonfinancial resources
Perturbation of the environment
• Political change
• Cultural change
• Economic change
Entrepreneurial
personality traits
Preparation to exploit
opportunities
• Education
• Experience
Social entrepreneurship
process begins
External forces
Internal forces

15. 2 - 15
Characteristics of socialCharacteristics of social
entrepreneursentrepreneurs
 Dees (2001): “Change agents in theDees (2001): “Change agents in the
social sector,” characterized by …social sector,” characterized by …
 Mission orientationMission orientation
 Pursuing opportunitiesPursuing opportunities
 Continuous innovation, adaptation,Continuous innovation, adaptation,
learninglearning
 Bold action regardless of resource limitsBold action regardless of resource limits
 Heightened accountability to constituentsHeightened accountability to constituents
 Various potential impacts ofVarious potential impacts of
demographics, gender, personaldemographics, gender, personal
experienceexperience
 But do these innate traits explain SE?But do these innate traits explain SE?

16. Psychological characteristics ofPsychological characteristics of
entrepreneursentrepreneurs
 InnovativenessInnovativeness
 Achievement orientationAchievement orientation
 IndependenceIndependence
 Sense of control over destinySense of control over destiny
 Low aversion to risk (i.e., willing to acceptLow aversion to risk (i.e., willing to accept
risk)risk)
 Tolerance for ambiguityTolerance for ambiguity
 For social entrepreneurs,For social entrepreneurs, communitycommunity
orientationorientation andand social concernsocial concern are importantare important
psychological characteristicspsychological characteristics
2 - 16

17. 2 - 17
Figure 1.4 The characteristics ofFigure 1.4 The characteristics of
a social entrepreneura social entrepreneur
Innovativeness
Education and experience
Achievement orientation
Independence
Sense of control over destiny
Low risk aversion
Tolerance for ambiguity
Entrepreneurial
orientation
Community awareness
And social concern
Socially-entrepreneurial
orientation
Innate characteristics
Innovativeness
Education and experience
Achievement orientation
Independence
Sense of control over destiny
Low risk aversion
Tolerance for ambiguity
Entrepreneurial
orientation
Community awareness
And social concern
Socially-entrepreneurial
orientation
Innate characteristics

18. 2- 18
Social entrepreneurs as …Social entrepreneurs as …
 LeadersLeaders
 Shape a vision that change publicShape a vision that change public
attitudesattitudes
 Have significant personal credibilityHave significant personal credibility
 Generate commitment in terms of valuesGenerate commitment in terms of values
to achieve collective purposeto achieve collective purpose
 PersonalitiesPersonalities
 AchieversAchievers
 Super-salesmanSuper-salesman
 Real ManagerReal Manager
 Expert idea generatorExpert idea generator

19. 2- 19
Myths about SE (1)Myths about SE (1)
 Social entrepreneurs are againstSocial entrepreneurs are against
businessbusiness
 Many social entrepreneurs come fromMany social entrepreneurs come from
business and have succeeded in businessbusiness and have succeeded in business
 The difference between commercialThe difference between commercial
and social entrepreneurship is greedand social entrepreneurship is greed
 Assumes that all commercialAssumes that all commercial
entrepreneurs are greedy, and that noneentrepreneurs are greedy, and that none
are philanthropicare philanthropic

20. 2 - 20
Myths about SE (2)Myths about SE (2)
 Social entrepreneurs run nonprofits.Social entrepreneurs run nonprofits.
 Some do, some don’t – many legal formsSome do, some don’t – many legal forms
support SEsupport SE
 Social entrepreneurs are born, not madeSocial entrepreneurs are born, not made
 Implies no role at all for nurture, that onlyImplies no role at all for nurture, that only
innate traits determine who does whatinnate traits determine who does what
 Myths for which there is no evidenceMyths for which there is no evidence
 Social entrepreneurs are misfitsSocial entrepreneurs are misfits
 Social entrepreneurs usually failSocial entrepreneurs usually fail
 Social entrepreneurs love riskSocial entrepreneurs love risk

21. 21
World Income DistributionWorld Income Distribution

22. 22
People Living in Poverty, 1981-2002People Living in Poverty, 1981-2002
7.81% of Malaysian pop<$2
vs
KLCC cost of RM1.8B
in 2004

23. 23
The 12 Most and Least Populated CountriesThe 12 Most and Least Populated Countries
and Their Per Capita Income, 2005and Their Per Capita Income, 2005
Malaysia 28m $7,760 in 2010
Singapore 5m $40,070 Botswana 2m
$6,740

24. 24
UN Millennium Development Goals 2015UN Millennium Development Goals 2015

25. 25
UN Millennium Development Goals 2015UN Millennium Development Goals 2015
(continued)(continued)

26. 26
Income and Happiness: Comparing CountriesIncome and Happiness: Comparing Countries

27. Further ReadingFurther Reading
 Scarborough, Norman, M. 2011.Scarborough, Norman, M. 2011. Essentials ofEssentials of
Entrepreneurship and Small BusinessEntrepreneurship and Small Business
Management.Management. 66thth
edition. Pearson.edition. Pearson.
 Brooks, Arthur C. (2006) Social Entrepreneurship :Brooks, Arthur C. (2006) Social Entrepreneurship :
A Modern Approach to Social Value Creation.A Modern Approach to Social Value Creation.
PearsonPearson
 Barringer, Bruce R. & Ireland, R. Duane, 2011Barringer, Bruce R. & Ireland, R. Duane, 2011
Entrepreneurship – Successfully launching newEntrepreneurship – Successfully launching new
venturesventures 44thth
edition, Pearson.edition, Pearson.
 Schaper, M., Volery, T., Weber, P. & Lewis, K. 2011.Schaper, M., Volery, T., Weber, P. & Lewis, K. 2011.
Entrepreneurship and Small Business.Entrepreneurship and Small Business. 33rdrd
AsiaAsia
Pacific edition. John Wiley.Pacific edition. John Wiley.