Social Entrpreneurship

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Social Responsibility and Social Entrepreneurship DAVID O. RENZ, PH.D.

Aditya Rajagopalan | PA5529 | 22 January, 2016


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Aditya Rajagopalan – Assignment 1

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PA 5529 – Social Responsibility and Social Entrepreneurship

Assignment -1

Social entrepreneurs are not content just to give a fish or teach how to fish. They

will not rest until they have revolutionized the fishing industry - Bill Drayton, founder of

Ashoka Changemakers

Social Entrepreneurship – How different it is from the “regular”

The term social refers to an inclusive and holistic approach towards the society.

Generally, social development has been related with promoting the well-being and

progress of the public and the community at large. Human tendency is usually inclined

towards pursuing personal gains over societal benefits. Thus, the processes and the

systems created by us, the humans, to serve the people are often biased. The role of

social development is to check this tendency, bring more balance and protect the larger

interest within the population.

On the other hand, entrepreneurs are talented and risk-taking opportunity seekers

who are committed to finding creative and innovative solutions to challenging problems,

making the best use of the resources and talents at their disposal, thereby creating value

for the society and wealth for himself. Social entrepreneurs are those counterparts of

business entrepreneurs, who work on problems having societal relevance. Apart from

possessing entrepreneurial traits like ambition, passion, creativity and dedication amongst

others, they also have a strong desire to make an impact and act as change agents. The

enormity of the societal and environmental problems, failure of open market policies and

public institutions, lack of political will, corruption, and the inability of the government

to solve such problems have resulted in bringing social entrepreneurship to the limelight

in recent history.


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The focus of social entrepreneurs is to find solutions that have an impact on the

society rather than the bottom line. A social entrepreneur focusses on creating wealth for

the community at large while safeguarding the environment for future generation.

The notion of a Social Enterprise

The process of social entrepreneurship begins with a combination of right people,

resources, and opportunity. Just as in the case of commercial ventures, where the value

proposition of a product or a service is crucial for success, a social value proposition is

very critical in social entrepreneurship. A social value proposition should be defined in a

way that is closely related to the desired outcome or the benefit, addresses the root of

the issue and is easily measurable.

In order to have a unique social value proposition and deliver results, social

entrepreneurs adopt many business and commercial strategies. The biggest challenge for

any social enterprise is to convert an opportunity into a mission, achieve sustainable

results and gain competitive advantage. A social enterprise can choose from various

business models and financing structures, come up with a suitable operational plan and

devise its long time strategy.

The story of AMUL, founded by social entrepreneur Dr. Verghese Kurien, is an

excellent example of a successful social enterprise in India. He not only just ran a

successful social enterprise but also started the White Revolution in India, helping the

small dairy farmers earn a better living. Initially founded to stop the exploitation of

farmers by middlemen. Playing a pioneering role in transforming India from a milk

importing country to the world's largest producer of milk, he famously said

“India's place in the sun would come from the partnership between the wisdom of

its rural people and skill of its professionals”.

http://en.wikipedia.org/wiki/Verghese_Kurienhttp://en.wikipedia.org/wiki/Verghese_Kurien


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AMUL gave the farmers direct access to domestic markets and built an excellent

supply chain management system for milk procurement. AMUL’s three-tier cooperative

structure helped in eliminating competition, achieve economies of scale, develop a

competitive advantage and create an iconic global brand. Backed by some excellent

leadership and management style, AMUL’s success was replicated across the country and

it totally altered the landscape of dairy industry in India.

Social Entrepreneurship – Different perspectives

Just as entrepreneurs change the face of business, social entrepreneurs act as the

change agents for society. The social innovation school of thought emphasizes that

viewing social entrepreneurship is establishing new and effective ways to address societal

problems. Irrespective the method they adopt and the way they function, ultimately the

thing that matters the most is the social value that they create. It is all about innovation

and impact, and not about commercial success or entrepreneurship. Though income

strategies and bottom line are important and are key to sustainability, it can never be

more important than the desired or intended social impact.

Traditionally social have focused on the business side of social engagement. Though

making a profit is not their main aim, these enterprises have to be reasonably profitable

in order to sustain and they may have to depend on investors or donors to support them

in the long run. Social enterprises are committed to solving social needs, bringing social

change, and inducing positive attitude in the community.

But they have an indirect

obligation to have a dual

double bottom line, meaning both social and financial bottom

line.


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On the other hand, social entrepreneurship from an innovation perspective tries to

shift the focus towards revolutionizing value creation. Coming from the social innovation

school of thought, Martin and Osberg argue that social entrepreneurship is all about

identifying a stable but inherently unjust equilibrium, finding an opportunity to create a

social value proposition that challenges the unjust equilibrium and subsequently working

towards forging a new, stable and just equilibrium for the welfare of the society.

Social innovators have a personal obsession to improve people’s lives by looking for

challenging problems and inequalities. Their personal background and the milieu in which

the person was exposed to the social sector are a major influence on their motivation to

work for the society and finding innovative and efficient solutions to address the root

cause of a social problem.

Social Innovation and Enterprise – Key Themes

Many a times, social entrepreneurs’ personal experience, education, work

experiences, and hobbies inspire them and make them uniquely positioned to solve some

of the most demanding social needs. They are driven, passionate and respond to the gaps

present between the existing situation and the desired social equilibrium. Making use of

the existing social assets and resources, they try to bring about a change or get inspired

and ride the change around them in order to bridge the gap between the desirable and

the reality.

The social impact theory articulates the importance of a well-conceived model which

connects the input, process, and the desired impact. The way social entrepreneurs choose

to enterprise their social innovation is a choice left to them and several factors like the

environment and the ecosystem in which they operate play a significant role in their

choice. Key elements of the entrepreneurial venture like an operational plan, resource


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strategy etc. should be designed in such a way that it aids the purpose of delivering social

impact, but never becomes the purpose in itself. Hence, we need to have a healthy and

supportive ecosystem, where the social entrepreneurs could make the best use of their

skills and innovative ideas.

Social Entrepreneurship – Further Learning

With rapid changes and advancements, social entrepreneurship has gained

unprecedented popularity. Some of the interesting areas to explore further in the area of

social entrepreneurship are:

1) The role of our education system in nurturing social entrepreneurs: What

constructive role should our education system play in creating and nurturing more

social entrepreneurs? What key changes needed in our present system?

2) The role of Networks and Coalition in Social Entrepreneurship: To what extent does

a “social” merger or an acquisition work? How important is to have a strong network

for a social entrepreneur to succeed?

3) A Cultural approach to Social Entrepreneurship: At both macro and micro level,

what role does culture play in influencing the entrepreneurial activity?

4) CSR vs Social Entrepreneurship: Would the corporate social responsibility of major

corporates overshadow social entrepreneurship in future? Should corporates have

“social” incubators for social entrepreneurs as part of their CSR?

5) Social Impact Assessment: With the increase in emphasis and demand for measuring

social impact, how to integrate social impact assessment as an internal part of

social entrepreneurship in a cost efficient way?

6) Future challenges and trends: What are the future challenges and trends in social

innovation that a budding social entrepreneur should anticipate?


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Assignment - 2

Social Entrepreneurship: Redefined

In the current scenario social entrepreneurs and also investors, to some extent, are

actively looking for opportunities that are sustainable in nature and can directly create a

significant positive social impact. Social entrepreneurs and donors are increasingly moving

away from the notion of donating to a social or environmental cause. There is philanthropy

on one end, where philanthropists focus solely on social return. There is the sustainable

investment on the opposite end, where investors focus on a financial return that is

appropriate to their risk appetite. Social Entrepreneurs, in this new age of social

innovation, are trying to tilt the balance towards the center where the main goal or

objective is to invest in social value based impact investments.

Legal, Financial and Assessment factors

There are a lot of legal, financial and assessment factors that need to be factored

in before starting a social enterprise. It is important to ensure that the vision of the social

enterprise is not lost such factors. The choice of legal or financial structure for a social

enterprise is a key decision to be made. A decision should be made in such a way that the

scale of the entrepreneurial activity, source of funding, types of stakeholders and the

nature of the beneficiaries are taken into consideration. A right legal structure is

important for a social enterprise to succeed and scale up in the future to be able to

address major social issues in the community. While on the other hand, some even the

greatest of an idea can fail if the social enterprise doesn’t have a proper legal structure

in place. Hence, it is critical for an entrepreneur to have to have a clear long term goal

before deciding on the legal structure.


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Both for-profit enterprises, as well as nonprofit structures, have their own merits

and constraints. Ideally, a social enterprise would like to have the advantages of both the

for-profit and nonprofit organization, and hence, a hybrid structure that combines the

goals of both the for-profit and nonprofit organization is gaining prominence. The hybrid

model is a mix of the non-profit and for-profit model, where the non-profit foundations

raise awareness about subjects related to their social objective and the for-profit part of

the foundation provides services that help supplement the social objective while

generating sufficient revenue and profit. Although hybrid structure helps in leveraging the

pros of both the non-profit and for-profit models, it is difficult to maintain focus on both

social and economic objectives.

Autonomy or the extent of control, ownership, funding, personal liability and

governance also play an important role. Exposure to personal liability is the reason why

legal structures like proprietorship and general partnership are not favored. The non–

profit structure goes well for those social enterprises that do not expect to make profits

from their revenues. The major advantage of following a non-profit model is that the

organization becomes tax-exempt. These organizations can accept both public grants and

private charitable donations. Hence, this is ideal for start-ups that work with the sole aim

of social benefits, without any pressure or need to generate income. However, in some

cases, the non-profit corporation can create a for-profit subsidiary that generates profit

to fund the activities of the parent non-profit corporation. But shared control, constant

public scrutiny and limited areas for operation are some of the drawbacks.

The for-profit enterprises have the liberty to compete in a market and sell a

product or a service to consumers. A key benefit of this model is the ability of for-profit

enterprises to attract funding from venture capitalists and easier access to capital

markets. On the flip side, the earnings are taxed at two levels.


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Hence, the pressure to register profits and the liabilit y towards to the shareholders

can cause the enterprise to lose focus on the social objective. There are also adaptations

of the for-profit models like the S corporation, where only the shareholders are taxed at

a personal level. Then there is the low-profit Limited Liability Corporation or L3C. Unlike

nonprofit entities, the L3C is not discouraged from earning a profit. The L3C model

protects social entrepreneurs from personal liability. It also gives entrepreneurs freedom

with respect to governance, regulations, and taxation laws. The L3C model also makes it

possible to receive investments related to the social mission.

Social entrepreneurs have also started to look at various new ways to look for

investments and funding. They are constantly looking for investors who think of social

return on investment. Fundraising methods are influenced by the legal structure of the

entity and the method of fundraising entrepreneurs adopt can have significant effects on

administrative decisions and the functioning of the enterprise. Innovative methods like

social impact bonds and crowdsourcing are also gaining popularity.

Grants, Debt, and equity are the three most common sources of capital. Grants are

sometimes program specific in nature and come with certain restriction. Different types

of debt instruments are also available for all types of entities. Through equity investment,

for-profits can raise capital by selling shares to investors. Alignment of investors’

expectation with that of the social mission is very important.

Social entrepreneurs are usually expected to report the impact they have created

to beneficiaries, investors, and partners. But social impact measurement should also be

seen as a tool to improve and verify the social enterprise model. Proper impact

measurement tools can help them ensure that they are on the right path. Assessment

should be done to study how value creation occurs rather than to just showcase results.


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Though a right form of a legal and financial structure is highly essential for a

successful social enterprise, it is the impact and the outcome of a social enterprise that

validates the underlying model and hence it is the most useful dimension to consider while

evaluating a social enterprise. Efficient resource allocation, making a stronger case to the

stakeholders, and identifying the organization with the industry and the proposed theory

of change are some positive outcomes that can arise out of measuring social impact in a

proper way.

Defining an accurate social value proposition, identifying metrics and parameters

that can be measured to quantify social value and monetizing the value of the social

indicators are the three basic steps in social impact assessment.

Role of Innovation and creativity

Entrepreneurship, in general, is about innovation and innovation is more of a social

or an economic concept. In today's scenario of social entrepreneurship, there is a free

exchange of values and ideas between nonprofit, government, and business sectors and

the boundaries between these sectors have blurred. This has raised the bar in terms of

the expectations out of social enterprises, and hence there is a need to adopt holistic and

innovative ways to create products that are efficient, high on novelty and can transform

an existing domain into a new favorable one.

Innovation, in itself, is comprised of four elements viz. the process of innovating

or generating a novel idea, the invention itself, the diffusion of the innovation and the

value created by the innovation. The final element, when seen as a social value, is the

core of social entrepreneurship. For innovation to occur, nonlinear or disruptive thinking

is required and creativity is nothing but lateral thinking coupled with novelty and newness.


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Creativity is the exploring new thoughts and conceiving new ideas whereas

Innovation is about bringing life to those ideas and designing a measurable solution out of

those ideas. Creativity is about ideation and inspiration, and it is a precursor to

innovation, which is more about implementation and incubation.

Relevance of Risk and concept of scale

Entrepreneurship is characterized by risk. Financial risk, operational risk,

environmental risk, political risk, competitive risk, economic risk and technology risk are

common to all entrepreneurs. But the risk of expectation mismatch or widening of the gap

between expectations and deliverables is very high in case of social entrepreneurship.

Often backed by passionate stories and emotional outreach, the optimism and hype

surrounding a social enterprise is so high that the ramifications of its failure are also

extreme in nature.

It is always better for any entrepreneur to start small enough to prove the theory

of change and then gradually scale if required. Though the success may weigh more at a

bigger scale, the probability of succeeding, however, is naturally lower. By “going to

scale”, optimized and larger social impact are possible only if the theory of change could

be replicated and adapted in accordance with the context, nature of people and the

ecosystem at the bigger level. It is not about just replication, but a whole new process

which involves studying the differences and customizing the existing model. It is also

important that we neither underestimate the risks no overstate the benefits. While it is

great if the “going to approach” succeeds, it is not appropriate to judge the success or

failure of a social enterprise based on its scale. After all, these enterprises are born out

of social innovations that are specifically targeted at a target population and it would be

highly unfair to always expect it to be capable of replication.


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Aditya Rajagopalan – Final Reflection and Integration Paper

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Final Reflection and Integration Paper

Corporate Social Responsibility

“Corporate Social Responsibility is the continuing commitment by business to

behave ethically and contribute to economic development while improving the quality of

life of the workforce and their families as well as of the local community and society at

large” - World Business Council for Sustainable Development

In terms of the relationship between corporates, the government, and the society,

there has been a traditional disconnect and the three entities have been predominantly

operating in isolation. Businesses were seen as pitted against the society. Corporates were

viewing corporate social responsibility (CSR) more as a cost for doing business as their

products and services have an impact on the environment. However, businesses can’t exist

in isolation and focus on profit maximization.

There has to be a transformation of the relationship between the businesses and

the society from a more generic and a philanthropic one to a strategic partnership, where

the joint interests of all the stakeholders are taken care of. Companies are slowly starting

to understand the fact that CSR practices have to move away from charity related work

towards strategic initiatives, so as to gain competitive advantage and ensure continued

relevance and existence.

Generally speaking, some of the main reasons why corporates engage in CSR are a

moral appeal, sustainability, license to operate and reputation of the firm. But t he current

business environment is going through rapid changes due to increased competition and

new business practices that are emerging out of globalization.


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Companies are evolving in a way to effectively compete in today's competitive

environment that emphasizes the interdependence of business and society. Rather than

just focusing on the bottom line, the focus needs to shift towards the triple bottom line

of economic, social and environmental performance. The focus should shift from

responsive CSR, which is focusing on social issues that are not significantly related to a

company’s operations, to strategic CSR.

Strategic Corporate Social Responsibility

A generic rationale behind CSR that is not linked to the strategy of the company

neither creates a lasting social impact nor helps the firm in distinguishing and

strengthening its position amongst the competition. A business depends on the society and

government to be successful and productive. Good governance, clear regulations and a

healthy society create an expanding environment for a business. Similarly, by creating

jobs, wealth and promoting innovation, companies and businesses play an irreplaceable

role in the development of societies.

Thus, it is important to identify the points of intersection between a company and

society. There are two approaches to identify these points of interaction and map the

social opportunities. The first approach is to look inside out and identify the impacts

caused by the company’s value chain on the environment and society. By understanding

the consequences of the company’s value chain, companies can try to find out solutions

to such problems in the ordinary course of business. By doing so, a company not creates a

social impact, but also protects itself from future legal issues and sets a benchmark for

the competition. By constantly plugging the gaps in the inside out linkages, a company

can preempt its competitors and stay relevant.


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The second approach would be to look at the outside in linkages. This approach

focusses on the competitive context in which a company operates and the social issues

and the shortcomings in the external environment. These limitations can significantly

impact a company’s performance. Competitive context can broadly be divided into four

areas:

Factor conditions or business inputs: These refer to the availability of specialized and

sophisticated inputs like human capital, infrastructure, technology etc. that can aid in

increasing the productivity

Regulations governing the business environment: Presence of clear and elaborate local

policies and norms that promote businesses, encourage investments and influence

productivity in an open and fair manner.

The sophistication of demand: The size of the local market and the consumption

propensity of customers in the local market is a key to enhancing the region's

competitiveness. A sophisticated market drives the industry towards better quality and

innovative products, and often can also create a new market for future products and

services.

Supporting industries: Presence of sound related and supporting industries and suppliers

that can help in reducing costs, enhance responsiveness and aid in the better exchange of

information and ideas.

By choosing a social issue that falls under one of the four categories described

above, a company not only creates a social impact but can also leverage benefits out of

its own corporate social agenda. By integrating both the approaches, i.e. working on value

chain developments through innovations and addressing inefficiencies and constraints in

the competitive context, the impact of CSR would be even more signifi cant.


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By adding a social dimension to the value proposition, a company can weave a

corporate strategy where corporate social responsibility seamlessly blends with regular

business activity. Companies could even engage in corporate philanthropy that are

strategic in nature. Corporate philanthropy could help in improving the competitive

context in a given area. By initiating such philanthropy, a company indirectly forces its

competitors to follow suit and thus share the costs. If the corporate philanthropy is

uniquely aligned with a company’s strategy, the company will benefit from the enhanced

context in a better way.

In order to maximize the value of corporate philanthropy, it is important to identify

an effective partner organization who can make the best use of grant and create maximum

social impact. Subsequently, the partner organization could be promoted so that

additional funding could be obtained, thereby eliminating the problem of social free riding

and creating an effective way of resource allocation.

But the role of corporate doesn't end with giving away funds. They should work

closely with the partner organizations to improve their performance. By providing

expertise, research ideas, infrastructure and other forms of support, the corporates can

extract the maximum social return on the grantee’s total budget.

From being defensive and not accepting social responsibility to being compliant

and accepting CSR as a cost of doing business, and then now looking at CSR in a strategic

angle, companies have come a long way along with the evolution of CSR. Going forward,

CSR is bound to develop as a mandatory identity for all corporates, promoting and

enhancing social and economic value creation through collective efforts.


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Social Entrepreneurship

Social entrepreneurship can be interpreted as a measure to apply practical,

innovative and sustainable approaches to benefit the society as a whole. The measure

would give adequate importance to the downtrodden and sections of the society that are

marginalized. It can be looked at as an approach to solving economic and social problems

which cut across sectors and disciplines. This approach that a social entrepreneur takes,

emerge to be distinct and this sets himself apart from the crowd of other entrepreneurs.

Social entrepreneurs possess an innate capability to strongly pursue an identified

opportunity and turn it into a favorable outcome for the society. They have a driving

passion for making it happen and in the process they also look at the practicality of the

model formulated. They can be called change drivers; they don't wait for something to

happen. A social entrepreneur is a pragmatic visionary whose primary focus is

social/ecological value creation and he tries to optimize it through financial value

creation. The enormity of the societal and environmental problems, failure of open market

policies and public institutions, lack of political will, corruption, and the inability of the

government to solve such problems have resulted in bringing social entrepreneurship to

the limelight in recent history.

Innovation is an important factor of social entrepreneurship. At the same time, the

ability to use the newly found approaches and its impact is also crucial. The difference

between regular entrepreneurs and social entrepreneurs is the way they define and

articulate success. They measure success in different ways. For regular entrepreneurs

financial success and profits define success. Whereas for social entrepreneurs the social

impact that they bring about constitute success. Quantifying the impact in the case of

social entrepreneurship is difficult as it is abstract and it varies across ventures and hence

is not comparable easily.


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There is philanthropy on one end, where philanthropists focus solely on social

return. There is the sustainable investment on the opposite end, where investors focus on

a financial return that is appropriate to their risk appetite. Social Entrepreneurs, in this

new age of social innovation, are trying to tilt the balance towards the center where the

main goal or objective is to invest in social value based impact investments.

Though a right form of a legal and financial structure is highly essential for a

successful social enterprise, it is the impact and the outcome of a social enterprise that

validates the underlying model and hence it is the most useful dimension to consider while

evaluating a social enterprise. The choice of legal or financial structure for a social

enterprise is a key decision to be made. It is important to ensure that the vision of the

social enterprise is not lost such factors.

Social Value

The underpinning factor for corporate social responsibility and social

entrepreneurship is social value. Economic value is more quantifiable whereas on the

other hand measuring social value is difficult. There are many forms of social value and

there is no standardized way of comparing them. Companies have lately been promising

the triple bottom line approach. This is an approach which creates economic,

environmental and social value.

Can social value be looked at as a benefit to the society or an improvement that

has taken place in the society? The answer is a big ‘NO’. Even technology can be termed

as an improvement for the society but what value has it created for the underprivileged?

Hence such benefits and advancements cannot be said to create social value. Hence social

entrepreneurs and companies that take up corporate social responsibility movements

should exercise caution while defining and measuring social value.


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Challenging the status quo and creating something new that will alter the social

continuum of the society is what social value is all about. Some instances of social value

creation can be the increase in the literacy rate in a region, increase the life expectancy

rate by improving health care, reduction in the number of infant deaths, reduction of the

number of people below the poverty line etc. The commonality among the above-stated

instances is that there is value creation in the way of living and the status of the people.

Who should be the focus for creating value? How do we identify our target group?

Something that is beneficial for one community need not necessarily be beneficial for the

other. There is tension in the air between companies and its investors as the investors

need a quantifiable measure for social value. This should, hopefully, lead to discoveries

that might bring about standardized measures for social value.

Going to Scale

What can be an appropriate measurement of entrepreneurship? The scale is

definitely not a right measure to judge social entrepreneurship. The context in which a

venture has been established is important. This context varies drastically when the frame

of reference fixed is social value. In the case of social entrepreneurship what works out

well for one community might not necessarily work out well for others too and hence

scaling to various other domains and communities might not provide the desired results.

In a customary view, companies grow much faster and realize profits sooner by making its

business scalable. Scaling, however, makes no sense when there is no unmet demand or

need for a product in a particular region. Therefore, the scale is not an appropriate

measure to judge the level of success of social entrepreneurship. For a social

entrepreneurial venture to be successful, efficient use of the limited available resources

and the desired social impact on the society makes much more sense.


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The risk is inevitable in any entrepreneurial venture. There are many types of risks

like financial risk, environmental risk, political risk, the risk that arises out of competitive

rivalry etc. Measurement minimization of such risks can also be looked at as a measure of

social entrepreneurship. In the case of social entrepreneurship, the risk of expectation

mismatch or widening of the gap between expectations and deliverables is very high.

Social entrepreneurs should prudently analyze all such caveats before starting to scale an

entrepreneurial venture.

While it is great if the “going to approach” succeeds, it is not appropriate to judge

the success or failure of a social enterprise based on its scale. After all, these enterprises

are born out of social innovations that are specifically targeted at a target population and

it would be highly unfair to always expect it to be capable of replication.

Characteristics of a Social Entrepreneur

It is quoted that “Give a man a fish and you feed him for a day; teach a man to

fish, and you feed him for a lifetime.” A social entrepreneur may not look at the man or

the fish, but he might rather analyze the inherent problem and explore the situation as

to what prevented the man from learning to fish and who are the other men who can’t

fish? Wealth is a measure of success for entrepreneurs while for social entrepreneurs

wealth is only a means to an end, the end being social change. They establish a business

with the goal of solving social problems. Their contributions to society embrace bringing

large-scale social development.

Transformative Action Institute (TAI) have been teaching the curriculum, which

inculcates the skills and competencies that are critical for becoming a social

entrepreneur. Everyone can and should aspire to be a social entrepreneur and the

following are the characteristics, which can be developed with practice.


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Leadership: People can take initiatives and actions towards resolving problems

instead of complaining about what went wrong.

Grit: A complete commitment and relentless drive to accomplish goals with the

blend of passion, perseverance, and hard work.

Empathy: People should imagine things from other’s perspective, which will enable

them to better understand the needs of the people whom they serve.

Optimism: This deals with developing a strong sense of self-efficacy to achieve a

bold vision, if people have the belief that that have the control to change their

circumstances.

Social Intelligence: This involves strong relationship building qualities and having a

good emotional connect with others.

Creativity: People should start seeing things from an unconventional perspective

and must be keen on exploring opportunities.

Resilience during adversity: Obstacles, Challenges, and failures should never hinder

their progress and they view failures as a stepping stone to success and as a

valuable feedback.

It could also be interesting to see how the Big 5 theory of personality (OCEAN)

namely, openness, conscientiousness, extraversion, agreeableness and neuroticism can be

extrapolated to measure the personality traits of a social entrepreneur namely. In general,

it seems that agreeableness and openness exert a positive influence on social vision and

innovation. Social entrepreneurs are also known for their knack to enable, enact and

envisage transformational changes, despite facing risks and having inadequate resources.

They tend to be focused, opportunistic, passionate, resourceful, persuasive and self -

believing leaders. Thus by focusing on the above behavioral characteristics, one can very

well go on to become a social entrepreneur.


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Though they seem to share certain behavioral characteristics with the commercial

entrepreneurs such as the ability to detect opportunities, drive to innovate and willingness

to bear the risk, the key difference, however, is their socio-moral motivation to engage

in social activities. They have the ability to formulate ideas with an eye to large scale

that will have a positive impact on society and economic sustainability. They strike a

balance between economic and societal value creation through their creativity and

proficiency. Their success is accomplished in a long haul when there is a long-term

structural change to the cause that is being addressed. In a nutshell, a strong ethical and

social impetus combined with a willingness to break free of established structure to find

innovative solutions would make a social entrepreneur successful.


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Indego Africa Case Study

Indego Africa (IA), founded by the father-son duo of Matt and Tom Mitro, is a

nonprofit social enterprise operating in Rwanda to alleviate systematic poverty. Having

already proved its business model in Rwanda by providing skills and job access to women,

it has already begun to expand the model in Rwanda. The mission of Indego Africa has

been to make businesswomen in Rwanda self-dependent by imparting long-term skills and

empowering them economically. Its operating model has been to partner with co-

operatives and sells contemporary products created by women artisans through high-end

retailers. Indego Africa believes that economically empowered women could bring

development to the society.

While Indego Africa in itself follows a nonprofit model, it partners with

cooperatives that are independent for-profit businesses employing world class women

artisans in Rwanda. Owing to this hybrid model, it generates revenues from both product

sales of cooperatives and from individual donations and other grants. Over the years,

product sales and donations averaged 25 percent and 75 percent respectively. The hybrid

model is advantageous and suitable for Indego Africa because donations and grants have

compensated for the decline in revenue from product sales if any.

Indego Africa's approach to achieving their mission is backed by their two key

strategies, i.e. guiding strategy, and retail strategy. By following best practices and

employing a high standard of transparency, Indego Africa can achieve better productivity

and visibility. By adhering to strict financial controls and ethics, Indego Africa can attract

better funding from corporate donors. By outsourcing the entire supply chain, they have

focused on a lean structure and avoided taking on additional unused excess capacity. This

gives them the flexibility to scale operations if required.


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As part of Indego Africa’s strategic model, its thrust on sustainability is worthy of

praise. Keeping long-term goals in mind, the emphasis on harnessing local talent and

providing training programs for the locals would come in handy during expansion. The

development programs targeted at the individuals impart necessary job skills while the

programs aimed at the co-operatives are intended to make the co-operatives profitable

and self-reliant.

Women folk of Rwanda would be an obvious stakeholder whom Indego Africa should

engage. It is very clear that apart from being economically backward, a host of other

issues like lack of health care, the prevalence of HIV, malnourishment, and psychological

trauma have been affecting the Rwanda community. Providing skill based training and

giving access to markets would definitely improve the economic condition. But it is unclear

whether the economic development would translate into social development in the near

future. Hence, it is important to understand from the beneficiaries, their most pressing

need.

Next, Indego Africa should engage the educational institutes and Rwanda’s

university students who play the important role of educating these women. These students

live in the same country, understand the culture in a better way and serve as the vital

link between the community and Indego Africa. This would help them in clearly defining

the training program, its intended benefits and also measuring the progress of the tra ining

program.

Indego Africa should also engage the government and the Rwandan public as a

stakeholder. The government is a stakeholder not just because of the grants and aid it

provides, but because of the constructive role it has to play.


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By gaining the support of the government and the public, Indego Africa can create

a better and a wider social impact. Also, for the model to be successfully scaled across

the country, the government's help would be very much needed in terms of favorable

policies and regulations. Finally, as 75% of the funding is through donations, Indego Africa

should also engage its donors.

With regards to tracking outcomes over time, Indego Africa should first target the

business results of its partner cooperatives. The success of its social mission is heavily

dependent on the success of its for-profit partners. Indego Africa and its co-operative

partners access the market through retailers on a strict fair trade basis and even the order

fulfillment process is outsourced to Amazon. There should be close monitoring of sales

pattern and order fulfillment data to get the pulse of the market trend. This would help

Indego Africa in staying ahead of competitors and adjust according to market demands.

Also, insights from retail partners can be used to customize products and to market the

products in a better way. Quality controls and production efficiency of the partner co-

operatives are also worthy enough of monitoring so that maximum economic output is

extracted.

Secondly, the effectiveness of the education program needs to be monitored. Since

considerable funds are being spent for training purposes, it would be useful to understand

how exactly the training helping these women in their day to day business. Data and

feedback about the training program could be used to review the program and modify it

accordingly to suit the needs. Apart from meeting business needs, it is important that the

education provided reaches more people and could be used for improving the living

conditions of the people.


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Finally, it is extremely important to measure the social outcomes out of these

economic activities. Facts show that the daily income of artesian women has increased up

to $2 a day. However, the intention is to use the additional income in a productive way

to improve the status of healthcare, education, housing and hunger. Hence, Indego Africa

should observe and keep track of how the additional income is being spent. Indego Africa

must also track financial security, participation rate and other indicators of quality of life

to see if the empowerment of women leads to empowerment of the entire society.

Indego Africa's baseline approach to measuring social impact is focused on personal

security, education, IT skills and fair trade. The fact that it has a scientifically valid social

impact assessment tool, which is used to access the efficacy of the program, in itself is a

big strength. The instrument or the questionnaire seems to address all major issues, but

it looks like qualitative indicators like self -confidence and perception are not considered.

Given that the history of genocide and trust deficit in the society, it is very important to

ascertain whether any progress is made in this direction.

While the questionnaire does a good job of capturing information from the

beneficiaries, one on one interviews with these women would be helpful in learning more

about the subtle behavioral aspects of their overall development. Also, the scope of the

assessment should be widened to include other stakeholders like the trainers, co-

operative partners and other people who are interact with the beneficiaries in a regular

manner. This would not only help in validating the data provided by the women but could

also throw light on different perspectives about the overall program. Given that Indego

Africa is looking to scale its presence throughout the country, it is better if the target

respondents are chosen in a way that closely resembles the entire society and

demonstrates external validity. The results of the assessment, however, should be

adjusted to eliminate the effects of other externalities, both positive and negative.


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Indego Africa faces internal challenges and incurs significant costs in terms of

money and human resources in conducting the social impact assessment process. To

overcome the issue of cost, it could consider partnering with like-minded market research

consulting firms. Independent Pro Bono consultants and universities could also be

approached for support. For example, graduate students could work on impact assessment

as part of their empirical or research work. Many institutes would be happy to be

associated with a good cause and outsourcing the assessment process would also bring

more credibility to it.

When it comes to the point of tackling comfort with the questionnaire, it is very

important to build trust with the women right from the beginning. Through workshops and

training programs, women should be made aware of the advantages of an accurate social

impact assessment mechanism. They should be made to feel that by providing relevant

data, they are helping themselves. At the same time, the assessment should be designed

in a way that appeals to all the participants irrespective of their educational and cultural

background.

Being a nonprofit organization that prides itself on being transparent and ethical,

it is only fair that Indego Africa puts constant effort to overcome the challenges faced in

its social impact measurement. As we have seen in this case, a successful combination of

business-minded approach to a social problem has yielded desirable results. As social

entrepreneurs continue to innovate and corporates adopt the idea of strategic corporate

social responsibility, there is a huge potential for the community to benefit from the

shared value of economic and social bottom line. Going forward, it would be interesting

to see how Indego Africa scales its model and achieves the final objective of expanding to

other places and countries.


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Aditya Rajagopalan – Class Discussion Worksheet

1

PA5529: Class Discussion Worksheet

1) What are three of the most important themes that weave through the readings? Why?

Corporate Social Responsibility: Society no longer tolerates companies that damage the

environment or don't care about worker's rights and conditions. Companies are held to a

higher social standard and according to Michael Porter, this has been the key reason behind

the rise of CSR. Companies have started to look at social issues which were previous not

considered as a part of the business responsibility. Business & competition are no longer a

zero sum game.

Defining Social Entrepreneurship: What exactly constitutes social entrepreneurship is

still very much debatable. Porter and Krammer, in their research article, argue that a social

context creates an opportunity that triggers a set of personal characteristics in a social

entrepreneur. Many a times, social entrepreneurs’ personal experience, education, work

experiences, and hobbies inspire them. Just as entrepreneurs change the face of business,

social entrepreneurs act as the change agents for society. A behavioral approach to defining

social entrepreneurship suggests that the action, not the outcome, of a social entrepreneur,

matters the most. In my personal opinion, anyone who even tries to change any unfair

equilibrium in the society is a social entrepreneur.

Scaling: Does a social entrepreneurial venture have to go to scale in order to be

considered social entrepreneurship? Is scale a correct measure of entrepreneurship? These

are pertinent questions for every social entrepreneur. Scale needs to be defined in terms

of the context. Context varies drastically when the frame of reference fixed is social value.

In some cases scale could be geographical while in some it could mean depth of operations.

In the case of social entrepreneurship what works out well for a particular segment might

not necessarily work out well for others. Realizing this fact is very important before we talk

about scaling an enterprise. This was also clearly evident in Finding The Way article.


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2) What are their implications for effective strategy and management?

Companies are evolving in a way to effectively compete in today's competitive

environment that emphasizes the interdependence of business and society. Social issues

can no longer be left behind as the responsibility of governments and Non-profits alone.

Earlier, businesses were focused mainly on the bottom line. Now, rather than just focusing

on the bottom line, the focus needs to shift towards the triple bottom line of economic,

social and environmental performance. In today’s world of strategy and management, the

following things are paramount for any business or social enterprise.

Make the social themes an integral part of the company's fabric

Be strategic with your financial, human capital and resources

Communicate both internally and externally regarding your strategy, efforts and results

The evolution of the idea of social value is significant and is increasingly becoming a

part of strategy and management. The underpinning factor for corporate social

responsibility and social entrepreneurship is social value. These concepts are dynamically

changing and are all interconnected with strategy and decision making.

The current business environment is going through rapid changes due to increased

competition and new business practices that are emerging out of globalization. Owing to

globalization and readily available sophisticated information, there has been a tremendous

change in the way society and business have been functioning. Through digital and social

media, people have quick and easy access to information about anything and everything

that they would like to know. The society has become more inclusive in terms of caring for

the environment and the underprivileged. With growing awareness among the people, there

has also been an increase in the expectations from businesses in terms of their

accountability and contribution to the community and environment. Thus, the themes

discussed above have far stretching implications on leaders and their management team.


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3) What does it mean for a corporation to practice "strategic corporate social

responsibility”? What are the key elements central to an effective approach to CSR?

Michael Porter and Mark Krammer argue that CSR can much more than a cost or a

charitable deed and companies can develop a competitive advantage by aligning their CSR

activities with the business. The fact that both the company and the community are

interdependent makes it easier to understand that the relationships a company builds with

the community can turn out to be a strategic partnership. There has to be a transformation

of the relationship between the businesses and the society from a more generic and a

philanthropic one to a strategic partnership, where the joint interests of all the stakeholders

are taken care of.

Simon Zadek also explains how a company can take a strategic position, wherein it treats

a societal issue and CSR as an integral part of business strategy, in contrast to a defensive

position that shies away from taking responsibility for societal issues. In making a transition

from a defensive approach to a strategic one, organizations may go through the stages of

“compliance”, where companies accept CSR as a cost of doing business and be compliant

to norms, and “managerial”, where managers take responsibility for mitigation of the

problem.

Thus, it is important to identify the points of intersection between a company and

society. By finding out the ways in which the organization affects the community and the

various limitations that are imposed by the society on a firm’s competitiveness, companies

can choose to address social issues that add a social dimension to its value proposition.

Thus, a company not only creates a social impact but can also leverage benefits out of its

own corporate social agenda. By moving along the spectrum from responsive CSR to

strategic CSR, a company can gain the maximum competitive advantage by weaving a

corporate strategy where social responsibility blends with regular business activity.


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4) Finding The Way: Case Discussion

Firstly the organization as a whole has to sit down and create a structured program

document that codifies all the processes followed so far. The organization should have a clear

and well-defined mission statement. How exactly is it differentiated from the other non-profits

working for the same cause? Knowing this would help the organization fine tune its process and

modify accordingly. Is there anything that is strikingly similar among the twenty-odd felons who

have been rehabilitated? If yes, that should be the organization's basis for targeting and

selecting future convicted felons. By answering the two questions above, we could arrive at a

well-positioned mission statement and clear target beneficiaries.

The present strength of the organization is good enough to serve only 12 to 15 young men.

The first focus would be to add members who could be mentored by the existing team. Slowly,

the organization can think of expanding the support to more convicted felons. The organization

has been operating on a limited budget of $235,000 that too entirely based on donations. This

is not a sustainable model for the long-term. Efforts must be made to involve community

members other than members of the church. Can we involve companies who could be potential

employers of these felons? The team can work on creating customized training programs that

could benefit the participating companies.

The idea of scaling this program nationwide could turn out to be disastrous. The grant of

500,000 would be sufficient enough to expand the services in Kansas City alone. The idea of

serving convicted felons in all states is impossible. There is still a lot of ground to be covered

in Kansas City itself as the organization is just three years old. The organization should also

exercise caution while accepting grants. The current board is comprised of like-minded people

and by accepting grants, there should not be any compromise on authority and decision making.

To conclude, the organization should certainly scale, but in terms of depth and quality of

operations in Kansas City and not in terms of geographical area.

Social Entrpreneurship

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