QIP on “Transition in Concepts and Practices in Commerce and

Management”14 to 17 March 2015Dept of Commerce,

Christ University, Bangalore

SESSION 1 : 9.30 AM : MARCH 16, 2015

SOCIAL ENTREPRENEURSHIP

PROF CHOWDARI PRASAD

IFIM BUSINESS SCHOOL, BANGALORE

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ip2Economic Times :

Bangalore11th March 2015 : Page 14 Think Innovation, Think Switzerland – Year of

Swiss Innovation in India, 2015-16

New Wave of Social Entrepreneurship

Social Innovation is gaining momentum the world over and Swissnex India is glad to be the bridge that brings it to India in a big way. As a Swiss Government initiative that makes Swiss start-ups “India-ready”, swissnex India brought in two unique Swiss Startups in the month of October 2014, namely FairFundr and Crowdguard.

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Page 5, ET Mar 11, 2015 The Focus on the Small with the Biggest Bang in the Budget

(of Govt of India on Feb 28, 2015)

Kudos to the Prime Minister and the Finance Minister

For the announcement of the Micro Units Development and Refinance Agency (MUDRA)

6 crore entrepreneurs will be grateful for this path-breaking initiative

An initial corpus of Rs. 20,000 crores

Responsible for regulating and refinancing all Micro Finance Initiatives which are in the business of lending to micro / small business entities

Would partner with state level / regional level coordinators to provide finance to Last Mile Financier of Small / micro enterprises. Budget also provides Rs. 3,000 crores for the creation of Credit Guarantee corpus for guaranteeing loans to this sector (Ref: Press Note No. 4 of DFS /MoF)

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ip4Origin of

“Entrepreneurship” In French Economics as early as the 17th

and 18th Centuries Meaning : Someone who ‘undertakes’; A significant project or activity Identifies venturesome individuals who

stimulated economic progress by finding new and better ways of doing things

Coined by French Economist Jean Baptise Say

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ip5Origin of

Entrepreneurship 19th Century literature says The entrepreneur shifts economic

resources out of an area of lower and into an area of higher productivity and greater yield

Entrepreneurs create value 20th Century : Joseph Schumpeter

described entrepreneurs as the innovators who drive the ‘creative destructive’ process of capitalism

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ip6“People Matters” 5th Year

Anniversary : Feb 2015 How did the word “Entrepreneur” originate?

13th Century : The word comes from French verb ‘entrependre’, meaning “to do something” or ‘to undertake’

16th Century : The noun entrepreneur had emerged to refer to someone who undertakes a business venture

1730 : The first academic usage of the term by economist Richard Cantillon, who defined it as someone who undertakes a business venture with no guarantee of profits

1800s : Economist Jean Baptiste Say, used it to refer to individuals who create value in an economy by moving resources out of areas of low productivity and into areas of high productivity and greater yield

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People Matters contd…..2 Late 1800s : Economist Alfred Marshall emphasized the

importance of entrepreneurship by tying the resource component (from Say) and management component (from JS Mill) together. Marshall claims that four primary factors are necessary for production: Land, Labour, Capital and Organisation

Early 20th Century: According to Joseph Schumpeter, an entrepreneur is willing and able to convert a new idea or invention to a successful invention. In his words, “the function of entrepreneurs is to reform or revolutionalise the pattern of production

Mid-20th Century: Profitability, new products, etc were introduced

Late 20th Century: Concept of Social Entrepreneur (SE) and intrapreneur gain ground. SEs are the reformers and revolutionaries described by Schumpeter, but with a social mission. They make fundamental changes in the way things are done in the social sector. Intrapreneurship on the other hand, refers to entrepreneurial ventures within the organization.

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ip8What Is Entrepreneurship?

Process of creating value by bringing together a

unique package of resources to exploit an

opportunity

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The New Buzzword:Social Entrepreneurship

So, is entrepreneurship basically entrepreneurship regardless of the context?

Or is “social entrepreneurship” something truly different?

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What Is Social Entrepreneurship?

Nonprofits making money?

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Social Entrepreneurship Defined

A social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change….rather than bringing a concept to market to address a consumer problem, social entrepreneurs attempt to bring a concept to market to address a public problem.

(Alex Nicholls, Oxford University’s Skoll Centre)

Social entrepreneurship takes many forms, but at it’s core is characterized by a leaders’ sense of social consciousness and a desire to make a positive impact on society

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What Is Social Entrepreneurship?

“Nonprofits” making money

‘For-profits’ doing things to show they are not evil

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What Is Social Entrepreneurship?

Nonprofits making money

For-profits doing things to show they are not evil

Process of creating value by bringing together a unique package of

resources to exploit an opportunity, in pursuit of high social returns

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The only big difference between commercial and social

entrepreneurship:

Denomination of the returns

Social and commercial entrepreneurship have

most of the same characteristics

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The Process of Social Entrepreneurship

1. Find an opportunity

2. Develop a business concept

3. Figure out what success means and how to measure it

4. Acquire the right resources

5. Launch and grow

6. Attain goals

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The Main Difficulty: Measurement

What is profit?How do we count it?What is “social return on

investment” for venture philanthropists?

Can we compare investments?

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Three characteristics

Social entrepreneurship meets needs unmet by commercial markets and (usually) the government

Social entrepreneurship is motivated by social benefit

Successful social entrepreneurship usually works with, not against, markets

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Forces on Social Entrepreneurship

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 entrepreneurshipprocess 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 entrepreneurshipprocess begins

External forces

Internal forces

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Social Entrepreneurs “Look” Like Any Other Kind of Entrepreneur

Innovativeness

Education and experience

Achievement orientation

Independence

Sense of control over destiny

Low risk aversion

Tolerance for ambiguity

Entrepreneurialorientation

Community awarenessAnd social concern

Socially-entrepreneurialorientation

Innate characteristics

Innovativeness

Education and experience

Achievement orientation

Independence

Sense of control over destiny

Low risk aversion

Tolerance for ambiguity

Entrepreneurialorientation

Community awarenessAnd social concern

Socially-entrepreneurialorientation

Innate characteristics

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Risk + Innovation

High risk aversion

Low risk aversion

Highly-innovative

Dreamer Entrepreneur

Not innovative Stuck Gambler

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“Myths” about Social Entrepreneurship

Social entrepreneurs are anti-business The difference between commercial and

social entrepreneurship is greed Social entrepreneurs are nonprofit managers Social entrepreneurs are born, not made Social entrepreneurs are misfits Social enterprises usually fail Social entrepreneurs love risk

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What Is a Nonprofit? Tax & regulatory definition: an organization that

Enjoys special tax status Faces a nondistribution constraint (profit=0)

Functional definition: an organization that forms to perform “public tasks”

environmental protection, social service provision perform tasks for which there is demand but no supply

from for-profits or governments religious activity, art museum

influence the direction of public policy political party, issue organization

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Main Challenges at Present

MoneyCompetitionDemonstrating effectivenessTechnologyTrustHuman resourcesPublic-sector relations

Ref. Salamon 2002

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Main Opportunities at Present

Demographic shiftsNew philanthropyHeightened awareness of

sectorIncreased social welfare

spending through sectorEntitlement expansionWelfare reform

Ref. Salamon 2002

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Main Trends at Present

Explosive growth Attention to marketing and management

movements Commercial ventures Development of umbrella organizations

and formal education Effectiveness in competing economically

and politically

Ref. Salamon 2002

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Main Risks at Present

Identity loss, “mission creep”

Industry concentrationPressure on managers for

resultsLoss of public trust

Ref. Salamon 2002

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Muhammad Yunus Was born in Chittagong, Bangladesh Educated at Dhaka University Was awarded a Fulbright Scholarship to study

Economics at Vanderbilt University, USA Became Head of the Economics Department at

Chittagong University in 1972 He is the founder and Managing Director of

Grameen Bank, both are winners of 2006 Nobel Prize

His three books are 1. Banker to the Poor 2. Creating a World without Poverty and 3. Building Social Business

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Some Prominent SE Examples Verghese Kurien of Amul, Anand, Gujarat

Vijay Mahajan of Basix, Hyderabad

Dr Parameswara Rao of Bhagavatula Charitable Trust, Visakhapatnam, Andhra Pradesh

Rippan Kapur of CRY, Mumbai

Muhammad Yunus of Grameen Bank, Bangladesh

Dr John Batch of Bolivia – FINCA and Village Banking

Sarath Babu of Food King, Chennai

Lizzat Papad of Mumbai

Suresh Hundre of Polyhydron in Belgaum, Karnataka

Ms Ela Bhat of SEWA in Ahmedabad

Dr Harish Hande of Bangalore in Solar Power industry

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Social Entrepreneurship Education Abroad & India

Skoll Centre for Social Entrepreneurship (Oxford Said BS)

Center for Advancement of SE (Faqua BS, Duke University)

Catherine B Reynold Program for SE (New York University)

Entrepreneurship in Social Sector Programs (Harvard BS)

Schwab Foundation for Ses (University of Geneva) and

SE Course Series (Stanford University)

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Indian School of Business, Hyderabad

Tata Institute of Social Sciences, Mumbai

XLRI, Jamshedpur

Entrepreneurship Development Institute, Ahmedabad