Social Entrepreneurship as a Norm?

Abstract

Is the act of entrepreneurship itself a social good? This simple and seemingly easy question goes to the heart of the debate of this issue's Point-Counter Point articles but the answer appears not to be so straightforward. The recently released 2015/16 Global Report from the Global Entrepreneurship Monitor (GEM) provides evidence of the breadth, power, and positives of entrepreneurship: increasing participation rates across the globe by individuals of varied backgrounds (Kelley et al., 2016). The GEM report shows that individuals are starting businesses, creating jobs, and building entrepreneurship ecosystems with positive impacts on their communities. On the other hand, some research contends that entrepreneurial activities need to be more closely scrutinized for their negative externalities (Beaver and Jennings, 2005; Khan et al., 2007; Zahra and Wright, 2016). The argument here is that all entrepreneurs have to go beyond providing an economic return and be responsible for a triple bottom line. Suddenly, the simple answer to the opening question is not so simple. I have often thought of the term ‘social entrepreneurship’ as redundant. Entrepreneurs take various forms, but generally speaking they invent or innovate and then execute in the market. They can be small and local, large and global, or somewhere in between, but their function is to match their goods or services to a market segment and provide that segment with value. As such, by their existence and actions they deliver positive value to society. They treat their customers right, build a good business and do no harm. On the other hand, research has noted that entrepreneurship may also have a dark side, as illustrated by Baumol's classic work highlighting unproductive and destructive entrepreneurship (1990). Written to advocate policy change, Baumol's argument illuminated the potential ills of entrepreneurial activity as typified by organized crime and other illegal operators As entrepreneurs focused on the environment and mission-driven causes have come of age over the past two decades, the relationship between ‘social’ and ‘entrepreneurship’ has become less clear. Classifying entrepreneurs as either job creating, innovators (positive) or Ponzi schemers, scam artists, or organized criminals (negative) trivializes the argument. These two poles anchor opposite side of the spectrum and while this simplification may be clear and sufficient for practitioners, it is less so for scholars. The contribution of entrepreneurship to society is and always will be a net positive (Reagan, 1985) but what are the social obligations, if any, for entrepreneurs? The answer to this and the opening question are more nuanced than one might see on the surface. The authors of this Point-Counter Point delve more deeply for us. Entrepreneurs that focus primarily on developing for-profit organization do great things for the world. Is that enough? Is it enough for them to provide economic value and then supplement it with good corporate citizenry? Or does the social aspect of entrepreneurship need to be part of the business at every turn? Do all organizations need to be a hybrid? Does every entrepreneur need to have a social mission intertwined into the very fabric of the business? In their entry in this two article series, Zahra and Wright argue that scholars need to re-examine and redefine the social role of entrepreneurship around five pillars that argue for a balance of the financial, social, and environmental outcomes of all entrepreneurial activity (2016). They rely upon arguments from policymakers, world leaders and billionaire entrepreneurs, who advocate for a greater awareness of the potential downside to entrepreneurial activity. They surmise that scholars need to consider an entrepreneurial canvas focused on hybrid organizations pursuing the blended value that comes from corporate social responsibility and bottom-of-the-pyramid strategies. In conjunction, McMullen and Warnick argue that the criticism of ‘typical and classic’ entrepreneurship may have gone too far. These authors posit that researchers and practitioners should not try to set up norms or legal obligations that require entrepreneurs to create blended value or hybrid organizations (2016). They assert that the social component of entrepreneurship should be a guideline or aspirational ideal instead of a legislated obligation. In sum, while there is ample research on social entrepreneurship and plenty of work that incorporates non-economic factors and variables, the interplay between economic and non-economic forms of entrepreneurship is not clear. Is the singular act of entrepreneuraship in and of itself a social good? Or must we insist that all entrepreneurs bring blended value? It seems that while we as an academy have been discussing the merits of each, we have mostly been doing so in parallel tracks. This Point-CounterPoint is designed to merge the conversations in order to further our understanding. Andrew Corbett Consulting Editor