Social entrepreneurship originates from various contexts, so it has no simple definition. There’s also quite some room for interpretation in the professional literature. One of the main differences between regular entrepreneurship and social entrepreneurship lies in the relative priority given to the creation of social welfare, alongside economic wealth creation. Social enterprises are enterprises like any other, but differ in their motivation. This arises from a real social problem.
In other words, it concerns the integration of social objectives into business practice. In this context, it is useful to reflect for a moment on Shared Value Creation, a concept introduced in 2011 by the famous economists Michael Porter and Mark Kramer in a Harvard Business Review article. Shared Value Creation is closely related and inherent to social entrepreneurship.
In their article, the authors make an analysis of current capitalism and the free market mechanism. They assert that the capitalist system is under pressure, because it’s part of the cause of the social, environment-related and economic crisis. Porter and Kramer are abundantly clear: companies are largely to blame for the current problems by remaining for too long locked in an old-fashioned, cramped approach to value creation, characterised by short-term thinking, little consideration for environmental aspects, challenges like the depletion of raw materials, the economic limitations of the community where they produce and sell, the reliability, soundness and ethical standards of their suppliers, etc.
With a Shared Value Creation approach, the economic success of an organisation is once again hooked up to social progress. Porter and Kramer believe that Shared Value can profoundly reshape the capitalist system and its relationship to society, and trigger a wave of innovation and productivity growth, because it responds to human needs and hence opens up new markets. It is hard to overestimate societal needs: health issues, housing problems, ageing, environment and climate change – and these all offer economic opportunities. According to the authors, the business community has overlooked these opportunities for far too long.
But they do realise that the concept is still in its infancy. After all, realising Shared Value requires different competences and expertise from managers and business leaders, government and social organisations. It comes down to products, goods and services being more aimed at real social needs. So, for example, large food concerns would then concentrate less on quantity and more consumption, and instead focus on the fundamental need for better and healthier food products. By responding to these needs, innovative products, services and business models are almost inevitably created, which also benefit society and thus create shared value.
Shared value naturally concerns internal processes as well. For instance, an organisation that invests in a safe, healthy and motivating work organisation, with much attention for training and development of employees, will benefit from this itself (through higher productivity, less staff turnover, less absenteeism), but the employees themselves and their immediate environment will also be positively influenced. The same reasoning applies to energy-efficient and less environmentally-damaging processes: these lead to a cost reduction for the company itself, but also contribute to a more environmentally-friendly society.