Challenges and Opportunities for Social and Community Enterprises - Essay Example

Challenges and opportunities for social and community enterprises Place Introduction Despite the possible consideration that entrepreneurship is simple earning money through selling things, Kuratko (2009) states that entrepreneurs are the “heroes of today’s marketplace”. Moreover, their efforts revitalize the economy of the countries creating more opportunities for people. In addition, entrepreneurship roots are in the ability of certain people to find new innovative ways in order to improve lives of others. In the present day context their innovation and creativity are aimed to build the multinational corporations with more new products and services assuming associated risks at the same time (Kuratko 2009). Such new generation of entrepreneurs uses new approaches from the commercial world and employ new types of technology to embrace the greater amount of social and environmental problems that occurred recently. Now enterprises are socially and environmentally oriented and it does not matter whether it is a for-profit or a non-profit organization, its entrepreneurial solutions propose more engagement, jobs and hope in those areas where until today there were none of such enterprises (Branson, 2013). There appeared entrepreneurs with social passion, whose creativity skills and entrepreneurial frame is deeply in mind, those who are ready to create and implement “something out of nothing” (Praszkier & Nowak, 2011). These individuals are the social entrepreneurs and these are their businesses, which have already created a phenomenon of social entrepreneurship in practice. Social entrepreneurs are aimed to address their activities to the unsolvable social problems and that is how these modern companies have earned a considerable success in motivating a people to generate a huge impact on the society (Defourny & Nyssens, 2010). By the time that social entrepreneurs became well known type of business makers, they have grown into a global movement earning the name of those who bring social- value creations to people and thus are appreciated by more and more people. However, due to the limited research in this sphere, there is no single opinion whether social entrepreneurs bring mainly good things to the society or whether their activities are underestimated (Short, Moss & Lumpkin, 2009). The following paper will try to analyze the challenges and opportunities that social enterprises face today and if it impacts social change. What is social entrepreneurship? Due to many researches that were studied, there are several definitions of social entrepreneurship. One of such definitions claims that its aim is the ability of social agents to adopt the mission in order to create and sustain social value (Martin & Osberg, 2007). They are also recognized and in pursuing new opportunities that serve that mission. Moreover, social agents are involved in the process of the constant innovation, adaptation to numerous changes and learning opportunities (Praszkier & Nowak, 2011). Hoogendoorn, Pennings and Thurik (2011) state that social entrepreneurship includes the non-profit organizations that utilize business approaches in order to become more effective for providing and delivering social services. Instead, for-profit businesses are supported by non-profits, however they help to reduce costs and non-profits to become more independent from grants and other subsidies. Moreover, donors usually follow their own personal social goals at the same time as socially responsible businesses offer innovative solutions to different social, economic and ecological issues utilizing market-based models (Hoogendoorn, Pennings & Thurik, 2011). Generally, social entrepreneurship deals with the businesses of discovering, evaluating and pursuing opportunities mainly for creation of social value for people and countries that are in need (Hoogendoorn, Pennings & Thurik, 2011). To understand social value creation, one can think of the social entrepreneurs as the person organization, which efforts are directed on providing clean water to the places where it is critically needed or the opportunities for education that modern social enterprises can afford to the developing communities. Such activities also include empowerment of women, providing jobs for disabled people, clothing for the poorest population on earth. There is, however, no single statement that social component contributes to the complexity of society and if there are any social objectives from which the society benefits (Dees, 2001). That is why from the moment of its appearance and in the modern society there have been many considerations as to the one complementary approach to non-profit, business and governmental contributions to society. Davis and Bornstein (2010) explain the social entrepreneurship as useful movement because it enables society to build a long held understanding about how entrepreneurs address major problems. Social entrepreneurs promote social change, they are developers of new combinations of people and resources that are able improve capacity to address social issues. In the modern world there are such companies that are based around social media (Twitter) that can promote socially-attractive questions and those socially-responsible businesses like Starbucks, which take care of certain social initiatives as reducing carbon emission. However, social entrepreneurs use their business methods to address both social and environmental issues in their peculiar innovative way. These change agents of the social sector adopt a mission of social issues and create and sustain social value (Martin & Osberg, 2007). They also recognize and promote new opportunities to serve that mission. Thus, in Portland, a social enterprise sector has emerged only recently (Greene, 2012). ANew Avenues for Youth, which is a local nonprofit, “provides job training and career opportunities to formerly homeless teens” (Greene, 2012). Fork in the Road Market makes healthy and cost affordable food in so called food deserts where there are no grocery stores. The importer of organic and Fair Trade coffee the Harvest Company develops iPad apps for use by coffee cooperatives in Africa and Latin America. Each of these organizations utilizes innovative and business-based solutions addressing social problems (Greene, 2012). Challenges of social enterprises The social enterprise exists for centuries, however, only recently the label of social entrepreneur has become more noticeable (Pool, 2011). Most of social enterprises are directed on sustaining environmental issues, such as recycling projects. Such involvement can be assumed by the unwillingness of the companies to risk their business. That is why most of such companies’ risk and return are entwined (Nkala, n.d.). In such a changeable business environment many social enterprises have a lack of confidence in the market and for the sake of the company itself they tend to stay in shadow rather than to attract the attention of big private organizations (Nkala, n.d.). However, not only fear of global corporations is the only challenge for the social entrepreneur. Funding is one of the major challenges for social enterprises since there can be a shift in funding policy (Ludlow, 2014). Most social enterprises failed to secure start-up capital. However, most of social entrepreneurs fostered by the local, central or regional governments feel the easing of financing ties. Despite that fact, social entrepreneurs can be pressured by the administration of the certain area, which is a potential challenge for just emerging social enterprises. It also does not matter what good purposes the social entrepreneurship is following, there can always appear socio-cultural resistance from the employees and managers of the organization or from the outside with its public stakeholders. Usually people are afraid of changes no matter how good results they can bring. Nkala (n.d.) states that the resistance to changes itself is like unhappy to both local population and employees who are provided a job within the social enterprise. In order to solve problems concerning conflict in social enterprises, it was identified that leaders should develop and implement different strategies for reducing such situations. Effective communication among the employees of social establishment and consultation with the stakeholders will help to overcome such a problem. Despite the skills of leader that manages social enterprise, the real challenge can occur between the social and financial objectives of the business. Such disbalance can appear when organization, which aim is to be socially responsible has problems with funding. While delivering social outcomes, the question of profitability seems more important. Here is the challenge for the enterprise manager to think over objectives so to avoid mistakes with inability to separate social mission with the profit question. Besides, the social enterprise should be committed about its social objectives and it is critical to develop a strong market and business platform in order to ensure the enterprise to be competitive and capable in bringing social mission. If the strategy is built with regard to possible threats, it will ensure that social enterprise will be sustainable in the long-term perspective and will deliver social outcomes. Otherwise, there will be opportunity to be present in the open market. Challenges are also great motivators that are able to bring opportunities to people. Thus, when in 2001 the only petrol station in Yackandandah, Australia, was closed, the local residents faced a problem to go to the nearest supplier for forty minutes. For a small town that would mean the end. However the community activists bought the petrol station and maintained it open employing people on volunteer labor conditions. The developed a business plan and a prospectus for a community helped people to raise money required for normal run of the business and even returned more than fifty percent of its profits to the community. The purchasing of Yackandandah made more than half the people in the town its shareholders (Understanding Social Enterprise, 2011). Despite the importance of social entrepreneurship, there are also concerns about the ethics and social businesses. Some state that social entrepreneurship represents a harmful union of the opposing values. Many of the founding deals of the public sector have shown the increasing emphasis on the effectiveness and profitability of market models (Zahra, Gedajlovic, Neubaum & Shulman, 2009). In order to continue social enterprise, it requires an entrepreneurial orientation, which is based on the use of business models. For instance, the Aravind Eye Clinic, India charges poor patients the sum they cannot afford to them for cataract lens in order to help defray the cost of the same operation of poorer people. These implants in such case would be provided for free. Social entrepreneurs are driven by an ethical obligation and desire to help others, their egoism can drive only to following unethical practices regarding poor people. That is why the social prefix is more and more given a critique and debate. This is called by some entrepreneurs to pursue multiple goals with a diverse set of personal objectives, which is inappropriate when running a social entrepreneurship. Opportunities of social enterprises Globalization and opening labor markets created more opportunities for entrepreneurs of all types to become highly visible agents in bringing their products and services worldwide (Zahra, Rawhouser, Bhawe, Neubaum & Hayton, 2008). Social entrepreneurs are also recognized as agents of change in developed economies, since they have applied innovative and cost-effective approaches in addressing such social problems as poverty, gender inequality, etc. Moreover, many of them have defied traditional solutions to such issues. A successful social enterprise should be a good business in solving social issues. Zahra et al (2008) state that while social enterprise provides employment, training and support for poor people, it also ensures services with regard to social and economic needs in the community where it presents its operations, thus generating profits in supporting community and non-profit activities. However, like all other types of entrepreneurship, social enterprises should take a long-term view and set up a finite amount of profit in a set amount of time for sustaining its business. What it needs to be sustainable over time is delivering of social outcomes. That is why foundations based in social enterprises are capable with more power to build well-being for communities. However, one should understand that social enterprise is different from a charitable organization, since it is connected to the open market and sells products and services to make certain profit. Due to this, social enterprise is also influenced by changes and opportunities that emerge in the market. However, the main purpose of the social entreneurship is to deliver goods and services to the poor people and as the mirror of the commercial business, social one moves its profit toward achieving its social goal. Opportunities for social enterprise do not arise from an specific local knowledge, however they serve as means of leverage in developing new products, goods and services. By introducing such innovations, entrepreneurs want to meet the needs of customers and at the same time respond social needs of people who need that (Carney and Gedajlovic, 2002). While social agents adjust customers’ needs to the social requirements, they represent Social Engineers, the entrepreneurs, who significantly differ from others with the ability to identify systemic problems within the social systems and find the solutions for addressing. Such search ends with bringing about the revolutionary change (Zahra, Gedajlovic, Neubaum & Shulman, 2009). The vivid example of Social Engineer is the TOMS shoes, an American social enterprise, founded with the aim to help poor people in Argentina with provision (shoes) and certain medical treatment (for people with problems with eyes) . With its mission to create a profit business with the accent on sustainability and which donations, as a result of which children from Argentina would have an opportunity to wear shoes. Today TOMS is a powerful foundation, more than a company, as it states, and provides shoes for thousands of children in need (TOMS, 2010). Moreover, the foundation implemented the approach of One for One, by which every purchased pair of shoes will give an opportunity to the person in need to obtain another pair for free. The other initiative of TOMS’ shoes is the possibility to restore sight for the person in need, when such product as Eyewear would be purchased. The social impact of such initiative and of TOMS foundation is great. Conclusion Despite all the pitfalls that social entrepreneurship faces in the modern world, its effective performance dependents greatly on the interrelationship between people, money, resources, leaders and community with its values, knowledge and culture. The way how these aspects work together will lead to achieving the end goals of sustainable social impact. Thus, achieving a high performing social goal is the primary objection for every society. With clear and firm motivation, despite the pressure, social entrepreneurs are able to achieve large scale social impact (The benefits and challenges of running a social enterprise, 2013). However, in following a comprehensive planning that leads to the development of a business plan, organizations need to continuing resources to support them, preparing for a long process to impact the change within the society. Many commentators warn that social enterprises do not display a quick repairing to problems with funding. Besides, the unrealistic financial expectations that social entrepreneur seeks to obtain can cost one lack of profitability and even loss of business. As a result of this, there is a constant risk of being diverted into other direction and then social goals cannot be met at all. References The benefits and challenges of running a social enterprise, 2013, The Benevolent Society Branson, R. 2013, Richard Branson on Social Entrepreneurship, The Entrepreneur, Available from http://www.entrepreneur.com/article/227044 [Assessed on 01 of February, 2015]. Bornstein, D. & Davis, S. 2010, Social Entrepreneurship: What Everyone Needs to Know, Oxford University Press Dees, G. 2001, The Meaning of Social Entrepreneurship, Available from http://www.caseatduke.org/documents/dees_sedef.pdf [Assessed on 01 of February, 2015]. Defourny, J. and Nyssens, M., 2010. 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