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Transcript of "Abdm4223 lecture week 2 part 2 110512"
ABDM4233 ENTREPRENEURSHIP From Ideas to Social Enterprise by Stephen Ong Principal Lecturer (Specialist)Visiting Professor, Shenzhen University
Grameen : Empowering People. Changing Lives. His observations in a village in 1974: Craftspeople were skilled, but returns to those skills were limited by credit availability The opportunity he saw: Micro-loans, with no collateral and low interest. This would boost the return to craftspeople The results: Very high loan repayment; Creation of the Grameen Bank; Nationwide adoption The recognition: Professor Yunus won the 2006 Nobel Peace Prize. Grameen is a famous model of SOCIAL ENTREPRENEURSHIP (“SE”) 2-3
Persistent SE concepts SE addresses social problems or needs not met by private markets or government Innovative solutions, unmet needs, private action SE is motivated primarily by social benefit Social mission + entrepreneurial behavior SE generally works with market forces Combining social purpose with financial sustainability 2- 4
Process steps in entrepreneurship (1) Social entrepreneurs recognize opportunities to create social value Seeing opportunity where others see only threats and tragedies Addressing present or latent demand Opportunity leads an enterprise concept Identify new products or markets Identify and define desired social rewards and how they are to be measured 2-5
Process steps in entrepreneurship (2) Resource needs are determined and necessary resources acquired Financial resources, human resources (labour), and human capital (expertise) Launch and grow the social venture Follow a strategy tied to metrics of success Goal attainment and beyond What to do after success is attained Shut down, redefine service, continue, or merge Figure 1.1 portrays this process 2- 6
Figure 1.1 The process of Social Entrepreneurship Opportunity recognition • Social problems • Unmet needs Concept development • Identification of social rewards • New products or markets Resource determination and acquisition • Financial resources • Human resources • Human capital Launch and venture growth • Measurement of returns • Expansion and change Goal attainment • Succeed in mission and shut down • Succeed in mission and find new opportunity • Attain a stable service equilibrium • Integrate into another venture 2- 7
The landscape of SE Significant growth of the nonprofit sector 3% annual growth in number of nonprofits from 1996 to 2004 Growth is higher in public charities and private foundations than for nonprofits in general Figure 1.2 portrays this growth 2-8
Figure 1.2 Social Venture Growth 1996 - 2004 8% 7% Average annual growth rate, 1996-2004 7% 6% 6% 5% 4% 3% 3% 2% 1% 0% All nonprofits Public charities Private foundations 2-9
Categories of social venture/SE1. Start a new product or service2. Expand an existing product or service3. Expand an existing activity for a new group of people4. Expand an existing activity to a new geographic area5. Acquire an existing business6. Partner or merge with an existing businessSource: Brinckerhoff, Peter C. (2000). Social Entrepreneurship: The Arts of Mission-Based Venture Development. New York: Wiley, pp. 16-21 2 - 10
Explaining entrepreneurship (1) Environment Entrepreneurship is stimulated by a conducive environment Resources Resource availability (financial, human resources, human capital) stimulates entrepreneurship Perturbation Entrepreneurship occurs when people are displaced from their routines 2 - 11
Explaining entrepreneurship (2) Personal traits Entrepreneurship occurs because of entrepreneurial personalities and types Preparation Entrepreneurship can be taught and learned through education and experience 2 - 12
Applying entrepreneurship theory to SE These theories apply very well to SE Environment, resources and perturbation are primarily external forces Personal traits and preparation are primarily internal forces This theory helps to explain SE, predict where it will occur, and suggest how to increase it Figure 1.3 portrays these forces 2 - 13
Figure 1.3 The forces on social entrepreneurship External forcesEnvironmental factors Perturbation of the environment• Social climate conducive to social entrepreneurship Availability of financial and • Political change nonfinancial resources • Cultural change• Political climate that facilitates • Economic change social innovation Social entrepreneurship process begins Entrepreneurial Preparation to exploit personality traits opportunities • Education • Experience Internal forces 2 - 14
Characteristics of social entrepreneurs Dees (2001): “Change agents in the social sector,” characterized by … Mission orientation Pursuing opportunities Continuous innovation, adaptation, learning Bold action regardless of resource limits Heightened accountability to constituents Various potential impacts of demographics, gender, personal experience But do these innate traits explain SE? 2 - 15
Psychological characteristics of entrepreneurs Innovativeness Achievement orientation Independence Sense of control over destiny Low aversion to risk (i.e., willing to accept risk) Tolerance for ambiguity For social entrepreneurs, community orientation and social concern are important psychological characteristics 2 - 16
Figure 1.4 The characteristics of a social entrepreneur Innate characteristicsEducation and experience Innovativeness Entrepreneurial Achievement orientation orientation Socially-entrepreneurial Independence orientationSense of control over destiny Community awareness And social concern Low risk aversion Tolerance for ambiguity 2 - 17
Social entrepreneurs as … Leaders Shape a vision that change public attitudes Have significant personal credibility Generate commitment in terms of values to achieve collective purpose Personalities Achievers Super-salesman Real Manager Expert idea generator 2- 18
Myths about SE (1) Social entrepreneurs are against business Many social entrepreneurs come from business and have succeeded in business The difference between commercial and social entrepreneurship is greed Assumes that all commercial entrepreneurs are greedy, and that none are philanthropic 2- 19
Myths about SE (2) Social entrepreneurs run nonprofits. Some do, some don’t – many legal forms support SE Social entrepreneurs are born, not made Implies no role at all for nurture, that only innate traits determine who does what Myths for which there is no evidence Social entrepreneurs are misfits Social entrepreneurs usually fail Social entrepreneurs love risk 2 - 20
One Peace at a Timehttp://www.youtube.com/watch?v=Z4UfvjMLwaA Video by The Nobelity Project 1 - 21
Further Reading Scarborough, Norman, M. 2011. Essentials of Entrepreneurship and Small Business Management. 6th edition. Pearson. Brooks, Arthur C. (2006) Social Entrepreneurship : A Modern Approach to Social Value Creation. Pearson Barringer, Bruce R. & Ireland, R. Duane, 2011 Entrepreneurship – Successfully launching new ventures 4th edition, Pearson. Schaper, M., Volery, T., Weber, P. & Lewis, K. 2011. Entrepreneurship and Small Business. 3rd Asia Pacific edition. John Wiley.
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