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Abdm4223 lecture week 3 210513

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From Ideas to Social Enterprise

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Abdm4223 lecture week 3 210513

  1. 1. From Ideas to SocialFrom Ideas to SocialEnterpriseEnterpriseFrom Ideas to SocialFrom Ideas to SocialEnterpriseEnterpriseABDM4233 ENTREPRENEURSHIPABDM4233 ENTREPRENEURSHIPbyStephen OngPrincipal Lecturer (Specialist)Visiting Professor, Shenzhen University
  2. 2. 1 - 2SocialSocialEntrepreneurshipEntrepreneurship
  3. 3. 2 - 3Grameen : EmpoweringGrameen : EmpoweringPeople. Changing Lives.People. Changing Lives. His observations in a village in 1974:His observations in a village in 1974:Craftspeople were skilled, but returns to thoseCraftspeople were skilled, but returns to thoseskills were limited by credit availabilityskills were limited by credit availability The opportunity he saw: Micro-loans, with noThe opportunity he saw: Micro-loans, with nocollateral and low interest. This would boost thecollateral and low interest. This would boost thereturn to craftspeoplereturn to craftspeople The results: Very high loan repayment; CreationThe results: Very high loan repayment; Creationof the Grameen Bank; Nationwide adoptionof the Grameen Bank; Nationwide adoption The recognition: Professor Yunus won the 2006The recognition: Professor Yunus won the 2006Nobel Peace Prize.Nobel Peace Prize. Grameen is a famous model ofGrameen is a famous model of SOCIALSOCIALENTREPRENEURSHIP (“SE”)ENTREPRENEURSHIP (“SE”)
  4. 4. 2- 4PersistentPersistent SESE conceptsconcepts SE addresses social problems or needsSE addresses social problems or needsnot met by private markets ornot met by private markets orgovernmentgovernment Innovative solutions, unmet needs, privateInnovative solutions, unmet needs, privateactionaction SE is motivated primarily by socialSE is motivated primarily by socialbenefitbenefit Social mission + entrepreneurial behaviorSocial mission + entrepreneurial behavior SE generally works with market forcesSE generally works with market forces Combining social purpose with financialCombining social purpose with financialsustainabilitysustainability
  5. 5. 2 - 5Process steps inProcess steps inentrepreneurship (1)entrepreneurship (1) Social entrepreneurs recognizeSocial entrepreneurs recognizeopportunities to create social valueopportunities to create social value Seeing opportunity where others see onlySeeing opportunity where others see onlythreats and tragediesthreats and tragedies Addressing present or latent demandAddressing present or latent demand Opportunity leads an enterpriseOpportunity leads an enterpriseconceptconcept Identify new products or marketsIdentify new products or markets Identify and define desired social rewardsIdentify and define desired social rewardsand how they are to be measuredand how they are to be measured
  6. 6. 2- 6Process steps inProcess steps inentrepreneurship (2)entrepreneurship (2) Resource needs are determined andResource needs are determined andnecessary resources acquirednecessary resources acquired Financial resources, human resourcesFinancial resources, human resources(labour), and human capital (expertise)(labour), and human capital (expertise) Launch and grow the social ventureLaunch and grow the social venture Follow a strategy tied to metrics ofFollow a strategy tied to metrics ofsuccesssuccess Goal attainment and beyondGoal attainment and beyond What to do after success is attainedWhat to do after success is attained Shut down, redefine service, continue, orShut down, redefine service, continue, ormergemerge Figure 1.1 portrays this processFigure 1.1 portrays this process
  7. 7. 2- 7Figure 1.1 The process of SocialFigure 1.1 The process of SocialEntrepreneurshipEntrepreneurshipOpportunity recognition• Social problems• Unmet needsConcept development• Identification of socialrewards• New products or marketsResource determination and acquisition• Financial resources• Human resources• Human capitalLaunch and venture growth• Measurement of returns• Expansion and changeGoal attainment• Succeed in mission and shut down• Succeed in mission and find newopportunity• Attain a stable service equilibrium• Integrate into another ventureOpportunity recognition• Social problems• Unmet needsConcept development• Identification of socialrewards• New products or marketsResource determination and acquisition• Financial resources• Human resources• Human capitalLaunch and venture growth• Measurement of returns• Expansion and changeGoal attainment• Succeed in mission and shut down• Succeed in mission and find newopportunity• Attain a stable service equilibrium• Integrate into another venture
  8. 8. 2 - 8The landscape of SEThe landscape of SE Significant growth of the nonprofitSignificant growth of the nonprofitsectorsector 3% annual growth in number of nonprofits3% annual growth in number of nonprofitsfrom 1996 to 2004from 1996 to 2004 Growth is higher in public charities andGrowth is higher in public charities andprivate foundations than for nonprofits inprivate foundations than for nonprofits ingeneralgeneral Figure 1.2 portrays this growthFigure 1.2 portrays this growth
  9. 9. 2 - 9Figure 1.2 Social Venture GrowthFigure 1.2 Social Venture Growth1996 - 20041996 - 20043%6%7%0%1%2%3%4%5%6%7%8%All nonprofits Public charities Private foundationsAverageannualgrowthrate,1996-2004
  10. 10. 2 - 10Categories of socialCategories of socialventure/SEventure/SE1.1. Start a new product or serviceStart a new product or service2.2. Expand an existing product or serviceExpand an existing product or service3.3. Expand an existing activity for a new groupExpand an existing activity for a new groupof peopleof people4.4. Expand an existing activity to a newExpand an existing activity to a newgeographic areageographic area5.5. Acquire an existing businessAcquire an existing business6.6. Partner or merge with an existing businessPartner or merge with an existing businessSource: Brinckerhoff, Peter C. (2000). Social Entrepreneurship: The Arts of Mission-Based VentureSource: Brinckerhoff, Peter C. (2000). Social Entrepreneurship: The Arts of Mission-Based VentureDevelopment. New York: Wiley, pp. 16-21Development. New York: Wiley, pp. 16-21
  11. 11. 2 - 11Explaining entrepreneurshipExplaining entrepreneurship(1)(1) EnvironmentEnvironment Entrepreneurship is stimulated by aEntrepreneurship is stimulated by aconducive environmentconducive environment ResourcesResources Resource availability (financial, humanResource availability (financial, humanresources, human capital) stimulatesresources, human capital) stimulatesentrepreneurshipentrepreneurship PerturbationPerturbation Entrepreneurship occurs when people areEntrepreneurship occurs when people aredisplaced from their routinesdisplaced from their routines
  12. 12. 2 - 12Explaining entrepreneurshipExplaining entrepreneurship(2)(2) Personal traitsPersonal traits Entrepreneurship occurs because ofEntrepreneurship occurs because ofentrepreneurial personalities and typesentrepreneurial personalities and types PreparationPreparation Entrepreneurship can be taught andEntrepreneurship can be taught andlearned through education and experiencelearned through education and experience
  13. 13. 2 - 13Applying entrepreneurshipApplying entrepreneurshiptheory to SEtheory to SE These theories apply very well to SEThese theories apply very well to SE Environment, resources andEnvironment, resources andperturbation are primarily externalperturbation are primarily externalforcesforces Personal traits and preparation arePersonal traits and preparation areprimarily internal forcesprimarily internal forces This theory helps to explain SE, predictThis theory helps to explain SE, predictwhere it will occur, and suggest how towhere it will occur, and suggest how toincrease itincrease it Figure 1.3 portrays these forcesFigure 1.3 portrays these forces
  14. 14. 2 - 14Figure 1.3 The forces on socialFigure 1.3 The forces on socialentrepreneurshipentrepreneurshipEnvironmental factors• Social climate conducive to socialentrepreneurship• Political climate that facilitatessocial innovationAvailability of financial andnonfinancial resourcesPerturbation of the environment• Political change• Cultural change• Economic changeEntrepreneurialpersonality traitsPreparation to exploitopportunities• Education• ExperienceSocial entrepreneurshipprocess beginsExternal forcesInternal forcesEnvironmental factors• Social climate conducive to socialentrepreneurship• Political climate that facilitatessocial innovationAvailability of financial andnonfinancial resourcesPerturbation of the environment• Political change• Cultural change• Economic changeEntrepreneurialpersonality traitsPreparation to exploitopportunities• Education• ExperienceSocial entrepreneurshipprocess beginsExternal forcesInternal forces
  15. 15. 2 - 15Characteristics of socialCharacteristics of socialentrepreneursentrepreneurs Dees (2001): “Change agents in theDees (2001): “Change agents in thesocial sector,” characterized by …social sector,” characterized by … Mission orientationMission orientation Pursuing opportunitiesPursuing opportunities Continuous innovation, adaptation,Continuous innovation, adaptation,learninglearning Bold action regardless of resource limitsBold action regardless of resource limits Heightened accountability to constituentsHeightened accountability to constituents Various potential impacts ofVarious potential impacts ofdemographics, gender, personaldemographics, gender, personalexperienceexperience But do these innate traits explain SE?But do these innate traits explain SE?
  16. 16. Psychological characteristics ofPsychological characteristics ofentrepreneursentrepreneurs InnovativenessInnovativeness Achievement orientationAchievement orientation IndependenceIndependence Sense of control over destinySense of control over destiny Low aversion to risk (i.e., willing to acceptLow aversion to risk (i.e., willing to acceptrisk)risk) Tolerance for ambiguityTolerance for ambiguity For social entrepreneurs,For social entrepreneurs, communitycommunityorientationorientation andand social concernsocial concern are importantare importantpsychological characteristicspsychological characteristics2 - 16
  17. 17. 2 - 17Figure 1.4 The characteristics ofFigure 1.4 The characteristics ofa social entrepreneura social entrepreneurInnovativenessEducation and experienceAchievement orientationIndependenceSense of control over destinyLow risk aversionTolerance for ambiguityEntrepreneurialorientationCommunity awarenessAnd social concernSocially-entrepreneurialorientationInnate characteristicsInnovativenessEducation and experienceAchievement orientationIndependenceSense of control over destinyLow risk aversionTolerance for ambiguityEntrepreneurialorientationCommunity awarenessAnd social concernSocially-entrepreneurialorientationInnate characteristics
  18. 18. 2- 18Social entrepreneurs as …Social entrepreneurs as … LeadersLeaders Shape a vision that change publicShape a vision that change publicattitudesattitudes Have significant personal credibilityHave significant personal credibility Generate commitment in terms of valuesGenerate commitment in terms of valuesto achieve collective purposeto achieve collective purpose PersonalitiesPersonalities AchieversAchievers Super-salesmanSuper-salesman Real ManagerReal Manager Expert idea generatorExpert idea generator
  19. 19. 2- 19Myths about SE (1)Myths about SE (1) Social entrepreneurs are againstSocial entrepreneurs are againstbusinessbusiness Many social entrepreneurs come fromMany social entrepreneurs come frombusiness and have succeeded in businessbusiness and have succeeded in business The difference between commercialThe difference between commercialand social entrepreneurship is greedand social entrepreneurship is greed Assumes that all commercialAssumes that all commercialentrepreneurs are greedy, and that noneentrepreneurs are greedy, and that noneare philanthropicare philanthropic
  20. 20. 2 - 20Myths about SE (2)Myths about SE (2) Social entrepreneurs run nonprofits.Social entrepreneurs run nonprofits. Some do, some don’t – many legal formsSome do, some don’t – many legal formssupport SEsupport SE Social entrepreneurs are born, not madeSocial entrepreneurs are born, not made Implies no role at all for nurture, that onlyImplies no role at all for nurture, that onlyinnate traits determine who does whatinnate traits determine who does what Myths for which there is no evidenceMyths for which there is no evidence Social entrepreneurs are misfitsSocial entrepreneurs are misfits Social entrepreneurs usually failSocial entrepreneurs usually fail Social entrepreneurs love riskSocial entrepreneurs love risk
  21. 21. 21World Income DistributionWorld Income Distribution
  22. 22. 22People Living in Poverty, 1981-2002People Living in Poverty, 1981-20027.81% of Malaysian pop<$2vsKLCC cost of RM1.8Bin 2004
  23. 23. 23The 12 Most and Least Populated CountriesThe 12 Most and Least Populated Countriesand Their Per Capita Income, 2005and Their Per Capita Income, 2005Malaysia 28m $7,760 in 2010Singapore 5m $40,070 Botswana 2m$6,740
  24. 24. 24UN Millennium Development Goals 2015UN Millennium Development Goals 2015
  25. 25. 25UN Millennium Development Goals 2015UN Millennium Development Goals 2015(continued)(continued)
  26. 26. 26Income and Happiness: Comparing CountriesIncome and Happiness: Comparing Countries
  27. 27. Further ReadingFurther Reading Scarborough, Norman, M. 2011.Scarborough, Norman, M. 2011. Essentials ofEssentials ofEntrepreneurship and Small BusinessEntrepreneurship and Small BusinessManagement.Management. 66ththedition. Pearson.edition. Pearson. Brooks, Arthur C. (2006) Social Entrepreneurship :Brooks, Arthur C. (2006) Social Entrepreneurship :A Modern Approach to Social Value Creation.A Modern Approach to Social Value Creation.PearsonPearson Barringer, Bruce R. & Ireland, R. Duane, 2011Barringer, Bruce R. & Ireland, R. Duane, 2011Entrepreneurship – Successfully launching newEntrepreneurship – Successfully launching newventuresventures 44ththedition, Pearson.edition, Pearson. Schaper, M., Volery, T., Weber, P. & Lewis, K. 2011.Schaper, M., Volery, T., Weber, P. & Lewis, K. 2011.Entrepreneurship and Small Business.Entrepreneurship and Small Business. 33rdrdAsiaAsiaPacific edition. John Wiley.Pacific edition. John Wiley.

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