"Visions of World Benefit & Global Responsibility: Perspectives of McGill Students

Wednesday, August 1, 2007

Social Innovation: The Advancement of Social Entrepreneurship in the Developing World

Over the past few years, financial scandals and unethical business practices exhibited by such firms as Enron have sparked intense debate over the importance of business ethics, corporate social responsibility, and environmental sustainability throughout the business world. From these debates, new concepts and ideas have slowly begun to emerge in an attempt to shift the profoundly profit-oriented mentality of corporations and managers alike. These ideas, known simply as social innovations, seek to establish new concepts and strategies in management that will help to satisfy specific social needs. One of the most important social innovations that has occurred in the business world is that of stakeholder theory, a concept that has shifted traditional business thinking from serving only shareholder interests to a broader focus that encompasses serving the interests of governments, communities, consumers, employees, and owners alike. In particular, the ideas that have evolved from social innovation, including stakeholder theory, are now being used in order to create change in developing nations.

Currently, one of the most complex global problems that the world faces today is that of poverty in third-world countries. Today, approximately one in six (or one billion) people around the world live in extreme poverty, earning less than $1 a day.[1] In order to address this problem, many new concepts and ideas have emerged in order to help solve the socio-economic issues of developing nations. One concept that has been implemented to help improve living standards in the developing world is that of social entrepreneurship. According to Gary McPherson, Executive Director of the Canadian Center for Social Entrepreneurship, this concept, at its most basic level, is a relatively new social innovation in business that “strives to combine the heart of business with the heart of the community through the creativity of the individual.”[2]

Social entrepreneurship seeks to identify social problems and attempts to create social change through the establishment of socially conscious business ventures, such as the Grameen Bank in Bangladesh. “Unlike traditional business entrepreneur[ship], social entrepreneur[ship] primarily seeks to generate ‘social value’ rather than profits.”[3] In particular, social entrepreneurship has slowly started to gain popularity in the developing world, appearing in such countries as Bangladesh and India. Social entrepreneurship is seen as a vital tool that can be used to achieve long-term socio-economic growth through the provision of education, micro-credit, and other resources that may be used to help push third-world nations in a more positive direction. Through various social entrepreneurial ventures, more positive, long-term socio-economic solutions are created through community involvement projects that provide the necessary tools needed to overcome challenges faced by many third-world nations, including lack of resources and education.

Today, several well-documented cases of social entrepreneurship programs have had a positive effect upon the communities in which they serve. For example, in Bangladesh, social entrepreneur Muhammad Yunus created the Grameen Bank, a microfinance development institution that provides micro-credit to skilled workers and impoverished citizens without the need for collateral. The bank provides these loans in recognition of the fact that a large portion of the impoverished population of Bangladesh has skills that are not being effectively utilized due to financial constraints. The ideas behind the social principles of the Grameen Bank have already spread to different nations across Asia and Latin America, and in 2006, social entrepreneur Muhammad Yunus was recognized for his contributions by receiving a Nobel Peace Prize nomination and being named one of Business Week’s Top 30 Entrepreneurs of All Time in 2007.[4]

Although social entrepreneurship is a relatively new social innovation in the world of business, it has a vast amount of potential to create positive change within developing nations. With international development organizations such as the World Bank, IMF, and the United Nations currently entangled in scandal and controversy (i.e. the United Nations Oil-for-Food Programme), social entrepreneurship is seen by many as a smaller and more effective way of providing long-term aid to developing nations. In his book How to Change the World: Social Entrepreneurs and the Power of New Ideas, David Bornstein, a renowned specialist on social innovation writes: “Social entrepreneurs identify resources where people only see problems. They view the villagers as the solution, not the passive beneficiary. They begin with the assumption of competence and unleash resources in the communities they're serving."[5] This point further emphasizes the notion that social entrepreneurship not only seeks to provide communities with short-term solutions, but rather seeks to provide communities with the resources and education needed in order to make people self-reliant and create a strong foundation for future sustainable growth.

Today, many scholars have developed a keen interest in studying the impact of social entrepreneurship on society. In Canada, the University of Alberta’s School of Business has already established the Canadian Center for Social Entrepreneurship in an attempt to further educate people about this emerging social innovation. Even though social entrepreneurship is a relatively new concept, it is an innovative way in which managers can begin to see business as a means of positive change. Currently, developing nations are plagued by many historical, political, economic, and social obstacles that have greatly impeded the development process. Although social entrepreneurship cannot fully address all of these complexities alone, it still has the potential to play an important role in the future development of many third-world nations. As such, in the future, I believe that as we continue to implement social entrepreneurship projects around the globe, individuals and corporations alike will begin to appreciate the importance of this new social innovation. Once this appreciation is achieved, it is my belief that social entrepreneurship will provide great potential in directing developing nations “not only towards immediate, small-scale effects, but [also towards] sweeping, long-term change.”[6] In the words of the great Mahatma Gandhi, “we must be the change we wish to see in the world,” and social entrepreneurship is just one way in which we can all help to make a difference.

[1] http://www.netaid.org/global_poverty/global-poverty/
[2] http://www.business.ualberta.ca/ccse/
[3] http://www.pbs.org/opb/thenewheroes/whatis/
[4] http://www.grameenfoundation.org/resource_center/newsroom/in_the_media/~story=228
[5] and 6 http://www.pbs.org/opb/thenewheroes/whatis/

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