With governments inundated with the responsibility of providing essential services while also overseeing private sector activity to a certain degree, the ensuing neglect of other societal problems especially poverty which continue to fester have attracted social entrepreneurs. This is affirmed by Martin & Osberg (2007) who define social entrepreneurship as involving identification of an unjust equilibrium causing societal suffering as well as an opportunity to rectify the unjust equilibrium which leads to creating a new, stable and empowering equilibrium for the affected people. Like in other ventures, social entrepreneurs are faced by challenges such as competition from other social entrepreneurs, funding as well as conveying business idea and attracting donors, among others (Sivathanu & Bhise, 2013).
The challenge of competition from other social entrepreneurs is identified in the case of ‘Echoing Green’ presented by Battilana, De Long & Weber (2009) where its head, Cheryl Dorsey, was seemingly being elbowed from business by new competitors. The competitors, who had greater capabilities than ‘Echoing Green’ were flooding the social entrepreneurship field and the firm was losing its investors. The solution identified involved creating a more robust organization guided by a focus on promoting the business to potential donors as well as leaders and participants as well as appointment of capable employees to effectively deal with the daily management operations. This included providing clarity to employees with regards to firm strategic direction so as to engender employee commitment. Even though this does not provide a relatively satisfactory solution to social entrepreneurs, the solution an associated problem involving funding will render needed support.
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The challenge of funding is identified by Reiser & Dean who affirm the importance of capital which they believe; that ‘even the most compelling social enterprise idea will go nowhere’ if capital or funding is unavailable to social entrepreneurs and their projected activities. The solution was identified by researchers from Harvard Business School and ‘Echoing Green’ (Cheryl Dorsey) in the form of ‘hybrid organizations that combine aspects of nonprofits and for-profits’ with an example provided of a New York City bakery called the Hot Bread Kitchen (Battilana et al., 2012). The bakery provides jobs largely to low-income immigrant women who bake bread for sale while being offered training and learning in various job skills that could open a way to managerial or better positions in the food industry. In this case, the bakery is able to generate much-needed revenue for continuing operations and supporting the training of the employees while staying true to their social welfare goals.
The ability to effectively convey business idea related to social entrepreneurship ventures as well as attracting donors and investors highlights another major challenge faced by social entrepreneurs which can be resolved by using the Measuring Effectiveness (ME) program. The central issue is that donors and investors are unable to comprehend objective facts about the benefits of social ventures which, using the ME program developed by Ashoka, can aid in can illuminating the associated benefits by providing objective information on ventures (Leviner, Crutchfield & Wells, 2007). Alongside this solution, providing a sales pitch to donors and investors in relation to adoption of a social innovation approach, which is oriented to future positive benefits, can convince then to provide funding. This is affirmed by Phills Jr., Deiglmeier & Miller (2008) who indicate that a social innovation approach provides a more sustainable model for social entrepreneurs who seek to succeed in an increasingly competitive business environment defined by knowledgeable investors.
Conclusion
Considering the increasingly economic-orientation of various modern environments, from the business arena to politics, social entrepreneurs, who seek to promote sustained positive change in communities, face major challenges in establishing seeming not-for-profit firms. These challenges include such as competition from other social entrepreneurs, funding as well as conveying business idea and attracting donors, among others. The solutions run the gamut from adopting a social innovation approach or a hybrid business model to initiating better and robust management practices as well as objective measurement of progress and potential benefits, among others.
- Battilana, J., DeLong, T. & Weber, J. (2009). Echoing Green. Harvard Business School 9-410-013, 1-16.
- Battilana, J., Lee, M., Walker, J. & Dorsey, C. (2012). In Search of the Hybrid Ideal. Stanford Social Innovation Review, 10(3), 51-55.
- Leviner, N., Crutchfield, L.R. & Wells, D. (2007). Understanding the impact of Social entrepreneurs: Ashoka’s answer to the challenge of measuring effectiveness. Understanding the Impact of Social Entrepreneurs, 89-103.
- Martin, R.L. & Osberg, S. (2007). Social Entrepreneurship: The Case for Definition. Stanford Social Innovation Review, 5(2), 28-39.
- Phills Jr., J.A., Deiglmeier, K. & Miller, D.T. (2008). Rediscovering Social Innovation. Stanford Social Innovation Review, 6(4): 34–43.
- Reiser, D.B. & Dean, S.A. (2014). Creative Financing for Social Enterprise. Stanford Social Innovation Review, Retrieved from http://www.ssireview.org/
- Sivathanu, B. & Bhise, P.V. (2013).Challenges For Social Entrepreneurship. International Journal of Application or Innovation in Engineering & Management (IJAIEM), 1-9.
