What Is Social Entrepreneurship – Definition, Types, And Importance

Social entrepreneurship is attracting increasing quantities of talent, money, and attention. Yet, there is less clarity on what a social entrepreneur is and does due to its expanding popularity. To learn more about social entrepreneurship, continue reading.

Doing business for a good purpose is what social entrepreneurship is all about. This type of entrepreneurship mixes commercial and social concerns to better people’s lives.

Apart from humanitarian intentions, one conceivable rationale for such a change is that enterprises will become more profitable as society advances. When an individual or a group of individuals take on the duty of solving society’s issues, this is known as social entrepreneurship. It might be a low-key event or a large-scale campaign involving the general public. What counts is that the activity or effort addresses a problem and impacts someone’s life positively.

Who can be a social entrepreneur?

Anyone, whether an organization or a person, may come up with a solution to a problem and become a social entrepreneur. The driving forces include strong willpower, a desire to do good, and an appropriate strategy.

Types of social entrepreneurship

There are various types of social entrepreneurship. Here we’ll look into four types of social entrepreneurship:

Community social entrepreneur

Small-scale changemakers are community social entrepreneurs. A young person educating poor children in a village, a group of college students organizing sanitation and plantation efforts in a metropolis, or one or more organizations working for social welfare are all examples of community social entrepreneurs.

Community social entrepreneurs operate in specific areas and regions but for various causes. They provide services ranging from cleanliness and sanitation to employment and food distribution, plantation and environmental safety, and offering jobs to worthy individuals.

These types of social entrepreneurs are the ones who bring about instant change and strive for more.

Nonprofit social entrepreneur

Profits are reinvested by these social businesses. So, in addition to the initial investment, they donate their income to the cause.

For example, if the first project were to educate children from low-income families and obtain more funding than they needed to complete the project, they would use the extra money to educate women and extend their portfolio.

Those with a business perspective prefer this sort of social entrepreneurship. Not only that but businesses and organizations have chosen nonprofit social entrepreneurship to put their generosity to good use.

Transformational social entrepreneur

These business owners are focused on starting a company that can address a problem that government programs and other businesses can’t.

Transformational social entrepreneurship is more like operating a business in that you recruit competent people, develop innovative methods to stay relevant in the market, follow regulatory requirements, and do everything else that a company does.

A collaborative set-up of various firms helping society collectively and individually is part of the bigger vision for transformative social entrepreneurs.

CRY (Child Rights and You), Goonj, and JusTea are a few instances of transformative social business.

Global social entrepreneur

Global social entrepreneurs examine issues on a bigger scale and concentrate on global transformations. They prioritize social duty over financial gain.

They generally cooperate with groups in certain regions/countries working on similar issues. The Make A Wish Foundation is one of the most well-known instances of this form of social business. It is based in Phoenix, Arizona, and works in more than 50 countries to grant the desires of terminally sick children.

Understanding social entrepreneurs

While the prospect of making a profit drives most entrepreneurs, this does not preclude the average entrepreneur from making a constructive contribution to society. “We anticipate our meal not from the butcher’s, the brewer’s, or the baker’s generosity, but their concern for their self-interest,” said economist Adam Smith in his book The Wealth of Nations. Smith felt that if people sought their own best interests, they would be led to take beneficial actions for others. For example, a baker needs to make a livelihood to support his family. To do so, they make bread, a product that feeds and nourishes hundreds of people.

Shift to social entrepreneurship

What separates social entrepreneurship from its for-profit relative if these are the essential entrepreneurship components? First, we feel that establishing social entrepreneurship’s congruence with entrepreneurship and understanding it as anchored in the same three principles as entrepreneurship is the most practical and instructive method to describe it. Anything else is perplexing and ineffective.

To understand what separates the two types of entrepreneurs, it’s necessary to debunk the myth that the distinction can be attributed to motive – with business people motivated by profit and social entrepreneurs motivated by compassion. The fact is that the possibility of financial gain seldom encourages entrepreneurs since the odds of gaining a lot of money are stacked against them. Instead, both the entrepreneur and the social entrepreneur are driven by the potential they see, chasing that vision with zeal and gaining significant psychological satisfaction from bringing their ideas to life. Whether they work in a for-profit or nonprofit setting, most entrepreneurs are never entirely paid for the time, risk, effort, and cash they invest.

The value proposition, we feel, is the essential distinction between entrepreneurship and social entrepreneurship. The value proposition anticipates and is arranged to serve markets that can afford the new product or service and is thus meant to generate financial benefit for the entrepreneur. The idea is that the entrepreneur and their investors will benefit financially. Profit is a sine qua non for every venture’s long-term viability and is the means to its ultimate goal of large-scale market acceptance and, eventually, a new equilibrium.

On the other hand, the social entrepreneur does not plan or arrange to make a significant financial return for their investors – most of whom are charitable and government organizations – or for themself. Instead, the social entrepreneur seeks value in the form of large-scale, transformative benefit to a substantial part of society or society.

Unlike the entrepreneurial value proposition, which assumes a market that will pay for the innovation and may even provide significant upside for investors, the social entrepreneur’s value proposition focuses on an underserved, neglected, or highly disadvantaged population that lacks the financial resources or political clout to achieve the transformative benefit on its own.

This isn’t to say that social entrepreneurs always avoid profit-generating value propositions. Social entrepreneurs’ ventures may produce revenue, and they can be structured as nonprofits or for-profits. The pursuit of “mission-related effect,” as described by Duke University professor Greg Dees in his fundamental work on the subject, is what defines social entrepreneurship.

We define social entrepreneurship as having the following three components:

  • recognizing a stable but fundamentally unfair equilibrium that results in the exclusion, marginalization, or suffering of a part of humanity that lacks the financial or political power to produce any transformational gain on its own;
  • seeing an opportunity in this unjust equilibrium, formulating a social value proposition, and bringing inspiration, creativity, direct action, courage, and fortitude to bear on the stable state’s hegemony, therefore challenging its hegemony; and
  • establishing a new, stable equilibrium that unleashes repressed potential or alleviates the suffering of the targeted group and ensuring a brighter future for the targeted group and even society at large via imitation and the formation of a stable ecosystem around the new equilibrium

Muhammad Yunus, the father of microcredit and the creator of the Grameen Bank, is a famous example of social entrepreneurship. Poor Bangladeshis’ limited possibilities for obtaining even the most minor sums of credit formed the stable but undesirable equilibrium he discovered.

They couldn’t get loans via the regular banking system, so they had to borrow from local moneylenders at outrageous interest rates. More often than not, they were reduced to begging on the streets. There was an unlucky steady balance here, which perpetuated and even exacerbated Bangladesh’s endemic poverty and misery.

Yunus defied the system by lending the now-famous sum of $27 from his pocket to 42 women from the village of Jobra, demonstrating that the impoverished were extraordinarily excellent credit risks. The woman paid back the entire debt. Yunus discovered that even tiny amounts of wealth allowed women to invest in their ability to generate revenue. Women could tailor outfits with a sewing machine, earning enough to pay back the loan, purchase food, educate their children, and elevate themselves out of poverty. Grameen Bank was able to stay afloat by collecting interest on its loans and then repurposing the funds to assist other women.

Yunus infused his venture with inspiration, innovation, direct action, daring, and grit, proving its sustainability and spawning a global network of organizations that reproduced or modified his model for other nations and cultures, firmly establishing microcredit as a worldwide industry.

Robert Redford, a well-known actor, director, and producer, provides a less well-known but illuminating example of social entrepreneurship. Redford took a break from his lucrative career in the early 1980s to reclaim space in the film business for artists. A series of competing forces were at work when Redford was hit. He saw an inherently oppressive but stable equilibrium in how Hollywood worked. Financial interests increasingly drive its business model, its productions gravitating toward flashy, often violent blockbusters, and its studio-dominated system increasingly centralized in controlling how films were financed, produced, and distributed.

Simultaneously, new technology — less cumbersome and less costly video and digital editing equipment – was developing, providing filmmakers with their needed tools.

Redford, seeing an opening, jumped at the chance to mentor this new generation of artists. To begin, he established the Sundance Institute to remove “money from the equation” and give space and assistance for budding filmmakers to develop their ideas. He then founded the Sundance Film Festival to promote the work of independent filmmakers. From the start, Redford’s value proposition centered on the rising independent filmmaker whose abilities were neither acknowledged nor supported by the Hollywood studio system’s commercial grip.

Redford established Sundance Institute as a nonprofit organization, using the help of his network of directors, actors, writers, and others to volunteer as mentors to aspiring filmmakers. He set the pricing of the Sundance Film Festival to appeal to a wide range of people. Sundance is credited with launching the independent film movement, which today ensures that “indie” filmmakers can get their work produced and distributed. Moviegoers can choose from various options, including thought-provoking documentaries, edgy international careers, and playful animations. A new balance has been achieved, which seemed shaky even a decade ago.

Victoria Hale is an example of a young social entrepreneur for whom our requirements apply ex-ante. Hale is a pharmaceutical chemist who has become dissatisfied with the market forces that have dominated her career. Even though substantial pharmaceutical corporations owned patents for treatments that might cure various infectious diseases, the drugs were never produced for a straightforward reason: the populations that needed them the most couldn’t buy them. The pharmaceutical business, driven by the need to make financial rewards for its shareholders, focused on developing and selling treatments for ailments that afflicted the wealthy, especially in developed world markets, who could afford them.

Hale grew adamant about upsetting this seemingly secure balance, which she considered unfair and unpleasant. She founded the Institute for OneWorld Health, the world’s first nonprofit pharmaceutical corporation, to ensure that pharmaceuticals to treat infectious illnesses in impoverished countries reach those who need them, regardless of their capacity to pay. Hale’s project has progressed past the proof-of-concept level. It created, tested, and received Indian government regulatory clearance for its first medicine, paromomycin, cost-effective therapy for visceral leishmaniasis, killing over 200,000 people each year.

Although it is too early to say if Hale will successfully establish a new equilibrium that ensures more fair treatment of impoverished people’s ailments, she satisfies the characteristics of a social entrepreneur. First, Hale has identified a stable but unjust equilibrium in the pharmaceutical industry; second, she has recognized and seized the opportunity to intervene, using inspiration, creativity, direct action, and courage to launch a new venture to provide options for a disadvantaged population. Third, she is demonstrating fortitude by demonstrating the potential of her model with early success.

It will take time to see if Hale’s invention encourages others to follow in her footsteps or if the Institute for OneWorld Health can scale up to the level required to create that permanent equilibrium change. However, there are encouraging indicators. Her backers, including the Skoll Foundation, may see a day when Hale’s Institute for OneWorld Health will have developed a new pharmaceutical paradigm, one with the same long-term social advantages as the now-established microcredit and independent cinema sectors.

Boundaries of social entrepreneurship

When defining social entrepreneurship, it’s also crucial to draw lines and give instances of activities that are both worthwhile and don’t meet our criteria. Failure to define boundaries would render the phrase “social entrepreneurship” meaningless.

We argue that social entrepreneurship should be separated from two basic types of socially valuable activities. The first form of social venture provides social services. In this situation, a brave and dedicated individual recognizes an undesirable stable equilibrium – for example, AIDS orphans in Africa – and establishes a program to solve it, such as a school for the children to guarantee that they are cared for and taught. The new school would undoubtedly benefit the children it serves, and some of them might be able to break free from poverty and alter their lives as a result of it. However, it is unlikely to succeed unless it is intended to be replicated on a vast scale or is so appealing that legions of imitators and replicators flock to it.

These sorts of social service projects never break free from their confines: their influence is restricted, their service area is limited to a small community, and their extent is limited by the resources they can attract. These businesses are inherently susceptible, which might result in service disruption or loss for the people they serve. There are millions of these groups worldwide, all of which are well-intentioned, noble in aim, and frequently exceptional in implementation, but they are not the same as social entrepreneurship.

A school for AIDS orphans might be restructured as a social entrepreneurship venture. However, this would necessitate a strategy through which the school would spawn a complete network of schools while also securing the foundation for its continued support. The result would be a stable new equilibrium in which, even if one school closed, there would be a solid structure to ensure that AIDS orphans received an education regularly.

The distinction between the two sorts of enterprises – one social entrepreneurship and the other social service – lies in the outcomes, not in the original business environments or many of the founders’ attributes. Imagine if Andrew Carnegie had just constructed one library instead of the public library system that now serves millions of Americans.

The town would have certainly benefited from Carnegie’s solitary library. His reputation as a social entrepreneur is anchored on his vision of an entire system of libraries generating a permanent new equilibrium that ensures all citizens have access to information and knowledge.

Social activism is the second type of social venture. The activity’s motivator is the same in this situation — an unpleasant and steady equilibrium. Inspiration, inventiveness, tenacity, and grit are all traits the actors share.

The character of the actor’s action orientation is what distinguishes them. Instead of taking direct action, as a social entrepreneur would, a social activist strives to effect change indirectly by persuading others — governments, NGOs, customers, employees, etc. Social activists may or may not form businesses or groups to help them achieve their goals. Successful activism can significantly improve current systems or even a new equilibrium. Still, the strategic nature of the action is distinct in its emphasis on influence rather than on direct action.

Why not refer to these individuals as social entrepreneurs? It wouldn’t be a catastrophe. However, such individuals have long had a name and a prestigious tradition: the Martin Luther King, Mahatma Gandhi, and Vaclav Havel traditions. They are campaigners for social change. Calling them something completely different – such as social entrepreneurs – and so confusing the general public, who already know what a social activist is, would be counterproductive to the cause of both social activists and social entrepreneurs.

Examples of social entrepreneurship

A new business model that combines enterprises with governmental and social groups has arisen globally. Nonprofits and corporations may collaborate to create a hybrid business model, which a new generation of social entrepreneurs will head. These leaders can address social concerns while also making a profit for their shareholders.

The success of the following social entrepreneurs was aided by widespread usage of ethical practices such as impact investment, conscious shopping, and corporate social responsibility initiatives.

Bill Drayton

Bill Drayton is regarded as one of our generation’s most innovative social entrepreneurs. In 1981, Drayton launched Ashoka: Innovators for the public, a nonprofit organization dedicated to discovering and supporting social entrepreneurs worldwide. Drayton is also the chair of getting America Working! And Youth Venture boards of directors.

Rachel Brathen

Rachel Brathen’s New York Times best-selling novel, “Yoga Girl,” is also the nickname for her Instagram account, which has 2.1 million followers. Rachel aspires to link teachers with people in the online community who need healing and offer her audience new yoga positions and ideas. “”What if social media might be used to carry out a social mission?” Brathen wonders. Her website oneoeight. Tv was an “online studio” that provided health, yoga, and mediation services.

Shiza Shahid

Shiza Shahid, co-founder and worldwide ambassador of the Malala Fund, overseas business operations for Malala Yousafzai, the adolescent who won the Nobel Peace Prize for the first time in 2014. 4 Shahid, like Malala, was born in Pakistan. She first contacted Malala in 2009, offering to host a camp for her and other Pakistani girls. Shiza traveled to Malala’s bedside in 2012 when the Taliban shot her for advocating for girls’ education. Shahid chose to assist Malala in organizing her campaign after being inspired by her commitment to continuing fighting for gender equality and education. Shahid established the Malala Fund, which advocates for and expands access to education for women and girls.

Blake Mycoskie

Mycoskie became the primary shoe donor and creator of TOMS Shoes during a trip to Argentina in 2006, investing $300,000 of his own money in the firm. TOMS initially vowed to provide one pair of shoes for every pair sold, and the company has now expanded its “One-For-One” program to include water, sight, birth, and anti-bullying activities. Mycoskie has raised awareness about global poverty and health problems through the TOMS brand. As of 2019, the charity had donated 95 million pairs of shoes and more than 722,000 weeks of potable water to individuals in underdeveloped nations. Furthermore, the TOMS Eyewear initiative has helped more than 780,000 people regain their sight by providing prescription glasses or surgery.

Scott Harrison

Scott Harrison abandoned his life of luxury in New York City to serve with Mercy Ships, a hospital ship organization based in West Africa. The trip was a turning point for Harrison, who started charity: water in 2006 to supply clean and drinkable drinking water to people in 28 countries worldwide. In underdeveloped nations, the organization has completed 51,438 projects as of 2020. Charity: water raised $69.3 million in 2018.

Muhammad Yunus

Professor Muhammad Yunus is well known for popularising microfinance and microcredit, two pillars of the Grameen Bank, which he started in 1983. Yunus was given the Nobel Peace Prize in 2006 for founding the Grameen Bank, based on trust and solidarity to provide people with the resources they need to escape poverty. According to the Grameen Bank, women make up 97 percent of its 9.31 million borrowers as of February 2020, and they repay their loans at a rate of 98 percent, which is greater than any standard banking system. The U.S.Presidential Medal of Freedom in 2009 and the Congressional Gold Medal in 2010 were among the many honors bestowed upon this illustrious scholar.

Jeffrey Hollender

Former Chief Executive Officer (CEO) and co-founder of Seventh Generation, a prominent natural goods company, Jeffrey Hollender, is well-known. He is now a renowned corporate social responsibility consultant, speaker, and campaigner. He is the author of seven books, the most recent of which is “How to Make the World a Better Place.” Hollender is the co-founder and CEO of Hollender Sustainable Brands, which distributes sustainable condoms, tampons, lubricants, pads, and other goods for sexual and personal health. Hollender is an adjunct professor at New York University, the co-founder and board chair of the American Sustainable Business Council, and a board member of Greenpeace USA, Health Care Without Harm, and Verité, a workers’ rights group.

Characteristics of a social entrepreneur

A social entrepreneur is a businessperson who has opted to use their entrepreneurial skills for a social cause, launching a project that will benefit many people rather than simply a few shareholders or stakeholders.

This type of entrepreneur combines the discipline and risk-taking that all business owners exhibit, avoiding the spotlight and preferring to let others shine.

Here are ten characteristics that successful social entrepreneurs have exhibited in the last two decades.

Healthy impatience

According to Duke University’s Fuqua School of Business’s Center for Advancement of Social Entrepreneurship study, a social entrepreneur has a healthy impatience with the way things are.

According to CASE, socially conscious entrepreneurs want to make a difference right away, know it can be done, and are upset when bureaucracy and a lack of political will, among other things, obstruct social improvements that would benefit the public.


Entrepreneurs that are socially conscious combine zeal and passion, especially in the early phases of a project or a long-term endeavor. They have a strong belief in their initiatives, and, as a result, it is not uncommon for them to work 80-hour weeks.

This trait may also be found in company owners who, at first, labor relentlessly on their projects.

The desire to change others

Every social entrepreneur has an unshakeable desire to transform others, particularly those they collaborate with.

People in positions of power share this urge to change minds, as seen by Mohammed Yunus, the founder of the Grameen Bank, which revolutionized the field of microfinance and enabled financing to previously excluded communities.

Commitment to improve social welfare

The fact that social entrepreneurs are, first and foremost, socially committed is self-evident.

What sets them apart from, say, a firm engaged in CSR is their capacity to commit all of their time, energy, and limited resources to ensure that things improve for the better.

While a company can utilize corporate social responsibility (CSR) to enhance social welfare (including anything from charity donations to community service), detractors point out that some for-profit companies employ CSR as a public-relations tactic.


Successful social entrepreneurs are always thinking of new ideas. They embrace technology, invent new methods to create things, provide goods and services, cure people, enhance people’s lives, etc.

The objective is to leverage commercial skills and expertise to alter mindsets and improve or save the lives of millions of people throughout the world.

Practicality when solving problems

Although there is no profit motivation in social entrepreneurship, this does not imply that financial limitations are ignored.

They do, in fact, and the majority of them are always looking for more effective and efficient methods to run their businesses. They must if they are not to vanish as quickly as they emerge in their social and economic environment.

The bottom line is that skilled social entrepreneurs figure out creative methods to address issues without breaking the bank – which isn’t the case because they don’t have much money. Therefore there isn’t a bank.


In social entrepreneurship – and any business, for that matter – taking risks is vital.

It takes a confident attitude to wake up one day and declare that you want to change the world. If you don’t have any money, don’t come from a wealthy family, quit your day job, or take on a project that may cost you your livelihood or perhaps your life, the danger becomes much more significant.

Philanthropic bent

Social entrepreneurs are often generous, which means they aren’t motivated just by money or celebrity. They also have a penchant for distributing revenues to the socially disadvantaged or reinvesting extra funds in the firm.

The objective is to expand the entity by enrolling more individuals, allowing more people to be favorably influenced, saving more lives, and generating much more long-term societal value.

Lack of megalomania

This feature is identical to the one before it. Social entrepreneurs aren’t necessarily enamored with themselves or their business, and they don’t always have a megalomaniac mentality. They are passionate about their cause; otherwise, they would not sacrifice everything to pursue it.

However, there is no “me, me, always me” drive here, no need to shine at all times and in all places. The essential thing to these businesses is the philanthropic purpose. Thus they don’t mind letting others shine, especially their team members or people interested in local projects.

Faith in teamwork

For social entrepreneurs, collaboration is crucial. People – and time, if you can call it that – are the only resources available in a field where money, resources, and expertise are frequently in short supply.

As a result, social entrepreneurship is based on crowdsourcing, which involves enlisting the help of a group of dedicated employees and volunteers from all over the globe to select great projects, fund them, and carry them out.

The bottom line

There are millions of problems that need to be acknowledged and solved, and there are many social entrepreneurs today. The list continues on and on, from educating children to supplying them with sustenance, from environmental challenges to women’s safety, from unemployment to mental health.

To make things happen, social entrepreneurs must have a clear vision. A compelling vision must define goals, create a timeframe to attain the plans, and motivate a team to work toward them. Many organizations fade into obscurity because they lack a vision of how they want the future to be.

Social entrepreneurs must have more significant goals than merely improving the existing situation. They should strive to alter the equilibrium on their own. They must adequately examine the problem.

They must first understand the system in which they work and then devise a methodical and particular strategy for realizing their goals. Instead, they must thoroughly understand the system they operate and then create an organized and specific plan for realizing their goals.

Do you want to work as a social entrepreneur for a cause that you care about?