Mapping The Area of Social Entrepreneurship - The Scheme

Mapping the area of Social Entrepreneurship:
The Social Entrepreneurship Scheme

Gorgi Krlev
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Gorgi Krlev
* gorgi.krlev@csi.uni-heidelberg.de *
* gorgi.krlev@gmail.com *
Phone: (+49) 6221-54119-81
Centrum fr Soziale Investitionen und Innovationen

(Centre for Social Investment)
Ruprecht-Karls-Universitt Heidelberg
Adenauerplatz 1
69115 Heidelberg
Germany
Electronic copy available at: http://ssrn.com/abstract=1871907

Gorgi Krlev
Abstract
Scholars currently discuss various concepts affecting the social sphere. One of the most prominent phenomena is the one of Social Entrepreneurship (SE). Due to the fact that definitions of
the term get increasingly precise, there is less remaining confusion about the meaning of SE
itself, however, many related discussions are taking place simultaneously pointing into a similar direction. Neighboring concepts covered by scholarly research include shifts in the traditional nonprofit sector, the Social Business concept, strategic Corporate Social Responsibility and Base-of-the-Pyramid business. It becomes evident that we witness an increasing tendency towards hybridity that surpasses boundaries of sectors traditionally held distinct a
development regularly referred to as a blurring of boundaries between the spheres of the
state, the market and civil society. This paper aims at shedding some more light on the field of
social impact activity and at putting existing concepts in relation to each other by conceptualizing a Social Entrepreneurship Scheme. The scheme shall also serve as a tool to enhance
studies of Social Entrepreneurial Organizations by offering a framework for integrating the
examined entities into the larger context.
Keywords: social entrepreneurial organizations (SEOs), social entrepreneurship scheme,

hybridity, social enterprise school, social innovation school, blurring of boundaries
Electronic copy available at: http://ssrn.com/abstract=1871907
Mapping the area of Social Entrepreneurship: The SE scheme

Existing attempts in clarifying the meaning of Social Entrepreneurship and recent influences
As the phenomenon of Social Entrepreneurship (SE) has attracted ever increasing theoretical
interest recently, due to its augmented appearance and significance in practice, numerous attempts of defining what the term actually means have emerged.
Most of these definitions have been of verbal nature and have identified certain traits most
scholars commonly agree upon (e.g. Waddock & Post 1991; Dees 2001; Defourney 2004: 16
18; Austin et al. 2006: 2; Mair & Marti 2006). Some scholars have also attempted to underscore verbal descriptions with visualizations. Nicholls and Cho (2006: 103) for instance draw
upon the three fundamental elements sociality, innovation and market orientation and
classify broad types of social entrepreneurial activity along the intersections of the three dimensions of their pattern. The GENISIS Institute (2009: 7) draws a continuum for organizations to be placed in between striving for social return and financial return thereby relating
to the aspect of income generation, which is one of the dominant aspects in the discussion of
SE as is going to be seen in the proceedings of this paper. Others do so in a similar way (Yunus et al. 2009: 23).
Simultaneously we find discussions of phenomena that seem to be related to the subject and
enrich the exploration of social value creation and impact activity, but at the same time add
some confusion about where commonalities and distinctions are to be found.
Base-of-the-Pyramid (BoP) business scholars do for instance discuss ventures of Grameen
be it Grameen Bank, Grameen Telecom or Grameen Danone Foods as typical for the concept (Prahalad & Hart 2002; London & Hart 2004; London et al. 2010) while those are addressed in the context of SE as well (e.g. Alvord et al. 2004; Martin & Osberg 2007; Seelos &
Mair 2005). Yunus et al. (2009) have added another aspect to the SE discussion, namely the
Social Business (SB) concept which they interpret as a subset of the wider field. Furthermore
we witness a development in Corporate Social Responsibility (CSR) literature emphasizing
strategic elements and pointing to the conceptualizing of responsible business models instead
of measures like corporate philanthropy or volunteering (Porter & Kramer 2006). Finally we
find an increasing number of references to entrepreneurial practices in the traditional third
sector (e.g. Bode & Evers 2005). This is linked to increasing scholarly discussions of hybrid
organizations (see e.g. Brandsen et al. 2005 and especially Glnzel & Schmitz 2010 and
Glnzel & Schmitz 2011) merging logics of the spheres described by the classical tri-sectoral
model (Pestoff 1992). Social Entrepreneurship in turn is usually interpreted as a special case
of hybidity (Evers & Laville 2005; Chew 2008: 23; Pache & Santos 2011).
It becomes evident that we currently find a large variety of concepts that seem to aim into the
same direction but often remain distinct. Thus, in order to clarify the relations in between the
cited concepts from a theoretical point of view it seems worthwhile to discuss them intensely
in an integrated form. This applies even more taking into account the numerous case studies
of social entrepreneurial ventures (Borzaga & Defourny 2004; Alvord et al. 2004; Bornstein
2007; Mair & Marti 2009; Kerlin 2009; Schmitz & Glnzel 2011). A mapping of the SE area
might enable us to draw an even more precise picture on the nature of these organizations and
especially to classify them in relation to others. Besides, attempts to visually capture the essence of SE seem to offer potential for advancement.
Hence, the aim of this paper is shed light on the following question:
How can the variety of diverse social impact organizations be captured by the establishment
of a Social Entrepreneurship Scheme that reflects the distinct features?
That there is an academic necessity to do so is revealed by e.g. Nyssens statement that
[f]uture research should then deal with the borders separating not-for-profit social enterprise
from for-profit organizations engaged in 'corporate social responsibility' practices (2006:
325). Particularities of both spheres are going to be derived from an analysis of nonprofit and
for-profit literature in order to derive metrics for positioning SE within the larger context.
This attempt is undertaken, despite Dart and Clows reported difficulties in classifying attempts in the area of SE (2010).
Since in SE we mainly identify streams from two different directions the nonprofit and the
for-profit sphere that are stressing particularities of each side to a varying extent, the sum of
organizations engaged in the broad field is going to be referred to as Social Entrepreneurial
Organizations (SEOs). The term Social Enterprise is not used on purpose, because it mostly
refers to rather big organizations and explicitly stresses the aspect of earned income generation via fees. The terms Social Entrepreneurs and Social Entrepreneurship Organizations
are instead used to refer to smaller scale initiatives with a focus on socially innovative approaches (Grenier 2009: 195196). These terms are just going to be found in case scholars
explicitly refer to the particular form of SE (as is the case in the citation above).
Mapping the area of Social Entrepreneurship: origins, variations and neighboring models of the concept
The idea of establishing a SE scheme in order to locate and discuss the interviewed organizations with increased precision is following Salamon and Anheier, who state: Classification is
the crucial prerequisite for scientific progress in any field of study. The development of clear
definitions and classification systems is a fundamental progress in the technology of thinking
(1992b: 288). The analysis of the theoretical background is going to start in the nonprofit section and will move on to the for-profit side. It will begin with sketching the wide area of
NPOs as prototypes of private social impact activity. The discussion on a growing commercialization of nonprofits is then going to be distinguished from SE. The SB concept, as a special form of SE that represents a strong tendency towards the for-profit sector will bridge a
comparison to models in the for-profit area, namely strategic CSR and BoP business.
Nonprofit Organizations
Salamon and Anheier have developed one of the most widely accepted definitions of NPOs
building on structural/operational characteristics (1992a). Therefore it is going to be used as
reference point here. According to their definition NPOs have to fulfill five criteria. They
have to be: 1. formal in terms of being incorporated; 2. private, meaning organizationally separate and independent from state agencies (not excluding significant monetary support or influence by the government); 3. non-profit-distributing (Hansmann 1980); 4. self-governing
and not other-directed; 5. characterized by voluntary contributions at least to a minimum extent. This definition captures organizations listed in the International Classification of Nonprofit Organizations (Salamon & Anheier 1992b: 283).
After having mentioned what is to be subsumed to the nonprofit sector, it is important to draw
comparisons to SE theory. One important aspect in SE is the emphasis of targeted increased
financial self-sufficiency (Boschee & McClurg 2003). How does the classical nonprofit
concept behave in comparison? Salamon et al. (2003) have found the following income pattern in an international study covering the nonprofit sectors of 32 developing and industrialized countries:
(1) private giving: 12%
(comprising giving from individuals as well as foundations and companies)
(2) public sector funding: 35%
(3) private charges and fees: 53%
(mainly consisting of payments for services and products as well as membership dues)
Including the monetary value of voluntary labor as philanthropic input the pattern changes
significantly to a ratio of (1) 30% - (2) 27% - (3) 43%, but fees remain as the largest source of
income. Weisbrod (1998a: 4849) uses another pattern to divide NPO income. He distinguishes three sources of income, which are (1) donations including contributions, grants and
gifts by individuals, corporations as well as the government, (2) user fees that represent direct
payment for services by their beneficiaries and (3) ancillary or unrelated business income
from activities apart from the mission. In contrast to Salomon et al.s income split, he stresses
the relation to the organizations mission. Tuckman (1998: 4041) uses a similar classification and divides unrelated passive income strategies that are aiming at income production
entirely unrelated to the organizations primary mission and active investment, revenue producing income that is consistent with the organizations mission. In either case fees do preserve their significance for NPOs. Scholars have been continuously pointing out to the fact
that the importance of fees is even increasing, due to cuts in government spending and donation levels without significant growth (Anheier 2005: 211).
Furthermore, Dees and Anderson with regard to SE being compared to traditional NPOs
point out that there is no evidence that earned-income increases sustainability (2006a: 148
150). It may mainly be interpreted as a way of generating funds more efficiently (because of
the strong attachment to the product or service provision) than donor fundraising or government lobbying allow for. Besides targeted self-sufficiency is probably going to be a precondition for commercial businesses to explore own models of social entrepreneurial activity.
The main difference of NPOs and SEOs seems to be a comparatively stronger stress lying on
the creation of mission related revenue streams by increasing the contribution of end users or
third parties in terms of fees directly linked to the provided core service or product.
SEOs are increasingly enabling the beneficiaries themselves to contribute to the financing of
services via the splitting of payments over a period of time or cross-subsidization models. Or
they are involving third parties in the funding of services, who have direct effects, like the
scaling of their own business by the SEO activity, or indirect effects, like savings for the government through preventative measures (Oldenburg 2009: 198).
But as e.g. cross-subsidization is a common phenomenon in the nonprofit sector (Steinberg &
Weisbrod 1998) and the importance of fees in the latter is significant, the aspect of income
cannot be the only point of distinction. Thus, the second main issue is innovation. SE brings
in an increasing orientation towards business practice in core activities and creates models
that address, serve and involve beneficiaries or customers in an often unprecedented way.
Moreover SEOs are usually not only innovative in redesigning business models, they do
play an important role in social innovation (Mulgan 2008).
Social Entrepreneurship: Two schools of thought

In consequence of the varying stress on particularities of SE Dees and Anderson (2006b) distinguish two schools of thought: The Social Enterprise School the other one is the Social
Innovation School.
The first school mainly got shaped in the USA. Already in the early 1980s there have been
demands towards business to engage in tackling social challenges, also in cooperation with
e.g. the government. Occasionally explicitly for-profits had been addressed, but the expression nonprofit enterprise had gradually evolved to describe the field. In any case the discussion and initiatives has been centered on the blending of business practices and social value
creation that e.g. Emerson still refers to (Emerson 2003). In the early to mid 1990s the use of
the term social entrepreneurship had been established to describe such kinds of organizations. The dropping of the element nonprofit hinted to the fact that organizations from different areas might be capable of putting the combination into practice (Dees & Anderson
2006b: 4144).
The second school of thought is mainly associated with Draytons organization Ashoka and
therefore with developing countries. Also in the early 1980s Drayton started to spot and support individuals in developing countries of whom he and his colleagues suspected that they
were able to foster social innovation and change with their initially small scale initiatives.
While Drayton first referred to individuals driving this change as public entrepreneurs,
Ashoka and others adopted the term social entrepreneur in the mid 1990s (Dees & Anderson
2006b: 4446). There certainly have been other systematic examples of SE before or at the
same time, just as there have been SE like social innovators a century ago (Bornstein 2007:
4047; for a discussion of early SE initiatives see also Alvord et al. 2004). The foundation of
Grameen Bank in the early 1980s in Bangladesh for instance might indeed be among the first
cases where innovation as well as the enterprising element of SE have been stressed simultaneously (Yunus et al. 2009: 48, 56-60), but the incidents referred to probably have been the
most visible landmarks for the social innovation element in SE.
It is, however, important to pronounce that, while distinct emphasis remains between the two
schools, it does neither mean that innovation plays no role in Social Enterprises nor that
earned income streams must not exist to qualify as a social innovator.
Dees and Anderson (2006b: 4748) underscore that the combination of both elements is what
makes SE distinct. Without innovative ways of applying business practices the issue might
also be comprised into the discussion on commercialization of the nonprofit sector (e.g.
Weisbrod 1998b). In the same way business principles can enhance the realization of socially
innovative ideas in organizations dealing with social issues. The scholars rather see a necessity of discussing SE as enterprising social innovation and considering [] social entrepreneurs who carry out innovations that blend methods from the worlds of business and philanthropy to create social value that is sustainable and has the potential for large-scale impact
(Dees & Anderson 2006b: 50).
The Social Business concept

The Social Business concept shaped by Yunus (Yunus et al. 2009) is one of the most recent
developments in SE. It is evident that SB is a hybrid concept that brings together features
from two different sides just as SE usually does, but with a particular stress on certain aspects:
It has the primary goal of the nonprofit organizations described previously, which usually is
the maximization of social or ecological impact. Besides, the nondistribution underscored in
the concept is a generic idea of nonprofit theory (Hansmann 1980: 838). Simultaneously the
model stresses profit-maximizing businesses characteristics. [] [a] Social Business is designed and operated as a business enterprise, with products, services, customers, markets, ex-
penses, and revenues (Yunus et al. 2009: 5). Opposed to most nonprofits and many SEOs a
SB is conceptualized so as not to rely on continuous fund raising in form of donations or subsidies at all.
To sum up, SB is a special form of SE that acts along certain, pre-defined principles stressing
the Social Enterprise school of thought but also incorporating the element of innovation.
Yunus et al. (2009: 711) point out that conventional business wisdom has to be challenged,
adapted or replaced by new, innovative ways of doing things. In economic terms it is thus
close to classical business enterprises, except for the non-distribution constraint and the necessity of adding new ideas to traditional business thinking. In terms of social impact it rather
aims at developing new solutions to social challenges or improving existing approaches than
at merely mitigating social problems, just as SE mostly does.
Strategic Corporate Social Responsibility

In order to map the field of Social Entrepreneurship comprehensively, it is not sufficient to
shed light on nonprofit elements. It is also necessary to take phenomena into account that involve in the profit-maximizing business world, which so to say delimits SE on the other hand
side. CSR itself comprises various notions and is being discussed from different perspectives.
This is illustrated by Gariga and Mels attempt to categorize the diverse definitions (2004).
They find that there are mainly four different kinds of theories: First, instrumental theories
that assess corporate social engagement as a means to lever economic success. Second, political theories that treat corporations as powerful players in society and are therefore concerned
with a responsible use of their power in the field of politics. Third, integrative theories that
focus on the fulfilment of social demands by companies. Fourth, ethical theories that deal
with the inherent societal, ethical responsibilities of businesses.
In terms of concrete activities two different facets of CSR are often referred to. The first facet
is that firms can shape their existing business in a way that it does not only satisfy legal requirements, but even exceeds societys expectations. The second possibility is to engage in
largely business unrelated philanthropic activity (Carroll 2008). What misses in this perspective is a link to pro-actively developing business models that are designed to address social
challenges in an economically profitable way as some SEOs do. One might claim the reason
is that the two concepts focuses are fundamentally distinct, but this is not entirely the case.
An overlapping of the concepts occurs in particular in the case of what Porter and Kramer call
strategic CSR (2006). The authors opt for assessing social responsibility activities in the
same way as core business activities. By doing so they claim an effective connection can be
established that might eventually lead to competitive advantage. CSR should be connected to
strategy and measured in terms of impact instead of cash amounts and volunteer hours spent.
It should be directed to maximize social impact and economic benefits simultaneously and
thereby create shared value. Companies should focus on areas where this is possible and leave
other fields to nonprofits or governments that might be in a better position to address them.
One example is Nestls Milk District (Porter & Kramer 2006: 13). Porter and Kramer distinguish between two types of CSR. The counterpart of strategic is responsive CSR. Furthermore CSR is spread over three different spheres: Generic social issues are not affected
by the firms ordinary operations. In turn they have no significant influence on a companys
competitiveness. Responsive CSR in this field might comprise donations for disaster relief.
While it might improve the image of the company it does not have a direct connection to the
firm success or its operations. Value chain social impact refers to areas that are affected significantly by ordinary business activity and vice versa. Responsive CSR in this case might be
represented by compliance to environmental standards in the production process. Strategic
CSR would include outstanding HRM practices that benefit the companys employees and
their families while attracting the most talented staff that can enhance firm success. Social
dimensions of competitive context are present if the external environment can strongly influence the firms competitive drivers. In these areas the companys operations can in turn create
high social impact and are thereby closest to the concept of SE.
Dacanay (2009: 177) remarks that SE and CSR do in any case play complementary roles in
the tendency towards the emphasis of the social side of the market economy. Besides, social
entrepreneurial actions may be comprised in the firms CSR concept being called strategic
CSR initiatives.
Base-of-the-Pyramid Business
The term BoP refers to the approximately 4 billion poorest people in the world. Therefore it
has a socio-economic and demographic dimension (Milstein et al. 2008: 41). As most of these
people live in the developing countries of South America, Africa and Asia it does almost have
the function of geographic localization.
By involving the poor people in developing countries in business transactions and thereby
addressing their needs, the poverty in those countries is going to be reduced according to the
BoP model. The model itself represents a combination of two streams within strategic management theory: First, the idea of expanding economic growth through innovation. The crucial point here is the shift of the focus on the source of innovation. While the area of innovation has classically been tied to company headquarters in industrialized countries, business
starts to replace the focus on developing countries as innovation centers. The second is the
increasing perception of the entire global economy. A large portion of the world population
has not been addressed by business until recently. Now, companies are beginning to see an
economic potential in exploring new customer groups at the base of the economic pyramid
with new or adapted types of products. The BoP model stresses that this is not only going to
benefit multinational companies (MNCs), but especially the targeted customers. BoP business
is a designated way of addressing poverty (Milstein et al. 2008: 4142).
This shall happen through the provision of products and services ranging from microcredit,
over affordable clothing and health care products to information and communication technology (ICT). Fighting poverty shall also be realized through local economic development and
inclusion, similar to the milk district case that had been termed strategic CSR. According to
Prahalad and Hart (2002) business leaders and western society should dismiss the imagination
that corporations are supposed to serve the rich, while NGOs and other nonprofits as well as
governments are going to care for the poor, the disadvantaged and the environment. Besides,
business should recognize that the poor can afford and use products similar to the ones in developed markets. It should further realize that products and cost structures can be reshaped so
that they can profitably compete for BoP markets. Since individual purchasing power is low,
products and services might have to be redesigned in terms of smaller package sizes or shared
access-models. Grameen Telecom e.g. builds on a system of telephone ladies who travel
even remote villages to sell mobile telephone calls per unit to their rural customers in Bangladesh (for a detailed insight into the business model see Seelos & Mair 2007).
Prahalad and Hart (2002) see MNCs in the lead of development at the BoP out of four reasons: First, they have the resources to establish an often inexistent infrastructure for new
businesses. Second, they can transfer knowledge from one place they are operating in to
another and thereby help to accelerate the development. Third, MNCs might unite and reinforce already existing isolated attempts of local communities, governments and NGOs.
Fourth, they can transfer innovations and lessons learned back to developed markets, which
might e.g. improve their ecological performance. Nevertheless, the authors stress that collaboration with local communities is going to be crucial for success. Additionally, partnerships
with nonprofits and governments with their complementary competencies make the difference
in creating successful BoP models.
The main differences we see in between BoP business and SE become already visible in the
two terms themselves. The first term refers to business that is being expanded to poor communities. The social dimension of poverty alleviation is originally supposed to emerge mainly
from inclusion and general economic development (Prahalad & Hammond 2002; Prahalad &
Hart 2002). The products and services offer added value, but they are not necessarily directed
to mitigate social ills. Sen (2001) pushes for regarding poverty as a multi-facetted problem
instead of focusing merely on the lack of income. He regards poverty as capability deprivation comprising the fields of health care, nutrition, education, social security and human
rights. To foster improvements in these fields Karnani (2007) underlines the role of local entrepreneurial growth. At the same time he criticizes the attitude of seeing all poor people as
born entrepreneurs and demands a shift to promoting the creation and scaling of local small
and medium enterprises that can create employment for the poor. The underlying mechanism
of poverty alleviation through economic advancement, however, does not change. Furthermore, the BoP concept focuses exclusively on poor populations in the developing world.
The primate of SE on the other hand is the tackling of social challenges and the creation of
social impact (see e.g. Dees 2001; Defourney 2004: 1618). The business aspect is often rather seen as a valuable and increasingly important means to create that impact in a more sustainable way. If it is not possible to create complete economic self-sufficiency, greater effectiveness and efficiency is usually emphasized (see e.g. Dees et al. 2001). Moreover the concept comprises developing as well as developed countries.
The geographic perspective

Finally it is nonetheless necessary to reflect about the differences in SE between developing
and industrialized countries. The particularity of SEOs in industrialized countries is that they
probably mainly emerge from civil society, either as start-ups or as nonprofits reoriented to
business practices directed at the provision of core activities. The classical business sector
seems to be less suitable to move into SE. This accounts in particular, because SE fields apart
from general local development, the acceleration of ICT connectivity, nutrition or basic
healthcare that apply to developing countries in particular seem to offer less opportunity for
earned income generation. Originally commercial business engaging in social entrepreneurial
activity is therefore more likely to be found in developing countries, be it in form of MNCs or
local business. There it can complement classical nonprofits and SEOs tending to the nonprofit sector that have to continue covering areas that might never or just very slowly become
economically self-sufficient. This does not mean that SEOs in developed countries would not
strive to generate income, however, activity fields of SEOs in industrialized countries for
instance in the field of education probably offer less economic potential than the ones underscored by the BoP concept (Prahalad & Hammond 2002), not even if those are overestimated as some scholars claim (Karnani 2007).

Upon the revision of literature on what SE comprises and what it can be contrasted with, it is
now possible to sketch an integrative SE scheme.
Figure 1 The Social Entrepreneurship Scheme (SE scheme)

Source: own illustration based on preceding discussion
The scheme does not focus exclusively on income generation, since we have seen that it is not
the only important dimension of SE. The social impact is actually the essential aspect in SE,
but it is included in neighboring concepts too, as seen in the foregoing discussion. It may
comprise different notions and is therefore split into categories ranging from 'socially responsible acting, e.g. in ordinary business activity, to unprecedented solutions to social problems. The innovation aspect discussed is incorporated into the upper end of the social impact
dimension by addressing unprecedented solutions or the improvement of existing solutions. These are contrasted with mitigating social problems by e.g. making gifts to homeless shelter providers or cultural societal advancement like the sponsoring of public concerts
or sports competitions.
The horizontal dimension is the one of economic self-sufficiency contrasting earned income with external contributions in terms of donations from individuals, foundations and
corporations or government subsidies. Volunteering time as philanthropic contribution plays a
role in sketching the traditional nonprofit sector. Taking into account Salamon et al.s findings (2003) earned income makes up about 40% of nonprofit income volunteering time being
interpreted as philanthropic input (see the dotted violet line), volunteering time being excluded earned income accounts for about 50% of all income. Earned income is raised primarily from fees for mission related or ancillary services. It is to be disputed whether government
payments based on service contracts should be dealt with as earned income or external contribution. The decision has been made to include it as earned income, since it has to be contested
for in quasi-markets. Therefore government funding has been split into two categories: In
addition to the one just mentioned non-performance-based, service unrelated government

subsidies have been included in the category of external contributions. Consequently the
earned income category in general includes direct fees (end user fees) and might include indirect payments for services (made by third parties like the government). In dependence of the
categorization of funding sources the existing data on NPO funding might have to be adapted,
which is abstracted from for reasons of simplification.
The SE sphere in the scheme is divided into the Social Innovator dimension that lays less
stress on the earned income generation in contrast to the Social Enterprise dimension. The
border is quite arbitrarily located at 50%, where earned income of traditional nonprofits lies
at a maximum on average and because of the fact that SEOs termed Social Enterprises are
often stated to be generating more income than traditional nonprofits. This certainly has to
be looked at in perspective considering that income patterns vary significantly e.g. with reference to the particular field of activity (Salamon et al. 2003). The aspect of relativity is underlined by drawing the border as a dotted, moveable and permeable line. Additionally the categories of Social Innovator and Social Enterprise are marked with two headed arrows,
which do first re-emphasize that the borderline is not fixed and second that there actually is no
real borderline in the first place, despite the existence of the two schools of thought, since a
Social Enterprise can be innovative just as a Social Innovator can be enterprising.
The Social Business sphere along its predefined principles is part of SE ranging between
(nearly) financial self-sufficiency and profit generation with the clear restriction of an entire
reinvestment of proceeds, except for the initial phase of investment repayment to start-up
funding investors.
CSR can focus on shaping non-social business activity as well as on charitable activities
including volunteering. As elaborated by Porter and Kramer (2000) these activities are mostly
responsive, but may also be strategic. Seelos and Mair (2004) indicate that a categorization
into social and non-social is problematic whenever a reference point is missing. They propose the United Nations Millennium Declaration (United Nations 2000) to serve as such, especially in the context of developing countries. A counterpart for industrialized countries or a
more universally applicable guideline is difficult to be found as social problems are probably
quite context-sensitive. For the purpose of the SE scheme a simplified distinction by using the
term non-social to underline that an initiative does not tackle a social challenge, and is therefore linked to ordinary commercial business activity, seems sufficient. Strategic CSR business models in contrast to the two ones initially mentioned shall make use of the companys
core competencies and tackle social challenges. Some of them might therefore be included
into the sphere of SE. However, if the profit generating and distributing aspect becomes dominant and social or environmental goals of the business initiative fall behind or are only byproducts in the first place, the initiative slips out of the SE sphere at the right hand side of the
pattern. In turn, if the profits of a targeted project are entirely reinvested, there is an intersection of SB and strategic CSR.
As we have seen BoP business might be considered as a part of the strategic CSR concept.
In addition it solely focuses on the BoP population and thus mainly on developing countries.
The other concepts in contrast, namely NPOs, CSR and SE can be applied to both, developing and industrialized countries. This applies for the SB concept too. Although it might
be strongly associated with developing countries, since it emerged there, it is of significant
relevance for industrialized countries as well. Since the SE scheme does not comprise a target
group distinction in terms of this primarily geographical aspect, BoP is totally subsumed to
strategic CSR. The possibility of increasing precision in describing an individual SEO in
this regard is given by symbols that can be attached. A triangle can be attached to SEOs targeting the BoP population, while a circle allows for indicating that an SEO operates in industrialized countries.
Finally, arrow symbols give an assessment of the organizational connection between social
impact and income generation within an SEO. (1) It might be that income which is generated
in a separate entity is used to finance social impact generation (separate bottom line). (2) The
two aspects might be integrated, while the organization still has to make a trade-off between
social impact generation and income generation. (3) Scaling income generation might simultaneously increase the generated social impact.1
Concluding comments
The SE scheme aims at clarifying what the concept comprises and which intersections there
are to previously existing definitions and models in the social sphere. The different literature
streams surrounding the area of social value creation and impact activity namely the one of
nonprofit literature as well as for-profit CSR, business ethics and BoP literature have been
integrated.
To a certain extent the scheme builds on the traditional tri-sectoral model (Pestoff 1992) consisting of the spheres of the state (organizationally embodied by public agencies), the market
(organizationally embodied by business firms) and civil society (organizationally embodied
by NPOs), while mainly relating to the latter two in terms of terminology and existing definitions. At the same time it also abstracts from the model in terms of detaching from delimiting
categories, putting more stress on the interweaving and relations of the involved organizations
and concepts. The scheme serves for illustratively and roughly categorizing organizations,
especially in an organizationally intercomparative perspective, and sheds lights on existing
theoretical intersections.
In consequence, it supports Glnzel and Schmitz (Glnzel & Schmitz 2010; Glnzel &
Schmitz 2011) hypothesis that strict distinctions between organizations perceptibly belonging
to one or the other sphere seem doubtful and that rather the attitude of interpreting every organization as being hybrid to a certain extent more accurately reflects reality. For this purpose
the scholars have developed a heuristic hybridity cube-model for analyzing individual entities
on the organizational level. Thereby they fundamentally integrate the sphere of the state into
the model. Thus, while the SE scheme focuses on the phenomenon of SE mainly emphasizing
the two spheres of civil society and the market and serves best for categorizing organizations
on the macro level, Glnzel and Schmitz cube model takes a meso and micro level perspective and tries to capture hybridity even more holistically a fact that makes it applicable to
almost every organization. Therefore the first rough indication given by the SE scheme can be
deepened by applying the hybridity cube-model in order to derive a more precise picture of
the meso and micro organizational level if desired.
Despite certain imperfections and potential for improvement, which classifications probably
always bring along, I hope to have been able to map existing theory and to develop a pragmatic tool that might especially be used for putting discussions of SEOs into relation and for
more precisely locating them within the larger frame. In any case the scheme hints to the advantageousness of integrating current research streams and disciplinary angles in order to capture SE as a form of hybridity in a more holistic way.
This model has been adopted from (GENISIS Institute for Social Business and Impact Strategies 2009).
10
Biographical notes
Gorgi Krlev holds a masters degree in Business Administration with intercultural qualification (Anglo-American studies) from the University of Mannheim. He has dealt in detail with
strategic aspects in Social Entrepreneurial Organizations across diverse cultural settings.
The same accounts for the analysis of political frameworks, their effects on Social Entrepreneurship and implications for improvement.
His current work at the Centre for Social Investment (CSI) in Heidelberg focuses on issues of
Governance and Leadership in Hybrid Organizations. Simultaneously he is preparing to
pursue a PhD.
Gorgis main research interests lie in social impact measurement, rating and social investment
as well as leadership, governance and strategic aspects in hybrid organizations. The phenomenon of Social Entrepreneurship, especially in industrialized countries (Germany), is one of
the grounding frameworks for his work.
11
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