Is all entrepreneurship social?
The field of social entrepreneurship is still in its infancy, so naturally writers on the subject find plenty to disagree about, right down to basic definitions. Case in point: Carl Schramm, the CEO of the Ewing Marion Kauffman Foundation, wrote an article this spring for the Stanford Social Innovation Review entitled, “All Entrepreneurship is Social,” in which he suggested that industrialists and tycoons like Cornelius Vanderbilt and Bill Gates should be considered “model social entrepreneurs.” After all, didn’t they create jobs, provide goods and services, and raise the standard of living for large numbers? He also worried about the “danger” of using the modifier “social” because it might diminish “the contributions of regular entrepreneurs.” (Emphasis his.)
To be sure, successful entrepreneurs bring social benefits. (Many also create new problems.) The real question is: Is it useful to distinguish one version from the other? And, if so, how? Take the example of Stanley Kaplan, founder of Kaplan, Inc., who made a fortune marketing test preparation to college aspirants. Kaplan built a great business helping middle-class youths attend better colleges. He also created lots of jobs. Is he a social entrepreneur, though? Or would a social entrepreneur in his shoes have looked for ways to expand college opportunities for low-income students who are under-represented in college?
In our book, Social Entrepreneurship: What Everyone Needs to Know, Susan Davis and I argue that there is a very real distinction between these two forms of entrepreneurship, and that the distinction boils down to a matter of priorities.
Here’s an excerpt:
The difference between business and social entrepreneurship has to do with purpose, or what the enterprise is trying to maximize. For social entrepreneurs, the bottom line is to maximize some form of social impact, usually by addressing an urgent need that is being mishandled, overlooked or ignored by other institutions. For business entrepreneurs, the bottom line may be to maximize profits or shareholder wealth, or to build an ongoing, respected entity that provides value to customers and meaningful work to employees.
The world needs both kinds of entrepreneurship; one should not be deemed superior to the other, although social entrepreneurship is often more challenging because it tackles problems that have defied governmental approaches and for which market solutions have not yet been demonstrated. And, of course, there are overlaps: social entrepreneurs often earn profits through social enterprises, and businesspeople are frequently concerned with social responsibility. Both types of entrepreneurship require vision, initiative, organization building and “marketing.” In terms of skill and temperament, social and business entrepreneurs are strikingly similar. But their primary objectives are different.