Social entrepreneurship can be defined as the way of creating and managing businesses with the aim of generating a positive impact on the environment or society through the use of business strategies that serve to solve cultural, social or environmental problems.
This is precisely where the difference lies with traditional entrepreneurship or business; while the main raison d’être of the latter is to maximise economic profit for all shareholders, social entrepreneurship focuses on social or environmental issues and the profits generated are reinvested in these areas.
Characteristics of social entrepreneurship
Social entrepreneurship, which combines entrepreneurial spirit with social commitment, has a number of characteristics. Let’s take a look at what these are and their main features:
- Social purpose. As we mentioned at the beginning of the article, the most notable objective of this type of entrepreneurship is to create a positive social or environmental environment by prioritising social action over economic profit.
- Community focus. Social issues and potential problems are at the heart of the strategy, which seeks to change or transform realities or improve the quality of life of the most disadvantaged groups.
- Collaborative leadership. The promotion of collaborative leadership and the creation of networks with other social, business, government and other actors are another aspect that sets social entrepreneurship apart.
- Sustainable business model. Although it can operate like a traditional company in terms of structure, sales and profit generation, most of its profits, as mentioned above, are reinvested to achieve social goals.
- Self-sustainability. Linked to the previous point, another feature is the pursuit of economic self-sustainability. It is also scalable when attempting to grow and replicate its impact in other contexts or communities.
- Long term. Although it is true that this is not unique to social entrepreneurship, ensuring long-term growth and impact requires a strategy focused on this.
Types of social entrepreneurship
There are different types of social entrepreneurship, differentiated by their focus, scope, structure or specific objectives. Let’s take a look at what they are:
By objective and scope
Depending on the scope it seeks to achieve or the objective it aims to fulfil, there are different types of social entrepreneurship:
- Promotional. Its main aspiration is to disseminate values, ideas or behaviours that raise awareness and/or mobilise people for an environmental or social cause.
- Community. In this case, the focus is on meeting the needs of specific communities or areas, acting directly in the area concerned.
- Long-range or global. Unlike the previous case, this type of social entrepreneurship is dedicated to addressing problems on an international or universal scale.
- Specialised. With the aim of educating, informing or disseminating knowledge on a specific topic, this type of social enterprise is led by professionals with a high degree of specialisation.
- Transformational. Through innovation and entrepreneurial action, it seeks to act on the root causes of social or environmental problems and achieve systemic transformation.
By business model
Depending on the business model, there are the following types:
- Non-profit. Their objective is to reinvent surpluses in the social or environmental mission they pursue, not to generate profits.
- Donations. Although not strictly social enterprises, for-profit companies may allocate part of their profits to social or environmental causes.
- Cooperative. Through collective management, these companies focus on the well-being and development of both their members and the community.
- Social purpose. A business explicitly founded to address a social mission that integrates social responsibility into its economic model.
- Socially responsible. Companies whose main objective may be profitability also have mechanisms such as incorporating environmental or social missions into their regular operations.
