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Social and Commercial Entrepreneurship: Same, Different, Or Both? ISSN 0080-2107 Social and commercial entrepreneurship: same, different, or both? James Austin Artigo publicado originalmente pelo Howard Stevenson Entrepreneurship: Theory and Pratice Journal, da Jane Wei-Skillern Baylor University, Estados Unidos, volume 30, número 1, páginas 1-22, janeiro de 2006. Empreendedorismo social e comercial: iguais, An earlier version of this article was presented at nd diferentes ou ambos? the 32 Annual ARNOVA (Association for Research on Nonprofit Organizations and Voluntary Action) conference in Denver, Colorado in November O empreendedorismo tem sido o motor que vem impelindo uma RESUMO of 2003. We thank James J. Chrisman and two boa parcela do crescimento do setor dos negócios, além de ser a anonymous reviewers for their insightful comments força motriz responsável pela rápida expansão desse setor. Neste and suggestions on an earlier draft of this article. artigo, oferece-se uma análise comparativa do empreendedorismo comercial e do social, valendo-se de um modelo analítico pre- All of the authors contributed equally to this valecente, proveniente da área de empreendedorismo comercial. research; authors’ names are listed alphabetically. Na análise, destacam-se as principais similaridades e diferenças entre essas duas formas de empreendedorismo e apresenta-se DOI: 10.5700/rausp1055 um arcabouço para uma abordagem mais sistemática e eficaz do processo empreendedor. Exploram-se as implicações dessa análise de empreendedorismo social tanto para seus praticantes como para seus pesquisadores. Palavras-chave: empreendedorismo comercial, empreendedorismo James Austin é Professor da Harvard Business School, social, similaridades, diferenças. Boston, MA, Estados Unidos (Boston, MA 02163). E-mail: [email protected] 1. INTRODUCTION Endereço: Harvard Business School Soldiers Field Road Social entrepreneurship, or entrepreneurial activity with an embedded so- Boston, MA 02163 cial purpose, has been on the rise in recent decades. Apartial indicator of this United States surge is revealed by the growth in the number of nonprofit organizations, which increased 31% between 1987 and 1997 to 1.2 million, exceeding the 26% rate Howard Stevenson é Professor da Harvard Business of new business formation (The New Nonprofit Almanac and Desk Reference, School, Boston, MA, Estados Unidos (Boston, MA 2002). However, the dynamic is even more robust, as other forms of social 02163). entrepreneurship, beyond that occurring within the nonprofit sector, have also E-mail: [email protected] flourished in recent years. The recent boom in social entrepreneurial activity Jane Wei-Skillern é Professora Assistente da makes a comparative analysis between commercial and social entrepreneur- Harvard Business School, Boston, MA, Estados ship timely. Social entrepreneurship is still emerging as an area for academic Unidos (Boston, MA 02163). inquiry. Its theoretical underpinnings have not been adequately explored, and E-mail: [email protected] 370 R.Adm., São Paulo, v.47, n.3, p.370-384, jul./ago/set. 2012 SOCIAL AND COMMERCIAL ENTREPRENEURSHIP: SAME, DIFFERENT, OR BOTH? the need for contributions to theory and practice are pressing. be pursued through various vehicles. Indeed, examples of social This article aims to open up some avenues of exploration for entrepreneurship can be found within or can span the nonprofit, social entrepreneurship theory development and practice by business, or governmental sectors. presenting an exploratory comparative analysis of the extent to We will use this broader conceptualization of social en- which elements applicable to business entrepreneurship, which trepreneurship here to offer a comparative analysis with com- has been more extensively studied, are transferable to social mercial entrepreneurship. We define social entrepreneurship entrepreneurship. To a lesser degree, we will also explore the as innovative, social value creating activity that can occur reverse applicability or the ways in which insights from social within or across the nonprofit, business, or government sec- entrepreneurship can contribute to a deeper understanding of tors. However, most definitions of social entrepreneurship in business entrepreneurship. We offer a comparative that identifies popular discourse, as well as in the academic literature, focus common and differentiating features between commercial and primarily on social entrepreneurship within and across the social entrepreneurship. This exploration develops new insights nonprofit and business sectors. To build on previous work and about social entrepreneurship and points to opportunities for for the purposes of this article, we will limit our discussion to further elaboration by researchers, as well as to practical implica- these two sectors as well. tions for social entrepreneurs and funders on how to approach To approach the comparative analysis more specifically, we social entrepreneurship more systematically and effectively. offer the following series of theoretical propositions focusing In the next section, we discuss some of the key distinctions on four different variables to guide the comparison: between social and commercial entrepreneurship as a modest step toward the development of a body of theory on social entre- ● Market failure. One theory behind the existence of social- preneurship. To analyze these theoretical propositions in depth -purpose organizations is that they emerge when there is and to draw out lessons for managers, we will then set forth one social-market failure, i.e., commercial market forces do not prevailing model used to examine commercial entrepreneur- meet a social need, such as in public goods (Weisbrod, 1975, ship and to explore new ideas that emerge when it is applied 1977) or in contract failure (Nelson & Krashinsky, 1973). to social entrepreneurship. The article concludes by presenting This is often due to the inability of those needing the services implications for social enterpreneurial practice and research. to pay for them(1). A problem for the commercial entrepreneur is an opportunity for the social entrepreneur. Our proposition 2. THEORETICAL CONSIDERATIONS here is: Market failure will create differing entrepreneurial opportunities for social and commercial entrepreneurship. Definitions of social entrepreneurship range from broad to narrow. In the former, social entrepreneurship refers to ● Mission. The fundamental purpose of social entrepreneur- innovative activity with a social objective in either the for- ship is creating social value for the public good, whereas -profit sector, such as in social-purpose commercial ventures commercial entrepreneurship aims at creating profitable (e.g., Dees & Anderson, 2003; Emerson & Twersky, 1996) or operations resulting in private gain. This contrast is, of in corporate social entrepreneurship (e.g., Austin, Leonard, course, overstated. Commercial entrepreneurship does ben- Reficco, & Wei-Skillern, 2004); or in the nonprofit sector, efit society in the form of new and valuable goods, services, or across sectors, such as hybrid structural forms which mix and jobs, and can have transformative social impacts. Such for-profit and nonprofit approaches (Dees, 1998). Under the transformations can even be a driving motivation for some narrow definition, social entrepreneurship typically refers to commercial entrepreneurs. Nonetheless, the differences in the phenomenon of applying business expertise and market- purpose and reward are useful for our comparative analysis. -based skills in the nonprofit sector such as when nonprofit Our proposition is: Differences in mission will be a funda- organizations develop innovative approaches to earn income mental distinguishing feature between social and commercial (Reis, 1999; Thompson, 2002). Common across all definitions entrepreneurship that will manifest itself in multiple areas of social entrepreneurship is the fact that the underlying drive of enterprise management and personnel motivation. Com- for social entrepreneurship is to create social value, rather than mercial and social dimensions within the enterprise may be personal and shareholder wealth (e.g., Zadek & Thake, 1997), a source of tension. and that the activity is characterized by innovation, or the cre- ation of something new rather than simply the replication of ● Resource mobilization. The nondistributive restriction existing enterprises or practices. The central driver for social on surpluses generated by nonprofit organizations and the entrepreneurship is the social problem being addressed, and the embedded social purpose of for-profit or hybrid forms of particular organizational form a social enterprise takes should social enterprise limits social entrepreneurs from tapping into be a decision based on which format would most effectively the same capital markets as commercial entrepreneurs. Ad- mobilize the resources needed to address that problem. Thus, ditionally, the economics of a social entrepreneurial venture social entrepreneurship is not defined by legal form, as it can often make it difficult to compensate staff as competitively R.Adm., São Paulo, v.47, n.3, p.370-384, jul./ago/set. 2012 371 James Austin, Howard Stevenson, and Jane Wei-Skillern as in commercial markets. In fact, many employees in social three main streams of research, which include a focus on the entrepreneurial organizations place considerable value on results of entrepreneurship, the causes of entrepreneurship, and nonpecuniary compensation from their work. Our proposi- entrepreneurial management
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