LLORENTE & CUENCA 30 Nov 2017 // 4:23PM GMT
The general definition of the so-called social entrepreneurship is “the use of the techniques by start-up companies and other entrepreneurs to develop, fund and implement solutions to social, cultural, or environmental issues.” But what is the idea behind this term? It is the combination of passion for social work with a business-like discipline, determination and innovation that comes along with any entrepreneurial approach. When it comes to applying this concept in any sector, one has to keep in mind the following guideline: the adoption of a mission to create and sustain social value; the recognition and pursue of new opportunities that attend the mission; the achievement of social value without being limited by the resources present in a specific territory; and finally, the responsibility for a community and for the outcomes of such process.
Nowadays, social entrepreneurship is expanding rapidly, specifically in Latin America, a region remarked by its emerging countries. But why is this? This occurs, because it is an area that has not being able to tackle effectively societal problems such as inequality and informal employment, women rights, and education that prevent the region from progressing accordingly. Additionally, social entrepreneurship in Latin America seeks to combine a sustainable market-driven model that is committed to achieve great community benefits with the help of technology, interconnectivity and access to capital push.
Clearly, the potential for long-lasting and transformative solutions to society is the main benefit of social entrepreneurship. However, many things are entailed when it comes to maximizing a country’s economy and its social value. Regarding enhancing the economic value of a region, social entrepreneurship stimulates job growth, market opportunities, and economic expansion. Moreover, concerning social value, this concept seeks to achieve social capital to facilitate economic and social development, as well as specific program outcomes such as the reduction of poverty, improvement of infrastructure, education and self-esteem of communities. Also, another benefit related to social value is community economic development, in the form of engaging groups of people who before, were less likely to participate in society and the economy.
If social entrepreneurship improves the conditions of communities in such ways, why is it not fully applied where needed? As already mentioned, firstly, Latin America is a region that counts with high inequality, especially if we compare it with Europe. Secondly, Latin America is remarked by a weak public educational system. Furthermore, the business climate within the continent suffers several problems regarding regulation, corruption, and private investment, among others. Finally, even though it counts with an advantage in regards to natural resources, it needs to learn how to capitalize those assets by combining knowledge and technology.
As already mentioned before, in times where knowledge, technology and resources flourish, thousands of communities continue to struggle with precarious human and environmental issues such as hunger, gender inequality, environmental destruction, poverty, and an ongoing huge gap between the rich and the poor. Moreover, the concept of social entrepreneurship goes along with the rise of SMEs in developing countries. Additionally, these types of business attract impact investors, because they seek to achieve a positive social impact and the improvement or protection of the environment and or communities they work with.
Therefore, one can conclude the problems are structural, which leaves room for improvement and for social entrepreneurs to develop their business ideas in areas to overcome these needs. For instance, women have the necessity of becoming independent in many areas due to economic factors and the lack of a supporting infrastructure. This is why, many businesses focus on empowering women to create a greater impact by playing an important role in helping a disadvatanged group (around 50% of the world’s population). An example of a company that does this is Krochet Kids, located mainly in Peru and Asia. It provides job opportunities to women in need through the purchase of hand-signed products made by them and the creation of an online platform so that people can learn more about the person who made the item. Another case of social entrepreneurship is the Bolivian company called Coronilla that produces and exports high quality, organic and gluten-free pasta from the Andean grains. Furthermore, we have the case of the Mexican company called Fabrica Social that supports and promotes the work and knowledge of indigenous artisans by producing clothing and artisanal textiles. It is committed to generate wealth for its employees and contributes to the country’s development, while protecting the environment. And these ones are just a few of the many examples of companies that base their businesses on the concept of social entrepreneurship (for further examples).
However, despite the many examples of companies using this concept as their business core, there is the existing issue of how they communicate with their diverse groups of stakeholders? Among the stakeholders we can find both spectrums: investors and the communities itself. Therefore, social entrepreneurs need to speak the same language in order to succeed. In regards to communicating with the community they work with, the practice of storytelling and storydoing is essential to engage and to inspire action, which is relevant when creating social impact. Also, social media play an important role. Creating an online presence to communicate what is behind a brand, to promote the effort of the communities they serve, and to invite their audience to participate is a key factor in any social program.
In conclusion, a business theory such as this one entails an explicit and central mission statement that shapes the way in which social entrepreneurs assess the opportunities and shape their ventures. The mission is directly related to the creation of impact and not of wealth. Wealth is just an end for them in order for their businesses to survive and sustain. When it comes to applying this concept in Latin America, one cannot compare its application to the one of other regions. In this region, it is mainly micro or small businesses and the fact that people are moved mainly by necessity and not by opportunity. Moreover, as seeing in the examples and also due to the fact that it is a territory remarked by its resources, social entrepreneurs tend to operate in traditional sectors such as furniture, textiles, metallurgy, and food among others. In addition, the main goal of social entrepreneurship is to improve the quality of life of individuals and communities by creating social value and innovative paths, not necessarily resulting in radical changes, which are harder to achieve, but in incremental ones that are more tangible solution to the existing concerns. Finally, the efforts entailed in creating social value need the support of communications. It not only attracts and builds an audience of supporters that share the same values and goals, but in return it fuels transparency and accountability which is the backbone of this type of business.
This paper was based on two publications by Luisa Garcia, Partner and COO Latin America (Sustainability, an essential component of corporate DNA )and David G. Natal, Global Director of Consumer Engagement at LLORENTE & CUENCA (From “Storytelling” to “Storydoing”, what 30 brands have to say on the emergence of stories).