Sunday, January 17, 2010

New GEM survey cites social entrepreneurs

The latest Global Entrepreneurship Monitor was launched today in Santiago, Chile, and it’s showing that young social entrepreneurs are rising in influence and number across the world, chiefly in innovation-driven economies.

It was the first time that the 10-year-old survey partnership between the London Business School and Babson College – the largest single study of entrepreneurial activity in the world -- included a measure of new social enterprise activity in its annual survey.

Its findings on social entrepreneurship across 49 countries (SE defined here as “individuals engaged in entrepreneurial activities with a social good”) showed that:
  • Social entrepreneurial activity appears to rise slightly with a country’s stage of economic development. “Individuals in richer countries, having satisfied their own basic needs, may be more likely to turn to the needs of others,” the study said. “In other words, the opportunity cost of social entrepreneurship may be higher in developing countries.”
  • More men than women started socially oriented ventures in 2009.
  • Social entrepreneurs tend to be active at younger ages than business entrepreneurs.
  • Better-educated individuals were more likely to be social entrepreneurs.
  • Social ventures were started in a variety of areas, notably education, health, culture, economic development, and the environment.
  • The distinction between “social” and “regular” entrepreneurship is sometimes blurred. However, using a more refined spectrum of social enterprises based on innovation and predominant organizational objectives, results suggest that social objectives (not-for-profit and hybrid social enterprises) still prevail over more economic (for-profit social enterprises) and less innovative ones (traditional NGOS).
  • Social entrepreneurial activity is much lower than traditional entrepreneurial activity in almost all countries surveyed, though in some countries (chiefly Peru, Colombia, Venezuela and Jamaica), there is significant overlap of social and business entrepreneurship, suggesting that “social” and “business” entrepreneurship categories may be blurred.
  • Social entrepreneurs differ widely in the type of organizations launched and the kind of social or environmental problems they try to solve. Social enterprises identified in the report spanned a wide array of areas such as education, health, culture, economic development and the environment. While sector participation does not vary much by country, there are differences in social issue focus among the three country groups by economic development. Social entrepreneurs in factor-driven economies tend to focus on more elementary issues and pressing needs such as basic health care provision, access to water and sanitation or agricultural activities in rural areas. In innovation-driven economies, individuals are particularly active in launching culture-related organizations, providing services for disabled people, focusing on waste recycling and nature protection or offering open-source activities such as online social networking.
GEM researchers also developed four broad groups of social enterprises: traditional NGOs (high levels of social/environment
Goals and not-for-profit status); Not-for-profit social enterprises (high levels of social/environmental goals; not-for-profit status; innovation); Hybrid social enterprises ( high levels of social/environmental goals; earned income strategy “integrated” or “complementary” to the mission), and For-Profit social enterprises (high but not exclusively social/environmental goals; earned income strategy.)

Across all 49 countries surveyed, not-for-profit social enterprises were most prevalent (24%); followed by hybrid for-profit/nonprofit models; for-profit social enterprises (12%), and traditional NGOs (8%). However, there were regional preferences. For example, hybrids were most popular with social entrepreneurs in the Scandinavian countries of Finland and Iceland, as well as in Algeria, Uganda, the Dominican Republic, Hungary, Latvia, Malaysia, Belgium, France, the Netherlands, Slovenia and Switzerland. Meanwhile, the for-profit social enterprise model is most favored, GEM says, by the United Arab Emirates, Venezuela and Romania.

While the rate of social entrepreneurial activity is dwarfed by traditional enterprise activity in efficiency-driven countries, they are a “significant” component of entrepreneurship in many innovation-driven countries. “A significant minority of social entrepreneurs, particularly in developing countries, appear to wish to have a profitable business that at the same time addresses social issues,” the report said. “This demonstrates that for many people, the categories of “social” and “business” entrepreneur are artificial, and more holistic definitions of entrepreneurship are needed if we are to capture the true extent of this phenomenon.”

What do you think? Let us hear from you.

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