Social entrepreneurship is good for society

My blog is really about business strategy, but I have given my view on corporate social responsibility so I thought I should also balance the discussion by commenting on social entrepreneurship, which is something totally different.

First a definition from wikipedia (here):

Social entrepreneurship means identifying or recognizing a social problem and using entrepreneurial principles to organize, create, and manage a social venture to achieve a desired social change.

Sometimes this is accomplished through a for-profit venture (e.g. Graemen Bank), but more often it is a not-for-profit venture (e.g. Ashoka). Governments giving foreign aids (e.g. SIDA of Sweden) or big charities (e.g. Red Cross) are not social entrepreneurship because the entrepreneurship is missing. (But I would not be surprised if an academic writes a paper about corporate social entrepreneurship in established not-for-profit organisations soon.)

There is currently a focus in business on innovating by creating new ways of doing business. This is innovation that does not involve a research laboratory. New ways of doing business are often pioneered by  entrepreneurs. The same should be true regarding solutions to social problems. Why should the bulk of money be channelled through existing organisations like the Red Cross or SIDA? After having been around for decades, are they really devoted to providing the best solutions? There are no doubt good people in these organisations, but as organisations they have become bureaucratic. The Communication Director of the Red Cross in Sweden was caught stealing USD 1M from the charity. Its governing board was asleep and the chairman of the board had to leave after it became known that he received USD 150K for leading the board meetings. Such behaviour is sadly typical for many established organisations, both for-profit and not-for-profit. There needs to be a turnover among organisations for the population of organisations to stay healthy. 

Dispersing public money to smaller social entrepreneurship organisations will naturally also have its problems, but probably not more so than for normal entrepreneurship. There will be some misuse of and duplication in  the system, but the dynamic gains due to innovation will probably be much higher. This has proven to be the case for normal entrepreneurship. So why not also in social entrepreneurship?

Another benefit of social entrepreneurship compared to corporate social responsibility is that the whole organisation exists for a specific mission. This would leave normal companies to focus on delivering products and services and not waste time with corporate social responsibility. We would get much more pluralism in organisational forms. That would be good. It would in fact be better to tax companies slightly higher and spend the proceeds on social entrepreneurship, if necessary, instead of the companies engaging in corporate social responsibility projects of their own choice.

There is a lot of room for academics to provide an outline for an alternative "ecosystem" for charitable activities.