Iguban, Chris Allerie August 26, 2024

ENT205 S1 2024-25 (Social Entrepreneurship Opportunities) TF 1:00 – 2:30

ENT205- A2
SOCIAL ENTREPRENEURSHIP THEORIES AND FRAMEWORKS

Social Entrepreneurship: Theories and Frameworks for Driving Positive Change

Social entrepreneurship is a dynamic field that leverages entrepreneurial principles to address

pressing social and environmental challenges. It seeks to create sustainable solutions that
benefit communities, marginalized groups, and the planet. This field is characterized by its dual
mission: achieving social impact while ensuring financial sustainability. This response will delve
into the key theories and frameworks that underpin social entrepreneurship, exploring their
origins, applications, and implications, while adhering to APA 6th edition referencing style.

Theoretical Foundations of Social Entrepreneurship

Social entrepreneurship draws upon a diverse range of theoretical perspectives from various
disciplines, including economics, sociology, and management. These theories provide a
conceptual framework for understanding the motivations, strategies, and impact of social
ventures.

1. The Triple Bottom Line (TBL): Popularized by John Elkington, the TBL framework
emphasizes three dimensions of performance: profit, people, and planet . Social entrepreneurs
strive to create value across all three domains, balancing financial viability with positive social
and environmental impact. For example, Patagonia, the outdoor clothing company, focuses on
sustainable materials, fair labor practices, and environmental conservation, demonstrating a
commitment to the TBL principles

2. Resource Mobilization Theory: This perspective focuses on how social entrepreneurs

acquire and allocate resources to achieve their goals. It recognizes that social ventures face
unique challenges in attracting funding, volunteers, and partnerships. Ashoka, a global network
of social entrepreneurs, exemplifies this theory by providing financial support, mentorship, and
networking opportunities to changemakers worldwide.

3. Institutional Theory: This theory examines how social norms, regulations, and cultural
expectations shape social entrepreneurship. It emphasizes the role of institutions in influencing
the legitimacy and acceptance of social ventures. Fair trade certification, for instance, has
become an institutionalized practice, signaling to consumers that products meet ethical
standards and supporting fair trade organizations operating as social enterprises.

4. Effectuation vs. Causation: Social entrepreneurs often employ effectuation rather than
traditional causation logic. Effectuation focuses on leveraging existing resources, forming
partnerships, and adapting to changing circumstances. Causation, on the other hand, follows a
linear approach based on predefined goals and plans. Toms Shoes, for instance, started with a
simple idea: for every pair of shoes sold, they would donate a pair to a child in need. The
founder, Blake Mycoskie, used effectual reasoning to build a successful business while making
a social impact.

5. Hybridity and Blended Value: Social enterprises often operate in the hybrid space,
balancing social and economic objectives. They create blended value by simultaneously
generating financial returns and addressing social issues. Danone Communities, a subsidiary
of the multinational food company, invests in local dairy cooperatives in developing countries,
aiming to improve nutrition, empower farmers, and create sustainable supply chains.

6. Social Innovation and Systems Change: Social entrepreneurship theory recognizes the
importance of social innovation, which involves developing novel solutions to complex
problems. Social entrepreneurs catalyze systems change by challenging existing norms and
structures. Kiva, a peer-to-peer lending platform, connects lenders with borrowers worldwide.
By enabling microloans, Kiva disrupts traditional banking systems and empowers
entrepreneurs in underserved communities.

Frameworks for Guiding Social Entrepreneurship

Social entrepreneurship frameworks provide a structured approach to addressing social issues

and offer valuable insights from various perspectives. These frameworks guide entrepreneurs
in defining their mission, identifying stakeholders, developing a theory of change, mobilizing
resources, and measuring impact.
1. The Social Business Model Canvas: Inspired by the business model canvas, this
framework helps social entrepreneurs design and analyze their ventures. It includes key
components such as customer segments, value proposition, channels, and revenue streams.
Grameen Bank, founded by Muhammad Yunus, provides microloans to impoverished
individuals, promoting financial inclusion, and exemplifies the application of this framework.

2. The Theory of Change (TOC): Developed by Act Knowledge, the TOC framework
encourages social entrepreneurs to articulate their vision for change and map out the steps
needed to achieve it. Ashoka uses TOC to guide its fellows in creating systemic impact.

3. Impact Measurement Frameworks: These frameworks help social entrepreneurs assess

and communicate their impact. Metrics may include Social Return on Investment (SROI),
outcome mapping, and social impact assessments. Acumen, an impact investment fund,
rigorously measures the social and financial performance of its portfolio companies.

4. The Base of the Pyramid (BoP) Approach: Developed by C.K. Prahalad, this framework
focuses on serving the world's poorest populations as a market opportunity. It encourages
innovative solutions that are both financially sustainable and socially impactful. D.light, a solar
energy company, provides affordable solar lanterns to off-grid communities, demonstrating the
BoP approach in action.

5. The Collective Impact Framework: Coined by John Kania and Mark Kramer, this
framework emphasizes collaboration among diverse stakeholders to address complex social
problems. It requires shared goals, mutually reinforcing activities, and continuous
communication. Strive Together, a network of education-focused organizations, uses collective
impact to improve educational outcomes for children.

6. The Social Innovation Ecosystem: This framework recognizes that social change requires
a supportive ecosystem. It includes actors such as government, nonprofits, businesses, and
academia working together. The Skoll Foundation, through its annual Skoll World Forum,
fosters connections and knowledge exchange among social entrepreneurs.

Evaluating Social Enterprise Performance

Social enterprises face the challenge of balancing social impact with financial sustainability.
Several frameworks and standards can help social entrepreneurs evaluate and report on their
performance, ensuring accountability and transparency.

1. Social Return on Investment (SROI): This framework quantifies the social and
environmental value created by a social enterprise in relation to the resources invested. It
helps demonstrate the value of their work to investors, funders, customers, and beneficiaries,
as well as identify areas for improvement and innovation.

2. Impact Management Project (IMP): A global network of practitioners and experts, IMP has
developed a set of norms and standards for impact measurement and management. It
provides a common language and framework for defining, measuring, and improving the
impact of social enterprises, aligning their impact goals with the United Nations Sustainable
Development Goals (SDGs).

3. B Impact Assessment (BIA): BIA assesses the social and environmental performance of a
social enterprise across five categories: governance, workers, community, environment, and
customers. It provides feedback and recommendations for improvement and is the gateway to
becoming a certified B Corporation, recognizing businesses that meet the highest standards of
social and environmental responsibility, accountability, and transparency.

4. Global Reporting Initiative (GRI): GRI develops and promotes the use of standardized
guidelines for sustainability reporting. It helps social enterprises communicate their social and
environmental impact to their stakeholders using a set of core principles and disclosures.

5. Social Enterprise Mark (SEM): SEM verifies the social enterprise status of a business
based on a set of criteria and standards. It ensures that a social enterprise has a clear social
or environmental purpose, reinvests or donates at least 51% of its profits to achieve that
purpose, and involves its stakeholders in its decision-making.
 REFERENCES

 Mulgan, G., & Leadbeater, C. (2013). Social innovation: A guide to sustainable change.
Wiley.

 Mair, J., & Marti, I. (2006). Social entrepreneurship research: A source of explanation,
prediction, and delight. Journal of World Business, 41(1), 36-44.

 Battilana, J., & Lee, M. (2014). Advancing the study of social entrepreneurship: The role
of institutional entrepreneurship. Academy of Management Annals, 8(1), 215-264.

 Schumpeter, J. A. (1934). The theory of economic development: An inquiry into profits,

capital, credit, interest, and the business cycle. Harvard University Press.