The Relevance of Sustainability for Investors
Can Socially Responsible Investments Offer Investors Superior Returns or Reduced Volatility?
Written by J. Levie
Bachelor Thesis: Social Entrepreneurship 3.1 Definition of Social Entrepreneurship Social entrepreneurship has become an increasingly popular term, but the exact meaning of the term is not consistent in the existing literature. It "is a simple term with complex meaning" (Trexler, 2008, p.65). Researchers have proposed a broad definition (Bornstein, 1998; Thompson, Alvy, & Lees, 2000; Zahra, Rawhouser, Bhawe, Neubaum, & Hayton, 2008). The entrepreneurs embodying their chosen enterprise are as follows: "Social entrepreneur is a mission-driven individual who uses a series of entrepreneurial behaviors to provide social value to disadvantaged groups, all of which are through an economically independent entrepreneur-oriented entity. Self-sufficient or sustainable” (Abu-Saifan, 2012, p. 25). 3.2 The emergence of social entrepreneurship Social entrepreneurship first appeared in the third sector in the 1990s (Wil Son and Post, 2011, p. 716). Since then, the term social entrepreneurship has been used more and more, but the definition of social entrepreneurship is still vague and there are multiple ways to understand it (Volkmann & Tokarski, 2012, p. 12). The first milestone of the movement was the creation of a special legal form for social cooperatives by the Italian government and the introduction of social enterprise initiatives from the Harvard Business School in the United States (Defourny & Nyssens, 2010, p. 33). Although early discussions of social enterprises focused on the establishment and development of new non-profit organizations (NPOs), over time, the literature has moved towards more hybrid enterprises. The expansion of social enterprises into market-based methods has created new creative and innovative revenue streams and business models (Perrini, as cited in Wilson and Post, 2011). Although some people may think that social entrepreneurship is any entrepreneurial activity that creates jobs and therefore creates more opportunities for society (Eppler, 2012, paragraph 2), some people think that it is a movement that introduces “social change” (Martin & Osberg, 2007, p. 30). In the current era, some of the challenges that social enterprises must solve are poverty (Volkmann & Tokarski, 2012, p. 110), environmental issues such as climate change and pollution (i-propeller, 2018 ), work integration and or reintegration of poor individuals (ICF Advisory Services, 2014, p. 12) and filling gaps not considered by the private sector (Zahra, Gedajlovic, Neubaum, and Shulman, 2009, p. 520). This so-called social change is achieved by a range of different institutions; from non-profit organizations to for-profit enterprises (Abu-Saifan, 2012, p. 26). Figure 2 shows the organizational aspect, which allows for the division of social enterprises in a comprehensive way (Alter, 2007, p. 15). 3.2.1 Hybrid enterprises In the past 20 years, scholars have called hybrid enterprises hybrid enterprises, which are neither typical NPOs nor profit-making enterprises, but also called social purpose enterprises (Hockerts, 2006, p. 145), Social enterprise (Yunus, 2008, p. 9) and low-margin market business (Wolk, 2007, p. 43). In order to distinguish different forms of enterprises, mixed spectrum is used as the guiding principle for the distinction. Nevertheless, because certain terms (such as social enterprise, social enterprise, and socially responsible enterprise) can be used interchangeably, the differences between definitions may be vague. Among the different hybrid enterprises discussed below, only social enterprises have been further investigated because they more commonly cover social donation business models. 18.104.22.168 Non-profit income-generating activities Some non-profit organizations generate a small amount of income to pay for part of their expenses. These non-profit organizations do not pursue economic independence and therefore rely on donations to fulfill their social mission (Alter, 2007, p. 17). In Switzerland, an example of a non-profit organization engaged in income-generating activities is "Wasser für Wasser" (WfW), which means "water for water". The mission of the organization is to create a sustainable source of clean water for the people of Zambia. WfW cooperates with more than 250 companies in the hotel industry. They do not sell branded water bottles, but supply tap water in WfW decanters. All proceeds from the sale of tap water will be used for the Zambia project. In addition, the association raises funds by selling various glass bottles at higher than market prices in its donation stores (WfW, 2018). 22.214.171.124 Social Enterprise Social enterprise is established mainly because of its social mission. Therefore, the main motivation of social enterprises is to produce sustainable social impact rather than shareholder value. As the name suggests, social entrepreneurship focuses on entrepreneurial activities and aims to open up market opportunities through innovation to create social purpose (Alter, 2007, p.18). The classic entrepreneurs who seek to maximize profits are high achievers and arbitrageurs with high risk tolerance. The distinguishing characteristics of social entrepreneurs are based more on purpose-driven; they try to create wealth for people worse than themselves. And opportunities (Abu-Saifan, 2012, p. 25). A well-known social enterprise that is market-oriented and achieves global breakthroughs is TOMS. The concept of TOMS is "One for One": every time a product is sold, one product is given to children in need. Initially, the company started giving away shoes for every pair of shoes purchased (TOMS, 2018, paragraph 1). The US-based company has expanded its business portfolio in the past few years to include sunglasses and clothing in the same way. Read Less