This chapter looks into opportunity identification/recognition in the process of social value creation. Opportunity recognition emerged as a process rather than a one-time action, which in turn involved a series of actions. Considering the fact that the contextual factors play an important role in the process of social value creation, this chapter explores the values and beliefs of the social entrepreneurs, and their different contextual backgrounds. Then, it explores the influence of these contextual differences on identifying/recognising opportunities by social entrepreneurs. The cases showed that social entrepreneurs identified opportunities in different ways, yet many similar patterns emerged out of the cross-case analysis. Based on the findings, two propositions have been developed, and finally, opportunity recognition in social entrepreneurship has been presented in a figure. The study showed that social entrepreneurs pursued opportunities to achieve their social mission, that is, to solve social problems and create social value. The cases showed that opportunity recognition/identification and exploitation involved a series of actions. Hence, it emerged as a process rather than a one-time action. Considering the fact that the contextual factors play a very important role in the process of social value creation, this chapter focuses on the values and beliefs of social entrepreneurs, the different contextual backgrounds (their family and social backgrounds, relationships, educational and professional backgrounds, work experiences and past experiences). Then, it explores the influence of these contextual differences on identifying/recognising opportunities by social entrepreneurs. The cases showed that social entrepreneurs identified opportunities in different ways, yet many similar patterns emerged out of cross-case analysis.
KeywordsSocial Capital Social Problem Social Enterprise Social Entrepreneurship Social Entrepreneur
6.1 Opportunity Recognition and Planning Process
Eventually I realised that whole world call it social, but I would say I still believe that, it’s a business, which is socially relevant.
Opportunity identification emerged as an action that was not preplanned or a well-thought-out decision in social entrepreneurship. Social entrepreneurs basically started their work around the social problems or needs which they identified over a period of time and experiences.
A similar pattern was observed by Corner and Ho (2010) in their study of how opportunities developed in social entrepreneurship. They mentioned that opportunity development involved growing and advancing an idea for social value creation, which took shape over time. They found that opportunities were organic phenomena that grew and were nurtured by them, owing to their awareness of a particular social issue. In the entrepreneurship literature, it is well accepted that entrepreneurial opportunities do not simply ‘jump out’ in a final or ready-made form, but emerge in an iterative process of shaping and development (Dimov 2007). The study reflected that similar to entrepreneurship, opportunity recognition/identification is the initiation point of the entrepreneurial process in social entrepreneurship as mentioned by other scholars (Austin et al. 2006). At the same time, it showed that opportunities in social entrepreneurship were embedded in the social context of the social entrepreneur, which is in contrast to commercial entrepreneurship. Several other scholars too are of the view that opportunities in social entrepreneurship are different from their commercial counterparts (Austin et al. 2006; Dorado 2006; Hockerts 2006; Mair and Marti 2006; Lehner and Kansikas 2012).
6.2 Opportunity Recognition: Influence of Context and Personality Traits
As mentioned earlier, social entrepreneurs identify opportunities and develop ideas with their experiences over a period of time. Hence, opportunity identification and the development of an idea is not a one-time effect. It evolves gradually with the experiences of social entrepreneurs in a variety of contexts. These contextual factors include family and social background, educational qualifications, working experiences, personal experiences or any incident. ‘Context refers to those variables which shape the characteristics of a setting, as well as the motivations and behaviours of different actors in that setting’ (Zahra 2008, p. 243).
Financial circumstances forced me to opt [for] entrepreneurship as a career, because since my childhood, in all my fantasies, being born and brought up in reasonably lower middle class family, you know… fantasies were that like I will fly, I should have a car, I should have my own house, and when I researched, when I reached the age of self-consciousness, then I realised, Okay only people, who are doing something on their own, they can have it.
My parents always throughout the upbringing, they kept telling that if you give somebody, a motor bike, who already has one motor bike, it may not create much of difference in his life, but if you give a bicycle to somebody, who doesn’t have a bicycle, it may revolutionise his whole life. They mean their value. And the second thing was that they always said that… you know…despite everything, you are still fortunate. You go and see outside that there are people who are forced to sleep without having two times meal. If you can do something to change that scenario, God will take care of you. That was something that I believe it. And I am blessed…And that’s the reason, so far, I mean we are in 5th year of operation I never compromised. Whenever I had to choose between my so called investors, I mean between money and benefits, I said, No I won’t compromise. These are the learning, the upbringing, values and circumstances actually groomed me to opt for entrepreneurship with social mission.
Shaheen Mistri could do what she wanted just because she had always been encouraged to take her own decisions in her family. In the case of Kaushlendra Kumar, his family and social background created a huge impact on him. Born in a farmer’s family in a small village of Bihar, Kaushlendra had witnessed and experienced the problems and struggles of farmers. Moved by their plight, he made the uplifting of Bihari farmers’ socio-economic condition his lifelong dream. Therefore, after passing out of IIM, Ahmedabad, he ignored all the lucrative job opportunities and chose to pursue his lifelong dream. A majority of the social entrepreneurs such as Irfan Alam, Dr. Brij Kothari, Dr. Armida Fernandez, Rajendra Joshi, Kaushlendra Kumar and Dr. Devi Shetty got full support from their families. Their confidence and trust encouraged social entrepreneurs’ own confidence in identifying and exploiting the opportunity of their choices. It showed that family and social background of the social entrepreneurs impacted them greatly, which influenced their opportunity identification and idea development.
In the case of Dr. Devi Shetty, the existing norm that poor people cannot access and afford quality healthcare services influenced his social entrepreneurial action. Through his innovative hybrid model for social enterprise, he proved that it was possible to make health care accessible and affordable to the common man. Meek et al. (2010) studied the impact of social norms on entrepreneurial action in the context of environmental entrepreneurship and found that social norms by themselves, and in conjunction with state-level incentives, had the ability to influence environmental entrepreneurship, and argued that both centralised (government designed) and decentralised (socially determined) institutions impacted entrepreneurial activity.
Apart from the family and social background, other contextual factors that influenced the social entrepreneurs’ opportunity identification and idea development were education, working experience (professional, entrepreneurial or volunteering), personal life experiences and incidents, rebellious nature and specific incidents, such as winning a business competition.
The cases show a common pattern that social entrepreneurs’ knowledge acquired through formal education; especially, specialised professional and technical knowledge and skills played an important role in their opportunity identification and idea development. The findings show that all the social entrepreneurs, who had sound technical knowledge or specialised professional knowledge, identified opportunities in their areas of specialisation. For example, Dr. Armida Fernandez (a neonatologist), Dr. Devi Shetty (a heart surgeon) and Dr. Ashwin Naik (a surgeon) were doctors and identified opportunity in the health sector using their specialised skills. Kaushlendra Kumar had a background in agriculture engineering and agribusiness management and identified opportunity in uplifting the socio-economic condition of farmers. Irfan Alam (who believed that studying at big prestigious institutes was an endorsement as it provided an opportunity to connect with the right people) accepted that he acquired his marketing skills from his mentor at IIM, Ahmedabad. He used his knowledge and skills to develop his model around advertisement and marketing. This finding is consistent with the existing entrepreneurship literature (Venkatarman 1997; Shane 2000). They mentioned that people recognised these opportunities related to information that they already possess. Shane (2000) found in a study that all people are not equally likely to recognise the same entrepreneurial opportunities which result from technological change. Knowledge acquired through formal education not only influenced opportunity identification, but it also helped in the process of social value creation. Formal education might be the reason why working in the education sector Shaheen Mistri and Geeta Ramanujam continued their education (both did Masters in education) even after identifying their opportunities. In the single case of Rajendra Joshi, his area of work was entirely unrelated to his educational or professional qualification. Hence, it shows that formal education does not necessarily play an important role in identification of opportunity, but definitely specialised professional knowledge and skills play a significant role in opportunity identification.
Across cases, an emerging pattern indicated that not only specialised knowledge and skills acquired through formal education, but prior working experience too played an important role in social entrepreneurs identifying opportunities. The study shows that all the cases that had acquired knowledge through work experience recognised opportunities in areas where they could put it to use. I found that work experience included not only professional experience, but also volunteering and entrepreneurial experiences of individuals. Some social entrepreneurs (Dr. Armida Fernandez, Dr. Ashwin Naik, Dr. Devi Shetty, Dr. Brij Kothari, Geeta Ramanujam and Rajendra Joshi) acquired knowledge through professional experiences, some (Shaheen Mistri) through volunteering experiences and some (Irfan Alam) through entrepreneurial experiences.
The case of Kaushlendra Kumar was the only one where he did not have work experience before starting his social enterprise. He too had started his charitable social enterprise before starting his for-profit social enterprise ‘KNIDS GREEN Pvt Ltd’. It shows that though knowledge acquired by social entrepreneurs through work experience was not always necessary to identify opportunities for social value creation, it certainly served to influence the opportunity identification for those who did have such experience. In fact, many of the social entrepreneurs such as Dr. Armida Fernandez, Dr. Devi Shetty, Dr. Ashwin Naik and Geeta Ramanujam recognised social problems or social needs during their professional jobs, while others such as Shaheen Mistri did so while volunteering with kids. The work experience made them aware about the social problems that shaped their opportunity development. Social entrepreneurs identified these problems as opportunities and came up with their ideas to solve these recognised problems. Hence, work experiences not only enhanced their knowledge, but also provided them opportunities to become aware of the social problems, following which social entrepreneurs developed their ideas to solve these problems.
Entrepreneurship literature too established that prior start-up or entrepreneurial experiences of social entrepreneurs facilitated their opportunity identification and exploitation (Davidsson and Honig 2003; Madsen et al. 2003; Farmer et al. 2011; Westhead et al. 2009). They learnt from their past experiences (Cope 2005; Corbett 2005). Based on the findings of the study, Madsen et al. (2003, p. 426) said, ‘…it is not so much inherent personality traits that influence the foundation and growth of new ventures as previous employment and entrepreneurial experiences. The longer the career path prior to founding the venture, the more experience an entrepreneur has accumulated’. Davidsson and Honig (2003) found that previous entrepreneurial experience was positively related to the probability of entry into nascent entrepreneurship and making progress in exploiting the opportunity. Habitual entrepreneurs with prior business ownership experience identified more business opportunities than novice entrepreneurs (Westhead et al. 2009). However, different from entrepreneurship literature, this study found that volunteering experience as a form of work experience played an equally important role in identifying opportunity for the social entrepreneur. Therefore, I suggest that there is a need to extend the scope of work experience of individuals in the context of social entrepreneurship. It should be extended further to include individuals’ volunteering experiences as well.
Like I said that the real issue was our own personal experience, where, we were not having an access to a hospital. My own parents, they have to travel. They stay in Dharwad. So they have to travel to Hubli or many times they have to come to Bangalore. That is one. Second is, the doctors. They are all coming to bigger towns. After they graduate, they are all coming to bigger towns, because they don’t have opportunities in smaller place. Our classmates, who were not able to go back to small towns. Even though, we come from medical background, there was no desire to set up a hospital and run it. When we saw this problem, me and my roommate, we looked at it. Ok. This is an opportunity. So, this is the genesis of the starting.
The rickshaw incident that I had mentioned was the game changer. That was the great incident. That was the germ of the whole idea. That was the main incident that actually shown me the market and the power of this whole unorganised sector.
He started working on the idea of selling water on cycle rickshaws. This rickshaw incident played the most important role in identifying the opportunity for Irfan Alam. Later, he developed his model around marketing and advertisement on cycle rickshaws.
I think there was necessity. I wanted to prove something to myself, to my husband and even to my parents, because they were very scared. I think, they underestimated me about my capabilities. So, I wanted to tell everyone… I was little bit rebel I would say since my childhood.
In fact, all the social entrepreneurs always loved challenging roles. Due to this trait, social entrepreneurs did not compromise easily with the existing situations or systems which were not producing desired results. They always tried to innovate and create new solutions to existing problems. Yiu et al. (2014) also found in their study that private entrepreneurs were motivated to participate in social entrepreneurship programs if they had distressing past experiences, including limited educational opportunities, unemployment experience, rural poverty experience and start-up location hardship. For Dr. Brij Kothari, the winning of a business plan competition at Stanford provided him the opportunity to develop his idea.
These findings show that experiences of individuals in different contexts influenced opportunity identification to a large extent. It is also important to mention that different sets of multiple contextual factors influenced opportunity development of different social entrepreneurs. It shows that life experiences of social entrepreneurs since their childhood also had different impacts on them. Through these experiences in different contexts, they learnt various things and improved their knowledge and skills. These different experiences provided them information and made them aware about the particular issues, areas and social problems. Hence, in addition to knowledge and skills acquired through education and past work experiences, social entrepreneurs also gained knowledge and skills through their past experiences in different contexts. A similar observation is made by Patzelt and Shepherd (2010), who suggest that entrepreneurs are more likely to discover sustainable development opportunities; the greater their knowledge of natural and communal environments become, the more they perceive that the natural and communal environment in which they live is threatened, and the greater their altruism towards others. Corner and Ho (2010) also supported this finding in their study. They mentioned that past experiences of social entrepreneurs created awareness and information about particular areas that shaped opportunity development. The knowledge, skills and abilities of persons, which come from their education, training and experience, are referred to as ‘human capital’ (Becker 1993). Human capital consists of resources possessed by the individual, who can use and dispose of them with his/her own freedom without much concern for compensation (Lin 2001). Human capital is one of the important factors that influence opportunity recognition (Dimov and Shepard 2005). Men and women both utilise human capital to identify opportunities (DeTienne and Chandler 2007).
In general, in entrepreneurship literature (Roberts 1991; Shane 2000; Madsen et al. 2003) ‘knowledge’ has been used in a conservative sense. It refers to specialised information and skills of entrepreneurs acquired through their formal education and prior work experiences. Prior information, whether developed from work experience, education or other means, influenced the entrepreneur’s ability to comprehend, extrapolate, interpret and apply new information (Roberts 1991). In social entrepreneurship too, Dorado (2006) recognised that there is a connection between experience and opportunities that has not been clarified, and there is a lack of systematic exploration of it. The findings of this study reflect that social entrepreneurs acquired knowledge not solely through education and work experiences (professional, entrepreneurial and volunteering experiences), but also from their life experiences since childhood in a variety of contexts. Corner and Ho (2010) also found similar findings. They learnt different things from their family members and others within their social network and enhanced the knowledge that influenced them in recognising opportunities. It is true that entrepreneurs learn from their experiences (Sarasvathy 2001), but individuals learn not only from their own experiences but also from the experiences of others around them and by observing them (Bandura 1986).
Sengupta (2009) found that ‘social capital’ is closely related to social networks, reputation, trust, commitment and goodwill in the context of entrepreneurship and access to social capital by entrepreneurs varied depending on various factors, such as work experience, friendship, family background and reputation based on knowledge and skill. Social capital may expand the scope of social learning of entrepreneurs. There is evidence that social capital facilitates the process of intentional social change (Smith 2006). Thus, both human and social capital influence opportunity identification. This result is supported by the study of Ramos-Rodríguez et al. (2010, p. 577), who said, ‘Although the intellectual capital factors do have a positive impact, individuals’ access to external knowledge through the social networks in which they participate proves to be fundamental for developing the capacity to recognise new business opportunities’. On the basis of these findings, I suggest that in the context of social entrepreneurship the notion of ‘knowledge’ should not be seen within the restrictive domain of formal education and work experience only. It should be seen as embedded in the social entrepreneurs’ different contextual life experiences (their background and past experiences), and not in isolation. The study affirms the finding of Kwon and Arenius (2010) in the context of entrepreneurship. It not only emphasises individual-level effects of the social entrepreneur, but also recognises that a social entrepreneur is embedded in the social context, especially social capital, which is an additional and important contributor to social entrepreneurship. Thus, the study suggests that social entrepreneurial activities are jointly determined by the individual and the contextual factors. Some scholars (Mair and Marti 2006; Jones et al. 2008) also emphasised the deep association between social entrepreneurs and their social contexts. Social entrepreneurs are deeply enmeshed within their social contexts (Jones et al. 2008), and therefore, they try to capture the complexity and richness of the relationships between life, ideology, family and the social context that characterise the motivations and beliefs of the social entrepreneur in their study. Mair and Marti (2006) also stress the importance of continuous interaction between the social entrepreneurs and the context in which they are embedded for understanding and explaining why and how social change is possible. ‘The concept of embeddedness implies that it is impossible to detach the agent (social entrepreneur) from the structure (community, society, etc.)’ (Mair and Marti 2006, p. 40). They mention that social entrepreneurship cannot be understood in a purely economic sense like entrepreneurship in business sector, rather it needs to be examined in the light of the social context and the local environment because social entrepreneurs stand in a dynamic relation to the social contexts that produce them, and they seek to influence these social contexts through new behaviours (Nicholls and Cho 2006).
Recognising the importance of social context in social entrepreneurship, Hill et al. (2010) emphasised the understanding of the social context of entrepreneurs. Therefore, Giddens’ (1979, 1984) ‘structuration theory’ emerged as an important tool to study social entrepreneurship, because this process-oriented theory focuses on structure both as a product and as a constraint upon human action. In the context of business entrepreneurship too, Sarason et al. (2006) reflected similar views when they stated that the entrepreneur and the social system coevolve. They have seen entrepreneurship as a nexus of opportunity and agency, where opportunities are not singular phenomenon, but idiosyncratic to the individual. Recently, Morris et al. (2012) also emphasised the experiential perspective to understand new venture creation in entrepreneurship. They presented a link between preventure experience, key events, experiential processing, learning, affective outcomes and decision-making and argued that the entrepreneur and venture emerged as a function of the on-going experience, with the venture creating the entrepreneur as the entrepreneur creates the venture.
Research in entrepreneurship has already shown the importance of prior knowledge, social network and identity for entrepreneurs (Dew and Sarasvathy 2007). In entrepreneurship research, it has been recognised that economic behaviour can be better understood within its historical, temporal, institutional, spatial and social contexts, because context simultaneously provides individuals with entrepreneurial opportunities and sets boundaries for their actions; in other words, individuals may experience it as asset and liability (Welter 2011). Emphasising the importance of context in opportunity identification in entrepreneurship, Zahra (2008) showed how contexts influenced entrepreneurial opportunities. She found that certain contexts are more conducive for discovery, and some for creation of opportunities in entrepreneurship. Similarly, in social entrepreneurship, context played an important role in identifying opportunities. Urbano et al. (2010) also found in their study that both informal (new social values, entrepreneurial and responsible social attitude and social network) and formal institutions (support mechanisms) are important to the generation of social entrepreneurship in Catalonia, but informal institutions have greater importance than formal institutions due to the fact that they affect not only the implementation of social entrepreneurship, but also their emergence.
6.3 Social Problems as ‘Opportunities’
Opportunity always exists and you just need to come with your findings and innovation, whatever you call it. Whatever you name it. But it is not that Columbus invented India, he just discovered. Right. It doesn’t mean that India was not there. It’s like that. India was always there. So, I realised that it’s such a massive sector and nobody is working here. It was more than enough to tempt you. I mean 8-9 million people- Unorganised, no organised rickshaw manufacturing market, none of them used rickshaw as a marketing engine. It was just required, was actually just packaging.
This supports the ‘discovery theory’ of opportunity recognition mentioned by Alvarez and Barney (2007), which emphasises that entrepreneurial opportunities exist, independent of the perceptions of entrepreneurs, just waiting to be discovered. However, other scholars such as Corner and Ho (2010), Lehner and Kansikas (2012) present a different view. Corner and Ho’s (2010) study reflects a mix or balance of effectuation and economic/rational approaches to opportunity development in social entrepreneurship. They have found that within opportunity development, development of innovative ideas for value creation and implementation of these ideas happens simultaneously through experimentation and learning. Opportunities do not neatly fit into either the effectuation or economic view. Opportunities are neither entirely created nor entirely discovered. Similarly, Lehner and Kansikas (2012) mention that opportunity recognition in social entrepreneurship cannot easily be viewed either from the discovery or creative perspective, because the process includes strategies and processes from both.
The findings of the present study differ slightly from the ones discussed above. I found that social entrepreneurs recognised or discovered those social problems which already existed in the society. It was not that they recognised completely new social problems, which never existed. At the same time, I do not support the trait approach of entrepreneurship which emphasises that entrepreneurs have special personality traits and characteristics, and therefore, some people are able to see opportunities, while others are not. For example, Kirzner (1997) stresses the individual entrepreneur’s alertness in discovering opportunity. In contrast to Dees (1998), I found that entrepreneurs enhance their knowledge through experiences and learning in various contexts in their lives, due to which they could identify the opportunities that others could not. Depending on the abilities, knowledge, values, experiences, learning, judgment, decision-making and actions, they look at social problems as opportunities and come up with innovative ideas to solve those problems. At the same time, to some extent I also accept the contribution of personality traits and characteristics in opportunity identification, because the study showed that the rebellious and challenging nature of social entrepreneurs contributed in their opportunity identification. Hence, the study rejects the view of Dees (1998) that social entrepreneurs are a special breed of leaders and supports the view of Gartner (1988) which states that ‘Who is an entrepreneur?’ is the wrong question. This study shows that in reality, social entrepreneurs are not the rarest breed of leaders as mentioned by Dees (1998). The finding combines the realist and constructionist approaches in identifying and developing opportunities by social entrepreneurs. In this context, an evolutionary realist approach mentioned by Alvarez et al. (2010) may be a fruitful tool to understand opportunity formation in social entrepreneurship.
6.4 Idea Development: Moment of Inspiration, Spark or Trigger
This was all in Sion hospital. When I was in Sion, We started saving a lot of babies’ lives and then the mortality decreased, then I realised what happens once we saved the baby’s life, one kilo baby, 1.5 kilo baby went back to the slums. There in the slums they again got lots of infections and died. They got some handicap because they were small and all, some blindness some cerebral palsy … So, it struck me, what are we doing really? We are working so hard to save babies lives, spending so much money. They are spending their money, they are spending their hard… It’s difficult to have a sick child in the hospital. They go through so much anguish. Mental anguish, you know. So, I thought, you know, what are we doing in hospital? If we want to save babies lives, we must prevent them from coming to hospital. So, I said, if they would not pre matured, they would not sick, they would not have come to the hospital. So, how to do that? So, I said, if I have to do that to work in the community and not in the hospital alone. So, that time, even when I was in the hospital, I used to take whole department and go to the slums once a week and that gave me the idea that I want to work in the slum and not in the hospital alone when I retired. Then, I started my NGO, SNEHA. That’s how SNEHA was started.
Although she always wanted to work for the poor, she was able to identify the opportunity only when she realised this moment of insight or inspiration. This spark was an important initial condition, which influenced the development of ideas and opportunities to solve the identified social problem and create social values.
The above discussion illustrates that all the social entrepreneurs identified social problems as their ‘opportunities’, which led to the process of social value creation. They developed ideas to solve identified social problems, and in their way to achieving their social mission, they created value for the beneficiaries. On the basis of this finding, I propose:
Social entrepreneurs recognise social problems as ‘opportunities’, which lead to social value creation by solving social problems.
6.5 Deep/Strong Belief to Work for Society, or to Earn Money Since Early Life, Coupled with Strong Social Values/Orientation
I think, what I did all my life is, I did, what I felt very strongly about. For example, all my life I thought that I will work for babies and I liked to help people basically and I thought, the best profession for that would be medicine. Although, I was better in Maths and physics, but I chose Medicine, because I wanted to work for people and people, so I became a doctor, because of that. And the second thing is, I always wanted to work with the poor.
Hence, this deep belief was already engrained, which needed a trigger or spark to be developed as a full-fledged idea. Rajendra Joshi (SAATH) mentioned that he always wanted to do something that could help to change the world and give him satisfaction. Similarly, Geeta Ramanujam (Kathalaya) belonged to a conservative Brahmin family which had a conventional way of looking at life. She always wanted to prove that a woman is also capable. All these social entrepreneurs already had this kind of social realisation or inclination, though they did not have any intention or prior thought of being social entrepreneurs or starting their own social enterprise in future. Hence, they all had identified opportunities and developed ideas with the sole purpose of solving the identified social problems, not for any other purpose.
What motivated me to do this, it was never social, I must tell you. You must write, if you can, it was not social, but hard core financial interest which prompted me to do this pilot.
At the same time, he accepted that his parents and their upbringing had induced deep social and moral values in him. He also identified his opportunity in social problems and developed the idea to solve a social problem, but his idea had a lot of scope to generate profits in the process of social value creation. Thus, the study showed that the pre-existence of a strong belief (either to work for society or to make money) since early life or beginning influenced opportunity development differently. They identified opportunities for different purposes. Those who had a deep belief to work for the society identified opportunities solely for social value creation, while others who had deep belief to earn money to become rich identified opportunities primarily for personal economic gains. For them, social value creation was the additional driver. In the rest of the cases (Dr. Devi Shetty, Dr. Ashwin Naik, Dr. Brij Kothari and Kaushlendra Kumar), there was no mention of the existence of any kind of their strong belief since early life. However, it has been observed that they also had strong social values and social orientation and they always felt responsible to the society, presumably developed with their life experiences.
6.6 Selecting Legal Form for the Organisation: Interests, Motivations, Intentions or Purposes of Social Entrepreneurs
First of all, we clarify to everyone that charity is not scalable. If we are going to do it free for ever, we are going to die. It has to be based on very good business fundamentals. We are one of the…perhaps the only organisation in the world, which has a balance sheet on a daily basis. We get a profit and loss account every day, which comes to my phone. All the senior administrators get a message about the previous day’s revenue, expenses and a bit of margins. So, we respect money. All over the world people talk about the reducing the cost of health care, but nobody knows that how much money they are spending today. How are you going to reduce, if you don’t know, how much is cost today? Our concept is we have to be very vigilant about our revenues, expenses, how much money you spend, what is a wasteful expense, these things, you have to be very careful.
If any enterprise doesn’t create profit, it is going to die, irrespective of what your motive is. You may be organising with the greatest intent, but if you are running on donations, it’s a matter of time. Donation will come to an end. If you want to build a sustainable organisation, run it like a company.
The study showed that all those social entrepreneurs who wanted to create economic value at the same time as social value, either for themselves and/or for sustainability, followed two routes. Some social entrepreneurs (Dr. Brij Kothari and Kaushlendra Kumar) initiated two social enterprises: the first one as a not-for-profit and the second as a for-profit to achieve the same social mission. On the other hand, Dr. Devi Shetty followed the hybrid model. He registered his organisation as for-profit, but he had a separate charitable wing for the poor patients, who could not afford the treatments. In addition, he also provided health care to the poor patients through various microhealth insurance programmes of the government. With the money saved through various sources, he managed to subsidise health care for poor patients. His focus was on reducing the cost of health care so that an increasing number of people could afford it. The cases showed that their interest in creating social value as well as economic value motivated them to follow hybrid models or to create two separate social enterprises, for-profit and not-for-profit, focused on the same social mission.
Hybrid organisations have both for-profit and mission-driven not-for-profit characteristics (Alter 2006; Hockerts 2006; Mort et al. 2003). Moving away from a pure for-profit or non-profit form to a more hybrid form of organisation is a case of ‘institutional entrepreneurship’ (Mair and Marti 2006). Maguire et al. (2004) defined ‘institutional entrepreneurs’ as ‘actors who have interest in particular institutional arrangements and who leverage resources to create new institutions or to transform existing ones’ (p. 657). Mair and Marti (2006) emphasised that social entrepreneurs must act as institutional entrepreneurs to bridge this division between for-profit and not-for-profit. However, Kistruck and Beamish (2010) found that cognitive network and cultural embeddedness play a constraining role in non-profit forms of organisations that seek to engage in social intrapreneurship. They used the definition of social entrepreneurship ‘a set of institutional practices combining the pursuit of financial objectives with the pursuit and promotion of substantive and terminal values’ (p. 737) and used the term ‘social entrepreneurship’ for it to reflect the differences of non-profit, for-profit, etc. The hybrid form of organisation is not visible in entrepreneurship, but it has emerged as a unique form of organisation in the context of social entrepreneurship. This finding is supported by the finding of Corner and Ho (2010).
It is clear from the study that a range of factors influenced the social entrepreneurs’ selection of the organisational form for the social enterprises. In this context, an important finding emerged that except one case (Dr. Armida Fernandez), all those social entrepreneurs (Dr. Ashwin Naik, Dr. Brij Kothari, Kaushlendra Kumar and Dr. Devi Shetty) who had acquired technical knowledge and skills through formal education and professional experiences identified opportunities either in technology-based work or used their technical knowledge in process and product innovation. These social entrepreneurs selected the for-profit form of organisation for their enterprise. One of the possible explanations for this could be that they had invested a lot of money and time in acquiring specialised knowledge and skills, so they wanted to earn a profit in return for their investments. In addition, all these enterprises had models which required a larger amount of financial capital than the others, because they needed to invest money for the innovation of a technology-based product, create a large infrastructure to provide services or pay at market rates to attract the talented and specialised human resources. It was observed that different interests, motivations, intentions or purposes, that is interest in maximisation of social value creation, economic interests, attracting investors or interest in creating social value to get satisfaction and to make money, sustainability and technical education influenced social entrepreneurs in selecting organisational forms for their social enterprises.
6.7 Location Identification: Family, Regional Roots and Familiarity with the Places
It was found that though location identification for starting the operations was a combined effect of multiple factors, family, regional roots and familiarity with the places played an equally important role in this process, especially in the initial stage. However, availability of resources, beneficiaries and low cost of operation were other factors which influenced location identification. A majority of the social entrepreneurs (Shaheen Mistri, Rajendra Joshi, Devi Shetty, Irfan Alam, Dr. Ashwin Naik and Kaushlendra Kumar) ultimately went back to places where they originally belonged to. Dr. Brij Kothari and Geeta Ramanujam selected those places where they spent a long duration of their lives for higher education and professional career. Social entrepreneurs were familiar with their locations and they felt emotionally connected to the people in these places.
In the case of Dr. Armida Fernandez, her husband’s suggestion played an important role in identifying the location. After completing her education, she wanted to go back to Hubli, but her husband suggested that she could do the same work in Mumbai too. She agreed and decided to work in Mumbai. Similarly, Dr. Devi Shetty was comfortable setting his business in Bengaluru because his family was settled there. It showed that the family also influenced the process of identifying locations for some social entrepreneurs. Therefore, it was found that all the social entrepreneurs identified locations to start their operations influenced by their family, regional roots and familiarity with the places.
In the study, it was also found that all the social entrepreneurs developed innovative ideas to solve identified social problems. However, I do not claim that an innovative idea is always essential to solve a social problem and create social value. I suggest further exploration of this issue.
The study reflects that social values and knowledge of social entrepreneurs acquired thorough formal education, working experiences (professional, entrepreneurial and volunteering) and past experiences played an important role in opportunity identification for social value creation. This leads to the following proposition:
‘Capabilities’ understood as social value, knowledge acquired through formal education, work experience and past experiences facilitate opportunity recognition/identification for social value creation.
Figure 6.1 also shows that social entrepreneurs needed a spark/trigger or a moment of inspiration to develop opportunities further into full-fledged ideas to solve social problems.
After developing innovative ideas to solve the identified social problems, social entrepreneurs selected the legal forms for their organisations. It was found in the study that those social entrepreneurs who had deep belief to work for society since their early life started charitable social enterprises. One social entrepreneur who had the strong urge to earn money since his early life—presumably due to the past financial struggles of the family—wanted to start his organisation as a for-profit. However, in order to attract potential investors towards his model, he had to register it as a Section 25 not-for-profit company.
Figure 6.1 shows that those social entrepreneurs who wanted to get the satisfaction of working for a social cause and in the process earn a decent living for themselves or to get financial sustainability for their social mission chose to follow the hybrid or for-profit route. It was also observed that those social entrepreneurs who had invested a lot of money, effort and time in acquiring specialised technical education and professional experiences selected the for-profit form of organisation because of their interest in economic value creation. It clearly reflects the difference between the approaches of these social entrepreneurs. It shows that the focus of the founders of charitable social enterprises was solely the maximisation of social value creation. Moving away from the founders of charitable social enterprises towards the founders of for-profit, the focus was shifting gradually from social value creation (SVC) to economic value creation (EVC) along with the social value creation.
After developing the ideas and selecting the legal form for their organisations, they identified the locations to implement their ideas on the ground. Figure 6.1 reflects that regional roots and emotional attachment with the people, familiarity with the location, family’s influence, availability of beneficiaries, low costs of operation and availability of resources influenced the location identification of the social entrepreneurs.
Here, ‘social value’ is used in the context of the founders’ inculcated values towards society, not in the context of value creation for the beneficiaries.
Bihar is one of the poorest and backward states of India. A large number of people of Bihar (Biharis) migrate to other states in search of livelihood. A large majority of these Bihari migrants are illiterate and employed in other states for performing unskilled tasks labourers, such as rickshaw pulling. Indians, in general, do not treat the natives of Bihar with respect and often abuse them.
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