Thursday, January 14, 2010

Global Upstarts

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.

GEM's key findings on social entrepreneurship across the 49 countries it researched show that in 2009:

* Social entrepreneurial activity appeared 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.

* Social entrepreneurs tended 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 was sometimes blurred. However, GEM says that social objectives (not-for-profit and hybrid social enterprises) still prevailed over more economic (for-profit social enterprises) and less innovative ones (traditional NGOS).

* Social entrepreneurial activity was much lower than traditional entrepreneurial activity in almost all countries surveyed, though in some countries (chiefly Peru, Colombia, Venezuela and Jamaica), there was a significant overlap of social and business entrepreneurship, suggesting that 'social' and 'busines' entrepreneurship categories may be blurred.

* Social entrepreneurs differed widely in the type of organizations they launched and the kind of social or environmental problems they tried to solve. Social enterprises identified in the report spanned a broad spectrum of categories, including education, health, culture, economic development and the environment.

* There were differences in social issue focus among the countries, depending on their level of economic development. "Social entrepreneurs in (developing) 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," the report said. "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, to help measure activity, created four classifications of social enterprise: traditional NGOs (which, GEM says, have high levels of social/environment goals and not-for-profit status); not-for-profit social enterprises (which have high levels of social/environmental goals; not-for-profit status, and innovation); hybrid social enterprises (with high levels of social/environmental goals and earned income strategies either “integrated” or “complementary” to their missions), and for-profit social enterprises (which have high but not exclusively social/environmental goals and earned income strategies.)

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%). There were regional preferences: hybrids, for example, 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.

And that's not all. While the rate of social entrepreneurial activity is dwarfed by traditional enterprise activity in developing countries, there is a “significant” component of social entrepreneurship in many innovation-driven, richer countries. “A significant minority of social entrepreneurs, particularly in developing countries, appear to wish to have a profitable businesses 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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