Innovation

From Wikipedia, the free encyclopedia

Innovation in its modern meaning is a "new idea, creative thoughts, new imaginations in form of device or method". Innovation is often also viewed as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs. Such innovation takes place through the provision of more-effective products, processes, services, technologies, or business models that are made available to markets, governments and society. An innovation is something original and more effective and, as a consequence, new, that "breaks into" the market or society. Innovation is related to, but not the same as, invention, as innovation is more apt to involve the practical implementation of an invention (i.e. new/improved ability) to make a meaningful impact in the market or society, and not all innovations require an invention. Innovation often manifests itself via the engineering process, when the problem being solved is of a technical or scientific nature. The opposite of innovation is exnovation.

 

While a novel device is often described as an innovation, in economics, management science, and other fields of practice and analysis, innovation is generally considered to be the result of a process that brings together various novel ideas in such a way that they affect society. In industrial economics, innovations are created and found empirically from services to meet growing consumer demand.

Innovation also has an older historical meaning which is quite different. From the 1400s through the 1600s, prior to early American settlement, the concept of "innovation" was pejorative. It was an early modern synonym for rebellion, revolt and heresy.

Definition

A 2014 survey of literature on innovation found over 40 definitions. In an industrial survey of how the software industry defined innovation, the following definition given by Crossan and Apaydin was considered to be the most complete, which builds on the Organisation for Economic Co-operation and Development (OECD) manual's definition:

Innovation is production or adoption, assimilation, and exploitation of a value-added novelty in economic and social spheres; renewal and enlargement of products, services, and markets; development of new methods of production; and the establishment of new management systems. It is both a process and an outcome.

According to Kanter innovation includes original invention and creative use and defines innovation as a generation, admission and realization of new ideas, products, services and processes.

Two main dimensions of innovation were degree of novelty (patent) (i.e. whether an innovation is new to the firm, new to the market, new to the industry, or new to the world) and kind of innovation (i.e. whether it is processor product-service system innovation). In recent organizational scholarship, researchers of workplaces have also distinguished innovation to be separate from creativity, by providing an updated definition of these two related but distinct constructs:

Workplace creativity concerns the cognitive and behavioral processes applied when attempting to generate novel ideas. Workplace innovation concerns the processes applied when attempting to implement new ideas. Specifically, innovation involves some combination of problem/opportunity identification, the introduction, adoption or modification of new ideas germane to organizational needs, the promotion of these ideas, and the practical implementation of these ideas.

Inter-disciplinary views

Business and economics

In business and in economics, innovation can become a catalyst for growth. With rapid advancements in transportation and communications over the past few decades, the old-world concepts of factor endowments and comparative advantage which focused on an area's unique inputs are outmoded for today's global economy. Economist Joseph Schumpeter (1883–1950), who contributed greatly to the study of innovation economics, argued that industries must incessantly revolutionize the economic structure from within, that is innovate with better or more effective processes and products, as well as market distribution, such as the connection from the craft shop to factory. He famously asserted that "creative destruction is the essential fact about capitalism". Entrepreneurs continuously look for better ways to satisfy their consumer base with improved quality, durability, service and price which come to fruition in innovation with advanced technologies and organizational strategies.

A prime example of innovation involved the explosive boom of Silicon Valley startups out of the Stanford Industrial Park. In 1957, dissatisfied employees of Shockley Semiconductor, the company of Nobel laureate and co-inventor of the transistor William Shockley, left to form an independent firm, Fairchild Semiconductor. After several years, Fairchild developed into a formidable presence in the sector. Eventually, these founders left to start their own companies based on their own, unique, latest ideas, and then leading employees started their own firms. Over the next 20 years, this snowball process launched the momentous startup-company explosion of information-technology firms. Essentially, Silicon Valley began as 65 new enterprises born out of Shockley's eight former employees. Since then, hubs of innovation have sprung up globally with similar metonyms, including Silicon Alley encompassing New York City. 

Another example involves business incubators – a phenomenon nurtured by governments around the world, close to knowledge clusters (mostly research-based) like universities or other Government Excellence Centres – which aim primarily to channel generated knowledge to applied innovation outcomes in order to stimulate regional or national economic growth.

Organizations

In the organizational context, innovation may be linked to positive changes in efficiency, productivity, quality, competitiveness, and market share. However, recent research findings highlight the complementary role of organizational culture in enabling organizations to translate innovative activity into tangible performance improvements. Organizations can also improve profits and performance by providing work groups opportunities and resources to innovate, in addition to employee's core job tasks. Peter Drucker wrote:

Innovation is the specific function of entrepreneurship, whether in an existing business, a public service institution, or a new venture started by a lone individual in the family kitchen. It is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth. –Drucker

According to Clayton Christensen, disruptive innovation is the key to future success in business. The organisation requires a proper structure in order to retain competitive advantage. It is necessary to create and nurture an environment of innovation. Executives and managers need to break away from traditional ways of thinking and use change to their advantage. It is a time of risk but even greater opportunity. The world of work is changing with the increase in the use of technology and both companies and businesses are becoming increasingly competitive. Companies will have to downsize and re-engineer their operations to remain competitive. This will affect employment as businesses will be forced to reduce the number of people employed while accomplishing the same amount of work if not more.

While disruptive innovation will typically "attack a traditional business model with a lower-cost solution and overtake incumbent firms quickly," foundational innovation is slower, and typically has the potential to create new foundations for global technology systems over the longer term. Foundational innovation tends to transform business operating models as entirely new business models emerge over many years, with gradual and steady adoption of the innovation leading to waves of technological and institutional change that gain momentum more slowly. The advent of the packet-switched communication protocol TCP/IP—originally introduced in 1972 to support a single use case for United States Department of Defense electronic communication (email), and which gained widespread adoption only in the mid-1990s with the advent of the World Wide Web—is a foundational technology.

All organizations can innovate, including for example hospitals, universities, and local governments. For instance, former Mayor Martin O’Malley pushed the City of Baltimore to use CitiStat, a performance-measurement data and management system that allows city officials to maintain statistics on several areas from crime trends to the conditions of potholes. This system aids in better evaluation of policies and procedures with accountability and efficiency in terms of time and money. In its first year, CitiStat saved the city $13.2 million. Even mass transit systems have innovated with hybrid bus fleets to real-time tracking at bus stands. In addition, the growing use of mobile data terminals in vehicles, that serve as communication hubs between vehicles and a control center, automatically send data on location, passenger counts, engine performance, mileage and other information. This tool helps to deliver and manage transportation systems.

Still other innovative strategies include hospitals digitizing medical information in electronic medical records. For example, the U.S. Department of Housing and Urban Development's HOPE VI initiatives turned severely distressed public housing in urban areas into revitalized, mixed-income environments; the Harlem Children’s Zone used a community-based approach to educate local area children; and the Environmental Protection Agency's brownfield grants facilitates turning over brownfields for environmental protection, green spaces, community and commercial development. 

Hasmath et al. have found that within local government organizations in China, the appetite to innovate may be linked to specific character types. They identify three distinct character types within the Chinese local government: authoritarian bureaucratic, a primarily older male cadre who are most likely to follow central government command; a consultative governance types that is most open to collaborating with NGOs and outside of government, and; an entrepreneurial type that is both less risk averse and demonstrates high personal efficacy.

Sources

There are several sources of innovation. It can occur as a result of a focus effort by a range of different agents, by chance, or as a result of a major system failure. 

According to Peter F. Drucker, the general sources of innovations are different changes in industry structure, in market structure, in local and global demographics, in human perception, mood and meaning, in the amount of already available scientific knowledge, etc.

Original model of three phases of the process of Technological Change

 

In the simplest linear model of innovation the traditionally recognized source is manufacturer innovation. This is where an agent (person or business) innovates in order to sell the innovation. Specifically, R&D measurement is the commonly used input for innovation, in particular in the business sector, named Business Expenditure on R&D (BERD) that grew over the years on the expenses of the declining R&D invested by the public sector.

Another source of innovation, only now becoming widely recognized, is end-user innovation. This is where an agent (person or company) develops an innovation for their own (personal or in-house) use because existing products do not meet their needs. MIT economist Eric von Hippel has identified end-user innovation as, by far, the most important and critical in his classic book on the subject, The Sources of Innovation.

The robotics engineer Joseph F. Engelberger asserts that innovations require only three things:

1. A recognized need,
2. Competent people with relevant technology, and
3. Financial support.

However, innovation processes usually involve: identifying customer needs, macro and meso trends, developing competences, and finding financial support. 

The Kline chain-linked model of innovation places emphasis on potential market needs as drivers of the innovation process, and describes the complex and often iterative feedback loops between marketing, design, manufacturing, and R&D.

Innovation by businesses is achieved in many ways, with much attention now given to formal research and development (R&D) for "breakthrough innovations". R&D help spur on patents and other scientific innovations that leads to productive growth in such areas as industry, medicine, engineering, and government. Yet, innovations can be developed by less formal on-the-job modifications of practice, through exchange and combination of professional experience and by many other routes. Investigation of relationship between the concepts of innovation and technology transfer revealed overlap. The more radical and revolutionary innovations tend to emerge from R&D, while more incremental innovations may emerge from practice – but there are many exceptions to each of these trends.

Information technology and changing business processes and management style can produce a work climate favorable to innovation. For example, the software tool company Atlassian conducts quarterly "ShipIt Days" in which employees may work on anything related to the company's products. Google employees work on self-directed projects for 20% of their time (known as Innovation Time Off). Both companies cite these bottom-up processes as major sources for new products and features. 

An important innovation factor includes customers buying products or using services. As a result, firms may incorporate users in focus groups (user centred approach), work closely with so called lead users (lead user approach) or users might adapt their products themselves. The lead user method focuses on idea generation based on leading users to develop breakthrough innovations. U-STIR, a project to innovate Europe’s surface transportation system, employs such workshops. Regarding this user innovation, a great deal of innovation is done by those actually implementing and using technologies and products as part of their normal activities. Sometimes user-innovators may become entrepreneurs, selling their product, they may choose to trade their innovation in exchange for other innovations, or they may be adopted by their suppliers. Nowadays, they may also choose to freely reveal their innovations, using methods like open source. In such networks of innovation the users or communities of users can further develop technologies and reinvent their social meaning.

One technique for innovating a solution to an identified problem is to actually attempt an experiment with many possible solutions. This technique was famously used by Thomas Edison's laboratory to find a version of the incandescent light bulb economically viable for home use, which involved searching through thousands of possible filament designs before settling on carbonized bamboo.

This technique is sometimes used in pharmaceutical drug discovery. Thousands of chemical compounds are subjected to high-throughput screening to see if they have any activity against a target molecule which has been identified as biologically significant to a disease. Promising compounds can then be studied; modified to improve efficacy, reduce side effects, and reduce cost of manufacture; and if successful turned into treatments.

The related technique of A/B testing is often used to help optimize the design of web sites and mobile apps. This is used by major sites such as amazon.com, Facebook, Google, and Netflix. Procter & Gamble uses computer-simulated products and online user panels to conduct larger numbers of experiments to guide the design, packaging, and shelf placement of consumer products. Capital One uses this technique to drive credit card marketing offers.

Goals and failures

Programs of organizational innovation are typically tightly linked to organizational goals and objectives, to the business plan, and to market competitive positioning. One driver for innovation programs in corporations is to achieve growth objectives. As Davila et al. (2006) notes, "Companies cannot grow through cost reduction and reengineering alone... Innovation is the key element in providing aggressive top-line growth, and for increasing bottom-line results".

One survey across a large number of manufacturing and services organizations found, ranked in decreasing order of popularity, that systematic programs of organizational innovation are most frequently driven by: improved quality, creation of new markets, extension of the product range, reduced labor costs, improved production processes, reduced materials, reduced environmental damage, replacement of products/services, reduced energy consumption, conformance to regulations.

These goals vary between improvements to products, processes and services and dispel a popular myth that innovation deals mainly with new product development. Most of the goals could apply to any organisation be it a manufacturing facility, marketing firm, hospital or local government. Whether innovation goals are successfully achieved or otherwise depends greatly on the environment prevailing in the firm.

Conversely, failure can develop in programs of innovations. The causes of failure have been widely researched and can vary considerably. Some causes will be external to the organization and outside its influence of control. Others will be internal and ultimately within the control of the organization. Internal causes of failure can be divided into causes associated with the cultural infrastructure and causes associated with the innovation process itself. Common causes of failure within the innovation process in most organizations can be distilled into five types: poor goal definition, poor alignment of actions to goals, poor participation in teams, poor monitoring of results, poor communication and access to information.

Diffusion

Diffusion of innovation research was first started in 1903 by seminal researcher Gabriel Tarde, who first plotted the S-shaped diffusion curve. Tarde defined the innovation-decision process as a series of steps that includes:

1. First knowledge
2. Forming an attitude
3. A decision to adopt or reject
4. Implementation and use
5. Confirmation of the decision

Once innovation occurs, innovations may be spread from the innovator to other individuals and groups. This process has been proposed that the life cycle of innovations can be described using the 's-curve' or diffusion curve. The s-curve maps growth of revenue or productivity against time. In the early stage of a particular innovation, growth is relatively slow as the new product establishes itself. At some point, customers begin to demand and the product growth increases more rapidly. New incremental innovations or changes to the product allow growth to continue. Towards the end of its lifecycle, growth slows and may even begin to decline. In the later stages, no amount of new investment in that product will yield a normal rate of return.

The s-curve derives from an assumption that new products are likely to have "product life" – i.e., a start-up phase, a rapid increase in revenue and eventual decline. In fact, the great majority of innovations never get off the bottom of the curve, and never produce normal returns.

Innovative companies will typically be working on new innovations that will eventually replace older ones. Successive s-curves will come along to replace older ones and continue to drive growth upwards. In the figure above the first curve shows a current technology. The second shows an emerging technology that currently yields lower growth but will eventually overtake current technology and lead to even greater levels of growth. The length of life will depend on many factors.

Measures

Measuring innovation is inherently difficult as it implies commensurability so that comparisons can be made in quantitative terms. Innovation, however, is by definition novelty. Comparisons are thus often meaningless across products or service. Nevertheless, Edison et al. in their review of literature on innovation management found 232 innovation metrics. They categorized these measures along five dimensions i.e. inputs to the innovation process, output from the innovation process, effect of the innovation output, measures to access the activities in an innovation process and availability of factors that facilitate such a process.

There are two different types of measures for innovation: the organizational level and the political level.

Organizational level

The measure of innovation at the organizational level relates to individuals, team-level assessments, and private companies from the smallest to the largest company. Measure of innovation for organizations can be conducted by surveys, workshops, consultants, or internal benchmarking. There is today no established general way to measure organizational innovation. Corporate measurements are generally structured around balanced scorecards which cover several aspects of innovation such as business measures related to finances, innovation process efficiency, employees' contribution and motivation, as well benefits for customers. Measured values will vary widely between businesses, covering for example new product revenue, spending in R&D, time to market, customer and employee perception & satisfaction, number of patents, additional sales resulting from past innovations.

Political level

For the political level, measures of innovation are more focused on a country or region competitive advantage through innovation. In this context, organizational capabilities can be evaluated through various evaluation frameworks, such as those of the European Foundation for Quality Management. The OECD Oslo Manual (1995) suggests standard guidelines on measuring technological product and process innovation. Some people consider the Oslo Manual complementary to the Frascati Manual from 1963. The new Oslo manual from 2005 takes a wider perspective to innovation, and includes marketing and organizational innovation. These standards are used for example in the European Community Innovation Surveys.

Other ways of measuring innovation have traditionally been expenditure, for example, investment in R&D (Research and Development) as percentage of GNP (Gross National Product). Whether this is a good measurement of innovation has been widely discussed and the Oslo Manual has incorporated some of the critique against earlier methods of measuring. The traditional methods of measuring still inform many policy decisions. The EU Lisbon Strategy has set as a goal that their average expenditure on R&D should be 3% of GDP.

Indicators

Many scholars claim that there is a great bias towards the "science and technology mode" (S&T-mode or STI-mode), while the "learning by doing, using and interacting mode" (DUI-mode) is ignored and measurements and research about it rarely done. For example, an institution may be high tech with the latest equipment, but lacks crucial doing, using and interacting tasks important for innovation.

A common industry view (unsupported by empirical evidence) is that comparative cost-effectiveness research is a form of price control which reduces returns to industry, and thus limits R&D expenditure, stifles future innovation and compromises new products access to markets. Some academics claim cost-effectiveness research is a valuable value-based measure of innovation which accords "truly significant" therapeutic advances (i.e. providing "health gain") higher prices than free market mechanisms. Such value-based pricing has been viewed as a means of indicating to industry the type of innovation that should be rewarded from the public purse.

An Australian academic developed the case that national comparative cost-effectiveness analysis systems should be viewed as measuring "health innovation" as an evidence-based policy concept for valuing innovation distinct from valuing through competitive markets, a method which requires strong anti-trust laws to be effective, on the basis that both methods of assessing pharmaceutical innovations are mentioned in annex 2C.1 of the Australia-United States Free Trade Agreement.

Indices

Several indices attempt to measure innovation and rank entities based on these measures, such as:

• The Bloomberg Innovation Index
• The "Bogota Manual" similar to the Oslo Manual, is focused on Latin America and the Caribbean countries.
• The "Creative Class" developed by Richard Florida
• The EIU Innovation Ranking
• The Global Competitiveness Report
• The Global Innovation Index (GII), by INSEAD
• The Information Technology and Innovation Foundation (ITIF) Index
• Innovation 360 – From the World Bank. Aggregates innovation indicators (and more) from a number of different public sources
• The Innovation Capacity Index (ICI) published by a large number of international professors working in a collaborative fashion. The top scorers of ICI 2009–2010 were: 1. Sweden 82.2; 2. Finland 77.8; and 3. United States 77.5.
• The Innovation Index, developed by the Indiana Business Research Center, to measure innovation capacity at the county or regional level in the United States.
• The Innovation Union Scoreboard
• The innovationsindikator for Germany, developed by the Federation of German Industries (Bundesverband der Deutschen Industrie) in 2005
• The INSEAD Innovation Efficacy Index
• The International Innovation Index, produced jointly by The Boston Consulting Group, the National Association of Manufacturers and its nonpartisan research affiliate The Manufacturing Institute, is a worldwide index measuring the level of innovation in a country. NAM describes it as the "largest and most comprehensive global index of its kind".
• The Management Innovation Index – Model for Managing Intangibility of Organizational Creativity: Management Innovation Index
• The NYCEDC Innovation Index, by the New York City Economic Development Corporation, tracks New York City's "transformation into a center for high-tech innovation. It measures innovation in the City's growing science and technology industries and is designed to capture the effect of innovation on the City's economy."
• The Oslo Manual is focused on North America, Europe, and other rich economies.
• The State Technology and Science Index, developed by the Milken Institute, is a U.S.-wide benchmark to measure the science and technology capabilities that furnish high paying jobs based around key components.
• The World Competitiveness Scoreboard

Rankings

Many research studies try to rank countries based on measures of innovation. Common areas of focus include: high-tech companies, manufacturing, patents, post secondary education, research and development, and research personnel. The left ranking of the top 10 countries below is based on the 2016 Bloomberg Innovation Index. However, studies may vary widely; for example the Global Innovation Index 2016 ranks Switzerland as number one wherein countries like South Korea and Japan do not even make the top ten.

Bloomberg Innovation Index 2016 Rank Country/Territory Index 1  South Korea 91.31 2  Germany 85.54 3  Sweden 85.21 4  Japan 85.07 5   Switzerland 84.96 6  Singapore 84.54 7  Finland 83.80 8  United States 82.84 9  Denmark 81.40 10  France 80.39

Global Innovation Index 2016 Rank Country/Territory Index 1   Switzerland 66.3 2  Sweden 63.6 3  United Kingdom 61.9 4  United States 61.4 5  Finland 59.9 6  Singapore 59.2 7  Ireland 59.0 8  Denmark 58.5 9  Netherlands 58.3 10  Germany 57.9

Future

In 2005 Jonathan Huebner, a physicist working at the Pentagon's Naval Air Warfare Center, argued on the basis of both U.S. patents and world technological breakthroughs, per capita, that the rate of human technological innovation peaked in 1873 and has been slowing ever since. In his article, he asked "Will the level of technology reach a maximum and then decline as in the Dark Ages?" In later comments to New Scientist magazine, Huebner clarified that while he believed that we will reach a rate of innovation in 2024 equivalent to that of the Dark Ages, he was not predicting the reoccurrence of the Dark Ages themselves.

John Smart criticized the claim and asserted that technological singularity researcher Ray Kurzweil and others showed a "clear trend of acceleration, not deceleration" when it came to innovations. The foundation replied to Huebner the journal his article was published in, citing Second Life and eHarmony as proof of accelerating innovation; to which Huebner replied. However, Huebner's findings were confirmed in 2010 with U.S. Patent Office data. and in a 2012 paper.

Innovation and development

The theme of innovation as a tool to disrupting patterns of poverty has gained momentum since the mid-2000s among major international development actors such as DFID, Gates Foundation's use of the Grand Challenge funding model, and USAID's Global Development Lab. Networks have been established to support innovation in development, such as D-Lab at MIT. Investment funds have been established to identify and catalyze innovations in developing countries, such as DFID's Global Innovation Fund, Human Development Innovation Fund, and (in partnership with USAID) the Global Development Innovation Ventures.

Government policies

Given the noticeable effects on efficiency, quality of life, and productive growth, innovation is a key factor in society and economy. Consequently, policymakers have long worked to develop environments that will foster innovation and its resulting positive benefits, from funding Research and Development to supporting regulatory change, funding the development of innovation clusters, and using public purchasing and standardisation to 'pull' innovation through. 

For instance, experts are advocating that the U.S. federal government launch a National Infrastructure Foundation, a nimble, collaborative strategic intervention organization that will house innovations programs from fragmented silos under one entity, inform federal officials on innovation performance metrics, strengthen industry-university partnerships, and support innovation economic development initiatives, especially to strengthen regional clusters. Because clusters are the geographic incubators of innovative products and processes, a cluster development grant program would also be targeted for implementation. By focusing on innovating in such areas as precision manufacturing, information technology, and clean energy, other areas of national concern would be tackled including government debt, carbon footprint, and oil dependence. The U.S. Economic Development Administration understand this reality in their continued Regional Innovation Clusters initiative. In addition, federal grants in R&D, a crucial driver of innovation and productive growth, should be expanded to levels similar to Japan, Finland, South Korea, and Switzerland in order to stay globally competitive. Also, such grants should be better procured to metropolitan areas, the essential engines of the American economy.

Many countries recognize the importance of research and development as well as innovation including Japan's Ministry of Education, Culture, Sports, Science and Technology (MEXT); Germany's Federal Ministry of Education and Research; and the Ministry of Science and Technology in the People's Republic of China. Furthermore, Russia's innovation programme is the Medvedev modernisation programme which aims at creating a diversified economy based on high technology and innovation. Also, the Government of Western Australia has established a number of innovation incentives for government departments. Landgate was the first Western Australian government agency to establish its Innovation Program.

Regions have taken a more proactive role in supporting innovation. Many regional governments are setting up regional innovation agency to strengthen regional innovation capabilities. In Medellin, Colombia, the municipality of Medellin created in 2009 Ruta N to transform the city into a knowledge city.

Social innovation

From Wikipedia, the free encyclopedia

Social innovations are new social practices that aim to meet social needs in a better way than the existing solutions, resulting from - for example - working conditions, education, community development or health. These ideas are created with the goal of extending and strengthening civil society. Social innovation includes the social processes of innovation, such as open source methods and techniques and also the innovations which have a social purpose—like activism, online volunteering, microcredit, or distance learning. There are many definitions of social innovation, however, they usually include the broad criteria about social objectives, social interaction between actors or actor diversity, social outputs, and innovativeness (The innovation should be at least ”new” to the beneficiaries it targets, but it does not have to be new to the world). Different definitions include different combinations and different number of these criteria (e.g. EU is using definition stressing out social objectives and actors interaction) . Transformative social innovation not only introduces new approaches to seemingly intractable problems, but is successful in changing the social institutions that created the problem in the first place.

Prominent innovators associated with the term include Pakistani Akhter Hameed Khan, Bangladeshi Muhammad Yunus, the founder of Grameen Bank which pioneered the concept of microcredit for supporting innovations in many developing countries such as Asia, Africa and Latin America, and inspired programs like the Infolady Social Entrepreneurship Programme of Dnet (A Social Enterprise).

Focus and application

Social Innovation has an inter-sectoral approach and is universally applicable. Social Innovations are launched by a variety of actors, including research institutions, companies and independent organizations, which tend to use their respective definitions of Social Innovation. Therefore, it is worth discussing what distinguishes it from other forms of social work or innovation.

Social Innovation focuses on the process of innovation, how innovation and change take shape (as opposed to the more traditional definition of innovation, giving priority to the internal organization of firms and their productivity). It likewise centers on new work and new forms of cooperation (business models), especially on those that work towards the attainment of a sustainable society.

The Young Foundation, in order to distinguish between social and business innovation, stressed that social innovation is developed and diffused via organisations, whose primary purposes are not centred on mere profit maximisation. The Bureau of European Policy Advisers more precisely defined social innovation as socially oriented in both ends and means. According to these influential definitions, social innovation is characterised by: the capacity to address social needs that traditional policy seems increasingly unable to tackle; the empowerment of groups and individuals; and the willingness to change social relations. Hence, social innovation is often presented as a way to increase the quality of social services and their cost-effectiveness, offering equivalent, if not superior, outcomes despite considerable budget constraints.

Social innovation can take place within government; the for-profit sector, the nonprofit sector (also known as the third sector), or in the spaces between them. Research has focused on the types of platforms needed to facilitate such cross-sector collaborative social innovation. Historical studies suggest that transforming any system may take many years, and requires not only the capacity for multiple partnerships, but also for engaging policy, legal and economic institutions.

Social entrepreneurship, like social enterprise, is typically in the nonprofit sector excluding both for-profit and public organizations. Both social entrepreneurship and social enterprise are important contributions to social innovation by creating social value and introducing new ways of achieving goals. Social entrepreneurship brings "new patterns and possibilities for innovation" and are willing to do things that existing organizations are not willing to do.

Social innovation is often an effort of mental creativity which involves fluency and flexibility from a wide range of disciplines. The act of social innovation in a sector is mostly connected with diverse disciplines within the society. The social innovation theory of 'connected difference' emphasizes three key dimensions to social innovation. First, innovations are usually new combinations or hybrids of existing elements, rather than completely new. Second, their practice involves cutting across organizational or disciplinary boundaries. Lastly, they leave behind compelling new relationships between previously separate individuals and groups. Social innovation is also gaining visibility within academia.

Since 2014, a subdomain of social innovation has been defined in relation to the introduction of digital technologies. The subdomain is called digital social innovation and refers to "a type of social and collaborative innovation in which innovators, users and communities collaborate using digital technologies to co-create knowledge and solutions for a wide range of social needs and at a scale and speed that was unimaginable before the rise of the Internet".

History

Social innovation was discussed in the writings of figures such as Peter Drucker and Michael Young (founder of the Open University and dozens of other organizations) in the 1960s. It also appeared in the work of French writers in the 1970s, such as Pierre Rosanvallon, Jacques Fournier, and Jacques Attali. However, the themes and concepts in social innovation existed long before. Benjamin Franklin, for example, talked about small modifications within the social organization of communities that could help to solve everyday problems. Many radical 19th century reformers like Robert Owen, founder of the cooperative movement, promoted innovation in the social field and all of the great sociologists including Karl Marx, Max Weber and Émile Durkheim focused attention on broader processes of social change. In recent years, the work of Gabriel Tarde on the concept of imitation has been rediscovered by social scientists in order to better understand social innovation and its relation to social change. Other theories of innovation became prominent in the 20th century, many of which had social implications, without putting social progress at the center of the theory. Joseph Schumpeter, for example, addressed the process of innovation directly with his theory of creative destruction and his definition of entrepreneurs as people who combined existing elements in new ways to create a new product or service. Beginning in the 1980s, writers on technological change increasingly addressed how social factors affect technology diffusion.

The article "Rediscovering Social Innovation" mentions how social innovations are dependent on history and the change in institutions. The article discusses the ten recent social innovations reflecting current change to include:

• Charter Schools: Charter schools are a social innovation that provides an alternative avenue for students to continue to develop and build upon their educational foundation without many of the issues prominent in the public school system. These primary and secondary schools are publicly funded and operate independently, which allows the teachers and parents to collaboratively develop alternative teaching methods for their students as related regulations are less stringent for Charter Schools.
• Community-Centered Planning: This social innovation allows communities to plan and develop systems that cater solutions to their specific local needs by using their historical knowledge and other local resources.
• Emissions Trading: The Emissions Trading program was designed to address issues associated with the continuous increase in pollution. The program provides solutions such as setting a cap on the amount that certain pollutants can be emitted, and implementing a permit system to control the amount of pollution produced by each participating business. If a business needs to use more pollution than permitted, it can purchase credits from a business that has not emitted its maximum permitted amount. The goal of the Emissions Trading program is that, over time and with increased awareness, society will limit the types and the numbers of pollutants emitted to what is only necessary.
• Fair Trade: Products including coffee, sugar, and chocolate are currently being traded without high standards that result in tough conditions for farmers and a less sustainable environment. Fair trade is a movement that certifies traders to exchange with the farmers that produce these products. The idea behind this movement is that by being paid a living-wage, being able to meet social and environmental standards and promoting "environmental sustainability, the lives of these farmers will be improved.
• Habitat Conservation Plans: Habitat Conservation Plans is an effort by the US Fish and Wild Life Service and the Environmental Protection Agency to protect species and their endangerment by providing economical incentives to conserve their habitats and protect these species from endangerment.
• Individual Development Accounts: This social innovation is made to support the working poor with saving decisions that they have made to better enhance their lives. This initiative will give $2 per every $1 saved by the working poor for College tuition, purchasing a home, starting a business, and other similar and productive initiatives. This is made possible by philanthropic, government and corporate sponsors that donate to this cause.
• International Labor Standards: Labor standards differ country-to-country, with some agreeably better than others. In effort to internationally align these, the International Labor Organization, participating governments, and employees contributed to the development of standards that protect workers’ rights to freedom, equity, security, and human dignity".
• Microfinance: This social innovation is created to support those financially unable to gain access to financial services such as banking, lending, and insurance. The ultimate goal of Microfinance is to enable an escape from poverty by helping to improve the living conditions and financial viability among the impoverished program participants.
• Socially Responsible Investing: "An investment strategy that attempts to maximize both financial and social returns. Investors generally favor businesses and other organizations whose practices support environmental sustainability, human rights, and consumer protection."
• Supported Employment: Supported Employment is a social innovation geared towards helping disabled or disadvantaged workers who are un- or under-employed due to their condition obtain suitable employment. The Support Employment service provides access to job coaches, transportation, assistive technology, specialized job training, and individual tailored supervision in effort to help program participants become more competitive applicants and better prepared overall for the job market.

Criticism

Over the last two decades social innovation has gained significant popularity as a strategy to tackle new social risks including population ageing and its health correlates (Hubert, 2010; Mulgan et al., 2007, 2010; Murray, Caulier-Grice and Mulgan, 2010). However, as other concepts recently developed within the academic debate – among them, social capital (Ferragina, 2012) – social innovation might soon turn out to be simply another way to juxtapose the qualifier "social" to the private sector jargon, in order to avoid heated discussions on structural inequalities (Grisolia and Ferragina, 2015).

In the context of ‘neoliberal austerity’, a strong call in favour of social innovation might hide the attempt to shift public attention from structural deficiencies and disparities to individual and group responsibility, following the vision: "doing more with less". In order to guarantee universal coverage and universal social rights, however, the welfare state system cannot be managed with the logic of mere cost-effectiveness alone (Grisolia and Ferragina, 2015). A Universal coverage is the precondition for any well-functioning economy, not the other way around. As such, the enhancement of "politically motivated policies under the pretence of budget cuts" can be particularly dangerous in its consequences for population health (Kleinert and Horton, 2013, p. 1074). Social innovation per se might not be able to substantially tackle pressing social needs. Rather, the all-innovating and self-empowering jargon currently in vogue might disguise a dangerous inattention to structural inequalities, adversely affecting health outcomes across the board, but especially of the poorest. Among the therapies prescribed by the neoliberal orthodoxy – liberalisation, deregulation, devolution, individual or group empowerment – social innovation might soon reveal itself as a convenient buzzword, an eclectic concept to dissimulate political choices, legitimated by the doctrine of budgetary constraints. The redistribution of resources "from past to present generations" – keeping constant the overall public spending – and the shift from a "transfer-based" to a "service-based" welfare state would represent a truly innovative approach to social policy, offering a credible and responsible alternative to the magic wand of social innovation.

Developments since 2000

Academic research, blogs and websites feature social innovation, along with organizations working on the boundaries of research and practical action. Topics include:

• Innovation in public services was pioneered particularly in some Scandinavian and Asian countries. Governments are increasingly recognizing that innovation requires healthcare, schooling and democracy.
• Social entrepreneurship, which is the practice of creating new organizations focusing on non-market activities.
• Responsible Research and Innovation, which takes into account effects and potential impacts on the environment and society. It includes Engagement of all societal actors (researchers, industry, policymakers and civil society); Gender Equality; Science Education; Open Access; Ethics; and Governance.
• Online volunteering, a free service launched in 2000 whereby individuals from all over the world contribute to the needs of development organizations and public institutions
• Open source innovation, in which the intellectual property involved in a product or service is made freely available.
• Complex adaptive systems, which have built-in mechanisms to help them adapt to changing circumstances.
• Collaborative approaches which involve stakeholders who are not directly responsible for some activity, such as stockholders and unions collaborating on business issue and business collaborating with government on regulatory issues.
• Innovation diffusion
• Localized influences that make some localities particularly innovative.
• Institutional or system entrepreneurship which focuses on agents who work at a broad system level in order to create the conditions which will allow innovations to have a lasting impact.
• Business, particularly in services.

Institutional support

The US created an Office for Social Innovation in the White House, which is funding projects that combine public and private resources. with foundations that support social innovation. In 2010, the US government listed 11 investments made by its 'Social Innovation Fund', with public funding more than matched by philanthropic organizations. This fund focuses on partnerships with charities, social enterprises, and business. Moreover, educational institutions are now increasingly supporting teaching and research in the area of social innovation. In addition to pioneered efforts by institutions such as the Harvard Business School's Initiative on Social Enterprise (launched 1993) and Said Business School's Skoll Centre for Social Entrepreneurship (launched 2003), INSEAD and other universities now offer short-term programs in Social Innovation, and a few such as Cambridge Judge Business School, University of Cambridge and Goldsmiths, University of London offer Masters courses dedicated entirely to the study of theory and practice in relation to social entrepreneurship and innovation. 

Public policy makers support social innovation in the UK, Australia, China and Denmark, as well. The European Union’s innovation strategy was the first well-funded research and development strategy to emphasize social innovation.

In 2002, the South Australian government, led by Premier and Social Inclusion Minister Mike Rann, embraced a ten-year social innovation strategy with big investments and a focus on reform in areas such as homelessness, school retention, mental health and disability services.

The Common Ground and Street to Home homelessness initiatives and the Australian Centre for Social Innovation were established in Adelaide and many reforms trialed in South Australia have been adopted nationally throughout Australia. This initiative, headed by Monsignor David Cappo, South Australia's Social Inclusion Commissioner, was advised by 'Thinkers in Residence' Geoff Mulgan and New York social entrepreneur Rosanne Haggerty.

Role in curbing corruption

Lin and Chen, in "The Impact of Societal and Social innovation: a case-based approach" have argued that social innovation's goal is to produce actions that are "socially valuable and good for many".

In governance, its main role is to enhance and maximize the trust of citizens through active involvement in society, whether in the public or private sphere. Social innovation's role in curbing corruption is carried out through two main mediums. Firstly, it is institutionalized through actors (in the public and the private sectors), and secondly, it is executed with new tools available, specifically ICTs.

Local and regional development

Literature on social innovation in relation to territorial/regional development covers innovation in the social economy, i.e. strategies for satisfaction of human needs; and innovation in the sense of transforming and/or sustaining social relations, especially governance relations at the regional and local level. Beginning in the late 1980s, Jean-Louis Laville and Frank Moulaert researched social innovation. In Canada CRISES initiated this type of research. Another, larger project was SINGOCOM a European Commission Framework 5 project, which pioneered so-called "Alternative Models for Local Innovation" (ALMOLIN). These models were further elaborated through community actions covered by KATARSIS and SOCIAL POLIS. More recent works focus on the societal role of the economic life in terms of innovations in social practices and social relations at the local and regional levels. Social Innovation, therefore, is increasingly seen as a process and a strategy to foster human development through solidarity, cooperation, and cultural diversity.

The EU funded URBACT programme is designed to help cities to exchange and learn around urban policies. The URBACT methodology can be seen as a social innovation action planning approach. A typical URBACT network would have ten cities working on a specific theme such as active inclusion or regenerating disadvantaged neighbourhoods. They examine good practice and then working through a local support group use the results to inform their local action plan.

The Social Innovation Europe initiative, funded by the European Commission's Directorate General for Enterprise and Industry, was set up to map social innovation at a European level, by creating a directory of grass-roots examples of social innovation from across the 27 member states.

The European Commission funded the SELUSI study between 2008 - 2013 that looked at over 550 social ventures and examined how these insights can spark change and innovation at a much larger scale. It looked at business models of social ventures in five countries - UK being one of them – identifying which specific practices evolved by social ventures are particularly successful, and how and by whom – be it social enterprise, public sector body or mainstream business – they can be most effectively scaled-up.

The European Commission has launched a new initiative (project) in 2013 under FP7 funding, with the aim to build a network of incubators for social innovation across regions and countries. This network facilitates identification of 300 social innovation examples and facilitates its scaling. The network is organised in a way to identify new models for scaling of social innovations across various geographical clusters in collaboration with each other, communicating the ideas, finding the tools and funds, developing business plans and models in order to promote the new promising ideas throughout Europe.

• A guide also exists that provides a way to promote social innovations at a local or regional level.

Some noted scholars

• Akhtar Hameed Khan
• Frank Moulaert
• Geoff Mulgan
• Ted London
• Jürgen Howaldt
• Frances Westley
• Natalie Slawinski

Social entrepreneurship

From Wikipedia, the free encyclopedia

Student organizers from the Green Club at Newcomb College Institute have formed a social entrepreneurship organization in 2010 that aimed to encourage people to reduce waste and live in a more environmentally conscious way.

 

Social entrepreneurship is the use of start-up companies and other entrepreneurs to develop, fund and implement solutions to social, cultural, or environmental issues. This concept may be applied to a variety of organizations with different sizes, aims, and beliefs. For-profit entrepreneurs typically measure performance using business metrics like profit, revenues and increases in stock prices, but social entrepreneurs are either non-profits or blend for-profit goals with generating a positive "return to society" and therefore must use different metrics. Social entrepreneurship typically attempts to further broad social, cultural, and environmental goals often associated with the voluntary sector in areas such as poverty alleviation, health care and community development. 

At times, profit-making social enterprises may be established to support the social or cultural goals of the organization but not as an end in itself. For example, an organization that aims to provide housing and employment to the homeless may operate a restaurant, both to raise money and to provide employment for the homeless. 

In the 2010s, social entrepreneurship is facilitated by the use of the Internet, particularly social networking and social media websites. These websites enable social entrepreneurs to reach a large number of people who are not geographically close yet who share the same goals and encourage them to collaborate online, learn about the issues, disseminate information about the group's events and activities, and raise funds through crowdfunding.

Modern definition

Grameen Bank founder and Nobel Peace Prize winner Muhammad Yunus (left) with two young social entrepreneurs (right).

 

In the 2000s, scholars and practitioners have debated which individuals or organizations can be considered to be social entrepreneurs. Thus far, there has been no firm consensus on the definition of social entrepreneurship, as so many different fields, disciplines and organization types are associated with social entrepreneurship, ranging from for-profit businesses to hybrid models combining charitable work with business activities, to non-profit charities, voluntary sector organizations and non-governmental organizations. Philanthropists, social activists, environmentalists, and other socially-oriented practitioners are often referred to as social entrepreneurs. Social entrepreneurs can include a range of career types and professional backgrounds, ranging from social work and community development to entrepreneurship and environmental science. For this reason, it is difficult to determine who is a social entrepreneur. David Bornstein has even used the term "social innovator" interchangeably with social entrepreneur, due to the creative, non-traditional strategies that many social entrepreneurs use. For a clearer definition of what social entrepreneurship entails, it is necessary to set the function of social entrepreneurship apart from other voluntary sector and charity-oriented activities and identify the boundaries within which social entrepreneurs operate. Some scholars have advocated restricting the term to founders of organizations that primarily rely on earned income (meaning income earned directly from paying consumers), rather than income from donations or grants. Others have extended this to include contracted work for public authorities, while still others include grants and donations.

Social entrepreneurship in modern society offers an altruistic form of entrepreneurship that focuses on the benefits that society may reap. Simply put, entrepreneurship becomes a social endeavor when it transforms social capital in a way that affects society positively. It is viewed as advantageous because the success of social entrepreneurship depends on many factors related to social impact that traditional corporate businesses do not prioritize. Social entrepreneurs recognize immediate social problems, but also seek to understand the broader context of an issue that crosses disciplines, fields, and theories. Gaining a larger understanding of how an issue relates to society allows social entrepreneurs to develop innovative solutions and mobilize available resources to affect the greater global society. Unlike traditional corporate businesses, social entrepreneurship ventures focus on maximizing gains in social satisfaction, rather than maximizing profit gains. Both private and public agencies worldwide have had billion-dollar initiatives to empower deprived communities and individuals. Such support from organizations in society, such as government-aid agencies or private firms, may catalyze innovative ideas to reach a larger audience. 

Prominent individuals associated with social entrepreneurship include Pakistani Akhter Hameed Khan and Bangladeshi Muhammad Yunus, a leader of social entrepreneurship in South Asia. Yunus was the founder of Grameen Bank, which pioneered the concept of microcredit for supporting innovators in multiple developing countries in Asia, Africa, and Latin America. He received a Nobel Peace Prize for his efforts. Others, such as former Indianapolis mayor Stephen Goldsmith addressed social efforts on a local level by using the private sector to provide city services.

Characteristics

Bill Drayton founded Ashoka in 1980, an organization which supports local social entrepreneurs. Drayton tells his employees to look for four qualities: creativity, entrepreneurial quality, social impact of the idea, and ethical fiber. Creativity has two parts: goal-setting and problem-solving. Social entrepreneurs are creative enough to have a vision of what they want to happen and how to make that vision happen. In their book The Power of Unreasonable People John Elkington and Pamela Hartigan identify why social entrepreneurs are, as they put it, unreasonable. They argue that these men and women seek profit in social output where others would not expect profit. They also ignore evidence suggesting that their enterprises will fail and attempt to measure results which no one is equipped to measure. About this, the Schwab Foundation says that entrepreneurs have, "A zeal to measure and monitor their impact. Entrepreneurs have high standards, particularly in relation to their own organization's efforts and in response to the communities with which they engage. Data, both quantitative and qualitative, are their key tools, guiding continuous feedback and improvement." Ashoka operates in multiple countries. 

Entrepreneurial quality builds from creativity. Not only do entrepreneurs have an idea that they must implemented, they know how to implement it and are realistic in the vision of implementing it. Drayton says that, "Entrepreneurs have in their heads the vision of how society will be different when their idea is at work, and they can't stop until that idea is not only at work in one place, but is at work across the whole society." This manifests through a clear idea of what they believe the future will look like and a drive to make this come true. Besides this, entrepreneurs are not happy with the status quo; they want healthy change. This changemaking process has been described as the creation of market disequilibria through the conversion of antagonistic assets into complementarities.

Social impact measures whether the idea itself will be able to cause change after the original founder is gone. If an idea has intrinsic worth, once implemented it will cause change even without the charismatic leadership of the first entrepreneur. One reason that these entrepreneurs are unreasonable is that they are unqualified for the task they take on. Most entrepreneurs have not studied the skills needed to implement their ideas. Instead, they bring a team of qualified people around themselves. It is the idea that draws this team. 

Ethical fiber is important because leaders who are about to change the world must be trustworthy. Drayton described this to his employees by suggesting that they picture a situation that frightens them and then place the candidate in the situation with them. If they feel comfortable in this scenario, the entrepreneur has ethical fiber. One distinguishing attribute of entrepreneurs is that they rarely take credit for making change. They insist that the change they have brought about is due to everyone around them. They also tend to be driven by emotion; they are not trying primarily to make a profit but to address suffering. Muhammad Yunus says about this characteristic, "He (or she) competes in the marketplace with all other competitors but is inspired by a set of social objectives. This is the basic reason for being in the business."

Challenges

Because the world of social entrepreneurship is relatively new, there are many challenges facing those who delve into the field. First, social entrepreneurs are trying to predict, address, and creatively respond to future problems. Unlike most business entrepreneurs, who address current market deficiencies, social entrepreneurs tackle hypothetical, unseen or often less-researched issues, such as overpopulation, unsustainable energy sources, food shortages. Founding successful social businesses on merely potential solutions can be nearly impossible as investors are much less willing to support risky ventures. 

The lack of eager investors leads to the second problem in social entrepreneurship: the pay gap. Elkington and Hartigan note that “the salary gap between commercial and social enterprises… remains the elephant in the room, curtailing the capacity of [social enterprises] to achieve long-term success and viability.” Social entrepreneurs and their employees are often given diminutive or non-existent salaries, especially at the onset of their ventures. Thus, their enterprises struggle to maintain qualified, committed employees. Though social entrepreneurs are tackling the world's most pressing issues, they must also confront skepticism and stinginess from the very society they seek to serve.

Another reason social entrepreneurs are often unsuccessful is because they typically offer help to those least able to pay for it. Capitalism is founded upon the exchange of capital (most obviously, money) for goods and services. However, social entrepreneurs must find new business models that do not rely on standard exchange of capital in order to make their organizations sustainable. This self-sustainability is what distinguishes social businesses from charities, who rely almost entirely on donations and outside funding.

History

Social entrepreneurship is distinct from the concept of entrepreneurship, yet still shares several similarities with its business cousin. Jean-Baptiste Say (1767–1832), a French economist, defined an entrepreneur as a person who "undertakes" an idea and shifts perspectives in a way that it alters the effect that an idea has on society. An entrepreneur is further defined by Say as someone who "shifts economic resources out of an area of lower and into an area of higher productivity and greater yield." The difference between "entrepreneurship" and "social entrepreneurship", however, stems from the purpose of a creation. Social entrepreneurs seek to transform societies at large, rather than transforming their profit margin, as classic entrepreneurs typically seek to do. Social entrepreneurs use a variety of resources to bring societies into a better state of well-being.

The concept of "social entrepreneurship" is not a novel idea, but in the 2000s, it has become more popular among society and academic research, notably after the publication of "The Rise of the Social Entrepreneur" by Charles Leadbeater. Many activities related to community development and higher social purpose fall within the modern definition of social entrepreneurship. Despite the established definition nowadays, social entrepreneurship remains a difficult concept to define, since it may be manifested in multiple forms. A broad definition of the concept allows interdisciplinary research efforts to understand and challenge the notions behind social entrepreneurship. No matter in which sector of society certain organizations are (i.e. corporations or unincorporated associations, societies, associations or cooperatives), social entrepreneurship focuses on the social impact that an endeavor aims at. Whether social entrepreneurship is altruistic or not is less important than the effect it has on society. 

The terms social entrepreneur and social entrepreneurship were used first in the literature in 1953 by H. Bowen on his book "Social Responsibilities of the Businessman". The terms came into widespread use in the 1980s and 1990s, promoted by Bill Drayton, Charles Leadbeater, and others. From the 1950s to the 1990s, the politician Michael Young was a leading promoter of social entrepreneurship and in the 1980s, he was described by Professor Daniel Bell at Harvard University as the "world's most successful entrepreneur of social enterprises". Young created more than sixty new organizations worldwide, including the School for Social Entrepreneurs (SSE) which exists in the UK, Australia, and Canada and which supports individuals to realize their potential and to establish, scale, and sustain, social enterprises and social businesses. Another notable British social entrepreneur is Andrew Mawson OBE, who was given a peerage in 2007 because of his urban regeneration work including the Bromley by Bow Centre in East London. Although the terms are relatively new, social entrepreneurs and social entrepreneurship may be found throughout history. A list of a few noteworthy people whose work exemplifies the modern definition of "social entrepreneurship" includes Florence Nightingale, founder of the first nursing school and developer of modern nursing practices; Robert Owen, founder of the cooperative movement; and Vinoba Bhave, founder of India's Land Gift Movement. During the nineteenth and twentieth centuries some of the most successful social entrepreneurs straddled the civic, governmental, and business worlds. These pioneers promoted new ideas that were taken up by mainstream public services in welfare, schools, and health care.

2000s

Major organizations

A panel discusses social entrepreneurship in the health care sector in 2015.

 

Groups focused on social entrepreneurship may be divided into several categories: community-based enterprises, socially responsible enterprises, social services industry professionals, and socio-economic enterprises. Community-based enterprises are based on the social ventures aimed at and involving an entire community. These enterprises build on the community's culture and capital (e.g., volunteer resources, financing, in-kind donations, etc.) to empower the enterprise and the community. Socially responsible enterprises focus on creating sustainable development through their inside organization acts that focus mostly on creating societal gains for the community. Social service industry professionals such as social workers and public health nurses work in social services, either for a government or a non-profit organization. They aim to expand social capital for individuals, communities, and organizations. Socio-economic enterprises include corporations that balance earning profits with nonprofit goals, such as seeking social change for communities. Some social entrepreneurship organizations are not enterprises in a business sense; instead, they may be charities, non-profit organizations or voluntary sector organizations.

In addition, there are support organizations dedicated to empowering social entrepreneurs, connecting them with mentors, strengthening their enterprise models, and preparing them for capital investments. These incubators and accelerator organizations provide office and meeting space (often free), mentoring and coaching for social enterprise founders and leaders to help them develop their enterprises by improving the effectiveness of their business model, marketing, and strategy. Some accelerator organizations help social entrepreneur leaders to scale up their organization, either by taking it from a local scale to a national scale or from a national scale to a global scale. Some entrepreneurship support organizations also provide mentoring and coaching to social entrepreneurs.

One well-known social entrepreneur from South Asia is Muhammad Yunus, who founded the Grameen Bank in 1976. He is known as the "father of microcredit," and established the microfinance movement, which aims to help millions of people rural communities to access small loans. For his work, he was awarded a Nobel Peace Prize in 2006. The work that Yunus did through Grameen Bank has been described as a major influence on later social entrepreneurs. Larger countries in Europe and South America have tended to work more closely with public organizations at both the national and local level.

Types

In The Power of Unreasonable People, John Elkington and Pamela Hartigan describe social entrepreneurs' business structures as falling under three different models, applicable in different situations and economic climates:

1. Leveraged non-profit: This business model leverages financial and other resources in an innovative way to respond to social needs.
2. Hybrid non-profit: This organizational structure can take a variety of forms, but is distinctive because the hybrid non-profit is willing to use profit from some activities to sustain its other operations which have a social or community purpose. Hybrid non-profits are often created to deal with government failures or market failures, as they generate revenue to sustain the operation without requiring loans, grants, and other forms of traditional funding.
3. Social business venture: These models are set up as businesses that are designed to create change through social means. Social business ventures evolved through a lack of funding. Social entrepreneurs in this situation were forced to become for-profit ventures, because loans and equity financing are hard to get for social businesses.

There are also a broader range of hybrid profit models, where a conventional business invests some portion of its profits on socially, culturally or environmentally beneficial activities. The term "Philanthropreneurship" has been applied to this type of activity. Corporate employees can also engage in social entrepreneurship, which may or may not be officially sanctioned by the company. This has been described as corporate social entrepreneurship.

One private foundation has staked the ground of more precise lexicon following the Newman's Own model having coined the phrase "Commercial Philanthropy" where commercial businesses are held and operated with all net proceeds going to serve social service needs.

International presence

Organizations such as the Skoll Foundation, the Omidyar Network, the Schwab Foundation for Social Entrepreneurship, Tasamy, Athgo, New Profit Inc., National Social Entrepreneurship Forum, Echoing Green, and the Global Social Benefit Institute among others, promote and providing resources to advance the initiatives of social entrepreneurs. The North American organizations tend to have a strongly individualistic stance focused on a handful of exceptional leaders. For example, The Skoll Foundation, created by eBay's first president, Jeff Skoll, makes capacity-building "mezzanine level" grants to social entrepreneurial organizations that already have reached a certain level of effectiveness.

Role of technology

The Internet, social networking websites and social media have been pivotal resources for the success and collaboration of many social entrepreneurs. In the 2000s, the Internet has become especially useful in disseminating information to a wide range of like-minded supporters in short amounts of time, even if these individuals are geographically dispersed. In addition, the Internet allows for the pooling of design resources using open source principles. Using wiki models or crowdsourcing approaches, for example, a social entrepreneur organization can get hundreds of people from across a country (or from multiple countries) to collaborate on joint online projects (e.g., developing a business plan or a marketing strategy for a social entrepreneurship venture). These websites help social entrepreneurs to disseminate their ideas to broader audiences, help with the formation and maintenance of networks of like-minded people and help to link up potential investors, donors or volunteers with the organization. This enables social entrepreneurs to achieve their goals with little or no start-up capital and little or no "bricks and mortar" facilities (e.g., rented office space). For example, the rise of open-source appropriate technology as a sustainable development paradigm enables people all over the world to collaborate on solving local problems, just as open source software development leverages collaboration from software experts from around the world.

Public opinion

Controversy

Many initiatives carried out with social entrepreneurs while innovative, have had problems becoming sustainable and effective initiatives that ultimately were able to branch out and reach the larger society as a whole (versus a small community or group of people). Compromises in social initiatives were developed, which often did not reach large audiences or help larger communities. Since the concept of social entrepreneurship has been popularized in the 2000s, some advocates suggest that there needs to be some standardization of the process in scaling up social endeavors to increase the impact of these ventures across the globe.

Policymakers around the globe may need to learn more about social initiatives, to increase the sustainability, effectiveness, and efficiency of these projects. Involvement and collaboration between private corporations and government agencies allows for increased support for carrying out social entrepreneurship initiatives, increased accountability on both ends, and increased connections with communities, individuals, or agencies in need. For example, private organizations or nonprofit organizations have tackled unemployment issues in communities. One challenge is that in some cases, social entrepreneurs may only propose short-term solutions, or that they are unable to scale up their virtual, online organization to a larger degree to maximize the number of people who are helped. Government program are able to tackle large issues; however, there is often little collaboration between governments and social entrepreneurs, which may have limited the effectiveness of social entrepreneurship. This lack of inter-sectoral collaboration may lead to stagnation, if the motives and goals of social enterprises and of those in policy-making and programs are not aligned. Those in policy-making and the development of delivery of government programs tend to have different priorities than social entrepreneurs, resulting in slow growth and expansion of social initiatives.

Since social entrepreneurship has only started to gain momentum in the 2000s, current social entrepreneurs are encouraging social advocates and activists to develop into innovative social entrepreneurs. Increasing the scope and scale of social entrepreneurship may increase the likelihood of an efficient, sustainable, and effective initiative; although it may also render social entrepreneurship more challenging. Increased participation draws more attention to social entrepreneurship ventures from policymakers and privately owned corporations. The increased involvement from corporations and governments may help to strengthen social entrepreneurship, as it may lead to policy changes and to the development of training programs and leadership development programs for social entrepreneurs. Simultaneously, research shows that as social entrepreneurs attempt to widen their impact and scale their efforts, external institutions will have a key role to play in their success.