Can Social Entrepreneurship replace CSR ?


By Manna Sarah Jacob

The problem of unlimited wants and limited means is a constant phenomenon in any economic system. Yet, companies are faced with the question of what to produce, how to produce and when to produce. Companies constantly face difficulties in creating new markets and in expanding their business horizon. This is true especially in the developing countries due to unaffordability by the individuals owing to the inequalities in wealth and income distribution existing in these economies. Public expenditure also marginalises the poor, pushing them into further misery and deprivation.

At this juncture, business entities can get involved by being more socially responsible, thereby creating a shared value for the businesses as well as various stakeholders. In fact, corporates are expected to address these societal challenges to ensure a sustainable growth trajectory. Businesses can no longer insulate themselves from these complexities and challenges existing in the society.

With the enactment of mandatory CSR in India, any company with at least INR 5 crore net profit or Rs. 1,000 crore turnover or Rs. 500 crore net worth, with effect from 1st April 2014, is required to spend two percent of the average net profits of the preceding three years on CSR activities. This has helped in strengthening the business-community interaction and ensuring transparency regarding the CSR practices.

In recent times, there has been a growing interest in such practices among stakeholders as it brings the business entities closer to the community, thereby ensuring effective distribution of resources to the poor. The term ‘Social Entrepreneurship’ encapsulates such practices adopted by the companies and elaborates a road map for ensuring sustainable development. In other words, it could be a solution to the growing social and environmental complexities existing in the society.

Social Entrepreneurship is the application of pragmatic, creative and sustainable approaches that ensures collective benefit to the society and to the stake holders. A social entrepreneur is dedicated to the cause of social improvement cutting across all sectors and disciplines, firmly grounded in certain values and beliefs.

Now the question arises as to why social entrepreneurship is more important than CSR initiatives adopted by companies. The answer to this would be that these socially sensitive entrepreneurs focus on the most pressing problems in the local space and design their strategies and solutions around these problems as compared to large institutions who base their CSR initiatives on the company policies and general functioning. This perspective becomes complicated owing to the subjective nature of the process.

Which issue should be a given a priority? An answer to this could be the Social entrepreneurship which aligns business goals with the United Nations’ Millennium Development Goals (MDGs). This could help in creating tremendous value while catering to the basic individual needs of food, clean and safe drinking water, education and so on. To cite an example, a Chennai based social entrepreneur Mathew Jose started a venture named ‘Paperman’ which is into recycling and waste management. In a city like Chennai, the waste that gets accumulated is massive and most of this waste can be recycled and this social venture provides a solution to this problem. The challenge which such ventures face is the problem of scaling up. To counter this, a global reach for these ventures become even more necessary. However, it is to be kept in mind that the longevity of a social enterprise largely depends on the strong social sentiment of the entrepreneur and this should not be lost in process of scaling up the business.

The domains of social entrepreneurship and CSR is a perfect mix for achieving the sustainable development indicators. In most developing nations CSR activities were centered around local communities and were not in alignment with the global development indicators. Companies found it easier to function in this way since it helped them in gaining reputation and financial gains in their local domain. To address greater challenges in society, companies could collaborate with local social entrepreneurs with a strong social sentiment and work towards achieving the targets set in the MDGs.

Social entrepreneurship lays down the road map to ensure sustainability so that the needs of the future generations are met. Social entrepreneurs benefit from this process as they can access the pool of corporate knowledge and managerial capabilities to implement ventures with a social motive. At the same time, companies will benefit out of these collaborative initiatives as they will be able to pursue their self-interests and also create a better place for individuals to live in.

About the Author: Manna Sarah Jacob is the Academic Associate at NSRCEL, Indian Institute of Management, Bangalore.

Copy Right/Conditions: India CSR Network does not permit other websites/agency to copy or reproduce or reprint the above article in any form/means.

Disclaimer: The views expressed by the author in this feature are entirely her own and do not necessarily reflect the views of India CSR Network and its Editor. 


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