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“Responsible Entrepreneurship” and “Social Entrepreneurship”

Differences and similarities

In recent times, most companies are trying to demonstrate a greater concern for local communities as well as the environment, repositioning themselves as “responsible” brands. As a consequence, worldwide media are overloaded by marketing claims focusing on “responsibility“. Nothing wrong with that, as long as we can clearly acknowledge what true impact making really is. So, in this article we are going to cover the notions of “responsible entrepreneurship” and “social entrepreneurship” to understand how the two differ and what they do have in common.

What is “responsibility” in business?

Responsibility = being accountable, dependable, able to honor over time specific commitments”. That’s the most common definition you would probably find on any given English vocabulary. But does the same meaning apply to business practices too?

According to the European Commission, responsible organizations are those that effectively implement strategies to prevent, manage and mitigate negative impacts they may cause on society or the environment. That’s the core, underlying principle driving Corporate Social Responsibility (or CSR) initiatives, carried out by both SMEs and large businesses.

responsible entrepreneurship and social entrepreneurship

CSR often include a wide array of different, purposeful activities such as embracing diversity and inclusion, engaging in charity, reducing carbon-footprint, just to name a few. Potentially, all able to benefit either single individuals or society as a whole. Nevertheless, we should acknowledge that acting responsible doesn’t necessary mean fostering impact nor leading lasting change.

So, what is “social” entrepreneurship instead?

Although still an umbrella term lacking a common definition, Social Entrepreneurship refers to ventures undertaking business activities to intentionally enhance social wealth and drive social change. Simply put, a combination of entrepreneurial practices and social mission.

Here, impact creation – and, more precisely, social impact creation – is intentional, thus constantly embedded in social enterprises’ business models. Business activities are carried out not to generate profits, but rather as a mean to drive systemic change. The goal is impact, whereas economic sustainability is a necessary condition to make it happen.

If it’s not yet clear, see it this way. On one hand you have social entrepreneurship, which is proactive by nature in solving complex social problems. That’s why organizations such as Aravind Eye Care and Proximity Designs were launched in the first place (to eradicate blindness and rural poverty, respectively).

On the other one you have traditional businesses, (finally!) acting responsible through their CSR activities, which are typically reactive. As a matter of fact, CSR programs usually create positive impacts and externalities while maintaining – or, at most, adapting – existing strategies, practices and procedures. An example of that is LEGO. In 2020, the Danish Group committed to make all its products from sustainable materials by the end of 2030. That’s surely great news for the environment! Still, LEGO core mission stays the same: “inspiring and developing the builders of tomorrow“. As LEGO lover, we can all be fine with that, as long as we don’t confuse it with true impact making.

Why we shouldn’t confuse responsible entrepreneurship and social entrepreneurship

Practitioners and experts in the field already know that. As impact investing is on the rise, the risk of “impact washing” and “green washing” is just around the corner.

Many companies are indeed trying to put positive spins on environmental and social activities they carry out. Truth is, they don’t act towards solving societal issues once and for all. Furthermore, at times, they even downplay facts and provide misleading information about side, negative externalities they create. So, to avoid disorientation, it becomes fundamental to draw a boundary line between responsible entrepreneurship and social entrepreneurship.

Responsible entrepreneurship often lead to incrementally improving (or simply compensating for) current business practices and operations. But in order to truly happen, systemic change needs radicality. And radicality is the foundation of social entrepreneurship. We must take the courage to start acknowledging that, otherwise the notion of “impact” may get diluted. Several long-term risks for both businesses and society may derive, including eroding trust, mixing up fakes and real impact makers, and most importantly failing at supporting those organizations who are actively tackling emerging, social challenges.

As some would say.. “if everything becomes impact, no impact will ever be truly achieved”.

Conclusion

In this article, we explored differences and similarities between responsible entrepreneurship and social entrepreneurship and understood why we shouldn’t confuse the two.

At Social Business Design, we analyze how existing social enterprises and social businesses concretely drive positive change. We hope that by sharing business models and tools adopted by successful entrepreneurs, a new generation of change-makers may ease its way towards impact creation. For that, if you found this content useful, feel free to further explore the platform! 🙂


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