Chapter 4

Question 1

What’s the difference between social entrepreneurs and traditional entrepreneurs?

Answer 1

The main difference between traditional and social entrepreneurship lies in its intended mission. Traditional entrepreneurs create ventures with a goal of making a profit, and they measure performance by the profits they generate. In contrast, social entrepreneurs create ventures to tackle social problems and bring about social change; they measure performance by advancing social and environmental goals.

Question 2

Wicked problems

Answer 2

Large, complex social problems where there is no clear solution, where there is limited, confusing, or contradictory information available, and where a whole range of people with conflicting values engage in debate.

Question 3

Conklin’s Defining Characteristics of Wicked Problems:

Answer 3

1. The problem is not understood until after the formulation of a solution
2. Wicked problems have no stopping rule
3. Solutions to wicked problems are not right or wrong
4. Every wicked problem is essentially novel and unique
5. Every solution to a wicked problem is a ‘one shot operation’
6. Wicked problems have no given alternative solutions

Question 4

Types of social entrepreneurship:

Answer 4

1. Social purpose ventures
2. Social consequence entrepreneurship
3. Enterprising nonprofits
4. Hybrid model of social entrepreneurship

Question 5

Social purpose ventures:

Answer 5

Businesses created by social entrepreneurs to resolve a social problem and make a profit.
As a participant in the Fair Trade movement, PACT uses family farms in India and pays a higher price on the cotton to help sustain the farms and the local communities.

Question 6

Social consequence entrepreneurship:

Answer 6

A for-profit venture whose primary market impact is social.
A good example of a for-profit venture with a social impact is Sword & Plough, a startup founded by sisters Emily and Betsy Núñez. Sword & Plough hires army veterans to recycle surplus military materials such as parachutes, sleeping bags, and tents into fashionable bags and accessories. The company was launched in 2013, benefiting from $312,000 in funding, thanks to a powerful Kickstarter campaign. It donates 10% of its profits to veterans’ organisations.

Question 7

Enterprising nonprofits:

Answer 7

Are a form of social entrepreneurship where both the venture mission and the market impact are for social purposes. This means that any profits made must be channeled back into the organisation. Unlike with social purpose ventures, profit may not be distributed to the owners of the enterprising nonprofit.
There are two types of enterprising nonprofits: earned-income activities, and venture philanthropy.

Question 8

Types of Enterprising nonprofits:

Answer 8

1. Earned-income activities
2. Venture philanthropy funding

Question 9

Earned-income activities

Answer 9

The sale of products or services that are used as a source of revenue generation.

Question 10

Venture philanthropy funding

Answer 10

A combination of financial assistance such as grants with a high level of engagement by the funder. In contrast to the earned-income model, venture philanthropy funding combines financial assistance such as grants with a high level of engagement by the funder.

Question 11

Hybrid model of social entrepreneurship

Answer 11

An organisation with a purpose that equally emphasises both economic and social goals.

Question 12

Social Venture Capitalists (SVC), also known as impact-investment funds

Answer 12

These funds look both for a return on investment and to make a specific social/environmental impact. For example, thanks to SVC, the global solar energy for-profit company d.light has transformed lives by manufacturing and distributing affordable solar energy solutions to over 50 million people in the developing world.

Question 13

The salience model

Answer 13

Helps social entrepreneurs select the most suitable communication approach for each group of stakeholders by classifying stakeholders based on their salience (or significance) in the social enterprise.

Question 14

Three primary attributes of stakeholders to consider when you are trying to achieve your objectives:

Answer 14

1. Power - a stakeholder in a position of power has the ability to either help or hinder your social objectives.
2. Legitimacy - legitimate stakeholders are those whose actions are appropriate, proper, and desired in the context of the company, organization, or community.
3. Urgency - it describes the extent to which stakeholders demand your attention.

Question 15

Types of stakeholders:

Answer 15

1. Dormant stakeholders
2. Discretionary stakeholders
3. Demanding stakeholders
4. Dominant stakeholders
5. Dependent stakeholders
6. Dangerous stakeholders
7. Definitive stakeholders

Question 16

Dormant stakeholders

Answer 16

Are “sleepers”—they hold power but do not tend to use that power unless they are given a reason to do so. However, dormant stakeholders may become significant when they begin to utilize their power; for example, a disgruntled member may complain about CEO on social media.

Question 17

Discretionary stakeholders

Answer 17

Have no power to influence and no urgent claims, but they have legitimacy. They may come in the form of philanthropists who donate to your organization and are willing to support social causes. For example, CEO provides visitors with the opportunity to donate money on its website to support the organization.

Question 18

Demanding stakeholders

Answer 18

Possess the urgency attribute. They have no power or legitimacy and may be the only dissenting voice in the room. For example, persons protesting outside the CEO national conference because they believe entrepreneurs create income inequality in the economy, but they do not have the power to enforce their claims. These stakeholders don’t really impact CEO, and not a lot of time and energy should be devoted to them.

Question 19

Dominant stakeholders

Answer 19

Have both power and legitimacy, which gives them strong influence in your organization. Dominant stakeholders of CEO include College Presidents or Deans of business schools where CEO chapters are located. Communicating with them regularly and responding to queries efficiently and accurately will help you maintain a good relationship with these stakeholders and keep the chapter on campus!

Question 20

Dependent stakeholders

Answer 20

Have both urgency and legitimacy but lack the power to influence. These stakeholders are the most passionate, and their passion is likely to attract dominant stakeholders. For example, the student members of CEO are the most enthusiastic and passionate stakeholders connected to the organization, but they may not have the power necessary to effect change with the leaders of the national organization.

Question 21

Dangerous stakeholders

Answer 21

Possess both power and urgency but may use this power to coerce or even resort to violence. Social issues can be emotive, and power and urgency exercised against your objectives can be a significant hindrance. For example, a competing organization may emerge that could use false advertising or slander to get members from CEO to move their membership to the new organization.

Question 22

Definitive stakeholders

Answer 22

Are the only ones who possess all three attributes of power, legitimacy, and urgency. These stakeholders have a significant role to play in your organization and must be given priority when it comes to handling their claims. In the case of CEO, the most definitive stakeholders are the foundations that fund CEO - the Kauffman and Coleman foundations.

Question 23

Corporate social responsibility (CSR)

Answer 23

Describes the efforts taken by corporations to address the company’s effects on environmental and social well-being in order to promote positive change.

Question 24

Work integration social enterprise (WISE)

Answer 24

A social enterprise whose mission is to integrate people who have been socially excluded into work and society through productive activity.