Social Entrepreneurship and the Bottom of the Pyramid Flashcards
social entrepreneurship
Recognizing and resourcefully pursuing opportunities to create social value
Crafting innovative (value innovation) approaches to addressing critical social needs
what are social entrepreneurs (ie characteristics and what they do)
• Social entrepreneurs are innovative, resourceful, and results oriented. They draw upon the best thinking in both the business and nonprofit worlds to develop strategies that maximize their social impact.
describe the difference between social entrepreneurs in the non-profit sector (the self-sufficiency part) and in the for-profit sector (sustainability part)
on the for profit side, it is run more like a business but the social goals of the organization are ingrained in the business. (ex. Grameen Bank)
what is the challenge of social entrepreneurship
Social entrepreneurs must strive to strike a balance between meeting their social goals and achieving financial success.
what does the degree of emphasis on either social goals or financial profits depend on?`
The degree of emphasis on either their social goals or their financial profits depends on the goals, structure, and orientation of the organization.
what is social intrapreneuship
already in the organization, trying to innovate to change current business practices
what is venture philanthropy
a hybrid between venture capital and philanthropy
–>both donation and grants as well as those that invest more directly or with loans
what does Yunus (Grameen Bank) think about social entrepreneurship?
about capitalism and the markets still
• I am in favor of strengthening the freedom of the market.
• Let us suppose an entrepreneur, instead of having a single source of motivation (such as, maximizing profit), now has two sources of motivation, which are mutually exclusive, but equally compelling −
– a) maximization of profit and
– b) doing good to people and the world.
what is microfinance? what is the principle behind it?
Microfinance is the business or policy of making microloans to impoverished entrepreneurs. Its effectiveness is based on the premise that unfortunate situations and not a lack of skill leave poor people in a perpetual state of poverty
The principle behind microfinance is that charity is not an answer to global poverty as it tends to create dependency and reduce individual initiative.
What are the key innovations in microfinance? (3)
- Group lending (solidarity loans)
• Joint liability (group of 3-20 people): if one does not repay, all lose access to future loans
• Focus on women - Intensive monitoring and early (two weeks after disbursement) and frequent (weekly) repayment schedules
• Lending against the periodic income of the household and not on the specific project
• Ensures early detection of default and rapid response. - Social pressure (social assets as collateral)
• Risk sharing
• Scale economies in administrative costs
• Peer selection: Good clients will match (if they have better information about each other) and reduce monitoring costs for the bank.
what is the impact of microfinance
Microfinance is among the best tools for reducing poverty among the very poor.
– Based on a 14-year study in Bangladesh, for example, the World Bank found:
>Moderate poverty in all villages declined by 17%.
>Poverty declined by more than 20% for microfinance borrowers.
>Impact was greater on extreme poverty than moderate poverty.
>Measurable “spillover” effects for non-microfinance borrowers in terms of greater village economic activity.
– In Uganda, 95% of microfinance clients engage in improved health and nutrition practices for their children.
– Bolivian microcredit loan clients doubled their income in two years.
what are 5 indirect impacts of microfinance?
- Formal Identity
Establishing a banking relationship gives people a formal identity they often lacked before, contributing to the process of political and social inclusion critical to development.
2.Greater personal safety
• Cash is a burden for the poor, making them vulnerable to crime. By doing away with the need to carry a lot of cash, such services as debit cards and mobile phone–based access to cash and billpaying facilities enhance personal safety.
- More education for children
• In Bangladeshi families that are clients of Grameen Bank, nearly all girls are in school, compared with only 60% in nonclient families. - more timely health care
• In Bolivia microcredit clients of Crédito con Educación Rural (Crecer) had higher rates of child immunization in their families than did non-clients. - Economic empowerment of women
• In Indonesia women who are clients of Bank Rakyat Indonesia (BRI) are more likely than other women to participate in family financial decisions.
• In India borrowers from SEWA Bank have organized unions to lobby for higher wages and more rights as members of the associated Self-Employed Women’s Association (Littlefield, Morduch, and Hashemi 2003).
what are other kinds of micro-funding?
mircosavings, microinsurance
describe the concept of Base of Pyramid (BOP)
-things that are designed for those with less wealth
(ie at the bottom of the wealth pyramid)
-brings reverse innovation (taking something that already exists and reverse engineer it to make it cheaper/more accessible
-want to use BOP as a source of innovation
–>trying to redefine/challenge beliefs and assumptions about poor people and markets
describe reconceptualizing the BOP
• Challenge core beliefs and embedded assumptions about poor people and markets
- The poor as an intractable problem (challenge this)
- The poor as an active market
- The BoP as a source of innovation
