USC Sol Price Center for Social Innovation: Social Innovation Seminar Series
“The Proverbs of Social Entrepreneurship”
Professor Paul Light
Paulette Goddard Professor of Public Service, New York University
Founding Director, Center for Global Public Service and Social Impact
Summary:
Social entrepreneurship is a courageous endeavor to create, scale, and execute a new combination of ideas
for solving an intractable social problem permanently. Entrepreneurship is an act, entrepreneurs are
people. But is social entrepreneurship an act only produced by an individual entrepreneur – or is it
something else? For some leading figures in the social entrepreneurship community, an individual
achieves social entrepreneur status only by permanently solving a problem (akin to how businesses must
permanently alter a market). Terminology is particularly important in this field. Whereas social
enterprise focuses on revenue generation or creative subsidy businesses within an organization, social
entrepreneurship makes direct reference to business entrepreneurship. Building on the work of Austrian
economists, business and social entrepreneurship are similar in most aspects – e.g. operations, creation of
new idea, efforts to scale and penetrate markets, creation of new equilibrium. The only difference
between the two types of entrepreneurship is motivation – social entrepreneurs are not driven by profit.
However real questions remain about the distinction between market and social equilibrium, namely
whether or not “old” social ideas ever permanently disappear. Graham Allison observed that business and
government are fundamentally alike in all unimportant aspects, yet there is intense pressure for
government and nonprofit organizations to operate more like businesses. The implications of this
observation are important for the social entrepreneurship field.
Social Entrepreneurship: A Definition in Proverbs
Social entrepreneurship is a field driven by proverbs. A proverb is a piece of compelling guidance based
on conventional wisdom, long-standing practice, and intuitive conclusions – but not necessarily true.
Proverbs are often based upon standard practice, ideas discerned from biased observations, or ideological
images of a “good” idea. Many are so vague that they cannot be operationalized. They commonly take
the form of parables – stories of success against the odds. The literature on social entrepreneurship is
filled with parables of individual social entrepreneurs.
The first component of the working definition of social entrepreneurship is courage. Courage, along with
related concepts like perseverance, grit, and tenacity, is critical because social entrepreneurs face almost
certain failure. However, courage is extremely difficult to test. Psychological lab experiments in the
business community have been able to identify heuristics used by individuals making new investments
and those investing in a task well beyond the failure expectation point. Few individuals are thought to
possess such courage, and those that do are thought to develop a motivation to endure from an early age
and share similar traits, habits, experiences and heuristics. Additionally, social entrepreneurship does not
happen in existing organizational contexts, in large part because nonprofit organizations cannot escape
entrenched practices and frames of reference. While some innovation may occur in existing social service
organizations, it is not the primary focus of such enterprises – and social entrepreneurship does not allow
for gradations. One explanation for the emphasis on the individual is that individual (not team or
organizational) fellowships are the primary mechanism for promoting social entrepreneurship. Bill
Drayton, the founder of Ashoka and a leader in the field of social entrepreneurship, believes that 1 in 10
million individuals are capable of becoming social entrepreneurs.
The next element of social entrepreneurship is the creation process. Despite popular conceptions of
“elevator” or “garage” accidents or special moments, creation is a stage-gate process that is rooted in the
sustained, long-term interests of social entrepreneurs. The primary task is “identifying a stable but
inherently unjust equilibrium that causes the exclusion, marginalization, or suffering of a segment of
humanity that lacks the financial means or political clout to achieve any transformative benefit on its
own.” Creation in the context of social entrepreneurship requires the proposed intervention or action to
be novel, yet attractive to potential adopters. Social entrepreneurship involves ideas about products (e.g.
programs, interventions) more than processes. The innovations are technical, not administrative.
However, incremental adjustments to existing products are not manifestations of social entrepreneurship.
And familiarity is not seen as an asset.
Achieving scale is a critical component of social entrepreneurship, representing the most critical barrier to
the “imitation” needed for the creation of a “just” equilibrium. After all, social entrepreneurship does not
occur until the status quo is fully replaced; eradication is the ultimate goal. But scaling requires a set of
competencies distinct from management; it is not like “opening a 13th department store in a chain.” It is a
nonpartisan activity that involves little discussion of policy and often requires engagement with a diverse
array of actors. Execution – which is commonly thought to require business-like behavior and a concern
about revenue – is critical to scaling social entrepreneurship. Social entrepreneurship is considered a fulltime task that requires a full commitment to entrepreneurial activity.
A social problem is defined as “the exclusion, marginalization, or suffering of a segment of humanity that
lacks the financial means or political clout to achieve any transformative benefit on its own.” Social
entrepreneurship focuses on solving intractable social problems, although some problems (e.g. civic
engagement, economic development, education, and human rights) are more intractable than others (e.g.
health and environment). But ideological questions remain; one major funder suggests that social
entrepreneurship is about redistribution and stands in opposition to principles of capitalism.
The State of the Field and Path Forward
Despite emerging almost 30 years ago, social entrepreneurship remains a fad. It will not become a field
until it becomes disciplined about understanding itself. A key component of that process must be
evaluation and the development of measures. There are no panel surveys or inventories on failed social
innovators, yet we know that there are failed nonprofits because 400,000 nonprofits have been decertified
by the IRS in recent years. However, funding for deeper research is almost non-existent because
technology entrepreneurs, hedge funders, and other financial supporters have a “know-it-when-we-see-it”
view and the academe lacks sufficient time to focus on measurement. Key questions remain, such as how
different intractable problems require different sources of entrepreneurship or combinations of ideas, and
how different ideas require different types of execution. Social exploring, which involves the everunpopular speaking truth to power and can incur significant financial cost, must be given greater
emphasis and attention. The key role for a social innovation center should be social exploring –
identifying what is going on in the world of practice and critically assessing what is working. An
important thing to consider in pursuing this mission is the simple principle that 2 cases is better than 1.
It is important to remember that social entrepreneurship also can lead to unintended consequences for
public life. For example, successful ventures by social entrepreneurs may create the perception that
government support is not needed to deal with social problems. The social entrepreneurship community
has largely stood silent on the public debates of our time (with the possible exception of education).
Government has tremendous potential to scale social innovation. Social entrepreneurs must engage
government, while at the same time maintaining a willingness to debate the policy agenda.