Critically appraise the factors (internal and external) that potentially help and impede the process of social entrepreneurship, and in particular, the development of start-up social enterprises in
Theories and practices have contributed considerably to the emerging sector of social entrepreneurship. This essay has discussed factors affecting it that have been followed by the start-ups in Australia. Two theories have been selected to guide the sector and its practices. The field opens plenty of opportunities for entrepreneurs, as people value the sector overwhelmingly. Financial, government, and social support make essential factors for social entrepreneurship to be successful.
Behavioral Theory of Social Entrepreneurship
Social entrepreneurship theory highlights an important aspect of entrepreneurship that cares about society and societal values. Behavioral aspects of the theory are vital because entrepreneurship is the action triggered by the behavior. In one of the theories on social entrepreneurship, it has taken the behavioral perspective under investigation. According to the theory, social entrepreneurship uses some contextual factors and fundamental attributes around business activity. The creation of the social venture has to follow motivation and commitment at the individual level. Besides, it has to consider the organizational dynamics and structure to make the social entrepreneurship that goes for the creation of the social enterprise. This form of entrepreneurship leads to the possibility of enabling social change that has unique attitudes and behaviors at the individual and organizational levels. The societal perspective is dominant in the social entrepreneurship that calls for an unusual response from the entrepreneur (Ebrashi, 2013).
Concepts in Social Entrepreneurship
It is also worth mentioning some concepts in social entrepreneurship. There are many definitions of it, and each definition discusses and unveils concepts in social entrepreneurship. A definition states social entrepreneurship as an innovative process that combines resources to meet goals and objectives. It leads society towards a social change and meets social needs. It reveals concepts of stewardship that are for the benefit of society and members of it. It has a social perspective, like the concept of corporate social responsibility. This concept urges organizations to take decisions for the responsibility of society. In light of this concept, each organization tends to preserve and protect the interests of society and social values. Considering these concepts, internal and external factors of social entrepreneurship can be explained (Tiwari, Bhat and Tikoria, 2017).
Factors that Help and Impede the Process of Social Entrepreneurship:
The process of social entrepreneurship is unique because it has the priority of society. Members become shareholders, and they are equal stakeholders in the business. Research has noted some internal and external factors of social entrepreneurship. External factors include the political and legal environment, knowledge regarding social entrepreneurship, and societal values. Internal factors are access to finance, recruitment strategy, and motivation, as well as the commitment of employees working in a social enterprise (Dobele, 2011). Each external and internal factor of social entrepreneurship goes to highlight assisting and impeding the nature of it. These factors are aligned with the theories and concepts in the literature (Pless, 2012). Behavioral theory and concepts of innovation and creativity are evident to play their role in the following factors.
Internal Factors:
The above has noted internal factors that are access to finance, recruitment strategy, and motivation as well as the commitment of employees working in a social enterprise. They are going to be explained in the following.
Access to Finance:
Social entrepreneurship has the perspective of society. It is a responsible way of doing business. However, it is the reality that one person has to take the initiative. It is not possible that every member of an organization generates an idea and makes decisions. There might be collaboration and participation at all levels, but there must be a unity of command to run an organization. As the field is new and is in an emerging stage, a social enterprise has to take steps with few hands. It creates problems to access finance. As it is a new concept and is in the emerging stage, financial institutions may be reluctant to issue money. It means that his internal factor is also related to external factors because sponsors and financers are outside of the organization (Lepoutre et al., 2013).
Recruitment Strategy:
The recruitment strategy is an essential internal factor of social entrepreneurship that can assist or impede the process. A social enterprise is broader, and every member has to be aware of its requirements and needs. It is an innovative and creative business model that requires a unity of ideas and thoughts. One person cannot run the enterprise because it requires a collective approach to be successful. Evidence confirms that social enterprises find difficulties in finding talented members. Some enterprises set a time limit to become a shareholder, but the decision to recruit the right person is crucial. Like the above factor, this factor, too, can help or impede the process of social entrepreneurship.
Motivation, as well as the commitment of employees:
Motivation is an essential internal factor that sets the tone and future perspective of an enterprise. Commitment is another essential internal factor that must be present among employees. Entrepreneurs seeking social motivation, as well as the commitment of employees, should consider this aspect because they have to maintain motivation and commitment of members working in the social enterprise. There might be concerns among members of the social enterprise regarding societal responsibility. They can raise concerns and complaints regarding the nature and extent of this responsibility. Therefore, it is vital to keep their motivation and commitment. Like the factors above, this internal factor can be helping or impeding. Consequently, it is the role of social entrepreneurs to handle this internal factor effectively (Amini, Arasti and Bagheri, 2018).
External Factors:
External factors affecting social entrepreneurship include the political and legal environment, knowledge regarding social entrepreneurship, and societal values. The following are external factors helping or impeding social entrepreneurship.
Political and Legal Environment:
It is not one factor, but it consists of two essential factors. Legal and political factors make up a great part of the external environment. Being an emerging field, social entrepreneurs may find it challenging to get proper legal assistance. Social entrepreneurship cannot expand if there is a lack of legal provisions and framework to work. However, it is not always the case because some countries have developed well established legal environment. Besides, there is the political factor that makes an integral part of the external environment. Legislations for social entrepreneurship are essential because they remove uncertainties. A lack of a favorable political environment can cause serious bottlenecks for the growth and expansion of social entrepreneurship. Even though some countries have advanced in the field, there is a need for more legislation and legal framework to assist the field. Presently, mush of impeding factors is emerging from the political and legal environment (Castellas and Barraket, 2017).
Knowledge and Awareness:
People should gain knowledge and awareness regarding social entrepreneurship. It can be an internal factor, along with motivation and commitment. However, it is an external factor because knowledge and awareness in this field should come from research and academics. It is pleasing to know that the research and practice in this knowledge area have been increasing. The pace of research is encouraging, and it is a point of comfort for the field. Still, there is enough to be done for the attainment of knowledge and awareness about this field. It seems to affect the field of social entrepreneurship neutrally. The trend is growing in the field, but there is plenty of room for taking more steps (Andersson and Self, 2015).
Societal Values:
Societal values make an essential external factor, mainly because of the social arm of the concept. Being a social entrepreneur, it cannot afford to be away from societal values. If society welcomes the initiative and supports the concept, there would be growth and expansion of social entrepreneurship. In contrast, it would not grow, and entrepreneurs would be reluctant to jump into it. Therefore, it is a delicate aspect to deal with social entrepreneurs. Values and trends in society are linked with the field, and, fortunately, these values are helping social entrepreneurship. However, social entrepreneurs have to consider the sentiments of society to move forward with the idea of social entrepreneurship (Stanescu, 2013).
Development of Start-up Social Enterprise in Australia
The above external and internal factors are there for the development of the start-up of social enterprise in any country. These factors help a start-up to grow if the social entrepreneur handles them correctly. In another case, she may face failure if the handling of these factors is not well-prepared. In the following, the discussed case is from Australia, where social entrepreneurship has been growing successfully (Kernot and McNeill, 2011).
The development of start-up social enterprise in Australia has been encouraging and satisfactory. Society has been valuing the concept, and social entrepreneurs have been investing in the sector with confidence. The evaluation of Australia on the grounds of the social start-up is helpful using the above-analyzed factors helping and impeding the sector. Before going into the Australian perspective, it is essential to note that each factor discussed above can be facilitating or inhibiting the sector. The most important factors include the response from Australian society, government regulations and support, and the necessary infrastructure in the economy. It is the criteria for the evaluation of any other country.
A report has identified Australia as the second-best country for social entrepreneurs in the world. Thomson Reuters Foundation conducted a global survey to know the ranking of best countries for social entrepreneurs. The survey received responses from 900 experts, and they ranked Canada as the top country on the list. Australia comes second. The following are factors contributing to Australia to take second place for social enterprises (Michael, 2019).
Government Support:
Social entrepreneurs find strong government legislation and support. Government policies are helping the sector, and social entrepreneurs are considering this external environment supportive for them. However, Australia also has a high place among countries with a friendly environment for doing business. Thus, the country offers a more favorable environment for businesses where social entrepreneurship gets further support from the government. The report also mentions that the government is investing in social enterprise strategies, and start-ups are getting support from the government. Another important factor is financial support for the sector (Michael, 2019).
Society Support:
Australian society has awareness and knowledge about social entrepreneurship that is in favor of this sector. Millennials in Australia are leading the growth in the social entrepreneurship because of their method of dealing with things. They are technology savvy, and social entrepreneurship has been getting benefits from technology overwhelmingly. Therefore, society has been offering demand and infrastructure for social enterprises and start-ups in Australia.
Financial Support:
An important factor for social enterprises is a lack of financial support. In Australia, funding bodies are increasing in number, and they predict a sharp growth in the social enterprise movement. They have observed potential growth in the sector, and it has been helping Australian position in social enterprises and entrepreneurship.
The above brief analysis of social enterprise start-ups in Australia has revealed that social entrepreneurship has got a friendly environment in Australia. The development of start-up social enterprises is possible in the presence of suitable factors. The most critical factors are social support, government support, and financial support. These factors have been extracted from the earlier section that has discussed helping and impeding factors for the process of social entrepreneurship. Australia has presented a favorable picture in light of these factors and has emerged as the second-best country for social entrepreneurs. In one of a report published in 2011, many start-ups in the sector had been working successfully (Kernot and McNeill, 2011). In this manner, the future of Australia is bright for social entrepreneurship (Allen, 2019).
Conclusion:
The essay concludes that social entrepreneurship has internal and external factors to help or impede its process. The most critical factors are financial, government, and social support for start-ups. The essay has reviewed the case of Australian start-ups and has found that it has these factors present. It means that Australia has been offering a favorable environment for the sector. The discussion in the essay has noted that social entrepreneurship requires a different mindset from for-profit entrepreneurship. Therefore, contextual factors are also critical for this form of entrepreneurship.
References
Allen, T. (2019) The State of Impact in Australia; How Social Enterprise Momentum Is Gaining, [Online], Available: https://www.impactboom.org/blog/2019/8/4/the-state-of-impact-in-australia-how-social-enterprise-momentum-is-gaining [30 April 2020].
Amini, Z., Arasti, Z. and Bagheri, A. (2018) ‘Identifying social entrepreneurship competencies of managers in social entrepreneurship organizations in healthcare sector’, Journal of Global Entrepreneurship Research, vol. 8, no. 1, pp. 1-14.
Andersson, F.O. and Self, W. (2015) ‘The Social-Entrepreneurship Advantage: An Experimental Study of Social Entrepreneurship and Perceptions of Nonprofit Effectiveness’, Voluntas, vol. 26, no. 6, pp. 2718-2732.
Castellas, E.I. and Barraket, J. (2017) Social enterprises are building a more inclusive Australian economy, [Online], Available: https://www.smartcompany.com.au/growth/social-enterprises-building-inclusive-australian-economy/ [30 April 2020].
Dobele, L. (2011) ‘Influencing factors of social entrepreneurship’, Research for Rural Development. International Scientific Conference Proceedings (Latvia). Latvia University of Agriculture.
Ebrashi, R.E. (2013) ‘Social entrepreneurship theory and sustainable social impact’, Social Responsibility Journal, vol. 9, no. 2, pp. 188-209.
Kernot, C. and McNeill, J. (2011) Australian Stories of Social Enterprises, 1st edition, The University of New South Wales Sydney.
Lepoutre, J., Justo, R., Terjesen, S. and Bosma, N. (2013) ‘Designing a global standardized methodology for measuring social entrepreneurship activity: the Global Entrepreneurship Monitor social entrepreneurship study’, Small Business Economics, vol. 40, no. 3, pp. 693-714.
Michael, L. (2019) The best countries for social entrepreneurs revealed, [Online], Available: https://probonoaustralia.com.au/news/2019/11/the-best-countries-for-social-entrepreneurs-revealed/ [30 April 2020].
Pless, N.M. (2012) ‘Social Entrepreneurship in Theory and Practice—An Introduction’, Journal of Business Ethics, vol. 111, pp. 317-320.
Stanescu, S.M. (2013) ‘Innovatory Employment in Social Economy: Busting Social Entrepreneurship versus Regulating Social Insertion Enterprises’, Revista de Cercetare si Interventie Sociala, vol. 43, no. 1, pp. 142-154.
Tiwari, P., Bhat, A.K. and Tikoria, J. (2017) ‘An empirical analysis of the factors affecting social entrepreneurial intentions’, Journal of Global Entrepreneurship Research, vol. 7, no. 1, pp. 1-25.
