Who aresocial entrepreneurs?

• ‘…driven by a social mission, with a desire to find innovative ways to solve social problems that are not or cannot be addressed by either the market or the public sector’.

風向轉變時 ,有人築牆 ,有人造風車‘When the wind changes direction, there are those who build walls andthose who build windmills’.

Chapter 4

Social and ethical entrepreneurship

Objectives1. Examine the concepts of the social entrepreneur and the social

business2. Explore the mind-set of social entrepreneurs 3. Introduce the concept of ecopreneurship4. Define the term ethics and the implications for entrepreneurs5. Examine environmental crime and its temptations for entrepreneurs6. Examine cross-cultural concepts of ethics and corruption7. Examine the ethics of criminal entrepreneurs and their similarities to

other entrepreneurs8. Focus on the challenges that face disadvantaged entrepreneurs

Social entrepreneurs

How would goals and success criteria vary between social entrepreneurs and more conventional entrepreneurs??

• “Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionised the fishing industry.”

Bill Drayton, Ashoka Foundation

Who are social entrepreneurs?

What is Satish Jha holding?

Defining the social business

Figure 4.1 Defining social businesses and enterprises

Mind-set of social entrepreneurs

• Recalling Chapter 2’s discussion on mind-sets . . . do social entrepreneurs have a different mind-set from business entrepreneurs?

• They have the same skills and temperament but there are differences.– Not as overtly positive and confident. More likely to fear failure and more likely to say that

lack of finance will stop them. Spiritual dimensions.

• “Scholars and artists come to rest when they've expressed an idea. Managers, when they solve a problem for their company, complete their goal. . . . None of that satisfies a social entrepreneur. The entrepreneur simply knows in a very deep way that, ‘I have got to change the whole society’.” Bill Drayton

• Combine the environmental, economic and social components of sustainability

• Different organising logic from more conventional entrepreneurs. • Market creation is more difficult for them • Face confusion in the marketplace • Operate their businesses in ways that run counter to popular

perceptions of entrepreneurial behaviour

Mind-set of sustainability entrepreneurs

Different ways of spotting market gap

Business entrepreneurs • Find ‘structural holes’ between

similar (homophilous) groups • Spot market gaps between

connected categories of people– such as between suppliers and customers.

• Position themselves in the middle (‘entre’) to plug the structural hole for their own increased personal gain.

Social entrepreneurs • Find ‘structural holes’ between

competing (heterophilous) groups. • Do not see others in terms of

categories (for example, suppliers and customers), but rather as real individuals.

• They value the unity of the whole of society and attempt to link others to the benefit of society.

• What could the word sustainable mean?

• What is its old and its new definition??

• Traditional definition – surviving or maintaining a business’ viability against its competitors.

• New definition– real commitment to the environment and climate change

mitigation/adaptation as well as a revamping of the entire business model to its core.

– providing products and services without jeopardizing the environment

Sustainable

• Traditional definition – surviving or maintaining a

business’ viability against its competitors.

• New definition– real commitment to the

environment and climate change mitigation/adaptation as well as a revamping of the entire business model to its core.

– providing products and services without jeopardizing the environment

SustainableCity of Melbourne, Australia, across the

four domains of sustainability

Ecopreneurs• ecopreneurship = ‘ecological’

and ‘entrepreneurship’. • Ecopreneur combines the

unrelenting drive of the entrepreneur with the stewardship of a conservator rather than the devastation of an exploiter.

Bob Brown, former leader of the Australia Green Party

Seeking competitive advantage on a warming planet

• Many entrepreneurs are ad hoc ecopreneurs – seeking to find commercial opportunities in a carbon-constrained world.– find products and services that hedge against physical climate risk, – mitigate regulatory costs – improve/ repair corporate reputations through green business. – seek to manage climate risk in the supply chain, – invest in low-carbon activities and – innovate new technology that sells while improving the planet.

Profitability drivers for climate-change-oriented entrepreneurs

Revenue drivers• How to pass climate-related costs through to

customers?• How to generate streams of revenue from new

low-carbon products?• What new forms of income (for example, carbon

credits) will become available?• What threats do we face from low-carbon

substitute products?• What will be the impact of weather patterns on

revenue?

Cost drivers• How can we pass on our regulatory costs? • Is there a chance that emissions will be taxed?• How much will our raw materials costs

escalate? And those of our competitors?• How much will our energy costs rise?• How will our risk profile affect our insurance

premiums? 41

Do you agree?

• That ‘the business of business is business’.– Is this still used to excuse profit and shareholder

value being put ahead of employee welfare and protecting the environment?

• Corporate social responsibility (CSR) was all the rage.

• This laissez faire attitude may have built a base of prosperity for some, but at considerable social cost for many and lasting environmental costs for the planet.

• Entrepreneurship can cause losses and hardships for some members of society … even as it creates new wellbeing among other stakeholders

?

We are now in a different era

• CSR helped sensitise business to a growing range of economic, social and environmental challenges

• Progress has been slow.• We are now in a different era where we need

Corporate Responsibility for a Sustainable Environment (CRSE)

• For entrepreneurs, research evidence increasingly shows that profit and sustainability can go hand in hand.

What do you think?

What does ethics have to do with entrepreneurship?• If you are invited to a business contact for dinner in

China . . . ?• Is it ethical to change the name of your

business . . . ?• Is it ethical to put pictures of young children . . . ?• Is it ethical to pad your expense account . . . ?• Is it ethical to put your business's rubbish . . . ?

?

Entrepreneurial ethics

• The Greeks were interested in right and wrong conduct (ethos).

• Chilon (in about 560 BCE) stated:– ‘A merchant does better to take an honest

loss than to make a dishonest profit’.– He reasoned that a loss may be painful for a

while, but dishonesty hurts forever.• Some entrepreneurs are not ethical

Why are some entrepreneurs not ethical?• Is it because they have a strong ‘action bias’

that prevents them from considering ethical issues?

• Is it because they are more focused on personal financial gain even at the expense of others?

• Is it because they love rule-breaking and are non-conformists?

• Is it because they lack resources and must rely on corruption and bribery?

‘Greed is good’• The attitude in Gordon Gekko’s phrase

‘greed is good’ (from the 1987 film Wall Street) has fuelled a series of economic crises. (Audio)

• Many entrepreneurs ‘see what works as right’.

• A moral consensus does not exist in our dynamic, changing environment.

Morally questionable

acts

When must ethical conduct break the law?

• Case Study–Sea Shepherd's

harassment of Japanese whaling ships in the Southern Ocean.

?

What is ethical with your own team?

• How do you divide up the ownership shares? • The unavoidable ethical dilemmas

that entrepreneurs face in dividing up shares

• Startup Equity Calculator?

When in Rome, do as the Romans do?

• Corruption = Monopoly + Discretion – Accountability

Corruption around the worldWorld rank / Country1 New Zealand5 Singapore9 Australia14 United Kingdom15 Hong Kong18 Japan19 United States36 Taiwan46 South Korea53 Malaysia80 China94 India94 Philippines102 Thailand114 Indonesia116 Vietnam

Build a line item in your Business Plan for ‘compliance commissions’

Entrepreneurship and organised crime

• Examples: Boot-legging cigarettes, hydroponic cannabis growers, pimping, people smuggling, illegal dumping, species smuggling and prostitution.

• Face same challenges as entrepreneurs.

– Must be excellent risk managers – ‘Know-who’ is as important as know-

how. – Are future-oriented organisation

builders. – Work the edge or the margin. – Seek ‘niche advantage’ – Satisfy consumer demand that

legitimate markets ignore.

Ross Ulbricht’s LinkedIn profile. This Internet entrepreneur, founder of Silk Road, was sentence to life in prison without possibility of parole.

Environmental criminal entrepreneurs

• Deliberate or careless act that harms the environment, e.g.– illegal logging and timber

smuggling– wildlife smuggling– black market in ozone-depleting

substances, – dumping of hazardous wastes

and chemicals

Illegal waste dump

Illegal ivory trade

Environmental criminal entrepreneurs

• Environmental crime is worth billions of dollars in profit to criminal groups around the world.

• Here are the major criminal groups.

• Have difficulty integrating into the market and are typically located outside the mainstream.

• Suffer ethnic disrespect, lack of language skills, poor access to finance and urban poverty, usually at the bottom of the social ladder.

• Different from ethnic or indigenous entrepreneurs.

Disadvantaged entrepreneurs

• Is it possible that being disadvantaged may actually lead one to become more entrepreneurial?

• Are entrepreneurs more likely to emerge from deprived or marginal groups?

• Corresponds with what is called the social marginality theory

• When a group is discriminated against, then a psychological disequilibrium might occur.

• This might drive a person into enterprising behaviour to compensate for this imbalance

Disadvantaged entrepreneurs

Indigenous entrepreneurs• Found in every inhabited climate zone and continent.• Everywhere they suffer from chronic poverty, lower

education levels and poor health. • Colonisation and post-colonial practices deprived

Indigenous people of their land, their culture and their human rights.

• Government assistance produced only mixed results • Indigenous entrepreneurship has been a positive step

for some groups, but it is not the answer for all Indigenous people.

Indigenous Australian entrepreneurs

• Three per cent of population with endemic poverty, poor health, low literacy, poor employment prospects.

• Archaeological evidence suggests that Aboriginal people engaged in wide-ranging intellectual, trade and entrepreneurial pursuits.

• Trade routes traversed the Australian coast prior to European settlement.

• Goods such as pearl, shell, flints and axe heads, oyster and turtle, knives, were traded and sold over vast distances, including Indonesia.

• Now Indigenous people are often caught in a spiral of discrimination that is scarcely conducive to authentic entrepreneurial activity.

• Building an enterprising spirit in these circumstances is far from easy.Australian arts

entrepreneur Jessica Mauboy

Māori entrepreneurs

• GEM study showed Māori had highest entrepreneurship rate in OECD.

• Māori have a history of commerce and resource ownership.

• Cultural resistance to wealth creation • Unhelpful cultural attitudes towards failure, risk, and

growth. • Trapped by the reverence for the past of their elders • Need to be accepted as successful in the “white”

business world.

Key concepts

(close your books)1. What does ethics have to do with

entrepreneurialism?2. How are ecopreneurs, social

entrepreneurs and Indigenous entrepreneurs different to conventional entrepreneurs?

?

Key concepts

• Ethics and entrepreneurship– Ethical behaviour by entrepreneurs is required for the

future of our planet.– Ethical entrepreneurship protects individuals and

communities from corrupt business practices.• Ecopreneurs, social entrepreneurs and Indigenous

entrepreneurs:– are focused on un-selfish goals– are committed to larger outcomes than the profit motive– can succeed despite significant challenges.