Chapter 4 Social Entrepreneurship and the Global Environment for Entrepreneurship PDF

Chapter4 Characteristics of Social Entrepreneurs as Change Agents Social Entrepreneurship and the Adoption of a mission to create and Global Environment fo...

Chapter4 Characteristics of Social Entrepreneurs as Change Agents Social Entrepreneurship and the Adoption of a mission to create and Global Environment for sustain social value (beyond personal Entrepreneurship value) Recognition and relentless pursuit of opportunities for social value The Social Entrepreneurship Movement Engagement in continuous innovation and learning Social Entrepreneurship Action beyond the limited resources at Entrepreneurship applied to social hand problem solving whereas traditional, Heightened sense of accountability private-sector entrepreneurship focuses on innovation, risk-taking, and large- scale transformation. Examples of Social Enterprise Obligations The Social Entrepreneurship Process Environment Recognition of a perceived social Pollution control opportunity Restoration or protection of Translation of social opportunity into an environment enterprise concept Conservation of natural resources Identification and acquisition of Recycling efforts resources required to execute the enterprise’s goals. Energy Defining the Social Entrepreneur Conservation of energy in production and marketing operations Social Entrepreneurs Efforts to increase the energy efficiency of products Are a person or small group of Other energy-saving programs (for individuals who founds and/or leads an example, company-sponsored car organization or initiative engaged in pools) social entrepreneurship. Also referred to as “public Fair Business Practices entrepreneurs,” “civic entrepreneurs,” or “social innovators. Employment and advancement of Are creative thinkers continuously women and minorities striving for innovation in technologies, Employment and advancement of supply sources, distribution outlets, or disadvantaged individuals (disabled, methods of production. Vietnam veterans, ex-offenders, former Are change agents who create large- drug addicts, mentally retarded, and scale change using pattern-breaking hardcore unemployed) ideas to address the root causes of Support for minority-owned businesses social problems. Human Resources Promotion of employee health and safety Employee training and development  Remedial education programs for Environmental entrepreneurship with disadvantaged employees entrepreneurial actions contributing to Alcohol and drug counseling programs preserving the natural environment Career counseling Child day-care facilities for working Social Entrepreneurship parents Activities and processes undertaken to Employee physical fitness and stress discover, define, and exploit management programs opportunities in order to enhance social wealth by creating new ventures or Community Involvement managing existing organizations in an Donations of cash, products, services, innovative manner or employee time Sponsorship of public health projects Corporate Social Responsibility Support of education and the arts Actions that appear to further some Support of community recreation social good, beyond the interests of the programs firm and that which is required by law Cooperation in community projects and often denotes societal engagement (recycling centers, disaster assistance, of organizations and urban renewal) Products Environmental Awareness Enhancement of product safety Ecovision Sponsorship of product safety education programs A leadership style that encourages open Reduction of polluting potential of and flexible structures that encompass products the employees, the organization, and Improvement in nutritional value of the environment, with attention to products evolving social demands. Improvement in packaging and labeling Key Steps in an Environmental Strategy 1. Eliminate the concept of waste. Social Enterprise and Sustainability 2. Restore accountability. Sustainable Entrepreneurship 3. Make prices reflect costs. The preservation of nature, life support, 4. Promote diversity. and community in the pursuit of perceived opportunities to bring into 5. Make conservation profitable. existence future products, processes, 6. Insist on accountability of nations. and services for gain, where gain is broadly construed to include economic and noneconomic gains to individuals, Shared Value and the Triple Bottom Line the economy, and society Shared Value Forms of Sustainable Entrepreneurship An approach to creating economic value that also creates value for society by Ecopreneurship addressing its needs and challenges— company success begets social  progress when overcoming societal Promoting Sustainable Enterprises problems reduces costs for firms, Benefit Corporation increases productivity, and opens new markets. 1. Purpose: to create a material positive impact on society and the environment. Triple Bottom Line (TBL) 2. Accountability: to have a fiduciary duty to An accounting framework that combines consider the interests of workers, the consideration of traditional economic community, and the environment. measures with environmental and social dimensions to measure the firm’s 3. Transparency: to report annually to the performance in achieving its public on overall social and environmental sustainability goals. performance with a credible and transparent third-party standard. Triple Bottom Line Measures The Global Marketplace Economic Performance Global Entrepreneurs Personal income Cost of underemployment Are opportunity-minded and open- Establishment sizes minded global thinkers able to see Job growth different points of view and weld them Employment distribution by sector into a unified focus. Percentage of firms in each sector Rise above nationalistic differences to Revenue by sector contributing to gross see the big picture of global competition state product. without abdicating their own nationalities. Environmental Performance Have a core language plus working knowledge of others. Hazardous chemical concentrations Confront the learning difficulties of Selected priority pollutants language barriers head-on, recognizing Electricity consumption the barriers such ignorance can Fossil fuel consumption generate. Solid waste management Hazardous waste management Diaspora Networks Change in land use/land cover are global networks of relationships Social Performance among ethnic groups that share cultural and social norms. Unemployment rate Median household income Advantages of Diaspora Networks Relative poverty They speed the flow of information Percentage of population with a post- across borders secondary degree or certificate They create a bond of trust Average commute time Third, they create connections that help Violent crimes per capita entrepreneurs collaborate within a Health-adjusted life expectance country and across ethnicities. Global Organizations and Agreements Venturing Abroad World Trade Organization (WTO) Gradual Internationalization Is the umbrella organization that Is a step-by-step progress toward overseas and administers WTO trade internationalization as risk and agreements commitment increase and entrepreneurs Handles trade negotiations or trade acquire more knowledge through disputes experience. Monitors national trade policies Learning Curve Concept Provides technical assistance and training for developing countries Increased sales from exports will lead to greater efficiencies along the firm’s cost The North American Free Trade Agreement curve, which in turn will lead to (NAFTA) increased overall profits as the firm Is an international agreement among expands into overseas markets Canada, Mexico, and the United States The Competitive Advantage of Nations that eliminates trade barriers among the three nations. Resource-rich Countries Created the world’s largest free trade area, linking 444 million people and Have extractive assets producing $17 trillion in goods and The OPEC nations and many parts of services annually. Africa The European Union (EU) Labor-rich Countries Have vast pools of available labor Is an economic and political union of 27 member states which are located Brazil, India, the Philippines, and select primarily in Europe. countries in South and Central America Objectives of the EU Market-rich Countries 1. Elimination of custom duties among member Have large purchasing power states Europe, Brazil, Mexico, India, China, and the United States 2. Free flow of goods and services among all members International at Inception 3. Creation of common trade policies toward all Characteristics of “Born Global” Firms countries outside the EU 1. Global vision from inception 4. Free movement of capital and personnel 2. Internationally experienced management within the EU 3. Strong international business network; 5. Encouragement of economic development in the EU 4. Preemptive technology or marketing 6. Monetary and fiscal coordination among all 5. Unique intangible asset members 6. Linked product or service 7. Tight organizational coordination worldwide. Methods of Going International Joint Ventures Importing Advantages Buying and shipping foreign-produced Immediate intimate knowledge of the goods for domestic consumption. local conditions and government Use of the resources of the other firms Exporting involved in the venture The shipping of a domestically produced Initial capital outlay and overall risk are good to a foreign destination for lower consumption. Disadvantages International Alliances Fragmented management control of the Agreements between companies from venture’s operations two or more countries, and they are not Differences of opinion that reflect legally binding. different nationalities Unanticipated withdrawal of a participating firm Types of International Alliances Alliance Type Direct Foreign Investment - Informal international cooperative Direct Foreign Investment alliance - Formal international cooperative alliance Is a domestically controlled foreign - Internal joint venture production facility that results from a foreign firm: Degree of Involvement Acquiring an interest in an ongoing - Limited in scope and time foreign operation. - Deeper involvement; exchange of Obtaining a majority interest in a proprietary knowledge foreign company. - Deep involvement; requires exchange of Purchasing part of the assets of a financial information, proprietary foreign concern in order to establish a knowledge, and resources direct investment. Building a facility in a foreign country. Ease of Dissolution - Easy and convenient for either side - More difficult to dissolve due to legal Licensing obligations and commitment Licensing - Most difficult to dissolve due to the significant investment of both companies A business arrangement in which a and the existence of a legal entity manufacturer of a product (or a firm with proprietary rights over certain Legal Entity technology or trademarks) grants - None permission to some other group or - None individual to manufacture that product in - Separate company return for specified royalties or other payments.  Types of Licensing International Threats and Risks Patents Political Risks- Unstable governments, Trademarks disruptions caused by territorial conflicts, wars, Technical Know-How regionalism, illegal occupation, and political ideological differences Entering the International Marketplace Economic Risks- Changes in tax laws, rapid rises in costs, strikes, sudden increases in raw - Conduct research materials, and cyclical/ dramatic shifts in GNP. - Prepare a feasibility study Social Risks- Antagonism among classes, - Secure adequate financing religious conflict, unequal income distribution, union militancy, civil war, and riots. - File the proper documents Financial Risks- Fluctuating exchange rates, - Draw up and implement the plan repatriation of profits and capital, and seasonal cash flows Researching Foreign Markets Market Research Parameters - Government regulations - Political climate - Infrastructure - Distribution channels - Competition - Market size - Local customs and culture International Threats and Risks Foreign Market Dangers: Ignorance and uncertainty Lack of experience Lack of information Imposed restrictions (demands and red tape) Political risks: Unstable governments Disruptions caused by territorial conflicts, illegal occupations, and wars Regionalism Political ideological differences.