Formation and development of the concept of social entrepreneurship

The development of civic activism and citizens' awareness of personal participation in events taking place within the state will lead to the formation of a prosperous and fair civil society. The interaction between the state and society is expressed in various forms, in particular in the idea of social entrepreneurship. The situation when the state is not able to provide all members of society with equal opportunities for self-realization in all areas can lead to the existence of social problems as an integral attribute of any society. If the needs of citizens are not satisfied and the growth of living standards and national welfare is not ensured we cannot talk about the effectiveness of modern socio-economic policy, because its main purpose is not fulfilled. In the modern world, social entrepreneurship is seen as a vector that determines the direction for eliminating or reducing urgent, pressing issues in various areas of the national economy, and solves the problems of finding people in difficult life situations. Social entrepreneurship as an activity is based on a social mission. Social entrepreneurship is a form of interaction between the state and society. Currently, there is no single approach to studying this problem. The article presents the development of theoretical aspects of social entrepreneurship. Based on the definitions given in the article, the characteristics of social entrepreneurship are described and identified. Stages in the history of the development of this phenomenon are highlighted; the main activities carried out by social entrepreneurs are considered; lists the main components and responsibilities of social entrepreneurship. The key advantages of a social enterprise are given.

Today's unresolved social problems, reduced social protection of citizens, differentiation of income of individual social groups have led to a serious stratification of society, a decrease in the level of well-being. At the same time, modern socio-economic policy is not effective, as the main mission is not fulfilled — meeting the needs of citizens, ensuring an increase in the standard of living of the population and national welfare.

Problems of a social nature exist in any society; the reasons for this are the inability to provide all members of society with equal opportunities for self-realization in all areas. In social entrepreneurship, a person makes higher demands on the ratio of economic efficiency and social justice, as a result of which he decides to deal with the problem on his own.

Social entrepreneurship focuses its efforts on satisfying consumer services, creating socially significant projects [1].

Social entrepreneurship consists of two main areas: social and economic, in connection with which a large number of different interpretations of social entrepreneurship have appeared in modern society. Initially, it is necessary to determine the very concept of «entrepreneurship». Economists believe that entrepreneurship contributes to the well-being of society. The society in this case puts forward needs, and entrepreneurs throw their forces to satisfy needs. In this sense, entrepreneurial activity expands the boundaries of solving social problems.

Entrepreneurship is the engine of any developed economy, since it is entrepreneurs who create the majority of jobs, introduce innovations, stimulate the growth of well-being of the middle class and lay the foundation for civil society and political freedom.

Entrepreneurship generates an increase in the material and spiritual potential of society. In Latin, there is the word «mancepts» — «entrepreneur», «contractor», which was formed from two words: «manus» — hand, strength, work, labor, activity, and «capio» — to acquire, adopt, and take possession. Hence the «mancepts» — a man who has earned capital on his own, by his labor, not only by perseverance, but also by cunning and quickness. If we proceed from the original meaning of the word, then entrepreneurship is «the ability to start», «embrace first. At the beginning of its development, entrepreneurial activity was limited mainly to the sphere of trade and was considered an occupation unworthy of people of high social status.

According to Platon trading is one of the occupations that tend to make people bad. In the middle Ages, businessmen included those who were engaged in foreign trade, organized shows, and leaders in the organization of the enterprise, while these activities did not carry risks. Gradually, with the development of market relations, the significance of entrepreneurial activity was reassessed: there was a transition from a negative to a positive representation of this phenomenon. In the future, entrepreneurial activity began to be comprehended by scientists, scientific approaches began to appear.

For the first time, the concept of «entrepreneur» appeared in the economic literature in the Universal Dictionary of Commerce (Paris, 1723), where entrepreneurs included a person who undertook «an obligation to manufacture or construct an object». During this period, the concept of «entrepreneur» was associated with the risk [2].

As a socio-economic phenomenon, entrepreneurship has passed a significant historical path of development. However, as a special (specialized) field of scientific knowledge, it is still under development: there is no uniformity in the name of the theory, a clear formulation of basic concepts, a mixture of the terms «entrepreneurship» and «business». Different theoretical approaches to the foundations of entrepreneurship in the historical context describe in different ways the ways of its development and formation (Table 1).

Table 1

The Evolution of scientific views on the phenomenon of entrepreneurship [3]

Author, title of work, year of publication

Interpretation Features

1

2

Classic school

R. Cantillon, An Essay on the Nature of Trade in General, 1755

An economic activity in the process of which commodity supply and demand are compared under constant risk

A. Smith, «A Study on the Nature and Causes of the Wealth of Nations», 1776

He connected entrepreneurship mainly with production activities, considering it as a means of generating income

Jean B. Say, A Treatise on Political Economy, 1803

Entrepreneurship is a rational combination of factors of production (land, capital, labor) at a given point in the market space. The basis of entrepreneurial activity is the ability to organize the production and marketing of products.

Neoclassical school

A. Marshall, «Principles of Political Economy», 1890

I. Thunen, «Isolated State», 1850

F. Knight, «The Concept of Risk and Un- certainty», 1994

The strong link between entrepreneurship and innovation Entrepreneurship is defined as risky decision making

Thunen, «Isolated State», 1850

Entrepreneurship is defined as risky decision making

F. Knight, «The Concept of Risk and Un- certainty», 1994

Entrepreneurship involves accepting risk and uncertainty

P. Drucker, «Good Governance», 1964

Innovation Based Entrepreneurship

Austrian school

J. Schumpeter, «Theory of Economic Development», 1912

Entrepreneurship is an economically free innovative activity related to risk, responsibility and competition, aimed at achieving new results, satisfying personal and social needs

Neoаustrian school

F. Hayek, Private Money, 1976

Entrepreneurship is the search and study of new economic opportunities, a characteristic of behavior in conditions of high market competition, where the strongest wins

L. Mises, «Human Activities», 1940

Entrepreneurship is understood as the ability of people to create and recognize the subjective potential benefits that arise in their environment

I. Kirtsner, «Competition and Entrepre- neurship», 1973

Entrepreneurship is considered as human activity associated with risk, creativity and the innovative component. Competition

1

2

 

is the «breeding ground», the «perpetual motion machine» of entrepreneurship

School of Institutionalism

R. Coase, The Nature of the Firm, 1937

Entrepreneurship is understood as the choice between the contractual relationship of the free market and the organization of the company in order to save transaction costs

J. Gelbraith, «Life in Our Time», 1986

Entrepreneurship is associated with a managerial techno structure organizing the production process

German school

M. Weber, «Protestant Ethics and the Spirit of Capitalism», 1905

Entrepreneurship is considered as a special type of economic behavior of a person with certain value guidelines, specific motivation and social role

Despite the presence of many economic theories, entrepreneurship is considered in various concepts. In economic theory, the concepts of «entrepreneurship» and «entrepreneur» appeared in the XVIII century, in the era of capitalism. So, the founder of the scientific concept of «entrepreneurship» was the English economist R. Cantillon (1680-1730), according to which the imbalance between supply and demand in the market allows individual market entities to buy goods cheaper and sell them more expensive. It was he who called these market entities entrepreneurs («entrepreneur» — translated from French as «intermediary»). In his opinion, an entrepreneur is an individual who has the foresight and desire to take the risk, is directed to the future, the actions of which are characterized by the desire to generate income, on the one hand, and the willingness to lose, on the other [3].

A. Smith connects entrepreneurial activity with personal profit, while not forgetting about meeting the needs of society and believes that the entrepreneur is only part of the market mechanism and its role is quite small. D. Ricardo considers the entrepreneur an indispensable participant in economic processes, the main initiator of the development of production, and considers entrepreneurial activity as the basis for improving the state of society. K. Marx believes that an entrepreneur is a capitalist, directing his capital to the formation of surplus value and using workers.

J. -B. Say expanded the literal translation of the word from French «he who undertakes» and developed the theory of three factors of production: land, labor, capital, which are the source of society's wealth. In his opinion, an entrepreneur is an economic agent combining factors of production, transferring resources from a low-productivity sphere to spheres where they are able to give the maximum result: profit and income.

The first among psychologists who performed an analysis of entrepreneurship was D. McClelland [2]. He justifies the legitimacy of the motive to achieve as the greatest impetus to entrepreneurship, and defines entrepreneurs as individuals taking on greater responsibility. Until the beginning of the 20th century entrepreneurship was studied mainly by representatives of the economic and psychological sciences.

Thus, to summarize, what are the differences in these approaches: economists focus on the importance of the entrepreneurial function in establishing a balance, or, conversely, in upsetting the balance; psychologists identify what motives encourage entrepreneurship; sociologists examine the social context and factors that influence the entrepreneur's decision-making. However, they are united by the following: representatives of these approaches examine entrepreneurs as an integral part of the market and attribute entrepreneurship to socio-economic activities associated with innovation, risk, the creation of new firms and profit. Over time, the concept of «entrepreneurship» expanded and modified. So, continuing to analyze this phenomenon, the entrepreneur acts as risk-taking and inclined to act independently in the face of uncertainty personality, focused on the search, disclosure and use of new combinations of production factors using available means.

Any person can become an entrepreneur. Only one has talent, and the whole world knows him, the other is hardworking, and the whole city knows him, the third is lazy and weak-willed, so he has no business. Being an entrepreneur is hard work.

An entrepreneur is a person who uses every opportunity with maximum benefit; this is a person who has his own profitable business. Such a person sees the possibility of making a profit in almost any field, while the rest do not notice it.

The entrepreneur is able to make decisions that involve risk, lose investment. But such a person sees the possibilities and tries to use them. At the same time, an entrepreneur who uses every opportunity does not spend his time on classes that do not bring benefits. The goal of any activity of such a person is the use ofavailable resources for profit. Acting in this way, an entrepreneur is able to determine what exactly he needs to do to succeed and what to avoid so as not being at a disadvantage.

In a crisis, there is an increased demand for the efficient use of all available resources, and entrepreneurship is becoming one of the main sources of socio-economic stability. Thus, the «Strategy for the Development of Small and Medium-Sized Entrepreneurship», developed by the Ministry of Economic Development of Russia, emphasizes the need to develop social entrepreneurship as a separate category specializing in the production of goods and services for socially vulnerable and poor groups of citizens or creating jobs for such groups of citizens. Although the term «social entrepreneurship» is relatively new, the phenomenon itself has a long history.

The development of social entrepreneurship is gaining incredible momentum in modern society. If a classical entrepreneur creates economic value and its goal is material well-being, then a social entrepreneur is a «change agent» in the social sphere, his mission is to change values within society and help people who lack resources, improve your living situation.

Researchers believe that this phenomenon has always existed, but scientists have not previously dealt with this issue. In 1963 B. Drayton described «social entrepreneurship», and defined «social entrepreneur» as an individual who combines practical and result-oriented business methods with the goals of a social reformer [4].

A social entrepreneur does not just give money to any fund and does not have a clear idea of where this money went and cannot actually assess the social consequences of his contribution, but creates an organization whose goal is to independently create social value and function on his own funds, that is, in fact without any third-party subsidies.

As in ordinary business, the goal of which is to make a profit, social entrepreneurship is important idea, the ability to assess and take risks, the pursuit of opportunities and innovation. An example of a British company that successfully operates has opened an additional shoe repair service and has entered into an alliance with 23 other companies and one hotel, shows that the application of the classical principles of entrepreneurship can also be used by a non-profit organization whose goal is to improve society. It is believed that social entrepreneurship does not just treat the symptoms of surface problems, but attacks the internal causes of problems.

Until 1990 as such, the theory of social entrepreneurship was absent, definitions did not occur, only rare references to the term were observed associated with values and social movements. With the greatest force, interest in social entrepreneurship increased in the 1990s.

In 1997 In the UK, the School of Social Entrepreneurs was created under the leadership of M. Young. At this time, the first attempts to define the term and the first studies appeared [1].

The definition of social entrepreneurship given by J.G. Dees in 1998 is considered classic. It is obtained by adding a social dimension to the definition of traditional entrepreneurship, borrowed from the works of Joseph Schumpeter, J. -B Say, P. Drucker and H. Stevenson.

J.G. Dees identifies specific factors that distinguish social entrepreneurship from traditional entrepreneurship:

  1. assuming the mission of creating and maintaining social value (good);
  2. the identification and use of new opportunities for the implementation of the selected mission;
  3. the implementation of a continuous process of innovation, adaptation and training;
  4. decisiveness of actions, not limited by available resources;
  5. the entrepreneur's high responsibility for the results of their activities — both to direct customers and to society;
  6. combining available resources to create opportunities to accelerate social change and / or to meet social needs;
  7. the emergence of social transformations as one of the results of the activities of a social entrepreneur [1].

According to J.G. Dees, social entrepreneurship uses the best practices of traditional entrepreneurship to fulfill a social mission. Social entrepreneurship is a new way of socio-economic activity, combining the social purpose of the organization with entrepreneurial innovation and achieving sustainable sustainability. The basis of social entrepreneurship is the functioning of the so-called social enterprises — enterprises created with the aim of solving a particular social problem or problems acting on the basis of innovation, financial discipline and business practices adopted in the private sector. D. Mair and I. Marti note that «social» is not equal to «altruistic», implying that a social entrepreneur to a certain extent seeks to satisfy not only the interests of society, but also personal interests [1].

Thus, according to J.G. Dees, social entrepreneurship is the application of the activities of traditional entrepreneurship to achieve social goals or fulfill a social mission.

The presentation of the Nobel Prize to social entrepreneur Muhammad Yunus, the founder of Grameen Bank, in 2006 was an important event in the formation of the concept of social entrepreneurship. This event caused a new wave of interest in social entrepreneurship, which entailed a large number of scientific works written by R. Harding, P. Light, J. Mair, I. Marti. They came to understand social entrepreneurs as organizations or individuals, taking risks, using innovations, refusing to accept restrictions on existing resources and trying to solve pressing social problems.

The period of active formation of social entrepreneurship falls on 2007. The population begins to seek support from the state in this matter, also at this time the legal status of social entrepreneurship is being fixed. The main researchers in this period are D. Bornstein, R. Martin, A.A. Moskovskaya, O.E. Kolbasenko and other [1]

Martin and Osberg stated that all the qualities of an ordinary entrepreneur (inspiration, creativity, willingness to directly participate in the implementation of a new idea, courage, and perseverance) are inherent in the social entrepreneur. The difference between them is «in the essence of the value proposition», and for the social entrepreneur it consists in creating a large-scale public good [5].

M. Volkova distinguishes the following stages in the history of social entrepreneurship: 1. the individualistic stage (until the 1930s) — during this period, there were separate examples of organizations that have characteristics similar to social enterprises. 2. The collective stage (1930–80) — the community recognized the social shortcomings of existing systems. In developed countries, they began to focus on the following problems: the presence of mass long-term unemployment, issues of social well-being. These problems were not resolved either in the private sector or in state structures, which influenced the popularization of publicprivate partnerships and the growth of entrepreneurial interest in social problems. 3. The institutional stage (from the 1980s to the present) –– social entrepreneurship in the world has received legal support [2].

Thus, the main difference between entrepreneurship and social entrepreneurship is that the value for the entrepreneur is the provision of a product or service to the market and the extraction of financial profit, while the Social entrepreneur does not wait and does not seek to achieve significant financial profit. Instead, he seeks values in the form of large-scale positive transformations that affect a significant segment of society or the whole of society. This does not mean that social entrepreneurs always avoid making a profit from the created values.

The main activities carried out by social entrepreneurs can be identified:

1. Production of goods:

  • - socially significant (playgrounds, rehabilitation equipment);
  • - general use (clothing, furniture, food, crafts).

2. The provision of socially significant works and services, including for certain categories of citizens:

  • - counseling (legal, socio-psychological, pedagogical);
  • - Education and training (development of creative abilities, seminars and trainings);
  • - domestic services (hairdressers, shoe repair, copy services, laundries, etc.);
  • - development of agricultural activities;
  • - development of ecological tourism;
  • - medical and social assistance (social services, home services, etc.);
  • - cultural services (decoration, theatrical performances, etc.);
  • - employment of the unemployed.

The main components of social entrepreneurship are:

  1. the identification of a stable, but essentially unfair balance, which leads to the exclusion or suffering of a group of people who are not financially secure and do not have political will to achieve positive changes on their own;
  2. the identification of opportunities within the framework of this unfair balance, the development of a definition of social value, the use of such personal qualities as inspiration, creativity, determination, courage and perseverance in order to violate the prevalence of the current state of affairs;
  3. creating a new stable equilibrium, this will provide the target audience and society as a whole with a better future.

The development of social entrepreneurship includes many factors that have a positive impact on society:

  • thanks to the creation of social projects, employment is ensured, new jobs are created for social organizations;
  • working with socially disadvantaged groups of the population they receive social support; social entrepreneurship involves people without a fixed place of residence;
  • socio-economic efficiency is increased due to the fact that the burden on budgets is reduced through the implementation of private entrepreneurial projects, the main role of which is assigned to the state (preschool, additional, specialized education, health care, mass sports, etc.);
  • the cultural environment is developing due to the maximum use of stagnant cultural institutions by social entrepreneurs; transport networks are developing, the urban environment is saturated, due to the development of transport infrastructure and the development of unused land.

Researchers and experts of the Our Future Foundation for Regional Social Programs have formulated their own definition of social entrepreneurship. There are the following responsibilities for social entrepreneurship:

  • innovativeness in approaches to solving social problems;
  • focus on a noticeable social improvement in solving pressing, acute, socially-called social problems;
  • the ability to line up in a system of market relations (business sociality is achieved not by lowering prices, but by benefits and additional services by target categories of the population);
  • take a dominant position in a selected niche (through innovation or through outreach);
  • distribution of the model of production of goods services [6].

Social entrepreneurship is becoming increasingly popular in many countries. In European countries, the approach to the regulation of social enterprises is diverse and focused on the development of socio-economic relations. Many countries have not yet developed specific laws governing the status of a separate legal entity, in particular a social enterprise. In many cases, practice shows that social enterprises operate in the form of cooperatives and are especially popular in the countries of Southern Europe (Italy, Spain, Greece). On the other hand, social enterprises registered as commercial organizations with social objects (Finland, Lithuania, England), as well as cooperative associations of public interest (France) [7].

Despite the existing differences in the legal framework of social enterprises, there are general principles that make it possible to define a social enterprise as a non-state entity that carries out economic activities to achieve social goals [8]. Social enterprises are active in all sectors of the economy: from agriculture and housing to industrial, banking and advanced services. They make a huge contribution to providing jobs for long-term unemployed, disabled people, thereby contributing to their inclusion in society. They occupy a special place in the development of communities and the local economy [9].

The use of new, unique tools, the ability to solve problems as long as necessary, and at the expense of their own incomes form the key advantages of social entrepreneurship. If charity is limited in resources, time and space, then social entrepreneurship initially involves scalability and repablicility. The goal is not a local solution to a single issue, but the achievement of a qualitatively new level in overcoming socially significant problems.

Key benefits of social enterprises playing a role in public service management [10].

Thus, there is no single definition of social entrepreneurship. It all depends on the approach the researcher takes. This concept can be considered both from the point of view of economics and sociology. The essence of social entrepreneurship, in our opinion, most fully reflects the definition that social entrepreneurship is an entrepreneurial activity aimed at mitigating or solving social problems, characterized by the following main features: social impact, innovation, self-sufficiency and financial stability, scalability and repablicility, entrepreneurial approach [11].

Social entrepreneurship is not a business where entrepreneurs donate a percentage of profits in favor of charity, here the main goal is social, and Kazakhstani businessmen are far from this.

2019 is a year of youth for Kazakhstan, therefore, state support for participating in the development of youth social entrepreneurship is very important. After all, no one better than youth can provide new ideas.

Social entrepreneurship is becoming increasingly popular in the world. And even many reputable universities have included it in their curriculum.

In Kazakhstan, this trend is still underdeveloped, and the concept of «social entrepreneurship» is blurred.

 

References

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Year: 2019
City: Karaganda
Category: Economy