Growth process in business and social entrepreneurship: the case of Brazil

The concept of entrepreneurship has been at the center of academic and institutional interest for more than a century (Davidsson, Low and Wright, 2001; Shane and Venkataraman 2000). In the last decades the concept of... [ view full abstract ]

The concept of entrepreneurship has been at the center of academic and institutional interest for more than a century (Davidsson, Low and Wright, 2001; Shane and Venkataraman 2000). In the last decades the concept of entrepreneurship has been enriched by that of social entrepreneurship (Alvord, Brown & Letts, 2004; Dees&Elias 1998). A social entrepreneur is an entrepreneur that has as a primary objective the creation of social value and the improvement of the well-being for the society as a whole. The birth and growth of the concept of social entrepreneurship is due to the increased awareness of the role individuals can play in re-shaping society and in solving some of the most taunting problems our world is facing.
The increasing relevance of social entrepreneurs for our society, has led academics to increase their efforts in studying this relatively recent phenomenon. Studies have focused first on the identification of social entrepreneurs, on their motivations and on the outcomes of their ventures (Alvord et al. 2004). Academics also focused on finding a proper definition for the concept and finally on the difference between social entrepreneurs and traditional entrepreneurs (Drayton, 2002; Thompson, Alvy& Lees, 2000). Up to now the studies concerning these differences have focused mainly on the differences in motivation and in outcomes between social and traditional entrepreneurs. Given the newness of this field, many avenues of research remain unexplored. This paper focuses on the difference in the growth process between social and traditional entrepreneurial ventures. It aims at understanding whether, while trying to scale-up their business, social and traditional entrepreneurs face the same challenges or whether the set of issues they have to deal with is different in a developing country context: Brazil.
We adopted a twofold methodology based, first, on a set of in-depth interviews with industry experts and then on a questionnaire administered to a sample of 78 social and 139 traditional entrepreneurs, totaling 217 subjects. The entrepreneurs were asked to score on a 1 to 5 likert scale a comprehensive list of possible challenges they could face in the growth phase of their business.
The first outcome was the creation of a comparative ranking listed in order of importance, challenges social and commercial entrepreneurs face. Taxation, Bureaucracy, Building Effective Teams, Finding the Right Employees and Reaching the Breakeven Point resulted as the main challenges for both group of entrepreneurs. Each challenge was then tested to evaluate whether the difference in ranking between the two sample groups were significant. Results showed that there are very few significant differences in the perceived importance of these challenges between social and commercial entrepreneurs. Challenges have been grouped into Internal Issues (those that the entrepreneur and the firm face on the inside such as measuring performance or innovate), Market Issues (those related to the market and the arena in which the firm competes such as Competitors or Customers’ Relationship), Context Issue (related to the socio-political context the firms operate into), Human Resource Management Issues (those related to people hiring and management) and Network Issues (those linked with the ability/need to form partnerships and networks with relevant external stakeholders). The regression carried out revealed that none of the coefficients is statistically significant at either 90 or 95% confidence level. These results should encourage cross learning and sharing of information and experiences between social and traditional entrepreneurs. Both groups have peculiar knowledge and experiences that could be applied by the other one.

Keywords: Entrepreneurship, Social Entrepreneurship

References

Alvord, S.H., Brown, L.D., Letts, C.W. (2004). Social entrepreneurship and societal transformation: An exploratory study. Journal of Applied Behavioral Science, 40, 260–282.

Davidsson, P., Low M.B., Wright, M. (2001). Editor’s introduction: Low and MacMillan ten years on: Achievements and future directions for entrepreneurship research. Entrepreneurship Theory and Practice, 25. 5–15.

Dees, J.G., Elias, J. (1998). The challenges of combining social and commercial enterprise. Business Ethics Quarterly 8, 165–78.

Drayton, W. (2002). The citizen sector: Becoming as entrepreneurial and competitive as business. California Management Review, 44, 120–132.

Shane, S., Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25, 217–26.

Thompson, J., Alvy, G., Lees A. (2000). Social entrepreneurship: A new look at the people and the potential. Management Decision, 38, 328–338.