Emerging Social Enterprise Trends

Matthew Lee, a doctoral candidate at Harvard Business School along with HBS Associate Professor Julie Battilana has undertaken a research on social enterprises. Their team is collecting and analyzing quantitative data on social entrepreneurship. The goal of their research is to identify broad social enterprise trends and provide a springboard from which to study the future course of this field.

Lee says, "A big weakness of the existing qualitative studies is that they're very biased toward heroic entrepreneurs. But to understand what the whole field looks like, you need to include everyone in your tent…not just the giants like Teach for America and City Year."

Lee's research is still in its early stages, but two key trends have already emerged about social entrepreneurs. The first revelation is that many of the social entrepreneurs are not aiming to transform the world, but rather focusing on effecting change in their own backyards. Secondly, an increasing number of social entrepreneurs are aspiring to finance their social enterprises through commercially generated revenue rather than rely on donations - a model that is known as a "hybrid" enterprise.

Battalina explains, "Hybrid organizations have a social mission but generate most of their revenue from commercial activities. As with traditional nonprofits, what's most important is the social purpose, but hybrids also have economic objectives to generate enough revenue to sustain their operations."

The research of Battilana and Lee primarily focuses on social entrepreneurs who are starting from scratch or are in their early stages of social enterprise. They partnered with Echoing Green, a socially focused investment organization, to identify an ideal data pool. They analyzed the applications received by Echoing Green from budding social entrepreneurs for funding. This led the researchers to discover key trend in the plans of social entrepreneurs to finance their social ventures in the long term. They found a growing trend towards self-sustainability and a diminishing inclination to rely on charitable donations.

Correction: quotes and comments contained in this Justmeans post by Vikas Vij should have credited their source: HBS Working Knowledge, " Beyond Heroic Entrepreneurs." We regret the error.

Photo Credit: ilco