Incompatibility between Social Entrepreneurship and Capitalist Paradigms.
The present essay develops supporting arguments for the fact that “Social entrepreneurship and capitalist paradigms are generally incompatible.” It tries to find supporting literature. The first part of this essay defines the concepts of social entrepreneur and capitalism. The second par analysis where exist differences lay. The way social entrepreneur and entrepreneur are generating profit and are creating value to the society are the main difference.
The concept of social entrepreneur (SE) has got much attention during the last decade. While many researchers have focused on understanding entrepreneurship in line with capitalist view, SE is a relatively new field of research. According to Swanson and Zhang (2012) there was no consensus on the unique definition of SE, but it was accepted that the goal of SE is to assume the social equilibrium to a more desired state. In other words, there a need in society that is not satisfied. Like capitalist entrepreneur, SE creates added value to the society by satisfying a neglected need. Ruturaj, Sangeeta and Prerna (2012) reiterated this, arguing that the ingenious ideas of the social entrepreneur were beneficial to society and its members as well as to the entrepreneur. SE got much attention since the 1980s as indicated by Filipe, João, Isabel, and Carlos (n.d.) and has spread globally with the goal of solving social problems through creating sustainable and scalable business models. Like SE, businesses have expanded their social responsibility policies through corporate social responsibility policies.
Capitalism is also seen as an economic system, according to Sarwat and Ahmed (2015), in which private actors own and manage property (capital, assets, factories , mines, and railroads, etc.) in line with their interests, and freely set market prices for demand and supply in a way that can serve the best interests of society. The basic trait of capitalism is the motive for making a profit. The role of government in capitalism is very limited to security stability, justice, appropriate taxes, and public infrastructures (Bruce,2006).
For the following reasons, social entrepreneurship and capitalistic paradigms are typically incompatible. Richard and Denielle (2013) suggested that individuals were losing faith in industry, and only small minorities believed in free-market capitalism in Europe. They added that social entrepreneurs are introducing new business models that combine conventional capitalism with solutions that solve our planet's long-term needs, including persistent social challenges (health care, agriculture). While the main purpose in the paradigm of capitalism is to make profit, the objective in SE is to solve social problems, improve communities, life chances of people, or the environment. Filipe, João, Isabel, and Carlos (n.d.) indicated that SE 's innovative initiatives are financed by some private organizations. They added that everyone can become SE if he / she focuses on a social problem that is neglected by society, understands it deeply, creates a new solution to the problem and puts it this way. Conversely, this argument is based on the private property theory of the capitalist entrepreneur. The profit made by a non-social entrepreneur is shared or reported in reserves among investors. In the case of many associates or many investors / shareholders, each investor receives his dividend according to his share in the company. SE partners with states, local authorities, corporations and conventional charities and creates business models that install technology and make it possible for investors and customers to achieve success by networking. In expanding social activities, SE generated organizations that are neither corporations nor charities that produce income in pursuit of social goals such as Girl Scouts, VisionSpring, Kassalow, El Salvador unit (Richard & Denielle, 2013), the profits obtained are transferred. While capitalists produce goods and services for the market, where the law of supply and demand regulates the price, the services or product of social entrepreneur are free or sold under the cost of production to generate a modest revenue like Riders for Health. Entrepreneurs take risk in investing his/her money in business activity without knowing if the result will be a profit or loss. Generally social entrepreneurs are funded by some organizations as it has been said previously. Generally social entrepreneurs operate under the concept of projected proposed to get funded. Entrepreneurs depend on the revenue of their activities (sales of goods or services), the equity, and the contracted credit. The regulation in social entrepreneur is not as complicated as in entrepreneurial activities. For instance, social entrepreneur does not pay tax on income because they non-profit organization. While in Burundi law for instance the maximum tax to be paid by a company on income is 30% in case of profit while a company pays 1% of the sales in case of loss. The difference mission of social entrepreneurs and entrepreneurs makes that using capitalist paradigms are generally incompatible in social entrepreneur.
Richard and Denielle (2013) suggested that global capitalism was at a turning point, whether through social entrepreneurs or reformed by political measures and the pressures of an angry public, suggesting that reforming capitalism was interdependent because business and culture went hand in hand. These writers added that capitalism has deluded its potential by relying on the fine equation of worth with short-term economic returns. They concluded that social enterprises create fresh value chains when producing genes. In conclusion, social entrepreneur is influencing entrepreneur to change his point of view of business. The development of corporate social responsibilities reminds entrepreneur that his behavior must consider society and community where his is working. The new concept of sustainable development is also changing the traditional entrepreneur spirit of making profit cost to cost. Traditional entrepreneur is now including in his business model the needs of society. A budget is voted for social work under the influence of social entrepreneur.