Exploratory Study of Indian Ecosystem for Social Entrepreneurship

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Exploratory Study of Indian Ecosystem for Social Entrepreneurship-Literature Review

Introduction

Social entrepreneurship is an alternative means of finding solutions to societal development problems that cannot be attained in mainstream government plans. Social entrepreneurs seek to create change by harnessing the power of commercial sector to create the undeserved positive impact among the members of vulnerable communities (Sonne, 2014). The social entrepreneurship projects leave a sustainable and enduring impacts from profit oriented social ventures instead of one-time relief from their charities. The motivation behind such arrangements is the belief that it is possible to have both profits and social welfare at the same time (Davis, 2002).

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Its success is measured on the extent to which social impacts of an enterprise surpasses associated economic returns. In the Indian context, social entrepreneurs are on the rise across such diverse sectors as education, healthcare, waste management, agriculture, housing and green technology (British Council, 2016). In healthcare specifically, social impact from these enterprises are manifested in the numbers of lives saved or improved through enhanced healthcare services. This definition notwithstanding, it is noteworthy that it is continually evolving. The conceptual framework outlined below shows the flow of resources from the various stakeholders towards or from social enterprises.

Differences of SE with Philanthropic, NGO, Not-for-profit Organizations

Social enterprises in India are structured as private or public limited companies with only a few companies having being registered as non-governmental and trust organizations. Social entrepreneurship deviates from philanthropic and not-for-profit organizations in the manner in which generation of wealth is achieved (Sonne, 2014).

Whereas the later advocates for offering consumable and ready solutions to the communities, the earlier encourage autonomy of entities in the formulation and execution of projects. India has had a sustained presence of non-state, non-profit agencies, which include civil societies, self-help groups and NGOs. In 2014, there were approximately 2 million NGOs and nearly the same number of self-help groups whose activities are in the rural areas and targets vulnerable groups such as women (Times of India, 2014; Isern et al., 2007). Such organizations as Sankalp Forum, Villgro, and Indian Impact Investors Council among others support social enterprises by offering guidance and initial capital. For instance, Sankalp Forum is an initiative by Intrellcap to support socially relevant with adequate advisory and networking. On the other hand, Villgro is an SE incubator supporting social enterprises with the much needed funding at the foundational stages. For more than 15 years that it has been in operations, Villgro has supported at least 110 enterprises and employed approximately 4,000 people (GIZ, 2012). The other similar organizations include UnLtd India, Ashoka, Ziqitza Health Care Limited (ZHL), Udyogini, Tara, and Claro Energy among others (British Council 2016).

Using structural features to define social entrepreneurship becomes extremely difficult as it overlaps the traditional entrepreneurship. This makes it quite critical to take into consideration the qualitative features of social enterprises as opposed to the structural features. The qualitative features will include inclusion, social change, social mission, and innovation of the population within the bottom of the pyramid (Alter, 2007). This also gives a good explanation of the social entrepreneurship process. Hence, the social entrepreneurship process is meant to compensate what profitable and non-profitable organizations and the government have failed to do. The social entrepreneurship process also enters into areas touching on the quality of life, while social enterprises provide services and goods that ensure well-being, meet physical needs, and even improve the quality of life. This is archived by improving the capabilities of people who are living at the lowest part of the economic pyramid, thus bringing them into the development mainstream.

The Origin of Social Entrepreneurship

Social entrepreneurship has been a term so commonly mentioned in literature in the past three decades. In the social sector, a basis for entrepreneurial activities is commonly attributed to cooperatives in Europe. These cooperatives had a sole function of funding socio-economic agendas (Alter, 2007). In Italy, “social cooperative’ in a specified legal form was created to give a drive to the process under the law. The 1990s saw the emergence of the ‘social entrepreneurship’, ‘social entrepreneur’, and ‘social enterprise’ concepts in Europe. The emergence of social entrepreneurship was seen as a process where social enterprises were created by social entrepreneurs. This led to the European countries adopting the new legal definitions forms that foster entrepreneurial activities. The main aim was the fulfillment of social mission within dominant market orientation. The new entrepreneurial activity forms that emerged and aimed at meeting social needs were described to be part of the third sectors (Defourny et al., 2012).

Several changes facilitate the social entrepreneurship concept globally, with the popular view of the concept as having a profit orientation in a dual-purpose business. Social enterprises are also seen to have a non-profit legal structure in some countries such as the USA and tend to mediate profit goals within social parameters to non-profit making organization that is engaged in different mission supporting commercial activity (Kerlin, 2006).

Ecosystem of Social Entrepreneurship in India

Social entrepreneurship in India is described to be in a progressive environment that has timely changed within the legal structure. The social enterprises legal status is recognized as a problem by the government, and also a critical deciding factor when raising funds. Government proceedings do not use the social enterprises specific nomenclature. The government tends to encourage social enterprises in different ways like its involvement of Medium, Small and Micro Sized enterprises, backing policy formulation and venture capital funds (ADB, 2012).

Figure 1 Interaction between Various Players in Social Enterprise

There is a great need in India for the government to ensure the necessary conditions for social enterprises are conducive. This is in regards to the fact that social enterprises in India prefer legal affiliation to the private and public limited companies and not the Medium, Small and Micro Enterprises (Allen et al., 2012). Thus in 2002, the government was encouraged to unveil The Producer Company Structure. This structure was an alternative legal form to the cooperative model. Such move by the government is aimed at spurring social enterprises through enabling legislations and policies. The ecosystem suggested by NESTA is in three tiers which are knowledge creation, natural selection instigated by competition and ability to mobilize resources. Successful combination of these tiers and eventual deployment in translation of knowledge into reality through both financial and non-financial support demonstrates the perfect social entrepreneurship ecosystem (NESTA 2009). 

Figure 2 Conditions which make up a social entrepreneurship ecosystem

In India, the Limited Liability Partnership Act, 2002 resulted in a great growth in social enterprises in subsequent years. The Act was responsible for creating a hybrid tax structure that would increase focus and diversify the different social concepts. The alternative structure was quite attractive since it provided internal flexibility within a partnership and had protective benefits indulged in a corporation (Allen et al., 2010). The hybrid structures also become more acceptable within social enterprises as it increased fund raising prospects and without altering the different interests associated to investors and donors (Allen et al., 2012). From this concept, the state or definition of social enterprises is seen to not only being influenced by the legal parameters but also influenced by the active role played by the government. This creates ambiguity within the social entrepreneurship phenomenon and confusing it with other different social sectors forms. It has deduced the notion that social entrepreneurship is a very big area of focus that includes corporate social responsibility, cooperatives, and public services, profit making organizations, and non-profit making organizations (OECD, 2010). For instance, Amul is an established dairy cooperative founded in 1946 and based in Anand. The cooperative is known for its contribution to the White revolution which saw the country become the world’s number one producer of milk and related dairy products. The success story of Amul illustrates what cooperatives can do to enhance the social entrepreneurship activities (Chawla 2007).

There are diverse perceptions in social entrepreneurship, making it very complicated to define it clearly. However, most of them are in the skills development, education, non-farm livelihoods, agriculture, civil action as observed by British Council (2016) in its study, “The State of Social Entrepreneurship in India”, and as detailed in the chart below:

Figure 3 Social Enterprises per Sector (British Council, 2016)

Using the social business form as the ideal form of social entrepreneurship is the only sustainable way of realizing improved lives in the community. This is especially in situations where a wide range of entrepreneurs are taken into consideration as some are purely driven by the hope of profits while on the other hand, some entrepreneurs are considered socially conscious. This is also considering the socially conscious entrepreneurs also need to make some profit in order to sustain their operations. Hence, social businesses are attributed to be for profit making organization. Taking India’s example, they are structured in a from all way as public and private limited companies that are concentrating to provide towards the needs of people living in the bottom part of the income pyramid. A good example is seen from Solar Energy Limited Company (SELCO). This company is a social enterprise providing solar power to low-income earners who do not access to electricity from the electricity grid. SELCO is a profit making company and registered legally as a private limited company, with its investors being aligned to the company mission. The company has devised some solar solutions that are extremely innovative like headlamps used by midwives. Solar electric products have also being redesigned to suit the different situations in both urban and rural environments. The company’s operations have directly improved the lives of people through solar installation, and indirectly improving the economic aspects of the region through improved health benefits (Yale School of Management 2009). Life cannot be considered to be the same in the regions where SELCO provides its services and solar products. Looking at social enterprises in a commercial enterprises situation, we find that the social enterprise is a result of the main activity that makes the profit. Another differentiating factor associated with social entrepreneurship is that it has the main goal of bringing change. The social change, in this case, should be limited or radical, and not archived through the exploitation of an opportunity within a market in order to increase wealth (OECD, 2010). This concept is in the form of the traditional concept of entrepreneurship.

The impact of social enterprises in Indian healthcare is significant because a notable improvement in the lives of local residents. The sector is approximately $160 billion industry. 74% of the total spending in this industry are in the private sub-sector. The general healthcare ecosystem informs the concerted efforts by social entrepreneurs to focus on the sector. The country trails in major indicators which are 1.3 beds for every a thousand people against the WHO recommendation of 3.5 and 1.7 qualified nurses and doctors against WHO guidelines of 2.5. This outlook, among other indicators illustrate that affordable healthcare among the poor require the intervention of non-governmental and not-for profit organizations. Evidently, the efforts by the government alone are not sufficient to ensure that equitable healthcare is achieved. The social entrepreneurship in this sector seeks to solve the pertinent challenges associate with availability, affordability and good quality of healthcare services. The social entrepreneurship in healthcare in India has had some notable successes as evident in such establishments as Aravind Eye Car system (1976), Narayana Health (2000), LifeSpring Hospitals (2005), Vaatsalya HealthCare (2004), Ziqitza Health Care Limited (2004), Glocal Hospitals (2011), and Neurosynaptic Communications Pvt. Ltd., Drishti EyeCare (2011). Investors in such social entrepreneurship ventures have risked their capital in uncertain conditions within rural establishments. With the much that social entrepreneurship successes in the Indian healthcare system it is evident that the input of social entrepreneurs has a big role to play (Davis, 2002).

The Indian ecosystem for social entrepreneurship is still challenging as compared to similar establishments in the US and European nations. Unless there government and international charitable organization work together, the ecosystem will remain to lag behind that of developed nations. The support required here is not only financial but also technical and capacity building among the members of rural communities (Isern, et al., 2007).

Social Entrepreneurship Role as Engine for Growth in Rural India

The Indian society has a current need for establishing an effective and meaningful program in social development, which is also identifiable through the uses of a number of social indicators. These social indicators should be reliable for measuring the actual quality of life and present a realistic outcome. In terms of potential, social entrepreneurship has the ability and capacity to be actively contributed to societal development through providing a positive result in improving the quality of life as indicated by social indicators when studying development. Using social indicators is extremely useful as it makes it easy to report on the state of society on a more accurate nature and making it simply to identify the path of change. The chart below shows the social indicators as published by the United Nations (UN Statistics Division). The impact of social enterprises may be evaluated by studying the improvement in living standards and population demographics as indicated in the list below over a period of interest.

Figure 4 Indian Social Indicators (UN Statistics Division, 2017)

It also helps in identifying impeding crises and problems while suggesting the best policy and strategies to be used in the modification process (Dube, 1988). As described in studies (Yujuico 2008, Ziegler et al. 2014), the central capabilities of humans can be effectively used as social development indicators, while being used to study then change associated with the quality of life. According to Yujuico (2008), the ten key capabilities tend to be unfulfilled by the markets and state, while it is evident that social entrepreneurship has resulted in making changes in the ten areas. The central human capabilities include political and material control, the opportunity for recreation, living with nature, respect, affiliation, practical reasoning, and emotional development, use of senses, personal security, shelter, nourishment, good health and normal lifespan. These capabilities are inter-related and tend to reflect humans as the ends but not the means within social entrepreneurship. This later translates to the improvement of capabilities, which have a ripple effect to others, capabilities in the different social area. The overall benefit is improved quality of social life (Yujuico, 2008).

Other than the social indicators indicated by the United Nations, there are other success factors which may be used to inform whether a social enterprise is successful or not. Rost (2014), found out through a four regression analysis that “full-time employment”, “venture experience”, “performance-related sources of income” and “team-size” are statistically significant success factors of social entrepreneurship. By looking at these factors, it is evident that some of the factors coincide with commercial entrepreneurship success factors.

The future of social entrepreneurship in India is dependent on the capacity of to leverage on the information technology and deliberate policy framework by the government. As it stands, the realities in the ground, especially rural settings, running of social ventures is still a challenge. However, the social entrepreneurship future is bright because government-led digital initiatives. The Digital India program under the leadership of Narendra Modi leadership seeks to digitally empower the society and in effect spur economic activities. The move to ease access to the internet through reliable infrastructure is creating an enabling atmosphere for many social enterprises such as Tana Bana, Project ECHO, In Venture, and AISECT. These ventures eliminate the roadblock created by multiple middlemen. Other areas likely to benefit from vibrant social entrepreneurship activity, government policy and donor community contribution are education, healthcare and agribusiness (Potdar n.d.).

Conclusion

In conclusion, the review of the literature available above, the quality of life and welfare can be immensely improved through social entrepreneurship activities. This change then becomes the growth and economic development vehicle. Even with all these significant attributes on social entrepreneurship, it is still considered to be a new field in practice and research, and not well defined. India has presented some empirical evidence on social entrepreneurship, showing its growth even with the existence of difficulties in measuring it. This is commonly attributed to the fact that there exist a lot of difficulties in measuring the social economy, non-profit and the third sectors. The difficulty associated with the measurement is commonly attributed to the fact that there are different entities affecting social entrepreneurship. The entities also vary according to the different geographical regions as social entrepreneurship is also defined differently (OECD, 2010). Even within all these difficulties, the manifestation of social entrepreneurship is seen where true development is attributed from investing in people. Hence it enables people and the society to effectively meet their basic need while improving their social quality of life.

The foregoing review of available literature suggests that social entrepreneurs play a critical role in alleviating the suffering in communities, especially in such a country as India where a sizeable part of the population is living in poverty. To do this, they need to establish beneficial networks from developed nations, government support and relevant custom knowledge. Through such networks, they accumulate sufficient capital to stir-up business activities. It was also established that in fulfilling its mandate of providing quality healthcare, the enabling environment has been set up to allow social entrepreneurs in the healthcare to meet the objectives. 

 

References
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