Rebo Use DP 2018 1801 PDF

The 18th Sustainable
Development Goal:
Social Entrepreneurship
in a global society
Harry Hummels
Discussion Paper Series nr: 18-01

Tjalling C. Koopmans Research Institute
Utrecht University School of Economics
Utrecht University
Kriekenpitplein 21-22
3584 EC Utrecht
The Netherlands
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Harry Hummels
Utrecht University
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www.uu.nl/rebo/economie/discussionpapers
Tjalling C. Koopmans Research Institute
Discussion Paper Series 18-01
The 18th Sustainable Development Goal:

Social Entrepreneurship in a global society
Harry Hummels

Utrecht University
March 2018
Abstract
This discussion paper aims to better understand what social entrepreneurship
means and how it contributes to overcoming some of the greatest social and
environmental challenges of our times. Based on the work of Sen and Nussbaum,
the idea basic human needs – and more in particular, the idea of increasing
capabilities to fulfil these needs – creates a reference point to determine the
meaning of ‘social’. Apart from reinforcing these capabilities, an important dimension
of ‘socialness’ is the extent to which the beneficiaries confirm that they are in a
better position to fulfil these basic needs. The 18th Sustainable Development Goal
(SDG) deals with the improved set of capabilities. In order to contribute to the grand
challenges of our times – as expressed in the 17 existing SDGs – certain conditions
in terms of innovation, scalability, and (financial) sustainability have to be met. It
will require that corporations, cooperatives, large business networks and institutional
investors step in and promote socially entrepreneurial initiatives to contribute to the
radical change needed to fulfil the basic needs of individuals and communities. Only
then will human development and a life with human dignity be able to materialize.
Keywords: Social entrepreneurship, Sustainable Development Goals, Basic human

needs, Human development, Radical innovation, Scalability, Sustainability,
Outcomes
JEL classification: D63, I31, M21.
Acknowledgements
This address is dedicated to my dear friend Theo Brouwers. Without his friendship and the
many discussion we have had, I would never have gained the knowledge, the insight and the
experience, that I have today. In addition, I am grateful to him and my colleagues Erik Stam
and Niels Bosma for their constructive comments on previous versions of this contribution.
The 18th Sustainable Development Goal
in a global society
by Prof. Dr. Harry Hummels
The 18th Sustainable Development Goal:
in a global society
T his address is dedicated to my dear friend Theo Brouwers. Without his friendship and the many discussion we have had, I would
never have gained the knowledge, the insight and the experience, that I have today. In addition, I am grateful to him and my
colleagues Erik Stam and Niels Bosma for their constructive comments on previous versions of this contribution.
2
Die Philosophen haben die Welt nur verschieden interpretiert;
es kommt drauf an, sie zu verändern 1.
1 Karl Marx, Thesen über Feuerbach, 1845, Marx-Engels-Gesamtausgabe Ab IV. Bd. 3, Akademie Verlag, Berlin 1998
3
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Colophon
Reference to this publication: Hummels, G.J.A., (2018), The 18th SDG: Social Entrepreneurship in a Global Society,
Utrecht University, Utrecht, March 1st.
Illustrations: Marjorie Specht, Ontwerpkantoor Vonk Specht
Graphic design & print: Coers & Roest ontwerpers bno | drukkers
4
5 5Colophon
_ Colophon
Content
1 Introduction 9
1. W hat are the problems or challenges that define the domain of social entrepreneurship? 11
2. When do we call entrepreneurial activities ‘social’? 12
3. W hat do organisations require to become geared toward social innovation in value chains? 13
2 Challenges in the domain of social entrepreneurship 19
3 A basic needs-based approach to social entrepreneurship 25
4 When do we call entrepreneurial activities ‘social’ ? 33

A. Contribution to the fulfilment of basic needs and capabilities 35
B. Demonstration of outcomes that lead to fulfilment of basic needs and capabilities 37
C. Involvement of beneficiaries in deciding on the adequacy of activities and results 39
A dynamic concept 41
Conclusion 43
6 _ Content
5 The entrepreneurial dimensions 47
D. The relevance and meaning of innovation 48
E. Scaling 55
F. Financial sustainability 61
6 A common global agenda 67

The Sustainable Development Goals 67
The 18th SDG 72
Evaluating human development 75
M-Kopa’s output report 77
7 The reversed logic of social entrepreneurship — a conclusion 83
About the author Prof. dr. Harry Hummels 89
Colophon 90
7 _ Content
8
1 _ Introduction 2
“A spectre is haunting Europe”. With these famous opening in which working conditions were often beyond imagination.
words of the Communist Manifesto, Marx and Engels describe In Capital, Marx provides an account of the devastation that
the rising of a movement that stood up against the bourgeoisie. was found in many sectors of the English industry.
Fear was all over Europe, leading the bourgeois to believe that
the proletariat would fundamentally disrupt existing social, “The manufacture of matches, (…), has such a bad reputation that
political and economic relationships. The fear was real and only the most miserable part of the working class, half-starved
for a reason. In the eyes of Marx and Engels, the omnipresent widows and so forth, deliver up their children to it, their ‘ragged,
bourgeoisie “has left remaining no other nexus between man half-starved, untaught children’. Of the witnesses examined by
and man than naked self-interest” 3 . It thereby “forged the Commissioner White (1863), 270 were under 18, fifty under 10,
weapons that bring death to itself” and “called into existence ten only 8, and five only 6 years old. With a working day ranging
the men who are to wield those weapons” 4 . Proletarians would from 12 to 14 or 15 hours, night labour, irregular meal-times, and
become the soldiers of economic warfare. They were labourers, meals mostly taken in the workrooms themselves, pestilent with
who “only live as long as they find work and who only find work phosphorus, Dante would have found the worst horrors in his
as long as their labour increases capital” 5 . Many men, women Inferno surpassed in this industry. 6
and children found work in an ever-expanding industrial age,
2 T his working paper provides the groundwork for my inaugural address as Professor of Social Entrepreneurship at the Utrecht University School of
Economics, held on 1 March 2018 in the Aula of the Academy building of Utrecht University.
3 K arl Marx and Friedrich Engels, The Communist Manifesto, orig. 1848, London, Penguin, 2002, p.5
4 Ibidem, 2002, p.11
5 Ibidem, 2002, p.11
6 Marx, K., Capital, Penguin, London, 2004
9 _ Introduction
That was 1863. Numerous children became the victims In his Theses on Feuerbach 9 , Marx argued for fundamental
of a system, that fundamentally disrespected the dignity change. The philosophers, he wrote, have only interpreted
of workers. They were degraded to a mere means for the the world. The point is to change it. But in order to change
aggregation of capital in the hands of bourgeois owners. Since the world, we need to understand it. In this contribution, I will
then, much has changed. Working conditions have significantly explain what I believe social entrepreneurship to be from the
improved in many parts of the developed and, increasingly viewpoint of this chair in social entrepreneurship. The research
also, the developing world. Unfortunately, however, our domain is defined as:
present time still witnesses serious challenges – both inside
and outside the workplace – as described by Marx. One “social entrepreneurship in general, with an initial focus on radical
example is provided by the cocoa industry. In this sector, innovations of value chains to improve the social and ecological
child slavery and other worst forms of child labour, such as aspects of production” 10 .
hazardous work, still cause great concern. On the latest ILO
count, some 75 million children are exposed to hazardous
work 7 – of which a significant part is employed in the cocoa On the latest ILO count, some 75 million
industry 8 . It is this concern for the lives and welfare of children
children are exposed to hazardous work –
in the cocoa industry that motivated the launch of the Social
Entrepreneurship Initiative at the Utrecht University School of
of which a significant part is employed in
Economics and its chair in social entrepreneurship. the cocoa industry
7 ILO, Global estimates of child labour, Geneva, 2017

8 Tulane University, Survey Research on Child Labor in West African Cocoa Growing Areas, 30 July 2015.
9 K arl Marx, Thesen über Feuerbach, 1845, Marx-Engels-Gesamtausgabe Abteilung IV. Bd. 3, Akademie Verlag, Berlin 1998
10 U trecht University School of Economics, Description of organisation and position of the chair, Utrecht, October 2015. I take ‘radical’ to stand for
fundamental or transformative, rather than linking it to the theory of ‘radical economics’.
10 _ Introduction
At the core of the research lies a desire to understand what My assignment leads me to focus on the
social entrepreneurship means and how it contributes to
interconnection between businesses –
overcoming some of the greatest challenges of our times.
This entails that the focus of study is not on the numerous and the collaboration with governments,
and laudable small-scale social enterprises that try to solve multilateral organisations, civil society
an often local, social or environmental problem. My assignment
organisations, and financiers – to solve
leads me to focus on the interconnection between businesses
– and the collaboration with governments, multilateral some of the fundamental challenges of
organisations, civil society organisations, and financiers – to our society
solve some of the fundamental challenges of our society – both
at a national and an international level. I will call for a reversed
logic of social entrepreneurship that starts at the backend of 1. W hat are the problems or challenges that define the
what socially entrepreneurial initiatives aim to achieve. domain of social entrepreneurship?
If our aim is to understand how social entrepreneurship
This leads me to define several areas of research, which are contributes to overcoming the societal challenges of our
best expressed in terms of a question: time, we first have to get a better understanding of what
1. W hat are the challenges that define the domain of social these challenges are. Are all challenges that affect individual
entrepreneurship? human lives and the relationships between humans and their
2. W hen do we call entrepreneurial activities aimed at environment, by definition social challenges – and, mutatis
overcoming these challenges ‘social’? mutandis, are all business efforts aimed at solving these
3. W hat do organisations require to be geared toward social challenges by definition forms of social entrepreneurship?
innovation in value chains? It is my contention that we need a generally acknowledged
Let me briefly elaborate on these three questions. reference point or cut-off point, allowing us to distinguish
between enterprises that significantly contribute to overcome
the social or environmental challenges, and those that do not.
At present, there is no such common yardstick.
11 _ Introduction
I will argue that the idea of fulfilling basic human needs, like this idea, and a means to achieving sustainable human and
the need of children to be free of slavery, for respect and environmental development that is conducive to a life in dignity
for decent work as part of their need to survive, can create for all, the UN Sustainable Development Goals may provide a
such commonly acknowledged reference point. More in useful reference point 14 . I will even propose an 18 th SDG that
particular, what should provide the cut-off point is a company’s will call for reinforcing human dignity by the strengthening
contribution to improving the capability of humans to fulfil these the capabilities of individuals and communities to actively
11
needs . The core challenges of our world today are all related participate in and effectively influence policies, practices and
to our ability, as Marx put it, to successfully become, a “rich activities that are part of SDG agenda. My interpretation of
human being” – someone able to fully function and participate social entrepreneurship will be in close alignment with this 18 th
12 .
in society and experience “a totality of human life-activities” SDG. Ergo, entrepreneurial initiatives will only belong to the
It requires the ability to develop ourselves as fully functioning domain of social entrepreneurship if they contribute to human
beings in a sustainable social and natural environment. Based, dignity and involve the beneficiaries in deciding whether they
inter alia, on the writings of Marx, Amartya Sen and Martha are truly being served through the entrepreneurial activities,
Nussbaum developed a capabilities approach 13 . The approach policies and practices.
examines human functioning in a constantly evolving society
and the development of our capabilities (and the barriers) to 2. When do we call entrepreneurial activities ‘social’?
live a dignified life. As a contemporary operationalisation of Second, what does the term ‘social’ mean and how does
11 A marty Sen argues that people should have be able to live the life – and fulfil needs – they have reason to value. In general, individuals should be able
to decide what is important and what not. Nevertheless, Sen uses the phrase having ‘reason to value’, since the fulfilment of some needs, like the basic
need for education, is central to hum development – regardless of their individual utility functions – that fulfilling this need is important.
12 K arl Marx, Economic and Philosophic Manuscripts of 1844, Third manuscript, p. 49, Edition published by Progress Publishers, Moscow 1959
13 S en tends to speak of ‘capability approach’. See A. Sen, 1989. “Development as Capability Expansion,” Journal of Development Planning 19, and A. Sen,
1999, Development as Freedom, New York, Knopf. Nussbaum, however, argues in Creating Capabilities (2011, Belknap Press of Harvard University Press,
p.18), that it is better to speak of capabilities “to emphasize that the most important elements of people’s quality of life are plural and qualitatively
distinct: health, bodily integrity, education, and other aspects of individual lives”. Although Sen fully agrees with the pluralist approach (Sen, 1989:47 &
54), he favours the term ‘capability approach’
14 H ere, I was inspired by the approach developed by Seelos and Mair (2004 – see footnote 12).
12 _ Introduction
it assist us in demarcating ‘social entrepreneurship’ from find scholars who argue that all business is inherently social 17.
regular entrepreneurship? Surprisingly enough, with a few There is no such thing as non-social entrepreneurship 18 .
exceptions, the literature is rather silent on what constitutes Such a conclusion can hardly be satisfactory, as it turns every
the ‘socialness’ of social entrepreneurship 15 . An example of the enterprise into a social enterprise.
confusion around the meaning of the adjective is provided by
the European Commission: 3. W
hat do organisations require to become geared
toward social innovation in value chains?
“A social enterprise is an operator in the social economy whose Social entrepreneurship is seen by most scholars as an
main objective is to have a social impact rather than make a profit innovative approach, using business concepts and tools to create
for their owners or shareholders. It operates by providing goods social or environmental change for the benefit of society. Often
and services for the market in an entrepreneurial and innovative with its roots in the third sector, social entrepreneurship is set
fashion and uses its profits primarily to achieve social objectives” 16 apart from entrepreneurship that mainly or primarily focuses
[Emphasis added, HH] on the creation of profits. Upfront, we have to ask ourselves
whether such a distinction is useful. If the objective is to study
Such vague and circular definitions merely beg the question “radical innovations of value chains to improve the social and
of what makes an economy, a company’s objectives and the ecological aspects of production”, the focus automatically shifts
impact it creates ‘social’. At the other end of the spectrum, we to for-profit businesses. As we will see in the remainder of this
15 E xceptions can be found in Mair, J., and I. Marti, (2006), “Social entrepreneurship research”, Journal of World Business, 41, 36–44; Tan, W.-L., Williams, J.,
Tan, T.-M., (2005), “Defining the ‘social’ in ‘social entrepreneurship’: altruism and entrepreneurship”, International Entrepreneurship and Management
Journal, 1, 353–365; Seelos, C., & Mair, J., (2004), Social Entrepreneurship: The contribution of individual entrepreneurs to sustainable development,
IESE Working Paper 553, March; and Peredo, A.M., McLean, M., (2006), “Social entrepreneurship: a critical review of the concept”, Journal of World
Business, 41, 56–65; Bacq, S., and Eddleston, K., (2016), “A Resource-Based View of Social Entrepreneurship: How Stewardship Culture Benefits Scale of
Social Impact”, Journal of Business Ethics, DOI 10.1007/s10551-016-3317-1
16 h ttp://ec.europa.eu/growth/sectors/social-economy/enterprises_en
17 Shane, S., & Venkataraman, S. (2000). “The promise of entrepreneurship as a field of research”. Academy of Management Review, 25(1), 217—226
18 S ee, for instance, Santos, F. M., (2012), “A positive theory of social entrepreneurship”, Journal of Business Ethics, 111: 335–351 and Seelos, C., & Mair, J.,
(2005), “Social entrepreneurship: Creating new business models to serve the poor”, Business horizons, 48(3), 241-246
13 _ Introduction
contribution, if social entrepreneurship wants to contribute Go-OV designed a device that instructs the user which means
to changing entire value chains to solve the world’s largest of transports to take, where to get on or off a vehicle, and what
problems, it is hard to conceive of not-for-profit organisations follow-on steps need to be taken. The device not only increases
being able to meaningfully contribute – let alone to achieve – the capability of the disabled to travel autonomously, it also
such innovation. Not-for-profit organisations using business reduces public travel expenses by approximately 50 percent.
tools, can help solve local, and maybe even national, problems. The company demonstrably adds value to individuals with a
They will not change an entire global value chain. variety of disabilities, but – as a not-for-profit – is unlikely to
innovate the entire public transportation value chain.
Dutch not-for-profit enterprise Go-OV provides an interesting
illustration – although the organisation is likely to transform The shift from organisations using business tools to businesses
into a for-profit business to be successful over time 19. – and corporations – is justified in light of the global problems
The company enables mentally or physically disabled of our society and the role business can play in solving them.
travellers to make use of public transportation independently. Take the cocoa industry. Eight corporations control the entire
market. What can social entrepreneurship do to help profit-
driven corporations like Nestlé, Mars, Hershey’s, Ferrero,
If the objective is to study “radical Mondelēz, Barry Callebaut, Cargill, and Olam face societal
innovations of value chains to improve challenges in their respective value chains? As eminent social
the social and ecological aspects of entrepreneurship scholars Seelos and Mair suggested, it is
precisely the potential of social entrepreneurship to create
production”, the focus automatically large scale social change while making a decent buck, that for-
shifts to for-profit businesses. profit corporations should step in 20 . A business organisation
19 S ee http://www.go-ov.nl The organisation aspires becoming a for-profit business because it needs investment capital. Grants and subsidies cannot
fund the company over the long run to change the value chain and reap the benefits of social innovation.
20 S ee Seelos, C., & Mair, J., (2004), Social Entrepreneurship: The contribution of individual entrepreneurs to sustainable development, IESE Working Paper
553, March.
14 _ Introduction
It is precisely the potential of social to an activity, to undertaking projects. Usually, the activities
or projects are associated with an individual or group of
entrepreneurship to create large scale
individuals – the entrepreneur. The Thatcherite free market era
social change while making a decent in the mid 1980s, however, turned entrepreneurship into the
buck, that for-profit corporations should touchstone of development for our economy and society 22 . It
points to the essential dynamics of the economy that is a result
step in.
from a fundamental disequilibrium between market players
with regard to market information. Differences in access to and
like Tony’s Chocolonely, aiming to eradicate (the worst availability of market data and differences in interpretation of
forms of) child labour in the entire cocoa value chain, clearly these data, result in the design, production and distribution
understood this message. It inspires others in the industry to of products and services. Economic activity, therefore, can be
take adequate action, but it is also open to inspiration from explained by “the tendency of certain people to respond to
others – including multinationals 21. the situational cues of opportunities” 23 . Individuals, groups
or organisations differently assess market information – for
Researching the ability and efforts of business organisations instance regarding market gaps, the needs of customers or the
geared toward the innovation of value chains, entails more potential to serve the better with new and innovative products
than highlighting the fundamental challenges of our society or services – while having ideas to overcome the lacunae.
and our planet, and the meaning of the term ‘social’. It also This not only leads to economic development, but clearly
should study the domain of ‘entrepreneurship’. The terms also to social value creation. According to Venkataraman,
‘entrepreneurship’ and ‘enterprise’ are derived from the French ‘‘entrepreneurship is particularly productive from a social
‘entreprendre’ and its past participle ‘entrepris(e)’. Both refer welfare perspective when, in the process of pursuing selfish
21 Tony’s Chocolonely’s annual report 2016/2017, p.88. The company committed to implementing the Child Labour Monitoring and Remediation System
(CLMRS) – a system which was developed by the International Cocoa Initiative.
22 C hell, E., (2007), “Social Enterprise and Entrepreneurship”, International Small Business Journal, 25, 1, p. 5-26
23 Shane S., and S. Venkataraman, (2000), The Promise of Entrepreneurship as a Field of Research, Academy of Management Review, 25, 1, p.219
15 _ Introduction
ends, entrepreneurs also enhance social wealth by creating corporations, cooperatives, and organisational networks.
new markets, new industries, new technology, new institutional These organisational forms are geared towards generating
forms, new jobs, and net increases in real productivity’’ 24 . outcomes on the scale that is necessary to stimulate radical
transformation in value chains 27. In this contribution, we
If our objective is to study social entrepreneurship with a will focus on larger businesses and corporations, simply as a
focus on radical innovation of value chains, it makes sense to metaphor for all organisational forms that express the tendency
look at some determinants of successful entrepreneurship in toward outcomes that lead to radical change in value chains.
national and international business environments. If, as Chell
argues, entrepreneurship is about the pursuit of opportunity For that purpose, a hexagon or social entrepreneurship
in the context of creating economic and social value, our screen is presented on the next page. The screen provides six
focus requires focusing on at least three dimensions. The dimensions to study social entrepreneurship and the creation
first is innovation and more specifically radical or disruptive of social, economic, financial, and/or environmental value.
innovation. It is unlikely that incremental or “sustaining
innovation” 25 will lead to fundamental change in order to The next part of this contribution focuses on determining the
solve the challenges of our time and of the future. Effective “socialness” of social entrepreneurship (A, B, C); the second
intervention demands scale in light of the magnitude of the part addresses the entrepreneurial challenges (D, E, F).
26 .
challenges and of long-term financial sustainability This
requires a shift in focus from individual entrepreneurial
activity – irrespective of organisational context – to
entrepreneurship driven by organisations, like businesses,
24 Venkataraman, S. (1997). The distinctive domain of entrepreneurship research. In J. Katz & R. Brockhaus (Eds.), Advances in entrepreneurship, firm
emergence, and growth (Vol. 3, pp. 119–138). Greenwich, CT: JAI Press, p.133
25 S ee Christensen, C., et al., (2016) Disruptive Innovation: Intellectual History and Future Paths, Harvard Business School, Working Paper 17-057
26 C hell (2007:14) argues, ‘if the mission of value creation is to be maintained, the activity and its outcomes must be sustainable’
27 T he shift from individual initiatives to organisational forms with higher levels of formalisation and propensity to create the desired social or
environmental outcomes, is not a principle one. It is prompted by the assignment I have been given.
16 _ Introduction
Social Entrepreneurship Screen
Determining Socialness B Demonstration outcomes
A Capability development C Beneficiaries involved
F Financial sustainability D Innovation
Minimum SE qualifying score E Scalability Determining Entrepreneurship

Inferred profile
17 _ Introduction
18
2 _ Challenges in the domain of
social entrepreneurship
One can easily sketch the social entrepreneurship field as Let me give you two examples that clarify that just serving the
an exotic zoo: “many different ‘animals’ combine social and needs of someone else – even if these come in large numbers –
market goals in substantially different ways and each species does not automatically turn entrepreneurship into a social
has distinct environments and needs” 28 . You only have to entrepreneurship.
look at the membership of relevant networks, like Ashoka,
B Corp, Impact Hub or Social Enterprise NL, to understand My first example is Dutch Railways company Nederlandse
what activities are undertaken in this domain. The activities Spoorwegen (NS). As a regular client and supporter of public
range from poverty alleviation and social cohesion to health transportation, I know NS quite well. Armed with my MacBook,
improvement, and from inclusive workplaces to environmental iPhones, thermos flask, and something to nibble, you can find
protection and the circular economy. Although activities may me on a train several days a week. But can its activities be
differ significantly, they seem to share a sense of responsibility subsumed under the heading of ‘social entrepreneurship’?
for the deprived – no matter whether the destitution focuses Let us look at the facts 29:
on humans, animals or nature. In other words, what these
organisations appear to have in common is a focus on the • NS transports as many people as possible by train.
needs of others. The question is, however, is serving the needs At present, on an average day approximately one million
of others a sufficient condition for social entrepreneurship? passengers use the train to reach their destination.
28 Young, D., and Lecy, J., (2014) “Defining the Universe of Social Enterprise”, (2014) Voluntas, 25:1307-1332 
29 NRC Handelsblad, 31 October 2015
19 _ Challenges in the domain of social entrepreneurship

Is serving the needs of others a sufficient the storage of energy from renewable sources. In pursuing a
business opportunity, Tesla aims to transform the car market
condition for social entrepreneurship?
and accelerate “sustainable transport by bringing compelling
mass market electric cars to market as soon as possible” 30 .
• The company provides additional transportation facilities, Through its energy storage business, Tesla demonstrates
like the OV-bikes. that renewable energy can be stored and used when power is
• All trains run on wind energy. NS reduced the CO2 emissions needed most. On both counts Tesla seems to show remarkable
of its train operations to zero. societal results – even though its business is merely selling as
• In 2020, NS aims to reuse 75 percent of the waste that is many cars or storage facilities as possible.
produced on a daily basis, and
• Finally, NS creates satellite working spaces in or around What unites both companies, is the opportunity they offer
stations to facilitate flexible work. for energy efficient transportation. They satisfy the need of
travellers for transport that minimizes environmental impact.
By running a countrywide railway service, NS positively Also, NS – in close collaboration with railway infrastructure
contributes to fulfilling transportation needs in The company ProRail – and Tesla invest in improving the efficiency
Netherlands. Nevertheless, these activities do not qualify as of the transportation system. NS does this by increasing
‘social entrepreneurship’. NS simply offers travellers an option its capacity, Tesla by investing in autonomous, self-driving
to go from A to B. Although it deserves praise for its active cars. There is a clear difference, however, between the two
contribution to maintain and improve an efficient transport companies. While NS is a responsible service provider offering
system and to reduce CO2 emissions, these are not sufficient transport services to an ever-increasing number of travellers,
conditions to think of NS as a company focusing on social Tesla is an innovative manufacturer of transport and energy
entrepreneurship. My second example is Tesla, the iconic storage solutions. It aims to transform the entire market for
company run by Elon Musk. Tesla addresses two of the greatest sustainable private transport and energy storage solutions.
challenges of our time: the reduction of CO2-emissions and This means that, unlike NS, Tesla does use an innovative
30 F or Tesla’s mission see www.tesla.com

business approach to create social and environmental change Tesla is innovative, it creates solutions
for the benefit of society. That is, from the viewpoint of
that weren’t available before, and it
(improving capabilities of communities to) fulfilling a need
for (the storage of) renewable energy, it is involved in social actively contributes to the transformation
entrepreneurship. Tesla is innovative, it creates solutions of the automobile sector to one that uses
that weren’t available before, and it actively contributes to
renewable energy sources.
the transformation of the automobile sector to one that uses
renewable energy sources. Particularly through this latter
contribution, Tesla’s activities are in the interest of society – at in) to fulfil basic human needs. In our global society, there is
least of our present society. Despite Tesla’s drive for societal certainly a need for transportation in order to get around and
change and its praiseworthy contribution to transform the participate as fully functioning human beings. The question
automobile and the energy storage markets, there are reasons we then have to ask ourselves is: does Tesla contribute to
to believe that Tesla, after all, does not belong to the domain the improvement of human capabilities to become ‘rich
of social entrepreneurship. We all need transportation, but human beings’ or take away some of the societal barriers to
providing cleaner transport is not a sufficient condition for experience such richness in a sustainable way? At face value,
‘social entrepreneurship’. We do not really need a Tesla to live this may seem to be the case. There is, however, some doubt
a meaningful and mobile human life in a sustainable world. about the ability of the company to answer this question
In the remainder of this contribution I will argue that other in the affirmative. Tesla is dependent, for instance, for the
criteria should be met as well to be able to qualify for social transformation of the car manufacturing industry on a finite –
entrepreneurship. and therefore unsustainable – resource: lithium. If the world’s
car park – or for that matter just the European or US car park
An important element in this discussion is the enhancement – would transform into one dominated by electric cars, lithium
of the capabilities of humans (and the societies they live would immediately be in short supply 31. Tesla, therefore, only
31 T im Steinweg, The electric car battery, SOMO, Amsterdam, March 2011

provides a temporary solution, particularly if it would produce
for a mass-market 32 .
The examples make clear that simply being innovative and

creating solutions to solve some of the world’s biggest
challenges is not enough to label a company as a ‘social
enterprise’. Acknowledging a business as a proponent and
promotor of social entrepreneurship requires a contribution to
(the capacities of individuals and communities for) improving
the fulfilment of basic needs.
32 I t is quite interesting in this respect, that Shell Netherlands CEO, Marjan van Loon, uses a hydrogen-powered car. See Teuws, R., “Marjan van Loon over
leiderschap tijdens de energietransitie, Management Scope, nr.10, Nov. 2017

24
3 _ A basic needs-based approach to
social entrepreneurship
“Saying that a human need is basic, implies that its absence resources, triggered the discussion on basic or essential
would deprive a human from a good, a service or a quality that human needs at a policy level 35 . World Bank president
33 .
is essential to life and the development of that life” This focus Robert McNamara initiated a commission to work explicitly
on basic human needs emerged in the mid 1970s to express on basic needs 36 , while the fulfilment of basic needs is a key
34 .
what a full human life consists of Significant inequality reference point for the definition of sustainable development
across the globe during the 1960s, a myopic translation of in the report Our Common Future of the World Commission on
human development in terms of GDP growth, and concerns Environment and Development. The report defines ‘sustainable
about an unsustainable consumption of the world’s scarce development’, as: “development that meets the needs of the
33 F einberg, J., (1973), Social Philosophy, Prentice Hall, Englewood Cliffs, N.J. p.111
34 S ee Etzioni, A., (1987), “Entrepreneurship, adaptation, and legitimation: a macro-behavioral perspective”, Journal of Economic Behavior and
Organization, 8, 175–189; Rawls, J., (2006), A Theory of Justice, revised edition, Belknap, Cambridge, MA; McCloskey, H., (1976), “Human needs, rights
and political values”, American Philosophical Quarterly, Vol. 13, 1, 1-11; Gomes, O., (2011), “The hierarchy of human needs and their social valuation”,
International Journal of Social Economics, Vol. 38, 3, 237-259; Amartya Sen, ‘Equality of What?’, Tanner Lecture on human values, Stanford University,
May 22, 1979; Braybrooke, D. Meeting needs, Princeton UP, Princeton, NJ.
35 S ee, for instance, Meadows, D., Meadows, D.L., Randers, J., Behrens, W., 1971. The Limits to Growth. Universe Books, New York; International Labour
Organisation ILO, (1976), Employment, Growth and Basic Needs. A One-World Problem, New York, London; USAID Development Coordination
Committee, (1979), Evolution of the Basic Needs Concept, March, Washington. See also Deneulin, S., Shahani, L., (2009), An Introduction to the Human
Development and Capability Approach, London, Earthscan, ch. 3
36 Streeten, P., et al., (1981) First Things First: Meeting Basic Human Needs in Developing Countries, World Bank, Washington
25 _ A basic needs-based approach to social entrepreneurship

“Saying that a human need is basic, does not mean that one fundamentally needs that particular
good or service. As mentioned previously, I may desire a
implies that its absence would deprive
Tesla, that does not mean that I need one – even though we
a human from a good, a service or a all need a clean environment to live a healthy and sustainable
quality that is essential to life and the life. When basic needs are not fulfilled an individual – and the
community one lives in – will be deprived of essential goods
development of that life.”
required to live and sustain a meaningful life. Basic needs, like
a need for subsistence, protection, affection, understanding,
present without compromising the ability of future generations participation, identity or freedom 39 , have more of a mandatory
37
to meet their own needs.” In other words, a sustainable nature. Without the capability of humans to fulfil these needs,
development of our economy and society and of our life on this life becomes a rather risky, nasty, and undignified affair 40 .
planet “requires meeting the basic needs of all and extending
to all the opportunity to satisfy their aspirations for a better In a discussion on equality and justice with American political
life” 38 . Basic human needs should be distinguished from philosopher John Rawls, Indian economist and philosopher
preferences, desires or interests. Desiring a good or service Amartya Sen developed his ‘capability approach’. At the core
37 World Commission on Environment and Development, (1987), Our Common Future, New York, p.54
38 ibidem, p.24. Sen (2009:251,252) suggested the following reformulating: “without compromising the capability of future generations to have similar
– or more – freedoms’. I believe, however, that the commission’s quoted clarification comes close to what Sen promotes as the more appropriate
reformulation of the definition of sustainable development.
39 S ee Manfred Max-Neef, “Development and human needs”, Paul Ekins & Manfred Max-Neef (eds.), 1992, in Real-Life Economics: Understanding Wealth
Creation, Routledge, London, pp. 197-213. He distinguishes between needs and satisfiers and argues that food and shelter are not needs. They merely
satisfy a fundamental need for subsistence.
40 A ccording to Streeten, other issues emerged in the development discussion, like the role of women, the environment, political freedom and
governance, human rights, corruption, leading to a demise of basic needs. The latter was regarded as too narrowly focused on commodity bundles
delivered to people by the government, and it had to carry the ballast of past misinterpretations. See Streeten, P. (2003) ‘Shifting fashions in
development dialogue’, in S. Fukuda-Parr and S. K. Kumar, Readings in Human Development, Delhi: Oxford University Press, pp. 72–75. The topic
ultimately re-emerged in the work of Amartya Sen.

of Sen’s approach, we find a deep concern for the (in)ability of What matters, is the extent to which
vulnerable people to fulfil their basic needs and for the lack of
people can (develop their capability to)
capability to do something about it. He opposes Rawls’ idea of
‘primary goods’. These goods are an expression of “what persons freely fulfil their personal needs
need in their status as free and equal citizens, and as normal and
fully cooperating members of society over a complete life” 41. goods, like food, shelter or clothing – even though in some parts
Primary goods, such as encompassing rights, liberties, income, of the world there is a clear need for these goods. A focus that
wealth and the social bases for self-respect, provide people with is limited to the provision of goods only leads to “consumer
the freedom to pursue their pluralist ends. Sen argues that the fetishism” 44 . What matters, is the extent to which people can
goods themselves should not be at the core of our attention. (develop their capability to) freely fulfil their personal needs,
They are mere means to freely pursue one’s own ends. It is including obtaining basic goods, and to realise this capability
42
what individuals can do with these goods or “what these in day to day life 45 . Capability constitutes “spheres of freedom
43
good things do to human beings” , that makes them relevant and choice” 46 . Despite this focus on opportunities for humans
objects of human doing and being. Human development, to influence their future lives, Sen is not blind to individuals who
therefore, is not primarily about the increase of consumable encounter limitations in achieving their ends, both internally
41 R awls, J., (2006), A Theory of Justice, revised edition, Belknap, Cambridge MA, p. xiii
42 A martya Sen. 1989. “Development as Capability Expansion,” Journal of Development Planning 19: 47
43 A martya Sen, ‘Equality of What?’, Tanner Lecture on human values, Stanford University, May 22, 1979, p.218
44 S en (1989, p.47) argues that the “objects of value can scarcely be the holdings of commodities. Judged even as means, the usefulness of the
commodity-perspective is severely compromised by the variability of the conversion of commodities into capabilities. For example, the requirement
of food and of nutrients for the capability of being well-nourished may greatly vary from person to person depending on metabolic rates, body size,
gender, pregnancy, age, climatic conditions, parasitic ailments and so on.” Even though Sen may be right in principle, it is quite harsh to think of the
poor and deprived needing nourishment as victims of ‘consumer fetishism’. In cases of sincere deprivation, the provision of basic goods and services is
a necessary condition for life as such – something that is acknowledged to a greater extent by Nussbaum.
45 S en distinguishes between capability – the freedom of an individual to make choices about her or his present and future being and doing – and agency
– the ability to pursue and realise goals that she or he (has reason to) value(s).
46 Martha Nussbaum, 2011, Creating Capabilities, Belknap Press of Harvard University Press, Cambridge, MA, p.25

and externally. These limitations are real. The major challenge of 1. L
ife: the ability to live a human life of normal length
human development in our society, therefore, is to “broaden the 2. Bodily health : ability to have a good health, adequate
limited lives into which the majority of human being are willy- nourishment and ditto shelter
nilly imprisoned by force of circumstances” 47. 3. Bodily integrity : to move freely from place to place and be
secured against violent assaults
Based on the work of Amartya Sen, American philosopher 4.
Senses, Imagination and thought : ability to think, reason and
Martha Nussbaum developed her own account of the imagine, informed and cultivated by an adequate education
‘capabilities approach’ 48 . She examines what constitutes a 5.
Emotions: ability to be attached to people and things, to
dignified life governed by justice for all and the basic human love and grieve, and experience longing, gratitude, and
capabilities required for such life. “A central part of our own anger
good, the good of each and every one of us,” Nussbaum Practical reason : ability to conceive the good and engage in
6.
argues, “is to produce, and live in, a world that is morally critical reflection about one’s life
decent, a world in which all human beings have what they ffiliation : ability to engage in various forms of social
7. A
need to live a life with human dignity.” 49 To provide guidance interaction and having the social basis of self-respect
to governments, but also to corporations, institutions and ther species: ability to live with concern for and in relation
8. O
individuals, about the most pressing capabilities, she presents to animals, plants, and nature
50
a list of ten capabilities: Play : ability to play, laugh and enjoy
9.
47 A martya Sen. 1989. “Development as Capability Expansion,” Journal of Development Planning 19:55
48 H er latest contribution to the discussion of central human capabilities can be found in: Martha Nussbaum, 2011, Creating Capabilities, Belknap Press
of Harvard University Press, Cambridge, MA. See also, Martha Nussbaum, 2006, Frontiers of Justice, Cambridge: Belknap Press of Harvard University
Press.
49 N ussbaum, M., 2003, 2nd Tanner Lecture, p.473 See https://tannerlectures.utah.edu/_documents/a-to-z/n/nussbaum_2003.pdf
50 S en does not oppose Nussbaum’s list as long as it is not seen as “the only route”. See Sen, A. (1993) ‘Capability and well-being’, in M. Nussbaum and
A. Sen (eds) The Quality of Life, Clarendon Press, Oxford. At the same time, as Domselaar argues, there are some epistemological concerns. The
list cannot be warranted without knowing the context of its use. See: Domselaar, I., 2009, ‘Nussbaum’s Capabilities Approach: In Need of a Moral
Epistemology?’, Rechtsfilosofie & Rechtstheorie, Vol, 38/3, 186-201

10. Control over one’s environment : Needs are not universal as they differ
– Political: ability to participate effectively in political
throughout time and space.
choices that govern one’s life, and
– Material: ability to hold property, seek employment, work
as human being exercising practical reason and engage Enabling people to fulfil basic needs and develop core
in meaningful relations of mutual recognition with other capabilities is not the same as granting them a right to
workers. universal primary goods, irrespective of national or cultural
values, customs, standards, or preferences. Needs are not
Together, the ten capabilities form the bare minimum of what universal as they differ throughout time and space. They
constitutes a dignified human life. In the domestic context of cannot, therefore, be claimed or upheld against rival claims,
developed countries, the institutions are often present to provide despite Nussbaum’s insistence on the moral or political
individuals with the required minimum set of entitlements. In a requirement to have individuals surpass the ‘threshold level
global context, however, improving central human capabilities of capability’ 52 . It is not until society, through its prevailing
poses a major challenge. The world is in constant flux and decision-making and governance structures, acknowledges the
institutions that function well at a national level, are often absent right to a specific fulfilment of a basic need or capability that
or dysfunctional at an international level. Despite the lack of individual entitlements come into existence 53 . Effectuation
overarching institutional arrangements and the difficult political, of the capabilities is, therefore, contingent on the current
social and economic situation in which many countries find state and qualities of our governing institutions at a local,
themselves, Nussbaum states, “[h]umanity is under a collective national and supra-national level 54 . Nussbaum’s account of
obligation to find ways of living and cooperating together so that the capabilities approach is a political doctrine about a just
51.
all human beings have decent lives” society in which human beings are morally entitled, just by
51 N ussbaum, 2003, p.474

52 S ee Martha Nussbaum, 2006, p. 70 and 2011, p. 40
53 ibidem, p. 79 and 180
54 S ee: Domselaar, I., 2009, ‘Nussbaum’s Capabilities Approach’, Rechtsfilosofie & Rechtstheorie, Vol, 38/3 p. 192

being human, to a basic “set of non-negotiable entitlements Here, business can contribute to social entrepreneurship,
55 .
of all citizens” Societies should achieve a threshold level of as Seelos and Mair observe. They turned the fulfilment of
each capability for every individual 56 . A failure by government basic needs into a hallmark of social entrepreneurship as it
to secure these entitlements results in a grave violation of basic “creates new models for the provision of products and services
justice 57. If basic needs cannot be met, American economist directly to basic human needs that remain unsatisfied by
Deirdre McCloskey argues, “society or the world should be current economic or social institutions” 60 . Businesses, aligning
reordered so far as possible, so that they are capable of being themselves with the social entrepreneurship agenda, have a
met” 58 – provided that greater goods are not thereby lost unique opportunity to further the capabilities of their clients,
or jeopardised. This puts a substantial burden on society their workforce and society, to fulfil basic needs. The question
– including governments, corporations, and civil society is: what contributions constitute a ‘social entrepreneurial’
organisations – to enable people to develop their capabilities response to the needs of individuals and their communities
59 .
and fulfil their autonomously defined basic needs To what and is more than merely business as usual?
concrete measures this should lead, differs from society to
society.
55 N ussbaum, 2003, p.448. In Frontiers of Justice (2006:71) she argues the capabilities approach is “only a partial and minimal account of justice”. It does
not address inequalities above the minimal threshold.
56 S en does not provide a systemic answer on the valuation of the capabilities that make up a life in human dignity. Nussbaum (2011:28), on the contrary,
pleads for a capabilities approach that is “evaluative and ethical from the start”. She asks what human capabilities “are the really valuable ones, which
are the ones that a minimally just society will endeavour to nurture and support”.
57 N ussbaum, (2011) p.32,33, and 62, where she argues that her approach is “a species of a human rights approach”.
58 M cCloskey, H., (1976), “Human needs, rights and political values”, American Philosophical Quarterly, Vol. 13/1, 1-11
59 S ee also Hill, M. T.: 2003, ‘Development as Empowerment’, Feminist Economics 9(2&3), 117–135.
60 S eelos, C., & Mair, J., (2005), “Social entrepreneurship: Creating new business models to serve the poor”, Business horizons, 48(3), 243-244

32
4 _ W hen do we call entrepreneurial
activities ‘social’ ?
Social entrepreneurship, understood as the innovative use design of a cooperative is based on the principles of autonomy
of business concepts and tools to create social, economic, or of the organisation, voluntary membership, democratic member
environmental outcomes for the benefit of society (or specific control, economic participation, education and information
groups within society), is not a new phenomenon. It traces sharing, and a concern for the community 62 . The movement
back to the roots of the corporation. Despite the omnipresent led to the emergence of cooperatives throughout Europe 63 .
hardship in industry, as described by Karl Marx in Capital, In the Netherlands, Jacques van Marken was a leading spirit.
history has shown some remarkable examples of social Even though he was an entrepreneur and not a leader of a
entrepreneurship in the early days of industrial development. cooperative movement, the founder of the Netherlands Yeast
Cornelius, et al., trace back the development of social and Methylated Spirit Factory, was a social innovator using his
entrepreneurship to the first worker cooperatives in the mid- business as a vehicle for societal change. Others include, inter
nineteenth century in the UK 61. The Rochdale Principles, that alia, Jurgens en Van den Bergh, Philips, Stork, Van Heek, Fentener
were set out in 1844, provided the framework on which many van Vlissingen, and the companies that grew out of them,
cooperatives have operated and still continue to operate. The like Unilever, DSM 64 and Philips Healthcare. As my colleague,
61 S ee Cornelius, et al., (2008), Corporate social responsibility and the Social Enterprise”, Journal of Business Ethics, 81:355–370
62 h ttps://www.rochdalepioneersmuseum.coop/about-us/the-rochdale-principles/
63 O bviously, a well-known example is provided by the Raiffeisen in Germany. Also, in Southern Europe cooperatives emerged. See, e.g., Duccie, G., et al.,
(2002) ‘The Social Enterprise in Europe’, International Journal of Mental Health 13(3), 76–91.
64 O ne of the current leaders in the field of corporate responsibility and sustainability – and also in the area of social entrepreneurship, I would argue, is
DSM – a direct descendant of Van Marken’s Yeast and Methylated Spirit Factory.
33 _ When do we call entrepreneurial activities ‘social’ ?

Keetie Sluyterman argues, these companies were far ahead of meaning insofar it can be distinguished from entrepreneurship
the curve. Their leaders, she continues, were seen as “social that is not explicitly social 67.
65
entrepreneurs” . Now the question emerges: What makes a
‘social entrepreneur’ or, for that matter, ‘social entrepreneurship’ Scholars that did address the meaning of the ‘socialness’
‘social’? Without clarity about what distinguishes social of entrepreneurship, mainly argue that the term refers to
entrepreneurship from regular entrepreneurship, it will be a desire to benefit society 68 . As mentioned previously, this
difficult to determine the contribution of social entrepreneurship is hardly helpful as many mainstream companies would
in improving the social and ecological aspects of production in instantly fall under this category. When focusing on “social
value chains. Surprisingly enough, the literature remains rather entrepreneurship in general, with an initial focus on radical
indifferent, undetermined and opaque, when discussing the innovations of value chains to improve the social and ecological
meaning of the term ‘social’. Often, it is treated as “so patently aspects of production” 69 , I propose three dimensions to
66 . Nicholls and
obvious as to require no further explanation” adequately demarcate my field of research. These dimensions
Cho’s remark makes sense that social entrepreneurship only has find their inspiration in the work of Sen and Nussbaum 70:
65 Sluyterman, K.E. (2012), “Corporate Social Responsibility of Dutch entrepreneurs in the 20 th century”, Enterprise & Society, 12, June 2012.
66 C ho, A., (2006), “Politics, Values and Social Entrepreneurship: A Critical Appraisal”, in Mair, J., J. Robinson, & K. Hockerts (eds.), Social entrepreneurship.
Basingstoke, UK: Palgrave Macmillan, 34-56
67 Nicholls, A., and Cho, A., (2006), “Social entrepreneurship: The structuration of a field”, in Nicholls A., (ed.), Social entrepreneurship: New models of
sustainable social change, Oxford, p.100
68 S ee footnote 12
69 U trecht University School of Economics, Description of organisation and position of the chair, Utrecht, October 2015.
70 W hen I say that I am inspired by Sen and Nussbaum, I mean that their approach provides an adequate starting point to reflect on the fulfilment of the
basic needs of individuals and communities. I diverge from Nussbaum’s moral position on individual entitlements. Basic needs and capabilities are an
important benchmark for businesses to calibrate their contributions to solving social and environmental challenges. Business has an opportunity to
contribute without being obliged to do so. N.B. in the past, Cornelius, et al., also referred to the capability approach of Sen and Nussbaum to determine
future directions of CSR research. Even though they touch upon the relationship between social entrepreneurship and the capability approach, they
do not develop and operationalise their argument. See Cornelius, et al., (2008), Corporate social responsibility and the Social Enterprise”, Journal of
Business Ethics, 81:355–370

A. Contribution (to reinforcing the capabilities of humans and A. Contribution to the fulfilment of basic needs
their communities) to the fulfilment of basic needs through and capabilities
designing, producing or distributing innovative products Many businesses design, produce and distribute products and
and/or services, services that explicitly intend to improve human capabilities
B. D emonstration of the positive and negative outcomes of and fulfil their basic human needs – without necessarily using
business interventions 71 reinforcing the capabilities of this vocabulary. I already referred to Tony’s Chocolonely,
individuals and communities to fulfil their needs (while that does not make a reference to basic human needs in its
contributing to the financial and operational sustainability of annual reports. Nevertheless, the company is clearly on a
the company), and path to eradicate the worst forms of child labour, including
C. Involvement of the (intended) beneficiaries of these hazardous work, in the entire cocoa value chain. The company
outcomes 72 and other direct stakeholders in deciding on the offers a high-quality consumer product – constantly adding
adequacy of the organisation’s activities and results. new flavours to attract new customers and please existing
ones. These products are primarily intended to be vehicles for
What do these dimensions entail and how can we decide social change. Through its production and sales of chocolate,
whether an organisation passes the test of the criteria and be and its close cooperation with farmer cooperatives in Ghana
called socially entrepreneurial? and Ivory Coast, Tony’s Chocolonely creates the conditions
for the elimination of child labour. In addition, the company’s
foundation stimulates, inter alia, education of children. Tony’s
Chocolonely’s ambition is to positively influence the policies,
practices and activities of the big eight corporations in the
71 T he assessment of the outputs and outcomes cannot be limited to a listing of the positive results that support the fulfilling of the basic need(s), but
should include the negative effects as well.
72 B eneficiaries are all those aimed at to experience the (positive and negative) consequences of the entrepreneurial activities, products or services. For
pragmatic reasons, I suggest to restrict the active involvement of beneficiaries to those who experience the direct consequences of these activities,
products and services. I do recognise, however, that in case of collective goods, like a healthy and clean natural environment, beneficiaries have to be
represented by, for instance, civil society organisation, academics and others that focus on our common, public benefit.

cocoa value chain, by running a successful business that or asking any questions 74 . Nearly 200 women and men
abstains from any form of illegal child labour. It, therefore, is that were previously disadvantaged, for instance because
a good example of a company that provides decent work (SDG they were incarcerated, have found a job at the company.
8), stimulates education (SDG 4) and supports developing Summarising the benefits of ‘open hiring’, Greyston argues
a human capability to ‘work as a human being exercising that the system “provides people with the opportunity to
practical reason and engage in meaningful relations of mutual experience the dignity of work and improve their lives and
recognition with other workers.’ their community” 75 .
Participation in our global society is often mediated through Practice shows, however, that it is not always crystal clear
paid work 73 . Even though the largest part of the labour whether an organisation’s activities, goods or services,
force is employed, several groups have difficulty in finding a contribute to fulfilling basic needs and capabilities. Take
job. One only has to think of refugees, elderly people, or the the example of Linestanding.com, presented by Harvard
physically, mentally or socially impaired, to understand that professor Michael Sandel. The company delivers a line-
these groups have difficulties in developing their capabilities standing service for those wanting to attend US Congressional
and live a dignified human life. Increasingly, bakeries, hearings, their respective committees and the US Supreme
restaurants, bike repair shops, print shops, or delivery Court. The company started its operations in 1985 based
services companies have been set up to offer work to, and on a simple business model. When the US Congress, its
coach, people who cannot participate. A recognised leader committees or the Supreme Court hold a hearing most seats
in this area is Greyston Bakery, providing job opportunities in the audience are available to the general public. This is
through the practice of ‘open hiring’. That is, the company done on a first-come, first serve basis. Lawyers, business
offers a job to “individuals who have been excluded from reps, lobbyist and others may take an interest in attending,
the mainstream workforce”, without judging the applicants while not being able or prepared to stand in line. As the
73 G ough, I., (2004), “Human Well-Being and Social Structures”, Global Social Policy, 4, 289-311
74 h ttps://greyston.org/the-center-for-open-hiring/
75 ibidem

demand for seats is overwhelming, the line is usually long. To into a commodity that can be traded on the market. This brings
accommodate these professionals, Linestanding.com hires me to the second dimension to determine the meaning of the
homeless people. They queue up and once the hearing starts, term ‘social’.
the professionals take over their place in line. The homeless
often love the work they do. They are out on the streets B. D
emonstration of outcomes that lead to fulfilment
anyway, while now getting paid for it. It brings Sandel to the of basic needs and capabilities
following provisional conclusion: As the example of Linestanding.com illustrates, social
entrepreneurship requires more than a business that
“The homeless people who spend hours queuing up receive a contributes to the provision of work and social relations. It is
payment that makes the waiting worth their while. Those who imperative to demonstrate that the job offer really increases
employ their services gain access to a Congressional hearing or a the capability of the homeless to lead a meaningful life. Just as
Supreme Court argument that they are eager to attend and willing giving bread to the hungry does not result in the development
to pay for. And the company that arranges the deal makes money of skills and qualities that allow them to feed themselves
too. All of the parties are better off, and no one is worse off.” 76 in the future, hiring homeless people for a few hours to
stand in line, cannot be seen as an expression of capability
Upon further investigation, Sandel shows the case to be more development. What counts is “a minimal conception of social
complex and demanding. The employment opportunity for a justice in terms of the realization of certain positive outcomes,
few homeless people comes into conflict with the democratic what people are actually able to do and to be.” 77 Nussbaum’s
tradition that allows all citizens equal access to the political focus on “outcome-orientedness” 78 requires an assessment
process, including access to public hearings. Commercial line- of the improved ability of the homeless to obtain a regular
standing also degrades democracy, Sandel argues, as it turns income in the future. Applying this to the practice of social
accessibility to the institutions of representative government entrepreneurship it requires businesses to demonstrate the
76 S andel, M., (2013), “Market Reasoning as Moral Reasoning”, Journal of Economic Perspectives, 27, 4, Fall, 125
77 ibidem, p. 465
78 N ussbaum, M., 2003, and Second Tanner Lecture, p. 473.

“empirical credibility” of their initiatives 79. As Ebrahim and Bridge International Academies (BIA) is an acclaimed social
Rangan argue, “organisations working on social problems, enterprise providing private primary education to more
…, should be able to demonstrate results in solving societal than 120,000 children in Kenya and Uganda. Research
problems” 80 . We cannot be too overoptimistic about the self- commissioned by the company shows that its approach
reporting of companies on the success of their entrepreneurial leads to a positive effect on acquiring knowledge and skills in
initiatives aimed at capability development and a contribution English and math 83 . The children educated by BIA, outperform
lifting the needs of the poor and the deprived. This means that those at public schools. However, as Kenyan teachers trade
an interactive demonstration process needs to be developed, unions demonstrated, BIA instructors do not have the right
resulting in a more comprehensive overview of both the qualifications and classrooms are not adequately and safely
positive and negative outcomes of socially entrepreneurial equipped 84 . It is rather paradoxical that a social entrepreneur
initiatives 81. In the field of international aid and trade, Easterly is successful in improving the educational results of children,
82 .
argues, the poor do not always end up better off Direct while crowding out public education. BIA’s initiative leads to a
foreign investments made into a country may, for instance, transition from public to private education, from teachers to
result in slowing down or even impairing public investments in mere instructors and from financing broad-based education to
primary goods like healthcare, education, poverty alleviation, investing in instruction aiming at improving basic qualifications
energy access, sanitation, basic infrastructure, et cetera. Take of pupils and making a profit. Ironically, the World Bank is
the following example. one of the prime investors in Bridge International Academies
79 H ervieux, C., and A. Voltan, (2016), “Framing Social Problems in Social Entrepreneurship, Journal of Business Ethics, 7 July 2016 DOI 10.1007/
s10551-016-3252-1
80 Ebrahim, A., and Rangan, K., (2014), “What Impact? A framework for measuring the scale and scope of social performance”, California Management
Review, Spring, 56, 3, 118-141
81 I certainly do not plead for the development of a formal SDG or capabilities audit or accounting process. That will only create a new and often
expensive industry, of which it is highly uncertain that it will add value to the implementation of the SDGs and the improvement of individual and
community capability development.
82 E asterly, W., (2003), “Can foreign aid buy growth?”, Journal of Economic Perspectives, 17, 3 Summer, 23–48
83 h ttp://www.bridgeinternationalacademies.com/results/academic/
84 h ttps://www.equaltimes.org/teachers-unions-call-controversial?lang=en#.WJEtWLFx-CQ

and, as a consequence, one of the forces driving out public their lives and their communities. According to Amartya Sen,
education. Is this result something we consider to be in the providing basic goods and services “can be done on the basis
best interest of society? It brings me to the third dimension to of broad uniformity of personal preferences”. But the idea
determine the meaning of ‘social’ in social entrepreneurship. of uniformity must be supplemented “by certain established
conventions of relative importance”. That means that, while
C. I nvolvement of beneficiaries in deciding on the recognising the principle of equal access to basic capabilities,
adequacy of activities and results national or local implementation must be “culture-dependent,
“If our world is to be a decent world in the future, we must especially in the weighting of different capabilities” 86 .
acknowledge right now that we are citizens of one inter Development can be seen as “an empowering process” 87 in
dependent world, held together by mutual fellowship as well which individuals are able, based on a wide set of freedoms
as the pursuit of mutual advantage, by compassion as well as and capabilities, to make informed choices about the fulfilment
self-interest, by a love of human dignity in all people, even when of basic needs. This means that the value of the fulfilment of
there is nothing we have to gain from cooperating with them.” 85 a specific basic need does not rest on the general consensus
in a society about the value of a certain good or service as a
Despite our sharing one common world, society is means to fulfil that need. Ultimately, Sen argues, it rests on the
fundamentally plural. Perceptions and valuations of basic individual being able to freely choose from the options that are
needs vary, just as (the capabilities to have) access to available to her or him.
goods and services to live a life in human dignity. It is fair to
assume, though, that people share some aspirations, like It is here that business, operating in the domain of social
longevity, good health, education, meaningful relations with entrepreneurship, can contribute to enlarging the set of
others, income that minimally allows for subsistence, and opportunities of individuals – and the societies they live
opportunities for influencing political decision-making affecting in – to fulfil their basic needs. An excellent example of this
85 N ussbaum, 2003, p.481

86 A martya Sen, (1979), ‘Equality of What?’, Tanner Lecture on human values, Stanford University, May 22, p. 219
87 A martya Sen, (2009), The idea of justice, Belknap Press of Harvard University Press, Cambridge, MA, p. 249

empowering development is the Community Life Center enhances the capabilities of individuals to freely decide among
(CLC) concept developed by Philips. The healthcare company alternative health care solutions.
defines a CLC as a “community driven holistic platform for
strengthening primary and community healthcare” 88 . At the The involvement of the local population, the government and
core of the concept lies the idea of improving access to better other relevant stakeholders is also important for another
primary healthcare – first and foremost in developing countries reason. As the example of Bridge International Academies has
in Africa. The company takes a holistic view, by aiming to shown, private schools can provide an alternative to educate
increase access to high-quality medical care, while also children, if government or civil society are unable or unwilling
improving “the living conditions of the community and such to adequately address the need for local, high-quality, public
factors as security, water, waste and lighting” 89 and creating education. But the case also led to a significant dilemma. What
jobs. In Kiambu County in Kenya, the center operates since capability should get priority? Is it the provision of adequate
2014 and services 180.000 citizens. It has taught the company instruction in English and math in primary education by a
“that local ownership and responsibility are key prerequisites private company that delivers superior quality to the benefit
for enduring success” 90 . The CLC provides a good illustration of the children? Or is it the provision of meaningful work to the
of Sen and Nussbaum’s insistence on improving the capability teachers in public schools, which enables them to compete with
of individuals to determine their own future course of a life private schools. In November 2017 the Ministry of Education in
in human dignity. In collaboration with government in several Uganda decided to shut down the initiative that was backed by
African countries, Philips increases the set of opportunities of prominent investors like the Gates and Zuckerberg foundations
individuals for access to better health care. The option is not and the World Bank. Involving the intended beneficiaries and
forced upon individuals and their communities. Philips simply other direct stakeholders in an early stage, could potentially
provides an alternative to existing options and, therefore, have prevented the closure. Alfred Cho rightfully calls for
88 h ttps://www.philips.com/a-w/about/sustainability/healthy-people/supporting-communities/fabric-of-africa/programs/philips-community-life-project.html
89 ibidem, brochure “The Community Life Center”
90 ibidem, brochure “The Community Life Center”

“critical evaluation” of the operations of well-intending social Legitimate decision-making is determined
entrepreneurs 91 by including the perspective of other direct
by the processes that are “communally
stakeholders.
and relationally constituted”, rather than
To know whether entrepreneurial activities and solutions work derived from “private sense making”.
in the interest of the individuals and their communities, they
deserve to be heard – either directly or via a representative.
A procedural theory is required, specifying the rules and important to understand their needs and the ways in which
practices for “effective debate and decisions on identifying these are met. The ability to voice needs, concerns and ideas
needs and satisfiers in specific contexts” 92 . Legitimate can be facilitated through beneficiary feedback mechanisms,
decision-making is determined by the processes that are social media platforms, or complaints mechanisms 95 .
“communally and relationally constituted”, rather than derived A minimum requirement appears to be the acknowledgement
from “private sense making” 93 alone. As Nussbaum and Sen of the principle of consent.
argued, involvement of those concerned invokes mutual
learning and helps to understand what people really want 94 . A dynamic concept
Organisational research recently pointed in the direction of Bridge International Academies shows, that being part of the
strategies to reinforce “downward accountability”. Particularly domain of ‘social entrepreneurship’ does not only depend on a
in cases where beneficiaries have no ‘exit’ option, it becomes company’s policies, practices and activities. It is also influenced
91 C ho, A., (2006), “Politics, Values and Social Entrepreneurship: A Critical Appraisal”, in Mair, J., J. Robinson, & K. Hockerts (eds.), Social entrepreneurship.
Basingstoke, UK: Palgrave Macmillan, p.51. I would argue, that this evaluation should include the operations of the ministry of education, public school
boards, and teachers and their unions as well.
92 G ough, I., 2004, p. 294
93 Parkinson, C, and C. Howorth, (2008), “The language of social entrepreneurs”, Entrepreneurship and Regional Development, 20, May, p. 288
94 N ussbaum, M., and Sen, A., (1989), “Internal Criticism and Indian Rationalist Traditions”, in M. Krausz (ed.), Relativism, Interpretation and Confrontation,
299–325. University of Notre Dame
95 Ebrahim, A., et al., (2014), “The governance of social enterprises”, Research in Organizational Behavior, 34, p. 81–100

by developments in the political, economic and social context Airbnb has turned into a social plague.
of a business, turning ‘social entrepreneurship’ into a dynamic
concept. An organisation can lose its ‘social entrepreneurship’
status because of market adaptations. When German and US Computers, cell phones, Skype, Whatsapp, Airbnb, or other
car manufacturers introduced their models at the start of the tech-applications increase the capabilities of individuals
20 th century, this heralded a new technological age. At the and communities, facilitating access to a wider universe
same time, the introduction solved a substantial social and and reducing potential isolation. They allow everyone of
environmental problem. At the end of the 19 th century cities us to connect to others in our networks and to the outside
like New York and London were flooded with horse manure. world. At the same time, technology creates several social
In New York more than 100.000 horses produced between challenges. Airbnb is an example of that trend. Initially
15 and 35 pounds of manure each per day 96 . For that reason, providing a very basic B&B service for the low end of the
97
the city celebrated the introduction of automobiles as an market, Airbnb has turned into a social plague. As a result,
environmentally friendly alternative to horse-drawn carriages it faces severe business restrictions in cities like Barcelona,
and busses, thereby making this type of transportation Berlin and Amsterdam.
redundant and solving the horse manure crisis. One hundred In addition, high–tech applications and devices are seen
years later, the use of cars – once considered a social as intruding our personal space and privacy, allowing ‘big
innovation – contributes to a global environmental crisis. brothers’ to constantly follow our steps. What once was a
‘social’ innovation, has become business as usual as a result
In our present day, we see a gradual change in the appreciation of wide-scale market adoption and the emergence of some
of several high-tech innovations to promote social progress. downsides to technological development – or even worse.
96 S ee Burrows E. and M. Wallace (1999), Gotham: A History of New York City to 1898, New York: Oxford University Press
97 W ith only 8.000 cars being sold in the US in 1900, 12 years later the number had increased to nearly 1.000.000 cars per annum. (See https://www.fhwa.
dot.gov/ohim/summary95/mv200.pdf – FHWA is the US Federal Highway Administration – part of the US Department of Transportation.) The latest
statistics show that year-end 2016 nearly 268 million vehicles were registered (https://www.fhwa.dot.gov/policyinformation/statistics/2016/mv1.cfm),
leading to what now is a CO2-crisis.

Conclusion distribution of small, large and very large energy storage
Where has this analysis of the meaning of the term ‘social’ devices are a major achievement and contribution to the global
brought us so far? I argued that the meaning of the ‘socialness’ of energy transformation. Tesla’s batteries allow individuals
‘social entrepreneurship’ has been ill-researched. The adjective and communities to increase their access to energy and their
‘social’ has been poorly defined – for instance, by referring to freedoms to live a more developed human life. The other
societal benefits – or not defined at all. I suggest an alternative dimensions – demonstration of outcomes and involvement of
account of ‘socialness’, based on three dimensions of the social stakeholders – are not met, or only to a limited extent.
entrepreneurship screen presented earlier in this contribution.
Meeting the criteria is a necessary condition to qualify for ‘social’ As Milton Friedman once pointed out, it would be a great
entrepreneurship and determine who is in and who is out. mistake “to judge policies and programs by their intentions
Companies that do not contribute to the (increase of) individual rather than their results” 98 . At present, Tesla offers only
or community capabilities to fulfil basic human needs, through limited proof. It does not disclose its social and environmental
the design, production or distribution of products and services, performance, nor the societal benefits of its activities. The
do not qualify. These companies may be ‘responsible’, ‘ethical’, company only publishes production and sales figures. These
‘sustainable’, ‘circular’, or ‘organic’, but they do not belong to the do provide an indication of Tesla’s contribution to the energy
‘social entrepreneurship universe’ as defined by this approach. transformation but cannot replace a full-fledged account of
I referred to NS as a responsible and sustainable company, but the company’s societal costs and benefits 99. The same counts
not one that belongs to the domain of social entrepreneurship. for the lack of active engagement with stakeholders. Taken
together, it means that Tesla may become a social enterprise in
We can now also conclude that Tesla’s activities do not qualify the future but at the moment it does not qualify.
as ‘social entrepreneurship’ – at least not yet. That may come
as a surprise, since Tesla’s development, production and
98 Milton Friedman in The Open Mind, a broadcasted conversation with Richard D. Heffner, 7 December 1975
99 A s microfinance showed in the last decade, its growth was phenomenal. This rapid market growth had significant repercussions for the quality of
products and processes offered, and for the (negative) outcomes for micro-entrepreneurs.

Further research
1. T his part asked some fundamental challenges about 3. In addition, research is needed to determine the
the concept, and more in particular the ‘socialness’ of boundaries of ‘socialness’. Is it possible to provide more
‘social entrepreneurship’. Further research is required detail on the location of the ‘red line’ that demarcates
into the practice of ‘social entrepreneurship’. This calls companies who belong to the domain of social
for, i.e., case-study research to analyse an enterprise’s entrepreneurship and those that do not.
‘social’ character. Deep dives on Tesla, Tony’s Chocolonely, 4. F ourthly, it is worthwhile studying the interaction between
Greyston Bakeries, Philips, DSM or Unilever, to mention the upper and lower part of the hexagon. To what extent
a few, on how they improve the capabilities of their does the promotion of the capabilities, its demonstration
target groups, are relevant. Surveys and research on and involvement of the beneficiaries, influence the
secondary data provide additional avenues to highlight opportunities for innovation, scale and financial
what companies do to develop these capabilities. By sustainability? Ex ante research – i.e. before investments
analysing the characteristics and predispositions of are made – into the opportunities and barriers of
organisations – as well as the actual results of their innovative, scalable and successful business ventures, is
activities – we contribute to further insights in improving important.
human development and the achievement of social and
environmental change in value chains. All research streams help to improve our understanding of
2. Research is needed to determine what constitutes an the potential role of social entrepreneurship in tackling some
adequate and sufficient approach to the demonstration of the largest social and environmental challenges of our
of outcomes – as well as the role of the beneficiaries in times.
deciding on the success of the intervention. It is not likely
that current, output-driven demonstrations suffice to be
convincing.

In the second part of this contribution, the focus will shift to
the entrepreneurial dimensions at the bottom half of the social
entrepreneurship screen.

46
5 _ The entrepreneurial dimensions
define it today, was a serious issue in Europe. Coinciding efforts
Having clarified the meaning of the ‘socialness’ of entrepreneur- by civil society organisations, forward-looking politicians and
ship the question arises what social entrepreneurship requires progressive business leaders, eventually led to the eradication
to help solve our society’s major challenges from an entrepre- of child labour for most parts of the OECD countries – while
neurial point of view. The motivation for this research comes remaining an issue in other parts of the world. Other challenges,
from the desire to improve the capabilities and the living and like climate change, the plastic soup, desertification, or access
working conditions of individuals and communities in the global to renewable energy, emerged more recently and have not been
South. It is our task to study global social and environmental dealt with adequately so far. If we want to positively influence
challenges and, therefore, target international value chains. the lives of millions – and sometimes even billions – and enable
This means that our focus will be on social entrepreneurship them to fulfil their basic needs and create a more sustainable
initiatives at a national and international, rather than a local world through the achievement of the SDGs, three dimensions
level – even though the research may provide relevant insights appear to be material: innovation, scaling and financial
for local social entrepreneurship as well. Special attention will sustainability.
be given to the SDGs.
Radical innovations of value chains and exponential scaling of
We start with the assumption that societal problems, like the the positive outcomes, are a sine qua non. “Scaling of social
eradication of child labour, can be solved and business can impact is essential for reducing social and societal problems.” 100
contribute to a successful transition toward an inclusive, just It is simply inconceivable to reduce the environmental pressure
and sustainable society. Only a century ago, child labour as we on land, water and air, or to alleviate poverty and provide more
100 Weber, C. et al., (2015), Scaling Social Impact in Europe, Bertelsmann Foundation, Berlin, p.60

opportunities to individuals and communities to access primary As the United Nations pointed out in
education, primary healthcare, water and sanitation, adequate
its resolution on the adoption of the
shelter, renewable energy, or a job that pays a living wage,
without major breakthroughs in innovation and scale. To attract Sustainable Development Goals (SDGs),
the resources for change at an international level, financial the implementation of the goals can only
sustainability of social entrepreneurship is a necessary condition
be successful with the support of the
as well. As the United Nations pointed out in its resolution on
the adoption of the Sustainable Development Goals (SDGs), the private sector.
implementation of the goals can only be successful with the
support of the private sector. Without the drive, resources, and
leadership of business and investors, the objectives will not be D. The relevance and meaning of innovation
met. To implement and achieve the goals and the underlying Innovation is a means to an end. It is not an end in itself.
targets, investments are needed of 6 to 7 trillion US dollars That is the core message conveyed in Seelos and Mair’s
per annum 101. Since mainstream businesses and investors Innovation and scaling for impact. Both innovation and scale
will only step in if they can align their contribution to the SDGs do not generate impact in themselves. They only generate
with their fiduciary responsibility towards their stakeholders, the potential or ‘capability’ to make better decisions about
including their shareholders, this means that long-term financial providing “disadvantaged people and communities with
sustainability is a mandatory condition for change. Taken solutions for their fundamental problems and to create fruitful
together, this means that social entrepreneurship, as conceived spaces for development” 102 . If the objective is to resolve these
of in this contribution, entails a screening on six dimensions, fundamental problems, new frameworks, ideas, products, and
as explained previously. In this second part, I will highlight the services, are indispensable for human development – despite
hexagon’s bottom half, focusing on innovation, scaling and the uncertainty that coincides with their implementation.
financial sustainability. It is precisely “the process by which an idea that is new to
101 U NCTAD, (2014), World Investment Report. Investing in the SDGs: an action plan, Geneva 
102 S eelos, C., and Mair, J., (2017), Innovation and Scaling for Impact, Stanford Business Books, Stanford, CA, p.3

an organization gives rise to a new set of activities” 103 , that and be informed, innovation needs to be radical, rather than
constitutes the dynamics of business, resulting in attempts incremental – both at a national and international level.
to tackle societal and planetary challenges. Seelos and Mair According to economist Kenneth Arrow, the distinction between
portray “innovation as an organisational process” 104 , taking radical and incremental change is based on greater uncertainty
different types of innovation together, such as operational, about whether the solution can be produced, how it can be
technical, business model, and product innovation. All produced and if there is sufficient demand for the solution 108 .
105
innovations face different degrees of uncertainty . What, The current level of CO2-emissions is just one example of a
therefore, determines the value of an ‘innovation’ in a context major challenge in need of radical ideas to restore the coping
of social entrepreneurship is the impact 106 on “the people and mechanisms of our planet and reinforce policies, practices and
communities that an organisation serves” 107. actions to keep rising temperatures well below the threshold of
2 degrees Celsius. On a related topic, the World Economic Forum
In light of the magnitude of the social and environmental reports limited access to (renewable) energy in developing
challenges to create human development and to allow countries, most notably in Africa. In 2017, less than forty percent
individuals and communities to live, think, interact, work, of the population of Africa had access to energy – whereas
103 S eelos, C., and Mair, J., (2012), What Determines the Capacity for Continuous Innovation in Social Sector Organizations?, Rockefeller Foundation Report,
Stanford Center on Philanthropy and Civil Society, Stanford, CA.: Stanford University
104 S eelos, C., and Mair, J., (2017). The focus on organisations is productive as part of the research focus of this chair on ‘value chains’ – which by definition
requires attention for the interaction between organisations.
105 S eelos and Mair, 2017:24
106 T his focus on impact is very much in line with the focus in the approach to social entrepreneurship suggested in this contribution – although I prefer
the term ‘outcomes’ instead of ‘impact’. The latter, as Seelos and Mair (2017:17) admit, belongs to the ranks of the buzz words.
107 S eelos and Mair, 2017:21. Just like the concept of social entrepreneurship, the term ‘innovation’ has characteristics of a buzz word, easily resulting in
what the authors call an ‘illusion of understanding’. When asking social enterprises about the meaning of innovation they got “a bewildering range of
definitions, assumptions, and expectations” (ibidem, p.18)
108 A rrow, K. (1962). “Economic Welfare and the Allocation of Resources for Invention.” In Nelson, R.R., ed., The Rate and Direction of Inventive Activity.
Princeton: Princeton University Press, pp. 609–626

the supply of the energy that was consumed was not reliable, Small and large firms are drivers of
affordable, or sustainable 109. Human advancement and
(radical) innovation, although, most
participation in our society and economy becomes increasingly
problematic without proper access to (renewable) energy. It breakthrough innovations come from
leads the UN, governments, and multilateral organisations to large organisations.
urge business to contribute to transformative change in national
and international value chains 110 . This also counts for some
other areas for which the collaborating international community large firms are drivers of (radical) innovation 111, although,
has defined ambitious goals and targets. most breakthrough innovations come from large organisations.
Kodak developed of the digital camera, Nokia brought the first
Pleading for radical innovation is not the same as calling on large cell phone to the market, and the introduction of the iPhone
corporates to develop solutions that (increase the capabilities speaks for itself 112 . Corporations engage in, what Christensen
of individuals and communities to) eradicate poverty, improve has called, “sustaining innovation”, by improving its offering to
access to high-quality education and primary healthcare, incumbent clientele, as a way to consolidate their leading market
provide adequate shelter, renewable energy and water, or position 113 . They have the financial and operational resources
reduce the pressure on climate, oceans and earth. Small and to induce and implement systemic innovation. Also, Aldridge
109 W EF, Shaping the Future of Energy System Initiative, https://www.weforum.org/projects/energy-access-africa

110 T he problem with radical innovation is, as Aldridge and Audretsch have argued, that its radical character can only be identified ex post. No
organisation or manager can start a working day by telling staff, clients or other stakeholders, that it is nice day for radical innovation. See Aldridge, T.,
and D. Audretsch, (2008), ‘Review of Radical Innovation in Small and Large Firms’, International Journal of Entrepreneurship Education, 6(4), 241-254
111 S ee Aldridge, T., and D. Audretsch, (2008), p.22, 24. In the US small firms have a higher share in radical innovations in consumer durables and office
products, while in Non-US countries large firms have a stronger position.
112 S ee Aldridge, T., and D. Audretsch, (2008), p.8
113 C hristensen, 2016:5 He argues that if corporations focus on innovation, they have a tendency towards “up-market” innovations instead of “down-
market innovations in lower value projects” (p.27) Rewards structures often induces executives to promote and invest in innovations that have a
tendency to stimulate growth and revenues in the short run rather than on the long term.

and Audretsch argue 114 , R&D is found to be positively correlated customers who would otherwise go without the product or
with firm size. Finally, large corporations have advantages if service. Having captured the forgotten customer part of the
technology plays a major role in the process of development 115 . market, they gradually move on to penetrate the mainstream
market. A great example of a “new market disruption” is
In several instances, multinationals were able to withstand the microfinance.
emerging competition from external innovators by creating The core paradigm of microfinance is to include individuals
116
“a structurally differentiated venture from the outset” . In and communities that have no or only very limited access
several high-tech industries, leading incumbents maintained to financial services in the processes of economic and social
their position by setting up a new business unit with sufficient development. Ever since BRAC and Grameen Bank started
freedom to pursue a disruptive opportunity. their initiatives in the nineteen seventies, microfinance soared
and became an industry. At present, more than 1000 financial
This might be different, Christensen argues, in case of institutions serve some 120mn clients with a total gross loan
“new market disruption” 117. A new market disruption is portfolio of approximately USD 100 billion 118 . Particularly
characterised by accessing customers that have not used interesting in this respect is the example of ACLEDA Bank in
existing product or service offerings, as these were not Cambodia. It is the country’s largest bank, with more than
available to them previously. The disruptive entrants target USD 4.5 billion in assets and a loan portfolio approaching USD
114 S ee Aldridge, T., and D. Audretsch, (2008), p.13

115 W hat might be a disadvantage is that investments in innovations may seem unattractive to large incumbents, as the innovation may cannibalise
the existing portfolio of products and services, or their profit margins. See Christensen, C., et al., (2016) Disruptive Innovation: Intellectual History
and Future Paths, Harvard Business School, Working Paper 17-057; and Markman, G., Waldron, T. (2014). ‘Small Entrants and Large Incumbents: A
Framework for Micro Entry. Academy of Management Perspectives, 28, 179-197. At the same time, if the innovation is seen as a threat, the changes of
innovation adoption is larger than when it is viewed as a mere opportunity (See Christensen, et al., 2016:6). The role of management is crucial in this
development. When an innovation is ‘competence destroying’ and requires the development of new capabilities, established firms are more likely to
fail. See Tripsas, M. & Gavetti, G. (2000). “Capabilities, Cognition, and Inertia”, Strategic Management Journal, 21, 1147-1161
116 G ilbert, C., “Unbundling the structure of inertia”, Academy of Management Journal, 2005, Vol. 48, No. 5, 741–763
117 C hristensen, C., et al., 2016:7,8
118 MIX Market, (2016), Global outreach and financial performance benchmark report 2015, Washington, D.C.

3 billion 119 , and a tremendous success for an organisation At times, corporations are receptive to
that started as a microfinance institution. Bank Rakyat
poor and forgotten clients.
Indonesia (BRI) is another remarkable example of a bank that
successfully serves a previously forgotten segment of the
market. With more than 30 million clients and USD 40 billion empowered to send money throughout Kenya for a small fee.
in assets on its balance sheet its dedication to microfinance Currently, an estimated 30 million Kenyans have subscribed
and SME finance has turned it into the second largest bank in to mobile money services, a market penetration of nearly
Indonesia 120 . 90 percent. Eighty percent of that market is dominated by
M-Pesa – using some 150.000 agents for transactions with an
The movement that was started by BRAC and Grameen has estimated annual monetary value of USD 12.5 billion. Ergo,
gradually turned into a professional industry. It demonstrates in as little as 10 years time, mobile money has revolutionised
that grassroots initiatives can result in new market disruptions – the market for financial transactions in the country 121. What
although the maturing of the microfinance market took several is remarkable about M-Pesa is that it was introduced by the
decades. Slightly contradicting Christensen’s observations, leading telecommunication provider in the country: Vodafone’s
we increasingly witness disruptions being initiated by large Safaricom. According to Christensen, large corporations have a
corporations, as we can see in the case of M-Pesa. The mobile tendency to overlook the needs of forgotten customers. They
money service was introduced in Kenya in 2007 and served focus on the most profitable segments of the market although,
in its early days mainly Kenyans without access to a formal at times, corporations are receptive to poor and forgotten
bank account. Using a network of agents, subscribers were clients. The successful introduction of small portions of Wheel,
119 h ttps://www.acledabank.com.kh/kh/eng/bp_annualreport
120 B oth banks aim to include financially deprived entrepreneurs. They gradually shifted from targeting micro-entrepreneurs only to a broad portfolio of
micro, small and medium-sized entrepreneurs. This trend is reinforced by asset managers and asset owners, including e.g. Triodos IM, and ACTIAM
teaming up with Dutch Development Bank, FMO. The latter partners developed the SME Finance Fund, lending out some USD 155mn to 36 financial
institutions in 23 developing countries. Since the start of the fund more than 4000 SMEs have received a financial loan through the fund’s operations.
121 Communications Authority of Kenya, First quarter sector statistics report for the financial year 2017/2018, p.13

a detergent produced and sold by Unilever daughter, Hindustan of the fair-trade movement, multinationals did not copy-paste
122 .
Lever, is a case in point Also, the example of the Community the innovation, but created their own initiatives. They embraced
Life Centres of Philips, demonstrate the ability of corporations the Rainforest Alliance or Utz Certified labels 123 in order to stay
to adequately detect and respond to the needs of deprived away from the strict requirements of the Fairtrade Labelling
individuals and communities. As the example of M-Pesa as Organisation (FLO) in terms of minimum price, premiums,
a corporation-induced innovation demonstrates, the time to pre-financing, or long-term contracts. Both movements in the
penetrate the mainstream consumer market in Kenya was just a markets – innovation and (adaptive) adoption – are important
fraction compared to microfinance. Therefore, there is reason to and create a process of “co-evolution”. This process describes
emphasise the role of corporations in engaging in and promoting “the simultaneous evolution of species who mutually depend on
innovations aimed at serving individuals and communities to each other” 124 As the authors argue:
(improve their capabilities to) fulfil their basic needs.
“this clearly contributes positively to the sustainability
Apart from radical change that occurs as a direct result transformation of an industry, because it improves access to
of a new market disruption, change may also come from products of higher social and environmental quality to a wider part
incumbents getting inspired by new market introductions of the market and is likely to reduce other sustainability impacts
elsewhere. Hockerts and Wüstenhagen analyse the greening of through process innovation along the way.” 125
corporations as a result of radical innovations by new entrants
in the market. They demonstrate the relevance of what we Co-evolution can be seen as a loose form of blended value
could describe as social entrepreneurship induced changes for the creation 126 , bringing actors together that differ in their
greening of certain product markets. Following the introduction interests, potential contributions, and desired outcomes.
122 S ee Prahalad, C K (2004), Fortune at the bottom of the pyramid, Upper Saddle River, NJ: Prentice Hall.
123 Recently, both organisations merged to improve their efficacy and efficiency.
124 H ockerts, K., & Wüstenhagen, R. (2010), Greening Goliaths versus emerging Davids— Theorizing about the role of incumbents and new entrants in
sustainable entrepreneurship. Journal of Business Venturing, 25(5), p. 488
125 H ockerts, K., & Wüstenhagen, R. (2010), p. 489
126 Emerson, J., (2003), “The blended value proposition: Integrating social and financial returns”, California Management Review, 45(4): 35–51

Further research
Given the focus on social entrepreneurship’s contribution
to the large social and environment challenges of our times
(and the relatively limited timespan in which change has
to take place), future research should be directed towards
potential market disruptors. Systematic comparison
of bottom-up and top-down social and environmental
‘new market disruptions’ can help to increase our
understanding of the role social entrepreneurship can
take in creating the desired change. Furthermore, insight is
needed in the sometimes dialectic processes of influencing
market behaviour of new entrants and incumbents aimed
at creating positive societal outcomes.
Tighter forms of blended value creation, like the collaboration Based on the commitments of corporations and investors
between corporations or investors with different objectives to contribute to the implementation of the SDGs, research
and risk-return profiles, to bring about a desired change can be directed toward ‘need gaps’ and the ways in which
increasingly emerge. Good examples of blended value corporates and financial actors can contribute to closing
approaches are provided by Climate Investor One 127 – a the gaps. More in particular, and in line with Hockerts and
private sector initiative by FMO and Phoenix Infraworks – or Wüstenhagen, additional research is needed regarding
the Tropical Landscape Finance Facility 128 – a public-private blended value creation (including a focus on blended
partnership. finance propositions) and co-evolution to overcome
financial, operational and other barriers for change.
127 h ttp://climateinvestorone.com./nl/
128 h ttps://tlffindonesia.org

E. Scaling Our Common Future, the UN report of
Innovation focuses on transforming the entrepreneurial
the World Commission on Environment
landscape to design, produce and distribute new products
and services that enable people better to fulfil their basic and Development, we now have to
needs. Scaling, on the other hand, is about doing more of what implement the world’s common agenda
was successful in the past. Former US President, Bill Clinton,
for human development and sustainability
once remarked when reviewing school reform initiatives
that “[n]early every problem has been solved by someone, as expressed in the Sustainable
somewhere.” Unfortunately, we never manage to replicate the Development Goals.
solutions elsewhere 129. In areas like school reform, but also
with regard to many other domestic social or environmental
issues, replication may be an appropriate strategy to scale right “impact-creation logic”, leads to greater positive impact.
successful innovations 130 . As eminent social entrepreneurship The focus on scaling provides the ‘raison d’être’ of innovation.
scholar, Gregory Dees, however, observed: “We have learned Without the potential to scale, the benefits of a social innovation
to create the small exceptions that can change the lives of will remain limited. Or, as Seelos and Mair, put it more
hundreds. But we have not learned how to make the exceptions forcefully, “if you cannot scale, don’t innovate” 132 . This is all the
131
the rule to change the lives of millions.” more relevant when dealing with issues of poverty, restricted
access to products and services fulfilling people’s basic needs,
Scaling generates “a stream of improvements and expansions of and building adequate capabilities. After Our Common Future,
current activities, products and services”, which, following the the UN report of the World Commission on Environment and
129 B radach, J, (2003), “Going to Scale: The Challenge of Replicating Social Programs,” Stanford Social Innovation Review 1, no.1
130 S ee Bradach, 2003; Winter, S. G., & Szulanski, G. 2001, “Replication as strategy”. Organization Science, 12: 730- 743; Bloom, P. and E. Skloot, (2010),
Scaling Social Impact, Palgrave, New York; Seelos, C., and Mair, J., (2017), Innovation and Scaling for Impact, Stanford Business Books, Stanford, CA, p.3
131 S ee Dees, J. G., Anderson, B. B. and Wei-Skillern, J., 2004. Scaling Social Impact: Strategies for spreading social innovations. Stanford Social Innovation
Review, Spring, pp. 24-32. The quote is attributed to Lisbeth Schorr.

Development 133 , we now have to implement the world’s common outcomes. Branching, finally, is about the creation of local
agenda for human development and sustainability as expressed sites through the logic of replication by a large organisation.
in the Sustainable Development Goals. To implement and This strategy resembles the franchise model applied in the
achieve the objectives, scale is absolutely a necessary condition. corporate world 135 .
The scaling of positive outcomes of social entrepreneurship
is widely discussed in the academic literature 134 . Several Scholars unanimously argue that scaling is not about designing
strategies have been suggested to increase the spreading of organisational growth. What matters, is the promotion
positive outcomes beyond the intervening organisation and the and facilitation of increased or improved positive benefits
communities it operates in. Dees, et al., for instance, distinguish for deprived individuals and communities. As a result,
between dissemination, affiliation and branching. While most academic studies focus on (the conditions for 136)
dissemination deals with the transfer of knowledge and support improving and increasing impact within social enterprises
to agents outside of the organisation, incentivising them to or between social enterprises and others operating in their
adopt and replicate the intervention, affiliation is more about environment 137. Their networks mainly consist of grassroots
developing formal relationships, based on specific agreements organisations, government organisations and community
to co-create an identifiable network aimed at spreading the development or civil society organisations. Limited mentioning
133 World Commission on Environment and Development, (1987), Our Common Future, New York, p.54
134 S ee Bradach, J, (2003), “Going to Scale: The Challenge of Replicating Social Programs,” Stanford Social Innovation Review 1, no.1; Dees, J., et al., (2004),
“Scaling Social Impact: Strategies for spreading social innovations”, Stanford Social Innovation Review, Spring, pp. 24-32; Bloom, P. and E. Skloot, (2010),
Scaling Social Impact, Palgrave, New York; Lyon, F. and Fernandez, H., (2012), Scaling up social enterprise: strategies taken from early years providers, Third
Sector Research Centre, Working Paper 79; Clark, C., et al., (2012), Scaling social impact: a literature toolkit for funders. Social Impact Exchange, Growth
Philanthropy Network and Duke University; World Economic Forum and the Schwab Foundation (2013), Breaking the Binary: Policy Guide to Scaling
Social Innovation, Geneva; Davies, A., and Simon, J., (2013), p.3; Weber, C. et al., (2015), Scaling Social Impact in Europe, Bertelsmann Foundation, Berlin;
Seelos, C., and Mair, J., (2017), Innovation and Scaling for Impact, Stanford Business Books, Stanford, CA
135 D ees, J., et al., (2004); see also Lyon, F. and Fernandez, H., (2012) and Winter, S., and Szulanski, G., (2001)
136 S ee World Economic Forum and the Schwab Foundation (2013), focusing on the role of public policy and government action.
137 B loom, P., Dees, G., 2008, “Cultivate your Ecosystem”, Stanford Social Innovation Review, Winter, p.46-53. Bloom and Dees argue that scaling requires an
ecosystem approach, based on a stakeholder mapping exercise and an ecosystem practices model.

is made of a collaboration between the social entrepreneurial •
I s the innovation supported by adequate and sufficient
sector and corporations or mainstream investors to enhance resources to enact the desired change? Scaling requires an
a J-curve like growth of the positive outcomes 138 . So, how investment in terms of, inter alia, financial, operational, and
does one create positive outcomes for an ever-widening communicative resources. Different strategies lead to a
community? Dees et al., provide an interesting set of criteria to search for different resources.
organisations in determining the path to fostering growth. In •
I s there a risk that the intervention triggers negative effects? It
order to evaluate the desirability of pursuing growth and the is important to ex-ante assess the likelihood of innovations
choice of the most appropriate scaling strategy, five questions creating counterproductive outcomes.
can be asked 139: •
I s the potential set of returns adequate and sufficient to justify
•
I s the innovation ready to be spread? Evidence is required to the scaling of the innovation? Different strategies have
demonstrate that the intervention has been successfully different yields in terms of potentially positive and negative
applied in the past. outcomes for individuals and communities. Branching or
•
I s it likely that the intervention will be well-received by the replication, for instance, may be efficient to rapidly roll out
community it targets? This leads to additional questions about an innovation in a large service area. They may come at a
the complexity of innovation, the threat to the status quo cost: reducing the involvement of beneficiaries, potentially
and the potential conflict with prevailing values and interests resulting in limited commitment or resistance of the target
of the targeted community. community.
138 A n exception is the excellent report from Acumen about its collaboration with multinationals like Coca-Cola, Unilever, SAP, or Dow Chemical. See
Acumen, (2015), Social Enterprises and global corporations collaborating for growth with impact, New York. Other exceptions are provided by Seelos, C.,
& Mair, J. (2007), “Profitable business models and market creation in the context of deep poverty”, Academy of Management Perspectives, 21(4), 49–63;
and Sakarya, S., et al., (2012) “Social alliances: Business and social enterprise collaboration for social transformation”, Journal of Business Research, 65,
1710–1720
139 D ees, J., et al., (2004), p.30,31. Other models, like the SCALERS model of Bloom and Chatterji also apply to analyse and improve the organisation’s
capacity to scale innovations.

The questions all relate to the core-organisation looking “The multinational may serve as a channel for the social
to expand its reach beyond its own geographic or product enterprise, with the social enterprise selling products and
and service range. It provides an inside-out perspective on services to the multinational’s suppliers, distributors, or retailers.
scaling. In an attempt to further collaboration between social Alternatively, the social enterprise may serve as a channel for the
enterprises and corporations, impact investor Acumen defined multinational, providing on-the-ground presence and services
a bottom-up, or outside-in approach. Acumen brought together that help the multinational reach that “last mile” to procure from
four multinationals and four of its own portfolio companies to smallholder farmers or sell to low-income consumers effectively.
create an environment in which the capabilities of all firms were The benefits of such channel partnerships – for both the social
enhanced in several ways. Corporations benefitted from the enterprise and the multinational – can include increased sales and
deeply rooted knowledge of small firms about the aspirations, enhanced quality, quantity, and reliability of supply.” 141
(dis)incentives and daily lives of the poor. Also, the portfolio
companies were able to quickly test innovative approaches As the study demonstrates, the collaboration between
with uncertain returns among their constituents. The small corporations and small enterprises, finds its origin in a
portfolio firms took advantage of the multinationals’ economies combination of shared values and the financial bottom-line 142 .
of scale. Also, from a resource-dependence perspective, It can only scale if there is a clear business model 143 – on both
the portfolio firms benefitted from considerable corporate sides. In addition, the objectives and needs of both partners
resources allocated for strategic support. The so-called “channel must be defined and transparent from the outset. Personal
partnership” appeared to be particularly promising to scale engagement may help to create trust and pave the way for
outcomes 140 . It allowed the partners to use each other’s sales or success. Finally, both organisations have to deliver on the
supply channels to distribute their own products and services. agreements and expectations created. Do they have adequate
The advantages are clear, according to Acumen: and sufficient resources, the right skillset, including mutual
140 S ee Acumen, (2015), p.16

141 S ee Acumen, (2015), p.16. The case of the Unilever – d.light collaboration is really compelling, both financially and socially.
142 In this respect, Acumen remarks, the collaboration between small, social outcome driven companies and multinationals is fundamentally different
than the much research area of corporation – NGO collaboration.
143 S ee also Weber, C. et al., (2015), Scaling Social Impact in Europe, Bertelsmann Foundation, Berlin

Personal engagement may help to create that was acquired by Philips 147. One of VHS’s product lines
allows patients across the world to have access to medical
trust and pave the way for success.
expertise, advice and counselling regarding non-communicable
diseases like diabetes, COPD, cancer and Alzheimer’s online
respect, and the commitment to make it a success – despite and through protected social media applications. In remote
mutual differences? 144 Research shows that partnerships are areas in China, its ICT applications create access to medical
145
on the rise, specifically those targeting societal progress .  expertise and medical professionals for potentially millions
of people. VHS is accountable and engages actively with
Sometimes, the mutual benefits of collaboration are so relevant stakeholders, and, as a result, belongs to the domain
interesting for the corporation to enhance its strategic position of ‘social entrepreneurship’ as defined by this approach.
and reinforce internal capacity development, and for the social It facilitates positive social changes in the medical value
enterprise to service far larger markets, that a takeover of the chain, allowing patients to take control over their disease
smaller enterprise become opportune 146 . This was the case and the communication with remotely operating medical
for Vital Health Software, a professional healthcare start-up professionals 148 . The company welcomed the acquisition by
144 T hese observations are supported and reinforced by Seelos and Mair, 2007, discussing the relationship between Grameen and Telenor regarding their
joint venture Grameenphone. Further research is required to understand potential areas of conflict that may emerge over time – and in the case of
Grameen and Telenor actually did emerge. See Seelos, C., and Mair, J.,
145 S akarya, S., et al., (2012) “Social alliances: Business and social enterprise collaboration for social transformation”, Journal of Business Research, 65,
1710–1720
146 S ee Austin, J., and Leonard, H., (2008) “Can the Virtuous Mouse and the Wealthy Elephant Live Happily Ever After?” California Management Review, 51/1,
Fall, p. 77-102. As the authors point out, the social innovators are not only attractive but also fragile. This means that they are easy to disrupt and to
destroy.
147 B efore being acquired by Philips N.V. in December 2017, VHS was independently owned by Noaber Foundation, Mayo Clinic, De Hoge Dennen, and
senior management.
148 Röntgen, M., & Hummels, H., (2016), Healthcare gone digital, Maastricht http://www.corporate-engagement.com/research/139

Philips as it would enable the company better to contribute to
e-health for millions of people around the world 149.
Future research
Future research should be directed towards the For this research, the first step may be to create a heuristic
preparedness of organisations to get to scale. Two types based on the Acumen study. Second, practical research
of research can be distinguished. analysing business2business (B2B) and business2society
The first starts with companies that have the ambition (B2S) collaboration should provide insight in the potential
to scale their company (either through replication or to get to scale. The existing literature already gained
centralised growth). The set of questions suggested by significant insight into take-overs from social enterprises
Dees, et al., provide an excellent heuristic for researching like Ben & Jerry’s, Tom’s of Maine, and Stonyfield Farm
and analysing these businesses. Alternatively, research Yoghurt 150 . The Acumen study points in a direction that
is needed to better understand the scaling of businesses allows for more variation.
through alliances or other forms of collaboration.
149 h ttps://www.vitalhealthsoftware.com/news/2017/12/08/philips-expands-its-population-health-management-business-with-the-acquisition-of-
vitalhealth. As Seelos and Mair (2007:61) point out, referring to the Telenor-Grameen case about the ownership structure of Grameenphone and the
distribution of profits, what once was a successful collaboration can turn into a nasty affair.
150 S ee Austin, J., and Leonard, H., (2008)

F. Financial sustainability B Corps adopt a ‘blended value’
In commenting on the success of Grameenphone, the joint
proposition, aligning market-rate financial
venture between Telenor 151 and Grameen Bank, former CEO
Tormod Hermansen of Telenor remarked: returns and a vigorous social and
environmental agenda.
“On the one hand, we are doing sound business. And you always
need to do sound business. On the other hand, we are also
contributing to development in a much broader sense – a fantastic entity. It aims to create public benefits and positive outcomes
opportunity for my company. Good business is good development, for, inter alia, society, workers, the community and our planet,
and good development is good business.” 152 in addition to the creation of profits for its shareholders. Its
status as a benefit corporation empowers the board and
Grameenphone started its operations in 1997, being the the management of the corporation to materially pursue
first to introduce GSM technology to serve mainly women in positive social and environmental outcomes in addition to the
rural areas. With more than 63 million subscribers 153 on a financial objectives of the firm. In other words, the interests of
population of 163 million citizens, the company is currently shareholders do not a priori take priority over those of other
the largest telecom provider in Bangladesh. This success story stakeholders. Inspired by the growth of the movement in the
is music to the ears of businesses that try to align financial US, the idea that corporations have a broader responsibility
benefits and social outcomes. Many of these businesses have than serving the interest of the shareholders, has soared.
joined forces under the umbrella of the B Corps movement. The international B Corps network brings together more than
This movement originated in the USA in 2010, following 2100 certified B Corps in over 50 countries, redefining what
formal regulation in the state of Maryland of the ‘benefit success in business means. All of them are for-profit companies,
corporation’. A benefit corporation is a for-profit corporate that meet rigorous standards of social and environmental
151 Telenor is the Norwegian, mostly government-owned, multinational telecommunications company.

152 S ee Seelos and Mair, 2007, p.63
153 h ttps://www.grameenphone.com/about/our-story

performance, accountability, and transparency 154 . Just like Specialisterne, have turned their “perceived antagonistic
155 ,
Grameenphone, B Corps adopt a ‘blended value’ proposition assets” into “complementary assets” with additional value
aligning market-rate financial returns and a vigorous social and for the employees, clients, and the company itself 157. The
environmental agenda. They believe that B2C and B2B markets company’s ambition is to create 1.000.000 jobs for people with
offer opportunities to sell products and services that contain an autism. Unlike Specialisterne, most companies do not have
explicit response to a social or environmental challenge. Failure assets with hidden economic value for which clients are willing
to combine both objectives by returning below-market financial to pay – and sometimes even order more of the goods and
results or disappointing social or environmental outcomes, will services or pay more for them. For many organisations in the
ultimately impede the opportunities of companies to implement social entrepreneurship space, putting the social mission first
and promote environmentally or socially driven strategies. comes at a price, as Austin, et al., observe:
Research shows that an increasing number of business “social entrepreneurs are often faced with more constraints:
organisations target a double bottom line of financial and non- limited access to the best talent; fewer financial institutions,
financial returns, and still do financially well 156 . They operate instruments, and resources; and scarce unrestricted funding and
on a business model in which financial results matter as inherent strategic rigidities, which hinder their ability to mobilize
much as social outcomes. Organisations as Greyston Bakeries and deploy resources to achieve the organization’s ambitious
and Danish placement agent for autistic ICT specialists, goals. To overcome some of these barriers, social entrepreneurs
154 S ee https://www.bcorporation.net/what-are-b-corps. Checked website on 25 January 2018

155 Emerson, J., (2003), “The blended value proposition: Integrating social and financial returns”, California Management Review, 45(4): 35–51
156 D oherty, B., Haugh, H., & Lyon, F. (2014), “Social enterprises as hybrid organizations”, International Journal of Management Reviews, 16(4), 417–436;
Seelos and Mair, 2007; Hockerts, K., (2015), “How Hybrid Organizations Turn Antagonistic Assets into Complementarities,”  California Management
Review, 57/3, Spring; Lee. M., and J. Jay, (2015) “Strategic Responses to Hybrid Social Ventures,” California Management  Review, 57/3, Spring, p. 126-147;
Emerson, J., (2003); Austin, J., & Reficco, E. (2009), “Corporate social entrepreneurship”, Int. Journal for Not-for-Profit Law, Vol. 11/4; Austin, J., & Leonard,
H., (2008), “Can the virtuous mouse and the wealthy elephant live happily ever after?”, California Management Review, 51(1), 77-102
157 H ockerts, K., (2015), p. 84 and 100. It is important to note that was is an antagonistic asset in one corporate environment can be an asset that create
excessive value in an environment that transforms the antagonism into a productive working capability.

sometimes opt for a for-profit organizational form to increase to their investors, are likely to impede their growth and, as
their ability to access commercial capital markets and to pay more a result, their success in terms of social and environmental
competitive wages to attract talent. However, even the corporate outcomes. They will have decreased access to financial
form does not remove all the constraints, as social entrepreneurs markets and to financial products, leading to higher cost
are then faced with the challenge of maintaining a focus on of capital 160 . It is partly for this reason that organisations
the social mission, while generating a competitive return for like the Global Impact Investing Network (GIIN) aim to
investors.” 158 demonstrate that investments that create positive social
and environmental returns also offer market-rate returns
From a fiduciary investor or lender perspective, the to their investors 161. Because of the short history of
159 .
balancing of financial and non-financial aspects is crucial impact investments 162 and the limited size of the market,
Organisations failing to return ‘reasonable’ financial outcomes the evidence is not conclusive to convince mainstream
158 A ustin, J., et al., (2006), p. 12

159 Increasingly, institutional investors markets are convinced of the (financial) relevance of social and environmental value creation. See, for instance,
Kotsantionis, S., et al, (2016), “ESG Integration in Investment Management”, Journal of Applied Corporate Finance vol 28/2 Spring, p. 10-16 Koedijk, K. and
Slager, A. (2011), Investment Beliefs: A Positive Approach to Institutional Investing, Palgrave Macmillan.; Martin, W. (2009), “Socially responsible investing: is
your fiduciary duty at risk?”, Journal of Business Ethics, Vol. 90 No. 4, pp. 549-560;
160 A ustin, J., et al., (2006), “Social and commercial entrepreneurship”, Entrepreneurship theory and practice, 30(1) 1-22; Lumpkin, G., et al., “Entrepreneurial
processes in social contexts”? Small Business Economics, 40, pp. 761–783; VanSandt, C., et al., (2009). “Enabling the original intent: catalysts for social
entrepreneurship”, Journal of Business Ethics, 90, p.419–428;
161 S ee, for instance, Mudaliar, A. and Bass, R., (2017), Evidence on the financial performance of impact investments, GIIN, New York; Matthews, J., et al., (2017),
The Financial Performance of Real Assets Impact Investments, Cambridge Associates and the GIIN, New York, May; Gray, J., et al., (2016) Great Expectations:
Mission Preservation and Financial Performance in Impact Investing, Wharton School of Business, University of Pennsylvania; Philadelphia; Bouri, A. et al.,
(2015), Introducing the Impact Investing Benchmark, GIIN and Cambridge Associates, New York, June.
162 A ccording to the Global Impact Investing Network (GIIN), impact investments are “made into companies, organizations, and funds with the intention
to generate social and environmental impact alongside a financial return” (see https://thegiin.org/impact-investing/need-to-know/#what-is-impact-
investing). They have a similar approach to development and the creation of positive social and environmental outcomes as social entrepreneurship
has on the side of business.

investors to allocate large sums of capital to the impact
economy 163 . The good news is that large institutional Future research
investors are increasingly convinced that they can, and have Future research should be directed towards the potential
to, contribute to sustainable development. More in particular, for financial sustainability of (collaborating) business
they openly endorse the Sustainable Development Goals organisations activities. Particular attention will be given
as a common, global agenda and look at ways to invest in to the mind-set of large corporations and investors,
164
Sustainable Development Investments . to enhance the adoption of social entrepreneurship
as an alternative that supports simultaneous human
development and fiduciary responsibility. Too often, the
The good news is that large worlds of social entrepreneurship and impact investing – let
institutional investors are increasingly alone those of mainstream business and finance – are not
in tune. The Acumen project showed that it is possible to
convinced that they can, and align the interests of both if the potential partners are able
have to, contribute to sustainable to define common goals, have shared interests and bring
development. additional resources to the table.
163 T he current market-size is estimated at USD 114 billion. See Annual Impact Investment Survey 2017, GIIN, New York
164 SDI are defined by a group of Dutch and Swedish institutional investors as “solutions that contribute to the UN Sustainable Development Goals. These
investments meet our financial risk and return requirements and support the generation of positive social and/or environmental impact through
their products and services, or at times through acknowledged transformational leadership.” See https://www.pggm.nl/english/what-we-think/Pages/
Investing-in-UN-targets-with-return-on-investment.aspx

66
6 _ A common global agenda
In the first part of this contribution a reference was made to freedoms. It is here that the UN has put forward an agenda for
Amarty Sen and Martha Nussbaum, who provide a foundation the transformation of our world, which aims to contribute to a
for the analysis of social entrepreneurship and its contribution minimum set of capabilities to support a life of human dignity:
to overcoming the grand challenges our society and our planet the 2030 Agenda for Sustainable Development. No one will be
are facing. In the second part, the focus shifted towards three left behind 165 .
conditions for effective and innovative interventions with the
potential for (financial) sustainability needed to create the right “On behalf of the peoples we serve, we have adopted a historic
scale to solve the biggest social and environmental problems decision on a comprehensive, far-reaching and people-centred set
of our time (and the future). To create the desired change in our of universal and transformative Goals and targets. (…) Recognizing
current value chains, Sen and Nussbaum suggest a capability that the dignity of the human person is fundamental, we wish to
approach which argues that social arrangements should aim to see the Goals and targets met for all nations and peoples and for all
expand people’s capabilities. They should allow them to freely segments of society. And we will endeavour to reach the furthest
chose the lives they want to live. Without, at least, the consent behind first” 166 .
of the beneficiaries, human development remains the dream of
the deprived and the fantasy of the fortunate ones. In order for The Sustainable Development Goals
individuals to make choices, this freedom should be effective The Sustainable Development Goals were adopted
in providing people with real opportunities to decide for unanimously by the Heads of State and Government and
themselves what is valuable and what not, rather than paper High Representatives at the General Assembly of the UN
165 U N General Assembly, preamble, p.1.

166 U N General Assembly, Declaration, p.3, items 2 and 4.

in September 2015. The declaration recognises that “the “We envisage a world free of poverty, hunger, disease and want,
dignity of the human person is fundamental” and needs to be where all life can thrive. We envisage a world free of fear and
furthered by a concrete plan of action for people, planet, and violence. A world with universal literacy. A world with equitable
prosperity 167. A particular responsibility is felt for the most and universal access to quality education at all levels, to health care
vulnerable of all people, including children, youth, persons and social protection, where physical, mental and social well-being
with disabilities, refugees and the elderly. They need to be are assured.” 169
empowered. Also, special attention should be given to the
most vulnerable countries, like least developed countries or The vision has been translated into 17 goals that need to be
small island developing states 168 . The document expresses a implemented in the year 2030 170 .
“transformational vision” that comes fairly close to Nussbaum’s
capabilities approach:
Without, at least, the consent of the beneficiaries,

human development remains the dream of the deprived
and the fantasy of the fortunate ones.
167 U N General Assembly, (2015), Resolution adopted by the General Assembly on 25 September 2015, 70/1. Transforming our world: the 2030 Agenda for
Sustainable Development, New York. See the Declaration item 4.
168 In this respect, I refer, for instance, to the work of the United Nations Office for Project Services (UNOPS), to support small island developing states
in protecting themselves against rising sea levels, increasing their access to renewable energy, and furthering (the capability of individuals and their
communities to) access to the fulfilment of other basic needs, like access to affordable housing, or water and sanitation.
169 U N General Assembly, Declaration, p.3, item 7.
170 Ibidem, p.14.

1. End poverty in all its forms everywhere. 12. Ensure sustainable consumption and production
2. End hunger, achieve food security and improved nutrition patterns.
and promote sustainable agriculture. 13. Take urgent action to combat climate change and its
3. Ensure healthy lives and promote well-being for all at all impacts.
ages. 14. Conserve and sustainably use the oceans, seas and
4. Ensure inclusive and equitable quality education and marine resources for sustainable development.
promote lifelong learning opportunities for all. 15. Protect, restore and promote sustainable use of
5. Achieve gender equality and empower all women and terrestrial ecosystems, sustainably manage forests,
girls. combat desertification, and halt and reverse land
6. Ensure availability and sustainable management of water degradation and halt biodiversity loss.
and sanitation for all. 16. Promote peaceful and inclusive societies for sustainable
7. Ensure access to affordable, reliable, sustainable and development, provide access to justice for all and build
modern energy for all. effective, accountable and inclusive institutions at all
8. Promote sustained, inclusive and sustainable economic levels.
growth, full and productive employment and decent work 17. Strengthen the means of implementation and revitalize
for all. the Global Partnership for Sustainable Development.
9. Build resilient infrastructure, promote inclusive and
sustainable industrialization and foster innovation.
10. Reduce inequality within and among countries.
11. Make cities and human settlements inclusive, safe,
resilient and sustainable.

The vision, which is operationalised in the SDGs, points to Businesses and investors belong to the
an ‘overlapping consensus’ within and among the nations
realm of opportunity. They can create
of the world that “the idea of what human beings need for
fully human living is among the most vivid intuitive ideas innovative solutions in developing,
we share” 171. This ‘overlapping consensus’ provides a producing and distributing goods and
justification for governments, multilaterals, non-governmental
services that help to fulfil the basic needs
organisation, businesses, investors, and individuals to (improve
the capabilities of humans and their institutions to) further of individuals and communities.
a just and decent society. Referring to the role of the private
sector the UN asserts:
from a moral obligation of these actors. The UN merely calls
Private business activity, investment and innovation are major upon non-state actors, and more in particular on the private
drivers of productivity, inclusive economic growth and job creation. sector, because they have the opportunity to contribute to
We acknowledge the diversity of the private sector, ranging from human development. It is not an imperative for businesses – both
micro-enterprises to cooperatives to multinationals. We call upon small and large – and investors to implement the goals, but it
all businesses to apply their creativity and innovation to solving certainly is commendable when they use their resources to
sustainable development challenges 172 . further human capabilities and a future in human dignity for
all. It is here that we find a compelling argument for companies
The justification for individual and collective action 173 by non- and investors to develop new strategies incorporating the
state actors to fulfil basic human needs, does not come from notion of ‘social entrepreneurship’. Not because they must,
individual entitlements or claims on these non-state actors or but simply because they can. Businesses and investors belong
171 S ee Martha Nussbaum, 2006, Frontiers of Justice, Cambridge: Belknap Press of Harvard University Press, p. 279
172 U N General Assembly, (2015), Declaration, item 67, p.29
173 U N General Assembly, (2015), p.1, preamble.

to the realm of opportunity 174 . They can create innovative are protected. Property ownership and the achievement of full
solutions in developing, producing and distributing goods and employment are seen as important elements for living a life in
services that help to fulfil the basic needs of individuals and dignity, just as increasing access to education.
communities. The enormous corporate and investor support
for the SDG agenda gives an indication that the private sector The Sustainable Development Goals promote free, equitable,
is open to creating opportunities for development – including quality primary and secondary education by 2030 for all girls
initiatives in social entrepreneurship and impact investing. and boys across the globe 175 – while providing adequate care
and support at a pre-school level, so that children are ready
The 18th SDG for primary education 176 . Also, the goals aim at ensuring that
The SDGs provide a pretty comprehensive overview of the basic all youth and a substantial proportion of adults are literate
needs that have to be addressed in our current and future and numerate, while substantially increasing the number of
society. Compared to Martha Nussbaum’s list of capabilities youth and adults with the right (vocational) skills. If these
that was presented earlier, the SDGs and the sub-goals provide goals are implemented successfully, they contribute, one
a relevant operationalisation of the capabilities. They address may infer, to improving Nussbaum’s capabilities of practical
the ability to live a human life of normal length in good health, reason. Interestingly enough, though, the SDGs do not aim
with adequate nourishment and ditto shelter. Also, the goals at (improving individual and community capabilities for)
stress the importance of peace and security and to live in increased access to information and communication, allowing
harmony with nature, in which wildlife and other living species them to effectively participate in and influence relevant
174 T he justification of a basic needs or capabilities approach for social entrepreneurship does not rest in (moral) obligation, but in (moral) opportunity.
That is, actions aimed at fulfilling basic needs do not merit blame when they are not enacted, though they do merit praise when they are completed
(see Miller, D., and Monin, B, “Moral Opportunities versus Moral Tests”, in Forgas, J., Jussum, L. and Van Lange, P., The social psychology of morality,
Routledge, New York, 2016, p. 40-55). The idea of (moral) opportunity seems fitting for and aligned with the notion of ‘entrepreneurship’, defined by
Shane and Venkataraman (2000, p. 218) as ‘opportunities to create future goods and services are discovered, evaluated, and exploited’.
175 SDG sub-goal 4.1
176 SDG sub-goal 4.2

decision-making 177. With the exception of sub-goals 5.5 Promote and strengthen the
and 6.b, focusing on ensuring women’s full and effective
capabilities of individuals and the
participation and equal opportunities in political, economic
and public life, and strengthening the participation of local communities in which they live to
communities in water management, the goals are silent about actively participate in and effectively
this key characteristic of Nussbaum’s approach. The SDGs
influence policies, practices and
limit themselves mainly to improving access to IC-technology.
Even though this technology is a sine qua non in our activities that are part of the global
increasingly digitalised society, it does not guarantee the active sustainability agenda – as expressed
participation of beneficiaries in decision-making processes
in the Sustainable Development
that influence human flourishing. The goals, therefore, are also
more or less silent on one of Nussbaum’s core capabilities, Goals.
namely political control over one’s life. The promotion and
enhancement of political participation is referred to only in
generic terms, like in sub-goals 5.5 (on women’s participation),
and 10.2 (on reducing inequalities) 178 . This leads me to
formulate the 18 th Sustainable Development Goal:
177 T he SDG document (p. 12, item 48) highlights the importance of data that should support the assessment of progress and the assurance that no one
is left behind. That is, however, not the same as ensuring that everyone has the capability and equal access to the adequate information, allowing her
or him to effectively influence political, economic, social, and environmental decision-making. Only 12.8 and 16.10 mention public access to relevant
information, but that is merely of a procedural nature.
178 In the introduction to the goals, the UN stresses the importance of the human right to political participation, but this right is not translated in
recommendations for governments, multilaterals, NGOs and the private sector to enhance the capabilities of individuals and communities to actively
and effectively participate in political decision-making. See Declaration items 19 and 20.

The 18 th SDG goes beyond the global partnerships that are The litmus test of sustainable
mentioned in the 17th SDG. It acknowledges the fundamental
development ultimately lies in the real
importance of including the intended beneficiaries in policy-
making and implementation of policies aimed at furthering opportunities of the beneficiaries to
their interests and fulfilling their essential needs. This objective freely make choices about the future they
can be promoted by:
value or have reason to value.
• Acknowledgment of the role of intended beneficiaries in
assessing policies, practices and actions of governments, goals beyond the currently available multi-stakeholder fora and
corporations and civil society organisations aimed at global partnership networks that allow stakeholders to voice
promoting their interests, their ideas and concerns. Following the capability approach
• Direct access to an advice mechanism allowing the intended the litmus test of sustainable development ultimately lies
beneficiaries to be consulted, and in the real opportunities of the beneficiaries to freely make
• Direct access to a complaints mechanism for intended choices about the future they value or have reason to value.
beneficiaries or their representatives to file a complaint Do beneficiaries positively receive and review the policies,
regarding the policies, practices and activities aiming at practices and activities aimed at creating a more just and
implementing the goals. sustainable world 179?
This 18 th goal aims to provide the intended beneficiaries a The relevance of the 18 th SDG for social entrepreneurship
chance to influence the upcoming changes that will influence lies in the perception, recognition and acknowledgement by
their current and future lives. In line with the philosophy of the beneficiaries – or their representatives – of the extent
Sen and Nussbaum, the 18 th SDG takes the realisation of these to which socially entrepreneurial initiatives aimed at their
179 O bviously, this is not the only test for human development. As Sen clarifies in his Tanner Lecture, people with serious capability deficits can get
accustomed to their situation and be perfectly happy with it. Assessing people’s well-being, therefore, requires additional information about their
lives, health, education, nutritional status, autonomy, and so forth.

well-being and the development of their capabilities, succeed consumers buying its cars. Ultimately, it is decided by the
in achieving their premeditated purpose. How can an initiative gradual communis opinio that emerges, based on the pros
be ‘socially’ or ‘environmentally’ meaningful for individuals and cons of Tesla’s offerings to the world. Does the company
or communities, if not for its perceived contribution to the provide a sustainable solution to cope with some of the grand
fulfilment of the basic needs of the beneficiaries and their challenges of our society in an effective and efficient way? At
capabilities to acquire basic goods and services they value present this is all but clear.
or have reason to value? Involving the beneficiaries to assess
the value of initiatives aimed at SDGs 3, 4 and 5 – ensuring Evaluating human development
healthy lives, inclusive and equitable quality education and In our day to day lives, the capability approach that is
gender equality – is relatively easy to organise. Organising expressed in the 18 th SDG can play two major roles: a
direct beneficiary feedback regarding SDGs 12, 13 and 14 – prospective role and an evaluative role. The prospective
ensuring sustainable consumption and production, taking role refers to “policies, activities, courses of action and
action to combat climate change or conserving the oceans – is recommendations that seem, at any given time, most likely
much more difficult. Here representatives of the interests of to generate considerable capability expansion and human
communities – or of our global society – like academics, civil development” 180 . The evaluative role assesses the extent
society organisations, multilateral organisations, or the free of freedom people have to promote and actively pursue the
press, have to step in. As indicated earlier, Tesla is as a case life they value or have reason to value. Both roles are briefly
in point. The company is dependent for the production of its explained below.
cars on a finite and therefore unsustainable resource: lithium.
This led critical NGOs, academics, and the press to question Prospective capability development
whether the company – and the technology it promotes – can As Marx indicated in his Theses on Feuerbach, the point
provide anything more than a temporary solution for serving is to change the world and to change it fundamentally.
a mass-market. In other words, it is not Tesla that decides Governments, multilaterals, NGOs, and the private sector
whether its invention adds societal value and not even the can contribute to radical innovations in value chains aimed
180 S ee Denuelin, S., Shahani, L., eds., (2009), An Introduction to the Human Development and Capability Approach, London, p.35

at solving the grand social and environmental challenges of aims at connecting millions of East Africans to solar energy
our society. Social entrepreneurship can play a role in that solutions. According to World Bank data, less than 13 percent
transformation, as the examples in this contribution have of Kenyans living in rural areas was able to access electricity in
shown. The social entrepreneurship screen that was presented 2014 182 . In Uganda and Tanzania, the situation is even worse,
in this contribution, can be helpful to determine the progress with respectively 10 and 4 percent of the rural population
they are making in furthering human development. Starting having access to energy 183 . Based on a rather generic mission
from an idea how to create societal value or help to solve a statement “to upgrade lives by making high-quality solutions
societal problem, businesses develop an intervention logic. affordable to everyone”, the company successfully started
Usually this is described in terms of an “impact-creation providing off-grid solar energy solutions in Kenya, and later
logic” 181. This term refers to the ensemble of the organisation’s in Uganda and Tanzania since it started its operations in
mission and strategy, the needs and problems it wants June 2012. Backed by strong partners like Safaricom, an
to address in a particular environment, and the available experienced management team – one of the founders is a
resources and capabilities to implement the strategy and former M-Pesa director and eager investors 184 , the company
resolve the needs or problems. This prospective approach is already in 2013 expressed its ambition to go from 50.000 to
fundamentally forward-looking and helps to guide businesses – 1 million customers by the end of 2018. At present, M-Kopa
either independently or in collaboration with other businesses, offers two home systems. The first is the baseline model
governments, and civil society organisations – to navigate with a small 8W solar panel, 4 LED light bulbs, a rechargeable
towards an unknown future. torch and a rechargeable radio. The more advanced model
comprises a 20W solar panel, 3 upgraded LED light bulbs, a TV,
Take the case of M-Kopa. The Kenyan solar energy company a rechargeable radio, and a phone charging USB. M-Kopa has

182 M ost recent data go back to 2014. The situation has improved since, although the improvement is not likely to be spectacular.
183 h ttps://data.worldbank.org/indicator/EG.ELC.ACCS.RU.ZS?end=2014&locations=KE-TZ-UG&start=1990
184 F ollowing financial support from the Dutch DOEN Foundation, Shell Foundation and d.o.b. foundation to run a pilot in Kenya, the company
successfully secured equity investments by the end of 2011. All were impact investors: Gray Ghost Ventures (USA), d.o.b Foundation (NL), Acumen
Fund (USA), LGT Venture Philanthropy (Switz), Lundin Foundation (Canada).

been successful in connecting hundreds of thousands of East- The report demonstrates that M-Kopa contributes to the
Africans to off-grid solar energy solutions. reduction of CO2 emissions, thereby reducing the pressure
on our climate. The company is innovative, financially
Evaluative capability assessment sustainable 188 and scales rapidly with an expected annual
185 ,
Based on its implicit impact-creation logic the company growth rate of 20 percent. Also, M-Kopa provides evidence that
presents its results on the company’s website in what it calls an the innovation has meaning for the intended beneficiaries.
186
‘impact report’ . In a range of videos customers give feedback on the value of
access to clean energy 189 in terms of increased autonomy,
access to new services – such as TV – or improving their
M-Kopa’s output report internal climate at home. It leads to the following inferred
• M -Kopa connects over 600,000 homes to affordable social entrepreneurship screen. The screen shows that M-Kopa
187
solar energy contributes significantly to human development, even though it
• Customers save US $300M in fossil fuel expenses can improve its systematic account of beneficiary feedback and
• Customers enjoy 50,000,000 hours of fume-free lighting demonstration of outcomes.
per month
• As a result of M-Kopa’s solar energy delivery, the Different stakeholders will evaluate the success M-Kopa’s
emission of CO2 was reduced by 380,000 tonnes differently. Governments are likely to value the company’s
• M-Kopa created 2500 jobs in East-Africa contribution to the SDGs. Reduction of CO2 emissions,
job growth, and increased access to ICT as a result of the
185 T here is no public record of M-Kopa’s impact-creation logic, although some of the elements of such logic can be inferred from what is available. The
company aims at serving customers in Africa – at the moment limiting itself to Kenya, Tanzania and Uganda – to provide them with access to off-grid
solar energy and to radio and/or television.
186 S ee http://solar.m-kopa.com/about/company-overview – Website visit on 28 January 2018.
187 T he company reports to add 500 new connections per day.
188 M -Kopa has been able to attract a many commercial and non-commercial investors, that enable to grow the company fast.
189 S ee e.g. http://videos.m-kopa.com/video/mkopa-100k-customers/ & https://www.youtube.com/watch?v=LTRaqeo_9i8

Social Entrepreneurship Screen
M-Kopa
Determining Socialness B Demonstration outcomes
A Capability development C Beneficiaries involved
F Financial sustainability D Innovation
Minimum SE qualifying score E Scalability Determining Entrepreneurship

Inferred profile

provision of electricity, can all be attributed to the company. of human development and the realisation of the SDGs. Some
The employees are likely to value their job opportunity, while outputs give a clear indication of the company’s contribution
clients will appreciate access to light and other services. to the implementation of the SDGs. Reduced carbon emissions
Commercial investors, such as responsAbility and Generation are a case in point. Despite M-Kopa’s modest reduction against
IM, presumably like M-Kopa’s balanced returns 190 , while the background of the global climate change challenge, the
impact investors like Gray Ghost DOEN Social Ventures, LGT company does contribute to sub-goal 13.1: “Strengthen resilience
Impact Ventures, Shell Foundation, Gates Foundation and and adaptive capacity to climate-related hazards and natural
DFID, are likely to value positive human development more. disasters in all countries”. Positive effects on the capabilities of
Increasingly, and following a demand from progressive clients and employees can only be inferred – although it is rather
investors, including institutional investors, “to measure and likely that employees improve their capabilities through their
report on social and environmental impact of their products, work for M-Kopa. An indication for this conclusion is provided
191, business organisations report on
services and leadership” by a short video on working at M-Kopa that starts with the
their outputs 192 . Swahili word ‘Maendeleo’. This is best translated as ‘progress’,
‘development’, and ‘improvement’ 193 .
From a social entrepreneurship perspective, the value
of M-Kopa’s products, services and activities lies in the Regarding the added value M-Kopa offers to its clientele, the
improvement of the capabilities of their clients and employees number of 600,000 East-Africans having gained access to solar
to further a ‘rich human life’. The positive effects of M-Kopa’s energy, is impressive. This number does not prove, however,
policies, practices and activities on the environment, on its that consumers have increased their set of capabilities. At
customers, on its employees, and on the wider community, is best, the output indicators are a mere proxy for the positive
what constitutes the legitimacy of the company’s efforts in terms contribution to human development. What should be
190 A balanced return is the outcome of the search of blended value: a combination of financial and social value.
191 h ttps://www.pggm.nl/english/what-we-think/Pages/Investing-in-UN-targets-with-return-on-investment.aspx
192 E ven though investors encourage the measurement and reporting of ‘impact’, at present most businesses and investors limit their focus to measuring
and reporting of outputs.
193 h ttp://videos.m-kopa.com/video/working-at-m-kopa/

The litmus test of sustainable and civil society organisations – to provide evidence on their
contribution to improve the capabilities of individuals and
development ultimately lies in the real
communities. An example of this reversed logic is provided
opportunities of the beneficiaries to by Collins, et al., in their book Portfolios of the Poor. 194 In their
freely make choices about the future they study of over 250 poor households in India, Bangladesh and
South-Africa, the authors researched the ways in which the
value or have reason to value.
families managed small, irregular, and unpredictable flows
of income. They found that poor people in the respective
measured is the extent to which the beneficiaries welcome countries used at least eight different financial instruments
the goods, services and activities and if the offerings improve to manage their income, provisions and liabilities with great
human flourishing and control over their lives. M-Kopa creativity. It supports Sen’s argument that it is not only the
attempts to provide such evidence through the use of videos amount of money that determines whether someone is poor
in which consumers provide feedback on the effects of having or not, but also the conditions under which people have to live.
access to M-Kopa’s products and services. The book provides an excellent example of an evidence-based
approach that shows that the litmus test of radical innovations
This reversed logic of capability evaluation, which starts at of value chains to solve social and environmental challenges of
the backend of what is ultimately the objective of socially our society does not (only) lie in access to goods and services.
entrepreneurial interventions in terms of human development It is found in the capabilities of humans to live a life worth
and a life in human dignity, therefore, calls for a different living in harmony with nature and with the other forces in our
approach to the demonstration of outcomes. We need to ask global society 195 .
companies and investors – but also governments, multilaterals
194 Collins, D., et al., (2009), Portfolios of the Poor, Princeton University Press, Princeton
195 Having said that, the telling examples provided by Collins, et al., clearly demonstrate the need for the implementation of the SDGs. The fact that
humans are very creative in times of great need and deprivation, should not lead us astray and leave the poor behind, struggling with their portfolios
of small, irregular and unpredictable income flows. Particularly in case of an accident or an unexpected expenditure, the capability of the poor to cope
with misfortune is easily exhausted.

Future research
This contribution calls for further research into the
reversed logic of capability evaluation. This is important
since investors and corporations increasingly want to
contribute to the implementation and achievement of
the sustainable development goals. As was argued in
this contribution, the SDGs are indeed about achieving
concrete outputs. At the core of the SDGs lies, however,
a fundamental assumption that achievement of the goals
will further human dignity for all – starting with those who
are furthest behind. This means that all actors claiming
to support the achievement of the SDGs are obliged to
demonstrate that their outputs contribute to reinforcing
human dignity. A core assertion in this contribution is
that such demonstration can never be convincing without
the beneficiaries consenting to the intervention and
the resulting outputs and their positive contribution to
developing the capabilities of the beneficiaries 196 .
196 A s argued previously, some SDGs do not – or only to a limited extend – lend themselves for direct involvement of the beneficiaries. In those cases,
it is justified if representatives, such as civil society organisations, take their place. The representative must, however, be able to demonstrate its
credibility in representing the beneficiaries.

82
7 _ The reversed logic of social
entrepreneurship — a conclusion
“A spectre is haunting Europe”. These famous opening words of of this chair was explained. It is to study the contribution of
the Communist Manifesto, with which this address started, can socially entrepreneurial initiatives to transforming value chains,
easily be applied to our present-day situation. Today, however, in ways that they promote human development and flourishing.
they clearly have with a different interpretation. The spectre The initiatives are to contribute to the fulfilment of the basic
is no longer a ghost that haunts us – although there are clear needs in a society – like the need for decent work, including
warning signs of the degradation of life on this planet and the eradication of child labour. Individuals and communities
the increasing injustice and highly unequal division of goods, should be able to live a life of human dignity. Following Sen and
services and opportunities between parts of our global society. Nussbaum, this requires improving their capabilities to live a
Nevertheless, there is a growing positive spirit that invites ‘rich and fulfilling human life’. A present day operationalisation
us to support human development and the implementation of the basic human needs approach can be found in the UN
(and achievement) of the Sustainable Development Goals. Sustainable Development Goals. They provide an excellent
Not because we must, but because we have an opportunity to and recognisable framework for all actors involved – social
contribute. enterprises, corporations, investors, governments, multilateral
organisations, civil society organisations, et cetera – to align
In this contribution, I have provided an account of social their respective contributions and create change. The SDGs are
entrepreneurship based on a reversed logic of implementation Our World’s Common Agenda to reinforce human development
and achievement. It starts with what it aims to achieve and then and human dignity in a way that benefits all, but most certainly
ploughs back to understand the necessary steps required to those furthest removed from it. As such the goals provide
realise the objective(s). At the start of this contribution, the aim relevant and practical anchors for (socially) entrepreneurial
83 _ The reversed logic of social entrepreneurship — a conclusion

activity aimed to resolve some the grand challenges and The SDGs are Our World’s Common
resulting in transformed value chains. Broadly speaking, and
Agenda to reinforce human development
just as many other public and private attempts, the goals
are missing a key aspect of Sen and Nussbaum’s capability and human dignity in a way that benefits
approach. It is here that this contribution offers a new all, but most certainly those furthest
approach.
removed from it.
Based on Nussbaum’s “outcome-oriented” approach, it was
suggested that an evaluation of socially entrepreneurial This means, that entrepreneurship cannot be understood as
interventions requires a demonstration of outcomes. In ‘social’, if it does not allow individuals and communities to
order for this demonstration to be credible, the beneficiaries influence their future lives. Therefore, if social entrepreneurship
should be allowed to speak out openly on the (perceived) is to contribute to the grand challenges of our society and our
value of the intervention. This is expressed in the 18 th planet, a new framework is needed. The existing framework,
Sustainable Development Goal that aims at providing the that starts with “the tendency of certain people to respond to
intended beneficiaries of positive social and environmental the situational cues of opportunities” 197, leading to innovative
change to voice their ideas, appreciation, and concerns about activities to overcome identified lacunae, is not sufficient.
interventions aimed at raising their human dignity: We cannot understand radical change by analysing individual
entrepreneurial initiatives – irrespective of the organisational
Promote and strengthen the capabilities of individuals and the form in which are shaped and formed – based on a rational plan
communities in which they live to actively participate in and to solve a significant social or environmental problem. We can
effectively influence policies, practices and activities that are only comprehend it by analysing the linkages in the value chains
part of the global sustainability agenda – as expressed in the and the interactions between the (public and private) actors
Sustainable Development Goals. involved. Studying socially entrepreneurial interventions should
take into account, how socially entrepreneurial interventions
197 Shane S., and S. Venkataraman, (2000), The Promise of Entrepreneurship as a Field of Research, Academy of Management Review, 25, 1, p.219

can be adopted by corporations, cooperatives, networks and The proof of a truly human, socially
(institutional) investors from a viewpoint of creating scale
entrepreneurial, pudding lies in increasing
and financial sustainability. It requires social entrepreneurs
to understand the mind of the investor, the corporation, and improving the capabilities of the
or the network. The Acumen study provides an excellent intended beneficiaries to influence the
example of this new thinking, in which corporations and social
future they value or have reason to value.
enterprises teamed up, based on a mutual understanding of
shared objectives, interests and goals, and sufficient resources
and commitments to effectuate change – in an institutional
environment that provides them with the opportunities to A capability approach provides an excellent starting point for
interact. Further research is warranted, where the hexagon tackling social and environmental challenges at the level of
that was presented earlier in this contribution can turn out to value chains through socially entrepreneurial interventions.
be a useful tool in analysing entrepreneurial initiatives and the It is clearly not a panacea, however, to overcome all major
extent to which they are truly social. challenges. As Hill argues, capability approaches do not
analyse, for instance, “the role of institutional power in causing
Coming to a conclusion, I have argue that the idea of fulfilling or perpetuating inequalities in individual opportunities’’. She
basic human needs, like the need of children to be free of argues for ‘‘an approach to human empowerment that ties
slavery, the need for respect, for decent work, or for control social outcomes to actual institutional arrangements’’ 198 . Hill is
over ones own life, can create a commonly acknowledged right, but that does not have to stand in the way of businesses
reference point for social entrepreneurship. More in particular, looking for solutions to some of the most challenging issues
what provides the cut-off point is a company’s contribution to that we face in a global society – or looking at national and local
improving the capability of humans to fulfil these needs. challenges. Private sector players like businesses – both small
198 S ee also Hill, M. T.: 2003, ‘Development as Empowerment’, Feminist Economics 9(2&3), 117–135. Hill asserts from a Marxist perspective that
the capability approach does not account for the role of institutional power that causes or perpetuates inequalities that prevent individuals or
communities to develop their capabilities.

and large – and investors – both for impact or institutional –
have an important role to play in bringing about the desired
change. By belonging to the realm of opportunity, they can
contribute substantially to radically improving the social and
environmental dimensions of the design, production and
distribution of goods and services that serve individuals and
communities in living a life in dignity. However, the proof of a
truly human, socially entrepreneurial, pudding lies in increasing
and improving the capabilities of the intended beneficiaries to
influence the future they value or have reason to value.
Utrecht, 1 March 2018

Harry Hummels

88
About the author
Prof. dr. Harry Hummels
Harry Hummels holds a chair in Social Entrepreneurship Harry published on Impact Investing, Social Entrepreneurship,
at Utrecht University School of Economics and one in Responsible Investing, Corporate Responsibility, Business
Ethics, Organisations, and Society at Maastricht University. and Organizational Ethics and Philosophy of Work, while also
In addition, Harry is a Special Advisor of the United Nations publishing two cookbooks. Not surprisingly, he loves cooking,
Office of Project Services (UNOPS) on Impact Investing. traveling with his wife and daughters, reading, and workouts
He serves on the UNDP/UNSIF Research Council on Sustainable – but doesn’t overdo the latter. His favourite café is Frowijn in
Development Investments, and on the board of Society Impact his hometown Nijmegen.
in the Netherlands. Also, he is one of the initiators of Le Souk
d’Orient, and member of the advisory board of B Lab Europe.
Between 1999 and 2015 Harry held a variety of functions in
the financial world including, but not restricted to, Director at
ING Bank and SNS Asset Management/ACTIAM in Responsible
Investing and Impact Investing and European Liaison of the
Global Impact Investing Network (GIIN).
89 _ About the author

90

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The 18th Sustainable

Discussion Paper Series nr: 18-01

The Tjalling C. Koopmans Institute is the research institute

In the discussion papers series the Koopmans Institute

Please send any comments and suggestions on the Koopmans

How to reach the authors

Please direct all correspondence to the first author.

This paper can be downloaded at: http://

The 18th Sustainable Development Goal:

Utrecht University School of Economics

Keywords: Social entrepreneurship, Sustainable Development Goals, Basic human

JEL classification: D63, I31, M21.

2 Challenges in the domain of social entrepreneurship 19

3 A basic needs-based approach to social entrepreneurship 25

4 When do we call entrepreneurial activities ‘social’ ? 33

6 A common global agenda 67

7 The reversed logic of social entrepreneurship — a conclusion 83

About the author Prof. dr. Harry Hummels 89

7 ILO, Global estimates of child labour, Geneva, 2017

Determining Socialness B Demonstration outcomes

A Capability development C Beneﬁciaries involved

F Financial sustainability D Innovation

Minimum SE qualifying score E Scalability Determining Entrepreneurship

19 _ Challenges in the domain of social entrepreneurship

30 F or Tesla’s mission see www.tesla.com

20 _ Challenges in the domain of social entrepreneurship

21 _ Challenges in the domain of social entrepreneurship

The examples make clear that simply being innovative and

22 _ Challenges in the domain of social entrepreneurship

25 _ A basic needs-based approach to social entrepreneurship

26 _ A basic needs-based approach to social entrepreneurship

27 _ A basic needs-based approach to social entrepreneurship

28 _ A basic needs-based approach to social entrepreneurship

51 N ussbaum, 2003, p.474

29 _ A basic needs-based approach to social entrepreneurship

30 _ A basic needs-based approach to social entrepreneurship

33 _ When do we call entrepreneurial activities ‘social’ ?

34 _ When do we call entrepreneurial activities ‘social’ ?

35 _ When do we call entrepreneurial activities ‘social’ ?

36 _ When do we call entrepreneurial activities ‘social’ ?

37 _ When do we call entrepreneurial activities ‘social’ ?

38 _ When do we call entrepreneurial activities ‘social’ ?

85 N ussbaum, 2003, p.481

39 _ When do we call entrepreneurial activities ‘social’ ?

40 _ When do we call entrepreneurial activities ‘social’ ?

41 _ When do we call entrepreneurial activities ‘social’ ?

42 _ When do we call entrepreneurial activities ‘social’ ?

43 _ When do we call entrepreneurial activities ‘social’ ?

44 _ When do we call entrepreneurial activities ‘social’ ?

45 _ When do we call entrepreneurial activities ‘social’ ?

47 _ The entrepreneurial dimensions

48 _ The entrepreneurial dimensions

49 _ The entrepreneurial dimensions

109 W EF, Shaping the Future of Energy System Initiative, https://www.weforum.org/projects/energy-access-africa

50 _ The entrepreneurial dimensions

114 S ee Aldridge, T., and D. Audretsch, (2008), p.13

51 _ The entrepreneurial dimensions

52 _ The entrepreneurial dimensions

53 _ The entrepreneurial dimensions

2 Challenges in the domain of social entrepreneurship 19

3 A basic needs-based approach to social entrepreneurship 25

4 When do we call entrepreneurial activities ‘social’ ? 33

7 ILO, Global estimates of child labour, Geneva, 2017

19 _ Challenges in the domain of social entrepreneurship

30 F or Tesla’s mission see www.tesla.com

20 _ Challenges in the domain of social entrepreneurship

21 _ Challenges in the domain of social entrepreneurship

22 _ Challenges in the domain of social entrepreneurship

25 _ A basic needs-based approach to social entrepreneurship

26 _ A basic needs-based approach to social entrepreneurship

27 _ A basic needs-based approach to social entrepreneurship

28 _ A basic needs-based approach to social entrepreneurship

51 N ussbaum, 2003, p.474

29 _ A basic needs-based approach to social entrepreneurship

30 _ A basic needs-based approach to social entrepreneurship

85 N ussbaum, 2003, p.481

109 W EF, Shaping the Future of Energy System Initiative, https://www.weforum.org/projects/energy-access-africa

114 S ee Aldridge, T., and D. Audretsch, (2008), p.13

140 S ee Acumen, (2015), p.16

151 Telenor is the Norwegian, mostly government-owned, multinational telecommunications company.

154 S ee https://www.bcorporation.net/what-are-b-corps. Checked website on 25 January 2018

158 A ustin, J., et al., (2006), p. 12

165 U N General Assembly, preamble, p.1.

181 S eelos and Mair, 2017:23