What is the connection between Social Entrepreneurship and Social Innovation?

Over the last two decades, the concepts of social entrepreneurship, social enterprise, and social innovation have received growing attention from the political, social, and economic standpoint. This growing importance is determined by the need to find solutions to face emerging social needs now becoming the focus of political, institutional, and academic debate.

Social innovation is the act of creating new solutions (products, services, models, processes) which address a social need, which is not yet or incompletely addressed. Such solutions lead to the creation of new capabilities and to a more efficient use of resources and values. For example, a certain type of technology does not necessarily represent an instance of social innovation, but if this piece of technology helps to improve quality of life or to diagnose a certain disease, it can be considered an aspect of social innovation.

There are many spheres of society that now require innovative solutions to problems that have gradually increased over time: the aging population; the worsening of many behavioral problems connected with well-being, such as obesity, poor nutrition, inactivity, and addiction to alcohol, drugs, and gambling; the clear challenges involving climate change and that affect the organizational models of cities, transport systems, and housing conditions, in order to drastically reduce carbon emissions and repair the environmental damage that already appears partially irreversible.

All these problems require seeking new solutions that consist of new programs, new models, new ways of thinking, or a combination of all three, resulting from actions planned and coordinated by a vast range of organizations that encompass social, governmental, and business sectors. An innovative idea may be brought forth by individuals, social movements, and markets.

Today, some examples of social innovation are known world-wide. For instance, Earth Hour (https://www.earthhour.org/), which takes place every year, on the last Saturday of March. Another example is Giving Tuesday (https://hq.givingtuesday.org/), a global fundraising campaign. As part of the open innovation trend, a very good example is #EUvsVirus – a hackathon which took place in April 2020, as a reaction to the COVID-19 pandemic, whose winners were genuine examples of social innovation. Among them we can mention:  Team Discovery (Hungary) – who created a patient monitoring system which minimizes direct contact between patients and nurses. Linistry for safe retail (Hungary) – proposed a solution to ensure social distancing in retail industry.

With respect to entrepreneurship, some authors emphasize that innovation is an intrinsic characteristic of social enterprises: “social entrepreneurship encompasses the activities and processes undertaken to discover, define and exploit opportunities in order to enhance social wealth by creating new ventures or managing existing organizations in an innovative manner.”  (https://www.intechopen.com/books/social-enterprise-context-dependent-dynamics-in-a-global-perspective/social-enterprise-and-social-innovation-a-look-beyond-corporate-social-responsibility)

Similarly, social entrepreneurship is defined as “that activity carried out by individuals or groups of people aimed at creating, distributing, or spreading social or environmental value in an innovative fashion, through social enterprises, non-profits, and private or public institutions.”

Therefore, although the social mission is the central element for qualifying social entrepreneurship, it is not enough on its own to capture the complex nature of the phenomenon. Tolerance for risk, proactiveness, and innovativeness are crucial characteristics to social entrepreneurship.

 For a social enterprise to be truly socially innovative it is necessary to identify a previously un-addressed social issue. This could be the development of a new green technology, the support of a disadvantaged group of people who are not currently being supported or even creating a more productive or efficient method for dealing with a current social need. No matter how it is approached, it must provide something new.

Sometimes, even though the social enterprise fails, the social innovation lives on to change industries. An excellent example has been provided by Professor Kai Hockerts from the Copenhagen Business School in his recent MOOC on Social Enterprise. It focuses on the green technology ‘Greenfreeze’ which was created by Greenpeace in the mid-1990s. Greenfreeze is an environmentally friendly refrigerator technology which is used in fridge-freezers. Greenpeace piloted their new technology in partnership with the East German manufacturer ‘Foron’. (https://jonathansandling.com/social-enterprise-vs-social-innovation/)

However, Greenpeace did not create Greenfreeze for financial, but for environmental reasons, putting Greenfreeze into the public domain; the majority of Foron’s competitors used it and replicated their work. Foron suddenly lost their major competitive advantage and in the years that followed they went bankrupt.

Today, over 300 million refrigerators use Greenfreeze technology, which means the refrigerator industry is now a much more environmentally friendly industry. Therefore, should Foron’s story be considered a failure or a success? From a ‘social enterprise’ point of view it has failed. However, from a ‘social innovation’ point of view it was a success, as the Greenfreeze technology completely transformed the entire industry.

Thus, while social entrepreneurship provides a much needed service, social innovation is a powerful force that has the ability to move industries, provide direction for new businesses and make a great collective difference to the social need it originally set out to address.

In conclusion, social innovation is about creating ideas for change; social enterprise is about the business model. “While a social entrepreneur is focused on solving a problem through business, a social innovator could be looking to solve the problem through a number of different mediums”. (Kayla Kurin, Social Innovation vs Social Enterprise, 2014)