Joe Johnson, Ph.D.
Entrepreneur. Investor. Startup Expert.

Travel to Brazil and you’ll readily note significant differences in the way that their economy operates. There’s more focus on people and on meeting social needs rather than on simply earning as much as possible to improve one’s individual standing. This is not at all the situation one finds in purely capitalist economies such as the United States of America’s. In those economies, people work to earn as much money for themselves as possible and an “every man for himself” mentality predominates.

That said, a social economy can be found in nearly every country in the world, to varying degrees. It runs in parallel to the traditional economy and operates between the public and private sectors. There are a wide range of different enterprises found in this area, including charities, non-profit organizations, and businesses expressly configured as social enterprises.

Social entrepreneurship is a highly viable base for the growth of the social economy. This is thanks, in large part, to the following points:

The Triple Bottom Line

Social entrepreneurship is holistic and takes into consideration the triple bottom line of social, environmental, and financial factors. These enterprises are able to meet needs that are often ignored by other stakeholders. Consequently, solutions are able to develop that include everyone within the society.

Helping Communities

Social economy is primarily about helping people and elevating communities. Social entrepreneurship serves to facilitate this goal since, as the business is working toward elevating the community’s productivity, it must also be sufficiently innovative to effectively compete with other businesses. Healthy competition helps to ensure elevated standards which, in turn, help motivate other businesses to aim higher.

Additionally, social enterprises empower local people to change their own communities, particularly with respect to sustainable efforts that can be easily accomplished by people with varying levels of education and skill. The people within the community feel more included in events occurring within their local economy and tend to become more active citizens.

Public and Private Ownership

Social entrepreneurship is, by nature, positioned between the public and private sectors. In the social economy, ownership decisions are typically predicated on several elements. Most social entrepreneurship ventures elect to remain in the private sector. This affords them the opportunity to build a social economy with minimal outside interference.

That said, there are certainly circumstances, usually finance-related, that require a given social enterprise to adapt itself to an existence within the public sector.

A Living Example

If you’re wondering how the social economy works, consider this example:

A woman wants to start a Bed-and-Breakfast at her home in a rural village. She knows that, since she lives outside of town, she faces a challenge in getting people to her premises. She identifies a young man in her village with a car and offers him an opportunity to transport guests to her home for a fee. This is the beginning of a social economy – finding ways to help others benefit from a venture.

Once guests begin to patronize her B&B, she finds that there’s room to sell cultural curios, so she hires a local woman to make and sell them at the inn for a profit. As she adds more services, her business continues to grow with relatively no additional incurred costs. However, thanks to the B&B, her village’s economy is growing.

As more guests visit, she realizes that she doesn’t have the capacity to feed them all, so she hires another villager to provide guest meals at a nominal cost. As time goes by, ever-more people are benefiting from the social economy created by her venture. Her efforts have improved the village and are continuing to build the local economy.

This is how social entrepreneurship works. It’s not primarily focused on profit and you can see that the woman in our example isn’t trying to do everything herself. Instead, her venture’s growth is directly tied to the community’s – and that is what’s working for her business.

About the Author

Dr. Joe Johnson is an entrepreneur, investor, and startup expert. He is the founder and principal of GoodField Investments and the GoodField Foundation (www.GoodField.com).

Joe has a Ph.D. in Entrepreneurial Leadership and an MBA. He is the author of the upcoming book on The Science of Why Most Entrepreneurs Fail and Some Succeed.

Most importantly, he is the incredibly blessed husband of one amazing wife and father of six wonderful children. He resides in Bradenton, Florida. For more information on Dr. Johnson and his work, go to www.JoeJohnson.com.