Chapter 2 Social Entrepreneurship as Organizational Behavior

Opening Discussion Read the case of the PaperSeed Foundation and answer the following questions:  Is PaperSeed a social entrepreneurial organization? Why (or why not)?  Is PaperSeed more (or less) socially entrepreneurial than another organization that you are familiar with? Why?

Chapter Outline Entrepreneurial orientation (EO) Entrepreneurial intensity (EI) Social entrepreneurial orientation (SEO)

Entrepreneurial Orientation (EO) The EO construct serves to conceptualize the processes, practices, and decision-making activities that lead to the act of entrepreneurship.  Can be associated with both individuals AND firms EO is recognizable through the presence of sustained behavioral patterns in terms of three common features:  Risk taking  Innovativeness  Proactiveness

EO in the Nonprofit Sector Context Similarities between nonprofits and business organizations in terms of EO:  Innovativeness  Proactiveness Differences between nonprofits and business organizations in terms of EO:  Risk-taking propensity, with consideration for the notion of prudent risk taking in the nonprofit sector context  Social mission

How Is EO Measured? EO is a latent construct that cannot be observed or measured directly. To measure EO among business organizations, Miller and Friesen develop a fifteen-item scale that examines the three EO dimensions. In the nonprofit sector context, items include, among others:  A high rate of new program and service development compared to other organizations in the field/area  Risk-taking by key managers or administrators in seizing and exploiting new opportunities  Managers’ pursuit of unusual, novel solutions to problems  Active searches for major new opportunities

The Antecedents of EO Existing research suggests a number of important factors influencing the levels of EO:  Organizational structure: Fewer layers or levels in the organizational structure; broader spans of management control; general orientation toward a more horizontal, less vertical design; a more active board of directors; and so on  Transformational leadership style  Organizational control systems: Informal control, flexibility, resource discretion, and so on

The EO-Performance Relationship The positive relationship between EO and organizational performance is well documented in the commercial entrepreneurship literature. In the public and nonprofit sector context, the relationship between EO and organizational performance is less clear, for these possible reasons:  Nonprofit scholars use a wide range of measures to capture the major EO constructs, which makes it difficult to compare results across different studies.  Whereas business enterprises focus on economic performance, nonprofit organizations value economic performance and, more important, social performance.

How Is EO Measured? How about you? What is your level of Entrepreneurial Orientation? Let’s take the test……

How Is EO Measured? How you score? If your score was 15+, you may want to seriously think about starting your own firm Scoring less might mean you need to think about a choice to start a company much more carefully. Why didn’t the test ask about risk, age or desire to get rich? What questions do you think should have been added (especially from a Korean perspective)?

How Is EO Measured? That test was set up to measure the aptitude towards being an entrepreneur. Did it do a good job measuring EO? Why/not? Now…what questions might we need to add if we were to measure Social Entrepreneurial Orientation ?

Entrepreneurial Intensity (EI) The concept of EI is an extension of EO EI is a function of both the degree (“How much?”) and frequency (“How often?”) of entrepreneurship that the organization demonstrates over time.  The degree of entrepreneurship: an organization’s entrepreneurial behavior may differ in terms of its levels of innovativeness, proactiveness, and risk-taking characteristics.  The frequency of entrepreneurship: this refers to the number of times an organization acts entrepreneurially.

The Entrepreneurial Grid

Where do the following firms fit? Which firms can you name?

Limitations of EO and EI These constructs seem to capture the “entrepreneurial” part of social entrepreneurship more effectively than the “social” part. It is necessary to incorporate consideration of mission relevance (or mission alignment) into the EO and EI constructs. There have been prior efforts in this direction.

Social Entrepreneurial Orientation (SEO) SEO is defined as a set of distinct but related behaviors that demonstrate an organization’s propensity to engage in social entrepreneurship. It extends the concepts of EO and EI in that it adds social mission as a separate dimension. It is thus conceptualized as a three-dimensional construct:  The degree of entrepreneurship  The frequency of entrepreneurship  The connection to social mission

SEO: A 3-D Matrix

Measures of SEO To measure SEO, a fifteen-question instrument is developed: (Book Exhibit 2.1)  Nine questions are designed to measure an organization’s degree of entrepreneurship: three questions each to assess innovativeness, proactiveness, and risk-taking.  Three questions measure an organization’s frequency of entrepreneurship.  Three questions measure the relevance of the organization’s processes, policies, products, or services to its core mission.

Exercise Select an organization (pref. social enterprise, but if not, any will do) that you are familiar with, then use the SEO instrument to assess its levels of SEO based on the three key dimensions. Visualize your assessment by placing the organization in the 3-D matrix. Compare your assessment with those of your classmates and see how organizations vary in their levels of SEO.