Jacques Defourny, an Economics professor at the University of Liège, Belgium who is a social economy expert, talks about the recent boom in social entrepreneurship and points out the differences between the United States and Europe in this field.
Gridmates, which enables people to share electricity, Dowino, which makes entertainment accessible to the visually-impaired, Homelink (in French), which helps to reduce the number of homeless people – there is a growing trend towards startups with a social conscience. These ‘social entrepreneurs’ are focusing on society’s key issues, practically relegating the profit motive to a matter of secondary importance. Jacques Defourny helps us understand this phenomenon, which is perhaps not as novel as we might think.
L’Atelier: We’re seeing more and more startups nowadays with social objectives – helping to reduce poverty, assisting the underprivileged and so on. What’s the difference between these young companies and existing enterprises and charities?
Jacques Defourny: Well, every company has its social aspects – duly paying salaries, creating jobs, purchasing locally, etc. All this has a social impact. But we tend to reserve the term ‘social entrepreneurship’ for those cases where the social objectives carry as much weight as the profit motive.
There are many different types of initiative here. But a movement is definitely underway and has really taken off in industrialised countries, more so than in the poorer countries. This doesn’t mean that there aren’t any initiatives in, say, Africa, but when we talk about the rise in social entrepreneurship we’re mainly thinking about Western concepts and trends.
Is this a new movement?
Well, it’s fashionable nowadays to say that social entrepreneurship is a brilliant idea, especially because firstly, the State no longer has the means to run all social initiatives and secondly because private companies only invest in sectors where they can make a profit. So there’s a huge gap where we need initiatives with private sector qualities – flexibility, dynamism, risk-taking – plus public authority features – focusing on the common good, addressing society’s main issues, etc. This is the area of the economic spectrum where social entrepreneurship sits. In this field there are a number of schools of thought: for instance, on the one hand you find charitable organisations which hook up with businesses in order to obtain additional funding, and then there are businesses which set out to address some of society’s issues.
Everyone talks about social entrepreneurship; there’s a magical ring to the word. Probably because our society has stacks of problems and these social entrepreneurs seem to be offering potential solutions.
So can these entrepreneurs really change things and sort out some of the problems?
Well, it’s a bit too soon to tell. However, we should be aware that this very ‘sexy’ term – ‘social entrepreneurship’ can also be used as a lens through which to take another look at the existing social economy – charities, foundations, and so on. This third – non-state but non-capitalist – sector also started with charismatic leaders such as [French movie actor and founder of free meals provider ‘les Restos du coeur’] Coluche, and Abbé Pierre [who founded the Emmaus movement that assists poor and homeless people and refugees], who built up huge charity organisations. So it wouldn’t really be right to regard social entrepreneurs as something entirely new.
‟At the moment we can’t say that these ‘new’ entrepreneurs are going to change the world”
Providing personal services, ‘fair trade’ food, and schemes for helping people to re-integrate into society through work are all areas that have really taken off in recent years. But these are all things that used to be the province of charitable organisations. So we’re looking at a process. At the moment we can’t say that these ‘new’ entrepreneurs are going to change the world.
How is digital technology changing the process you describe? Can crowdfunding for example give a new boost to this type of initiative?
Well, it’s a fact that we’ve seen a large number of crowdfunding initiatives over the last five years. The Internet has huge potential for reaching out to people, whereas in the past such activity was restricted to those who could afford to pay for mass mailings of prospectuses, ad campaigns, etc. The Web has brought communications and marketing within reach of everyone and a lot of ventures have started up as a consequence.
You’ve written a lot about the difference between the United States and Europe in terms of their view of the social economy. Is the difference cultural, historical, legal, or what?
The first difference is that in the United States budget cuts began with the Reagan administration in the 1980s. This wasn’t the case in Europe at that time. Another factor is that in the US people like the idea of ‘hero’ figures.
‟In the United States, the focus is on the personality of the lone entrepreneur”
Americans like to honour their heroes and the ‘success stories’ that have been highlighted tend to give the impression that what we’re now seeing is a new generation of social entrepreneurs. The focus is on the personality of the lone entrepreneur while in Europe people tend to talk more about collective effort, for example highlighting what the members of a charity organisation are doing. The huge scale of foundations in the US has accentuated this phenomenon: great philanthropists in the mould of Bill Gates want to be talking to an entrepreneur rather than a charity. The second difference is that the United States has seen a proliferation of consultancy firms which work with charitable organisations on fund-raising campaigns, for instance. In Europe we see far less of this.