3.1 The difference between social entrepreneurship and traditional entrepreneurship
Social entrepreneurship includes two main areas: social and economic, based on this, a large number of different interpretations of social entrepreneurship have appeared.
Initially, it is necessary to determine the basic concept of "entrepreneurship". Economists consider entrepreneurship to be a driving force contributing to the well-being of society. In this case, society puts forward needs, and entrepreneurs throw their efforts to meet needs. In this sense, entrepreneurial activity expands the boundaries of solving social problems.
According to the Civil Code of the Russian Federation (Article 2), an entrepreneurial activity is an independent activity carried out at its own risk, aimed at systematically obtaining profit from the use of property, the sale of goods or the provision of services by persons registered in this capacity in accordance with the procedure established by law."
Entrepreneurship is the free economic management of the economy in various fields of activity carried out by subjects of market relations in order to meet the needs of specific consumers and society in goods (works and services) and to obtain profit (income) necessary for the self-development of their own business (enterprise) and to ensure financial obligations to budgets and other economic entities.
The most typical and capacious definition of entrepreneurship is given in the work of American scientists R. Khizrich and M. Peters: "Entrepreneurship is the process of creating something new with value; a process that consumes time and effort, assuming financial, moral and social responsibility; a process that brings monetary income and personal satisfaction with what has been achieved." Thus, traditional entrepreneurship is a process of introducing innovative ideas aimed at meeting needs with obtaining material benefits (Khizrich, 2011). The question arises: what is the main difference between social entrepreneurship and traditional entrepreneurship? To answer this question, we will analyze various approaches to the definition of social entrepreneurship, as a result of which we will determine the main signs of this phenomenon.
It is worth noting that the very concept of "social entrepreneurship" began to be used in the literature in the 60 - 70s of the XX century, and only 20 years later this term was widely recognized in foreign literature in the field of management. At the present stage, a large number of definitions of the concept of "social entrepreneurship" are presented in foreign economic literature, but there are no clearly defined boundaries for this term. The difficulty of forming the concept of social entrepreneurship is associated with the creation of a theoretical base on practical knowledge and analysis of existing cases. The absence of a generally accepted interpretation of the term and its boundaries leads to a blurring of the boundaries between social entrepreneurship and entrepreneurship in the social sphere.
For the first time, the problem of social entrepreneurship was addressed by G. Dees (Dees, J.G., 2001). The researcher believes that the phenomenon has always existed, but scientists have not previously dealt with this issue. In 1963, B. Drayton characterized "social entrepreneurship" as a phenomenon. The founder of the organization "aShoka: Innovators for Society", which unites and supports social entrepreneurs around the world, defined a social entrepreneur "as an individual who combines the practical and result-oriented methods of a business entrepreneur with the goals of a social reformer (Ashoka, 2000). Until 1990, as such, there was no theory of social entrepreneurship, there were no definitions, there were only rare mentions of the term associated with values and social movements. Interest in social entrepreneurship increased with the greatest force in the 1990s. In 1997, a School of Social Entrepreneurs was established in the UK under the leadership of M. Young. At this time, the first attempts to define the term and the first studies appear. The main persons in this period are S. Waddock, D. Post, S. Campbell, G. Diz, G. Prabu. Social entrepreneurs are defined as agents of change in the social sector, they discover and distribute undervalued resources or change the order of distribution of rare public resources.
An important event in the formation of the concept of social entrepreneurship was the awarding of the Nobel Prize to social entrepreneur M. Yunus, founder of Grameen Bank, in 2006. This event caused a new wave of interest in social entrepreneurship, which led to a large number of scientific papers written by R. Harding, P. Light, D. Mair, I. Marti. Attempts to create a general concept of social entrepreneurship and generalize previous experience have led to the understanding of social entrepreneurs as organizations or individuals taking risks, using innovations, refusing to accept limitations in existing resources and trying to solve pressing social problems.
Social innovations are innovations in the form of strategies, concepts, ideas aimed at solving social problems and meeting social needs. The boundaries of social innovation are quite wide: from improving working conditions, the emergence of new services in education, the creation of innovative communities acting in the public interest, to the modernization of public policy and management. The purpose of social innovation is to create favorable conditions for the development of society. Without innovation, social entrepreneurship is not able to present a solution to social problems to society. Only innovative ideas and their implementation can turn negative social issues in a positive direction. Just as businessmen in the commercial sector discover new business models, social entrepreneurs find new, radical solutions to social problems and bring them to life. They see opportunities that are invisible to other people, and improve the system by introducing new approaches and coming up with solutions that bring favorable changes in society.
Since 2007, there has been a period of active formation of social entrepreneurship, researchers have resorted to many attempts to form a theory, the concept of the term. Civil society is seeking state support in this matter, the legal status of social entrepreneurship is being consolidated. Leaders who take risks and find innovative ways to combine resources to solve social problems and create social value are social entrepreneurs. The main researchers in this period are D. Bornstein, R. Martin, A.A. Moskovskaya and others.
Most definitions of social entrepreneurship can be combined into three fundamental groups (Antonikova N.A., 2016):
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1. Definitions that emphasize that social entrepreneurship is the creation of commercial enterprises with a social purpose. These definitions have a disadvantage, which is that the activity of an enterprise can be any, if the income from it will be directed to solving social problems. Thus, social entrepreneurship is automatically identified with such concepts as charity, corporate social responsibility, philanthropy, etc.
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2. Definitions that highlight the innovative activity of entrepreneurship as a significant emphasis in order to achieve a significant social effect. This approach increases the importance of the innovative component for solving socially significant social problems. These definitions, focusing on the mobilization of resources to solve social problems, identify social entrepreneurship with the activities of non-profit organizations.
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3. Definitions emphasizing the peculiarity of social entrepreneurship in the way of social transformation leading to global strategic changes. These interpretations shift the focus from the current problem to the change of the entire social order. In our opinion, social entrepreneurship is reflected in every approach considered earlier.
Gregory Dees, the founder of the definition, identifies specific factors that distinguish social entrepreneurship from traditional entrepreneurship (Dees, 2001).:
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1. Taking on the mission of creating and maintaining social value (good);
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2. Identification and use of new opportunities for the implementation of the chosen mission;
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3. Implementation of a continuous process of innovation, adaptation and learning;
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4. Determination of actions not limited by available resources;
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5. High responsibility of an entrepreneur for the results of his activities - both to direct clients and to society;
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6. Combining available resources to create opportunities to accelerate social change and/or meet social needs;
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7. The emergence of social transformations as one of the results of the activity of a social entrepreneur (Alter K., 2017). According to G. Dees, social entrepreneurship uses the best practices of traditional entrepreneurship to fulfill its social mission (DEES, 2001).
Social entrepreneurship is a new way of socio-economic activity that combines the social purpose of an organization with entrepreneurial innovation and the achievement of sustainable self-sufficiency. Social entrepreneurship is based on the functioning of so-called social enterprises - enterprises created to solve a certain social problem or problems, operating on the basis of innovation, financial discipline and business practices adopted in the private sector.
Thus, based on the analysis of research sources, it can be concluded that social entrepreneurship in Russia is entrepreneurial activity aimed at solving or mitigating urgent social problems. However, the main difference between social entrepreneurship and the activities of commercial structures is that the interests of society are brought to the fore, leaving behind the desire for financial profit.
The development of social entrepreneurship carries many factors that have a positive impact on the life of society:
1) social support: work with socially unprotected segments of the population, socialization of socially vulnerable groups of the population, implementation of projects aimed at employment of persons without a fixed place of residence, etc.;
2) ensuring employment of the population by means of implementing social projects that ensure self-employment of the population, creating jobs for social organizations;
3) the growth of socio-economic efficiency of Russian regions by reducing the burden on budgets of all levels through the implementation of private social entrepreneurial projects, in which the state plays a dominant role. These tasks in Russia are set in the field of development of preschool, specialized and additional education, healthcare (including private nursing homes), mass sports, etc.;
4) territorial development by saturating the urban environment and increasing territorial connectivity, including through the development of unused land and the creation of transport infrastructure;
5) development of the cultural environment through the most effective use by social entrepreneurs of the potential of cultural institutions.
3.2. Development of social entrepreneurship in Russia and abroad
According to analysts, the share of social entrepreneurship in Russia today accounts for no more than 1% of business enterprises. To date, almost 1,200 small and medium-sized businesses have received the status of "social enterprise" in the Unified Register of Small and Medium-sized Enterprises in Russia. In European countries, the share of social enterprises in the sector of small and medium-sized enterprises is on average 2.6%.
Social entrepreneurs in Russia, whether organizations or individuals, can work in various fields, implementing social projects within their core activities: healthcare, education, agriculture, services.
Social entrepreneurship in Western countries appeared through the transformation of the model of activity of charitable and volunteer organizations. Their activities have grown into the production and sale of goods, the provision of commercial services and the use of profits to solve social problems.
The development of social entrepreneurship in Europe has a longer history than in Russia, Latin America or the USA. First of all, this is due to the traditions of the cooperative movement and workers' associations, rooted in self-help organizations created by workers in the 19th century. It is also worth noting the active role of the state providing assistance to social enterprises.
Delving into history, we find the concept of "social enterprise" in the form of a stable term in Italy, which appeared in 1990 in the magazine of the same name "Impresa Sociale".
In the USA, the concepts of "social entrepreneur" and "social enterprise" began to gain popularity around the same years, in particular, at the Harvard Business School in 1993, the structure of the "Social Enterprise Initiative" was already created to study the experience of social enterprises, as well as training and consulting social entrepreneurs - profitable, non-profitable and public sector who want to improve the living conditions of their communities. Currently, assistance to social entrepreneurs abroad is direct investment through various funds or government programs, they exist in all Western countries, but there are also specifics. Now in the USA, social entrepreneurship is a profitable business aimed at providing social assistance to needy members of society. In the USA there is a program "Money for successful projects". The government is more actively financing the projects of those entrepreneurs whose activities are self-supporting and do not require subsidies. So, social entrepreneurship is the leading trend in the American Silicon Valley. In 2011, in the USA, social entrepreneurship was first named the fourth sector of the economy (Social Enterprise Initiative, 2020), (Osina D., 2020).
Currently, "social cooperatives" are active in Italy. If a firm sets social tasks for itself, and more than 30% of citizens from unprotected segments of the population work in its composition, the company is recognized as a social cooperative and provides tax benefits.
In Australia, it is believed that investors better support those projects where the state risks with them on an equal footing. Hence the state program "one to one": the government invests in the project exactly as much as the investor himself.
In Europe, social entrepreneurship appeared later and originated in the UK. It was in this country that the term "social entrepreneur" was first used in the 60s of the twentieth century. It is worth noting that the legislation of different countries set different directions for the development of social entrepreneurship. In 2002, in the UK, according to the law, social enterprises began to be enterprises with primarily social goals, with the condition that income was directed specifically to the realization of these goals (it meant the development of their own business), and not to maximize the profits of the owners.
Thus, the Italian law focused on the need to involve stakeholders, primarily socially vulnerable groups of employees and customers, the British law paid special attention to the market conditions of social organizations - about 50% of their income was to be received on the basis of the sale of goods and services.
In many Western countries, there is a separate organizational and legal form and a separate law for social enterprises. So, for example, in the UK there are "public benefit companies", and the criterion of social
the entrepreneur is that he can distribute only 35% of the profit among the shareholders, he is obliged to direct the rest of the profit to social tasks (N.I. Zvereva, 2020). It is worth noting the existence in the UK of a special department of social enterprises in the Department of Industry and Trade.
Currently, social entrepreneurship as a type of economic activity in the countries of the European Union is studied within the framework of economic law, which is divided into three components: "economic and private law (the area of private law relating to the economy), economic and criminal law (a set of norms establishing criminal liability for economic crimes) and public economic law, or economic and administrative law."
Thus, our analysis of the scientific literature has allowed us to identify many approaches, some of which are radically different from each other. However, the generally accepted characteristics of social entrepreneurship stand out, they include: the primacy of social mission over commerce, self-sufficiency, scalability, innovative approach. In addition, the shortcomings and difficulties of social entrepreneurship were identified.
3.3. Features of social entrepreneurship model
Scientists usually distinguish two main types of social enterprises: some are based only on charity and others are based only on commerce. Thanks to K. Alter, a third type of hybrid enterprises appeared (see Table 1) (ALTER, 2017)
Table 1
Features of models of social organizations
(Source: Alter K., 2007, p. 13 (adapted taking into account: Dees et al. 2001, Davis & Etchart, 1999)
| Organizations | Based on pure charity | Hybrid | Based on pure commerce |
| Motives | Good will | Mixed | Personal gain |
| Methods | Determined by the mission | Determined by a combination of mission and market | Determined by the market |
| Goals | Creating social value | Creating social and economic value | Creating economic value |
| Purpose of income/profit | Directed directly to the implementation of the mission of non-profit organizations (determined by the law or the policy of the organization) | Reinvested in the implementation of the mission, or on operating expenses and/or retained for business expansion and development (may be partially redistributed between participants)развития бизнеса (может частично перераспределяться между участниками) | Distributed between shareholders and owners |
Table 1 shows that the main differences between different models of social entrepreneurship mainly lie in the goals and distribution of profits.
For social entrepreneurs based on pure charity, the main goal is to solve a socially significant problem and they reinvest the profits from their activities in this solution. For social entrepreneurs based on pure commerce, the main goal is to make a profit, and the profit itself will be distributed among the participants (Moskovskaya A.A., 2020).
In turn, hybrid organizations combine social and economic qualities. In his theory of hybrid organizations, K. Alter shows that the fulfillment of a social mission using the mechanisms of entrepreneurship is much more effective than if non-profit organizations were at the heart of solving social problems (Alter, 2017).
The main provisions of hybrid organizations are:
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- a combination of goodwill and personal benefit of the organization's management;
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- the methods of work are determined not only by the social mission, but also by market conditions;
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- the created product (service) represents not only social, but also economic value;
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- the profit received is fully or partially invested in the further expansion of the business (depending on the organizational and legal form of the enterprise).
Table 2
Spectrum of hybrid organizations (Alter K., 2007, p. 14).
| The spectrum of hybrid organizations |
| Traditional non-profit organizations (NPO) | Non-profit organizations with profitable activities | Social enterprises | Socially responsible business | Companies practicing social responsibility | Traditional profitable organizations |
| Mission-defined motivation; Responsibility to stakeholders; Reinvestment of income in social programs, or operating expenses | Motivation to make a profit; Responsibility to shareholders; Profit is distributed among shareholders. |
Based on the identified features of social entrepreneurship, its main functions can be determined:
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1. creation and development of social infrastructure;
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2. organization of support for socially vulnerable categories of citizens;
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3. search and implementation of innovative methods to achieve their goals; making decisions aimed at social impact and not limited by available resources;
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4. implementation of a continuous process of innovation, adaptation and learning;
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5. organization of activities characterized by a high level of responsibility to customers and society as a whole;
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6. mitigation of problems of social inequality.
3.4. Development of social entrepreneurship as an effective way to solve social problems
Currently, we can talk about social entrepreneurship as a widespread phenomenon: in 2019, representatives of more than 150 countries from Africa, Asia, Europe, North and South America, Oceania took part in the World Social Entrepreneurship Week.
The development of social entrepreneurship as an effective way of solving social problems has its own peculiarities in various territories. In this regard, there is a need to turn to the foreign experience of the formation of social entrepreneurship in order to avoid possible future unsuccessful results, rationally determine measures for the further development of social entrepreneurship in Russia.
A special contribution to the development of social entrepreneurship in the world practice belongs to the United States of America. The reasons for the emergence of social entrepreneurship in the USA were the removal of the state from solving social problems, the developed infrastructure formed thanks to various funds, as well as scientific developments in this field (Kerlin J., 2006).
The peculiarity of the American way of developing social entrepreneurship is the presence of an extensive and stable system of private support in the form of charitable foundations and tax benefits for the economic activities of non-profit organizations. The largest of them is the Ashoka Foundation, established in 1980 by McKinsey business management consultant Bill Drayton. In 1981, the fund's budget was 50 thousand dollars. Today it exceeds $85 million. The financial well-being of the fund is ensured by investment support from private individuals and non-state structures. The fund does not accept any financial injections from the state. The number of entrepreneurial social initiatives supported by him, according to the latest report, has reached three thousand.
The key criteria when making a decision to support a project are: the novelty of the idea, creativity, entrepreneurial abilities, ethical values and the presence of a social effect.
The American approach implies a broad definition of social entrepreneurship, where "social enterprises include a number of organizations and activities that are created to solve social problems, but are financially stable and earn independently on fulfilling a social mission." The most common organizational and legal form in the United States are low-profit companies (low-profit limited liability company).
A review of the legal structures and legislation of many European countries that have adopted domestic laws regulating social enterprises (Belgium, Finland, France, Italy, Poland, Portugal, South Korea) shows that these laws solve common problems of institutionalization of social entrepreneurship, are determined by the organizational and legal form of social enterprises, the conditions for their certification and tax benefits.
The first European country to support social entrepreneurship at the state level was Italy, which approved the organizational and legal form of a social cooperative in 1991. The Italian Law on Social Cooperatives divided social enterprises into two groups. The group "A" (social services) included cooperatives providing services in the field of health, education, care for the elderly and the disabled, and the group "B" - social enterprises providing any services, the main purpose of which was to provide employment for vulnerable segments of the population. Portugal, Greece, France, and Poland followed the Italian path (Kerlin J., 2006).
Since 2003, the Polish Government has been pursuing an active policy aimed at mass dissemination of the idea of opening social cooperatives. The population groups that have the right to create social cooperatives are the unemployed for a long time, released from prison, refugees, the disabled, the homeless, who have become dependent on alcohol and drugs. The start - up capital for the opening of a cooperative is provided by the state in the amount of a subsidy of 3,500 euros .
In 2002, UK social enterprises received legislative support. The Government has approved the definition of "social entrepreneurship" as "a business that sees as its main goal the fulfillment of social tasks, whose profits are reinvested for this purpose or for the local community, and not distributed among the owners of the business or its shareholders."
In 2005 The Government of the country has established a new legal status specifically designed to define social enterprises - "public interest companies". However, unlike continental economies, where the laws focused on the involvement of vulnerable groups in employment and the restriction of profit distribution for social purposes, the British law focuses on improving the efficiency of market performance of social enterprises: at least 50% of income should be obtained through the sale of goods and services to the population, i.e. this is a new type of company created for the purpose of conducting commercial activities in the interests of a community (Davronov B.B., Chikova O.M., 2014), (Defourny J., 2019), (mOskovskaya A.A., Soboleva I.V., 2018), (Sorvina T.A., 2014)
The European experience of the practice of applying social entrepreneurship differs significantly from the American one, since it has several features.
Firstly, the emergence of social entrepreneurship in Europe was due to the active support of the state.
Secondly, in Europe, social entrepreneurship is the most institutionally mature form of intersectoral partnership, in which the state, business and non-profit organizations find ways to cooperate to solve social problems that go beyond their direct influence or require pooling resources.
Thirdly, the entrepreneurial nature of this type of activity is shown.
Fourth, in the European context, the cooperative movement served as the basis for the development of social entrepreneurship. Perhaps that is why, unlike American social enterprises focused on the production of a "social product" available to consumers free of charge or at below-market prices, European social entrepreneurs are aimed at creating new jobs for vulnerable groups with reduced competitiveness in the labor market.