How social entrepreneurship is influencing the next generation

Image | Charles Forerunner

Philadelphia has evolved into a central hub for social benefit ventures, and local universities are prioritizing purpose-oriented strategies rather than profit-based ones given the mounting interest in social entrepreneurship.

Business programs across campuses are promoting the study of cause-related marketing campaigns and social impact investing, and this emphasis on societal concerns is dulling the interest in basic business principles and practical information (like the need for securing investors or drafting a business plan).

Students are feeling pressured to serve as social agents (to save the ocean from pollution or provide housing for the homeless) and the focus on social performance rather than financial performance is downplaying the benefits of wealth creation and its spill-over effects.

For-profit businesses improve access to products and services, pay taxes, and provide jobs. Businesses drive economic growth – which raises the standard of living and our quality of life.

The ways for-profit businesses improve our lives should not be minimized or marginalized, especially on campus.

Economic productivity is a noble pursuit, particularly given that those who work in thankless positions are often the backbone of American enterprise. Yet higher ed institutions are deflating those positions by placing the spotlight on social initiatives.

Take Temple’s Be Your Own Boss Bowl, hosted by the Fox School of Business. The BYOB started in 1997 as a competition to promote and reward entrepreneurial ideas. However, by 2011, a Social Impact Tract was added. Although there is still a general undergraduate tract and an upper-class tract (for grad students, alumni, and faculty/staff), this new category obstructs them by implying that a business being a business doesn’t generate social value in and of itself.

The Social Entrepreneurship Summit, now in its fifth year, and the Changemaker Challenge, also promoted by Fox, encourage students to be outward-oriented “advocacy agents” more than self-directed, self-reliant risk-takers.

Instead of being motivated by the gains of exchange, students are prompted by communal concerns. And students interested in entrepreneurship competitions feel the pressure to feature a social cause within their business plan to prove their goodwill rather than simply their business savvy.

Drexel University takes the social impact focus a step further. Students can opt for a social entrepreneurship minor as well as a certificate or a master’s in social entrepreneurship. Drexel’s Close School espouses that a central aim is to prepare students to “pursue solutions to society’s problems.

Certainly, we all want the world to be a better place, but things get tricky and contentious when we ask according to whose morals and by what means.

The implications of ethical sourcing and conscious consumption are not always clear-cut or easily understood, and imposing one’s views of “what is right” or “what should be done” is often patronizing or paternalistic.

Moreover, what constitutes a “social impact” is largely subjective, as are its measurements. This is why even Warren Buffet argues against firms playing the part of “moral arbiters.”

Probably the most prominent player in the social marketing scheme is the University of Pennsylvania. Wharton’s Social Impact Initiative states their mission is to “Strengthen the role of business in creating a more inclusive, equitable, and sustainable global economy.” In addition to a whole slew of courses and programming, the Social Impact Initiative promotes impact investing and loan forgiveness for alums seeking to solve social problems.

Accordingly, a student opening an accounting firm is not praised or rewarded to the same degree as a student pursuing a non-profit venture. This is unfortunate given that the economic benefits for society derived from for-profit firms far outweigh that of non-profits.

The non-profit sector has been surging at a growth rate of 20%, whereas the for-profit sector has only grown by about 3%. Moreover, for-profit employees are opting to work at non-profits at a significant pace given the uptick in salaries being offered and the activism accolades one can receive.

The non-profit sector is the third-largest US employer (behind retail and manufacturing), and graduates of these Philly programs will surely lead to a further expansion locally.

Herein lies the problem: Students will be pursuing ideas that require donor financing, government grants, and non-profit partnerships instead of embracing the profit motive. Given that it is a rare occurrence for donor/recipient relations to be devoid of strings attached, non-profits tend to be influenced by and reactive to their contributors. This is unlike entrepreneurs who must be responsive to the desires of constituents and consumers to ensure satisfaction and value creation.

The obsession with having a social impact that local universities push onto students misses the vital social impact already accomplished by the for-profit realm.

Financial performance improves opportunities and funding streams for addressing social matters, not the reverse.

Along these lines, the corporate social responsibility (CSR) construct of Professor Archie B. Carroll, an internationally known scholar on this topic, holds that CSR is composed of economic, legal, ethical and philanthropic responsibilities.

“The economic performance of businesses is foundational to all the rest. Companies are required to be economically sustainable and thus profit-making is the building block upon which the other responsibilities rest,” Carroll said. “What can have more social impact than for businesses to provide the goods and services, along with jobs, that society needs?”

So, rather than having students focus on society’s ills, let’s empower them to determine their own means for personal progress and remind them that money-making is not an evil endeavor when done ethically and efficiently.

Students should be basing their experiences in the economic realities that have allowed this country to prosper, and embrace the American work ethic in the traditional sense rather than adhere to the moral sentiments of degree granting institutions that foster savior like mentalities.

The road to hell is often paved with good intentions, and it would be good for students to be made more aware of this fact.

Kimberlee Josephson is an Associate Professor of Business and the Associate Dean for the Breen Center for Graduate Success at Lebanon Valley College.

    • Kimberlee Josephson is an Associate Professor of Business and the Associate Dean for the Breen Center for Graduate Success at Lebanon Valley College.

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