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Difference Between Social Enterprise And Business Enterprise

The main aim of the paper is to talk about the difference between social enterprise and business enterprise. The differences between the two kinds of enterprise will be critically highlighted, along with the similarities. The differences and the similarities will help in the understanding of the way in which these kinds of enterprises work. Real-life examples will be connected to the discussion, which will help the readers with a better understanding of the concept. The second part of the paper will critically assess the concept that social entrepreneurs seek profit maximization without diluting the ideology of social entrepreneurship. Similar real-life examples will be provided so that the credibility of the concept can be realized by the readers and to the future leaders of the business world. This could be considered an important area of research based on the claim that social enterprises tend to develop and apply innovation that is crucial to that of social and economic expansion and develop new goods and services (Panayotou 2016).

Apart from that, it could also be identified that social enterprises help in retaining and reinvesting profits into the local economy. Depending on the above statement, the importance of social enterprise could be significantly realized in the business setting. Lastly, based on the discussion and other readings, a thorough reflection will be provided, which will again help with introspecting the various aspects of social enterprises. All the claims that will be provided in the paper will be backed by a thorough discussion, and the discussion will be based on a reliable source of information.

In the beginning, it needs to be stated that the concept of social business has been initiated by Muhammad Yunus. As a matter of fact, a social business could be identified as a business that aims at solving social problems and the motive of those enterprises are not only related to profit-making. However, the profits that are made get distributed among the investors for the initial capital. Adding to that, they are also used for the purpose of catering to the operational cost of the business. Also, social businesses are generally identified in the healthcare, education, housing, nutrition, and financial sectors. The success factor related to these enterprises is directly connected to the amount of impact on society as opposed to the number of profits made (Ng 2022). Based on the observation that these enterprises primarily function to positively impact society, opposed to the number of profits made, the question of funding might significantly arise.

Similarities Between Social And Commercial Enterprises

It gets significantly important to understand the source of funding for social enterprises. Lee, Sameen and Cowling (2015) have claimed that the sources of funding significantly depend on the stage of the startup. It also takes into consideration the legal structure of the social enterprise, and lastly, it scans the maturity of the idea. Also, certain studies claim that the primary sources of funding include seed and angel funds, grant fund agencies, debt funding and they are also funded by the big social impact V.C.s (Lall and Park 2022). In order to understand the concept of social enterprise, a real-life example needs to be provided. There are several social enterprises around the world; however, there are certain social enterprises that need special attention. Belu is an award-winning social enterprise that has been bottling natural mineral water in the United Kingdom. It could also be identified that Belu has started selling water with the purpose of raising money. The noble purpose that the social enterprise tends to serve is that they help the individuals living without access to clean water (Kernot 2009). To be more specific, Belu enables 100% of their profits to the charity WaterAid. This charity helps in transforming lives worldwide with clean water.

Adding to the company has also been working with the U.K. hotel, restaurant and catering sectors and they have been fulfilling the water requirements and that too with the lowest carbon footprint possible (wateraid 2022). There are several other social enterprises that have been functioning in the United Kingdom, and to name a few, The Big Issue, The Eden Project. Friedman (2007) argues that social business has two principles on which they could be categorized. The first principle includes the social business that exist with the purpose of solving societal problems. The second principle tends to include the social enterprise that is society-owned, and they significantly exist to make profits and then distribute those profits to the less fortunate (Yamazaki 2018). Rachel Naomi Remen has presented a philosophical explanation of purpose-driven enterprises, which stated that "Helping, fixing, and serving represent three different ways of seeing life. When you help, you see life as weak. When you fix, you see life as broken." She adds to that, "When you serve, you see life as whole. Fixing and helping may be the work of the ego, and service the work of the soul." (Helman 2018). Based on this statement, the importance of social enterprises could be easily realized.

Critically Assessment For Social Entrepreneurs To Seek Profit Maximization Without Diluting The Ideology Of Social Entrepreneurship

Now, this part of the paper will highlight the differences between a social enterprise and a commercial enterprise. Identification of the differences will enable the readers to get a holistic view of the ways in which the enterprises have been continuing with their operations. Vismara (2016) states that Commercial enterprises have been significantly raising their capital from individuals and stock markets, whereas on the other hand, social enterprises tend to raise their capital from non-governmental organizations and sources. Based on this observation, it could be realized that social enterprises and business enterprises lenses their objectives from a very diverse bottom line. As a matter of fact, commercial enterprises are purely financial, whereas, on the other hand, social enterprises take into account the social assistances that significantly gets derived from the enterprise's operation.

With the differences that have been identified, it also gets significantly important to talk about the similarities that could be identified in relevance to the social and commercial enterprise. To be specific, it could be identified that social enterprise and commercial enterprise are equally determined. The next similarity that could be identified is that social enterprise and commercial enterprise both have the aptitude to look for resources in most remote places (Kwilinski et al., 2019). Apart from that, it could also be realized that they are significantly creative in their solution to the identified societal problems. Lastly, the most important similarity that could be identified is that both the category of enterprises tends to be built on something out of nothing. However, the fact that needs to be highlighted is that commercial enterprises are significantly moving toward philanthropic activities under the current circumstances. It has also been identified that these companies are opening sister companies which are primarily not for profit organizations (Kwilinski et al., 2019). These organizations are aimed at giving something back to the community where they have been significantly operating.

Critically Assessment For Social Entrepreneurs To Seek Profit Maximization Without Diluting The Ideology Of Social Entrepreneurship

In order to be considered an effective social enterprise, it gets significantly important for them to solve the issues related to achieving the right trade-off between the dual objectives of profit and purpose. The theory of social enterprise tends to enable the readers with the understanding that, in order to survive and help the community, it gets significantly important for those social enterprises to maintain a relevant ratio between profit and purpose. According to Rahdari, Sepasi and Moradi (2016), it could be realized that while resolving the relevant social issues, social enterprises has been indirectly or directly contributing to the socio-economic development of the country. Apart from that, it could also be realized that social enterprises tend to encourage community building. At the same time, social enterprises are able to nurture a culture of creative problem-solving in the community that has been able to facilitate economic development. Therefore, it could be realized that social enterprises do have a significant impact on the economy of any given country.

Now, it gets important to highlight that the concept of social entrepreneurship at times gets conflicts with the idea of profit maximization. The conflict could be realized based on a real-life example, that needs to be discussed. Ben and Jerrys was an ice cream brand that was primarily established with the purpose of pursuing strong ethical norms along with more commercial ends. To be more specific, the ice cream was manufactured in Vermont with the implementation of hormone-free milk and this milk was significantly sourced from local farms. Next, this milk was eventually sold to Unilever at the order of shareholders. The second part of the process tends to raise significant questions regarding their categorization, and many sources started to question them as a social enterprise (Defourny and Nyssens 2017).

Besley and Ghatak (2017), has been able to state the fact that the role to a recruitment strategy is based on motivation and not completely depending on ability. The connection gets depicted in the illumination of the process of social enterprises and that they have the ability to thrive and achieve an equilibrium between social goals and profit. Lee, Sameen and Cowling (2015) argues that in contrast to that of the nonprofits, it could be seen that social enterprises have significantly been able to issue equity as a source of enhancing their access to the capital markets.

Based on this observation, it could be realized that social enterprises have ample amount of opportunities to maximize their profit and that could be done with the implementation of specific strategies. It could also be stated that social enterprises will not be able to survive for a significant period if they are not focusing on the profit aspect. Therefore, finding the right balance between the concept of profit with purpose should be the primary motive of any given social enterprise.

Now it gets significantly important to reflect upon the discussion that has been presented. Reflection could be identified as the process of examining and also, at the same time, exploring the concepts along with the actions and the experiences (Ullmann 2017). Adding to that, it also helps in developing skills and also enables an individual to review the effectiveness of the concept. Business, in the current day scenario, is way more than just about the market forces of supply and demands. The above discussion and the course material has enabled me with the understand that, business in the current day scenario is about working cohesively with every individual in the system and at the same time, it is about working towards helping society to grow.

Connecting sustainable approaches to business practices is the primary motive of any given enterprise. As stated by Kiel et al. (2020), in their article that current day business cannot only focus on the economic aspects. It has become significantly important to consider the social aspect of the business and the biggest examples are social enterprises. Therefore, it could be realized that it is extremely important to include societal concerns in regular business decisions. This the only way in which the entire business industry will be able to create a positive impact on the world. This could only be achieved by collectively supporting the society and working towards a common goal. I have always wanted to become a business leader and have accordingly tried to shape my career. The study has helped me to understand the ways in which I could become not only a successful leader but also, at the same time, an effective leader. Apart from that, I have also realized the importance of the social responsibility programs. Shen and Benson (2016) claim that implementing social responsibility programs do have the ability to boost employee morale in the workplace and it has also been stated that this tends to increase productivity by multiple folds. Other studies have also claimed that enterprises that have been able to implement social responsibility initiatives have significantly increased customer retention and loyalty.

According to the sources, it could be seen that around 77 per cent of customers are interested to make their purchases from businesses that are significantly committed towards reshaping the world into a better place (Zheng and Chi 2015). On the other hand, it could also be seen that around 73 per cent of investors have claimed that their efforts to improve the environment and society has significantly contributed in relevance to their investment decisions (Abubakar 2015). Based on these statistics, it could be realized that business generally gets significantly rewarded by prioritizing most of the Customer Social Responsibilities. Therefore, it could be realized that taking social initiatives and working them into its strategic tactics will help in attracting both customers and, at the same time, will help in attracting the, investors. Based on the entire discussion, I have been able to realize that it is very much feasible for the social entrepreneurs to seek profit maximization without diluting the ideology of social entrepreneurship. Rather, it should be considered one of the most important aspects of the business as it will not only amplify the profit of a company but also, at the same time will, help in increasing the brand value of the enterprise.

Conclusion

On a concluding note, based on the entire discussion, it could be realized that supporting and encouraging entrepreneurs and helping them to realize the potential of their ideas becomes significantly important in their specific approach. The paper has also been able to facilitate the readers with the understanding that the entrepreneurship is a major driver of factors such as innovation, competitiveness, and growth. It should not matter whether it is a social enterprise or a business enterprise; both the presence is extremely crucial in the current business scenario.

Also, it could also be realized that social entrepreneurs do have the ability to seek profit maximization without diluting the ideology of social entrepreneurship in every sense. Finally, it could be easily realized that social and business enterprise should be considered as the cornerstone of a modern economy, and also, at the same time, they are considered as the lifeblood of thriving local communities. Also, it also enables us with the understanding that this tends to amplify employment opportunities and also augments growth in multiple aspects of the economy. Therefore, the paper has successfully been able to present the concept related to social enterprise and present the relevant discussion related to the same. The fact that makes the paper a significant source of information is that the discussions that are presented are based on reliable sources. Lastly, this paper could be used for the purpose of further research in connection with the current business market and the various concepts connected to it.

References

Panayotou, T., 2016. Economic growth and the environment. The environment in anthropology, 24, pp.140-148.

Kiel, D., Müller, J.M., Arnold, C. and Voigt, K.I., 2020. Sustainable industrial value creation: Benefits and challenges of industry 4.0. In Digital Disruptive Innovation (pp. 231-270).

Shen, J. and Benson, J., 2016. When CSR is a social norm: How socially responsible human resource management affects employee work behavior. Journal of management, 42(6), pp.1723-1746.

Abubakar, H.A., 2015. Entrepreneurship development and financial literacy in Africa. World Journal of Entrepreneurship, Management and Sustainable Development.

Zheng, Y. and Chi, T., 2015. Factors influencing purchase intention towards environmentally friendly apparel: an empirical study of U.S. consumers. International Journal of Fashion Design, Technology and Education, 8(2), pp.68-77.

Besley, T. and Ghatak, M., 2017. Profit with purpose? A theory of social enterprise. American Economic Journal: Economic Policy, 9(3), pp.19-58.

Ng, M., 2022. Social Enterprise and Private Business: What's The Difference?. [online] Linkedin.com. Available at: <https://www.linkedin.com/pulse/social-enterprise-private-business-whats-difference-ng?articleId=6550124404515438592> [Accessed 29 March 2022].

Lee, N., Sameen, H. and Cowling, M., 2015. Access to finance for innovative SMEs since the financial crisis. Research policy, 44(2), pp.370-380.

Lall, S.A. and Park, J., 2022. How social ventures grow: Understanding the role of philanthropic grants in scaling social entrepreneurship. Business & society, 61(1), pp.3-44.

Kernot, C., 2009. Social enterprise: A powerful path to social inclusion. Centre for Social Impact.

wateraid, 2022. Belu | WaterAid UK. [online] Wateraid.org. Available at: <https://www.wateraid.org/uk/get-involved/corporate-partnerships/belu> [Accessed 29 March 2022].

Friedman, M., 2007. The social responsibility of business is to increase its profits. In Corporate ethics and corporate governance (pp. 173-178). Springer, Berlin, Heidelberg.

Helman, C., 2018. Rachel Naomi Remen. In Doctors and Patients (pp. 43-46). CRC Press.

Vismara, S., 2016. Equity retention and social network theory in equity crowdfunding. Small Business Economics, 46(4), pp.579-590.

Kwilinski, A., Dalevska, N., Kravchenko, S., Hroznyi, I. and Kovalenko, O., 2019. Formation of the entrepreneurship model of e-business in the context of the introduction of information and communication technologies. Journal of Entrepreneurship Education, 22, pp.1-7.

Rahdari, A., Sepasi, S. and Moradi, M., 2016. Achieving sustainability through Schumpeterian social entrepreneurship: The role of social enterprises. Journal of Cleaner Production, 137, pp.347-360.

Defourny, J. and Nyssens, M., 2017. Fundamentals for an international typology of social enterprise models. VOLUNTAS: International Journal of Voluntary and nonprofit organizations, 28(6), pp.2469-2497.

Ullmann, T.D., 2017, March. Reflective writing analytics: Empirically determined keywords of written reflection. In Proceedings of the Seventh International Learning Analytics & Knowledge Conference (pp. 163-167).

Yamazaki, K., 2018, January. Design Approach for Sanpoyoshi Principle and Case Study. In International Conference on Intelligent Human Systems Integration (pp. 543-549). Springer, Cham.

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