The Social Entrepreneurship Model

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Social Firm Entrepreneurship  The Social Entrepreneurship Concept and Model In the neoclassical theory the traditional model of the enterprise is one in which ownership rights are held by investors and the main objective of the enterprise is the maximization of profits. The social enterprise is considered as being part of the third sector and has distinctive features both from private and public firms. According to Rory et al. (2013) the term third sector encompasses more voluntary bodies, charities, social firms and producers, marketing and consumer cooperatives. Many of these organizations share a common goal of reducing social exclusion, provision of services more cheaply and negotiating access to scarce resources by collective bargaining…show more content…
By mobilizing social capital the SE has the potential to reduce transaction costs which are associated with lack of trust. For Coleman (1990) and Putnam (1993) the social capital is a set of resources that center on organizational operations, networks, norms and trust and further coordination and cooperation thus providing mutual benefits. In this way the social capital in SE leads to increased trust and reduces the motive to behave in an opportunistic manner which in turn decreases transaction costs. Besides the boost of trust the social capital in these organizations improves the productivity of production factors (Laville J. et al, 2010) and thus the return on financial capital. SE demonstrates ability to be innovative and to mobilize social capital by transferring it from the private to the public sphere. The striving to provide collective benefits to society is an element of its entrepreneurial…show more content…
Thus independent social entrepreneurs have an important complementary role to undertake flexible and continuous innovations, experimentations and dealing with various current or future problems. In order to be successful the social entrepreneur is reliant on the existence of supportive institutions (legal, cultural, organizational etc. environment) to promote the ideas of social entrepreneurship. Thus this process should go hand in hand with active institution building process and establishment of mechanisms for knowledge dissemination, designing financial markets and necessary underpinning structures to improve the selection and investment process. On the other hand, the microeconomic perspective on social entrepreneurship according to Santos F. (2009) is that the SE have the objective to generate value to society through the proposal of sustainable solutions to unresolved social problems. While in traditional management theory the firm centers on value capture, from

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