Social Entrepreneurship and the Reduction of Inequality

Abstract

How does social entrepreneurship benefit society? Relying heavily on the adjective 'social', previous research has held that social entrepreneurship catalyzes social transformation and is essentially about solving social problems and creating social value. But the connotation of 'social' here is largely ambiguous as all forms of entrepreneurial activity take place in society and are aimed at creating value for its members. We draw upon the notions of efficiency and equality in the economics literature to offer an alternative perspective on how social entrepreneurship creates value. We observe that social entrepreneurship at its essence represents the drive to reduce the inequality in opportunities that people experience, by altering existing circumstances and/or creating new circumstances for them. Such circumstance manipulation is intended to empower people in different ways such as through giving improved access to education, health care or employment and is not merely about wealth re-distribution. Thus, it results not only in reducing inequality in society, but also simultaneously in increasing its productivity as the empowered population can now contribute in better ways. Successful social entrepreneurship can help break the classical trade-off between equality and efficiency and push the equality-efficiency frontier outward. We briefly illustrate these ideas using narratives of three recognized Indian social initiatives. Interpreting social entrepreneurship in these terms offers a new way to recognizing its importance and also helps distinguish it from mainstream commercial entrepreneurship.