TESI CORRETTTA definitiva stampata

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Corso di Laurea in
Economia, Commercio Internazionale e Mercati Finanziari
Curriculum Economics and Management of Innovation
ORGANIZATIONAL BEHAVIOR AND DESIGN

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“Social Entrepreneurship:
a new prospective in
business value creation”
“we can make market forces work better for the
poor if we develop a more creative capitalism – if
we can stretch the reach of market forces so that
more people can make a profit, or at least a
living, serving people who are suffering”
Bill Gates

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Sommario
INTRODUCTION......................................................................................................................................6
Global Scenario ......................................................................................................................................6
1 COMPARISON BETWEEN TRADITIONAL AND SOCIAL ENTREPRENEURS............................................7
1.1 The traditional vision of entrepreneurs and entrepreneurship........................................................7
1.2 Social Entrepreneurship .................................................................................................................11
1.3 A possible Social Entrepreneur motto: "value is true only if shared".............................................12
1.4 Some examples of Social Entrepreneurship ...................................................................................13
1.5 Economic Karma, opportunities and the Cost of being Social ........................................................18
2 ENVIRONMENT ANALYSIS AND INTERACTION...................................................................................19
2.1 Analyzing the Environment ............................................................................................................19
2.2 Bricolage; networks for value creation...........................................................................................21
2.2.1 Making do............................................................................................................................22
2.2.2 The refusal to enact or be constrained by limitations .........................................................23
2.2.3 Improvisation ......................................................................................................................23
2.3 Social Entrepreneurship is all about participation..........................................................................24
2.3.1 Persuasion...................................................................................................................................24
3 HOW DOES SOCIAL ENTERPRISE CREATE VALUE? .............................................................................25
3.2.1 Revenue generation strategy through trading ............................................................................26
3.2.2 They aim to achieve social and environmental goals ..................................................................26
3.2.3 They seek to generate additional benefits such as increased social capital and enhancement of
community cohesion............................................................................................................................26
3.3 Strategy in developing networks in order to raise funds................................................................27
3.3.1 Networking and social resourcing (such as crowd funding and fundraising),..........................27
3.3.2 Financial bootstrapping:..........................................................................................................27
3.3.3 Strategy of effectuation...........................................................................................................27
3.4 Maslow's model for value creation ............................................................................................29
4 THE ROLE OF IINOVATION.................................................................................................................31
4.1 Anthropological point of view on economic innovation.................................................................32
4.3 Innovation in management ............................................................................................................33
4.4 Bloom's Taxonomy; how to learn to innovate................................................................................36
5. RISKS INVOLVED IN INNOVATION.....................................................................................................37
5.1 SWOT analysis' for evaluation risk..................................................................................................38

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6 CASES OF INTEREST ...........................................................................................................................39
6.1 In Italy.............................................................................................................................................40
6.2 Social enterprises: Fit for Women ..................................................................................................42
7 CONCLUSIONS...................................................................................................................................43
BIBLIOGRAPHY .....................................................................................................................................45

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INTRODUCTION
Over the last few years, social entrepreneurship has emerged in both the public and
the private non-profit sectors due to an increase in demand for social programs. There
has been an increase in requirement for organizational structures for an improvement
in performance in social programs that has led to an increase in interest in social
entrepreneurship.
Social entrepreneurs are seen as a possible way to increase economic sustainability and
effectiveness in non-profit organizations, especially in view of diminishing public
funding due to the financial crisis. Furthermore, entrepreneurship seems to represent
a solution in an environment characterized by increased competition for scarce
resources. The number non-profit entities have in fact increased over the last few years.
Global Scenario
Globally, we have witnessed a concentration of wealth in the private sector and a
decrease in public funding. As a matter of fact, neoliberal economic choices have led
to an increase in private company market share with a corresponding reduction in
public companies. The public sector is facing more and more difficulties in providing
public funding for the no-profit and cultural entities.
This change in wealth distribution between public and private has encouraged the rise
of public-private partnerships, a general call for private company social responsibility
and a proactive response to social problems.
In this scenario, social entrepreneurship is increasing in importance due to its
innovative way of solving social needs with an emphasis on innovation in and for
solving social problems; social enterprise reduces the traditional boundaries between
for-profit and non-profit activities. This new structure is a hybrid form that enables
those two sectors to work in harmony, therefore increasing effectiveness and opening
a new perspective in problem solving.

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But before we start to define social capitalism and how it works by explaining the
various models, we need to consider some definitions.
1 COMPARISON BETWEEN TRADITIONAL AND SOCIAL
ENTREPRENEURS
1.1 The traditional vision of entrepreneurs and entrepreneurship
As the Stanford Social Innovation Review (SSIR) states, when defining the term
“social entrepreneurship” we must first understand the meaning of
“entrepreneurship.” The word “social” simply specifies a characteristic of the term
entrepreneurship. If entrepreneurship doesn’t have a clear meaning, then modifying
it with “social” will not accomplish much, either.1
(SSIR) continues by stating that the word “entrepreneurship” connotes a special,
innate ability to sense and act on opportunity, combining out-of-the-box thinking with
a unique brand of determination to create or bring about something new to the world.
On the negative side, entrepreneurship is an ex post term, because entrepreneurial
activities require a passage of time before their true impact is evident.2
Oxford Advanced Learner’s Dictionary defines an entrepreneur as “a person who
makes money by starting or running a business, especially one involving financial
risk”
The Online Business Dictionary defines entrepreneurship as: "The capacity and
willingness to develop, organize and manage a business venture along with any of its
risks in order to make a profit. The most obvious example of entrepreneurship is the
starting of new businesses. In economics, entrepreneurship combined with land,
labor, natural resources and capital can produce profit. Entrepreneurial spirit is
characterized by innovation and risk-taking, and is an essential part of a nation's
1
https://ssir.org/articles/entry/social_entrepreneurship_the_case_for_definition
2

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ability to succeed in an ever-changing and increasingly competitive global
marketplace".3
What we can state from all those definitions of entrepreneur and entrepreneurship is,
that the entrepreneur has to possess the ability to forecast future risks and the
willingness to invest his resources in order to earn more in the future; taking
advantage of an innovation or through an opportunity in investment, accepting the
risk of losing money if he relies on his misrepresentation of the future.
But what is the difference between a traditional entrepreneur and a social one?
We will use criteria stated by J. Defourny and M. Nyssen in order to generalize the
characteristics of social entrepreneurship.
Most importantly, such indicators never represented the set of conditions that an
organization should meet to qualify as a social enterprise. Rather than constituting
proscriptive criteria, these indicators describe an "ideal-type" in Weber’s terms, i.e. an
abstract construction, that enables researchers to position themselves within the
"galaxy" of social enterprises.
Four criteria reflect the economic and entrepreneurial dimensions of social enterprises:
 A - a continuous activity producing goods and/or selling services
 B - a high degree of autonomy
 C - a significant level of economic risk
 D - a minimum amount of paid work
Five other indicators relate to the social dimensions of such enterprises:
 E an explicit aim to benefit the community
 F an initiative launched by a group of citizens
 G a decision-making power not based on capital ownership
3 Read more: http://www.businessdictionary.com/definition/entrepreneurship.html

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 H a participatory nature, which involves various parties affected by the
activity
 I limited profit distribution4
(J. Defourny and M. Nyssen 2008, p. 11)
The first four criteria can be found in almost every enterprise, social and non, because
they are components of a business model:
 A key activities
 B key resources
 C cost structure (the economic risk has to be considered in every activity
involving resources)
 D revenue stream (used to compute income and expenses)
https://diytoolkit.org/tools/business-model-canvas/
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SOCIAL ENTREPRENEUR, SOCIAL ENTREPRENEURSHIP, SOCIAL ENTERPRISE Three terms in quest of a
theoretical framework Andrea Bassi

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“A business model describes the rationale of how an organization creates, delivers,
and captures value”.
(Alexander Osterwalder and Yves Pigneur)5
https://www.gluu.org/blog/gluus-business-model/
The other five indicators describe the social dimension of the business and then
determine the actions of the social enterprise not from an economic perspective,
but from an ethical one.
5
Laure j. Mullins management & innovational behaviour ninth edition.

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1.2 Social Entrepreneurship
Citing the Economist: "Social entrepreneurship is a hot topic. In business schools,
students seem increasingly keen to find ways to use the skills they are learning to
improve the world as well as their bank balances".6
The word “social” in the term Social entrepreneurship is crucial in explaining how this
term is related to the manufacturing of products and services, otherwise we risk giving
a superficial definition of this term, creating the idea of a field which is closer in nature
to the non-profit sector than to a new business perspective.
(SSIR) wonders: "What distinguishes social entrepreneurship from its for-profit
cousin?".
The difference can be ascribed simply to motivation – with entrepreneurs spurred on
by money and social entrepreneurs driven by altruism. The truth is that (...) both the
entrepreneur and the social entrepreneur are strongly motivated by the opportunity
they identify, pursuing that vision relentlessly, and deriving considerable psychic
reward from the process of realizing their ideas.
The Review continues: "We believe that the critical distinction between
entrepreneurship and social entrepreneurship lies in the value proposition itself. For
the entrepreneur, the value proposition anticipates and is organized to serve markets
that can comfortably afford the new product or service, and is thus designed to create
financial profit. From the outset, the expectation is that the entrepreneur and his or her
investors will derive some personal financial gain. Profit is sine qua non, essential to
any venture’s sustainability and the means to its ultimate end in the form of large-scale
market adoption and ultimately a new equilibrium.
6
http://www.economist.com/blogs/schumpeter/2013/12/gregory-dees

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The social entrepreneur, however, neither anticipates nor organizes to create
substantial financial profit for his or her investors – philanthropic and government
organizations for the most part – or for himself or herself. Instead, the social
entrepreneur aims for value in the form of large-scale, transformational benefit that
accrues either to a significant segment of society or to society at large. Unlike the
entrepreneurial value proposition that assumes a market that can pay for the
innovation, and may even provide substantial upside for investors, the social
entrepreneur’s value proposition targets an underserved, neglected, or highly
disadvantaged population that lacks the financial means or political clout to achieve
the transformative benefit on its own. This does not mean that social entrepreneurs as
a hard-and-fast rule shun profit making value propositions. Ventures created by social
entrepreneurs can certainly generate income, and they can be organized as either not-
for- profits or for-profits"7
In summary, this concept illustrates how the difference between two kinds of
entrepreneurs is based on different attitudes towards the creation and definition of
"value".
1.3 A possible Social Entrepreneur motto: "value is true only if shared"
Value is perceived by traditional business managers in terms of tangible benefits,
which will increase the wealth of the company and also the directors themselves, while
a social entrepreneur has a broader perspective of value creation which incorporates
all aspects of production in the attempt to achieve a distribution of wealth based on
the concept of fairness.
The core characteristic that distinguishes a mission-oriented social entrepreneurship
from a general one is the importance of social benefit.
The Professor Dees defined the entrepreneurial aspect of social entrepreneurship:
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 Recognition and “relentless” pursuit of new opportunities to further the
mission of creating social value
 Continuous engagement in innovation and modification
 Bold action undertaken without accepting the limitations of existing resources.8
This propensity to have coherent action lead the entrepreneur to provide a balanced
benefit to all stakeholders, while still maintaining the moral integrity of his mission.
A special value added by social entrepreneurs is their way of recognizing and taking
advantage of opportunities to develop projects using resources that are not used
properly or are not considered such at all.
1.4 Some examples of Social Entrepreneurship
A practical example is provided by the Swiss company Freitag who has developed a
production method of Upcycling (Upcycling, also known as creative reuse, is the
process of transforming by-products, waste materials, apparently useless, or
unwanted products into new materials or products of better quality or for better
environmental value 9.) using second hand truck tarpaulins and seat belts to produce,
for instance hand bags. The raw materials were considered waste with high
consequent recycling costs.
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SOCIAL ENTREPRENEURSHIP: A CRITICAL REVIEW OF THE CONCEPT1 Ana María Peredo Faculty of Business
University of Victoria 3800 Finnerty Drive Victoria,
9
https://en.wikipedia.org/wiki/Upcycling

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https://www.freitag.ch/it
In 1993, graphic designers Markus and Daniel Freitag were looking for a functional,
water-repellent and robust bag to hold their creative work and they decide to use old
tarpaulins. The use of these resources allowed them to cut costs and create a business
model based on recycled materials.
http://cognitiveseo.com/blog/9352/upcycling-increase-content-marketing-roi/
This example relates to raw material but we can also take into consideration the
labour market, which is highly competitive and where are highly important skills:
people with some form of disability or for others reasons are at a disadvantage.

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Here we can mention the community of San Patrignano which is the biggest drug
rehabilitation community in Europe and the one with the highest success. They have
2,000 inmates and promote rehabilitation by giving them the chance to work and
thus restoring their dignity.
http://expoliberia.org/comunita-san-patrignano/
This institution also offers them the opportunity to acquire new skills in different
fields, while providing them with food and a place to sleep in exchange for work. This
gives the patients the chance to rebuild their independence after losing it through the
misuse of drugs.
Another example that I would like to mention is from the financial market; it is the
enterprise of Akhtar Hameed Khan, Nobel Peace Prize winner and the inventor of
Microcredit.
Microcredit has created a wide social impact allowing many families in poorer
countries to rise from poverty (first implementation in Bangladesh): those families
could not access traditional banks for loans, because they lacked the normal
requisites to obtain them.

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The Grameen Bank provides small loans principally to women who have started
small businesses, in a way that has made the repayment of debt much easier, in fact
90% of debts have been repaid.
Microcredit has been tested with success and nowadays it is a project that is
implemented in many developing countries, under the responsibility of various
credit institutions.
The usage of this kind of ethical bank produces gains not only for the social impact,
by improving the living standards of poorer people, but it has also brought benefits
in legal terms, because this market was partly in the hands of criminals (usury).
https://www.cgap.org/blog/power-successful-market-led-savings-mobilization
The last but not least important example is of a traditional company which decided
to act socially, implementing fair trade with coffee producers.
Illy, (Italian coffee producer) ones through their fair trade practices with suppliers,
has been able to retain the good ones, innovate production with a vision which better
matches to the suppliers’ production, increases product quality and enhances the
environment.

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http://www.saporifineflavors.com/social.php
Having analyzed this kind of entrepreneurship we can say that it utilizes a different
perspective of reality, which generates projects that are both productive and virtuous.
Finally, social entrepreneurs exhibit in the social area the same skills as commercial
entrepreneurs in terms of risk-tolerance, innovation and “proactiveness”.

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1.5 Economic Karma, opportunities and the Cost of being Social
Research conducted by the Ernesto Illy foundation on value, quality and sustainability
has shown that firms which focus on quality and sustainability create more value than
firms which are only cost-efficient: the value was calculated not just inside the
company itself and this value it is higher and better spread among the stakeholders.
Moreover, this research has shown that a company interested in sustainability has a
longer life than a one that is only cost efficient (71% do not last more than 10 years,
while the sustainable ones have a longer average life). 10
This economic research highlights a sort of “economic karma” and shows that, with
the classical instruments for measuring economic performance, some elements for
evaluating long term company growth are missing.
This limit has also been shown by the whole economy, where even if the GDP is a
measure of growth, it is beginning to show limits in the measurement of the well-
being of a nation; the existence of this limit has been supported by the philosopher
and Nobel Prize in Economics Amartya Sen.
10
https://www.youtube.com/watch?v=Gl204OQtlfg

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2 ENVIRONMENT ANALYSIS AND INTERACTION
2.1 Analyzing the Environment
Clever business people recognize the right moment to put a new idea onto the market
and how to implement it. Often an idea that initially - for various - reasons didn't
succeed, was at a later time repurposed with great success.
http://www.suggest-keywords.com/cGVzdGVsIG1hY3Jv/

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Management strategies also depend on a company's external and internal
environment. A typical way of evaluating the nature of a certain region or sector is the
PESTEL analysis which attempts to assess a context using five dimensions: political,
economic, socio-cultural, environmental and legal.
In particular, social entrepreneurship not only assesses the socio-cultural and
environmental context, but it also tries to improve it by means of a smart and ethical
business strategy.
As we might intuitively understand, ethics is subjective, related to environment and
influenced by the five PESTEL dimensions. A social entrepreneur studies the context
to which he or she belongs and tries to use scarce resources to improve the situation.
Laurie J. Mullins, MANAGEMENT & ORGANISATIONAL BEHAVIOUR. NINTH EDITION.
Social entrepreneurship is important in developed countries, but is of fundamental
importance in order to create virtuous cycles in developing countries.

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If we search for example, we find Sunbula11, a non-profit organization that is working
in order to develop traditional craftsmanship through the fair trade circuit with the
aim of empowering vulnerable groups and provide for economic development in the
West Bank, Palestine.
As a matter of fact, social entrepreneurship is seen as one of the key factors that will
help in reaching the 17 Social Development Goals according to ONU.12
Decision making is seen from an ethical viewpoint, as a balance between means and
ends in commercial practice.
Therefore, the question that arises is: does the end justify the means?
While the pure capitalistic vision, primarily caring about "profit, market share, etc"
would say yes, the new social entrepreneurship model, more conscious about context,
would say "it depends”.
2.2 Bricolage; networks for value creation
In this section we are going to evaluate social entrepreneur practices which are applied
in order to create networks capable of avoiding limitations imposed by scarce
resources.
For this purpose, I refer to research conducted by Maria Laura di Domenico, Paul
Tracey and Helen Haughs, in their text “Social Bricolage: theorizing social value
creation in social enterprise” which provides an analysis summarizing the actions of
social entrepreneurship based on data collected from a sample of social enterprises
from around the world.
Social enterprises develop their activities in different fields (education, arts, fair trade,
cross sector partnerships etc..) but we can find some common features.
11
http://www.sunbula.org/
12
http://www.un.org/sustainabledevelopment/sustainable-development-goals/

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This interesting method for the acquisition of resources is provided by Levi-Strauss’s
theory of social bricolage (Levi-Strauss 1967)
By “bricolage” we mean the process of integrating diverse knowledge sets that enable
entrepreneurs to deal with problems using a range of individuals to fully leverage their
essential skills.
"Bricolage has been denoted to resourcefulness and adaptability within an existing
context. The “bricoleur” aims to be ready to deploy whatever strategies are required
under various circumstances, such as new organization combination, in response to
unpredicted activity” (Ciborra 1996).
The bricoleur is able to recombine existing resources in order to reconfigure a structure
or process in the company; this ability is essential to be able to face a dynamic situation
that continuously alters the equilibrium. Entrepreneurs use a bricolage of skills and
resources in order to solve existing problems and create new opportunities.
Social bricolage has three main characteristics: making do, refusal to enact (or be
constrained by) limitations and improvisation.
2.2.1 Making do
Making do was first identified by Levi-Strauss (1967) and is a concept that has been
developed to solve problems to create new opportunities, where resources are not seen
anymore as ready input, but are recombined in order to create new applications. Input
determines its capability depending on the combination and application that it
assumes.
It is possible to observe three main approaches: creating something from nothing,
using discarded, disused or unwanted material for a new purpose and using hidden
or unwanted local resources that other organizations fail to recognize, value or use
adequately.

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 In the create something from nothing approach there is the creation of a new
product or services not existing on the market; microcredit is a service which
didn’t exist on the market before the Grameen bank.
 Another approach is to use discarded, disused or unwanted material for a new
purpose; a good example of this kind of approach is the previously cited bag
manufacturer Freitag
 Finally, another method is the use of hidden or unwanted local resources that
other organizations fail to recognize, value or use adequately; an example of
this approach is the Seven Women Project in Nepal.13
This resulting company employs disabled people in its workforce in Nepal, where they
are considered to have been punished by the devil for their previous lives and
therefore are excluded by their society.
By giving them the chance to work, the company has improved their lives and
promotes in general the acceptance for women.
2.2.2 The refusal to enact or be constrained by limitations
This second characteristic of social bricolage was identified by Baker and Nelson (2005)
as a refusal to be limited by political or institutional frameworks that can stop the
development of a project.
The entrepreneur has to consciously and consistently counteract conventional
limitations, because those limits inhibit innovation and development.
2.2.3 Improvisation
Improvisation is associated with adapting standard ways of working and creative
thinking in order to counteract environmental limitation (Miner et al.,2001; Weick,
1993 b). Improvisation is shown through creativity in administration and business
development, which is able to change perspectives by substituting resources that are
not affordable or available.
13 https://www.youtube.com/watch?v=JHKmwsrGMdI

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The creative process, given that it is not quantifiable using the standard norms, cannot
provide us with an a priori definition; conversely we have to go through a trial and
error process.
2.3 Social Entrepreneurship is all about participation
To cut a long story short, to create social value, given a scarcely resourced
environment, it is not enough to work on internal management; we have to implement
a strategy involving external social relationships in order to obtain support from all
stakeholders and possible supporters.
Stakeholder participation is one of the main features of social entrepreneurship.
2.3.1 Persuasion
In order to attract support, social bricolage has a final consideration; the use of
persuasion.
Persuasion is the ability to convince, involve and influence someone, and is performed
through an emotive connection or due to a recognized social position that creates
credibility.
Starr and Macmillan (1990) noted the role of the social asset of friendship, linking trust,
obligation and gratitude in co-opting resources into an entrepreneurial venture.
These emotive connections are extremely important because we are asking for help
from society. In this case people want to be sure that the beneficiary is not trying to
gain personal profit from their generosity.
Trust is one of the main focus points when we are asking for donations. An effective
way to generate a good response is to give donors a reward; for a certain amount of
donation, many non-profit organizations give donors a form of recognition, which
may seem to be a shallow strategy but creates an emotive connection which gives a

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feeling of belonging to the mission. The idea behind this is to create long lasting
relationships and a broader awareness.
Even if the donor is going to contribute only once, this still creates the potential for the
growth of informal networks.
Persuasion can also be seen as the result of negotiation. An equilibrium created
through negotiation is seen as "a continuous permutation of action" from Levi-
Strauss's perspective, because when there is a change in environment, the terms of a
contract also have to be renegotiated.
To summarize, social bricolage, due to its optimization of resources capacity, has the
potential to lower costs by reducing risks related to financial exposure, and an
increased return on assets.
3 HOW DOES SOCIAL ENTERPRISE CREATE VALUE?
http://boldempowerment.org/site/business-network/
The limitation of resources is the one of the central concepts in social entrepreneurship,
so let's look at some ways of collecting resources in a poor environment.

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3.2.1 Revenue generation strategy through trading
Social enterprise has learned how to develop strategies in order to sustain its projects.
These strategies were implemented due to a lack of resources provided by traditional
resources (charity donations etc..).
Using trade as a resource doesn't just provide the chance to create sustainability in
social projects, but also creates the opportunity to export the business model to other
social sectors.
The strength of this kind of model of social action is repeatability; the creation of
resources from trading is an activity that is developed through a company's own
internal capabilities, while traditional funding comes from the outside and is difficult
to replicate and predict.
3.2.2 They aim to achieve social and environmental goals
Pearce (2003, sec 2004) refers to their ethos of financing social purpose through
commercial activity.
What social entrepreneurship drives is a response to a community need that is not
satisfied by the market or by the government.
3.2.3 They seek to generate additional benefits such as increased
social capital and enhancement of community cohesion.
Networks which social enterprises develop are an intangible resource which are able
to sustain companies and help the development of projects even if they are not easily
measurable.

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3.3 Strategy in developing networks in order to raise funds
The creation of a network is useful for social and non-social enterprises, not only to
raise funds in order to start a business but also to foster projects that find difficulty
because of scarce resources.
Good businessmen are able to apply strategy, in order to receive support from as
many funders as possible, this being possible through ability in planning,
communication and persuasion (2.3.1)
3.3.1 Networking and social resourcing (such as crowd funding and
fundraising),
Personal networking is one of the essential resources of the entrepreneur, which links
people or entities permitting the company to acquire support skills and experience
which in turn are an essential resource for market penetration.
3.3.2 Financial bootstrapping:
"Bootstrapping describes a situation in which an entrepreneur starts a company with
little capital, relying on money other than outside investments. An individual is said
to be bootstrapping when he attempts to found and build a company from personal
finances or from the operating revenues of the new company. Bootstrapping also
describes a procedure used to calculate the zero-coupon yield curve from market
figures."14
3.3.3 Strategy of effectuation.
There are five core principles that define Effectual Logic. These are:
14
http://www.investopedia.com/terms/b/bootstrapping.asp#ixzz4Lw0GRokB

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1) The Bird in Hand Principle.
Entrepreneurs start with what they have. They will look at who they are, what they
know and who they know. Their education, tastes and experience are examples of
factors which are important at this stage. Besides these examples, this is also the
stage where entrepreneurs look at their relationship circle, better known as friends,
family and fools. From this point, they will look at their abilities. So an entrepreneur
does not start with a given goal, but with the tools he or she has.
2) The Affordable Loss Principle.
An entrepreneur does not focus on possible profits, but on the possible losses and
how he can minimize those losses.
3) The Crazy Quilt Principle.
Entrepreneurs cooperate with parties they can trust. These parties can limit the
affordable loss by giving pre-commitment.
4) The Lemonade Principle.
Entrepreneurs will look at how to leverage contingencies. Surprises are not necessarily
seen as something bad, but as opportunities to find new markets.
5) The Pilot-in-the-plane.
During this stage, all the previous principles are put together. The future cannot be
predicted, but entrepreneurs can control some of the factors which determine the
future.15
15
https://en.wikipedia.org/wiki/Effectuation

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3.4 Maslow's model for value creation
In economics, the creation of a product or service is done in order to respond to a
certain demand; the demand has to be evaluated depending on which market segment
we are going to serve, the elasticity of demand in the sector (depending on possible
substitute products and utilities attached to the product) and reservation prices for the
products or services that we are going to sell.
So, when we try to develop a value proposition we have to consider social needs, but
at the same time we have to think about how we want to place ourselves on the market.
In defining our value proposition, we can take inspiration from Maslow's model by
adapting it in order to identify specific consumer needs, and then adapting it to our
vision.
Maslow's model explains that within a person's needs there is a hierarchy of priorities,
where the bottom of the pyramid shows the essential needs (psychological and safety)
and in the upper part we can find needs that we can consider to be factors that improve
our existence and create motivation in achieving goals.

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Maslow's five categories are simplified into three categories in Aldefer's theory, and
into two in Herzberg's.
Those more simplified views enable us to easily create a strategy to motivate people,
in order to obtain support for our project.
An effective strategy would be to consider those models not just in relation to
individuals but also to society; this could lead to maximum satisfaction for each sector
by targeting each market with a proper motivator.
Let’s start with a hypothetical case involving a group that faces a problem of existence
such as the need for drinking water. For this group the motivator for work is driven
by a natural need (psychological and safety); for those people we don't need to create
a specific motivator in order to involve them in the project.
The next target is people who are close to the area but who don't suffer directly from
the problem, or people who even if they are not close to the affected area are
emotionally involved with the problem that we are trying to address. For those people,
the best motivator is relatedness. So, for those who live close to the problem, the safety
aspect is strongly promoted, by providing the possibility to reduce the necessity for
water in order to reduce their personal risk of being affected directly by the problem;
the "love" aspect will be satisfied by creating a community that drives altruistic
behavior by exploiting the relationships between individuals as a kind of "glue". Good

31
cohesion between individuals facilitates the progress of projects. Within the group
structure, personal esteem will motivate people to be more productive and
competitive.
The third group is represented by people who have already satisfied most of their
needs and the only possible motivators are growth factors such as enhanced personal
standing and self-actualization. Within this group we find professionals at the top of
their career who are looking for new and original ways to boost their profile or general
sense of achievement. Involvement in projects not directly related to corporate profit
generation or personal advancement places already successful people in a new light.
This can bring them wider opportunities for general and social appreciation which
may also feedback to improve the image of their company or institution. There are
many cases of major brands getting involved in social projects for example McDonald
who contribute to child education projects around the world and Microsoft who invest
in disease research. While this on the surface appears to be generosity on a massive
scale, it is also highly advantageous to corporations in terms of offsetting taxes.
4 THE ROLE OF IINOVATION
http://www.propertycasualty360.com/2016/04/28/4-steps-that-foster-a-culture-of-innovation

32
4.1 Anthropological point of view on economic innovation
Considering market evolution as a continuous search for equilibrium, we can see how
innovation is a driver to reach a higher level of economic balance.
In particular, the figure of the social entrepreneur is able to mix business acumen and
techniques with a responsible social vision to reach economic balance. As a matter of
fact, social entrepreneurs, by organizing collaborations between profit-making and
non-profit making structures, create a higher value that is better spread among
stakeholders.
In this way they provide a possible alternative to modern capitalism.
The economy can in fact be considered as a dynamic equilibrium which is
continuously evolving in order to survive in an ever-changing environment.
This scenario can find a metaphor in Darwin where companies are compared to
animals and the socio-economic context is compared to the process of natural selection.
"Living organisms are in balance with their environment, because the environment
changes, they too must change, otherwise they are doomed to disappear." Darwin.
4.2 Innovation in Industry
One factor that an entrepreneur and a social entrepreneur have in common is
innovation.
But what is an innovation? It is an invention put into practice; a good example is where
Leonardo da Vinci invented the helicopter. With his drawings he created a general
theory but it didn't become an innovation because he had no real mechanical means to
produce his invention.

33
An innovation is a product or service that through its commercialization changes our
lives. What often happens is that the time between the invention and the innovation is
very long, due to the lack of means of production or market demand.
Innovation can be of two types: radical or incremental.
Radical innovation is a new product not previously existing in the market, like the first
mobile-phone invented by Motorola.
Incremental innovation is an improvement on an existing technology, for example the
new I-Phone can have new features, but it is merely an improvement of an existing
product.
Innovation can be driven by product technology or production technology, the first is
a new element that is able to improve product quality or performance of an existing
market sector, or even create a new one.
Production technology instead is a new way of manufacturing goods or organizing
services.
4.3 Innovation in management
Innovation is not limited to products or processes; in fact, we can also apply this
concept to management and company structures.
Social entrepreneurship itself can be said to be both an incremental and a radical
innovation.
In fact, it embodies all the positive elements of general entrepreneurship, while taking
into account the wellbeing of its environment and not it’s just profits.
Burns & Stalker, after an analysis based on 20 industrial firms, distinguish 5 different
kinds of environment ranging from stable to least predictable. From this, they
developed two divergent systems of management; mechanical and organic.

34
The mechanical system is a rigid structure and appropriate for stable conditions; this
structure is able to optimize resources but is inadequate for a fast changing
environment.
The organic system is a more fluid structure appropriate for changing conditions, and
it appears to be the better one when unforeseeable circumstances happen constantly
and require a redefinition of roles in the hierarchy structure.
Another research conducted on 42 voluntary churches in the USA found that as the
organization becomes more mechanistic, the intrinsic motivation and the sense of
freedom are reduced.
For social enterprise it is very important to know how to create an adequate structure
in order to be efficient in the management of scarce resources and create a good
psychological contract.
Usually social entrepreneurship uses intrinsic motivators for employees who
normally cannot be motivated by extrinsic motivators because of scarce resources.

35
Moreover, good adaptability is also required because, social enterprises have less
resources necessary for a change in assets due to a change in the environment.
This weakness has to be compensated with a dynamic company structure, capable of
reinventing roles and tasks.
Another capability required for the management of the social enterprise (if it has the
possibility to grow on a global scale), is that it must improve a global vision in order
to achieve higher scale objectives, but it has to continue to act locally in order to
preserve its social mission that has to be linked to a territory in order to be effective.

36
4.4 Bloom's Taxonomy; how to learn to innovate
In this paragraph I would like to comment on the process that drives innovation or an
invention; an innovation doesn't happen by chance, but is the result of a learning
process.
1
http://www.learnnc.org/lp/pages/4719
Bloom’s Taxonomy was created in 1948 by psychologist Benjamin Bloom and several
other colleagues. Originally developed as a method of classifying educational goals for
student performance evaluation, Bloom’s Taxonomy has been revised over the years
and is still utilized in education today. In the 1990s, one of Bloom’s students, Lorin
Anderson, revised the original taxonomy. In the amended version of Bloom’s
Taxonomy, the names of the major cognitive process categories were changed to
indicate action because thinking implies active engagements16.
Bloom’s pyramid show how creation is the result of various steps of the compression
of existing concepts; the evolution of concepts can be achieved, when they are analyzed
by breaking them down and evaluated in each part with a micro and macro vision.
16
http://www.learnnc.org/lp/pages/4719

37
After the individual gain, the ability to consciously "play" with the various
components of a concept, it is then possible to recombine all the "paces" or change it in
order to create something new.
Creativity is one of the main assets of social entrepreneurship, but it is a skill that has
to be trained in order to exploit its full potentiality. It is not a coincidence that one of
the main fields where social enterprise focuses its efforts is education.
5. RISKS INVOLVED IN INNOVATION
The link between all these concepts is the capacity to choose and assume risk in a
responsible way. I stress the concept "responsible way" because the entrepreneur is
able to balance risk in different sectors in order to innovate and create value.
The entrepreneur, thanks to his skills, is able to balance risk and goals in order to
change investment from a less profitable investment to a more profitable one or
decrease risk for the same revenue stream.
The differences in entrepreneurs' behaviour can be sorted by their different attitudes
towards risk.
http://www.policonomics.com/lp-risk-and-uncertainty2-risk-aversion/

38
Risk is a factor strictly linked to the creation of value; we can find a direct relation
between risk and value created "the higher the bet the higher would be the premium
but with a proportionally higher risk of losing everything".
But how can we judge the "bet"? The bet is based on the entrepreneur's vision of
innovation, his attitude towards risk and the ability to forecast future outcomes.
Innovation often leads to the creation of value, but attached to this future value there
is a certain level of uncertainty about the revenue stream; the higher the uncertainty
the higher the risk.
The successful entrepreneur, being alert, is able to see market signals that lead to an
opportunity for a change in an existing structure, in order to solve existing problems,
also by applying "creative destruction" (Schumpeter).
5.1 SWOT analysis' for evaluation risk
http://pandora.edu.vn/en/swot-analysis/

39
SWOT analysis is a process that identifies the strengths, weaknesses, opportunities and
threats of an organization. Specifically, SWOT is a basic, analytical framework that
assesses what an organization can and cannot do, as well as its potential opportunities
and threats. A SWOT analysis takes information from an environmental analysis and
separates it into internal strengths and weaknesses, as well as its external opportunities
and threats.17
SWOT analysis' is one of the most widely used methods to evaluate a company’s
capabilities and risks. The company usually uses a process of brainstorming to collect
common ideas and opinions; from this survey it is possible to identify strengths that
will be used to support weaknesses and face threats, while opportunities have to be
cached avoiding threats and be conscious of existing weaknesses in the company.
This analysis can be done and is suited for each stage of the company’s evolution but,
in order to show a realistic picture of the company, we need a certain level of
awareness of the affordable means and freedom of expression.
6 CASES OF INTEREST
I decided to report here some interesting data about two examples of social
entrepreneurshipfrom “Iris Report Impresa Sociale in Italia identità e sviluppo in un
quadro di riforma 2015 edited by Paolo Venturi and Flavio zandonai ” : The Italian
Market for Social Enterprise and Women as Resources for Social Entrepreneurship.
17
SWOT Analysis http://www.investopedia.com/terms/s/swot.asp#ixzz4MOFgzLrj

40
6.1 In Italy
http://www.fundraisingschool.it/wp-content/uploads/2015/04/Rapporto-Iris-Network2015.pdf
There are 12,577 social enterprises in Italy. Among these, following recent legislation,
now have 774 have assumed the status of "social enterprise", 574 are organizations
classified as "social enterprises" but not yet listed in the dedicated section and 12,570
are "social co-operatives", the most widespread and consolidated legal and
organizational model of social enterprise in Italy and Europe.
There are also 144,007 organizations that constitute a "potential for social
entrepreneurship" in Italy 82,231 non-profit organizations of production (other than
social enterprises and social cooperatives) and 61,776 for-profit enterprises operating
in the fields identified by the regulations as areas where it is possible to produce and
exchange goods and services of "public benefit".

41
After our analysis of Italian potentiality in social enterprises, we can now the value of
production represented in graph 1; the north produces a higher value and the
regions of Lombardia and Emilia Romagna showing the best performance.
grap1
grap2

42
Graph 2 represents the occupation created in 2011: absolute values (left) and every
1,000 inhabitants (right). From this survey I discovered an interestig point see next
paragraph.
The Nord confirm its importance with Emilia Romagna and Piemonte showing the
best performance.
6.2 Social enterprises: Fit for Women
The Dalai Lama said something about women that is just now making the rounds on
Twitter. His statement, “The world will be saved by the Western Woman,” was
delivered during the Vancouver Peace Summit 2009.18
Social entrepreneurship is a revolution in the economy; if this revolution can save the
planet from a selfish vision it is something that we will have to wait to see; what we
know for sure is that this parallel economy is driven by ladies.
In fact, what research shows is that women are the main supporters of social
entrepreneurships; 73.9% of people hired in 2011 by social enterprises in italy were
women.
They have always been well represented in the nonprofit sector and appear to be better
represented in social enterprises than in traditional businesses. According to the 2013
State of Social Enterprise Survey in the UK, 38 percent of social enterprises (compared
to 19 percent of small-to-medium-sized businesses) and three percent of the 100 largest
companies on the London Stock Exchange were led by women.19
18
http://www.dharmacafe.com/index.php/news-briefs/article/the-dalai-lama-the-world-will-be-saved-by-the-
western-woman
19 http://www.womenofinfluence.ca/2014/11/03/rise-social-enterprise/#.v-4a_pclrhe the rise of social enterprise

43
http://www.womenofinfluence.ca/2014/11/03/rise-social-enterprise/#.v-4a_pclrhe the rise of social enterprise
In my opinion women have an advantage in this market because they display a
higher sensibility to social problems which makes them better able to detect
problems and use empathy to fully understand the necessities.
7 CONCLUSIONS
The model that should, in my opinion, be spread around the word is a reviewed kind
of capitalism that acts in a more responsible way, not just philanthropically, but also
to create long term business perspectives that will provide companies with a
competitive advantage in the various market segment.
Its good business plan will give a higher competitiveness to the company, which will
implement a global social mission and act with a vision strictly linked to the territory
where it operates.
The kind of enterprise that this model suggests is suited to a more creative capitalism,
that can adapt business to the market, to better address unmet social needs, using more

44
altruistic neoliberal ideas and where “the invisible hand of the markets is driven more
by the heart and less by the stomach”.
Watching the economic scenario, we can see that the public sector is reducing while
the private sector keeps on increasing, implementing innovation and efficiency. But –
on the other hand - if we don’t push for a more altruistic business vision, this model
will continue creating more and more inequality.
States provide public goods which profit-driven companies do not provide; there are
sectors in the market, especially the ones where social interests are involved, where a
distribution based on company profitability is morally inappropriate and will bring a
significant market failure.
Non-profit organization try to fill the gaps in the social structure, helping people to be
able to afford their basic needs; by so doing they face problems with organizational
structures due to scarce resources.
Social entrepreneurships are particularly interesting because they can be considered a
new point of view and a new way to help solve modern social problems, because they
can count on skills of traditional business organizations to raise funds, foster and
create solutions to meet unfilled social needs.
As a social enterprise can be a for profit or non-profit organization, its social attitude
can be applied to the company's mission or become part of its vision in order to create
a suitable distribution of value for stakeholders.
Moreover, by not being focused just on profit seeking, they can explore innovative
markets which are too risky from a business perspective, but can provide important
social values that, in the long term and on a wide scale, can create an interesting
monetary stream.

45
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