The rise and impact of social entrepreneurship

This article is part of the ‘Inspiring Transformations’ series promoted by Esade Entrepreneur Institute for its 30th anniversary.

The field of social entrepreneurship has grown significantly in the last two decades, with thousands of companies worldwide using entrepreneurial approaches to address social and environmental challenges, a transformation that has been supported by an ecosystem of incubators and accelerators, investors, regulators, and other intermediaries and market actors.  

The growth of social entrepreneurship has not only manifested in practice but also in academia. It has become a consolidated field of study in management scholarship, trying to understand, among other issues, the particularities of the profiles of social entrepreneurs, the tensions that appear when blending social and financial logics, the potential of hybrid business models to address societal challenges, and the legitimacy and development of the sector. 

Today, Esade Center for Social Impact, Esade Entrepreneurship Institute, and eWorks collaborate to support students and external impact entrepreneurs through courses and acceleration programs, focusing on topics such as developing and managing impact-centric business models, exploring the role of impact tech startups in addressing the Sustainable Development Goals (SDGs), and effectively supporting new business model exploration and validation through the practice of impact measurement and management. 

Towards an impact economy

The current state of the sector is generally positive. Not only are many social enterprises thriving, but an increasing number of conventional companies are also integrating impact considerations into their decision-making processes. In this sense, social entrepreneurship has had a positive influence in promoting what we call the impact economy. More and more companies now recognize the importance of creating social and environmental value alongside financial returns. 

Impact measurement, transparency and accountability need to go hand in hand with social innovation

As claimed by the European Social Enterprise Monitor (ESEM), a study coordinated in 21 European countries on the state of social entrepreneurship and for which Esade is the country partner in Spain, there has been accelerated growth and spread in the sector: despite many social enterprises being relatively small and young, they are now active in all economic sectors and 91% aim to scale in a sustainable manner. 

The challenges ahead

Nonetheless, challenges persist. For example, many social and environmental causes can benefit from business and entrepreneurial approaches, but those organizations might only sometimes be able to produce huge financial returns. Further research is needed to understand the unique challenges and opportunities offered by these hybrid models and explore systemic initiatives that can drive impact across multiple fronts. 

With continued support from the ecosystem and ongoing research efforts, social entrepreneurship holds the potential to create a lasting impact that goes beyond individual enterprises and addresses the pressing issues of our time. As with other practices that arise at the intersection of the business and social realms, social entrepreneurship will have to find the proper balance between leveraging business and financial practices that can help organizations scale and be more efficient, and at the same time maintain its strong social purpose. 

In other words, impact measurement, transparency and accountability need to go hand in hand with social innovation, new consumer and corporate behaviors, and the objective of systemic change.