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Social Entrepreneurship
Social entrepreneurship as an all-round solution to national problems

Social Entrepreneurship
© Pixabay

“Making money does not give pleasure. There is much more pleasure in contributing to change in the world,” says the Bangladeshi banker Muhammad Yunus, who is known for his generosity and is associated with the concept of social entrepreneurship.

The phenomenon of social entrepreneurship has not yet spread to all of the world’s citizenry, particularly not throughout Indonesia. The concept is still at the beginning of becoming widely known in parallel with the growing urgency of social problems in the world—poverty, health, education, social justice, the environment. Broadly speaking, the concept can be understood as a set of measures that help to identify social problems and to shape entrepreneurial principles underpinning the organization, creation and management of a company in order to achieve the social change.

The concept can also be applied to entrepreneurs who not only have an eye on profit but who also are interested in solving social imbalances by initiating certain processes of social entrepreneurship. It is closely linked to the notion of volunteering and to the non-profit sector.

Although it may sound new, social entrepreneurship has existed for hundreds of years. Robert Owen, a cotton entrepreneur in the 18th century, was an early practitioner of combining business with strengthening the community. Born in Wales, Owen is known as the father of the cooperative movement, as he was interested in generating profit while at the same time helping his employees. He wanted them to work in a good environment by giving them all the same level of access to health and educational services.

The momentum of social entrepreneurship surged again after the global economic crisis in 2008. The economic crisis initially affected only the economic sector, but then a domino-like effect caused it to impact other sectors one after the other. As economic growth slowed due to the crisis, the world’s population—Indonesia included—feared an escalation of social problems, ranging from higher levels of poverty to rising unemployment.

Based on foregrounding social issues, social entrepreneurship helped minimize the negative impact of the 2008 global financial crisis. It was credited with developing strategies and innovations with which social problems could be solved so that the benefits could be perceived and understood in the general public.

Social entrepreneurship in Indonesia 

Social entrepreneurship has been practiced in Indonesia for quite some time. Its beginnings are associated with Bambang Ismawan. Born in 1938, Ismawan implemented the concept of social entrepreneurship with his Yayasan Sosial Tani Membangun (Social Foundation Farmers Rise Up). The renamed Yayasan Bina Swadaya (Developing Self-Help) foundation was established in 1957 and is dedicated to empowering poor people through microfinance and microenterprise. The focus is on training foundation members and promoting social skills.

Over time, social entrepreneurship has caught on and spread. This is evident from the founding of several foundations aimed at empowering the population, foundations such as Dompet Dhuafa, Institut Bisnis, Ekonomi Kerakyatan (IBEKA), Rumah Perubahan and others. These organizations have one thing in common: they aim to empower the local population with their available potential without focusing on maximum profit.

Today, social entrepreneurship is being applied in a clearly visible way worldwide, Indonesia included. This can be attributed to the commitment of the Bangladeshi banker Muhammad Yunus, the “father of social entrepreneurship”. He received the Nobel Peace Prize for his work and made the headlines around the world for his Grameen Bank’s policy of granting microloans. Yunus conceived of the bank specifically to empower poor segments of the population by lending people the capital to start and grow their businesses. The concept has proven to be an effective way of alleviating social imbalances in Bangladesh while yielding profits.

Yunus’ success marks a change of direction in entrepreneurship: while at the beginning the focus was on measures that empowered the population, a balance increasingly emerged between profit making and social mission. This resulted in greater enthusiasm among entrepreneurs to do the same. It seems that the practice now is gaining acceptance in the business world. Taking part in social activities is appealing because it can also generate financial profit. The more social grievances there are in a population, the more this practice becomes a comprehensive package for entrepreneurs: a solution that generates profit on the one hand and supports government on the other.

The creation of organizations such as Asosiasi Kewirausahaan Sosial Indonesia (AKSI) and Indonesia Setara demonstrate that practitioners of social entrepreneurship are taking increasingly visible action. The two organizations share one objective, namely to act as umbrella organizations for entrepreneurs who want to help solve social problems in Indonesia.

Support from home and abroad

A few years ago, the government began turning its attention to developing the practice of social entrepreneurship. This is evidenced by the concept being introduced into the national draft bill on social entrepreneurship. The bill states that social entrepreneurship is a possible way to resolve social problems while generating profit. In effect, the law accepts and legally approves of promoting social entrepreneurship.
Social Entrepreneurship © Pixabay The development of social entrepreneurship in Indonesia receives support from both home and abroad. Foreign companies are increasingly taking an active part in promoting business based on social entrepreneurship through their investments. Studies indicate that about thirty foreign companies show interest in investing in businesses that practice social entrepreneurship. In 2016 foreign investments totaled $300 million.

The existence of cross-sectoral organizations, legal security, and clear support from different stakeholders puts Indonesia in a position to develop social entrepreneurship even more. The bottom line: entrepreneurs will generate material profits while gaining appreciable satisfaction from their role in helping to alleviate social problems.