**3. Social venturing entrepreneurship ontology**

Social entrepreneurship has become ambiguous, because all sorts of activities are now being called social entrepreneurship. The proponents of SVE have generally agreed on the following terms and their definitions.

#### **3.1. Social venturing entrepreneurship (SVE)**

yet agreed on a common definition, typology and entrepreneurship theories. Similarly, in spite of the growing amount of attraction and popularity in social entrepreneurship, scholars and practitioners, there still remains great amount of ambiguity as to what a social entrepreneur is and does. Within social entrepreneurship, common concepts and ontology that provides understanding of social venturing entrepreneurship have emerged. These ontologies and concepts in turn help to define the role of social venturing entrepreneur and investor or philanthropist in a social venturing and co-operative entrepreneurship (SVCE) business

Consequently, this chapter has been written in order to explain the practical and theoretical approach in relation to the concepts, common ontologies, the social venturing entrepreneur, social venturing and co-operative entrepreneurship business model, social venturing economics that help to explain, predict, analyze the behavior of economic actors as they perform their activities and practical applicability of social venturing entrepreneurship using appre-

In an essay, as a member of the Advisory Board of Stichting Het Groene Woudt (SHGW), Van Dijk approves of Meindert Witvliet, practicing social venturing entrepreneurs, for the entrepreneurial drive, quest for doing better things and deep insight in various sections of society (Netherlands and developing countries in Asia and Africa) and the manner in which Meindert Witvliet and Emmy Jansen structured, governed and managed SHGW's ventures.

The literature on SVE can be traced back to entrepreneurship as described by the classical authors like Von Mises, Kirzner, Schumpeter and Knight (van Dijk, op.cit). In particular, four concepts (purposeful action, sympathy, alertness, and judgment) turn out to be essential for entrepreneurship that applies also to social venturing entrepreneurs. The concept of *purposeful acting* is essential to understanding entrepreneurship. For classical economists, entrepreneurs act purposefully [9]. They have an end in view or, in other words, they have teleology. The term "teleology" was coined by the philosopher Christian Wolff in his Latin treatise of 1728 and he defined it as indicating the part of natural philosophy that explains the ends, or purposes, of things [10]. There are many ways of achieving those ends. Schumpeter coined the terms *new combinations and creative destruction*. The entrepreneurial act is to combine resources that the entrepreneur does not, or not yet own. Although authors like Kirzner pay much attention to the rewards of entrepreneurs, classical economists take the view that entrepreneurs do not in the first place act in order to just make money. Being an entrepreneur is to create value for society and in this way share meaning with society. Their entrepreneurial activities are geared to adding value in sectors and business activities for which they have developed a passion and they develop enterprise for customers for whom they *feel sympathy* (Smith). The key competency of entrepreneurs, for Kirzner [11], is the mastering of *alertness* for business opportunities and for Knight, the ability to *make judgment* under risk and uncertainty conditions [1].

Through his work, social venturing concepts and strategies kept on unfolding [8].

model enterprise, and appropriate supporting SVE economic theories.

**2. Key concepts in social venturing entrepreneurship**

ciative inquiry.

84 Entrepreneurship - Trends and Challenges

Social venturing entrepreneurship is defined as the contribution to solving wicked societal problems by entrepreneurial methods [8]. It was Adam Smith, who once stated that moral sentiments and virtues are the forces that result in entrepreneurship with the aim to contribute to solving the problems of society. The market mechanism—invisible hand, as Smith coined the concept, was just to avoid partiality, which favors one person above the other. The market ought to be impartial in Smith's view as it is just an efficient coordination mechanism [12–14].

#### **3.2. The social venturing entrepreneur**

A social venturing entrepreneur is a Schumpeterian [2], Von Mises [9, 15–17], Kirznerian (1973), Knight [1] entrepreneur, a Smithian [12] economist and a Raiffeisenian (1818–1888) social reformer ([18]: pp. 170–172, [8]: p. 42). A social venturing entrepreneur is a creator of effective social change in a context of economic, social and political conditions and masters the skills of *networking* and *lobbying* [19]. Just as entrepreneurship is a creative action to explore and find opportunities within the boundaries of actual conditions, social, political, commercial, business, practical and technological, for Dijk et al. [8, 20], social venturing entrepreneur applies entrepreneurship and investments in a business-minded and entrepreneurial approach to societal problems in areas where the market is functioning poorly or lacking. The social investors and entrepreneurs do invest in society via products and services to stimulate people toward independence and self-sustaining—economically and socially—in an entrepreneurial way. As such, social venturing entrepreneurship has an advantage above conventional entrepreneurship as it reintroduces the concept of entrepreneurship as a calling and nothing less than a (silent) revolution in mainstream entrepreneurship ([7]: p. 70, [21]).

#### **3.3. SVE: social investor**

This type of entrepreneurial behavior is current and commonly exhibited by entrepreneurs who benefited from the first successful development phase of their entrepreneurial life cycle. They got attention for society's problems and want to establish, individually or cooperatively a social venture, as a matter of significance, by solving these issues in an entrepreneurial way, drawing on their entrepreneurial talent, persistence, networks and finance. These social ventures are very much driven by a clear vision of solving societal issues anywhere in the world. The social investor applies social innovation by setting up social venture investments, thereby bringing ideas into sustainable practice in solving societal problems, especially where the market and public sector have failed to tackle social challenges [8, 20–22].

Mainstream entrepreneurs in the corporate world seek opportunities in small but innovative or specialized startup firms and provide venture capital, by which it might also provide other core competencies such as management, operational and marketing skills. Similarly, in social venturing entrepreneurship, social investors seek for social and economic return on their capital by investing in the innovative social enterprise. By leveraging on networks (in public, private and social sectors) and entrepreneurial prowess such as entrepreneurial judgment, social innovation, leadership and business/managerial competencies, acquired over time, seek to deliver significant lasting impact in solving identified social problems. These social investors are inspired by renown successful mainstream entrepreneurs, but turned social entrepreneurs (Van Leer, Krȍller, Carnegie, Rockefeller, Bill gates, Alumero of Nigeria) and accomplished natural social entrepreneurs [23]. These individuals or through their foundations have been providing social investments to innovative social venturing enterprise with long-term societal impact.

investment on return is ideal for social venturing business model's enterprises, unlike in the investor owned business model, state owned enterprise business model enterprise or nongovernmental business model enterprises that are susceptible to market, state and voluntary failures ([18]: pp. 173–174). The return of social venture investments is hidden and difficult to express in monetary values. It definitely targets identified social return and financial return and ensures that the social enterprise remains health and sustainable. The Social investment strives to satisfy multiple stakeholders—the key partners, the internal and external customers. The key partners are interested more on addressing the social impact than on accrued economic benefits. The internal customers are interested in both economic and social benefits. The external customers are interested in the value of their money in exchange for the product

A Practical and Theoretical Approach to Social Venturing Entrepreneurship

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For SVEs, the exit strategy in the business model is defined at the inception of the social enterprise and implemented, managed, and modified during the course of the business in order to ensure that the stakeholders for whom the social enterprise was created are able to self-manage the enterprise in a sustainable way when key partner exit. The social venture entrepreneur must define the financial exit and impact exit modes ([25]: pp. 100–102, [8, 26]). Exit is defined as transfer of economic/legal (equity with residual claims) and psychological

Similarly, the forms of exit must be agreed at the inception of the business. Nuer [25]: p. 110 presents various transfer of ownership models such as co-operative (e.g. farmer owned), employee owned company, divestment to local entrepreneur(s), communal ownership via a

The term business model emerged during the end of the twentieth century. To date, there is not only a perforation of business models in literature and different business model definitions, but also, there is an array of conceptualizations and typologies that have been conceived from differing views of the problem domain—economic, strategic, entrepreneurship and operational and no general taxonomy of business model currently exist ([29]: p. 13, [30]: p. 2, [31]: p. 2, [32–34]). The business model concept is gaining traction in different disciplines, but it is criticized for being fuzzy and vague and lacking a consensus on its definition and

Zott et al. [37]: p. 1020 conducted an extensive review of the business model literature and found that scholars do not agree on what a business model is and that the literature is developing largely in silos and according to the researchers' phenomena of interest. However, the study observed four emerging themes that could serve as catalysts for the unified study of business model. The common emerging themes were: a business model is a unit of analysis

or service offered by the social enterprise.

ownerships ([25]: pp. 67–68, [8, 27, 28]).

compositional elements ([35]: p. 85, [36]).

trust or other body and social enterprise development fund.

**4. The social venturing entrepreneur(ship) business model**

**3.6. SVE: the exit**

#### **3.4. SVE: venture philanthropy**

The innovative social venturing business model's enterprises tackle societal ill problems, but lack stable funding, capacity and partnerships to address impact sustainably on their own. This is where venture philanthropy comes in. It is one of the most effective methods for sourcing social investment funds in social venturing business model enterprises [8, 18]. In venture philanthropy, the venture philanthropist, either as an individual or as a civil society organization undertake activities that are of greater benefit to society and execute or support projects such as exploration, expansion of culture, education, investment that target employment of target groups missing the connection to economic prosperity. The venture philanthropic sector started in the United States of America and has spread to other western countries. The venture philanthropy provides philanthropic toolkit that consists tailored financing (grant, debt, quasi-equity or mezzanine financing), capacity support or pro-bono contribution (skills development or governance structures and processes) and impact measurement and management. In order to address the social impact sustainably, social ventures demand an active involvement of people in philanthropic projects. They carefully define an expectation of the expected risks and try to get a firm grip on prescribed social return. Social venturing, as well as venture philanthropy, primarily focuses on the development of social entrepreneurship. This kind of social entrepreneurship focuses on achieving self-independent position in society upon philanthropist exit. Subsequently, the philanthropists the long-run philanthropist motive is for the people stay independent of gift-giving and the kindness of donors [8, 24].

#### **3.5. SVE: investment on return**

The primary teleology in social venturing entrepreneurship is to determine the impact investment—the investment that generates the desired social impact as well as financial return. An optimal balance of these is essential; otherwise the enterprise may not qualify to be a social venturing enterprise, but just a traditional profit making business or charitable/not-forprofit organization. The investment on return is the optimal social investment that is required for creating a sustainable financial return and social impact or public benefit. This type of investment on return is ideal for social venturing business model's enterprises, unlike in the investor owned business model, state owned enterprise business model enterprise or nongovernmental business model enterprises that are susceptible to market, state and voluntary failures ([18]: pp. 173–174). The return of social venture investments is hidden and difficult to express in monetary values. It definitely targets identified social return and financial return and ensures that the social enterprise remains health and sustainable. The Social investment strives to satisfy multiple stakeholders—the key partners, the internal and external customers. The key partners are interested more on addressing the social impact than on accrued economic benefits. The internal customers are interested in both economic and social benefits. The external customers are interested in the value of their money in exchange for the product or service offered by the social enterprise.

#### **3.6. SVE: the exit**

Mainstream entrepreneurs in the corporate world seek opportunities in small but innovative or specialized startup firms and provide venture capital, by which it might also provide other core competencies such as management, operational and marketing skills. Similarly, in social venturing entrepreneurship, social investors seek for social and economic return on their capital by investing in the innovative social enterprise. By leveraging on networks (in public, private and social sectors) and entrepreneurial prowess such as entrepreneurial judgment, social innovation, leadership and business/managerial competencies, acquired over time, seek to deliver significant lasting impact in solving identified social problems. These social investors are inspired by renown successful mainstream entrepreneurs, but turned social entrepreneurs (Van Leer, Krȍller, Carnegie, Rockefeller, Bill gates, Alumero of Nigeria) and accomplished natural social entrepreneurs [23]. These individuals or through their foundations have been providing social investments to innovative social venturing enterprise with

The innovative social venturing business model's enterprises tackle societal ill problems, but lack stable funding, capacity and partnerships to address impact sustainably on their own. This is where venture philanthropy comes in. It is one of the most effective methods for sourcing social investment funds in social venturing business model enterprises [8, 18]. In venture philanthropy, the venture philanthropist, either as an individual or as a civil society organization undertake activities that are of greater benefit to society and execute or support projects such as exploration, expansion of culture, education, investment that target employment of target groups missing the connection to economic prosperity. The venture philanthropic sector started in the United States of America and has spread to other western countries. The venture philanthropy provides philanthropic toolkit that consists tailored financing (grant, debt, quasi-equity or mezzanine financing), capacity support or pro-bono contribution (skills development or governance structures and processes) and impact measurement and management. In order to address the social impact sustainably, social ventures demand an active involvement of people in philanthropic projects. They carefully define an expectation of the expected risks and try to get a firm grip on prescribed social return. Social venturing, as well as venture philanthropy, primarily focuses on the development of social entrepreneurship. This kind of social entrepreneurship focuses on achieving self-independent position in society upon philanthropist exit. Subsequently, the philanthropists the long-run philanthropist motive is for the people stay independent of gift-giving and the kindness of donors [8, 24].

The primary teleology in social venturing entrepreneurship is to determine the impact investment—the investment that generates the desired social impact as well as financial return. An optimal balance of these is essential; otherwise the enterprise may not qualify to be a social venturing enterprise, but just a traditional profit making business or charitable/not-forprofit organization. The investment on return is the optimal social investment that is required for creating a sustainable financial return and social impact or public benefit. This type of

long-term societal impact.

86 Entrepreneurship - Trends and Challenges

**3.4. SVE: venture philanthropy**

**3.5. SVE: investment on return**

For SVEs, the exit strategy in the business model is defined at the inception of the social enterprise and implemented, managed, and modified during the course of the business in order to ensure that the stakeholders for whom the social enterprise was created are able to self-manage the enterprise in a sustainable way when key partner exit. The social venture entrepreneur must define the financial exit and impact exit modes ([25]: pp. 100–102, [8, 26]). Exit is defined as transfer of economic/legal (equity with residual claims) and psychological ownerships ([25]: pp. 67–68, [8, 27, 28]).

Similarly, the forms of exit must be agreed at the inception of the business. Nuer [25]: p. 110 presents various transfer of ownership models such as co-operative (e.g. farmer owned), employee owned company, divestment to local entrepreneur(s), communal ownership via a trust or other body and social enterprise development fund.
