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

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

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 centered on a firm explicitly and implicitly; a business model can be used in explaining how the whole business operates; the business activities and partners are important in business model conceptualization; and that the business model seeks to explain value creation and capture [38].

**Sector General typology Classes Meaning Examples**

Traditional investor owned firm business model Inclusive investor owned firm business model Large commercial farming

A Practical and Theoretical Approach to Social Venturing Entrepreneurship

Wholly privately owned Privately owned firms, but contracts some operations Large vertically integrated farms Vertically integrated farms using contract farming (e.g. KASCOL, Dunavant COMACO, Zambeef, Pamarat etc. Bangwe & Van

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Kopen 2012; [39])

e.g. ZESCO

TAZARA

NGO

ZANACO Bank

CARE, Greenpeace

and NGO

impact

members

impact to members; Social venture to make a profit for some partners & deliver

impact to others

Wholly owned, state enterprise

State and private owned firm e.g.

Joint social venture by state and

Completely not-for-profit NGOs International NGO e.g. OXFAM,

Joint social venture by Private

Social venture using the same platform to make profit & deliver

Social venture for profit making but use the whole profit to deliver impact elsewhere

Social venture to deliver profit to

Social venture to deliver profit &

Two states owned firm e.g. TAZAMA pipeline, IZB Three states owned firm e.g.

Smallholder contract farming

Traditional state owned enterprise business model Government to government

Government to government to government business

Public private partnership

State non-governmental organization business model

governmental organization

Private non-governmental organization business model

Traditional social venturing enterprise business model—

Social investor owned firm business model—no exit

New generation co-operative

Traditional co-operative business model Social venturing & co-operative

entrepreneurship business model with exit strategy [25]

business model

business model

business model

business model

Traditional non-

business model International nongovernmental organization

business model

no exit strategy

business model

strategy

model

TIOF-bm IIOF-bm LCF-bm SCF-bm

TSOE-bm GTG-bm GGG-bm PPP-bm SNGO-bm

TNGO-bm INGO-bm PNGO-bm

TSVE-bm SIOF-bm NGC-bm TC-bm SVCE-bm

Private **Economic teleology**

model

Public **Economic & social teleology**

Voluntary or third sector—split into two

IOF-bm - Investor owned firm business

SOE-bm - State owned business model

**Social impact teleology** NGO-bm - Nongovernmental organization business

**Economic & social impact teleology** SVE-bm - Social venturing enterprise business model

model

Source: Siame [18]: p. 173.

**Table 1.** Business model typology

Among the common theme that scholars of business models have highlighted above is that the business model seeks to explain how value is created, delivered and captured. Likewise, the success of social venturing entrepreneur lies in the design of business model, a tool that he/she uses to create, deliver and capture the envisaged teleology—economic and social impact. Likewise, a conventional entrepreneur and social entrepreneur can be identified by the enterprise business model they use, the teleology their business model pursues, the type of key partners the incorporate in the business model, the ownership criteria and the presence or absence of exit model.

In his study, Siame [18]: p. 173 developed a business model typology based on business model teleology. The typology permit, business model comparison based on teleology. It holds the prognosis that a typology based on teleological value provides a rational basis for comparing, contrasting, evaluating, and predicting the behavior of the economic and social actors. In **Table 1**, any business model can be traced to a sector—private, public or voluntary. The general typology column provides the general business model typology and the main teleology being pursued. The class column indicates a specific class of business model within the general typology by recognizing their specific teleology and the remaining columns brings out the meaning and examples based in Zambia—a developing country where the study was undertaken.

The proponents of SVE argue that the 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 example of which are shown in **Figures 1** and **2**. In his study, Siame [18]: p. 170 presents a wicked environment that constitutes barriers #1 and #2. In such environment, the social venturing entrepreneur needs to establish a social venture enterprise with a business model that incorporates micro, small and medium enterprises (MSMEs) owners, smallholder farmers or co-operatives (those affected by wicked problems) with the help of selected key stakeholders represented in barrier 1 & 2 enablers. The established social venture enterprise is able to trade in a free market environment dominated by large companies that was not possible to penetrate. Consequently, the social venture enterprise, using both economic and social coordination [41] is able to make sufficient profits some of which is used to finance impact in addition to other sources for impact finances.

Similarly, Dorward and Kydd [40], presents an environment depicted in **Figure 2** where markets are not functioning (due to economic coordination and other problems inherent to very poor rural economies) and where market-based development processes cannot be relied on to drive development.

In these environments characterized by wicked problems—depicted in **Figures 1** and **2**, the traditional investor owned firm (IOF) business model, state owned enterprise (SOE) business model, non-governmental organization (NGO) business model, and social venturing enterprise (SVE) business model are inadequate to solve these ills. The argument to justify the inadequacy for this business model enterprise in solving the wicked problems in these environments is as follows:


Source: Siame [18]: p. 173.

centered on a firm explicitly and implicitly; a business model can be used in explaining how the whole business operates; the business activities and partners are important in business model conceptualization; and that the business model seeks to explain value creation and capture [38].

Among the common theme that scholars of business models have highlighted above is that the business model seeks to explain how value is created, delivered and captured. Likewise, the success of social venturing entrepreneur lies in the design of business model, a tool that he/she uses to create, deliver and capture the envisaged teleology—economic and social impact. Likewise, a conventional entrepreneur and social entrepreneur can be identified by the enterprise business model they use, the teleology their business model pursues, the type of key partners the incorporate in the business model, the ownership criteria and the presence or absence of exit model.

In his study, Siame [18]: p. 173 developed a business model typology based on business model teleology. The typology permit, business model comparison based on teleology. It holds the prognosis that a typology based on teleological value provides a rational basis for comparing, contrasting, evaluating, and predicting the behavior of the economic and social actors. In **Table 1**, any business model can be traced to a sector—private, public or voluntary. The general typology column provides the general business model typology and the main teleology being pursued. The class column indicates a specific class of business model within the general typology by recognizing their specific teleology and the remaining columns brings out the meaning and examples based in Zambia—a developing country where the study was undertaken.

The proponents of SVE argue that the 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 example of which are shown in **Figures 1** and **2**. In his study, Siame [18]: p. 170 presents a wicked environment that constitutes barriers #1 and #2. In such environment, the social venturing entrepreneur needs to establish a social venture enterprise with a business model that incorporates micro, small and medium enterprises (MSMEs) owners, smallholder farmers or co-operatives (those affected by wicked problems) with the help of selected key stakeholders represented in barrier 1 & 2 enablers. The established social venture enterprise is able to trade in a free market environment dominated by large companies that was not possible to penetrate. Consequently, the social venture enterprise, using both economic and social coordination [41] is able to make sufficient profits some

of which is used to finance impact in addition to other sources for impact finances.

to drive development.

88 Entrepreneurship - Trends and Challenges

environments is as follows:

Similarly, Dorward and Kydd [40], presents an environment depicted in **Figure 2** where markets are not functioning (due to economic coordination and other problems inherent to very poor rural economies) and where market-based development processes cannot be relied on

In these environments characterized by wicked problems—depicted in **Figures 1** and **2**, the traditional investor owned firm (IOF) business model, state owned enterprise (SOE) business model, non-governmental organization (NGO) business model, and social venturing enterprise (SVE) business model are inadequate to solve these ills. The argument to justify the inadequacy for this business model enterprise in solving the wicked problems in these

**Table 1.** Business model typology


Bakshi [51], in Van Der Velden [7], argue that the IOF business model is associated with social, environmental and economic problems while Raid and Afronet [52] and Saluseke [53] accuse IOF business model firms for engaging in tax avoidance through transfer pric-

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*The IOF business model has been marvelous in a free market economy in terms of its innovativeness. However, relying squarely on IOF business model enterprise pursuing predominantly economic teleology may not be the only best option to mitigate wicked problems in developing countries like Zambia.* 

• However, the delivery of impact by government or SOE business models is severely questioned by the grabbing hand theory, Shleifer and Vishny [54], p. 4. The theory portrays government or indeed SOE business models as not maximizing social welfare and instead pursue their own selfish objectives, or the inability of weak states to implement policies effectively and provide a supportive institutional environment, Brown et al. [55]: p. 264. According to grabbing hand view, the policy makers are motivated by the aim to please the interest of specific, well-defined voters, ([56]: p. 9, [54]: p. 2). In this case, government personnel are assumed to be just as self-interested as any other economic actor, and will therefore exploit their monopoly over certain decisions to generate rents. Public choice scholars argue that public officials, besides pursuing public interest, might act to benefit

*The SOE business model has been quite phenomenal in countries with strong cultural values, but has not done well in many developing countries. Likewise, relying squarely on SOE business model for* 

• The NGOs, organizations have been criticized for various reasons in the past ([60]: p. a15, [61, 62]). Due to the dependency on donor funding, in times of declining aid, the NGOs find themselves unable to deliver impact. When this happens, the economic and social status of aid beneficiaries for whom the NGO was set up to start plummeting and in some cases becomes worse off than before they started receiving aid. This criticism leveled upon NGO's necessitated the introduction of SVE business model—self-financing business model—to maximize aid resource and ensure sustained impact. *The* Dutch ambassador to Ethiopia and Eritrea, Pieter Marres, publicly questioning the use of development aid. He says it is keeping people dependent and less self-reliant. The form of assistance that would be preferred is one that allows the recipient to help themselves, applying the famous age-old quote: "Give a man a fish; you have fed him for today. Teach a man to fish; and you have

*The NGO business model enterprise plays a great role in mitigating market and state failures. However, donor fatigue and special interest and keeping recipient dependent on donor aid render them ineffective* 

• The TSVE business model is an innovation from the NGO business model. However, the TSVE business model does not have an exit strategy building block that is important in preparing the stakeholders for independence. As a result, when the social enterprise winds-up for some reason, the economic sustainability is not guaranteed ([18]: p. 308, [65]: p. 176).

*and therefore, there is a need for more innovations in third sector business models.*

*economic and social development may not be the only best option due to state failures.*

*There is a need for more innovative business models to complement the traditional ones.*

themselves, possibly at the cost of efficiency [57–59].

ing in developing countries.

fed him for a lifetime" [63, 64]

**Figure 1.** Wicked problems due to market, state and voluntary failures. Source: Siame [18]: p. 170.

**Figure 2.** Coordination failure and the low level equilibrium trap. Source: Dorward and Kydd [40].

• The IOF business model, in a free market sector, is inadequate to solve social problems ([42]: p. 49). The primary focus for IOF business model enterprise is to achieve economic objective; the social or ecological objective are incidental or secondary ([18]: p. 173, [43]). For instance, the IOF business model entrepreneur is associated with profit maximization and self-interest with guile behaviors ([44]: p. 3, [45, 46]: pp. 215–233, [47]: p. 123, [48]: p. 30). Christians have criticized the use of IOF business model for neglecting wellbeing of all people [49]. Pope Francis described unfettered capitalism as "a new tyranny" and called on the world leaders to fight rising poverty and inequality. Porter and Kramer [50] and Bakshi [51], in Van Der Velden [7], argue that the IOF business model is associated with social, environmental and economic problems while Raid and Afronet [52] and Saluseke [53] accuse IOF business model firms for engaging in tax avoidance through transfer pricing in developing countries.

*The IOF business model has been marvelous in a free market economy in terms of its innovativeness. However, relying squarely on IOF business model enterprise pursuing predominantly economic teleology may not be the only best option to mitigate wicked problems in developing countries like Zambia. There is a need for more innovative business models to complement the traditional ones.*

• However, the delivery of impact by government or SOE business models is severely questioned by the grabbing hand theory, Shleifer and Vishny [54], p. 4. The theory portrays government or indeed SOE business models as not maximizing social welfare and instead pursue their own selfish objectives, or the inability of weak states to implement policies effectively and provide a supportive institutional environment, Brown et al. [55]: p. 264. According to grabbing hand view, the policy makers are motivated by the aim to please the interest of specific, well-defined voters, ([56]: p. 9, [54]: p. 2). In this case, government personnel are assumed to be just as self-interested as any other economic actor, and will therefore exploit their monopoly over certain decisions to generate rents. Public choice scholars argue that public officials, besides pursuing public interest, might act to benefit themselves, possibly at the cost of efficiency [57–59].

*The SOE business model has been quite phenomenal in countries with strong cultural values, but has not done well in many developing countries. Likewise, relying squarely on SOE business model for economic and social development may not be the only best option due to state failures.*

• The NGOs, organizations have been criticized for various reasons in the past ([60]: p. a15, [61, 62]). Due to the dependency on donor funding, in times of declining aid, the NGOs find themselves unable to deliver impact. When this happens, the economic and social status of aid beneficiaries for whom the NGO was set up to start plummeting and in some cases becomes worse off than before they started receiving aid. This criticism leveled upon NGO's necessitated the introduction of SVE business model—self-financing business model—to maximize aid resource and ensure sustained impact. *The* Dutch ambassador to Ethiopia and Eritrea, Pieter Marres, publicly questioning the use of development aid. He says it is keeping people dependent and less self-reliant. The form of assistance that would be preferred is one that allows the recipient to help themselves, applying the famous age-old quote: "Give a man a fish; you have fed him for today. Teach a man to fish; and you have fed him for a lifetime" [63, 64]

*The NGO business model enterprise plays a great role in mitigating market and state failures. However, donor fatigue and special interest and keeping recipient dependent on donor aid render them ineffective and therefore, there is a need for more innovations in third sector business models.*

• The IOF business model, in a free market sector, is inadequate to solve social problems ([42]: p. 49). The primary focus for IOF business model enterprise is to achieve economic objective; the social or ecological objective are incidental or secondary ([18]: p. 173, [43]). For instance, the IOF business model entrepreneur is associated with profit maximization and self-interest with guile behaviors ([44]: p. 3, [45, 46]: pp. 215–233, [47]: p. 123, [48]: p. 30). Christians have criticized the use of IOF business model for neglecting wellbeing of all people [49]. Pope Francis described unfettered capitalism as "a new tyranny" and called on the world leaders to fight rising poverty and inequality. Porter and Kramer [50] and

Low economic activity, thin market, high transaction costs, risks & high unit costs

> High cost information access & property rights

Inhibited economic & technological development

**Barrier 1 & 2 enablers** °extension service providers

° inconsistent policy ° fail access to market ° absolute poverty ° corruption ° low human capital ° gender bias ° cultural barriers ° health problems ° lack of justice ° low productivity ° lack of institutions ° poor input supply

Inhibited market access & development

° local NGO's

° audit firms

° microfinance

°churches

° media

° universities ° research institutions

° accounting firms

° development banks

° bilateral institution

90 Entrepreneurship - Trends and Challenges

°government ° philanthropist ° insurance institution °banks ° international NGO's

° limited public funds for investment

**Figure 1.** Wicked problems due to market, state and voluntary failures. Source: Siame [18]: p. 170.

**Figure 2.** Coordination failure and the low level equilibrium trap. Source: Dorward and Kydd [40].

**Barrier #2: °** low entrepreneurial levels ° low women participation ° lack of access to resources ° environmental degradation ° poorly developed market ° poorly developed legal system

> **Barrier #1: = Porters five forces**  °power imposed by large firms °bargaining power of buyers & suppliers

> > Free market economy dominated by large enterprise

Weak institutional & infrastructural environment

MSMEs Smallholder / co-operatives

°substitute products °competitor's rivalry °market entry barriers °technology °product dumping °monopoly °monopsony °oligopoly

> • The TSVE business model is an innovation from the NGO business model. However, the TSVE business model does not have an exit strategy building block that is important in preparing the stakeholders for independence. As a result, when the social enterprise winds-up for some reason, the economic sustainability is not guaranteed ([18]: p. 308, [65]: p. 176).

Arising from the negative effects of forenamed business models, especially the TSVE business model, Siame [18], in his study designed a generic social venturing and co-operative entrepreneurship (SVCE) business model with exit strategy building block. The social venturing entrepreneur, using SVCE business model is expected to empower the community for whom the social venture is established to self-manage the social enterprise when key stakeholders exit.

*4.2.1.1. Key partners (KP)*

**Figures 3** and **4.**

*4.2.1.2. Commercial customers (CC)*

The smallholders do not have finance, technical know-how, skill and knowledge to set up and run a value adding enterprise. The model needs key partners to provide these resources. Some or all partners shall exit when the stakeholders for whom the social enterprise was established acquire the know-how to self-manage the enterprise. The social venturing entrepreneur uses his/her skills in networking and lobbying to bring in partners as shown in

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The success of SVCE business model enterprise relies on the availability of commercial customers that are willing to buy the processed products or service. A feasibility study must

establish this niche market. Tentative customers are in **Figures 3** and **4.**

**Figure 3.** SVCE business model for fruit juice processing enterprise. Source: Siame [18]: p. 179, [65]: p. 302.

#### **4.1. The social venturing entrepreneur's business model**

Social venturing entrepreneurship, using Van Dijk terminology, is "entrepreneurship with calling," and is "a silent revolution to mainstream/traditional entrepreneurship." Among the social innovations that the social venturing entrepreneur pursues is the design of exit element in SVCE business model enterprise. The exit element or building block encompasses all that is required to empower the local stakeholders so that they are able to address the unsolved social problems themselves when the key stakeholders are gone or exited. The key stakeholders are those who partner with the social venture in order to solve the ill social problems sustainably and exit. These could be, for example, the philanthropist, government, companies practicing sustainable corporate social responsibility, International and local non-governmental organizations, multilateral and bilateral institutions etc. In the traditional business models (IOF, SOE, NGO, and TSVE business models), the exit strategy is an action plan to either change ownership, in case of IOF and SOE enterprises or when an investee ends the relationship in such a way that the social impact is either maintained or amplified, or the potential loss of social impact is minimized in the case of NGO and TSVE. However, the exit strategy in SVCE business model enterprise means handing over ownership to local stakeholders when they have acquired sufficient knowledge, expertise to manage the social enterprise sustainably [8, 18, 24].

#### **4.2. The SVCE business model building blocks**

The SVCE business model can simply be defined as an innovative framework for creating and delivering sustainable impact investment. The SVCE business model is most appropriate for firms wishing to create, deliver and capture both economic and social impact in developing economies characterized by a Schulze-Raiffesien environment or environments exposed to low level equilibrium trap ([66]: pp. 5–7, [67]: p. 4, [18]: p. 167, [65]: p. 303).

The SVCE business model creates economic value through key activities and key resources in order to deliver to three layered customers—key partner, commercial customers and input supply customers (the local people for whom the social enterprise has been formed). The social value is created through exit strategy building block activities. The value created (economic and social) is delivered to three layered customers through channels, customer relationships, and value preposition building blocks. The economic and impact revenue is captured through finance building blocks (see Figures 7 and 8 in Siame [18]: p. 177 & 179).

The business model elements are briefly explained as follows:

#### *4.2.1. Customers*

In the SVCE business model, customers comprise three elements that must be established before setting up an SVCE business model enterprise.

#### *4.2.1.1. Key partners (KP)*

Arising from the negative effects of forenamed business models, especially the TSVE business model, Siame [18], in his study designed a generic social venturing and co-operative entrepreneurship (SVCE) business model with exit strategy building block. The social venturing entrepreneur, using SVCE business model is expected to empower the community for whom the social venture is established to self-manage the social enterprise when key stakeholders exit.

Social venturing entrepreneurship, using Van Dijk terminology, is "entrepreneurship with calling," and is "a silent revolution to mainstream/traditional entrepreneurship." Among the social innovations that the social venturing entrepreneur pursues is the design of exit element in SVCE business model enterprise. The exit element or building block encompasses all that is required to empower the local stakeholders so that they are able to address the unsolved social problems themselves when the key stakeholders are gone or exited. The key stakeholders are those who partner with the social venture in order to solve the ill social problems sustainably and exit. These could be, for example, the philanthropist, government, companies practicing sustainable corporate social responsibility, International and local non-governmental organizations, multilateral and bilateral institutions etc. In the traditional business models (IOF, SOE, NGO, and TSVE business models), the exit strategy is an action plan to either change ownership, in case of IOF and SOE enterprises or when an investee ends the relationship in such a way that the social impact is either maintained or amplified, or the potential loss of social impact is minimized in the case of NGO and TSVE. However, the exit strategy in SVCE business model enterprise means handing over ownership to local stakeholders when they have acquired sufficient knowledge, expertise to manage the social enterprise sustainably [8, 18, 24].

The SVCE business model can simply be defined as an innovative framework for creating and delivering sustainable impact investment. The SVCE business model is most appropriate for firms wishing to create, deliver and capture both economic and social impact in developing economies characterized by a Schulze-Raiffesien environment or environments exposed to

The SVCE business model creates economic value through key activities and key resources in order to deliver to three layered customers—key partner, commercial customers and input supply customers (the local people for whom the social enterprise has been formed). The social value is created through exit strategy building block activities. The value created (economic and social) is delivered to three layered customers through channels, customer relationships, and value preposition building blocks. The economic and impact revenue is captured through

In the SVCE business model, customers comprise three elements that must be established

low level equilibrium trap ([66]: pp. 5–7, [67]: p. 4, [18]: p. 167, [65]: p. 303).

finance building blocks (see Figures 7 and 8 in Siame [18]: p. 177 & 179).

The business model elements are briefly explained as follows:

before setting up an SVCE business model enterprise.

*4.2.1. Customers*

**4.1. The social venturing entrepreneur's business model**

92 Entrepreneurship - Trends and Challenges

**4.2. The SVCE business model building blocks**

The smallholders do not have finance, technical know-how, skill and knowledge to set up and run a value adding enterprise. The model needs key partners to provide these resources. Some or all partners shall exit when the stakeholders for whom the social enterprise was established acquire the know-how to self-manage the enterprise. The social venturing entrepreneur uses his/her skills in networking and lobbying to bring in partners as shown in **Figures 3** and **4.**

#### *4.2.1.2. Commercial customers (CC)*

The success of SVCE business model enterprise relies on the availability of commercial customers that are willing to buy the processed products or service. A feasibility study must establish this niche market. Tentative customers are in **Figures 3** and **4.**


**Figure 3.** SVCE business model for fruit juice processing enterprise. Source: Siame [18]: p. 179, [65]: p. 302.


enterprise. The feasibility study ought to establish the needs of all the customers so that they are part of the business model operations. The tentative value propositions are indicated in

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This building block dictates the nature of the relationships that a SVCE business model enterprise will develop with its customers—KP, CC and ISC. The examples of customer relationships that a social venturing entrepreneur needs to establish are stated in **Figures 3** and **4**.

Similarly, separate channels for different customer segments—KP, CC, and ISC—must be developed. These channels are the touch points through which a SVCE business model enterprise liaises with its customers and as such, play a huge role in defining the customer experi-

These are the most important assets needed to make SVCE business model work. It is through them that the enterprise generates value proposition, service customers and generate revenue. These can be physical, intellectual, financial, and human and can be owned or acquired from key partners as is the case with the SVCE business model. Key resources are directly relevant to the number and type of key activities being performed in the social venture enterprise. Ultimately, the quality of SVCE key resources will impact the sustainability and profitability

of the enterprise. The example of key resources is shown in **Figures 3** and **4.**

This element constitutes costs and revenue streams as explained in **Figures 3** and **4**.

Thus, exit means that some or all partners who initiated the SVCE business model enterprise must *transfer ownership* at some point by selling equity rights to stakeholders who have been successful with delivery rights contractual obligations. The exit building block is unique for this business model typology and is meant to establish exit strategies and activities and impact through a feasibility study [25]. The example of exit strategies and impact are shown

What is the preferred transfer ownership model—legal or psychological ownership or both? What are the planned activities to be undertaken in order to equip the smallholders so that they assume the kind of preferred ownership? How are the associated costs going to be

**Figures 3** and **4**.

*4.2.4. Channels*

*4.2.5. Key resources*

*4.2.6. Finances*

in **Figure 3**.

financed?

*4.2.7. The exit building block*

**4.3. Exit strategies and activities**

*4.2.3. Customer relationship*

ence. See example in **Figures 3** and **4**.

#### *4.2.1.3. Input supply customers (ISC)*

The SVCE business model enterprise is setup for local stakeholders who are already engaged in survival, activities (such as farming, street vending, stone crushing, etc.). The value adding social venture enterprise is established where they own delivery rights to supply the social venture with the raw materials. And they are promised to purchase equity rights on exit—a kind of psychological ownership is created.

Only the willing are selected and given delivery rights for the supply of inputs to the value adding social enterprise. They are selected on the basis of what they have to bring to the SVCE business model enterprise—based on appreciative inquiry. Thus, they do not only own the ventures they are already engaged in but also earmarked to own a value adding social venture on exit.

#### *4.2.2. Value proposition*

The value proposition must address specific intrinsic and extrinsic needs of KP, CC and ISC; otherwise, these customers may see no need to support or being part of the social venture enterprise. The feasibility study ought to establish the needs of all the customers so that they are part of the business model operations. The tentative value propositions are indicated in **Figures 3** and **4**.

#### *4.2.3. Customer relationship*

This building block dictates the nature of the relationships that a SVCE business model enterprise will develop with its customers—KP, CC and ISC. The examples of customer relationships that a social venturing entrepreneur needs to establish are stated in **Figures 3** and **4**.

#### *4.2.4. Channels*

Similarly, separate channels for different customer segments—KP, CC, and ISC—must be developed. These channels are the touch points through which a SVCE business model enterprise liaises with its customers and as such, play a huge role in defining the customer experience. See example in **Figures 3** and **4**.

#### *4.2.5. Key resources*

These are the most important assets needed to make SVCE business model work. It is through them that the enterprise generates value proposition, service customers and generate revenue. These can be physical, intellectual, financial, and human and can be owned or acquired from key partners as is the case with the SVCE business model. Key resources are directly relevant to the number and type of key activities being performed in the social venture enterprise. Ultimately, the quality of SVCE key resources will impact the sustainability and profitability of the enterprise. The example of key resources is shown in **Figures 3** and **4.**

#### *4.2.6. Finances*

*4.2.1.3. Input supply customers (ISC)*

94 Entrepreneurship - Trends and Challenges

*4.2.2. Value proposition*

kind of psychological ownership is created.

**Figure 4.** COMACO business model. Source: Siame [65]: p. 308.

The SVCE business model enterprise is setup for local stakeholders who are already engaged in survival, activities (such as farming, street vending, stone crushing, etc.). The value adding social venture enterprise is established where they own delivery rights to supply the social venture with the raw materials. And they are promised to purchase equity rights on exit—a

Only the willing are selected and given delivery rights for the supply of inputs to the value adding social enterprise. They are selected on the basis of what they have to bring to the SVCE business model enterprise—based on appreciative inquiry. Thus, they do not only own the ventures they are already engaged in but also earmarked to own a value adding social venture on exit.

The value proposition must address specific intrinsic and extrinsic needs of KP, CC and ISC; otherwise, these customers may see no need to support or being part of the social venture This element constitutes costs and revenue streams as explained in **Figures 3** and **4**.

#### *4.2.7. The exit building block*

Thus, exit means that some or all partners who initiated the SVCE business model enterprise must *transfer ownership* at some point by selling equity rights to stakeholders who have been successful with delivery rights contractual obligations. The exit building block is unique for this business model typology and is meant to establish exit strategies and activities and impact through a feasibility study [25]. The example of exit strategies and impact are shown in **Figure 3**.

#### **4.3. Exit strategies and activities**

What is the preferred transfer ownership model—legal or psychological ownership or both? What are the planned activities to be undertaken in order to equip the smallholders so that they assume the kind of preferred ownership? How are the associated costs going to be financed?

A needs assessment at the inception of the SVCE enterprise is done in order to establish the training needs for the delivery rights holders to be able to take part in social venture management. And establish also the interventions that are required to increase production and productivity of economic ventures that the stakeholders are already engaged in so that they are able to supply the value adding social venture with delivery rights of the right quality, the right quantity, at the right time.

#### **4.4. Impact**

Before exit, what economic, social, environmental, etc., impact ought to be achieved so that the SVCE business model enterprise remains sustainable even after partner exit? How will the impact be measured and communicated to stakeholders?

government, private business sector and philanthropy have difficulties to bring lasting and

A Practical and Theoretical Approach to Social Venturing Entrepreneurship

http://dx.doi.org/10.5772/intechopen.72011

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The success of the SVCE business model enterprise across the supply chains is possible when the social venturing entrepreneur applies social venturing entrepreneurship rooted in new institutional economics, behavioral economics and exit strategy theory as shown in **Figure 5**. The conceptual framework is premised on the notion that SVCE business model enterprise performance and growth is influenced by: Social venturing entrepreneurship + social venturing exit theory + Institutional, legal and policy environment + Internal governance + incentive

**6. Practical applicability SVE using SVCE business model enterprise**

According to Bushe, appreciative inquiry (AI) advocates collective inquiry into the best of what is, in order to imagine what could be, followed by collective design of the desired future state that is compelling and thus does not require the use of incentives, coercion or persuasion for planned change to occur [70]. Using AI, there are many government projects and enterprise and individual business activities that could make use of SVE in order to achieve

Government starts projects and business ventures for social and economic development which, eventually become a burden to the treasury. For example, many countries in Sub-Sahara Africa have a Farmer Inputs Support Program (FISP). This program supports smallholder farmers with finances to purchase seed and fertilizer among others. In Zambia, this program has become a burden to the treasury and a hindrance to agricultural development in general because it is consuming a large percentage of the finances allocated to Agriculture ([71]: p. 5, [72]). It is a political program whereby the government of the day

sustainable results to these issues with the available instruments [8, 18, 68].

**Figure 5.** SVCE business model conceptual framework. Source: Siame [18]: p. 173.

**5.1. The conceptual framework for SVE**

greater, effective, and efficient performance.

structure ([69]: p. 235).

### **4.5. The difference between SVCE business model and the TSVE business model enterprises**

The proponents of SVE argue that SVCE business model enterprise is superior to traditional social venture enterprise (TSVE) business model on account of exit strategy building block that is integrated with SVCE business model. For example, Community, Market for Conservation (COMACO) business model (a TSVE business model shown in **Figure 4**), has been very successful in delivering economic and impact teleology to communities, but the lack of exit strategy for COMACO lenders the smallholders perpetually dependent on it. In case of COMACO winding-up for some reason the converted smallholders would revert to pouching since they social enterprise where they sell farm produce is no longer in existence ([65]: pp. 307–308).
