Most frequent asked Questions on Entreprenuership by my students in class.

a)Using relevant examples make an argument for people to become entrepreneurs in Uganda
Definition of entrepreneurs (5 marks)
The word entrepreneurship is a mixed blessing. On the positive side, it 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.

Entrepreneur is associated with starting a business. However this is a very loose application of a term. The term “entrepreneur” originated in French economics as early as the 17th and 18th centuries. In French, it means someone who undertakes a significant project or activity. More specifically, it came to be used to identify the venturesome individuals who stimulated economic progress by finding new and better ways of doing things. The French economist most commonly credited with giving the term this particular meaning is Jean Baptiste Say. Say put it this way,
“The entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.” Entrepreneurs create value.

In the 20th century, the economist most closely associated with the term was Joseph Schumpeter.
He described entrepreneurs as the innovators who drive the “creative-destructive” process of capitalism. In his words, “the function of entrepreneurs is to reform or revolutionize the pattern of production.”
Entrepreneurs can do this in many ways:
• “by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way,
• by opening up a new source of supply of materials or a new outlet for products,
• by reorganizing an industry and so on.”
Schumpeter’s entrepreneurs are the change agents in the economy. By serving new markets or creating new ways of doing things, they move the economy forward. It is true that many of the entrepreneurs that Say and Schumpeter have in mind serve their function by starting new, profit-seeking business ventures, but starting a business is not the essence of entrepreneurship. Though other economists may have used the term with various nuances, the Say-Schumpeter tradition that identifies entrepreneurs as the catalysts and innovators behind economic progress has served as the foundation for the contemporary use of this concept.

Business expert Peter Drucker (1909-2005) took this idea further, describing the entrepreneur as someone who actually searches for change, responds to it, and exploits change as an opportunity. A quick look at changes in communications - from typewriters to personal computers to the Internet - illustrates these ideas.

Discussion of reasons for the importance of entrepreneurs in Uganda ( 20 marks)Individual benefits (5 marks)
What leads a person to strike out on his own and start a business? Perhaps a person has been laid off once or more. Sometimes a person;
• Is frustrated with his or her current job and doesn't see any better career prospects on the horizon.
• Realizes that his or her job is in jeopardy.
• A firm may be contemplating cutbacks that could end a job or limit career or salary prospects.
• Perhaps a person already has been passed over for promotion.
• Perhaps a person sees no opportunities in existing businesses for someone with his or her interests and skills.
• Some people are actually repulsed by the idea of working for someone else. They object to a system where reward is often based on seniority rather than accomplishment, or where they have to conform to a corporate culture.
• Other people decide to become entrepreneurs because they are disillusioned by the bureaucracy or politics involved in getting ahead in an established business or profession.
• Some are tired of trying to promote a product, service, or way of doing business that is outside the mainstream operations of a large company.
In contrast, some people are attracted to entrepreneurship by the advantages of starting a business. These include:
• Entrepreneurs are their own bosses. They make the decisions. They choose whom to do business with and what work they will do. They decide what hours to work, as well as what to pay and whether to take vacations.
• Entrepreneurship offers a greater possibility of achieving significant financial rewards than working for someone else.
• It provides the ability to be involved in the total operation of the business, from concept to design and creation, from sales to business operations and customer response.
• It offers the prestige of being the person in charge.
• It gives an individual the opportunity to build equity, which can be kept, sold, or passed on to the next generation.
• Entrepreneurship creates an opportunity for a person to make a contribution. Most new entrepreneurs help the local economy. A few - through their innovations - contribute to society as a whole. One example is entrepreneur Steve Jobs, who co-founded Apple in 1976, and ignited the subsequent revolution in desktop computers.

Community/societal benefits (15 marks)

The Impact of Entrepreneurs
The importance of entrepreneurship in general and social entrepreneurship in particular is often overlooked. Social entrepreneurship is important to economic development policies because it can play a vital role to the progress of societies and deliver vital value to societal and economic development.
• Employment Development- The first major economic value that social entrepreneurship creates is the most obvious one because it is shared with entrepreneurs and businesses alike: job and employment creation.
A second dimension of employment development is almost unique to social enterprises; social enterprises provide employment opportunities and job training to segments of society at an employment disadvantage, such as the long-term unemployed, the disabled, the homeless, at-risk youth and gender-discriminated women Some social enterprises act as an “intermediate between unemployment and the open labor market”. Re-integration of disadvantaged groups into the labor market is both socially and financially beneficial for the community at large. In the case of the Grameen Bank, the economic situation of six million disadvantaged women micro - entrepreneurs were improved

• Innovation / New Goods and Services-Social enterprises develop and apply innovation important to social and economic development and develop new goods and services. social-purpose enterprises … bring new responses to unmet social needs can be measured as the provision of new goods and services that are complementary to those delivered by the public and private sectors and accessible to a greater number of citizens” Issues addressed include some of the biggest societal problems such as HIV /Aids, mental ill-health, illiteracy, crime and drug abuses which, importantly, are confronted in innovative ways. Some of these new approaches in some cases are transferable to the public sector e.g. home -based care model for AIDS patients which later changed government health policy. These new kinds of organizations as “hotbeds of ideas and experiments, and they are able to get innovative policies adopted at the central, regional or local government levels”
• Social Capital-Next to economic capital one of the most important values created by social entrepreneurship is social capital. Although the term social capital again is not clearly defined, it is usually understood as “the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition" Social capital is the most important form of capital created by social entrepreneurs because economic partnerships require shared values, trust and a culture of cooperation which is all part of social capital. Examples include the success of the German and Japanese economies, which have their roots in long-term relationships and the ethics of cooperation, in both essential innovation and industrial development. The World Bank also sees social capital as critical for poverty alleviation and sustainable human and economic development. Existent bonding social capital within groups is reinforced by bridging/linking social capital catalysed by social entrepreneurs” The “virtuous circle of social capital”, starts with the initial endowment of social capital by the social entrepreneur. Building up a network of trust and cooperation and getting more partners involved enables access to physical (e.g. buildings), financial and human capital. Organizational capital is created, and, when the social enterprise is successful, more social capital such as in the form of a re - opened hospital is created:

• Equity Promotion-Another aspect is that social entrepreneurship fosters a more equitable society which is an objective for most economic development policies. Complementing the equity promoting activities of public agencies and NGOs, social enterprises address social issues and try to achieve ongoing sustainable impact through their social mission rather than purely profit-maximization The Grameen Bank and its support for disadvantaged women is an example of how social entrepreneurs support equity-promoting policies. Other examples include reintegrating disadvantaged groups into the labor market and providing affordable goods and services to the poor. Social entrepreneur have helped thousands of low-income high-school students to get into tertiary education.


Or
b) Using Dees (1998) arguments, discuss how social entrepreneurs can play the role of change agents in Uganda
Definition of social entrepreneurs (5 marks)
• Social entrepreneurship is seen as not-for-profit initiatives in search of alternative funding strategies or management schemes to create social value (Austin, Stevenson& Wei-Skiller, 2003; Boschee, 1998)
• Social entrepreneurship understood as the socially responsible practice of commercial business engaged in cross-sector partnerships (Sagawa & Segal, 2000; Waddock, 1998)
• Social entrepreneurship as a means to alleviate social problems and catalyze social transformation ( Alvord et al.., 2004; Ashoka Innovators, 2000)

• Alvord, Brown & Letts (2004) Social entrepreneurship creates innovative solutions to immediate social problems and mobilizes the ideas, capacities, resources and social arrangements required for sustainable social transformation.

• Saiid Business School (2005) Social entrepreneurship may be defined as a professional, innovative and sustainable approach to systemic change that resolves social market failures and grasps opportunities.

• IESE Business School (2005) Social entrepreneurship is a process involving the innovative use and combination of resources to pursue opportunities to catalyze social change and /or address social needs.

• Mort, Weerawardena, & Carnegie (2002) Social entrepreneurship is a multi-dimensional construct involving the expression of entrepreneurially virtuous behaviour to achieve the social mission , a coherent unity of purpose and action in the face of moral complexity , the ability to recognize social value –creating opportunities and key decision-making characteristics of innovativeness, proactiveness and risk-taking.

• Social entrepreneurship can be viewed as a process of creating value by combining resources in new ways (Stevenson, Roberts & Grousbeck, 1989; Schumpeter, 1934).

• Haugh & Tracey (2004) Social enterprises are businesses that trade for social purpose. They combine innovation, entrepreneurship and social purpose to seek to be financially sustainable by generating revenue from trading. Their social mission prioritizes social benefit above financial profit and if and when a surplus is made, this is used to further the social aims of the beneficiary group or community and not distributed to those with a controlling interest in the enterprise.

• Dees (1994) social enterprises are private organizations dedicated to solving social problems serving the disadvantaged, providing socially important goods that were not in their judgment adequately provided by public agencies or private markets. These organizations have pursued goals that could not be measured simply by profit generation, market penetration and or voter support.
• According to Dees (1998), Social entrepreneurs play the role of change agents in the social sector, by:
o Adopting a mission to create and sustain social value (not just social private value)
o Recognizing and relentlessly pursuing new opportunities to serve that mission,
o Engaging in a process of continuous innovation, adaptation and learning,
o Acting boldly without being limited by resources currently in hand and,
o Exhibiting heightened sense of accountability to the constituencies served and for the outcomes created

Explanation of Dees (1998) argument or proposition (5 marks)

Dees (1998) -social enterprises are private organizations dedicated to solving social problems serving the disadvantaged, providing socially important goods that were not in their judgment adequately provided by public agencies or private markets. These organizations have pursued goals that could not be measured simply by profit generation, market penetration and or voter support.
Change agents in the social sector: Social entrepreneurs are the reformers and revolutionaries described by Schumpeter, but with a social mission. They make fundamental changes in the way things are done in the social sector. Their visions are bold. They attack the underlying causes of problems, rather than simply treating symptoms. They often reduce needs rather than just meeting them. They seek to create systemic changes and sustainable improvements. Though they may act locally, their actions have the potential to stimulate global improvements in their chosen arenas, whether that is education, health care, economic development, the environment, the arts, or any other social sector field.

Discussion of how social entrepreneurs can act as change agents (15 marks)
According to Dees (1998), Social entrepreneurs play the role of change agents in the social sector, by:
• Adopting a mission to create and sustain social value (not just social private value) ( 4 marks)
• Recognizing and relentlessly pursuing new opportunities to serve that mission, (4 marks)
• Engaging in a process of continuous innovation, adaptation and learning, ( 4 marks)
• Acting boldly without being limited by resources currently in hand and, ( 4 marks)
Exhibiting heightened sense of accountability to the constituencies served and for the outcomes created
Social sector leaders will exemplify these characteristics in different ways and to different degrees.

• Adopting a mission to create and sustain social value:-This is the core of what distinguishes social entrepreneurs from business entrepreneurs even from socially responsible businesses. For a social entrepreneur, the social mission is fundamental. This is a mission of social improvement that cannot be reduced to creating private benefits (financial returns or consumption benefits) for individuals. Making a profit, creating wealth, or serving the desires of customers may be part of the model, but these are means to a social end, not the end in itself. Profit is not the gauge of value creation; nor is customer satisfaction; social impact is the gauge. Social entrepreneurs look for a long-term social return on investment. Social entrepreneurs want more than a quick hit; they want to create lasting improvements. They think about sustaining the impact.
• Recognizing and relentlessly pursuing new opportunities: Where others see problems, entrepreneurs see opportunity. Social entrepreneurs are not simply driven by the perception of a social need or by their compassion, rather they have a vision of how to achieve improvement and they are determined to make their vision work. They are persistent. The models they develop and the approaches they take can, and often does, change, as the entrepreneurs learn about what works and what does not work. The key element is persistence combined with a willingness to make adjustments as one goes. Rather than giving up when an obstacle is encountered, entrepreneurs ask, “How can we surmount this obstacle? How can we make this work?”
• Engaging in a process of continuous innovation, adaptation, and learning: Entrepreneurs are innovative. They break new ground, develop new models, and pioneer new approaches. However, as Schumpeter notes, innovation can take many forms. It does not require inventing something wholly new; it can simply involve applying an existing idea in a new way or to a new situation. Entrepreneurs need not be inventors. They simply need to be creative in applying what others have invented. Their innovations may appear in how they structure their core programs or in how they assemble the resources and fund their work. On the funding side, social entrepreneurs look for innovative ways to assure that their ventures will have access to resources as long as they are creating social value. This willingness to innovate is part of the modus operandi of entrepreneurs. It is not just a one-time burst of creativity. It is a continuous process of exploring, learning, and improving. Of course, with innovation comes uncertainty and risk of failure. Entrepreneurs tend to have a high tolerance for ambiguity and learn how to manage risks for themselves and others. They treat failure of a project as a learning experience, not a personal tragedy.
• Acting boldly without being limited by resources currently in hand: Social entrepreneurs do not let their own limited resources keep them from pursuing their visions. They are skilled at doing more with less and at attracting resources from others. They use scarce resources efficiently, and they leverage their limited resources by drawing in partners and collaborating with others. They explore all resource options, from pure philanthropy to the commercial methods of the business sector. They are not bound by sector norms or traditions. They develop resource strategies that are likely to support and reinforce their social missions. They take calculated risks and manage the downside, so as to reduce the harm that will result from failure. They understand the risk tolerances of their stakeholders and use this to spread the risk to those who are better prepared to accept it.
• Exhibiting a heightened sense of accountability to the constituencies served and for the outcomes created: Because market discipline does not automatically weed out inefficient or ineffective social ventures, social entrepreneurs take steps to assure they are creating value. This means that they seek a sound understanding of the constituencies they are serving. They make sure they have correctly assessed the needs and values of the people they intend to serve and the communities in which they operate. In some cases, this requires close connections with those communities. They understand the expectations and values of their “investors,” including anyone who invests money, time, and/or expertise to help them. They seek to provide real social improvements to their beneficiaries and their communities, as well as attractive (social and/or financial) return to their investors. Creating a fit between investor values and community needs is an important part of the challenge. When feasible, social entrepreneurs create market-like feedback mechanisms to reinforce this accountability. They assess their progress in terms of social, financial, and managerial outcomes, not simply in terms of their size, outputs, or processes. They use this information to make course corrections as needed.

2. Either
a) Using practical examples familiar to you outline and comment on the process of social entreprise venture formation in society.

Stage 1. The Formation of Social Sentiments
Sentiments-including perceptions, motives and emotions, thinking and learning and complex combination of opinions and feeling that’s lead to action and judgment, and focus the individual on the pursuit of relativity permanents ends. They accidentally develop from a strong relationship with someone or something and are biased by the individual’s prior experiences. Once developed, their strength is manifested in the strong devotion individual develop towards, for example other people or ideas. Sentiments control individual’s behavior, energize them towards what has become their attention (e.g. a particular social issue), and guide their long-term individual actions. In social entrepreneurship context, social sentiments seem to turn individuals into citizens who are dissatisfied with the status quo, loyal to their values and philosophy and motivated to act in socially responsible manner. Social sentiments are formed from the complex combination of a key relationship (her relationship with nature), and predisposition traits (her capacity to experience and instill empathy and her high degree of moral judgment). Predisposition traits are those that naturally motivate the individual to take into consideration other people's needs or interests. The formation of social feelings does not automatically imply the creation of social venture. Individuals with strong social feelings may act in various sectors and in a wide variety of professions (e.g. doctors) and vocations (e.g. religious or educational). However, social feelings seem to be an important element in the process of formation of intentions to create a social venture. The decision to create a social venture is influenced by the early formation of social feelings, which are originated by a key relationship with someone or something (external factor), and predisposition traits (internal factors).

Stage 2: The entrepreneurial process:
Will power- defined as energetic determination and, "the most powerful force of human behaviour, is closely related to propensity to act . Willpower can be identified in an individual when he/she goals. This is described it as “a deep personal attachment to an intention". It's power is such that it moves an individual to act, despite adversity, lack of motivation, low energy levels, or alternative opportunities. Furthermore, willpower to inspire the individual in the face of difficulties. Willpower can result from the complex combination of motivation (create social impact, reach more people, financial, and desire for social change) with action- related traits (her tendency to do things her way, adaptation skills, and long term focus). In addition it can be displayed in particular action –oriented traits that make one feel capable of accomplishing the undertaking. They possess skills already attributed to traditional entrepreneurs, which increase their level of willpower. While individuals acts with willpower will not necessarily create a social venture, willpower is an important variable in understanding the process by which the intention to create a social venture develops. A social entrepreneur's propensity to act is influenced by the display of willpower and it is determined by the combination of the type of motivations that social entrepreneurs experience and action-oriented traits that make them feel capable of pursuing their initiatives.
 Development of skills that may contribute to entrepreneurial behavior
 Awareness - building interest in the option of starting an SE/SF (AIDA - awareness, interest, desire, action)
 Examining opportunities to fulfil needs or wants and t solve problems
 Generate ideas to satisfy the opportunities

Stage 3: Use available resources and resources to evaluate opportunities and ideas
 Assess the opportunities and ideas
 Support: – defined as access to human and material resources – that social entrepreneur are able to gather affects their perception of feasibility only after they have evaluated the amount and type of support available for the venture. Support must occur at two distinct levels (individual and organizational) if it is to have a positive influence on the social entrepreneur's perceptions of the feasibility of the venture. The level of support that social entrepreneurs obtain from stakeholders will depend on the stock of resources available in their social network, and on their ability to enhance that stock by influencing stakeholders' judgment of the venture and thus also their willingness to invest. Access to human social and material resources is a necessary, but not a sufficient, condition to develop intentions to create a social venture. The perceived feasibility of a social venture is influenced by the amount and type of support the social entrepreneur is able to gather at the individual and organizational level.

Stage 4: Plan and prepare the venture thoroughly
Opportunity Construction: Opportunities can be searched for they can be discovered. Both types of opportunity recognition require prior experience or knowledge. One does not search for what one does not know, and one cannot discover what one mind cannot perceive. A third way to recognize opportunities-- construct them: "opportunities are thus very much in the eyes of the beholder. Once the individual perceive the opportunity, he/she will experience perceptions of desirability – among other factors – if the venture meets personal preferences ( e.g. high versus low tech ) In some cases the opportunity is constructed by combining prior experience and salient events. While important, opportunity construction is a necessary, but not sufficient condition for the intention to create a social venture. The perceived desirability of a social venture is influenced by the combination of a social opportunity. The construction of a social opportunity is determined by a combination of the social entrepreneur's prior experience and salient events that help him/her to recognize it.

Stage 5: Implementation



b) Discuss some of the impacts of social entrepreneurs in Ugandan society

The Impact of Social Entrepreneurs

The importance of entrepreneurship in general and social entrepreneurship in particular is often overlooked. Social entrepreneurship is important to economic development policies because it can play a vital role to the progress of societies and deliver vital value to societal and economic development.

Employment Development: The first major economic value that social entrepreneurship creates is shared with entrepreneurs and businesses alike: job and employment creation. A study from the John Hopkins University from 1998 shows that the number of people who are employed in social enterprises in a multi-country context, ranges from one to seven percent in the selected countries.

A second dimension of employment development is almost unique to social enterprises; social enterprises provide employment opportunities and job training to segments of society at an employment disadvantage, such as the long-term unemployed, the disabled, the homeless, at-risk youth and gender-discriminated women19. Some social enterprises act as an “intermediate between unemployment and the open labor market”. Re-integration of disadvantaged groups into the labor market is both socially and financially beneficial for the community at large. In the case of Prof. Yunus and the Grameen Bank, the economic situation of six million disadvantaged women micro - entrepreneurs were improved

Innovation / New Goods and Services: Social enterprises develop and apply innovation important to social and economic development and develop new goods and services. As the Organisation for Economic Co-Operation and Development (OECD) states, “social-purpose enterprises … bring new responses to unmet social needs can be measured as the provision of new goods and services that are complementary to those delivered by the public and private sectors and accessible to a greater number of citizens” Issues addressed include some of the biggest societal problems such as HIV /Aids, mental ill-health, illiteracy, crime and drug abusers which, importantly, are confronted in innovative ways. An example showing that these new approaches in some cases are transferable to the public sector is the Brazilian social entrepreneur Veronica Khosa, who developed a home -based care model for AIDS patients which later changed government health policy. The OECD sees these new kinds of organizations as “hotbeds of ideas and experiments, and they are able to get innovative policies adopted at the central,
regional or local government levels”.

A second dimension of employment development is almost unique to social enterprises; social enterprises provide employment opportunities and job training to segments of society at an employment disadvantage, such as the long-term unemployed, the disabled, the homeless, at-risk youth and gender-discriminated women. Some social enterprises act as an “intermediate between unemployment and the open labor market”. Re-integration of disadvantaged groups into the labor market is both socially and financially beneficial for the community at large. In the case of Prof. Yunus and the Grameen Bank, the economic situation of six million disadvantaged women microentrepreneurs were improved

Social Capital: The most important value created by social entrepreneurship is social capital. Although the term social capital again is not clearly defined, it is usually understood as “ the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition". To Leadbeater (1997), social capital is the most important form of capital created by social entrepreneurs because economic partnerships require shared values, trust and a culture of cooperation which is all part of social capital. As examples he mentions the success of the German and Japanese economies, which have their roots in long-term relationships and the ethics of cooperation, in both essential innovation and industrial development. The World Bank also sees social capital as critical for poverty alleviation and sustainable human and economic development. Hasan (2005) mentions the Grameen Bank again, along with several other Asian examples, and concludes with the statement that “existent bonding social capital within groups has been reinforced by bridging/linking social capital catalysed by social entrepreneurs”.

The “virtuous circle of social capital”, starts with the initial endowment of social capital by the social entrepreneur. Building up a network of trust and cooperation and getting more partners involved enables access to physical (e.g. buildings), financial and human capital. Organizational capital is created, and, when the social enterprise is successful, more social capital such as in the form of a re - opened hospital is created:


Equity Promotion: Another aspect is that social entrepreneurship fosters a more equitable society which is an objective for most economic development policies. Complementing the equity promoting activities of public agencies and NGOs, social enterprises address social issues and try to achieve ongoing sustainable impact through their social mission rather than purely profit-maximization. Again Yunus’s Grameen Bank and its support for disadvantaged women is an example of how social entrepreneurs support equity-promoting policies. Other examples include reintegrating disadvantaged groups into the labor market and providing affordable goods and services to the poor. For instance, the American social entrepreneur J.B. Schramm has helped thousands of low-income high-school students to get into tertiary education.