CHAPTER 4 Social Entrepreneurship and the Global Environment for Entrepreneurship

Objectives of the EU

1.Elimination of custom duties among all member states. 2.Free flow of goods and services among all members. 3.Creation of common trade policies toward all countries outside the EU. 4.Free movement of capital and personnel within the EU. 5.Encouragement of economic development in the EU. 6.Monetary and fiscal coordination among all members.

Benefit Corporation

1.Purpose: To create a material positive impact on society and the environment. 2.Accountability: To have a fiduciary duty to consider the interests of workers, the community, and the environment. 3.Transparency: To report annually to the public on overall social and environmental performance with a credible and transparent third-party standard.

Licensing

•A business arrangement in which a manufacturer of a product (or a firm with proprietary rights over certain technology or trademarks) grants permission to some other group or individual to manufacture that product in return for specified royalties or other payments.

Direct Foreign Investment

•A domestically controlled foreign production facility that results from a foreign firm: •Acquiring an interest in an ongoing foreign operation. •Obtaining a majority interest in a foreign company. •Purchasing part of the assets of a foreign concern in order to establish a direct investment. •Building a facility in a foreign country.

Ecovision

•A leadership style that encourages open and flexible structures that encompass the employees, the organization, and the environment, with attention to evolving social demands.

Social Entrepreneurs

•A person or small group who founds or leads an organization or initiative engaged in social entrepreneurship. •Also referred to as "public entrepreneurs," "civic entrepreneurs," or "social innovators." •Creative thinkers continuously striving for innovation in technologies, supply sources, distribution outlets, or methods of production. •Change agents who create large-scale change using pattern-breaking ideas to address the root causes of social problems.

Corporate Social Responsibility

•Actions that appear to further some social good, beyond the interests of the firm and that which is required by law, and often denotes societal engagement of organizations.

Social Entrepreneurship

•Activities and processes undertaken to discover, define, and exploit opportunities in order to enhance social wealth by creating new ventures or managing existing organizations in an innovative manner.

International Alliances

•Agreements between companies from two or more countries; not legally binding.

Triple Bottom Line (TBL)

•An accounting framework that goes beyond the traditional measures of profit, return on investment, and shareholder value to include environmental and social dimensions.

Shared Value

•An approach to creating economic value that also creates value for society by addressing its needs and challenges. •Transforms business thinking by addressing issues through innovation and methods.

Social Risks

•Antagonism among classes, religious conflict, unequal income distribution, union militancy, civil war, and riots

Importing

•Buying and shipping foreign-produced goods for domestic consumption.

Driven by Social Goals

•Challenges are presented regarding the boundaries of what is and what is not a social enterprise. •Social causes can be based on personal goals. •General agreement that there is the desire to benefit society in some way. •Arguments can begin over the location and purposes of the social goals.

Economic Risks

•Changes in tax laws, rapid rises in costs, strikes, sudden increases in raw materials, and cyclical/dramatic shifts in GNP

Global Thinking

•Entrepreneurs who expand into foreign markets think about how to design and adopt strategies for different countries.

Social Entrepreneurship

•Entrepreneurship that is a form that exhibits characteristics of nonprofits, governments, and businesses. •Combination of private-sector focus on innovation, risk taking, and large-scale transformation with social problem solving.

Ecopreneurship

•Environmental entrepreneurship with entrepreneurial actions contributing to preserving the natural environment, including the Earth, biodiversity, and ecosystems.

European Union (EU)

•European Economic Community including 28 member states, which are located primarily in Europe.

Financial Risks

•Fluctuating exchange rates, repatriation of profits and capital, and seasonal cash flows

Sustainable Entrepreneurship

•Focus on the preservation of nature, life support, and community. •Pursuing opportunities to bring into existence future products, processes, and services for gain, including economic and noneconomic gains to individuals, the economy, and society.

Diaspora Networks

•Global networks of relationships among ethnic groups that share cultural and social norms. •Advantages of Diaspora Networks

Resource-Rich Countries

•Have extractive assets •OPEC nations and many parts of Africa

Market-Rich Countries

•Have large purchasing power •Europe, Brazil, Mexico, India, China, and the United States

Labor-Rich Countries

•Have vast pools of available labor •Brazil, India, the Philippines, and select countries in South and Central America

Learning Curve Concept

•Increased sales from exports will lead to greater efficiencies along the firm's cost curve, which in turn will lead to increased overall profits as the firm expands into overseas markets.

Environmental Movement

•Initiated primarily by values rather than by design. •Developed by a plan to create sustainable future.

North American Free Trade Agreement (NAFTA)

•International agreement between Canada, Mexico, and the United States that eliminates trade barriers among the three nations. •Created the world's largest free trade area, linking 444 million people and producing $17 trillion in goods and services annually.

Venturing Abroad

•Opportunities to expand internationally.

Global Entrepreneurs

•Opportunity-minded and open-minded global thinkers able to see different points of view and weld them into a unified focus. •Rise above nationalistic differences to see the big picture of global competition without abdicating their own nationalities. •Have a core language plus working knowledge of others. •Confront the learning difficulties of language barriers head-on, recognizing the barriers such ignorance can generate.

Global Organizations and Agreements.

•Organizations, unifications, and trade agreements are some of the vehicles that have developed.

Types of Licensing

•Patents •Trademarks •Technical know-how

Social Entrepreneurship Process

•Recognition of a perceived social opportunity translated into an enterprise concept. •Resources are acquired to execute the enterprise's goals.

Exporting

•Shipping of domestically produced goods to a foreign destination for consumption.

Gradual Internationalization

•Step-by-step progress toward internationalization as risk and commitment increase and entrepreneurs acquire more knowledge through experience.

World Trade Organization (WTO)

•Umbrella organization that overseas and administers WTO trade agreements. •Handles trade negotiations or trade disputes. •Monitors national trade policies. •Provides technical assistance and training for developing countries

Political Risks

•Unstable governments, disruptions caused by territorial conflicts, wars, regionalism, illegal occupation, and political ideological differences