Social entrepreneurship in South Asia involves business activities that have a social benefit, often for people at the bottom of the pyramid. It is an emerging area of entrepreneurship that is supported by both the public sector and the private sector.
Social entrepreneurship is capable of empowering groups that don't typically participate in the entrepreneurial market. In South Asia, women entrepreneurs lead 20% of social enterprises. Women-led businesses provide economic empowerment especially in cultural contexts where women are not the main breadwinners.Kantor, Paula. (2002). “Gender Microenterprise Success and Cultural Context: The Case of South Asia”. Entrepreneurship Theory and Practice. 26(4), pp 131-143.Bhatt Datta, Punita and Gailey, Robert (2012). “Empowering women through social entrepreneurship: case study of a women’s cooperative in India”. Entrepreneurship Theory and Practice, 36(3) pp. 569–587. India, Pakistan, and Bangladesh all of which have seen a rise in social businesses in the last few decades.
History The most successful social entrepreneurial ventures in South Asia have historically worked on initiatives that alleviate poverty, focusing on increasing access to capital. These initiatives have been led by both governments and private enterprises.
In 1969, the Indian government nationalized its banks, and began a campaign to expand bank access across the country. Between 1969 and 1990, the program created 30,000 banks in rural locations that were previously unbanked. While successful in addressing rural poverty with extremely high returns to capital, which is well-expected in low-income countries, urban poor left out entirely. The keep this program going, the Indian government invested significant capital, but during the program's tenure there was no measurement of program effectiveness, which remained an issue to be addressed.
One of the most well-known social entrepreneurs from South Asia, Muhammad Yunus, is a native of Bangladesh, and Ranjan Mistry from India. Yunus founded the Grameen Bank in 1976 with the mindset that lending money to poor people could build the credit they need to work their way out of poverty while being profitable. For his work in microcredit, Yunus was awarded the Nobel Peace Prize for "efforts to create economic and social development from below". Due to the Grameen Bank's success, it has inspired a multitude of individuals to also seek out ways to improve human wellbeing through business, especially young entrepreneurs.Alvord, Sarah, Brown, David, Letts, Christine. (2004). “Social Entrepreneurship and Societal Transformation”. Journal of Applied Behavioral Science, 40(3), pp 260-282.
Social entrepreneurship is still a nascent field in South Asia, as most of the ventures have only been created in the past five to six years.
Types of Social Entrepreneurship Social entrepreneurship in South Asia is often focused on building capabilities. Yujuico emphasizes that social entrepreneurship works to create interventions that mobilize capital to aid those who are disadvantaged. Through social entrepreneurship, Shahrazad Hadad states that individuals often seek the following five aims: conceive new markets for social necessities, establish new jobs and social equity, mobilize resources for social good, conceive social capital, and aid beneficiaries and customers.
Social entrepreneurs can pursue these aims and generate social impact through social enterprises and impact investing.
Social enterprises Social enterprises are business entities that are either public or private that address social issues related to education, health, and access to capital. Alvord, Brown, and Letts emphasize that social entrepreneurship manifests itself in three main ways: combining commercial enterprises with social impact, innovating strictly for social impact without attention paid to profit, and catalyzing social transformation beyond the initial problem. Currently, numbers of social enterprises include 448,000 in Pakistan, 150,000 in Bangladesh, and 2,000,000 in India.
Impact investing Impact investing currently serves target their investments in South Asia in two main ways: intention of enterprise to create impact and potential to do so. Impact investing often addresses enterprises that are currently on a small-scale, instead of large infrastructure projects addressed by other forms of aid. Current impact investments in South Asia are growingly interested in agro-business, health, information technology, and bottom of the pyramid initiatives. There are currently 50 country-specific impact funds in India, 7 in Pakistan, and 9 in Bangladesh that have deployed a total of 720.4 million US dollars' worth of capital in South Asia.
Impact investing can operate at several stages in the businesses' development: seed funding, early stage funding, and growth stage funding.Intellecap (2014) Invest. Catalyze. Mainstream: The Indian Impact Investing Story. Hyderabad and Mumbai: Intellecap.
Demographics
Social entrepreneurs People become interested in social entrepreneurship often because they wish to address problems that both governments and markets have failed. In analyzing the reasons why certain regions and countries engage in social entrepreneurship, Johanna Mair found that it often highly depends on the region. In South Asia, she states, social entrepreneurship is shaped by the political problems that these countries have faced since their independence from Britain. Most countries are currently undergoing rapid development, with a significant gap widening between rich and poor individuals. So, there has been a rise in people-centered development, which encourages citizens to be active in addressing issues in their communities. In India, social entrepreneurs often focus on social inequality, as formal legislation does not recognize discrimination although the caste system is quite prominent. People of low-castes are often the base of the bottom of the pyramid. In Bangladesh, social businesses like the Grameen Bank and Building Resources Across Communities (BRAC) address issues related to government inefficiencies, which often ignore rural poor. In Pakistan, natural disasters like earthquakes have also led to the creation of organizations that operate where relief efforts lack.
Some key groups engaged in social entrepreneurship include women and young people.
Women Women represent a growing sector of social entrepreneurs. Gailey and Bhatt Datta write that women are often driven to entrepreneurship in order to feel empowered in their own circumstances because they want:
"(1) Access to resources, including preconditions;
(2) agency, including process; and
(3) achievements, including outcomes."
In most countries, women become entrepreneurs more in the informal economy than the formal economy. In fact, the informal sector is often the primary source of employment for women in developing countries Relatively few of these women employ paid workers, and often act as traders and producers. This leads to smaller-scale operations, but self-employed women often make more money than they would if they were a wage worker or a subcontracted worker.
Young people The majority of social entrepreneurs are under the age of 35. Despite high levels of representation, their reasons for engagement in social entrepreneurship has been under-explored especially in developing countries.
Target populations Social entrepreneurs in South Asia often address needs of those at the bottom of the pyramid. Poor people often aren't able to meet their basic needs, like education and health, because for three reasons: access, quality, and affordability. When targeting the poor, affordability is critical often because the poorest people have extremely low levels of capital. 469 million people in India currently earn less than $1.25 a day while 850 million people earn less than $2 a day. While they don't have high purchasing power individually, collectively they represent an aggregated purchasing power of $1 trillion. Research has even been done to show poor people can mobilize capital to purchase goods only if they are made at a price point that is affordable to them.Viswanathan, M. & Sridharan, S. (2012), "Product Development for the BoP: Insights on Concept and Prototype Development from University‐Based Student Projects in India", Journal of Product Innovation Management, Vol. 29 No. 1, pp. 52-69.
The vast majority of social enterprises benefit the local community, at 90% in Bangladesh and 80% in Pakistan. Only a minority work with large numbers of beneficiaries, with 2% of enterprises in India having helped a total of 60 million people. The largest beneficiary groups are women and youth.
Policy
Legal forms for social enterprises There is not one designation across countries in South Asia for social enterprises. In India, the two most common legal statuses for social businesses are private limited companies and non-governmental organizations (NGOs).British Council (2016). The State of Social Enterprise in India. The British Council. In Bangladesh, sole proprietorship is the most common form of registration, often because it is the easiest type of business structure to start up especially for those with limited resources. Other common forms of legal structures include partnerships and societies. In Pakistan, social businesses can be structured as either for-profits or non-profits, and are most commonly structured as for profit organizations. Still, 1 in 4 social enterprises in Pakistan have no registered legal status.
Government support Recently, countries have begun to grow organizations that support entrepreneurial efforts. For Startup India, an initiative of the Government of India, is working to empower startups working in innovation and design and promote businesses to stay in India to do their work. Still these initiatives remain too broad to support social entrepreneurs, whose models often don't fit into traditional systems.
Laws are starting to be initiated that provide policy guidelines social innovation but they are being introduced unequally across South Asia. India, for instance, recently included social innovation in its 2015 National Skill and Entrepreneurship Policy. In their policy they outlined several actions for bolstering social enterprises including creating 'Social Entrepreneurship' courses in academic institutions, offering fiscal incentives for impact investing, helping grass-roots innovation commercialize, and creating social impact incubators. Both Pakistan and Bangladesh have no such explicit policy on social enterprises.
Corporate social responsibility Corporate social responsibility (CSR) is becoming far more important in the growth of social entrepreneurship, and has a great impact on the impact of social innovation. Companies often have the finances available to support local efforts and invest in the research needed to understand the need of the rural poor. The Companies Act, 2013 in India requires companies that have a network of INR 500 crore, turnover of INR 1,000 crore, or a net profit of INR 5 crore to commit 2% of average net profits to pursue CSR policy. It is the only country in the world to do so.
Eligible CSR activities include:
Reducing child mortality Environmental sustainability Eradicating hunger Promotion of education Gender equity Disaster relief.
Companies can pursue CSR through the following four methods:
Directly as the company Through a company's non-profit foundation Through a registered non-profit organization Collaborating with other companies.
Capacity Building
Education and training