Sample Business Studies Paper on Social Entrepreneurship: Key Issues and Challenges


The contemporary business environment has evolved significantly over the years, resulting in the demand for innovation and concern for the environment. The social structures and systems are changing continuously, and the ability of businesses to adapt to those changes determines their probability of success. In the midst of all these, a new concept referred to as social entrepreneurship, has emerged. Social entrepreneurship is slowly becoming the contemporary business model for sustainable operations, and is driven by various factors. Many organizations are opting to practice social entrepreneurship as their working business model regardless of the industry in which they operate. Social entrepreneurship is described as the business model that combines capitalism with the attitude to do good. In the current times, the younger generations as well as the older ones who interact with them, have developed a system whereby they are driven more by the desire to do good and the intention to have a social impact on the communities within which they operate. This social entrepreneurship continues to drive success in the current times, and it is expected to be a leading business model even in the coming decades.

Social Entrepreneurship Key Issues

The drive towards social entrepreneurship is founded on the realization of the impacts of social influence on business performance. According to a report by Fox (2016), more than 94% of American youngsters getting into the corporate environment have the desire to make a positive impact on the communities within which they operate. Most of these people desire to use their skills for the benefit of others. To do this effectively, the business environment has slowly evolved into a combination of capitalist practices and benevolence. Besides the desire to realize business objectives of economic benefit, entrepreneurs operate with the desire to participate in global issues such as hunger alleviation, poverty eradication, environmental conservation, and education improvement. These issues have a lot of negative impacts on global communities, and entrepreneurs take the initiative to fund specific programs or to partner with other governments of philanthropic entities to realize greater good for a larger group of people.

There are many reasons for the corporate belief in entrepreneurship as the new business model. One of these reasons is that it connects entrepreneurs to their life purposes. Fox (2016) posits that most entrepreneurs who choose to weave the desire of having a social impact into their business model do so to enable them live their life on purpose. Social entrepreneurship connects the business practices, conduct and ethics with the business purpose not just as a marketing gimmick but as a genuine mechanism for solving the existing social issues while also feeling connected to a higher purpose. Those who opt for social entrepreneurship find fulfillment in the impacts they can make on others and use their businesses to model the kind of behavior they would engage in personally. One of the most notable outcomes of social entrepreneurship with regards to impact is that it also fosters support for others. Organizations engaging in social entrepreneurship plan for events and philanthropic activities through which they not only get into contact with people with whom they share the same purpose but also make communities more accessible and equitable. Essentially, social entrepreneurship makes communities more vibrant and generally better places to live in.

The preference for social entrepreneurship is not only among entrepreneurs. On the contrary, the present day consumer also supports organizations that focus on social entrepreneurship. Increasing awareness about the social and environmental problems facing the modern day society has resulted in the increasing willingness of customers to support organizations that practice social entrepreneurship (Peredo & McLean, 2006). Customers recognize the value of environmental conservation and humanitarian action, and tend to align their purchase practices to those values. The focus is no longer on utility, rather, products are considered holistically. Product prices are examined not only in terms of the costs incurred but also in terms of how their costs would impact the social structure. The total costs of production are determined to include the costs of all inputs to primary production processes such as the farming and pesticide costs (Schwab & Milligan, 2015). Industries are increasingly growing around the realization of the customers’ focus on social and environmental conservation, and the need to produce goods and service that offer fulfillment through connection with the individual customer values and which help them live in harmony with nature.

The growth of social entrepreneurship as a business concept and model has been steered by other factors as well. Some of these factors include increasing competition in business, and changes in employment rates. Increasing competition has driven companies to go beyond the conventional differentiation and the cost leadership strategies that were commonly used as business models to attain customer loyalty. Instead, entrepreneurs are using social entrepreneurship as the basis for differentiation. Moreover, the concept of conscious capitalism has also gained increasing attention as more entrepreneurs tend to increase visibility through their social impacts (Peredo & McLean, 2006). Similarly, the increasing preference for entrepreneurship over employment has led to the creation of a lot of job opportunities. This has resulted in increased employment opportunities especially in the developed countries. Employees have greater variability to choose from, and with the competing organizations each targeting the best resources, the employees get to choose those whom they desire to work for (Peredo & McLean, 2006). For this reason, social entrepreneurship has also found a place in the employee choice as more people tend to choose working for organizations that have strong missions, great impacts and strong earning potential.

Various areas have been identified as social entrepreneurship friendly, and organizations operating within those domains have the highest chances of becoming social entrepreneurs. Schwab and Milligan (2015) point out that social entrepreneurship uses new approaches to solve existing social problems. As such, would be social entrepreneurs are likened to change agents and activists that have been in operation throughout history. However, those who work as social entrepreneurs have broken down the dichotomy between business and charity, and established strategies to incorporate charitable practices into business.  Some of the industries that commonly practice social entrepreneurship include crowd-funding, educational travel, electricity and biotechnology projects, and micro-lending among others. The industries identify the societal needs and come up with solutions to those needs. The characteristics of such social entrepreneurship ventures include the ability to change the status quo, sustainability over time, large scalable impacts on the communities especially the vulnerable members of the population. Additionally, these ventures have to be quite innovative and be financially sustainable.

Various notable social entrepreneurs have influenced the business environment in many different ways. Tyre (2020) describes the work done by some of these social entrepreneurs. One of these entrepreneurs is Jazzmine Raine, the founder of a zero waste guesthouse in India, Hara House. The entrepreneur developed a vibrant tourist destination by focusing on the need for environmental conservation. The profits obtained from the business additionally go to funding various social justice projects, conducting environmental education, and promoting economic involvement among local youths. Another social entrepreneur is Scott Harrison, the CEO of Charity: Water organization. The project is aimed at providing clean and safe drinking water for vulnerable communities in the developing countries through donor funds. Other social entrepreneurs such as Emily Kirsch and Tony Weaver Jr have been involved in activities aimed at promoting the adoption of solar power in California and sharing inspiring media stories of black men to encourage youngsters, respectively. The businesses run by all these entrepreneurs have similar characteristics including their common identification of societal needs and the use of modern, innovative solutions to solve problems that have been in existent over time. The same businesses have had multiple impacts in communities within which they operate, with great probability of growth.

Challenges of Social Entrepreneurship

Social entrepreneurship plays an important role in shaping not only the quality of lives that people live, but also their thought process. To do this effectively, social entrepreneurs have to have an impact on the attitudes of people, as well as their competence at working with new solutions to previously existing problems. As such, the social entrepreneurship outfits not only affect the direct employees of businesses but also a wide category of stakeholders. This cannot happen without challenges, and the ability of those organizations to identify and address those challenges is paramount to their success.

One of the most common challenges of social entrepreneurship is that it is more difficult to raise investment capital. According to Muhammed (2018), that while most venture capitalists desire to see a rapid growth and profitability of their investments, social capitalists can never promise such a rapid outcome. Venture capitalists therefore have to get alternative sources of capital including crowd-funding from their families and their friends. Most of them fail to raise the funds needed through cord-funding and are forced to sacrifice their own assets in order to achieve their goals. They may also get involved with small strategic investors, a process that is time consuming. Other agreements may restrain the decision making authorities of the entrepreneurs, resulting in a shift of the business model to more profitable ventures from the beginning. Social entrepreneurs therefore have to really believe in their ideas to be able to stand by them in spite of lack of support from others.

Another commonly faced challenge in social entrepreneurship is that of identifying suitable manufacturers. Coming up with a social entrepreneurship idea is one aspect of the business but sustaining that business takes a lot more than the idea. First, the entrepreneur must have sufficient manufacturing capacity and resources to develop adequate product supply without having excessive inventories (Muhammed, 2018). Inadequate and/or excessive inventories can pose a challenge to entrepreneurs especially if they have no background in inventory management and supply chain. As such, some social entrepreneurs opt to outsource manufacturing capabilities to foreign companies where they can get the labor and raw materials cheaply. However, this may also be a challenge especially where the values of the host countries and/or manufacturing companies are not aligned to those of the social entrepreneur. High costs of organic product sourcing and limited domestic availability of some raw materials can be a challenge for social entrepreneurs. Geo-political stability and natural disasters can also affect the sustainability of social entrepreneurship practices, resulting in failure.

Additionally, low profit margins can be a challenge for social entrepreneurs. In most cases, social entrepreneurs focus more on doing good than on maximizing profits. Compared to their conventional competitors, social entrepreneurs realize lower profit margins for their goods and/or services (Muhammed, 2018). Most millennial entrepreneurs experience these lower profit margins and even those who are exempt from this outcome area aware of its existence. Most of the social entrepreneurs have found a solution in the use of in-kind donations to achieve their social impact objective without jeopardizing business growth or suffering from the negative implications of low profit margins. Without this as a probable solution, it is expected that social entrepreneurs would subsequently experience a drift in their initial objectives, which is another common challenge among social entrepreneurs.

A drifting mission can be a challenge as social entrepreneurship projects expand. Muhammed (2018) points out that as social entrepreneurship projects expand; there are two possible outcomes, namely the expansion of the social objectives of the investment and a drift from the social objectives towards a more economical objective. Drifting from the social mission usually occurs when a social entrepreneur experiences losses such that their operations become unsustainable economically. To salvage the business and to satisfy investors, the decision may be made to focus on the economic objectives of the business for some time. The financial challenges faced by social entrepreneurs are bigger and can be more damaging than those of their competitors who run conventional business models. As such, the mission statement of a social entrepreneur has to be sufficiently strong and be reviewed periodically to develop a sense of focus. Due to the sincere desire to contribute to the community in one way or the other, social entrepreneurs have to be aware of their potential challenges and be adequately prepared to face those challenges. Otherwise, their ventures would ultimately decline.


Social entrepreneurship is a concept that has increasingly gained ground in the contemporary business environment due to the desire to not only make economic headway but to also make a sustainable impact on the communities. Social entrepreneurship mainly involves using modern solutions to solve identified community problems in an innovative way. As such, the practice of social entrepreneurship is characterized by innovation; focus on the impacts such as alleviating poverty and enhancing education, identification of social needs, sustainability and the ability to change the status quo. Social entrepreneurs have to first realize the probable impacts of their activities and to put in place measures that can enable them run sustainably over time. In spite of the recognition of their impacts on the communities, social entrepreneurs face various challenges in their operations and without a strong enough mission statement, the likelihood of failure is strong enough. Some of these challenges include initial capital constraints, difficulty in identifying supportive manufacturers, low profit margins, and the probability of drifting missions. Allowing oneself to understand these challenges and to be effectively prepared to tackle them when they arise is the starting point of social entrepreneurship potential for success.




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