Understanding the Social Role of Entrepreneurship

• Author: Shaker A. Zahra,Mike Wright
• DOI: http://doi.org/10.1111/joms.12149
• Published date: 01 June 2016
• Date: 01 June 2016

Understanding the Social Role of Entrepreneurship

Shaker A. Zahra and Mike Wright

University of Minnesota; Imperial College Business School and University of Ghent

ABSTRACT There is a need to rethink and redefine the social value added of entrepreneurial

activities to society. In this paper we develop five pillars on which the evolving social role of

entrepreneurship can rest and have its impact: (1) connecting entrepreneurial activities to

other societal efforts aimed at improving the quality of life, achieving progress, and enriching

human existence, (2) identifying ways to reduce the dysfunctional effects of entrepreneurial

activities on stakeholders, (3) redefining the scope of entrepreneurial activities as a scholarly

arena, (4) recognizing entrepreneurship’s social multiplier, and (5) pursuing blended value at

the organizational level, centring on balancing the creation of financial, social and

environmental wealth. In a final section we discuss implications for practices and for further

research.

Keywords: blended value, hybrid organizations, social entrepreneurship, sustainability

INTRODUCTION

The study of entrepreneurship has advanced significantly, showing greater research

breadth, depth and rigor. Yet, research has left some fundamental questions answered

unsatisfactorily. For example, what is the best way to define the social role of entrepreneurship? For

some, this is a question that has been fully addressed; they view the value of entrepre-

neurship as creating and sustaining financial wealth. They also consider entrepreneur-

ship to be a key plank of economic recovery; the engine of technological, economic and

social growth. Entrepreneurs have introduced new technologies that have spawned

countless industries, creating jobs and improving the social and economic conditions of

nations (Audretsch et al., 2006; Baumol, 1986, 2010; Birch, 1979; McMullen and

Warnick, in press). Entrepreneurship has also improved the quality of life (Baumol

et al., 2007; McMullen and Warnick, 2016). It is the engine that moves and sustains cap-

italism, and is universally accepted as a means of creating momentum for growth in

developed, emerging and less developed economies.

Address for reprints: Mike Wright, Imperial College Business School, London SW7 2AZ, UK (mike.

wright@imperial.ac.uk).

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C2015 John Wiley & Sons Ltd and Society for the Advancement of Management Studies

Journal of Management Studies 53:4 June 2016

doi: 10.1111/joms.12149

Other researchers from various perspectives (Beaver and Jennings, 2005; Kets de

Vries, 1985; Khan et al., 2007; Steinmetz and Wright, 1989; Wright and Zahra, 2011),

public policymakers, well recognized world leaders (e.g., the President of the USA and

the Pope) and even some successful entrepreneurs (e.g., Bill Gates and Warren Buffet)

have sounded the alarm that entrepreneurship’s potentially dysfunctional effects on soci-

ety are not being carefully considered. Entrepreneurs may add to (and even create)

problems that impair progress in their societies, often without assuming responsibility

for addressing these issues. The consensus from these different perspectives is that we

need to rethink and redefine the social value added of entrepreneurial activities to

society.

Given these vastly divergent views, we hope to promote a conversation on the net

value added of entrepreneurship by recognizing its significant social costs. Entrepreneur-

ship is not always productive (Baumol, 1986). To begin this conversation, we propose

that we need to strike an effective balance between gaining economic or financial

‘wealth’ and enhancing the quality of life in a society (‘social wealth’). Without the

motive and opportunity to create financial wealth some may forgo entrepreneurial activ-

ities. Similarly, without attention to the needs of their communities and societies, entre-

preneurs would fail to contribute to the common good –harming themselves and their

societies. Because entrepreneurship takes place in independent ventures and existing

companies (Westhead and Wright, 2013), such challenges apply to the roles of corporate

and independent entrepreneurs. Defining this social role poses great challenges (and

offer significant opportunities) for independent entrepreneurs who have the opportunity,

ability and power to define the type of value they want to create and steer their ventures

accordingly. Independent entrepreneurs are more apt to articulate social needs and

decide how to address them and to use their own skills and resources to address these

needs. As such, these entrepreneurs are the sense makers who define and pursue oppor-

tunities to improve social wealth without a mandate from stakeholders. This promotes a

focus on the community and society, potentially curbing greed that afflicts some entre-

preneurs. Similarly, corporate entrepreneurs also have bountiful opportunities to shape

and guide their firms’ different initiatives and contribute to the public good while mak-

ing profits and sustaining growth. They can shape their companies’ thinking about the

social role associated with their entrepreneurial activities.

THE FIVE PILLARS OF THE SOCIAL ROLE OF ENTREPRENEURSHIP

Entrepreneurship research can be viewed as largely being concerned with five broad

themes. First, who does entrepreneurship involve? This question is especially important

given the growing variety of stakeholders involved in an entrepreneurial ecosystem, not

just the individual entrepreneur (Autio et al., 2014). Institutions and other companies,

both new and established, are important to birthing and growing entrepreneurship. For

example, new companies in energy-related industries have to deal with many established

institutions and emerging ones, host of other companies and multiple stakeholders with

competing interests and claims. The diversity of these groups and their multiple needs

affect these new ventures’ behaviour and also shape the evolution of their ecosystems.

611Understanding the Social Role of Entrepreneurship

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C2015 John Wiley & Sons Ltd and Society for the Advancement of Management Studies