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Last modified: Friday, January 15, 2010

Kelley School of Business professor co-authors global study on social entrepreneurship

Jan. 15, 2010

BLOOMINGTON, Ind. -- An international report on new business development released Thursday (Jan. 14) in Santiago, Chile, includes the first global study of social entrepreneurship, co-produced by a professor at Indiana University's Kelley School of Business.

For the first time, the Global Entrepreneurship Monitor (GEM) includes a study of the prevalence of people engaged in entrepreneurial activities with a social goal, whether profit or non-profit, public or private.

Siri A. Terjesen, assistant professor of strategic management and international entrepreneurship, produced the social entrepreneurship component of the report with Rachida Justo of the Instituto de Empresa in Spain and Jan Lepoutre of Ghent University in Belgium.

Since 1998, the Global Entrepreneurship Monitor has become the world's most comprehensive research consortium dedicated to understanding the relationship between entrepreneurship and national economic development. GEM provides the most comprehensive comparative data about attitudes toward entrepreneurs, start-up business activities, and plans for starting and building businesses, globally, by geographic region and by country.

In 2009, 49 national teams collected data on social entrepreneurial activity. It covered any activity with a social purpose, including social or community work, for profit or non-profit, and incorporated or non-incorporated.

Terjesen and her co-authors found that the average rate of social entrepreneurship activity increases slightly with economic development.

"Individuals in richer countries, having satisfied their own basic needs, may be more likely to turn to the needs of others," they wrote in the report. "In other words, the opportunity cost of social entrepreneurship may be higher in developing countries.

"On the other hand, social and environmental problems are often more prevalent in developing countries," they added. "Another reason for this finding is that the definitions of a traditional enterprise and a social enterprise may overlap in developing countries, whereas they may be more distinct in developed counties."

For example, they found that social and business entrepreneurship overlap "quite significantly" in places such as Peru, Columbia, Venezuela and Jamaica.

"A significant minority of social entrepreneurs, particularly in developing countries, appear to wish to have a profitable business that at the same time addresses social issues," the report said. "This demonstrates that for many people, the categories of 'social' and 'business' entrepreneur are artificial, and more holistic definitions of entrepreneurship are needed if we are to capture the true extent of this phenomenon."

Countries with the highest prevalence of social entrepreneurs in the 2009 GEM sample included United Arab Emirates, the United States, Iceland and Argentina. Countries with few social entrepreneurs included Guatemala, Saudi Arabia and Malaysia.

The GEM report found that socially oriented entrepreneurs are found in a variety of areas -- education, health, culture, economic development and the environment. Among them, specific issues differed across economic groups.

For example, many social entrepreneurs in factor-driven economies -- which are highly sensitive to world economic cycles, commodity price trends and exchange rate fluctuations -- tend to focus on "more elementary issues and pressing needs" such as providing health care, access to sanitation and fresh water and agricultural activities in rural areas.

Many of those in innovation-driven countries focus on recycling, nature protection, providing services for disabled persons and even open-source activities such as online social networking.

The complete GEM report, which is based on interviews with at least 2,000 people in 54 countries, is available online at and provides further details about social entrepreneurship and many other global entrepreneurial findings.