Social enterprises are not easy businesses to run. The challenge of retaining financial stability while utilizing commercial practices to actively develop social impact brings unique leadership and management challenges.
The role of a social entrepreneur is a good starting point to explore the ins and outs of running a social business. The challenge of retaining financial stability while utilizing commercial practices to actively develop social impact brings unique leadership and management challenges. Numerous researchers have explored the traits, models and theories that shed light on a social entrepreneur’s role as a social business leader. On the one hand, social entrepreneurs should lead with vision and guidance and constantly reiterate the importance of institutionalizing social value. On the other hand, as the day-to-day running of a social enterprise is based on sound business management principles, they have to master market competitiveness and risk-taking to ensure the commercial viability of the business.
This contribution – which is the product of collaborative action research with a number of stakeholders across the globe – aims to explore and address the complexity of leadership within a social business environment, where creating social value is driven by market competitiveness and the organization strives to survive through independent financial sustainability.
The role of a social entrepreneur may be split into three core themes: societal leadership, strategic organizational management and personal leadership. Each of the three roles brings unique challenges and considerations for the social business leader. The roles should not be seen separately, but as a whole. A ‘good’ social entrepreneur therefore strives to combine practices and personal qualities that address each role optimally.
1. Societal leadership
Societal leadership is concerned with the social entrepreneur’s core commitment to bringing about socio-political change and how this commitment consequently shapes his or her relationship with various social actors. A social entrepreneur can create a sense of shared commitment and co-ownership by embedding the social objective within the hearts of relevant social actors. By practising societal leadership, social entrepreneurs are able to foster active citizen involvement and positively impact the rate and reach of their social vision. Societal leadership is about the ability to co-create and the ability to share commitment by nurturing and adopting various leadership styles including steward leadership, transformational leadership, servant leadership and responsible leadership. 1
2. Business management: translating vision into action
In a social business, a distinction may be made between the social entrepreneur’s role as a mission-driven leader and his or her role at the strategic management level. The latter is about the social entrepreneur’s responsibility to form business strategies that will uphold the organization’s social vision. The importance of good leadership practice is a crucial element in social business management. Vision-led strategies must be institutionalized in the culture and structure of a social business to prevent the social business from drifting away from its social mission. To achieve this, the emphasis needs to be placed on exploring and adapting skills and traits as found within the theories of servant and steward leadership. It is important to emphasise the social entrepreneur’s role as a leader who is able to constantly realign strategic choices made at the commercial level with the organization’s social vision, while effectively utilizing its social capital to this end.
3. Personal leadership: self-awareness and self-development
The social entrepreneur is the heart of a social business. Personal leadership, in this context, is about the social entrepreneur’s ability to drive forward the social objective, advocate the cause, with a people’s approach to doing business whilst simultaneously achieving and preserving financial sustainability. It is crucially important that a social entrepreneur is visionary, self-aware and able to learn and self-develop. A social entrepreneur should have change-making competencies, including the ability to change him/herself.
1 Stewardship aims to integrate the value orientation of both leaders and society by identifying a common goal of governance. Transformational leadership focuses on creating and fostering community and stakeholder relations and may help social entrepreneurs tap into previously unidentified resources. Servant leadership focuses on social transformation by constantly striving to be sensitive to and reiterating the needs of all stakeholders. Finally, Responsible leadership prescribes a more balanced and rational approach, where the needs of all parties are equally important.
This article is based on: Titus van der Spek, Anne-Marie Schreven & Fons van der Velden, Leadership in Social Business, Utrecht: Context, international cooperation, 2013 (Contextual No. 11). This contribution has emerged from a collaborative action research process about leadership in social business carried out with Accion Fraterna (Anantapur India), ICS (Amersfoort, the Netherlands), SHGW (Driebergen, the Netherlands) and others.
Context is organizing a MasterClass about Leadership in Social Business in Utrecht on 25 November, 2014. For more information and to sign up, contact firstname.lastname@example.org.