The Social Entrepreneur as Trailblazer: A Role for the Social Enterprise in a Market Economy
Jeremy P. Thornton
Samford University - Brock School of Business
Franz T. Lohrke
Samford University - School of Business; University of Alabama - Department of Management and Marketing
October 6, 2014
This paper offers an alternative to the normative rationale for social entrepreneurship. We draw from the nonprofit economics literature to develop a simple theoretical model of a social entrepreneur as a profit-deviating firm. We then demonstrate how profit deviation lowers the effective cost of the firm, allowing it to recognize opportunities and enter markets previously considered unsuitable by the neoclassical entrepreneur. In doing so, the social entrepreneur generates knowledge spillovers by providing valuable ex-post entry information regarding the expected costs of a venture. In this sense, the social entrepreneur provides a public good to latent neoclassical entrepreneurs, who then may enter markets previously considered unprofitable. We illustrate the range of market conditions that are relevant for the social entrepreneur and offer a simple case study illustration of the model.
Number of Pages in PDF File: 46
Keywords: profit deviation, social entrepreneurship, entry
JEL Classification: L21, L26, L33
Date posted: November 9, 2012 ; Last revised: October 7, 2014
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