The Social Entrepreneur as Trailblazer: A Role for the Social Enterprise in a Market Economy
Thornton, J., Lohrke, F., Gonas, J.(2015). The Social Entrepreneur as Trailblazer - A Role for the Social Enterprise in a Market Economy. ACRN Oxford Journal of Finance and Risk Perspectives, 4(4). 145-167
46 Pages Posted: 9 Nov 2012 Last revised: 8 Dec 2016
Date Written: October 6, 2014
Abstract
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.
Keywords: profit deviation, social entrepreneurship, entry
JEL Classification: L21, L26, L33
Suggested Citation: Suggested Citation