Global Entrepreneurship Monitor 2015 to 2016: Special Topic Report on Social Entrepreneurship

Abstract

The Global Entrepreneurship Monitor’s (GEM) social entrepreneurship activity research is based on interviews with 167,793 adults in 58 economies in 2015, and is thus the largest comparative study of social entrepreneurship in the world. This report presents a broad measure of social entrepreneurship activity as well as a narrow measure. The broad measure considers individuals who are starting or currently leading any kind of activity, organization or initiative that has a particularly social, environmental or community objective. The narrow measure imposes the following restrictions: that this activity, organization or initiative (i) prioritizes social and environmental value over financial value; and (ii) operates in the market by producing goods and services. The narrow definition is available for 31 economies. The main findings from this report include:

• The average prevalence rate of broad social entrepreneurial activity among nascent entrepreneurs in the start-up phase (SEA-SU-BRD) – that is, individuals who are currently trying to start social entrepreneurial activity – across all 58 GEM economies is 3.2%, but ranges from 0.3% (South Korea) to 10.1% (Peru). By comparison, the rate of start-up commercial entrepreneurship averages 7.6% in the world, and ranges from 13.7% in Vietnam to a high of 22.2% in Peru.

• The average prevalence rate of individuals who are currently leading an operating social entrepreneurial activity (SEA-OP-BRD) across all 58 GEM economies is 3.7%, but ranges from 0.4% in Iran to 14.0% in Senegal.

• Narrowing down the definition of social entrepreneurship makes a considerable difference to the prevalence of social entrepreneurial activity. In terms of the narrow definition, organizations must be driven by social value creation rather than value capture, and be market- rather than non-market-based. The average prevalence rate of narrow social entrepreneurial activity among nascent entrepreneurs in the start-up phase (SEA-SU-NRW) across 31 GEM economies is 1.1%. The average prevalence rate of narrow currently operating social entrepreneurial activity (SEA-OP-NRW) is 1.2%.

• One of the emerging themes in social entrepreneurship is measuring social impact. About half of those individuals who fit the broad definition of social entrepreneurs (SEA-OP-BRD) report that they put substantial effort into measuring the social and environmental impact of their social venturing activities.

• About five in every ten individuals involved in broad social entrepreneurship activity that is currently operational (SEA-OP-BRD) reinvest profits towards the social goals set by the activity, organization or initiative.

• Of the world’s social entrepreneurs, an estimated 55% are male and 45% are female. The gender gap in social entrepreneurial activity is significantly smaller than the roughly 2:1 gender gap in commercial entrepreneurial activity found in some economies. For the Middle East and North Africa, the difference between women’s involvement in social versus commercial entrepreneurship is particularly striking. Female representation is high regardless of the type or phase of entrepreneurship in Southern and Eastern Asia, Latin America and the Caribbean.

• Social entrepreneurship is often associated with young change-makers who are idealistic in nature. The GEM results show that this to be partly true. Among 18-34 year olds there is a greater representation of nascent social entrepreneurs than nascent commercial entrepreneurs in three of the world’s regions— namely the Middle East and North Africa, sub-Saharan Africa, and Western Europe. However, in Eastern Europe, Latin America and the Caribbean, South-East Asia, Australia, and the US, there are more nascent commercial entrepreneurs than nascent social entrepreneurs in this age range. With respect to operating initiatives, organizations, or activities, there are more social entrepreneurs than commercial entrepreneurs in every global region, except for Latin America and the Caribbean.

• Social entrepreneurs’ education levels differ substantially across regions. Sub-Saharan Africa’s social entrepreneurs and commercial entrepreneurs are far less often highly educated than in other global regions. The US and Australia report notably higher proportions of operational social entrepreneurs with a high level of education (62%), while in MENA, Eastern Europe, and Western Europe around half of operational social entrepreneurs are highly educated.

• Although most of the world’s social entrepreneurs use personal funds, the average rate of own investment (expected own investment as a share of total required investment) ranges more widely. Social entrepreneurs who start in Southern and Eastern Asia and the Middle East and North Africa commit the highest levels (estimated over 60%), while the share of own investment is lowest in sub-Saharan Africa (roughly 30%). More than a third of the world’s social entrepreneurial ventures rely on government funding, while family and banks are also important sources of funding for social entrepreneurs.

• In general, social entrepreneurs tend to be quite optimistic in terms of growth aspirations. Patterns of size, use of volunteers and job expectations are fairly mixed across the globe.

• Social entrepreneurs are visible to the wider population, with on average 32% of the adult (age 18-64) population agreeing that they are often aware of enterprises that aim to solve social problems. For some economies, however, there appears to be a mismatch between visibility and reported activity.

Keywords: Social Entrepreneurship, Social entrepreneurship activity, Global entrepreneurship monitor, Social ventures, Social entrepreneurs

JEL Classification: L26, L30, L31, L33, L38, L29, L53