Friday, December 10, 2010

The Art of Social Entrepreneurship


Since Jerome Engel joined University of California at Berkeley's Haas School of Business in 1991, the entrepreneurship expert has seen social entrepreneurship evolve into an increasingly attractive prospect for students. These kind of ventures aim to pair profits with societal impact. Lately, says Mr. Engel, who now chairs the New Venture Creation and Venture Capital Program at the school, the school has seen more students participating in social entrepreneurship competitions and enrolling in classes on the topic. Mr. Engel spoke with Wall Street Journal reporter Diana Middleton about why social entrepreneurship is snagging the attention of M.B.A. students – and what schools can do to help them do it well. Edited excerpts follow.

Q: How did social entrepreneurship take off at the school?

A: It all started about 10 years ago. A student asked me about social enterprise, and I said, "The non-profit center is down the hallway." But what the student wanted was a for-profit business that also had a social mission. From there, the leadership and initiative came from the students

Q: How are the social entrepreneurship classes structured? 

A: We have courses that are focused on the topic, but we don't do 'how-to's.' We don't say exactly how to do it. Our classes are more about strategy and finding a worthy purpose. We engage students by showing them how they can use the capitalist model in a powerful way by allocating resources to solve local problems. And we show how to measure that social contribution in a legitimate way.

Q: Is there any evidence to show that consumers or investors will respond to for-profit companies with a social mission? 

A: Customers pay a higher price for a product that has higher personal value, or perceived value. People tend to use their economic power to illustrate personal choices, and people are connecting with doing good. People are increasingly associating their personal values in personal investments. That's because the value we receive isn't just the product, but the intangible. Look at bottled water. There was a product that had no differentiation, but it was sold at different price points based on intangible desires from the consumer. Of course, bottled water is frowned upon right around now.

Q: Is social entrepreneurship benefiting from a level of "trendiness" right now? 

A: There may be a superficial percentage who think it's stylish to care, but the bulk of consumers are substantive. It's important that social enterprises aren't just public relations stunts. People have values, and they want to link those to their identity. Capitalistic ventures that do social entrepreneurship well can deliver a good product while building up a bank account of good will.

Q: Aside from classes, what are other ways Berkeley students get involved? 

A: In partnership with several other schools, we also offer the Global Social Venture Competition. Students come together with real socially-minded projects they are going to pursue and compete to find a way to make it profitable. Students also have to prove and measure the social contribution.

Write to Diana Middleton at

Courtesy of The Wall Street Journal

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