Breaking the Mold: HRD and Social Entrepreneurship – A Recipe for Progress

Abstract

Social entrepreneurship practices integrate aspects from the private, public, and non-profit sectors into a cohesive practice. This paper advocates for the integration of human resource development (HRD) research and practices into social entrepreneurship initiatives to drive progress and build effective organizations committed to positive social change and value creation. By exploring HRD insights on ethical organizational strategies, initiatives for workforce development, and their impact on employee engagement and attitudes, we contend that HRD professionals can significantly contribute to the success of social entrepreneurship.

Muhammad Yunus founded the microfinance organization Grameen Bank in 1983 to provide business loans to marginalized parties in Bangladesh who were excluded from traditional banking institutions. This endeavor gained international acclaim and led Yunus to adopt the moniker of a social entrepreneur and the recipient of the Nobel Peace Prize in 2006. However, Grameen Bank has faced numerous challenges throughout its four decades of operation, including accusations that it has strayed from its original social mission and engaged in exploitative practices such as charging high interest rates (Bangladesh Ministry of Finance, 2013). The criticisms ultimately led to the removal of Yunus as Managing Director in 2011. Yunus attributes the issues to political motives and cites differing ethical perspectives on the organizational purpose of Grameen Bank (Yunus Centre, 2022). With further probes by the Bangladesh government in 2022, the ongoing controversy surrounding Grameen Bank highlights the complexities of implementing social entrepreneurship initiatives.

Social entrepreneurship involves the use of business strategies and processes to mitigate societal problems and generate social impact that extends beyond economic value (Bacq & Janssen, 2011; Dees, 2007). Social entrepreneurship is practiced across various sectors, including education, healthcare, housing, and financial services (Morris et al., 2021). There are three main organizational models that can serve as examples of social entrepreneurship. These are (1) a social purpose venture, with a primary focus on social impact along with generating economic outcomes; (2) a non-profit enterprise, solely dedicated to a social mission without any financial expectations; and (3) hybrid models, that may prioritize social objectives but lack definitive organizational outcomes (Neck et al., 2009). At the organizational level, social entrepreneurship practices seek to address societal needs that have been overlooked or inadequately addressed by traditional institutions and government bodies (Saebi et al., 2019; Zahra et al., 2009). Organizations practicing social entrepreneurship straddle the divide between the private, public, and non-profit sectors, blurring the lines of traditional boundaries and stakeholder expectations of such organizations (Doherty et al., 2009).

Increasingly, organizations are expected to fulfill diverse roles beyond traditional business functions (Drucker, 2007), including advocating for human rights, addressing environmental concerns, and tackling global social challenges (Garavan & McGuire, 2010). Furthermore, organizations are tasked to foster ongoing learning and growth among their employees, promote ethical behavior, cultivate capable leaders who can drive strategic change, and communicate effectively with stakeholders to mobilize support (Fenwick, 2014; Garavan & McGuire, 2010). In most organizations, these expectations typically fall within the responsibilities of adult education and human resource development (HRD) professionals (Garavan & McGuire, 2010; Nadler, 1984; Sambrook, 2014).

HRD is any process intended to enhance an individual’s knowledge and abilities for his or her long-term growth, which may, without expectation, benefit the organization or, ultimately, humanity (McLean & McLean, 2001; Nadler, 1984). HRD has evolved with two main perspectives among practitioners: a functionalist approach concentrating on performance, and another centered on human learning and growth (Lee, 2014). Yet, as organizations continue to evolve with the emergence of new models, such as social entrepreneurship, HRD professionals must confront the task of supporting the contrarian forms of organizational structures (Wang, 2019).

We assert that the characterization of social entrepreneurship makes it an ideal focus for HRD. While Chalofsky (2019) emphasized the need for HRD to support organizations practicing social entrepreneurship in understanding the impact of their organizations on wider society and Wang (2012) has called for more research in this domain, responses to these suggestions have been notably muted. Callahan (2012) offered valuable insights into HRD’s role in supporting alternative organizational forms. Yet, there remains a gap in understanding exactly how HRD practices can support initiatives such as social entrepreneurship. We find this intriguing, given the strong synergy between the objectives of HRD and social entrepreneurship, both of which aspire to empower individuals, uplift communities, and foster societal progress. In the following section, we first discuss the complexities associated with characterizing social entrepreneurship that may explain the lack of attention by HRD. Afterward, we provide a perspective on how research and practice in HRD can add value to this multifaceted concept.

The Characterization of Social Entrepreneurship

One result of the three broad characterizations of social entrepreneurship (a social purpose venture, a non-profit enterprise, and a hybrid) is the various examples of different structures and missions. The ambiguity in social entrepreneurship organizations is amplified due to differences in their setup, legal structures, and funding sources, which vary across various communities, nations, and areas (Bacq & Janssen, 2011). For example, in the U.S., entities engaged in social entrepreneurship can choose from several legal forms, such as low-profit limited liability companies (L3Cs) and Benefit Corporations (Brown et al., 2019). However, the efficacy of these forms is questioned since they lack federal recognition, leading to a lack of national tax incentives and a dependence on private funding and conventional non-profit revenue methods (Callison & Vestal, 2010; Katz & Page, 2010). On the other hand, the UK acknowledges social entrepreneurship at a national level, with legal forms like community interest companies and charitable incorporated organizations that balance financial and societal goals (Bacq & Janssen, 2011).

Furthermore, there is no unified theory or research body in social entrepreneurship. In scholarship (and practice), social entrepreneurship is characterized by various terms that reflect its multifaceted nature, such as social businesses, social ventures, and social enterprises (Maclean et al., 2013; Neck et al., 2009). Social entrepreneurship research is subject to regional variations, with European assessments focusing on community involvement and U.S. assessments focusing on individual entrepreneurs (Bacq & Janssen, 2011). While a comprehensive literature review has identified up to 58 unique definitions of social entrepreneurship (Morris et al., 2021), the discourse on social entrepreneurship extends beyond mere definitions into three major research domains.

Research on social entrepreneurship includes three key areas: (1) social innovation—the ability of social entrepreneurs to create and implement new solutions to social problems; (2) social value creation—social entrepreneurship’s ability to generate social good and tackle societal issues; and (3) the entrepreneurial process—the business-like elements of social entrepreneurship, including identifying opportunities, gathering resources, and taking risks (Dees, 2012).

It is our belief that HRD can play a significant role in advancing social entrepreneurship through research and practice. HRD can support organizations practicing social entrepreneurship across a spectrum of facets, including ethical considerations, cultivating a skilled workforce, establishing strong stakeholder relationships, complying with legal regulations, and addressing complex challenges and opportunities.

Research and Practice Implications for HRD

Organizations engaged in social entrepreneurship often integrate both for-profit and non-profit strategies into their operations. While legal and regulatory guidelines offer some direction, they may not comprehensively address the ethical complexities that organizations, especially those supporting vulnerable populations or operating in ethically challenging environments, may encounter (Solomon, 1992). In such cases, human resource development professionals play a vital role in cultivating ethical cultures that prioritize the well-being of beneficiaries and in navigating the evolving landscape of social movements or shifts in organizational dynamics (Hatcher & Bowles, 2006).

Moreover, many social entrepreneurship-focused organizations frequently incorporate workforce development initiatives into their models, often employing individuals they aim to benefit (Ebrahim et al., 2014). HRD research that investigates the ethical considerations associated with employing these beneficiaries as part of the workforce can offer valuable insights and guidance to refine and optimize this practice.

Beyond conducting studies and aiding organizations in addressing ethical considerations, HRD holds the potential to amplify employee engagement and cultivate positive attitudes toward impactful practices. This, in turn, can have a transformative effect on both business and social outcomes. In the context of social entrepreneurship, the involvement of HRD professionals in shaping organizational culture can significantly influence the likelihood of success. HRD professionals possess the expertise needed to develop personnel, shape workplace cultures, and nurture leaders who understand how a dedicated workforce can advance an organization’s mission (Garavan & McGuire, 2010). HRD contributions can be instrumental in driving positive change by these professionals targeting and implementing everyday practices in organizational operations. This may involve assisting leaders in identifying feasible and appropriate actions based on organizational size, past experiences, sociocultural context, financial resources, and stakeholder involvement (Fenwick, 2014).

While there are numerous complexities in the characterization of social entrepreneurship, most social entrepreneurship practices adopt a holistic business approach emphasizing the equal importance of responsible business and positive societal impact. HRD professionals with expertise in enacting strategies prioritizing people and an organization’s potential contribution to society can bring significant advantages to such organizations. Although not comprehensive, we believe that these points exemplify the potential impact of incorporating HRD research and practice in social entrepreneurship to create a recipe for progress in organizations creating social change and value.