New research from the Global Entrepreneurship Monitor (GEM) Global Report shows that social entrepreneurship is taking root in both developing and developed nations. More entrepreneurs are focusing on doing good rather than making a profit.
Social entrepreneurs are starting businesses in all the major regions of the world, with the most social entrepreneurship activity being undertaken in the US, Australia, Western Europe and Africa.
This is according to the Global Entrepreneurship Monitor (GEM) Global Report, released with sponsors Babson College, Universidad Del Desarrollo, UniversitiTun Abdul Razak, Tecnológico de Monterrey, and the London Business School.
The report is the largest comparative study of social entrepreneurship in the world, based on interviews with 167,793 adults in 58 economies in 2015.
According to the Global Entrepreneurship Monitor (GEM) Global Report:
- World regions with the highest social entrepreneurial activity (both in the start-up phase and those that are operational) are the US and Australia (11%), followed by sub-Saharan Africa (8.9%). Western Europe lags behind at (5.8%), and the UK’s overall activity stands at 5.4%. Southeast Asia is the region with the least amount of social entrepreneurs – at just 3.8%.
- Early-stage social entrepreneurial activity, measured by the percentage of adults between the age of 18 and 64 who are currently trying to start a social purpose business is at a global average of 3.2% – ranging from 0.3% (South Korea) to 10.1% (Peru). By comparison, the rate of start-up commercial entrepreneurship in the same regions averages 7.6% (13.7% in Vietnam and 22.2% in Peru).
- Of the world’s social entrepreneurs, an estimated 55% are male and 45% are female – a gender gap that is less pronounced than in commercial entrepreneurship.
- Most social entrepreneurs use their personal funds to start and run their businesses. 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.
- Social entrepreneurs’ education levels differ substantially across 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.
- Developing countries are better at converting start-ups into operational phases and post-entrepreneurial activity.
Quotes from GEM:
“Social entrepreneurship – which GEM defines broadly as any kind of activity, organisation or initiative that has a particularly social, environmental or community objective – is now a significant share of entrepreneurial activity around the world; however, there is a wide variation in rates across economies, ” says GEM Executive Director Mike Herrington, also a faculty member of the University of Cape Town. “Social and environmental problems are ubiquitous in all economies. Hence, politicians, business leaders, and members of society are increasingly calling for endeavours that focus on social and environmental objectives – and entrepreneurs are responding!”
“A holistic view of entrepreneurial activity may nuance the apparent gender gaps observed in global entrepreneurial activity as it seems that many women do display entrepreneurial behaviour albeit not as an employer or self-employed. These women tend to pursue this role in a more social setting – for example by becoming a social entrepreneur or by making an entrepreneurial contribution in the public sector,” explains report lead author, NielsBosma, Assistant Professor with the Utrecht University School of Economics in the Netherlands.
“Governments are not equipped to solve all of the world’s problems – nor should they be – and are looking for innovative solutions from the private sector. Social entrepreneurs will play a vital role” says SiriTerjesen, a professor at American University (Washington D.C.) and the Norwegian School of Economics (Norway) . “The world will be a better place if we can determine the most appropriate ways to support social entrepreneurs and scale up their solutions.”