An economic perspective on social entrepreneurship: Insights and policy implications

Social entrepreneurship has an economic impact through its social purpose and the development and implementation of innovative business models that address social and environmental challenges. This chapter discusses the economic returns of social entrepreneurship through knowledge spillovers and standard-setting perspectives. Knowledge spillovers to for-profit businesses or other organizations are a critical second-order effect of social entrepreneurship. Moreover, socially motivated businesses that implement welfare-enhancing business practices also impact norms and set standards that other organizations adopt. These factors affect social entrepreneurs’ overall societal and economic impact, role in competitive markets, and innovation. Overall, the review of insights on the economic returns of social entrepreneurship shows that their impact often goes beyond the specific social purpose of their business and that they play a fundamental role in the diffusion of innovative business practices. However, social entrepreneurship also has significant challenges regarding classical hurdles such as financing constraints and bureaucracy. In addition, the success and impact of social entrepreneurs may, to a larger extent, depend on founders’ social and business networks, political connections, and non-conventional funding sources. These properties of social entrepreneurship, alongside their intrinsic characteristics, stress the need to develop and implement ecosystems and policy designs that account for social entrepreneurship’s direct and indirect effects.

Hottenrott, Hanna (2024), An economic perspective on social entrepreneurship: Insights and policy implications, in: Soumitra Dutta, Bruno Lanvin, Lorena Rivera León, Sacha Wunsch-Vincent (Eds.), 17, Vol. 17, WIPO - World Intellectual Property Organization, Geneva, 1-38