The organization offered microfinance lending

to communities, thus enabling microenterprises

CHAPTER 1 to thrive and grow. It gave communities an
INTRODUCTION TO SOCIAL opportunity to lift them- selves out of poverty
ENTREPRENEURSHIP, DEVELOPMENT, AND THE through their own community-based
PHILIPPINE CONTEXT entrepreneurial efforts.

Sandra Seno-Alday & Ana Marina A. Tan Grameen Bank was remarkable not just
because it addressed a gap in the financing
UNDERSTANDING SOCIAL ENTREPRENEURSHIP market which traditional banks could not (or
refused to) fill. It was noteworthy because it
The term "social entrepreneurship," which
devised a new financing model built around
gradually came to prominence over the past
"lending circles." This model allowed communi-
twenty years, refers to a phenomenon that in
ties to apply jointly for financing even without
itself is not new. Indeed, some of the earliest
collateral and harnessed their inherently
social entrepreneurs have been identified as far
collectivist nature to ensure that loans were
back as the 19th century. The French inventor
paid. Grameen Bank thus showed that it was
and entrepreneur Jean-Baptiste André Godin
possible to design an innovative, culturally
(1817-1888), for example, patented a heating
sensitive, and profitable business model that
system and later built an enterprise to
contributed to development. The enterprise
commercialize it. Godin's enterprise was unique
generated social as well as economic value and
in that it offered his employees an opportunity
ultimately helped transform social and
to live together in a community (a familistère)
economic structures.
where they enjoyed a range of benefits,
including social security, healthcare, and It is most interesting to note, however, that
education for their children. The enterprise despite gaining some traction in practice and
created both social and economic value and policy, there continues to be no generally ac-
was in fact a profitable market leader in its time cepted definition of social entrepreneurship. It
(Boutillier, 2009). is worthwhile, therefore, to survey the current
scholarly literature and explore the range of
"Social entrepreneurship" as a concept did not
meanings of the term. The next sections
emerge until the 1970s (Huybrechts & Nicholls,
investigate the characteristics of social
2012), and has since gained significant
entrepreneurship in order to arrive at its most
popularity in both practice and policy. The
common definition.
awarding of the 2006 Nobel Peace Prize to
Muhammad Yunus was perhaps the most The "Entrepreneurship" in Social
significant event that thrust it into the global Entrepreneurship
spotlight. Having seen the difficulties
encountered by micro-entrepreneurs when What makes social entrepreneurship an
obtaining credit from the traditional banking entrepreneurial activity? Answering this
system, Yunus established Grameen Bank' in question requires drawing on literature from
Bangladesh ("Grameen Bank" translates to the broader field of entrepreneurship, which is
"Bank of the Villages" in the Bengali language). a relatively new area of inquiry in itself.
Most scholarly studies trace the origin of the taking. By serving a traditionally high-risk
concept of entrepreneurship to the ground- market while drawing on several sources of
breaking work of Joseph Schumpeter (1934), funding itself, the Bank functions as a risk
whose economic history essays focused on the intermediary absorbing a significant amount of
important role of entrepreneur-driven risk.
innovation in economic growth. Schumpeter
argued that it is the entrepreneur's ability to The "Social" in Social Entrepreneurship
undertake "creative destruction" that allows What makes social entrepreneurship a social
economies to grow and develop over time. As activity? The primary characteristic of a "social"
the main agents of economic change, enterprise or organization is its mission to
entrepreneurs introduce new products, design create value for society (that is, value that is
new methods of production, create new not limited to the en- terprise alone) and more
markets, identify new resources and sources of importantly-drive positive social change
supply, and conceive of novel and innovative (Volkmann et al., 2012).
ways of organizing businesses and industries.
Going back to the example of Grameen Bank,
In undertaking this innovative behavior, the organization clearly creates social value for
entrepreneurs necessarily take risks and the communities that it serves. More
typically achieve their goals within resource- significantly, it contributes to change in deeply
constrained environments. While there entrenched social and economic structures,
continues to be no generally accepted definition particularly in the banking and financing infra-
of entrepreneurship, Schumpeter's work points structure of the country. It allows market
to three important elements that characterize segments that have been historically locked out
the economic value-creating function of of the financial system to gain access to it. In
entrepreneurship: INNOVATION, RISK-TAKING, doing so, the Bank allows communities to
AND RESOURCE SCARCITY. The term social prosper, helping to break the cycle of poverty
entrepreneurship, which implies that it is a and strengthening the social fabric of both the
subset of the broader umbrella of communities and the country.
entrepreneurial activity (Dees, 1998), thus
possesses exactly the same characteristics. Debates in Theory, Policy, and Practice

Drawing on the example of Grameen Bank, Although current scholarly literature, policy
social entrepreneurship entails innovation. The papers, and regulatory documents draw on the
Bank offered a new product (financing for those entrepreneurship and social elements de-
with low credit worthiness), and in the process scribed above, there continues to be much
tapped into new and unserved markets debate on precisely what constitutes social
(microenterprises). The Bank also designed a entrepreneurship. The core question is whether
new business model (built around "lending or not an activity can truly qualify as social
circles"), resulting in a profitable, economic entrepreneurship if it contains only some of
value-adding enterprise. these elements. If not all are necessary, which
of them are absolutely essential?
The Grameen Bank also highlights the reality
that social entrepreneurship requires risk-
Does the absence of a profit or economic being run like businesses. He considers other
objective qualify an undertaking as social projects like school feeding programs or Gawad
entrepreneurship? Non-profit organizations are Kalinga, on the other hand, as examples of
a good example for illustrating the complexity social entrepreneurship.
of this question. They clearly have a mission to
fill a social need and indeed champion social Other studies have also pursued this question
change, but do not, by definition, aim to (Luke & Chu, 2013; Thompson, 2008; Mort et
generate profit. Some schol- arly works al., 2003). Given that both social
describe SOCIAL ENTERPRISES as not-for-profit entrepreneurship and social enterprise address
organizations (Defourny & Nyssens, 2008, p. social and environmental problems and are
202, 2010, p. 43). In the United Kingdom, often used interchangeably, the fine distinction
however, SOCIAL ENTERPRISES have been seems to be in how they approach such issues.
classified as "third sector organisations," a SOCIAL ENTERPRISES use their businesses and
term used to describe "the range of profits to address social and environmental
organisations that are neither public sector nor concerns; SOCIAL ENTREPRENEURSHIP uses
private sector." These include "voluntary and Schumpeter's elements of innovation, risk-
community organisations (both registered taking, and resource scarcity (Schumpeter,
charities and other organisations such as 1934) but may not necessarily create economic
associations, self-help groups and community value. The latter, moreover, may include social
groups), social enterprises, mutuals and enterprises as well as non-profit or
cooperatives" (National Audit Office, n.d.). They philanthropic organizations.
can take a number of legal forms and are  Should social entrepreneurship focus
generally independent of government. What equally on generating both economic
they have in common is the aim to achieve and social value?
social goals through their work.
There are definitions of social entrepreneurship
In line with this question, Bienvenido Nebres, that highlight the dual and equal importance of
S.J. (personal communication, 2018), former economic, financial, or market elements and
university president and mentor to several social impact (Chell, 2007; Dart, 2004; Luke &
social entrepreneurs, distinguishes "SOCIAL Chu, 2013). Hockerts (2010), for example,
ENTREPRENEURSHIP" from "SOCIAL defines "social entrepre- neurship as the
ENTERPRISE," suggesting that "social discovery of opportunities to generate social
entrepreneurship is about... developing, impact and the identification of a mechanism to
funding and implementing solutions to social do so in a financially sus- tainable way" (p. 178).
problems like poverty, environmental The Social Enterprise Alliance, a support group
problems, or even cultural problems" while for the development of the social enterprise
social enterprise entails "applying business sector in the U.S., defines social enterprises as
methods to solve social, cultural, and other "organizations that address a basic unmet need
problems." On the one hand, he uses Got or solve a social or environmental problem
Heart, Rags2Riches, and Hapinoy as examples of through a market-driven approach" (Social
social enterprises given that their main Enterprise Alliance, n.d.).
objective is addressing social problems while
Given the limitations of donor funding, many services on their behalf. This can be thought of
non-profits have resorted to engaging in as an arrangement where governments
income-generating activities in order to fund "outsource" service provision to a third party. In
their core social mission. Can these October 2010, for example, the U.K.
organizations be defined as en- gaging in social government published its strategy to support
entrepreneurship in view of the economic third sector organizations, acknowledging their
nature of their secondary objective? role in helping government run public services
Furthermore, there are for-profit enter- prises (HM Government, 2010). These organizations
that engage in responsible and sustainable clearly create social value. Does the provision of
business. Nestlé, for example, one of the largest social services on behalf of government-without
and most successful multinational compa- nies necessarily employing innovative service
in the world, has a policy of purchasing raw delivery models in the process-constitute social
materials only from suppliers with entrepreneurship?
environmentally sustainable practices, thereby
creating social and environmental value. Can  Does resource abundance (or
companies whose main objective is to generate sufficiency) disqualify an undertaking
profit alongside a secondary focus on as social entrepreneurship?
generating social value be considered as There are definitions that highlight the
engaging in social entrepreneurship? achievement of social impact in an environment
 Does the absence of risk and of resource scarcity. Seelos and Mair (2005), for
innovation qualify an undertaking as instance, refer to social enterprises as
social entrepreneurship? "organizations that have created models for
efficiently catering to basic human needs that
Some scholarly and policy definitions of social existing markets and institutions have failed to
entrepreneurship focus on the importance of satisfy." For them, "social entrepreneurship
taking risks and of being innovative (Davidsson, combines the resourcefulness of traditional
2006; Kirzner, 1979; Shane, 2003; Venkatara- entrepreneurship with a mission to change
man & Sarasvathy, 2001) in the pursuit of social society" (p. 241). However, organizations that
impact. Perrini (2006, in Dacanay, 2012), for receive government grants and public funding
example, states that "social entrepreneurship to provide services on behalf of government as
entails innovations designed to explicitly described above may not necessarily operate in
improve societal well-being, housed within environments of resource scarcity. Can these
entrepreneurial organizations, which initiate, social service providers be classified as social
guide or contribute to change in society" (p. entrepreneurs?
26). The European Commission considers social
enterprises as providers of "goods and services  Does focusing on addressing a social
for the market in an entrepreneurial and need rather than advocating for
innovative fashion, using their profits primarily fundamental social change disqualify
to achieve social objectives" (PwC, 2018, p. 11). an undertaking from being classified as
social entrepreneurship?
There are organizations, however, that receive
funding from the government to deliver social
 Some parts of the scholarly literature high- relief and incentives for registered social
light social engineering (that is, the destruction enterprises. Companies that qualify are those
of traditional social systems and the creation of that generate 50% of their revenue from the
new, more effective ones) as one of the business while reinvesting 70% of profits back
functions of social entrepreneurship (Volkmann into the same.
et al., 2012). In this case, if an enterprise fills a
social need effectively and creates social value Toward a Definition of Social Entrepreneurship
without necessarily contributing to significant Scholars have attempted to reconcile these
social change, can it be considered as engaging wide-ranging issues and propose paths toward
in social entrepreneurship? an integrative definition of social
The answers to these questions remain unclear entrepreneurship (for example, see Peredo &
in the scholarly literature and reflect the McLean, 2006). The most common description
continued theoretical and conceptual "fuzz- of what a social entrepreneur does that has
iness" of the social entrepreneurship space. This withstood the test of time was offered by Dees
lack of clarity is ev- ident in practice as well; for (1998, 2001):
example, recent research has identified Social entrepreneurs play the role of change
organizations that operate as social enterprises agents in the social sector by:
but do not recognize themselves to be so. They
are either unaware of the term or simply  Adopting a mission to create and
choose not to categorize themselves as such sustain social value (not just private
(Darko & Quijano, 2015). value),
 Recognizing and relentlessly pursuing
Nevertheless, it is clear that social enterprises new opportunities to serve that
deliver significant value despite confusion over mission,
the definition of social entrepreneurship in both  Engaging in a process of continuous
theory and practice. In recognition of this, innovation, adaptation, and learning,
governments have instituted policy and  Acting boldly without being limited by
regulatory mechanisms to support their growth. resources currently in hand, and
In Vietnam, for example, the Law on Enterprises  Exhibiting a heightened sense of
(Decree detailing a number of articles of the accountability to the con- stituencies
Law on Enterprises, 2015) creates a conducive served and for the outcomes created.
environment for the establishment and (2001, p. 4)
development of social enterprises by offering
investment incentives, among others. Thailand It captures all the entrepreneurial (change,
passed a Royal Decree on tax exemption-No. innovation, risk-taking, resource scarcity) and
598, B.E. 2559 for social enterprises (Adulyadej, social (social value, social change) dimen- sions
2016)-in recognition of their role in addressing discussed above.
the needs of disadvantaged sectors, followed by
Social Entrepreneurship in the Developing
a Social Enterprise Promotion Act in February
Context
2019 "to define and the development of social
enterprise" (Pybus, 2019). The law offers tax
What motivates entrepreneurs to take risks and impact, however, are mixed. On the one hand,
establish their own enterprises? This has been there are studies indicating that weak policy
an important question in the field and and regulatory support for entrepreneurs in
continues to be investigated by scholars around developing countries has tended to limit growth
the world. However, a survey of the scholarly in the number of new entrepreneurs as well as
literature on entrepreneurship shows that curtail the development of existing
research has been focused predominantly on entrepreneurial ventures (Bizri et al., 2012). The
North America and Eu- rope. Scholars have Global Entrepreneurship Monitor (GEM), the
indicated that "entrepreneurship in developing widest and most established survey of
countries is arguably the least studied entrepreneurs around the globe, highlights
significant economic and social phenomenon in unfavorable regulations, taxes, and government
the world" (Lingelbach et al., 2005, p. 1). bureaucracy as among the biggest barriers to
entrepreneurship in four surveyed Southeast
The same is true for research on social Asian countries (Indonesia, Malaysia, Thailand,
entrepreneurship, with studies in the U.S. and and Vietnam) (Global Entrepre- neurship
U.K. contexts accounting for almost 60% of all Monitor, 2018).
scholarly work in this sub-field of
entrepreneurship (Short et al., 2009). There is On the other hand, some studies have found
certainly much that remains to be understood that weaknesses or gaps in the policy and
about the drivers and impact of both regulatory infrastructure of a country can exert
entrepreneurship and social entrepre- neurship a positive influence on the nature of
in the context of developing countries. entrepreneurial activity. For example,
entrepreneurs can view the lack of regulation as
an opportu- nity to launch innovative
Drivers of Entrepreneurship businesses designed to fill market gaps that
may exist because of it (Webb et al., 2019).

There is also evidence that the nature of the

Understanding the drivers of social political environment, apart from influencing
entrepreneurship in the context of developing entrepreneurial motivation, significantly affects
countries first requires understanding what the entrepreneur's strategic orientation. A
motivates entrepreneurs in general. Helpful in study of entrepreneurs in conflict areas in the
this regard are recent studies on Philippines, for example, reveals that the
entrepreneurship in emerging markets that strategies they employ tend to be tactical, with
point to certain key factors which drive a view toward achieving short- term gains
entrepreneurial motivation and shape en- (Canares, 2011). This is in response to the highly
trepreneurial activity. volatile nature of their enterprise context,
which makes it very challenging to view their
Studies have shown, for example, that the
businesses over a longer time horizon. It shows
political and regulatory environment makes a
that entrepreneurial perspectives, approaches,
significant impact on the nature of
and ways of thinking are heavily influenced by
entrepreneurship in developing country
the nature of the entrepreneurial context.
contexts. Findings on the precise nature of the
The level of economic development of a sponsored entrepreneurial support), along with
country has also been found to have an impact a view toward generating cash immediately
on the nature of market opportunities and en- through tried-and-tested business models,
trepreneurial motivation. Studies point to could poten- tially explain the generally lower
significant differences in both the levels of innovation among enter- prises in
characteristics of markets in developing developing countries.
countries and the consequent nature of
entrepreneurial opportunities in those contexts. Lastly, society and culture shape
For example, the presence of large, bottom-of- entrepreneurial orientation, moti- vation, and
the-pyramid markets with very limited the nature of entrepreneurial ventures in
disposable income presents opportunities for profound ways. A study of the varieties of
entre- preneurs to conceptualize and develop Southeast Asian capitalism (Tipton, 2009), for
novel strategies that capture value from this instance, found that historical colonial
significant but resource-constrained market structures tended to inhib- it rather than
segment (Venugopal & Viswanathan, 2015; promote entrepreneurial growth in the region.
Nakata & Weidner, 2011; Mak- toba & Williams, Local businesspeople tended to engage in small,
2009; Prahalad & Hart, 2002). peripheral concerns such as trading and
distribution, and were generally not involved in
Analysis of GEM data (Global Entrepreneurship devel- oping major industries given that
Monitor, 2018), moreover, shows that colonizers viewed the colonies as extensions of
entrepreneurs from developing economies tend their own markets and businesses (Tipton,
to be driven by necessity rather than by 1998). Such remnants of this colonially rooted
opportunity; that is, unlike most of their entrepreneurial orientation could potentially
counterparts in developed countries who are explain the low levels of innovation in
motivated to establish business ventures in Southeast Asia as noted by the GEM surveys.
order to take advantage of perceived market
opportunities, entrepreneurs in developing Recent studies focused on entrepreneurs in the
nations tend to es- tablish their own businesses Philippines and Vietnam have also discovered
mainly as a source of income. This is true that family has a significant impact within the
particularly among women who leave the context of the entrepreneurial ecosystem
workforce to care for their children and who (Baughn et al., 2006; Bizri et al., 2012; Global
need to supplement household income. Entrepreneurship Monitor, 2018). Evidence
shows that these entrepreneurs establish their
The GEM survey data also reveals that businesses primarily to support their families,
entrepreneurial ventures in developing something that can be explained by deeply
countries tend to be less innovative. Further rooted cultural values and expectations
study, however, is required to determine regarding one's responsibility to care for one's
whether this might be related to the primary family. In fact, even decision-making on
motivation of economic necessity when operational as well as strategic business
establishing a business. Indeed, the urgency to concerns is heavily influenced by conditions in
set up an enterprise while having access to very the entrepreneur's household.
limited resources (including government-
Key Drivers of Social Entrepreneurship
The field of research on social entrepreneurship trigger an emotional response which in turn
especially within the context of developing drives the creation of social programs or
countries is still very much in its in- fancy. enterprises that ben- efit those sectors.
Nevertheless, existing studies show that the
drivers of entrepreneurship discussed above are Preliminary results show that the deep level of
generally the same as those of social emotional en- gagement associated with
entrepreneurship. empathy and compassion plays a signifi- cant
role in social entrepreneurship. Interestingly
If these factors drive the "entrepreneurship" in enough, this deep level of emotional
social entrepreneurship, what, then, influences engagement also fulfills certain needs of the
the "social"? Studies have shown that large, social entrepreneurs, such as their sense of
bottom-of-the-pyramid markets in developing vocation and commitment to social mission.
countries are a major driver of social
entrepreneurship (Ansari et al., 2012). Evi- Notwithstanding the fact that weaknesses and
dence in support of this has also been found in gaps in political and regulatory systems do
both the Philippines (Nielsen & Samia, 2008) shape entrepreneurial growth and activity as
and Africa (Pervez et al., 2013). discussed above, systematic efforts by major
governments and in- ternational bodies such as
There also appears to be a very individual or the United Nations (U.N.) have also played a
personal dimension to social entrepreneurship. major role in underscoring the need for
Exploratory studies on social entrepreneurs in economic players to con- tribute to both
Vietnam and the Philippines point to the role of economic and social development. The
affect (empathy and compassion) in the Sustainable Development Goals (SDGs), in
motivation of social entrepreneurs (Bizri et al., particular, have helped raise awareness of
2012; Global Entrepreneurship Monitor, 2018). persistently disadvantaged sectors and can thus
This is different from largely altruistic or be viewed as supporting further growth in social
philanthropic behavior which itself has been the entrepreneurship. World leaders adopted these
focus of studies (on corporate social 17 SDGs at the historic United Nations Summit
responsibility, for example) in developed held in September of 2015 (United Nations,
country contexts. Empathy, on the one hand, 2015; Figure 1.1) and sig- natory countries have
implies that some social entrepreneurs identify begun to work together ever since these came
with certain disadvantaged sectors in the into force in January of 2016, mobilizing their
population (such as when they consider efforts toward achiev- ing the SDGs by 2030.
themselves as belonging to that sector). This Built on the success of the Millennium De-
serves as strong motivation for the creation of velopment Goals (MDGs), the SDGs aim to
social programs or enterprises. Compassion, on improve people's lives through economic
the oth- er hand, implies having a strong empowerment while addressing social needs
emotional response toward certain and protecting the environment. This is where
disadvantaged sectors. Some social social entrepreneurship can potentially play a
entrepreneurs, without necessarily identifying key role.
or seeing themselves as belonging to those
sectors, may have personal experiences that Figure 1.1 (?)
Social enterprises are in a unique position, as and/or owners and ensures that a substantive
businesses driven by a social mission, to part of the wealth created by the enterprise is
catalyze movement toward achieving the SDGs, distributed to or benefits them. In addition to
particularly through their characteristic reinvesting its surplus or profits back to the
multiple-bottom-line approach and by creating enterprise to sustain the fulfillment of its social
strategies to build economic growth while mission, an SE also uses its surplus or profits and
addressing social and/or environmental issues. mobilizes other resources to assist the poor to
Running a social en- terprise and being a social become partners in SE or value chain
entrepreneur means being able to juggle the management and governance and to become
rigors of a traditional business while ensuring partners in community, social and sectoral
the welfare of peo- ple and without harming transformation. (Senate Bill No. 820, 18th
the planet. Such enterprises can thus set the Cong., 2019)
example and pave the way for bigger, more
traditional businesses to operate in more The challenge of poverty reduction is not new
socially and environmentally responsible ways. to the Philippines. Many organizations have
attempted to address it using a range of
Social Entrepreneurship in the Philippines different approaches, including a new breed of
social enterprises that began gaining traction at
While different countries have different the turn of the millennium (Darko & Quijano,
operating contexts and definitions of social 2015). Employing an entrepreneurial mindset
entrepreneurship, what remains common and business tools, these enterprises actively
among them is the social mission or purpose of sought solutions to the problem of poverty in
these enterprises. In the Philippines, the the country.
Poverty Reduction through Social
Entrepreneurship Act (PRESENT) proposes the The integrative report of an Institute for Social
following definition: Entrepreneurship in Asia (ISEA)-OXFAM project
(Institute for Social Entrepreneur- ship in Asia,
Social Enterprise or SE refers to a social mission 2015) categorized Philippine social enterprises
driven organization, in the form of an INTO FIVE FORMS, namely, SOCIAL
association, single proprietorship, partnership, COOPERATIVES, MICROFINANCE INSTITUTIONS
corporation, cooperative, people's organization, (MFI), FAIR TRADE ORGANIZATIONS (FTOS),
non-stock, non-profit and people's organizations TRADING DEVELOPMENT ORGANIZATIONS
or any other legal form, that conducts economic (TRADOS), AND NEW-GENERATION SOCIAL
activities providing goods and/or services di- ENTERPRISES (NEW-GEN SES). Each form has its
rectly related to their primary mission of own target beneficiary, business model, and
improving the well-being of the poor, basic and suite of services. All these groups, moreover,
marginalized sectors and their living envi- use one of the following stake- holder models
ronment. A social enterprise explicitly declares of engagement: control, collaboration, or
and pursues pov- erty reduction as its principal empower- ment (Dacanay, 2012).
objective by purposefully rendering both
transactional and transformational services. An Social enterprises in the Philippines are
SE engages and invests in the poor for them to registered just like any other business, are
become effective workers, sup- pliers, clients subject to the same business regulatory
framework, pay the same taxes, and have no CHAPTER 2
incentives. Unlike traditional busi- nesses,
however, they have a social mission at their SOCIAL ENTERPRISES AS GAME CHANGERS IN
core similar to that of non-government ACHIEVING THE SUSTAINABLE DEVELOPMENT
organizations (NGOs). Yet, unlike NGOs, they GOALS
need to earn profits to keep themselves Marie Lisa M. Dacanay
sustainable and meet their social purpose,
although it is worth noting that some NGOs The development paradox of having high
have begun supporting wealth creation in poverty and inequality despite economic
communities in order to sustain their social growth is a difficult starting point for the Phil-
mission. Nevertheless, while NGOs rely largely ippines when it comes to achieving the 2030
on grants and donations to stay afloat, social Agenda for Sustain- able Development (United
enterprises use business skills to create profit Nations, 2015). It is only a fundamental shift-in
that is used for their intended beneficiaries. the way we conceive of economic development
While tra- ditional businesses ultimately worry as well as pursue innovative, game changing
only about the profit that they generate, social strategies-that will get us there. It is not enough
enterprises have to deal with generating profit to promote corporate social responsibility
while simultaneously creating value for both towards making our corporate-led market
society and the environment. Social enterprises economy work better. We need to conceive of a
may also promote the interests of a particular plural economy (Laville, 2010) where social
sector similar to how people's organizations enterprises that engage the poor as
(POs) represent marginalized groups like stakeholders (Dacanay, 2012) are key players in
fisherfolk, farmers, or the urban poor. building ethical markets and a strong social
economy.
Moreover, as the cases in this book illustrate,
empathy and com- passion have been key Ethical markets result when social and
drivers in Philippine social entrepreneurship. environmental costs and benefits are
Filipino social entrepreneurs have endeavored internalized in the valuation of goods and
to harness their business or professional services as they are produced, traded, and
backgrounds and intimate knowledge of com- consumed in the marketplace. A strong social
munities to create novel and profitable business economy means that the principles of
models aimed at addressing complex social reciprocity and redis- tribution, rather than
issues. They have successfully integrated purely those of the market, govern the develop-
bottom-of-the-pyramid markets into the social ment and growth of social enterprises as
enterprise ecosys- tem as partners or suppliers, sustainable and innovative mechanisms that
with some even providing employ- ment enable the poor to become stakeholders in
opportunities to those experiencing significant econom- ic development. A pathway toward
difficulties in the job market. building ethical markets and a strong social
economy is social entrepreneurship. This means
These are the remarkable stories of remarkable creating innovative, multi-stakeholder platforms
Filipino social entrepreneurs. that nurture a vibrant sector of social
enterprises to create decent jobs and
livelihoods, practice sustainable consumption SEPPS are not dependent on grants or public
and production, achieve zero poverty and subsidies-or wealth created elsewhere-the way
hunger, address inequality, and empower traditional non-profit organiza- tions are. They
women. engage instead in the production and sale of
goods and services just like other businesses or
Social Enterprises in the Context of Developing private enterprises. Howev er, unlike these
Countries enterprises which aim to create profit
Social enterprises that engage the poor as principally for shareholders, SEPPS create
stakeholders are responses to systemic and surplus or profit to pursue their social mission in
widespread poverty, inequality, and the a sustainable way. Their financial bottom line
continuing failure of state and market plays a sup- porting role to their social bottom
institutions to serve the needs of the poor line.
especially in developing countries such as the This distributive enterprise philosophy of SEPPS
Philippines. The or- ganizations in this major is in contrast with the accumulative philosophy
segment of social enterprises, which has been of private enterprises. SEPPS create social and
the subject of research studies by this author economic value that accrue to the poor as
and the Institute for Social Entrepreneurship in primary stakeholders while private enterprises
Asia (ISEA), have been referred to as social create and accumulate wealth for the owners of
enterprises with the poor as primary capital. They consider payments or wages made
stakeholders or SEPPS. A Philippine study to the poor, which a business or private
conducted in 2012 crafted this definition: enterprise might treat as finan- cial costs to be
SEPPS are social mission-driven wealth creating minimized, as social benefits for primary
organizations that have at least a double stakeholders that need to be optimized. SEPPS
bottom line (social and financial), ex- plicitly build the assets and capability of the poor as
have as a principal objective poverty reduction productive citizens in ethical markets and the
or improving the quality of life of specific social econ- omy to move them out of poverty.
segments of the poor, and have a dis- tributive The Poor and Major Segments of SEPPS in the
enterprise philosophy. (Dacanay, 2012, p. 51) Philippines
As social mission-driven organizations, SEPPS According to another study by ISEA, the most
engage the poor not only as workers, clients, significant segments of the poor served by
suppliers, or nominal owners of these enter- SEPPS are the enterprising poor, farmers, agri-
prises but also, and more importantly, as cultural workers, indigenous peoples, the poor
partners in social enterprise and value chain in urban communities, persons with disability,
management; as full-fledged owners and the unemployed and underemployed, and the
decision makers in social enterprise women across these segments (ISEA, 2015).
governance; and as change agents for Indeed, a big number of the poor beneficiaries
themselves and their community, sector, or of SEPPS are marginalized or socially and
society as a whole. economically challenged women.
The nature of the impacts of SEPPS among the cooperatives of the poor and serving the poor
beneficiaries sur- veyed include the following: and have an estimated membership of around
4.56 million, which includes farmers, agrarian
⚫ increased, diversified, and more sustainable reform beneficiaries, fishers, vendors, the
sources of income; entrepreneurial poor, persons with disability,
⚫ increased capacity to cover basic household and the women of these sec- tors. An example
needs and im- proved quality of life; of a social coop is the Omaganhan Farm- ers
Agrarian Reform Cooperative in Leyte.
⚫ improved access to social and community
services; 2. Social mission-driven microfinance
institutions (SMD MFIs). The ISEA study also
⚫ movement out of poverty; estimated that among providers of financial or
microfinance services to the poor, 2,000 may be
⚫ improved participation, position, and
considered SEPPS or SMD MFIs which reach
empowerment;
about 2.5 million individuals. Many of these are
⚫ improved status and empowerment of development organizations that went into
women in the community; microfinance services, including savings, credit,
and micro-insurance, and many have also
⚫ increased capacity for self-governance and to diversified their services to include various
contribute to community development, and forms of social protection, education and
training, business development, and value chain
⚫ increased levels of community development
development (ISEA, 2015, pp. 80-81; MCPI,
and prosperity (ISEA, 2015, pp. 44-45).
2016, pp. 4, 11). An example of a social mission-
A comprehensive profile of social enterprises in driven microfinance institution that has evolved
the Philippines that have the poor as primary into a multi-organizational group of social
stakeholders has yet to be made. A rap- id enterprises of- fering these multiple services is
appraisal in 2007, which was further refined by the Center for Agriculture & Rural
the ISEA study, es- timated the number of Development-Mutually Reinforcing Institu- tions
SEPPS in the country to be at around 15,500 as (CARD-MRI).
of 2014 (ISEA, 2015, p. 19). Figure 2.1 shows
3. Fair trade organizations (FTOs). FTOS provide
five significant seg- ments of social enterprises,
marginal- ized producers access to markets
identified by the aforementioned study, which
using globally recognized fair trade principles
be differentiated in terms of nature and form of
and enable them by establishing stra- tegic
organiza- tion, initiators, and main services
partnerships with them as supplier
provided to the poor.
communities, pro- viding fair prices for their
1. Cooperatives of the poor and serving the produce and pre-financing their production,
poor, or social cooper- atives (social coops). The training, and capacity building. Fair trade orga-
ISEA study estimated that over 11,000 out of nizations affiliated with the World Fair Trade
the 23,672 cooperatives registered with the Organization (WFTO) also practice a
Cooperative Development Authority of the comprehensive WFTO Standard and Guarantee
Philippines in 2013 were SEPPS. These are System based on ten fair trade principles
(WFTO, 2017). In 2012, there were 32 fair trade poor. There is not much literature yet on these
organi- zations in the directory of the Philippine SES, which usually take the legal form of stock,
Fair Trade Fo- rum (ISEA, 2015; Dacanay, 2017). for-profit corporations; among the more
Examples of fair trade organizations are Alter prominent ones are Gandang Kalikasan/Human
Trade Foundation, Inc., which has Nature, Rags2Riches, and Hapinoy. It is difficult
demonstrated a model for moving agrarian to ascertain how many New-Gen SEs exist,
reform bene- ficiaries out of poverty, and Bote though it is definitely a growing segment
Central, Inc., which en- ables coffee-producing nonetheless.
communities to process and retail their coffee
beans.

4. Trading development organizations Figure 2.1

(TRADOS). These are non-government Social Enterprises with the Poor as Primary
development organizations (NGDOs) engaged in Stakeholders (SEPPS; Dacan-ay, 2012, p. 51)
the production, trading, and/or marketing of
goods and/or provision of economic services SOCIAL COOPS
(e.g., finan- cial services, enterprise
 Cooperatives of the poor and serving
development services) to help sus- tain their
the poor
operations and serve specific sectors of the
 Includes farmers, agrarian reform
poor. A subset of this group is the NGDO-owned
beneficiaries, fishers, vendors,
or -initiated social enterprises that are set up as
entrepreneurial poor, persons with
commercial or trading arms of their parent
disability. and women of these sectors
NGDOS and which usually take the form of
 Example: Omaganhan Farmers Agrarian
stock-for-profit corporations. The ISEA SEPPS
Reform Beneficiaries Cooperative in
study estimated that there were around 2,500
Leyte
TRADO in the country as of 2014 (ISEA, 2015, p.
19), though the actual number is difficult to SMD MFIS
ascertain. Examples of trading development
organizations are Tahanang Walang Hagdan- an,  Non-government development
which provides employment to persons with organizations that went into
disabili- ty, and Pilipinas Ecofiber Corporation, a microfinance services including savings,
subsidiary of the Foundation for a Sustainable credit, and microinsurance, among
Society, Inc., which works to diversify and others
improve the incomes of coconut farmers.  Example: Center for Agriculture and
Rural Development- Mutually
5. New-generation social enterprises (New-Gen Reinforcing Institutions (CARD-MRI)
SEs). In contrast with the older generation of
trading development organiza- tions that are FTOS
NGDO-initiated, New-Gen SEs make up a rising
 Provide marginalized producers access
segment of social enterprises that are
to markets using globally recognized
established by young professionals or
fair trade principles
entrepreneurs with a social mission to help the
 Example: Alter Trade Foundation, Inc.
TRADOS operationalized without much difficulty.
Although they are currently a minority, a
 Non-government development growing number of SEPPS have taken the form
organizations or their subsidiary of stock corpora- tions and, in so doing, have
corporations that are engaged in the had to innovate to practice a distributive
production, trading, and/ or provision philosophy. Gandang Kalikasan/Human Nature
of economic services to target exemplifies some in- novations in this regard-
segments of the poor while the minimum wage required by law was
 Example: Tahanang Walang Hagdanan about P480/day in the National Capital Region
Pilipinas Ecofiber Corporation, a and was lower in other regions in 2015, the
subsidiary of the Foundation for a lowest paid worker in Gandang Ka- likasan was
Sustainable Society, Inc. Dacanay, 2012, receiving a living wage of P750/day regardless
p. 51 of location of employment, a rate that has also
New-Gen SES been adjusted proportionately over time.
Gandang Kalikasan also plows back up to 100%
 SES established by young professionals of its profits from its best-selling products to
or entrepreneurs with a social mission partner supplier communities (ISEA, 2015, p.
to help the poor, which usually take the 81), a practice that has been a longstanding
legal form of stock, for-profit staple of fair trade organizations. The use of fair
corporations. trade premiums, moreover, is decided by the
 Example: Gandang Kalikasan, Inc. and producer organizations themselves.
most of the SEs featured in this book
SEPPS as Hybrid Agents of Change in Markets
Note. This figure is a brief summary of the five and the Economy
significant segments of social enterprises that
have been identified by the ISEA SEPPS Study. The findings of the ISEA SEPPS studies and
others clearly show the nature of SEPPS as
hybrid organizations that straddle the line
between for-profit and non-profit as well as the
Legend.
market and social spheres of the economy. As
 SMD MFIs: Social mission-driven such, they provide a combination of mar- ket
microfinance institutions and non-market services to the poor whom
 FTOS: Fair trade organizations they serve, making them distinct from ordinary
 TRADOS: Trading development businesses. These services may be classified
organizations into transactional, transformational, and social
 New-Gen SEs: New Generation Social inclusion types (Dacanay, 2012, pp. 304, 321;
Enterprises ISEA, 2015, p. 3). A brief summary is shown in
Figure 2.2.
As can be noted from these segments, many
SEPPS take the form of non-stock corporations,  Transactional services pertain to
foundations, cooperatives, and as- sociations enterprise- or market-driven activities
where the distributive philosophy can be such as providing loans, demonstrating
new technol- ogies, or conducting
 trainings that are necessary for the poor Services Provided by SEPPS (Dacanay, 2012, pp.
in the social enterprise system to 304, 321; ISEA, 2015, p. 31)
perform their roles as workers,
suppliers, clients, and nominal owners Transactional services-enterprise- or market-
both effectively and ef- ficiently. driven activities that help the poor in the social
 Transformational services pertain to enterprise system perform their roles as
activities such as leadership formation workers, suppliers, or clients
and organizational development, asset  providing production loans
build-up, and the provision of education  providing access to technology to
and experiential learning opportu- increase productivity
nities that empower the poor to
become full-fledged owners and Transformational Services-activities that
conscious decision makers of SEPPS, empow- er the poor toward becoming owners
take over new roles or functions in and decision makers of SEPPS, taking over new
value chains where they are situated, roles of functions in value chains, and becoming
and be- come change agents for change agents
themselves as well as their communi-
 leadership formation and organizational
ties, sectors, and society as a whole.
development
 Social inclusion services are non-fee-
 provision of education and experiential
based social welfare ser- vices such as
learning opportunities
the development of community-based
systems for health, water, and Social inclusion services-non-fee based social
sanitation that directly assist the poor welfare services that directly assist the poor and
and their families in meeting their their families to have immediate access to basic
immediate basic needs or immediately needs or to immediately improve their quality
improving their quality of life. of life
Potential for the Development and Growth of  development of community-based
SEPPS systems for health, water, and
sanitation and volato
The data generated by the ISEA studies shows
the importance of the current and potential These studies also indicated a big potential for
outreach that SEPPS have among the poor. The SEPPS to scale up their operations. The median
purposive survey sample of 32 SEPPS, which asset base size of the surveyed SEPPS, which
represented devel- oped organizations that was on a micro scale (P70,000 or less) when
have been in existence for an average of 14 they were first set up, had already reached the
years, generated a combined outreach for medium scale (above P350 thousand to P2.4
approximately 2.5 million poor beneficiaries. million) by 2012 (ISEA, 2015, p. 62). Indeed, the
This may already be considered significant given data sug- gests that SEPPS have the potential to
that there were 4.2 million poor families in the evolve from an initial stage of economic
Philippines in 2012 (ISEA, 2015, p. 62). organization-characterized by a low degree of
internal organization, weak governance, and
Figure 2.2
inefficient management, along with great The main output of the ISEA action research
dependence on external support to a mature was a proposed legislative measure called the
stage where they can become financially Poverty Reduction through Social En-
autonomous socio-economic enterprises that trepreneurship (PRESENT) Bill, which was
have highly complex internal functions as well discussed and enhanced by the participants of
as the ability to serve the poor and their the national stakeholders' consultation. Figure
communities at large through innovation and 2.3 discusses the main features of the bill that
collective learning. resulted from the consultation process.

One can imagine a scenario where the 15,500 The stakeholders' version of the PRESENT Bill
SEPPS in the Philippines, which are mostly micro may be seen as a codification of a policy reform
in size at the moment, are assist- ed to become agenda to recognize and support social
similar to the 32 developed SEPPS that were enterprises as key players in poverty reduction.
surveyed in the ISEA study. Their potential However, lobby efforts since 2012 by the
outreach and qualitative impact on the poor PRESENT Coalition in both houses of Congress
would really be quite significant. Thus, in a to have the bill considered a priority by the
context where conventional programs for Office of the President have not progressed as
reducing poverty have shown themselves to be much as they should. Indeed, while the cur rent
lacking in effectiveness, the Philippine and ISEA administration under President Duterte has
SEPPS stud- ies provide insights on conditions identified the billas a priority in the Philippine
that can make social enterprises with the poor Development Plan, setbacks have been
as primary stakeholders active vehicles for experienced as a number of key advocates in
poverty re- duction and eradication. the Upper and Lower Houses of Congress did
not get re-elected in the May 2019 elections
Poverty Reduction through Social The PRESENT Coalition, therefore, needs to
Entrepreneurship (PRESENT) Bill and Coalition restrategize and devel- op new advocates for
(Dacanay, 2013; PRESENT Coalition, 2015, 2020) the bill to be passed.

On February 16, 2012, social entrepreneurs and As of June 2020 and after undergoing some
leaders of major na- tional networks as well as changes, the PRES- ENT Bill has been filed as
resource institutions of social enterprises Senate Bill Nos. 820, 105, and 1496 and as
established the Poverty Reduction through House Bill Nos. 2145, 2894, and 3729 in both
Social Entrepreneurship (PRESENT) Coalition. Houses of the 18th Congress.
Formed during the National Stakeholders' Figure 2.3
Consultation held from February 15-16, 2012 at
the University of the Philippines in Quezon City, The PRESENT Bill as Proposed by the PRESENT
Philippines, PRESENT was the cul- mination of Coalition
action research undertaken by ISEA (which also
houses the Coalition's secretariat) to explore The proposed legislative measure mandates the
the features of a policy environ- ment planning and implementation of a National
conducive to the development and growth of Poverty Reduction through Social
SEPPS. Entrepreneurship (PRESENT) Program.
The PRESENT Program is focused on the comprehensive insurance system to
development of strategic economic subsectors reduce the vulnerability of these social
with potentials for growth and where poverty enterprises and the poor they serve to
groups are concentrated. The poor are climate change, natural calamities,
expected to benefit the most economic downturns, and pandemics;
 Provision of resources for encouraging
start-up social enter- prises, ecosystem
Figure 2.3 cont. development and comprehensive
capacity development for social
. enterprises, enablers of social enterpris-
es, and their partners among the poor:
from subsector development and growth
 A proactive social enterprise market
through their effective participation as workers,
development program pro- moting the
suppliers, clients and/or owners of social
principles of fair trade;
enterprises and as partners in economic and
 A research and development program
social development. Substantive poverty
involving strategic eco- nomic
reduction is envisioned as an outcome.
subsectors, appropriate social
The proposed law seeks to provide priority enterprise technologies. and
support and incentives to social enterprises innovations in democratizing access to
with the poor as primary stakeholders in these quality basic social services; and
strategic economic subsectors. Cognizant of the
various le- gal forms that these organizations
have taken-from cooperatives to non-stock, Figure 2.3 cont.
nonprofit corporations, to stock for-profit
corpora- tions, or a combination of these forms-  Mainstreaming of social
the proposed Act provides for the qualification entrepreneurship in the educational sys
of these organizations as social enterprises to tem at all levels to ensure strategic
avail of support services and incentives from human resource development.
the state. Incentives for social enterprises with
the poor as primary stake- holders shall
Support programs include: include:
 Preferential treatment in government
 Provision of hybrid financing to social
procurement including coverage of
enterprises and their re- source
their performance bonds;
institutions: a combination of grants for
 Tax exemptions and tax breaks; and
capacity devel- opment and accessible
 Cash incentives equivalent to at least
non-collateralized loans guaranteed by
25% of the minimum wage for social
a pool of funds set up for such purpose;
enterprises employing persons with
 Setting up a Social Enterprise Recovery
disability.
and Rehabilitation Fund to assist social
enterpises affected by calamities and Developing Platforms for Cooperation
pandemics; •Setting up of a
A study on social enterprises in agricultural 1. promoted appropriate technology and
value chains in South- east Asia was pursued by community-based in- novations,
ISEA from 2015-2017 to understand the critical
elements that social enterprise-led 2. progressively positioned small producers to
interventions contribute toward transforming reap a more sub- stantive share of value
the lives of small-scale producers in such chains, created over time,
especially women (Dacanay, 2019). Value chains 3. proactively built their resilience to disasters,
are vertical networks of economic actors that
buy and sell from each other as they perform 4. promoted their stewardship over the natural
various functions to produce products or resource base sustaining their livelihoods,
services and provide or de- liver them to end
5. paved the way for the empowerment of
markets. Social enterprises enable small
small-scale producers, 6. provided a
producers in agricultural value chains to
combination of transactional and transforma-
increase their productivity and incomes as well
tional services,
as take over functions and enhance their
positions in these value chains. These small 7. invested in value chain development
producers, both women and men, are orga- practices that enhanced women's participation
nized and enabled in the process to become not and empowerment, and
only stakeholders in value chains and markets
but also change agents in their own com- 8. produced measurable outcomes of
munities and sectors. transformation at the level of women, small
producers, households, communities, value
chains, and subsectors. (Dacanay, 2019)
Eight best practices were chosen as case studies
from a rapid appraisal of significant practices of
social enterprises that have had impact on These benchmarks developed and
small-scale producers across four Southeast operationalized into scorecards by ISEA can
Asian countries, including the Philippines. A serve to unite multi-stakeholder cooperation
cross-case analysis then re- sulted in a set of anchored on supporting partnerships with
Benchmarks for Transformational Partnerships social enterprises as enablers of the poor,
and Women's Economic Empowerment in especially in agricultural value chains where
Agricultural Value Chains (Dacanay, 2019). many of the poorest are situated. Such
platforms for cooperation that support the
As demonstrated by these eight cases, scaling up of social enterprises as vehicles for
agricultural value chain interventions showed a poverty reduction are important
greater depth of impact and a higher level of complementary processes to the creation of
sustainability when they engaged a critical mass policies and political environments that enable
of small-scale pro- ducers in strategic the growth and development of social
transformational partnerships that involved enterprises.
social enterprises playing key roles. These
partnerships exhibited eight ele- ments, Social Enterprises as Key Actors in Achieving
namely, they the 2030 Agenda for Sustainable Development
The SEPPS model of social enterprise is Nations, 2015). Policy makers may also use the
significant as a response to poverty and benchmarks as guideposts for identifying and
inequality amidst economic growth in the developing policy interventions that would
Philippines. Through a combination of promote inclusive and sustainable agricultural
transactional, transformational, and social value chain development in the Philippines.
inclusion services, these organizations provide
the poor with access to social and economic Through such platforms, social
services as well as decent jobs and livelihoods. entrepreneurship could serve as a framework
SEPPS at their best enable the poor to move out for innovative public-private-people
of income pover- ty and capability deprivation partnerships an- chored on scaling up the
and become key actors in the econo- my. These outreach and impact of SEs as well as for
organizations are in a good position, therefore, replicating successful models that have
to become major partners of governments, effectively provided sustain- able livelihoods
corporations, civil society, and social and quality social services for, along with
movements in progressing toward the transform- ing the lives of, the poor and
ambitious targets of the U.N. General marginalized in the country. To aid in building
Assembly's Agenda for Sustainable these platforms, it is proposed that the
Development, goals which the latter committed Philippine govern- ment put in place dedicated
to achieve by 2030. policies and programs that support social
enterprises that have the poor as stakeholders
In this context, therefore, it is proposed that as well as give priority to the passing of the
social entrepre- neurship be considered as a stakeholders' version of the PRESENT Bill.
major platform for innovation and multi-
stakeholder collaboration to achieve what is Indeed, while the government had announced
embodied in the 2030 Agenda for Sustainable through the Office of the Cabinet Secretary that
Development. An example of this would be the it was determined to improve the qual- ity of
adoption and promotion of the Benchmarks for life of Filipinos, particularly by reducing poverty
Trans- formational Partnerships and Women's and hunger in the country in the coming years
Economic Empowerment for the benefit of as part of its commitment to achieve the SDGS
stakeholders in agricultural value chains. (Kabiling, 2019, p. 4), no clear strategy was
Practitioners and support institutions in outlined on how this would be done. It is
agricultural value chains that adhere to these proposed, then, that a substantive por- tion of
benchmarks could contribute directly to many Official Development Assistance be allocated
interrelated Sus- tainable Development Goals toward support- ing a National Poverty
(SDGs) which include, among others, the ending Reduction through Social Entrepreneurship
of poverty and hunger, reduced inequalities, Program that would mainstream the value
decent work and inclusive economic growth, chain approach envisioned in the PRESENT Bill
inclusive and sustainable industrial- ization and and as exemplified by the agricultural value
innovation, sustainable consumption and chain interventions that inspired the ISEA
production as well as sustainable communities, benchmarks. Such a pro- gram, which would
women's economic empowerment, and focus on providing sustainable livelihoods to the
partnerships to achieve the SDGs (United poor, could become a centerpiece initiative of
the government in its drive to end poverty and
achieve zero hunger by 2030.

If resources comparable to what the previous

administration al- located for the Conditional
Cash Transfer (CCT) scheme were made
available to social entrepreneurship as a
strategy to reduce poverty and achieve zero
hunger, there is a chance it could become a
game changer toward achieving the 2030
Agenda for Sustainable Development,