Classifying socially oriented entrepreneurial activity is a challenging task. Science has so far come to a result that is not really satisfactory yet. We have therefore developed a working model that uses three central differentiation categories:
- Does a company / organization / project achieve social development, particularly through its core processes? - Social development?
- Is the primary challenge of the entrepreneurial activity a social problem? - Social intention?
- Where do the money and liquid funds come from? - Cash flow?
First, we ask ourselves whether a company, an organization or a project achieves social goals in relation to a problem in relation to its core processes. It should be borne in mind that both social goals and those that can be identified as a problem are very culturally bound and dependent on social standards.
If we see that a company tends not to bring anything to the society or improve it, then we ask a sub-question. Namely, whether the company implements CSR activities (Corporate Social Responsibility) and sees itself in the sense of corporate citizenship as an actor in a social environment and is socially committed, e.g. about donations or other activities that show a sense of responsibility. Nowadays hardly any company can really afford not to rely on the triple bottom line of "People, Planet, Profit". Companies that are socially committed, i.e. we call CSR activities “Responsible Businesses”. Organizations that do not do this at all are referred to as "Conventional Business", which we perceive as a species that is becoming smaller in number.
The next question we ask is whether the primary goal or the primary intention of doing business is a social concern. So is there a “societal” intention that essentially defines entrepreneurial activity? This can be assessed, for example, via mission statements, overall concepts, communication channels, etc., which express why the entrepreneur, the management team or the managers are "economically" committed. A good example is the Styrian chocolatier Josef Zotter. His his primary intention is to produce the best chocolates in the world. As a "by-product" - to be able to guarantee the best quality - he builds "sustainable" and fair relationships in the supply chain. We refer to entrepreneurs / organizations of this type as "Social Impact Businesses".
If a company / organization has primary “social” intentions, we ask the question about the origin of the cash flow, what is the source of necessary revenues . We differentiate between three size categories:
- In size category 1, we see companies / organizations that generate between 0% and 20% of their revenue via the market. We differentiate between non-profit organizations (NPOs), civil society organizations (CSOs) or non-governmental organizations (NGOs). They earn between 80% and 100% of their income in return for services or products for the common good from the public sector or private philanthropists.
Examples of NPOs: Caritas, MSF, Clinic clowns
Examples of CSOs: volunteer fire brigade, rural youth association
Examples of NGOs: attac, Amnesty International, WWF
- In size category 2 we define "social hybrids"organizations / companies with sales revenue between 20% and 80%. They generally use the market principle in a very balanced manner, as well as the commitment of philanthropic and public actors.
Styrian examples would be Bicycle, Atempo, Heidenspass
- Size category 3 comprises "social business"with 80% to 100% of sales via market structures. They can exist relatively independently of the public sector and legitimize their existence through the principle of supply and demand. Examples would include Compuritas, Weltläden, , Grameen Bank, Bonergie