The dynamism of entrepreneurship

SUITS THE C-SUITE By Antonette C. Tionko

Business World (10/12/2015 – p.S1/4)

In the past dozen years that the SGV Foundation has been running the Entrepreneur Of The Year Philippines program, it has acknowledged nearly 200 individuals who have contributed positively to the country’s economy and, in effect, to nation-building. When the program was launched in 2003, a basic question we had to grapple with was: what is an entrepreneur? It may sound simple and require an equally simple answer but, in our experience, that is not necessarily the case. What we have learned is that entrepreneurship is very dynamic and diverse; and that an entrepreneur cannot be stereotyped.

Take for example that question of what is an entrepreneur. A textbook definition might describe an entrepreneur as an individual who runs a business and assumes all the risks and rewards of that business. Entrepreneurs are generally seen as business leaders and innovators in that they come up with new ideas.

Early on, one of the perceptions that we had to break was the persistent notion (at least in the Philippine context) that entrepreneurs are those engaged in the “buy and sell” business or those who run “mom and pop” stores. While a good number of successful enterprises trace their origins to such humble beginnings, a great majority of entrepreneurs have transcended those labels.

In fact, since entrepreneurship is a multi-faceted discipline, we have had to provide more inclusive definitions to help individuals and the public at large better understand the dynamics of entrepreneurship. For example, the Entrepreneur Of The Year Philippines program considers the following to be entrepreneurs:

· Traditionally, the entrepreneur is the Chief Executive Officer (CEO) and original founder of an organization.
· A CEO who comes on board to join an existing business can also be considered an entrepreneur.
· In certain cases, the CEO or President of a subsidiary may qualify as an entrepreneur.
· Entrepreneurs can also be multi-generational — when the business is passed from generation to generation — but the new leadership must exhibit their own form of risk and “make their mark” on the family business.

Whether the entrepreneur is the original founder or a non-founding CEO, these individuals find creative, venturesome ways to acquire capital resources, build their team, innovate to achieve their goals and grow their business. They are leaders and visionaries responsible for organizing, managing and assuming the “educated” risks of a business.

Besides helping redefine entrepreneurship, we have had the unique opportunity of witnessing the evolution of certain entrepreneurial activities. One such phenomenon is what is now called social entrepreneurship.

At the start of our program, we had established that entrepreneurs have a vital role to play in society. Some entrepreneurs take this role to a higher level by making his or her business an integral part of the community in which it operates. We purposely included an award category known then as the “Socially Responsible Entrepreneur.”

Socially responsible entrepreneurs use their private sector skills and creativity to help their communities overcome social and environmental problems. They manage profit-oriented businesses that have created products with a social benefit, with social responsibility being practiced in all aspects of their business operations. The award was not intended to recognize the largest or most visible charitable contributors; rather, it was intended to celebrate individuals with entrepreneurial efforts to give back to their communities.

For the first two years, the winners of this category award were entrepreneurs whose businesses had very strong corporate social responsibility (CSR) programs that were, in most cases, closely aligned with their main line of business. However, in 2005, we were presented with an opportunity to collaborate with the Schwab Foundation for Social Entrepreneurship which brought about a more focused description of social entrepreneurship.

As early as 10 years ago, we had already adopted the following definition of social entrepreneurship:

“Social entrepreneurship is about applying practical, innovative and market-oriented approaches to benefit the marginalized and the poor. A social entrepreneur is one who has created and leads an organization, whether for-profit or non-profit, that is aimed at catalyzing large scale and systemic social change through the introduction of new ideas, methodologies and changes in attitude.

Social entrepreneurs create innovative, hybrid organizations that look like businesses — they may be set up as for-profit organizations — but their bottom line is social value creation.

Social entrepreneurs undertake both public and private sector functions simultaneously. On the one hand, they work with those populations that governments have been unable to reach effectively with basic public goods and services. On the other, they address market failures by providing access to private goods and services where business does not operate — because the risks are too great and the financial rewards too few. With little market rewards or assistance, social entrepreneurs are reshaping the architecture for building sustainable and peaceful societies.”

Social entrepreneurship is a term that captures a unique approach to economic and social problems. It is an approach that cuts across sectors and disciplines. It is grounded in certain values and processes that are common to each social entrepreneur, independent of whether his or her area of focus has been education, health, welfare reform, human rights, workers’ rights, environment, economic development, agriculture, and others.

When we introduced the Social Entrepreneur Award category, there was much interest and we received numerous nominations from entrepreneurs who may have seen themselves as such. However, in many cases, they did not quite fit the bill. We need to remind interested nominees what social entrepreneurship is not:

· It is not another word for charity or philanthropy.
· It is not about advocacy for social causes alone. It must provide practical alternatives to eliminate the harmful practice.
· It is not synonymous with corporate social responsibility.
· It is not another word for a nonprofit development organization.

Today, we have seen the rise and recognition of social entrepreneurs — many of them young entrepreneurs driven to spur change through a business that responds to a social need.

Looking back, in the 12 years the Entrepreneur Of The Year Philippines program has honored our outstanding Filipino entrepreneurs, we have had to adapt to the changes in both business and society. And while we have seen the dynamism of entrepreneurship, there are certain truths that remain the same — the passion, drive and commitment of entrepreneurs that inspire others and that help create a much better world for all.

Antonette C. Tionko is a lawyer and tax principal of SGV & Co. and Program Director of the Entrepreneur Of The Year Philippines.