How Entrepreneurs Can Successfully Address Social Challenges
Transition from traditional practices to the contemporary business environment involves adapting to changes
To address today’s global challenges, entrepreneurs are vital. Entrepreneurship is seen as a solution to various social challenges, including those in agriculture, public health, housing, sustainability, public education, and income generation. The entrepreneurial ecosystem –and particularly the role of social entrepreneurs— is key to create sustainable social value. To this end, entrepreneurs need to strengthen their organizational capabilities and competencies, and integrate adaptive marketing strategies, to achieve growth and business success.
My new book, Rebuilding Entrepreneurship at the Grassroots (Palgrave MacMillan, 2024), explores the intersection between entrepreneurship and social challenges, marketing strategies, and behavioral dynamics, providing insights for both academic study and practical application in the business world. The book discusses future perspectives on promoting entrepreneurship to meet social challenges and reshaping the future through new entrepreneurial ventures, innovation, and technology.
Traditional vs. Modern Entrepreneurship
Entrepreneurship has evolved from traditional family-owned businesses to contemporary practices. Traditional entrepreneurship, often rooted in family legacies, is characterized by resistance to change, limited investment in innovation, and centralized decision-making, while modern entrepreneurial ventures prioritize innovation, technology adoption, and market responsiveness.
Family-run enterprises tend to focus on niche markets, exhibit risk-averse behavior, and face challenges in succession planning. However, they also demonstrate resilience during economic downturns and maintain strategic control over their operations. On the other hand, modern entrepreneurial firms leverage technology, crowdfunding, and market-driven strategies to enhance their competitiveness. They emphasize continuous learning, stakeholder engagement, and sustainability goals.
The shift from traditional family-centric entrepreneurship to contemporary, technology-driven practices, highlights the strategic imperatives for reshaping the future of micro and small enterprises. Innovation, marketing, and strategic alliances drive business growth, while disruptive technologies, frugal innovations, and reverse innovation are key in addressing social and economic challenges.
In today's competitive markets, micro, small, and medium enterprises (MSMEs) need to provide innovative high-value integrated solutions tailored to individual customer needs. These enterprises are already integrating service capabilities such as operations, consultancy, and finance to enhance customer value.
The challenges of managing growth
Business expansion drives growth, but entrepreneurs face challenges aligning growth trends with their desires. MSMEs are exploring opportunities for globalization and expansion through strategies like zero-based productivity, leveraging technology, and embracing global-local strategies.
The Marketing 4.0 era focuses on digitalization, e-commerce, and IoT in industrial marketing, improving buyer-seller relations. Firms face challenges in positioning new products, avoiding the innovator's dilemma [when it is difficult for the company to adopt new technologies], and sustaining market competition through innovation-driven strategies.
Integrating entrepreneurial strategies involves business modeling, standardizing products, implementing value-added activities, and forming strategic alliances. Future growth perspectives revolve around technology adoption, transformational leadership, inclusivity, and convergence between business factors.
In managing future growth perspectives, firms must consider PNS factors (Problem-Need-Solution), technology-market dynamics, competition-value creation, social challenges-profitability, and creativity-collective intelligence to optimize entrepreneurial performance and achieve competitive advantages.
Entrepreneurs should consider various aspects to manage growth:
- Frugal Innovation and Reverse Innovation: Entrepreneurs often adopt frugal innovations to address challenges at the bottom of the pyramid. Large companies may then commercialize these innovations for broader markets, a process known as reverse innovation.
- Client Relations and Marketing Strategies: Client-specific key account managers and technology-driven business-to-business marketing are crucial for client acquisition and retention. Digital client services and social networks facilitate experience sharing and collaboration.
- Capabilities and Competencies: Firms acquire skills from internal and external sources, including technology, innovation, and managerial competencies. Organizational competencies must align with strategic intent and adapt to changing market dynamics.
- Product Development and Marketing: Product design, pricing, distribution, and promotion are essential elements of marketing mix strategies. Co-creation with consumers and continuous improvement are emphasized to meet evolving consumer preferences.
- Business Scaling: Scaling a business involves reducing costs while increasing production and sales volume. Economies of scale are achieved through efficient production and optimization of product lines.
- Market Competition and Performance: Marketing strategies should focus on acquiring and retaining customers, maximizing customer lifetime value, and enhancing customer value. Positive psychodynamics, brand advocacy, and corporate image play crucial roles in driving consumer demand and loyalty.
- Business Proliferation and Risk Management: Diversifying business operations and expanding product portfolios are strategies for growth, but they also pose challenges such as disruptive innovation and market competition.
Understanding the core of social entrepreneurs
Social entrepreneurs are driven by factors such as social responsibility-led self-esteem, voluntary behavior, social leadership, and active involvement in social media. These factors contribute to their focus on improving social welfare through entrepreneurial endeavors.
Identifying and exploiting opportunities are essential for generating and implementing innovative social business ideas. Innovation, technology, and skills are driven by the problems, needs, and expected solutions within the social system. Social business models incorporate sustainability strategy and leadership, mission, communication and learning, social care and work life, and loyalty and identification. Proactive management of social sustainability involves participatory projects with key partners and stakeholders on cultural change and development initiatives.
Social entrepreneurs may use circular design thinking to learn on factors like acquiring knowledge on resources, recycling technology, and reusability of products from consumers’ perspectives. Companies engaged in circular economy applications usually invest in collective intelligence, prototyping, and feedback loops. The book also explores the concepts of reverse entrepreneurship, crowd-based entrepreneurship, and alternate business modeling.
The transition of entrepreneurship from traditional practices to the contemporary business environment involves adapting to changes in market dynamics, societal expectations, and technological advancements. Entrepreneurship drives convergence between the market, society, and embedded values, fostering mutual benefit and value creation.
Finally, the book underscores the importance of entrepreneurship in driving economic development and social progress in developing countries. It highlights the need for businesses to adapt to changing social values and engage with stakeholders effectively to achieve sustainable success in today's dynamic business environment.
The author is professor of Marketing, Management, Innovation and Entrepreneurship at EGADE Business School.
