What are the business models used by social entrepreneurs and how do they differ from traditional business startups? De Cuyper, together with Bart Clarysse (ETH Zurich) and the late Mike Wright (Imperial College Business School, UK), recently  published an article on this topic in the Strategic Entrepreneurship Journal. Their research was also the focus of a feature article published on the Schulze School of Entrepreneurship website.

Importance of sustainability and CSR

Even though terms like ‘social enterprise’ and ‘social entrepreneurship’ have become popular, the unique business models used by these organisations aren't widely known. Why is it important to identify the strategies used by social entrepreneurs? Because issues such as sustainability, social responsibility, and alignment with the Sustainable Development Goals (SDGs) are increasingly becoming a vital part of the business landscape.

Business model lens

The researchers found significant distinctions between a ‘social business model’ and the traditional business models found in conventional entrepreneurship. They also saw major differences when it came to the type of social business model used by social startups.  ‘Instead of applying a one-size-fits-all strategy, understanding the diverse approaches within social enterprises can lead to more effective decision-making’, says De Cuyper. Through their analysis of social startups, the researchers defined 4 social business models:

• Social Stimulators
• Social Providers
• Social Producers
• Social Intermediaries.

Each of these models offer specific opportunities and challenges for the financial sustainability of the social enterprise. Entrepreneurs could choose 1 model that best suits their goals and mission. This makes it possible for them to create both social and financial. ‘The models we defined help entrepreneurs better understand and plan for how they can create positive impact for the environment or for society. The type of social enterprise they are leaning towards has important implications for their cost structure, revenue structure, and how they set up their organisation’, explains De Cuyper.

Future research

De Cuyper believes that the team’s findings provide important building blocks for further research on this topic. De Cuyper: ‘Using a business model lens to look at social ventures is a step toward a better strategic understanding of the micro-foundations behind social ventures and social entrepreneurship’.