Challenges of social entrepreneurship and the role of the government
in addressing or shaping these challenges, a case study in
Johannesburg
Micky Westerbeek
Student number 11120207 Micky.westerbeek@live.nl
Master thesis - International Development Studies
Graduate School of Social Science, University of Amsterdam Supervisor: Dr. H.J.L.M (Hebe) Verrest
Second reader: Dr. N.P.C (Niels) Beerepoot Date: December 2, 2016
Acknowledgments
This thesis would not have been possible without the support of many people. A much appreciated thank you to Dr. Hebe Verrest for her valuable guidance throughout the process of writing this thesis, and her continuous enthusiasm and feedback. To my second reader, Dr. Niels Beerepoot, who was able to be involved in very short notice, thank you for making the time. Furthermore, I want to thank my family and friends for their endless support in helping me along the thesis path. Last but by no means least; I thank all the participants in this research who made the time and effort to share their stories with me. I feel very lucky I got to meet all these incredible inspiring people. They not only contributed to the results of this thesis, but their stories inspired and encouraged me to get involved with social entrepreneurship myself.
Table of content
I Abstract 6
II List of abbreviations and acronyms 7
III List of tables and figures 8
Chapter 1 - Introduction 9
1.1 The rise of social entrepreneurship in South Africa 10
1.2 Relevance 11
1.3 Structure 12
Chapter 2 - Theoretical framework 13
2.1 Social entrepreneurship 13
2.2 Forms of social entrepreneurship 14 2.3 Social entrepreneurship versus commercial entrepreneurship 16 2.4 Government support for social entrepreneurship 19
2.5 Conclusion 21
Chapter 3 - Johannesburg, a post-apartheid city 23
3.1 The aftermath of apartheid 23
3.2 Inequality 24
3.2.1 Income 25
3.2.2 Employment 25
3.2.3 Access to basic facilities 25
3.3 Institutional framework 26
3.3.1 New Growth Path 27
3.3.2 Broad-Based Black Economic Empowerment 27
3.4 Conclusion 29
Chapter 4 – Methodology 30
4.1 Epistemology and ontology 30
4.2 Operationalization 30
4.3 Case study design 31
4.4.1 Semi-structured interviews 32
4.4.2 Direct observations 33
4.4.3 Secondary data 34
4.4.4 Sampling 34
4.5 Data analysis 35
4.6 Ethical considerations and quality reflection 36
Chapter 5 - Social entrepreneurship in Johannesburg 39 5.1 Forms of social entrepreneurship 39
5.1.1 For-profit entities 40 5.1.2 Nonprofit entities 42 5.1.3 Hybrid entities 44 5.2 Individual factors 46 5.2.1 Drivers 46 5.2.2 Social mission 47 5.2.3 Opportunity 48 5.4 Contextual factors 49 5.4.1 Macroeconomy 49
5.4.2 Tax and regulatory structure 50
5.4.3 Sociopolitical environment 51
5.5 Conclusion 51
Chapter 6 - Challenges for social entrepreneurship 53
6.1 Context 53
6.1.1 Capabilities and bureaucracy 53
6.1.2 Access 55
6.2 Capital 56
6.2.1 Financial capital 56
6.2.2 Human capital 58
6.3 Growth versus balance 59
6.4 Conclusion 60
Chapter 7 - Policy framework of social entrepreneurship 63 7.1 The New Growth Path 63
7.2 Broad-Based Black Economic Empowerment 65
7.3 The role of the government 67
7.4 Conclusion 68 Chapter 8 - Conclusion 71 8.1 Conclusion 71 8.2 Discussion 73 Reference list 74 Appendix 78
I Abstract
Social entrepreneurship is a multi-interpretable concept that occurs in the for-profit, nonprofit, and hybrid sectors. Countries worldwide have established legislation to promote and support the development of social entrepreneurship. However, attempts to unpack the relationship between effective policy and these different forms of social entrepreneurship have been rare. This research examines challenges of different forms of social entrepreneurship and the role of the government in addressing or shaping these challenge in the context of Johannesburg. Drawing upon qualitative case study research, interviewees were held with social entrepreneurs and government experts to understand the individual and contextual influences on how social entrepreneurship is shaped, what the challenges are, and how policies reduce or enlarge these challenges. The main findings of this research show that challenges of nonprofit organizations are mostly enlarged by government policies since the South African government mainly focuses on for-profit organizations. Therefore, this research argues social entrepreneurship should have clearer boundaries to allow the government to support social entrepreneurship more effectively. This research contributes to the wider debate of the role of the government in supporting social entrepreneurship, as it provides insight for policy makers to consider which type of social entrepreneurship they want to address, which type most needs their support, and which type of support is needed.
II List of abbreviations and acronyms
ANC African National CongressB-BBEE Broad-Based Black Economic Empowerment
BEE Black Economic Empowerment
CIC Community Interest Company
CSR Corporate Social Responsibility DTI Department of Trade and Industry GEM Global Entrepreneurship Monitor IDC Industrial Development Company NGO Non-governmental organization
NGP New Growth Path
NPO Nonprofit organization
NYDA National Youth Development Agency PBA Public Benefit Activities
PBO Public Benefit Organization
SE Social entrepreneurship
SEDA Small Enterprise Development Agency SEFA Small Enterprise Finance Agency SME Small and Medium Enterprise SSE Social and Solidarity Economy SVP Social Value Proposition
TIPS Trade and Industrial Policy Strategies WISE Work integration social enterprise
IIII List of Figures and tables
Figure 1 Social entrepreneurship framework of Austin et al. (2006) 19
Figure 2 Conceptual scheme 22
Figure 3 Map of Johannesburg 24
Figure 4 Conceptual scheme 2.0 74
Table 1 Spectrum of social entrepreneurship according to Young and Lecy (2014) 15
Table 2 B-BBEE rating system 28
1. Introduction
Over the last decade, social entrepreneurship has become a widely recognized phenomenon. Through the use of efficiency and boldness of the private sector, as well as the “do-good” of nonprofit organizational activities, social entrepreneurship promises to reap the benefits from two worlds and, as such, is able to contribute to urgent development questions. Social entrepreneurship’s growing appeal appears to be particularly strong among a group of socially aware people who have become more skeptical about the ability of governments and businesses to address complex “wicked” sustainable development problems, such as inequality and climate change (Dacin et al., 2011). Furthermore, the global trend of social entrepreneurship is reflected in the establishment of a number of influential support organizations, such as the Ashoka Foundation and the Schwab Foundation, for social entrepreneurs; the establishment of teaching programs at universities, including Harvard and Oxford, for future social entrepreneurs; and policy recognition in many countries (Dacin et al., 2011; Hoogendoorn et al., 2010).
Social entrepreneurship has become a buzzword, yet scholars have not agreed on a universal and specific definition (Hoogendoorn et al., 2010). Not surprisingly, many studies focus on defining fundamental characteristics of social entrepreneurship (Mair & Martí, 2006; Peredo & McLean, 2006). Some scholars define social entrepreneurship as adding business principles and market-based skills to the nonprofit sphere (Dees, 1998). Others focus on creating social change and define social entrepreneurship as an intersectional domain that occurs across the government, private, and nonprofit sectors (Austin et al., 2006; Mair & Martí, 2006; Young & Lecy, 2014).
Within these different focuses, much scholarship focuses on social entrepreneurs, the “who” of social entrepreneurship, whereby the characteristics and capacities of the individual are emphasized as the key to the social enterprise’s success (Kickul & Lyons, 2012). Both commercial and social entrepreneurs are driven by a passion and use creativity and innovation to create value. However, while commercial entrepreneurs mainly create financial value, social entrepreneurs are driven by creating social value. Hereby, the individual is seen as the change agent in creating innovative solutions to societal problems (Hoogendoorn et al., 2010). Thus, social entrepreneurship can refer to different types of enterprises, ranging from for-profit to nonprofit. However, limited research has been conducted on the challenges of social entrepreneurship and the differences within the different forms.
In the last decade, countries worldwide have created policies to support social entrepreneurship. In the United States, an Office of Social Innovation and Civic Participation has been set up within the White House (Teasdale, 2011). England has the most developed government support structure for social entrepreneurship in the world and is the first country that created a legal
entity for social enterprises (Teasdale, 2011). Other countries, such as Belgium and Italy, followed with the creation of legal forms. However, attempts to unpack the relationship between effective policy and these different forms of social entrepreneurship have been rare.
1.1 The rise of social entrepreneurship in South Africa
A country where social entrepreneurship has also arrived is South Africa. Social entrepreneurship arrived when the U.S. Ashoka Foundation established offices in the country in 1991. This social enterprise provides financial help to social entrepreneurs to succeed in implementing their social ideas (www.ashoka.org). Before 1991, there were many NGOs, nonprofits and co-operatives participating in the social enterprise field, yet this was not identified as social entrepreneurial activity. With the establishment of government bodies, such as the Small Enterprise Development Agency (SEDA) and the Industrial Development Corporation (IDC), the South African government attempts to better understand and support social entrepreneurship development.
According to Urban (2008), the emergence of social entrepreneurship in South Africa can be explained by two reasons. First, traditional government initiatives do not have the financial and human capacity to address all social needs. As governments attempt to reduce dependency on grants, the survival of many non-governmental organizations is at stake (Urban, 2008). Hence, NGOs need to reduce their dependency on social welfare by creating their own revenues. Secondly, many government and philanthropic organizations have failed in addressing social problems in an efficient, effective, and responsive way. Policymakers particularly have limited guidance and recognize that “the invisible hand frequently fails to assert itself in the most socially beneficial outcomes” (Urban, 2008, p. 347). Thus, the rise of social entrepreneurship is mainly explained by the lack of governmental financial recourses to support NGOs and to address social problems in an efficient and effective way.
In South Africa, considerable legislation can be identified as important in informing social enterprises, their activities, and the wider social economy. The country has developed legislation that both directly and indirectly addresses social entrepreneurship. However, in South Africa as elsewhere, vagueness remains as to how the government can be supportive to social entrepreneurship, and if policies addresses or shapes challenges of different forms of social entrepreneurship.
The disagreement about the boundaries of social entrepreneurship and the differences between forms of social entrepreneurship leads to confusion within the academic debate about how policies should support social entrepreneurship. As social entrepreneurship occurs in both the private and nonprofit sector, how can policies be effective in supporting these different forms of enterprises? Since many countries around the world created policies that promise to support social entrepreneurship, what kind of social entrepreneurship is being addressed by these policies?
Moreover, despite the growing academic and political interest in social entrepreneurship, limited research has been conducted on how social entrepreneurship is shaped in a Global South environment, and research mainly draws upon understandings, experiences, and data from the western world (Littlewood & Holt, 2015). Assuming social entrepreneurship is a promising means of addressing social problems, it is important to examine it in a Global South context. Therefore, there is a need for a comprehensive understanding of how different forms of social entrepreneurship can be supported by policies and how individual and contextual factors influence how social entrepreneurship is shaped.
Drawing upon case study research, this research seeks an understanding of the influence of individual, contextual, and policy factors on challenges of social entrepreneurship in Johannesburg, a case where social entrepreneurship occurs and where legislation is in place. Until today, research largely has been focused on the evaluation of the Broad-Based Black Economic Empowerment (B-BBEE) and how it affects social entrepreneurship since the B-BBEE framework has a major influence on the CSR strategy of businesses (Littlewood & Holt, 2015). However, more recent legislation, the New Growth Path (NGP), which promises to support the Social Solidarity Economy (SSE), including social enterprises, and thus directly addresses social entrepreneurship, has not yet been examined. Furthermore, polices and institutional support mechanisms are divided in South Africa, particularly between for-profit and nonprofit ventures, but also between cooperatives and other forms of social entrepreneurship (Steinman & Van Rooij, 2012). Therefore, Steinman and van Rooij (2012) argued for a new legal title for social enterprises that could allow for this business form to be recognized and make scaling up easier. However, a clear definition of which forms of social entrepreneurship would fit under this legal entity is lacking. In addition, little research has been conducted on the relationship between different forms of social entrepreneurship and the legislations that are in place.
In sum, taking into account individual and contextual factors in social entrepreneurship research can help in understanding the different forms of social enterprises and their challenges, as well as how policies should address these challenges in a Global South context. The central question of this research is the following:
What kind of challenges do different forms of social entrepreneurship experience, and what is the role of the government in addressing or shaping these challenges?
The central question is divided in four sub-questions, which are the following:
1. How do individual and societal factors shape different types of social entrepreneurship in Johannesburg?
2. What are the challenges for different types of social entrepreneurship?
3. How is the policy framework around social entrepreneurship designed for different types of social entrepreneurship?
4. How could the government meet the needs of social entrepreneurship in the eyes of social entrepreneurs?
Although these questions are focused on Johannesburg, this research can contribute to the general debate about what social entrepreneurship means in an emergent economy and whether there is a role for the government in supporting it.
1.3. Structure
This research is structured in the following way. In Chapter 2, the academic debates among social entrepreneurship are discussed, whereby the forms of social entrepreneurship, the difference between commercial and social entrepreneurship, and the role of the government in supporting social entrepreneurship are explained. In Chapter 3, a historical background, current issues, and relevant policies are described to gain a better understanding of the context of Johannesburg. In Chapter 4, the methodology and research design is discussed so the reader knows what kind of choices have been made in the process of data collection and data analysis. In the following three chapters, the empirical findings are presented: Chapter 5 attempts to provide an overview of how social entrepreneurship is shaped in Johannesburg, Chapter 6 discusses the challenges of social entrepreneurs within the different forms of social entrepreneurship, and Chapter 7 examines the relevant policies and how they relate to the needs of social entrepreneurship. Finally, Chapter 8 attempts to answer the central question and provides the limitations of this research and suggestions for further research.
2. Theoretical Framework
This chapter discusses the theoretical debates around social entrepreneurship and the government support of social entrepreneurship. First, the chapter elaborates on the debate among the definitions of social entrepreneurship. Secondly, it discusses the different forms of social entrepreneurship. Thirdly, it addresses the differences between commercial entrepreneurship and social entrepreneurship. Finally, it discusses the literature on government support of social entrepreneurship.
2.1 Social entrepreneurship
The founder of the social enterprise Ashoka, Bill Drayton, is widely considered to have founded the term “social entrepreneurship” in the 1980s (Kickul & Lyons, 2012). However, J. Gregory Dees was the first scholar who recognized social entrepreneurship as a profession and a field of study in the late 1990s (Kickul & Lyons, 2012). Thus, while social entrepreneurial activities have occurred for a long time, research on social entrepreneurship is quite new. Because of this lack of theoretical background on social entrepreneurship, and because of the multi-interpretability of it, the definition has not been agreed on among scholars or policy makers and often varies per country. One stream in the literature focuses on the social entrepreneurs themselves. According to this stream, the social entrepreneur plays a crucial role in the process of creating social value. The most cited definition of social entrepreneurship comes from Dees (as cited in Kickul & Lyons, 2012) and states the following:
Social entrepreneurs play the role of change agents in the social sector by: • Adopting a mission to create and sustain social value (not just private value), • Recognizing and relentlessly pursuing new opportunities to serve that mission, • Engaging in a process of continuous innovation, adaptation, and learning, • Acting boldly without being limited by resources currently in hand and,
• Exhibiting a heightened sense of accountability to the constituencies served and for the outcomes created. (p. 16).
Other studies identified the required characteristics and capabilities of a social entrepreneur. They stated social entrepreneurs bring leadership and resources to communities (Korosec & Berman, 2006); are proactive and take risks (Urban, 2008), are able to use their creativity to innovate (Martin & Osberg, 2007), have a strong ethical fiber (Mair & Martí, 2006), and have a committed vision to persist until they have transformed an entire system. Thus, this stream focuses on the "who" of
entrepreneurship and how characteristics and capabilities contribute to social entrepreneurship. However, it neglects the space of societal factors that can influence the process of social entrepreneurship, the “how” of entrepreneurship. More importantly, the focus on the individual limits the examination of what the challenges are between different forms of social entrepreneurship and how the government reduces or enlarges these challenges.
2.2 Forms of social entrepreneurship
Another stream focuses on which enterprises are part of social entrepreneurship and thus focuses on the forms of social entrepreneurship, which is in line with the focus of this research. Some scholars claim that social entrepreneurship solely refers to nonprofit organizations (NPOs) that may be in search of alternative funding strategies or management schemes to create social value (Mair & Martí, 2006). These NPOs use an entrepreneurial mindset to change the status quo of the nonprofit sphere and incorporate innovation and business tools to achieve financial sustainability and create long-term change (Dees, 1998). Other scholars argue that social entrepreneurship exclusively operates in the for-profit sphere, whereby the outcome (the “what” of entrepreneurship) refers to a social enterprise that seek profit, while it incorporates a social mission at the core of the business (Driver, 2012).
Young and Lecy (2014) argued that the balance between creating social value and market success are different among organizational logics, legal forms, and overall objectives. According to them, the process of the social value creating the nature of the social entrepreneurial activities is found across the nonprofit, business, and government sectors and occurs in six different forms (an overview is displayed in Table 1) (Young & Lecy, 2014). The first type refers to for-profit business corporations that strategically use social goals, such as Corporate Social Responsibility (CSR), Environmental Sustainability, and Corporate Philanthropy. Social goals are used for the improvement of public relations, to distinguish the cooperation in the market, or to increase the motivations of the corporations’ employees. In this way, the business corporation tends to maximize long-term profit.
Secondly, social businesses, such as B corporations, tend to balance between profit-seeking and their social mission. B corporations are “for-profit companies certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency” (according to their website: www.bcorporations.net). The third type are the social cooperatives. Social cooperatives “explicitly includes some dimension of general public benefit in their missions in addition to benefits to their members” (Young & Lecy, 2014, p. 1320). The cooperative is an organization that operates for the benefit of those using its services, whereby profits are distributed
among the members of the cooperative. This form is mainly popular in Europe, especially in Italy, where the focus is on the provision of basic services or on reintegration by offering employment to people distant from the labor market. In South Africa, the cooperative model is quite common as well and is used in industries such as healthcare, agriculture, and retail.
The fourth type is the commercial NPOs, which are established to address some explicit social mission. Commercial goals are instrumental to the success of these organizations (Young & Lecy, 2014). The distinction between commercial NPOs and “normal” NPOs is that the former seeks other sources of income than government support or philanthropy and, instead of providing aid, tries to create innovative solutions to address the social need. In other words, commercial NPOs seek ways to be financially sustainable and to create long-term social impact. A commercial NPO’s core objective is to meet its social purpose, and it uses a financially sustainable business model to generate sufficient income to exceed costs. Thus, a commercial NPO is often dependent on multiple revenue streams, such as the government, private sector, and market-based income, and seeks long-term social impact.
The fifth type, Public Private Partnerships (PPPs), are “contractual arrangement among for-profit, nonprofit and governmental entities designed to address some designated public purposes such as community development or the needs of a particular groups such as the homeless” (Young & Lecy, 2014, p. 1321). Each entity has its own goals and objectives: Profit-seeking by business partners, social purpose by nonprofit organizations, and public welfare by government bodies. However, a PPP as a whole is a fusion of the commercial and social goals of its entities in order to achieve its social mission. In Nigeria, for example, the health care system is a collaboration between NGOs, the government, and the private sector.
Finally, the last type of social enterprise is hybrid organizations, which are “new forms that internalize the features of other forms of social enterprise by explicitly combining organizational
Table 1. Spectrum of social entrepreneurship according to Young and Lecy (2014)
Types of social entrepreneurship Characteristics Examples
For-profit business corporation Social goals are strategically used to increase profit in the long- term.
CSR, Environmental Sustainability, Corporate Philanthropy
Social business Seek balance between profit-seeking and social values.
components with commercial versus social goals” (Young & Lecy, 2014, p. 1322), for example, a for-profit business owned by a nonfor-profit, in order to generate income, or for-for-profit businesses that control nonprofit subsidiaries. To conclude, although most social enterprises are hybrids of sorts since they mix market-oriented activities with social goals, the hybrids are distinct entities because “they mix corporate forms either through subsidiary arrangements or through hybrid legal structures that build the double-bottom-line into the DNA of an organization” (Young& Lecy, 2014, p. 1322).
The spectrum of Young and Lecy (2014) allows me to recognize different organizational structures within social entrepreneurship and to identify which types are relevant in the context of Johannesburg. However, the spectrum solely focuses on the organizational structure and lacks information about the challenges each form encounters. What are the differences between the different forms in terms of their challenges? How does each form interact with the government? Most importantly, is the categorization relevant to the context of South Africa?
2.3 Social entrepreneurship versus commercial entrepreneurship
The term social entrepreneurship seems to raise the question what "normal" entrepreneurship is, the commercial entrepreneurship. What happens if the "social” is taken away from entrepreneurship? Are “commercial” entrepreneurs asocial, and how strict is this line between the two types of entrepreneurship? This section attempts to answer these questions. There are many similarities to be found between the two types of entrepreneurship. Martin and Osberg (2007) stated that both the social entrepreneur and the commercial entrepreneur are strongly motivated by the opportunities they identify, pursue that vision relentlessly, and have the willingness to bear the inherent risks. Furthermore, both types of entrepreneurships are often defined as a creative process
Social cooperative Tend to address the needs of the general public.
Cooperatives in industries such as healthcare and agriculture
Commercial nonprofit organization
Commercial goals are
instrumental for the success of the organization.
An organization dependent on various income revenues that wants to create long-term impact.
Public Private Partnership Contractual agreement among private, public, and third sectors. Fusion of sectors tend to address both economic goals and social goals
Health care system in Nigeria
Hybrid organization Combination of different organizational components that consist of both commercial and social factors.
A for-profit business owned by a nonprofit, in order to generate income
that pursues an opportunity to produce something new (Mair et al., 2006). Hereby, the production of something new is what makes it distinct from managerial activity (Mair et al., 2006).
Austin et al. (2006) developed a social entrepreneurship framework based on a comparison of a commercial entrepreneurship model, which consists of four components: The people, the context, the deal, and the opportunity (PCDO). They analyzed key similarities and differences between the two forms of entrepreneurship, according to the PCDO model, and developed a framework on how to approach the social entrepreneurship process more systematically and effectively (Austin et al., 2006). This social entrepreneurship framework consists of five criteria: Opportunity, context, people, capital, and the Social Value Proposition (SVP). These criteria are displayed in Figure 1.
Opportunity is defined as “the desire future state that is different from the present and the belief that the achievement of that state is possible” (Austin et al., 2006, p. 6). The distinction between the two types of entrepreneurship is that, for the latter, an opportunity must have a growing market size and the industry must be structurally attractive, whereas for social entrepreneurship, a social need or market failure is seen more as an opportunity than sufficient market size. Social entrepreneurship tries to create an innovative, sustainable solution for a societal problem. Hereby, the key challenge for social entrepreneurship is to resist the “powerful demand-pull for growth” and to have a long-term impact plan (Austin et al., 2006). In other words, social entrepreneurship tends to experience difficulties in finding the balance between growing as an organization, which is important to be financially sustainable, and focusing on creating social impact, which is the core principle of social entrepreneurship.
Context refers to the macroeconomy, the tax and regulatory structure and the sociopolitical environment (Austin et al., 2006). The two types of entrepreneurship distinguish themselves to their context in terms of how they respond to the context and the extent to which they are sensitive to it. Austin et al. (2006) argued the critical contextual factors correspond in many ways. However, the contextual influence on social entrepreneurship varies from commercial entrepreneurship on one point: the macroeconomy has less influence on the performance of social entrepreneurship than on commercial entrepreneurship. For instance, while commercial entrepreneurship would suffer during an economic crisis, social entrepreneurship could grow since social needs would intensify.
People, which refers to human capital, is often more difficult to mobilize for social entrepreneurship than commercial entrepreneurship. While both commercial entrepreneurship and social entrepreneurship want to recruit human talent for their ventures, they differ in terms of resource mobilization. Commercial entrepreneurship often has the financial resources to recruit talent, whereas social entrepreneurship often relies upon volunteers to serve key functions.
Capital refers to financial capital and is often more difficult for social entrepreneurship to mobilize as it has fewer financial institutions, instruments, and resources, and scare unrestricted funding. Conversely, commercial entrepreneurs have access to several financial institutions once viability is demonstrated. According to Austin et al. (2006), people and capital relate to each other as mobilizing human resources demands financial resources, which is one of the main challenges of social entrepreneurship. Therefore, social entrepreneurship takes a for-profit organizational form to increase its ability in generating revenue, allowing it to pay more competitive wages. Nevertheless, a for-profit organizational form could lose it focus because it then needs be accountable to its shareholders at the cost of social-value creation.
Finally, Social Value Proposition (SVP) refers to the nature and central role of the social mission in social entrepreneurship. While commercial entrepreneurship focuses on a value proposition that creates financial profit, social entrepreneurs aim for value in the form of large-scale, transformational benefits in society (Austin et al., 2006). This is widely recognized as the crucial distinction between commercial entrepreneurship and social entrepreneurship (Martin & Osberg, 2007). While commercial entrepreneurship reports its financial return to its shareholders, the major challenge for social entrepreneurship is reporting results because it is difficult to measure social impact. Therefore, Austin et al. (2006) argued social entrepreneurship needs to have a clear understanding of its theory of change.
To conclude, the distinction between social and commercial entrepreneurship is not dichotomous, but rather more conceptualized as a scale through which organizations or companies can score, ranging from purely social to purely economic (Austin et al., 2006). However, there can still be found elements of both at the extremes. Thus, a NPO still has to consider economic realities, while a for-profit company can create social value. Therefore, this research defines social entrepreneurship as an “innovative, social value creating activity that can occur within or across the nonprofit, business, or government sector” (Austin et al., 2006, p. 2).
Although the framework of Austin et al. (2006) examines the differences between social entrepreneurship and commercial entrepreneurship, little research has been conducted on the differences within social entrepreneurship, ranging from purely economic to purely social. The framework raises questions about what kinds of challenges each type of social entrepreneurship faces? What are the similarities and differences between these challenges, and should forms of social entrepreneurship be grouped according to their shared challenges? The framework allows me to analyze the six forms of social entrepreneurship of Young and Lecy (2014), whereby each form is examined in terms of challenges according to the five criteria.
Figure 1. Social entrepreneurship framework of Austin et al. (2006)
2.4 Government support for social entrepreneurship
For social entrepreneurship to be effective and create social value, it is of significant strategic interest for governments to promote it. However, little research has been conducted on the role of the government in social entrepreneurship and on how policies and legislation could address the needs of social entrepreneurs. Defourny and Nyssens (2010) provided an overview of the legislation across Europe among social entrepreneurship. They noted that countries have different forms of legislation, which address different types of social entrepreneurship (Defourny & Nyssens, 2010). In France, Spain, and Greece, legislation is designed for the co-operative types, while countries such as the UK, Italy, and Belgium focus on more open models of social enterprise rather than only on co-operatives. The Belgium government defines social entrepreneurship as a “company with a social purpose”, and the Italian law on social enterprise says it “crosses the boundaries of all legal forms and can be adopted by various types of organization” (Defourny & Nyssens, 2010, p. 235).
However, not every country in Europe has developed legislation, and most social enterprises across Europe are defined as commercial entrepreneurship. Therefore, social enterprises often adopt legislation meant for co-operatives or traditional business forms. According to Nysses and Defourny (2010) new legal forms mostly focus on “work integration social enterprises” (WISEs) because this is the most dominant type of social enterprise across Europe. This means that the main objectives of legislation are to help unskilled people, people distant from the labor market, or unemployed people who are at risk of permanent exclusion from the labor market. Therefore, social enterprises that
work with other social purposes than the principles of WISE could experience difficulties with receiving support from the government.
Korosec and Bernman (2006) conducted empirical research about municipal support for social entrepreneurship in the US and stated that municipal support is important because social entrepreneurs bring leadership and resources to communities. They argued that social entrepreneurship can be supported through raising awareness, helping social entrepreneurs to acquire resources, and coordinating efforts among social entrepreneurs and others in program implementation (Korosec & Berman, 2006). In addition, the report “Ambiguous Entrepreneurship,” from Stam et al. (2012), discusses the policy areas relevant in promoting and supporting ambiguous entrepreneurship. This report defines ambiguous entrepreneurship as an entrepreneur concerned with the entrepreneurial process and who develops a new enterprise with the main goal of creating as much value as possible through innovation and growth (Stam et al., 2012).
The report argues the importance of three policy areas crucial in promoting and stimulating entrepreneurship. First, policy around education is important as it should stimulate human talent and ambitions, which could improve skills and innovation of future entrepreneurs. Public investment in education is, therefore, needed. Furthermore, entrepreneurship policy should create an entrepreneurial friendly climate, which means the policy considers people’s preference in order to enhance their knowledge and skills. Additionally, the policy should improve access to finance and labor, and it should reduce the regulatory burden (Stam et al., 2012). Finally, industrial policy should address the reduction or removal of growth barriers. In this way, it will be easier to scale-up and to deal with competition.
The United Kingdom is one of the few countries in the world that has a legal entity for social enterprise, the Community Interest Company (CIC). An CIC analysis argued that although the policy is an attempt to meet the needs of social enterprise, it still faces challenges since “it does not connect with the emerging range of social impact measurement models – that represent an increasingly credible information channel concerning performance and accountability for social enterprises” (Nicholls, 2010, p. 408). Thus, although the UK has a legal entity for social enterprises, it still faces challenges in understanding the complexities of social entrepreneurship.
Although several countries worldwide have developed legislation promoting social entrepreneurship, an attempt to unpack the relationship between effective policy and these different forms of social entrepreneurship have been rare. Therefore, the first question is how government policies in practice support specific types of social entrepreneurship and hamper others. Secondly, how do non-specific policies affect these varied types of social entrepreneurship? This research addresses these questions for South Africa, where both general and specific policies are in
place.
2.5 Conclusion
In sum, literature on social entrepreneurship is defined along a spectrum wherein the for-profit sector, the nonfor-profit sector, and hybrid sector are included. Although different forms of social entrepreneurship exist, they have two characteristics in common:
• The underlying drive for social entrepreneurship to achieve social goals rather than profit-seeking to support personal or shareholder returns
• Innovation and a pragmatic response to problem solving.
This research, therefore, uses the definition of Austin et al. (2006), who defined social entrepreneurship as follows: “innovative, social value creating activity that can occur within or across the nonprofit, business, or government sectors” (p. 2). Although the framework of Austin et al. (2006) examines the differences between social entrepreneurship and commercial entrepreneurship, little research has been conducted on the differences within social entrepreneurship, ranging from purely economic to purely social. Therefore, this research examines the kinds of challenges each form of social entrepreneurship encounters, whereby individual and societal factors are taking into account. Furthermore, since research on unpacking the relationship between effective policy and these different forms of social entrepreneurship have been rare, this research addresses this question in the case of Johannesburg. An overview of the concepts and the relationships between them are provided in Figure 2.
3. Johannesburg, a post-apartheid city
This chapter describes Johannesburg, a city heavily shaped by the apartheid era, and discusses how social entrepreneurship is embedded in this post-apartheid context. First, the chapter provides a short historical background on the city and discusses the meaning of race as a social construction. Secondly, it elaborates on the different forms of inequality in South Africa. Thirdly, it provides an understanding of the rise of social entrepreneurship and the relevant policies examined by this research.
3.1 The aftermath of apartheid
Johannesburg was founded as a gold mine city by the Dutch colonists in 1886. After ten years, it had grown to approximately 10,000 residents, which made it one of the fastest growing cities in the world. Many migrants came to the city, searching for a job in the gold mines (Parnell & Robinson, 2006). By 1931, the population had reached 40,000, which then doubled during the Second World War, and grew to 1.8 million in 1995 (World Population Review, 2016). The rapid urbanization and apartheid national legislations have had a major influence on the urban policies of Johannesburg. During apartheid, the city was segregated by race, with the black population being forced to the outskirts of the city, next to the mines where they had to work. They were living in poor living conditions, with often no access to water, electricity, sanitation, and (good) education. The black population being neglected for decades has created a huge impact on today’s society in South Africa. During apartheid, South Africa became one of the most thoroughly racialized societies in the world (Posel, 2001).
Since the aftermath of apartheid still has a significant influence on daily life in Johannesburg, it is important to discuss the concept of race. Most scholars agree that race is a social construct and is not genetically defined (Gans, 2005; Lopez, 1994; Posel, 2001; Smedley & Smedley, 2005). In other words, race is defined by human interaction rather than natural differentiation. Lopez (1994) differentiates four facets that characterizes racial categorization:
a) humans rather than abstract social forces produce races; b) as human constructs, races constitute an integral part of a whole social fabric that includes gender and class relations; c) the meaning-systems surrounding race change quickly rather than slowly; d) races are constructed rationally, against one another, rather than in isolation. (p. 29).
The skin color and facial features used to define race are often chosen in a way that is linked to the country’s class-and-status hierarchy (Gans, 2005). Therefore, race and class are correlated,
which means that races are naturally unequal. During apartheid, South Africa had racial classifications embedded in the legal and social systems. Race was officially defined in three categories (black, white, and colored), and each category was linked to factors of lifestyle and social standing (Posel, 2001). Since the idea of race as a social construct was bureaucratized, “the Apartheid state opened up spaces for this racial common sense to infiltrate the process of racial classification” (Posel, 2001, p. 89). Therefore, South Africa cannot escape the process of racialization since it is deeply rooted in the consciousness of its people (Smedley & Smedley, 2005).
Figure 3. Map of Johannesburg
3.2 Inequality
In addition to the racial segregation that characterizes South Africa’s society, huge inequality issues exist. This section discusses the different ways in which inequality occurs: Income, employment, and access to basic facilities. Notably, the major inequality issues are recognized by the South African government, which has been led by the African National Congress (ANC) since 1994. However, since the ANC made a shift from only serving 10% of the population to serving 100% of the population, it faces difficulties in keeping promises because of the lack of human and financial resources. Furthermore, it is estimated that the population in Johannesburg, which is the largest economic hub of the country, will grow to 6.5 million by 2040 (World Population Review, 2016). In order to serve the growing population, the ANC designs its policies based on neoliberal principles, meaning it believes economic growth is the key to success and will trickle down to the poor. It is argued that these neoliberal policies failed to address the poverty issues and instead increased inequality (Newton & Schuerman, 2013; Todes, 2012).
3.2.1 Income
With a Gini Index that ranges between 0.66 and 0.70, South Africa is one of the most unequal countries in the world. While the top decile of the population accounts for 58% of the country’s income, the bottom decile accounts for 0.5% and the bottom half less than 8% (World Bank, 2016). The country has major poverty issues, with 56.8% of the population living in poverty (Statistics South Africa, 2009). Hereby, poverty is monitored according to the Living Conditions Survey, and the Income and Expenditure Survey by Stats South Africa (2009), whereby poverty indicators are food, clothing, housing, furniture, health, transport, communication, recreation and culture, education, restaurants, welfare, and neighborhood conditions. Approximately 20% of Johannesburg residents live in abject poverty, which means they live in informal settlements that lack proper roads or electricity or any kind of direct municipal service (The City of Johannesburg, 2007). In addition, 40% live in inadequate housing, with insufficient municipal services. The urban poor is mainly characterized by black people (72%), who earn less than R25,000 (€1700) annually (The City of Johannesburg, 2007).
3.2.2 Unemployment
The high level of poverty corresponds to the high level of unemployment. Since new entrants to the labor market are almost always young people, the unemployment rate among the youth is 52.6%, compared to 25.1% of the total population of Johannesburg (World Bank, 2014). Furthermore, because Johannesburg is characterized by a large number of black people, and a smaller proportion of colored, Indians, and white people, unemployment mainly occurs among black people (The city of Johannesburg, 2007). Additionally, since black people did not have access to basic facilities such as education, unemployment mainly affects black people.
3.2.3 Access to basic facilities
Although South Africa has a public health care system, treatments and medicines are not affordable for a large majority of the population. Another problem is the lack of access to sanitation as the households lacking municipal sanitation is 16% (The City of Johannesburg, 2007). Furthermore, 15% do not receive municipal electricity, 3.6% percent do not have water supplies, and around 120,000 families live in informal settlements (The City of Johannesburg, 2007). According to the Global Entrepreneurship Monitor (GEM) 2014 report, the level and quality of education in South Africa is one of the worst in the world. The level of math and science education in the country, as assessed by the Global Competitiveness Report (2014/2015), puts South Africa at 144th of 144 countries (GEM, 2015).
3.3 Institutional environment
The rise of social entrepreneurship in South Africa occurs in a society characterized by segregation and inequality, which puts considerable pressure on the government. Therefore, social entrepreneurship could be a promising means to contribute to the societal issues. The lack of a legal entity for a social enterprise, and the yet undefined space of social entrepreneurship, makes it difficult to know how many social enterprises are operating in South Africa. However, in South Africa the use of the terminology has been increasing as social entrepreneurship is portrayed as a way to address complex social problems and create innovate solutions to solve them, which is reflected in several ways (Littlewood & Holt, 2015). First, several business schools in South Africa promote the importance of social entrepreneurship, such as the Centre for Social Entrepreneurship and the Social Economy at the University of Johannesburg; the Gordon Institute of Business Science (GIBS) runs a social entrepreneurship certificate program, and the Bertha Foundation has the Social Innovation and Entrepreneurship program at the University of Cape Town (UCT).
Secondly, there is an increase in institutional support since several government bodies that address the development of social entrepreneurship, such as the Small Enterprise Development Agency (SEDA), the National Youth Development Agency (NYDA), the Industrial Development Company (IDC), and the National Job Fund, have been established. Moreover, considerable legislation can be identified as important for supporting social entrepreneurship, its activities, and the wider social economy in South Africa, including the following:
• Nonprofit Organization Act (1997) • Taxation Amendment Act (2000)
• National Lotteries Act (1997), which created the National Lottery Distribution Trust Fund to support national good causes
• Co-operative Act (2005) • Cooperative regulations (2007)
• Wider business legislation, e.g., the Companies Act (2008)
• Broad-Based Black Economic Empowerment Act (B-BBEE) (2003) and its recent amendments (2013)
A range of policies which are also relevant to social entrepreneurship in South Africa include the following:
• Co-operative Development Policy for South Africa (2004)
• The New Growth Path Act (NGP) (2011), with it accords on national skills, basic education, and green and social economy.
While the national government is responsible for policy making, the provincial departments are responsible for the implementation at the local level (Steinman & Van Rooij, 2012).
3.3.1 New Growth Path
In recent years, there has been an emphasis on the development of the Social and Solidarity Economy (SSE), which has been incorporated in the NGP. SSE refers to enterprises and organizations based on principles of solidarity and participation and produces goods and services, while pursuing both economic and social aims (Steinman & Van Rooij, 2012). The policy promises to create 100,000 jobs in 2020 through the support of the social economy. To achieve this target, the NGP states that government support is needed for social-economy initiatives, including the following:
• Assistance with marketing, bookkeeping, and technological and financial services and training
• The development of linkages within the social economy to encourage learning and mutual support
• Work with union and community investment companies to develop a charter with commitments to job creation
• Increased state procurement from and service delivery through organizations in the social economy.
Although the policy does not use the terminology of social entrepreneurship, it does refer to the social economy and the importance for businesses to strive for both economic and social aims. Consequently, it remains unclear how the government defines social entrepreneurship and which forms it supports.
3.3.2 Broad-Based Black Economic Empowerment
Another relevant legislation is the B-BBEE legislation, which was developed to ensure a significant increase in the number of black people that manage, own, and control the country’s economy, as well as to ensure significant decreases in income inequalities through affirmative action (Arya & Bassi, 2011). The B-BBEE Act involves the “Codes of Good Practice,” which forms a scorecard of seven elements that can be used to assess companies’ B-BBEE performance. Littlewood and Holt (2015) described these seven elements as follows:
1) Ownership – the transfer of ownership to black people (20 points), 2) Management Control – the share of black people in senior management (15 points), 3) Skills Development – the share of payroll devoted to training (15 points), 4) Enterprise and Supplier Development
– investment in and procurement from ‘black-owned’ entities (40 points), 5) Socio-economic Development – supporting community initiatives (5 points). (p. 17)
Companies can achieve a B-BBEE status ranging from Level 1 to Level 8 (whereby Level 1 is the highest score). Level 4 to Level 1 are B-BBEE compliant businesses, which is seen in Table 2. Although engagement with B-BBEE is voluntary, with no financial penalties for noncompliance, it is a key criterion in winning public sector procurement and service contracts (Littlewood & Holt, 2015). All government entities are obliged to be B-BBEE complaint and need to reach the stated targets in a certain number of years. Therefore, government entities only collaborate with enterprises that are B-BBEE compliant, which incentivizes businesses to meet the targets.
Furthermore, engagement with B-BBEE can lead to further business benefits, such as access to South African banks that prioritize B-BBEE compliant companies, and B-BBEE complaint businesses have a competitive advantage when competing with other companies that are not B-BBEE compliant. For example, if a phone company is seeking a security company to secure its stores, a highly B-BBEE compliant company would have more chance to obtain a contract than a non-compliant security company because the phone company would gain points for Enterprise and Supplier Development if the supplier is a highly B-BBEE compliant enterprise.
For social entrepreneurship, this means that corporations need to develop their CSR strategies according to B-BBEE and thus need to give money (grants, funds, investments) to black-owned initiatives that focus on skills development and/or socioeconomic development to meet the targets. Therefore, it can be appealing for social entrepreneurs to focus on these types of developments to increase their competitive advantage against others social initiatives.
Table 2. B-BBEE rating system
B-BBEE Level Score Status
Level 1 contributor 100+ points
Level 2 contributor 95 – 99 Compliant
Level 3 contributor 90 – 94 Level 4 contributor 80 – 89
Level 5 contributor 75 – 79
Level 6 contributor 70 – 74
Level 7 contributor 55 – 69 Non-compliant
Level 8 contributor 40 – 54
The act is used to address the racial imbalances in the country because the act promotes affirmative action. Paradoxically, the act reproduces racial categories as the basis on which affirmative actions is to be installed and measured (Posel, 2001). The B-BBEE Act refers to “black people” as the target for affirmative action. Black people are defined as Africans, colored, and Indians, (a) who are citizens of the Republic of South Africa by birth or descent prior to 1994 or (b) who became citizens of the Republic of South Africa by naturalization prior to 1994 but were precluded from doing so by apartheid policies (B-BBEE Act, 2013).
3.4 Conclusion
This chapter provided a description of how the rise of social entrepreneurship is embedded in South Africa. Decades of apartheid have left a legacy for the country, which is characterized by major inequality issues. Because of the lack of resources, the government faces difficulties in serving its population and solving the issues in its society. However, with legislation such as the B-BBEE act and the NGP act, the government incentivizes (social) businesses to engage with the national development agenda. The NGP emphasizes the role of the SSE and the role of social enterprises in creating jobs, whereby it promises to provide assistance to social enterprises. Since a clear definition of social enterprises is lacking, this policy is examined on how it directly addresses social entrepreneurship and which type of social entrepreneurship it supports. Furthermore, the B-BBEE is created to increase Black Economic Empowerment (BEE) and pushes for corporations to invest in social initiatives that contribute to skills development of black people. Therefore, this B-BBEE act is examined to discuss how it indirectly addresses social entrepreneurship.
4. Methodology
To gain a more comprehensive understanding of the complexity of social entrepreneurship in Johannesburg, the data collection was conducted in a qualitative way. This chapter elaborates on the research method and design used. First, it discusses the epistemological position of this research. Secondly, it elaborates on the multi-method qualitative research design and the case study design. Thirdly, it explains how data was collected and analyzed. Finally, it discusses the ethical considerations of this research.
4.1 Epistemology and ontology
Since this research focuses on the influence of individual, societal, and policy factors on the shape and challenges of social entrepreneurship, it is important to examine how the social entrepreneurs interpret their environment and orient their actions in ways that are meaningful to them. Therefore, I take a constructionist standpoint, meaning that experiences of social entrepreneurs are structured and understood through concepts and contexts that are constructed by those entrepreneurs (Flick, 2014). Since there are policies in place that are not constructed by social entrepreneurs, my standpoint is not based on an extreme form of constructionism. However, the way social entrepreneurs understand and interpret those policies could be influenced by their concepts and contexts. Thus, social entrepreneurs in Johannesburg are embedded in a context of subjective meanings that support the way the field is shaped.
Since this qualitative research relies on understanding the social reality of social entrepreneurship in Johannesburg through the interpretation of transcripts of interviews (which will be further discussed in this chapter), it is important to keep in mind what happens with the translation of reality into text and what happens in the retranslation of texts into reality (Flick, 2014). It is often difficult to know if the text is a representation of reality or if it is influenced by the interpretations of the researcher. Therefore, it is important to carefully organize the methodology during the research process and to constantly reflect on the relationship between the text and the social world (Flick, 2014).
4.2 Operationalization
In order to examine the challenges of social entrepreneurship, the framework of Austin et al. (2006) was used to operationalize social entrepreneurship according to the five criteria: Social Value
Proposition (SVP), people, context, capital, and opportunity. An overview of the operationalization table is presented in the appendix. SVP was operationalized through the examination of the type of social impact, the drivers, and the priorities of the social entrepreneur. People was examined by looking at the recruitment, staff (the number, type of contract, hours per week), and required skills (education, work experience) of the organization. Context was examined by the criteria tax and regulation, demographics, sociopolitical environment, and the macroeconomy. Capital was operationalized by income streams, investors, and network (access to funding). Finally, opportunity was examined through questions about the customers (who are the customers, and who is paying?), recognized social need (how is it addressed and embedded in the organization?), and scale (ambition to scale up, growth-strategy).
Based on these criteria, the first question (how do individual and societal factors shape different types of social entrepreneurship in Johannesburg) was examined. Furthermore, for each criterion, I asked whether the social entrepreneur faced any difficulties related to that criterion. Hereby, I gave the social entrepreneur the opportunity to share challenges or other comments that were not related to the above operationalization. This allowed me to answer the second question, what are the challenges for different types of social entrepreneurship? Furthermore, the third question (how is the policy framework around social entrepreneurship designed for different types of social entrepreneurship?) was operationalized according to policy targets, type of support the government promises, and the requirements to qualify for its support. Finally, the fourth question (how could the government meet the needs of social entrepreneurship in the eyes of social entrepreneurs?) was examined by asking social entrepreneurs what type of support they need, whether there is a role for the government in offering this support, and if so, what type of support should be offered.
4.3 Case study design
The methodology used during the research process is defined by its research design. This research is qualitative and is based on a case study of Johannesburg. It is largely exploratory research but uses both an inductive and deductive approach. As mentioned, some research on social entrepreneurship has been conducted; thus, it is not a new concept. Hence, the first phase of the research was built on a deductive approach and used the social entrepreneurial framework of Austin et al. (2006) for the operationalization of the concept. Since empirical research on the differences between forms of social entrepreneurship and how government could address related challenges is limited, an inductive approach was used to allow new insights and draw on new concepts.
In order to gain an in-depth understanding of social entrepreneurship within the spectrum of different types of organizational forms, this research is based on a single case study with embedded units (Yin, 2014). This means that the case study is focused on social entrepreneurship, whereby the embedded units refer to social entrepreneurs in different organizational forms, and the context is defined by the post-apartheid sphere in Johannesburg. The examination of different organizational types of social entrepreneurship in Johannesburg allowed me to identify differences and similarities between the types, as well as what their challenges are and what they need from the government. The embedded units tend to add significant opportunities for the analysis, as they provide more insights into the single case (Yin, 2014).
4.4 Data collection
In order to reach a broad understanding of social entrepreneurship, multiple methods were used for data collection: In-depth interviews, observations, and secondary data. Furthermore, it was necessary to use triangulation, which is defined as “a strategy that adds rigor, breadth complexity, richness, and depth to any inquiry” (Denzin, 2012, p. 82). Through triangulation, validity is better ensured; hence the use of multiple sources and the use of theory in the case study (Yin, 2014). Furthermore, the use of multiple methods allowed me to answer sub-questions that required data based on experiences and opinions through interviews and other sub-questions that required data on policy reports and policies with secondary data. Therefore, the first two chapters of the empirical findings are mainly based on interviews and observations, and the last is largely built on policy reports and interviews with government experts. Data was collected during fieldwork from June to August 2016 in Johannesburg. All interviews were recorded, although interviewees were given the option to abstain from recording. The recordings were transcribed into text for data analysis.
4.4.1 Semi-structured interviews
The main type of method used is in-depth interviews, with a total of 20 interviews. Seventeen of those interviews were held with social entrepreneurs who were founders of for-profit entities (five interviewees), nonprofit entities (eight interviewees), and hybrid entities (four interviewees), two interviews were held with people who worked within the government, and one was held with an expert on social entrepreneurship and NGOs in Africa. The interviews were semi-structured to comply with the inductive and deductive aspect of the research.
of social entrepreneurship in Johannesburg?), the interviews were set-up in a deductive way. Firstly, this allowed me to categorize their organization into one of the six forms of Young and Lecy (2014). Secondly, through the use of the social entrepreneurship framework of Austin et al. (2006), I was able to examine the differences and similarities between the various forms of social entrepreneurship, as well as the individual and societal influences on these forms.
To answer the second sub-question - what are the challenges for different types of social entrepreneurship? – interviews were set-up in both a deductive and inductive way. This allowed me to compare the challenges with each form of social entrepreneurship according to the criteria of Austin et al. (2006), while at the same time other types of challenges could be shared that did not fit within the framework. Finally, to be able to answer the final sub-questions – how is the policy framework around social entrepreneurship designed for different types of social entrepreneurship? and how could the government meet the needs of social entrepreneurship in the eyes of social entrepreneurs? - interviews with social entrepreneurs and government experts were used. The interviews with social entrepreneurs were used to identify which policies were the most relevant for them and what their expectations of the government were. The interviews with the government expert were used to identify how social entrepreneurship is defined by the government and which type of social entrepreneurship they (would like to) support. Although interviews were mostly set-up in a deductive way, it was semi-structured, which allowed me to have some flexibility during the interviews to asks questions that were relevant at the moment but that were not based on theory and expectations.
4.4.2 Direct observations
Another method that is used is direct observations, which is useful when studying a phenomena of interest that has relevant social or environmental conditions that are available for observation (Yin, 2014). Observational evidence is often being used when the researcher wants to provide additional information about the research topic (Yin, 2014). Direct observations were mainly used to get a better understanding of the post-Apartheid context and what social entrepreneurship means in this type of context. For example, when I commuted to the field to question interviewees, but also at the working places of the social entrepreneurs, or with people who were living in Johannesburg. When I reflected on conducted interviews, I compared my findings with observations to seek for confirmation, and thus the observations had a supportive role in data analysis.
4.4.3 Secondary data
Secondary data collection is used for the collection of policy documents, reports and news articles that are related to social entrepreneurship. This information is used to try to answer the sub-question - how is the policy framework around social entrepreneurship designed for different types of social entrepreneurship- as the secondary data provided an insight in how the government defines social entrepreneurship, to what extent they tend to promote it, and which type of social entrepreneurship they address. Since the epistemological assumptions, it was important to be aware of the context and how things are being said. Therefore, I took notes when I conducted interviews, but also during observations or after conversations with people on the streets. Field notes allowed me to reflect on the data collection, which is important since the inductive aspect of the research. Data reflection during fieldwork can lead to new insights or concepts (Flick, 2014).
4.4.4 Sampling
In order to select the people for the interviews, snowball samplings and sampling for range were used. The latter refers to a sampling that is based on sub-categories of the unit of analysis to ensure to interview a given number of people in each category (Small, 2009). To ensure that the different forms of social entrepreneurship were selected, the sampling was based on two categories: organizations that called themselves a social enterprise in the for-profit sector, and organizations that called themselves a social enterprise in the non-profit sector. Within these categories, legal entities varied, as the for-profit sector could refer to for-profit entities and co-operatives, and the non-profit sector could refer to a trust or a NPO. Since South Africa does not have a legal entity for social enterprises, organizations that called themselves social enterprises were sometimes recognized as hybrid organizations during the interview.
In order to reach out to social entrepreneurs, online and offline platforms were used, such as LinkedIn and organized events for (social) entrepreneurs. Furthermore, the Dutch embassy provided two contact details of social entrepreneurs, and some social entrepreneurs were found online by googling ‘social enterprise in Johannesburg’. Through these first contacts, multiple snowball samplings were used to seek for accesses of new informants. This process was repetitive, in the sense that new informants were asked if they could provide contact information of informants. The process of data collecting and data accessing was therefore mutually dependent, meaning that ‘the quality of the referring process is naturally related to the quality of the interaction’ (Noy, 2007, p. 334). In order words, if the interviewee felt uncomfortable or discontent about the interview, he or she might not provide referrals. Therefore (next to other reasons) it was important for me to gain the
