Social Entrepreneurship

Intan Jingga

Independent management consultant

Abstract
The purpose of this research paper is to look at how social entrepreneurship is emerged in small
businesses in Indonesia. This research paper will find out what social entrepreneurs who have
small businesses perceive social entrepreneurship as. The comparison of social entrepreneurs or
activities underlying social entrepreneurships in Indonesia will be generally reviewed, then focus
on small businesses who venture on social entrepreneurship from the beginning or at later stage.
This research will focus on the comparison of intentionally and unintentionally planned social
entrepreneurship of small business owners through case studies of one Agribusiness and one Batik
Craft business. It will overview their motivations in being social entrepreneurs, planned or
unplanned. It will also look at whether the intentionally or unintentionally planned social
entrepreneurship and social entrepreneurial behaviors are necessary as to survive the businesses
and the social enterprises. In doing so, it will observe the social wealth being created or to be
created, and analyzes the impact of social entrepreneurship on the social entrepreneurs themselves.
It will find and discuss factors that encourage small business people in overcoming the challenges
of obtaining entrepreneurial behaviors and entrepreneurial skills and other barriers, thus survive
the market.

Key words: Social Entrepreneurship, Small Business, Underlying Motivations, Overcoming

Challenges, social wealth

I. Introduction As the purpose of this research paper is to look

In western context, social entrepreneurship is
perceived as non-profit venture to create social
value or change that will eradicate social
challenges with innovation in new scheme, or
innovative process, or management or funding
strategies by those with strong ethical fiber
(Mair and Marti, 2006). While in Asian, which
comprises of most developing countries, the
definition of social entrepreneurship is similar
to above description except that it needs profit
as well for its’ financial sustainability
(Prahalad, 2005) and it requires not only one
leading social entrepreneur but many grass-
roots entrepreneurs (Bornstein, 2004). It is as
Yunus (2003), the founder of Grameen Bank,
contend that social entrepreneurship is not for
‘personal gain’ but it is a ‘social-
consciousness-driven enterprises’ that can
compete with ‘greed-based enterprises.’
at how social entrepreneurship emerges in
small businesses in Indonesia, it will find out
definition of social entrepreneurship in
Indonesia context. Next, the comparison of
social entrepreneurs or activities underlying
social entrepreneurships in Indonesia will be
generally reviewed, then focus on case studies
of small businesses who venture on social
entrepreneurship. Although 50.8% Indonesian
live in villages with agribusiness as main
livelihood (World Bank., 2007) and Indonesian
textile was one of the growing top three major
contributors to Indonesian export since 1990
(ADB, 2008), both producers in this two
sectors earn low profit margin or lowest wage
with 42% of textile workers earning below the
minimum wage (ADB, 2006). Therefore, this
research will focus on the comparison of
intentionally and unintentionally planned
social entrepreneurship of small business

1
owners through case studies of one
agribusiness, and one hand craft traditional
textile business.
II. Social entrepreneurship in
Indonesia Context
By interviewing 300 respondents in Indonesia,
Suprapto (2006) conceptualizes that social
entrepreneurship in Indonesia context is ‘not
only civic innovations but included also
various traditional to modern means in
combining social and business.’ These civic
innovations include ‘arisan’ – traditional
savings-and-loans system and nonprofit
organizations that separate profit making
business with theirs social ventures, while
there are various types of traditional
cooperative.’
This is reflected in Indonesian institutional
social entrepreneurs of NGOs, who are seeking
to empower poor stakeholders to have full
ownership of the enterprise through inter-
mediation and empowerment. The activities
vary from enabling access to market (inter-
mediation) through fair trade practices for
marginalized art producers by Pekerti
Foundation; replicating Grameen Bank model
of microfinance by Yayasan Mitra Usaha NGO
to enhance poor family income and children’s
education; and empowering small animal
breeders in poor village area to have skills and
livelihood in husbandry by Dompet Dhuafa
Foundation (Dacanay, 2004).
III. Case Studies
The case studies will focus on social
entrepreneurship by two small business owners
in Agribusiness and hand craft traditional
textiles (Batik and Weaving). We will refer the
later as Batik business. The methods used in
the case studies research were partly
questionnaire, partly interview, and email
correspondences. Small businesses are used as
the case studies in this research paper because
22.7 million companies in Indonesia, which
consist of micro and small businesses, take up
84.4 % of Indonesia’s employment and 99.1%
2
of its business units (Kuncoro, 2008).
Therefore, the progress of small scale industry
would highly correlate not only with
employment and business opportunities boost
in Indonesia and its rural areas, but also with
export and GDP development (Tambunan,
2009, Kuncoro, 2008).
3.1. Social Entrepreneurship Concept and
Underlying motivations
In the case studies of this research paper, the
social entrepreneur in agribusiness views social
entrepreneurship as an attitude or intention to
empower other people by developing their
potential to become independent, and a
willingness to enhance one’s own life while
caring as well as sharing with others. Whereas,
the social entrepreneur in Batik business
defines social entrepreneurship as a business
that have social responsibilities toward the
Batik craft producers in sustainability of their
livelihood, activities, facilities, skills, healthy
living conditions and environments. The key
message here is social entrepreneurship is
about giving and sharing back to the
community and producers in the same business
sectors or areas. Refer to Table 1 below.
In addition, the Agribusiness owner also
mention that one of the reasons that motivates
him to overcome challenges in his social
enterprise would be
to always hope that rural/
district community can grow
in the future so that economic
sector grow to have equity in
growth that it can force down
the speed of increasing poverty
in Indonesia because the
influence of poverty toward
the future will be very bad
impact to all people especially
in time of crisis like this
In my analysis, the underlying motivations of
both social entrepreneurs are highly related to
poverty eradication and provision of sustain-
able improved livelihood (financially, socially,
and environmentally) and living conditions for
producers in their sectors in both rural/district
or urban areas.

Table 1: Overview the motivations in being social entrepreneurs, planned or unplanned.

No Business Reason for social entrepreneurship Planned

1 Agribusiness The commencement of social entrepreneurship is while Yes

developing business plan as to:
• create maximum work environment in term of
performance
• enforcement of values
• sustain a place in the market
• help people to grow their potential (because just can
help, not change people)

2 Batik Business The commencement of social entrepreneurship is after Not at the

running the Batik business because: beginning
• Realizing the impact of traditional textile business
on the community and producers.
• Seeing the poor living condition of the producers
and have compassion to do something for them

3.2. The Role of Social entrepreneurship necessary for their business. While, in term of
and Social Entrepreneurial Behaviors social entrepreneurship, only Batik business
Both social entrepreneurs in the case study owner sees it as important for survival. The
view that business entrepreneurship is detailed explanations are in the following table:

Table 2: Social entrepreneurship qualities possessed and its importance in the business

3
No Business & Activities Social Entrepreneurship Important for survival?
Qualities Owned (why)
1 Agribusiness: Behaviors: accountability to No, but the social enterprise
A. Seedlings of organic community, Initiative and help smooth the path
vegetables mission to create and sustain business development.
B. Creation of organic social value, Sincere, Want to
fertilizers help others, concern for Agribusiness Owner find it
C. Organic Vegetables sustainable development necessary for business as ‘to
crop production and selling (environment and community achieve continuous business
D. Mengkudu (Noni) juice and financial) because social
production and selling (job entrepreneurial have become
openings) Skills: Networking, leadership, part of market strategy that is
E. Empowerment of mentoring, self development very needed this time as well
Farmers to have own as to upgrade capacity and
business unit in seedlings, Example: Mentoring friends mindset of workers or team
and/or making fertilizers, (since 3 years a go)and now his that are involved in my
and/or Organic Vegetables personnel’s about attitude and business whether it is in
crop production and selling business skills like basic production, marketing or
accounting and self Human resource
development development.’

4
 2 Batik Business:
A. Adopt national textile
community by sub-
province working group.
B. Register copyrights for
the ethnic motif to sustain
its existence as each
regions cultural identity.
C. Vocational Training &
Women Empowerment,
collaborating with local
women’s organizations.
D. Introducing and
enforcing ways of clean-
living among the villages
in rural area by providing
suitable facilities.
Behaviors: accountability to
community, Initiative and
mission to create and sustain
social value, Sincere, Want to
help others, concern for
sustainable development
(environment and community
and financial), family, creative,
tenacious with unshakeable
motivation
Skills: understanding context
and local culture, recognize
social problem and solve it
together with community,
empower community, Fund
raising, create value for
society, promote equity
Example: collective and
community owned activities,
equity promotion
Yes, because of the intention
in this business is not to be
like other middle men whose
focus is only on money. The
social enterprise would hold
on to products’ philosophy
and beliefs that the owner
can tolerate in each region to
create meaningful products.
Batik business owner sees
that ‘Indonesians base the
working philosophy on
familiar relationship and their
orders. Maintaining good
relationship means we must
provide activities to maintain
close contact and intensive
updates among each party.’

As to exhibit opinions of social entrepreneurs themselves and the social wealth being created
on the impact of social entrepreneurship on or to be created, please refer to Table 3.

Table 3: Social Wealth and Impact of Social entrepreneurship on social entrepreneurs

No Theme Agribusiness Batik Business

1 Social wealth that is ‘Unity in the society that
being created and will diminishes the differences so
be created that we can fill each other with
each other’s potentials thus can
create peaceful environment
and increase economic
standard of involving parties.’
‘Technology patent……… colour
from cinnamon, block of woods,
techniques, if with technology
from powder to minimize cost.
Patent and then give free to
producers who have passion to
protect community.’

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 2 Impact on social
entrepreneurs
‘very influential, because in the ‘During the whole process of
application, I learn and can building this social enterprise, I
directly apply knowledge that I will also have the opportunity to
get to the business and my life, increase my social wealth.’
like leadership, care, self
development, attitude, and skill
that in the future will surely
influence the sustainability of
my life and business to face the
full of challenge conditions
ahead.’

The social wealth created and to be created in
Table 3 through the social enterprises above
varies from unity, relationship, improvement of
economic standard, and intellectual property
that belongs to or to protect community. Those
social wealth mentioned and the explanation of
why social entrepreneurship is important in
Table 2 are all related to what Remenyi and
team (2004) as capital for poverty eradication,
which include financial, human, institutional,
social, natural, liquid capital. The social wealth
is not directly related to monetary value but
more to the increased trust that enhance
partnering relationship, which later will
enhance the enterprise. This is because trust
could add value in ‘improving possible
benefits; mitigating risks; linking opportunity,
motivation and ability (Theingi, 2008).’ As
comparison, Tambunan’s (2009) study of cases
in Bali, Jepara, Padang (provinces in
Indonesia) showed that business relationship in
small and medium enterprises (SMEs) are
mainly sup- ported by personal relationship
rather than formal agreements, especially in
rural areas.
As asserted by Theingi (2008) that ‘building
trust is a deliberate strategy in developing an
individual's network structure,’ the impact of
social entrepreneurship on the social
entrepreneurs increase their own social wealth
and also encourage them to have self
development. There is a high correlation
between social entrepreneurship with social
capital called ‘trust’, which in turn will affect
social entrepreneurs’ own social wealth and
self development in positive direction.
Moreover, synergic alliance of private
enterprise, policy makers and producers who
have social concern for living standard of
farmers and batik crafters in social initiatives
would result in joint culture, social, and
economic gain (Papanek, 2006, Pasaribu,
2006).
3.3. Challenges in venturing social entrepre-
neurship
As for challenges in the case studies, both
social entrepreneurs in venturing social
entrepreneurships come across social,
economic, politic and technology issues. In
regard to social issue, human resources’ mental
is viewed to be most challenging for its low
exposure to education and old long formed
mind set. As of Batik business, other than the
reason mentioned afore, the human resources
availability is also inadequate because the
regeneration of technical and intellectual skills
is indisposed. The human resources availability
is administered through cultural practice which
reduces craft workers capacity to fulfill buyers’
orders on time. And because of economic
recession, thus less demand for traditional
textile, some of the batik and weaving hand
craft community have switched livelihood to
be factory workers within or outside their
province.
Rutten (1999) explains that the mindset issues
mentioned above is highly related to cultural
factors like specific mental and business
cultures which result in dependent behavior of

6
the entrepreneurial class in Southeast Asia. As
of Indonesia, the case studies show that the
mindset of producers is greatly influenced by
the political environment in Indonesia where
the network and law enforcement set by
government have corruption, collusion and
nepotism issues. In term of Agribusiness, the
connection influences the provision of fertilizer
and determination of retail price. Moreover,
after district autonomy is enforced in
Indonesia, the prices in the distribution line
increase sharply in which district tax varies and
district authority shows little interest in helping
agribusiness in comparison to Orde Baru (the
new regime) government and other
governments in Thailand, Vietnam and other
ASEAN countries. As Marshall and team
(2006) utter that after the new regime
government, there is a shift of communal to
private ownership of land and other productive
assets which hinders the underprivileged small
rural farmer communities’ access. In term of
Batik business, the development or availability
of raw materials often time is influenced by
Indonesian political current. The Batik
producers often will buy supply of raw
materials owned by the present ruling regime.
The politic is highly influential in the
economic challenges for both social
entrepreneur- ship activities (as shown in Table
2) in Agribusiness and Batik business. Both
social entrepreneurs say that the support of
government is needed to make social
enterprises more affordable and accessible in
term of licenses, training, knowledge,
technology and technology management. For
example, In the case of Agribusiness, Organic
plant which should not be expensive because
all materials are taken from nature has become
very expensive. This is because it is labeled as
upper class item, which affects the high cost of
the permit and organic raw materials. In the
case of Batik business, the price of raw
materials is highly influenced by global
commodity market price of imported cotton
and silk. The Batik business owner gives good
example of the challenge in accessing
technology for producers at community level:
7
Many studies had been done
by the government and their
academic affiliations. [How-
ever,] lack of documentations
and minimal exposure of their
findings to the crafters
community resulting in mini-
mal knowledge development
across Indonesian crafters
community.
Other than that, the environment in each
district or province is far from identical;
therefore each would need different politic,
economic, social and technology solution
approach. In addition, the challenges above are
acknowledged as familiar challenges for other
SMEs in Indonesia including lack of capital,
difficulties in marketing and distribution, high
transportation costs (Tambunan, 2009). There-
fore, there is high probability that overcoming
challenges in social enterprise will establish
social entrepreneurs’ market position that will
in effect assist other SMEs or producers related
to the social enterprise.
3.4. Factors that Encourage Social
Entrepreneurs in Overcoming the
Challenges
Furthermore, the catalyst of ‘highest level of
self-fulfillment’ endowed in social
entrepreneurship’s ventures in gaining profit
and social returns (Yunus and Jolis, 2003)
make overcoming challenges even more
feasible. In the following section, the paper
will discuss factors that encourage these small
business owners in Agribusiness and Batik
business to overcome the challenge in
implementing social entrepreneurship.
There is a sense of hope and nationalism in
both of them, where one of them argue that he
believes Indonesia will be recovered if every
potential is maximized through endorsement of
life values, which in turn will bring prosperity
to every individual involved in the future. He
dreams to have healthy affordable food supply
chain and to empower farmers to be
independent business owners of Agribusiness
products. The other has a dream to promote
Indonesian traditional textile to global world as
to promote Indonesian economic condition.
Both social entrepreneurs perceive a
sustainable process is important to achieve
their dreams or visions, so their social
enterprise will also help improve the
producers’ lives. This factor of sense of hope
and nationalism that encourage them to
overcome challenges are closely related to the
underlying motivation of the small business
owners to start social entrepreneurships
mentioned above such as poverty eradication
and provision of sustain- able livelihood for
both producers in Agribusiness and Batik
business. This is as Yunus (2003) theorizes
that the social entrepreneur- ship ‘not only
brings businesspeople of the future closer to
real life, but it also creates room for a socially
and environmentally friendly global economy.’
The other factors that encourage social
entrepreneurs to overcome challenges in their
enterprises would be having vision shared with
others, interactive network to exchange mind
and expertise, good management, loyal
customers, innovation and opportunity to learn.
In my view, to have vision shared with others
is not only strengthening one’s commitment to
one’s dream but also inspire and unite
community to face challenges as a team in the
market in different aspects of politic,
economic, social, technology and operational.
Interactive network with community in the
social entrepreneurship also open the
opportunity for social entrepreneurs to facilitate
mind- set change and training in community
level. Whilst, Network with government would
provide updated information of policies
currently, hopefully it would provide the
system that assists entrance to market and
facilitate access to technology and its
management for small producers at community
level in the future.
As for good management both social
entrepreneurs perceive that efficient, practical
and arranged mechanism of system procedures
8
and programs are necessary. In the end, in the
process of doing social entrepreneurship, both
correspondents hope to get opportunity to learn
or practice from experts who has brilliant
innovation and ideas as to achieve their
business bottom lines with sustainable process.
In their case, the theory that proposes
‘entrepreneurial ventures are socially
embedded, and therefore pursue opportunities
using innovative solutions to resolve social
problems and satisfy a variety of stakeholders
to attain legitimacy over time (Neck et al.,
2009)’ fits. Instances of the innovative
affordable environmental sustainable process
after by the social entrepreneurs in the case
studies are as follow: natural dye and other
ancient techniques in Batik business and zero
waste management for Agribusiness.
IV. Conclusion
In the case studies, social entrepreneurship is
viewed as good will and social responsibilities
that come with assistances for the community
and producers in the same business sectors or
areas. The social entrepreneurs’ main intention
to start social enterprises instead of just
business for profit is encouraged by the com-
passion to help eradicate poverty in the lives of
producers in their business with a sustainable
process. In the midst of building the foundation
of their social enterprises, they find out that
they are to learn and to innovate even more if
they want to compete in the market. However,
the relationship built with producers in their
fields and the learning and innovation would
help them to sustain long term business growth
and profit. The main reason that encourages
them to overcome challenges is the same with
their underlying motivation as to help
community in their business line to live out of
poverty line and have a sustainable livelihood
in economic, social, environment, technology
aspects. In the end, in various contexts of
western world, Asian, Indonesian, and the case
studies of small businesses in Jakarta, the
social enterprise is fuelled by the altruism and
satisfaction of gaining meaning of life in social
entrepreneurship. This paper proposes that
further research is needed to find simple, eco-
friendly, and economic technology to help
small businesses in agriculture and traditional
textile as to empower social entrepreneurs to
help improve Indonesian’ economy at grass
roots level.
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