Globalization & Social Entrepreneurship

How Globalization Creates Opportunities & Challenges for Social Entrepreneurs

Globalization & Social Entrepreneurship

Global issues, such as the refugee crisis, world poverty and climate change, are the harsh, yet indisputable, realities of the twenty first century. With the current refugee crisis leaving over 65 million people displaced, as a result of political tensions throughout Syria, Iraq and Palestine, this is the most devastating humanitarian crisis the world has ever seen (UNHR, 2015). Similarly devastating are the amounts of impoverished people worldwide, with close to 11% of the world living on less than two dollars a day (World Bank, 2013). Additionally alarming is climate change, which is heavily debated throughout the United States, but already effecting hundreds of thousands of lives across the globe (International Federation of Red Cross and Red Crescent Societies, 2010).

These global issues, along with many others surrounding human rights, are perpetuated by globalization (Moghadam, 2013). Globalization is the growth of international markets, the enhanced mobility of goods and services, and the creation of new forms of competition beyond the capacity of nationally organized agencies (Cox, 1997). The universalization of markets has created a global economy in which powerful economies are given more opportunity, and developing economies are presented with additional challenges. This dynamic has exacerbated existing tensions throughout the world.

The twenty first century globalization phenomenon has led to the universalization of economies, societies and politics, which has disseminated local cultures and exploited already scarce resources. The cyclical nature of globalization, and the detrimental impacts it has on developing countries worldwide, exacerbates existing global issues. Because of this, the most vulnerable populations throughout the world are facing harsher realities than ever before.

Although globalization is exacerbating existing tensions, it has also led to various opportunities that had never before existed. International organizations, such as the United Nations, the World Bank, and Amnesty International, are paving the way in creating a global governance system where solutions to global issues can be discussed and debated across country borders (Castells, 2008). Due to globalization, these organizations are no longer on their own, as the emergence of innovative businesses for social change gain momentum.

Social entrepreneurship, which is a form of business that prioritizes serving the public over profitability, is facing many opportunities as a result of globalization. Although social entrepreneurship isn’t emerging due to globalization, as it has existed for decades prior to the twenty first century, it is evolving alongside global trends in the economy. As social entrepreneurship evolves simultaneously with globalization trends, the role of the social entrepreneurs and their global social ventures become increasingly more distinct (Zahra et. al, 2008). Because globalization is perpetuating global issues, and the need for global governance has never been more, social enterprises are emerging as a unique and innovative solution, supplementing existing efforts of international organizations.

However much momentum social entrepreneurship may be gaining as a result of globalization, there is also an influx of challenges that the global economy presents as well. Social entrepreneurs, who are social change agents administering the efforts of social enterprises, are having to tackle the tensions between nation states that are a result of the twenty first century. As the world economy becomes more globalized, and local cultures become disseminated, an inevitable obstacle presents itself for social entrepreneurs deciding where their efforts are best needed.

Analyzing both the opportunities and the challenges that globalization provides to social enterprises is crucial the decision-making process of social entrepreneurs, and their ability to make impactful global change. With current globalization trends in businesses, technology and politics, social entrepreneurship efforts have had to redefine themselves and find new ways to best serve their global missions. Social entrepreneurs evaluate risk, time sensitivity, exit decisions, biases and more when deciding where to best target their efforts (Shepherd et. al, 2014). Therefore, the decision-making process for social entrepreneurs in the globalized age has inevitably had to change.

This study aims to understand how globalization is affecting the efforts of social entrepreneurs towards global issues such as the refugee crisis, world poverty and climate change. To do this, this conceptual study will define the relationship between social enterprises and globalization, and will analyze how this relationship is affecting the decision-making process for social entrepreneurs. Findings from various studies will be reviewed to better understand how globalization is creating opportunities, as well as challenges, for social entrepreneurs focused on global issues.

How does globalization affect the decision making of social entrepreneurs aiming to tackle global issues, such as terrorism, poverty and climate change?

Impact of Universalizing Markets

Globalization can be defined in a multitude of ways, however the core concept relies upon the universalizing of markets. However, many confuse the effects of globalization with its definition. Through the universalization of markets, the power of nation states is inherently reduced, thus disseminating cultures, while also expanding the ability of social movements, which refer to the mobilization of citizens in reaction to an issue of shared concern, to emerge on a global scale. Globalization leads to changes in the global infrastructure, whether it is economic, social or political, all of which leads to the emergence of social movements. The globalization cycle, which creates both problems as well as solutions, is a foundation for understanding the role of social entrepreneurs in the globalized world.

Critiques of globalization often argue that it further develops opportunities for wealthy nation states to maximize profits globally, while developing states continue to fight for basic resources. Developed countries, such as The United States, have benefited tremendously from globalization, as it has allowed for American markets to scale internationally. However, for developing countries whose economies aren’t as stabilized, they are unable to enter the global economy, and therefore cannot benefit as greatly from globalization. This trend is true of most developed and developing countries: globalization benefits strong economies, while putting additional pressure on small economies. Nations that participate in the global economy will benefit through the universalization of markets, whereas local economics will face additional challenges.

Emergence of Global Movements

As this tension grows, social movements are inevitable. Social movements, which are the mobilization of social groups whose collective action is aimed towards solving a given issue, are often in response to changes in the nation state. When globalization threatens the existence of local cultures and economies, social mobility tends to increase. Social movements in Europe such as Brexit, the fight for Catalan independence in Spain, and the referendum for Scottish independence, are all a direct result of globalization (Hartmann, 2017). While each of these movements is unique, they have all overlapped in not only their timeliness, but in their fight for economic, social and political independence.

As our markets become more globalized, economies that carry much of the financial weight, such as the previously mentioned London and Madrid, are fighting for independence. While globalization has caused this trend, it has also paved the way for simultaneous social movements to emerge and mobilize. These trends are not unique to economic social movements, in fact, they can also be found at the core of many political movements.

Political movements, such as the Arab Spring in the Middle East, are also products of globalization (Moore, 2012). Because globalized markets put pressure on nation states to enter and withstand the global economy, politically divided nations tend to make decisions that benefit their global economic standing. The pre-existing tensions that existed throughout Middle Eastern countries were exacerbated by globalization, as the universalization of markets led to economic disparity, which caused political tensions. This trend mirrors that of the social movements in Europe, as the pattern of universalizing markets and political estrangement are cyclical.

Globalization perpetuates social mobility, as it creates an economic disparity that inevitably mobilizes those who have been neglected. While globalization allows for a globalized world, in which our nation states become of less independent value, many nations are fighting for their freedom from the globalized world. This pattern indicates a relationship between globalization and social movements, which is directly related to the opportunities and challenges faced by social entrepreneurs aiming to tackle global issues.

Opportunities and Challenges for Social Entrepreneurs

Globalization has led to the emergence of new economic, political and social structures which are crucial to understanding how social enterprises create social change (Robinson, 2003). The universalization of markets that has led to the emergence of social and political movements has created both opportunity and challenges for social entrepreneurs. Because globalization is mobilizing groups worldwide, social enterprise are better able to locate issue areas. However, implementing change has grown more difficult because independent groups are secluding themselves in reaction to globalization. Globalization is creating opportunities, as well as challenges, for these efforts to be implemented because of this tension.

Because globalization is creating access to existing social movements, social enterprises are able to better allocate the necessary resources to support and empower their target audience. Similarly, as globalization inherently disseminates culture, social enterprises are of the up-most need to social movements who are attempting to preserve their social networks (Kerlin, 2010). However, because communities are facing threats to their independence, they are growing wary of outside support. Regardless of the intentions of social entrepreneurs, many communities are rejecting their support as they feel under attack. Globalization has led to a mistrust of the “other”, especially in terms of the local communities looking outside at those who are offering support.

As globalization exacerbates political tensions, it is also presenting opportunities for social enterprises to make impactful change. Social enterprises are now given a platform to support existing movements, and create infrastructures that support and empower already existing collaborations. Previous to globalization, social enterprises aimed to tackle global issues that weren’t being addressed or acknowledged outside of the given community. As a result of globalization, social enterprises are better able to make change because many of these issues are emerging on a global scale. Although there is now a better global understanding of various political tensions worldwide, social enterprises are finding it difficult to support these initiatives from the outside.

Globalization is universalizing markets, which is allowing for social enterprises to financially support international causes. Prior to globalization, humanitarian global issues were often tackled by non-governmental organizations, which often found it difficult to allocate funds across nation state borders. The emergence of globalization has created a global economy that better supports the efforts of social entrepreneurs.

Social Enterprises & Global Issues

Terrorism

Terrorism is the unlawful use of violence against civilians in pursuit of power over an existing nation-state. The emergence of ISIS, the terrorist group that has claimed over one hundred attacks in twenty-nine countries, has killed over two thousand civilians internationally (Yourish et. al, 2016). The actions of this terrorist group can be traced back to the Arab Spring, which as previously mentioned, was a social movement that was a response to the globalization of Middle Eastern markets- and politics.

Social enterprises have responded to the global terror trends by creating business initiatives that support refugees and other marginalized groups who have been under attack. Both within the nations under attack, and within the nations receiving refugees, social enterprises have moved into the international market in order to aid the victims of terrorism.

Social enterprises are finding unique and transformative innovations to aid those more deeply impacted by terrorism, however they are also facing obstacles when attempting to scale their impact. Social enterprises focused on terrorism have had to redefine their innovations, and find new ways to reach their target audience, namely refugees. Because globalization exacerbates tensions surrounding “the other”, social enterprises now have to tackle an additional obstacle that is a product of twenty first century globalization.

Poverty

Poverty is not a product of the twenty first century, however globalization has transformed the scope and scale of what it means to be impoverished. Poverty is the state of economic insufficiency. As globalization continues to scale international businesses and disseminate local culture, impoverished communities are hit the hardest. The global economy tends to benefit developed nations and their pre-existing, sufficient economies, while neglecting to support developing nations whose economies are unstable.

The instability of developing nations economies is the result of globalization. Large economies are able to universalize their markets, create cross-border partnerships, and scale internationally, while smaller economies are unable to enter the global economy. This disparity is exacerbated by globalization, as it doesn’t allow for partnerships between large and small economies, and instead further expands the efforts of pre-existing, powerful economies.

Social enterprises aim to create economic opportunity through business initiatives that empower those in need, namely the impoverished. As globalization continues to exacerbate poverty, social enterprises are at a unique positioning, where their impact has never been more desired, but their ability is at risk. Due to technology, and the evolving international communication systems, social enterprises are now able to research, develop and implement global solutions to poverty.

Climate Change

Climate change, a twenty first century scientific phenomenon in which increased levels of atmospheric carbon dioxide leads to a detrimental change in climate patterns, is exacerbated by globalization. Although climate change has become a political issue, at its core, it is a global problem that is affecting everyone worldwide. As natural disasters continue to affect the poorest nations the most, and basic resources are reaching scarcity levels unlike ever before, climate change is yet another attack on the poor and more specifically those in conflict.

The environmental decisions made by the United States, China, and various developed, economically stable nations, have insufferable impacts on developing nations worldwide. Climate change is a global issue in which developed and developing nations need to work together, on an international scale, to create sustainable solutions. Social enterprises have been at the forefront of this movement, alongside environmental NGOs and the United Nations.

Because climate change is a global issue, it needs global solutions. Globalization, while it perpetuates climate change, also offers an infrastructure for global solutions to develop- especially through social entrepreneurship. Social enterprises have a unique foothold in the climate change debate, as they’re able to allocate resources from across sectors, unlike existing governmental efforts, which are sector specific.

Defining the Role of Social Entrepreneurship

Defining Social Entrepreneurship and Its Implications

Social entrepreneurship, as previously discussed, is the creation of socially driven businesses that aim to have an impact beyond profit. The role of social enterprises is to allocate resources utilizing a cross-sector approach. The intersection of the public and private sectors allow for social enterprises to have a role outside of traditional businesses. The ultimate goal isn’t to drive profit, but instead to create a sustainable framework in which the communities and individuals the enterprise serves are empowered to reach economic stability.

While this definition allows for social enterprises to work in a multitude of ways, it also creates a dynamic in which they are not treated as traditional businesses. Traditional businesses, that prioritize profit, are not held to the standard of social enterprises, and therefore are able to make decisions that benefit their company and their shareholders, as opposed to society. Because of this disparity in responsibility, social enterprises have a difficult time scaling their own growth, which ultimately impacts their ability to scale their impact.

Evolution & Emergence

Because the global economy is allowing for international and multinational corporations to scale globally, enterprises and traditional businesses that focus on global issues are more interconnected than ever before (McDougall et. al, 2000). As global issues continue to be exacerbated by globalization, social enterprises will need to evolve to be agents of social change on an international scale. However, this inevitable evolution will only be possible if social enterprises are better able to reach their target audiences. The challenges raised by globalization will effect the decision making of social entrepreneurs in their ability to support global initiatives, such as terrorism, poverty and climate change.

Decision Making of Social Entrepreneurs

The decision-making of social entrepreneurs is based on the problem they wish to solve, the existing stakeholders, and the access to necessary resources needed to implement change. Additionally, the decision-making of social entrepreneurs is dependent on the cultural tendencies of the given region, specifically the economic, political, legal and social factors (Lee, et. al, 2000). These components are all affected by globalization, which makes this relationship crucial to understanding the development of problem solving in the twenty first century. As globalization perpetuates existing global issues, as previously highlighted through the examples of terrorism, poverty and climate change, social entrepreneurs are faced with an onslaught of obstacles that affect their decision-making. In relation to globalization, this decision making process becomes increasingly interesting to evaluate, as the landscape for socially conscious businesses is changing.

As previously discussed, the development of “the other” has created a tumultuous relationship between social enterprises and their target user. As globalization continues to exacerbate the conceptualization of “the other”, a phenomenon in which individuals have preconceived notions of those outside of their own culture, local communities are growing wary of outside help. Social enterprises tackling global issues are having a difficult time scaling their impact due to this dynamic. Although the intentions of social entrepreneurs may be to empower local communities and support their ability to access resources in order to achieve economic stability, the target users within these local communities are distrustful of outside support. The development of this phenomenon has negatively affected the decision making of social entrepreneurs looking to tackle global issues.

However, globalization has also created opportunity for social entrepreneurs to scale their impact, which has positively affected their decision-making. Because globalization has led to various social movements, social enterprises are better able to support global issues. As globalization continues to bring social movements to the forefront of a worldwide discussion, as seen in the Arab Spring, Brexit and the previously mentioned movements, social entrepreneurs have better access than ever before to global crises. Due to the universalization of markets, globalization has led to closer communication across nation states, which has allowed for the emergence of social movements on a global scale. This dynamic has created an opportunity for social entrepreneurship to scale globally, alongside the development of these pre-existing movements.

Conclusion: The Future of Globalization & Social Entrepreneurship

Globalization perpetuates global issues such as terrorism, poverty and climate change, while simultaneously creating opportunity to combat these worldwide crises. Because of this, social entrepreneurs focused on global issues are facing both opportunity and challenge when making decisions on their future initiatives. As the world becomes more globalized, and nation states continue to identify themselves independent from the global economy, social entrepreneurship will grow exponentially valuable. Because social entrepreneurship utilizes a cross-sector approach, in which the civil, state and private sectors are forced to allocate resources appropriately, the emergence of global social enterprise is inevitable.

As social entrepreneurship continues to grow as a sustainable solution to global issues, the decision-making process of entrepreneurs will change. The global economy effects nation states worldwide, and this impact will only continue to grow as businesses aim to scale internationally. The cyclical nature of globalization is key to understanding the decision-making process of social entrepreneurs, as both as continuing to change in response to the trends and patterns each exhibit.

To best understand the future of social entrepreneurship, the role of globalization is inherently valuable. For social enterprises to best scale their efforts on a global scale, an evaluation of globalization is inevitable. Social entrepreneurship and globalization are two factors of the twenty first century that need to be evaluated simultaneously to best evaluate potential areas for impactful global change.

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