By Peter Vandor, Magdalena Winkler, Martin Mehrwald
Recent years have seen a rapid increase in the number of social enterprises across the world, introducing a broad range of innovations to different industries. Recent estimates suggest that already 21% to 26% of start-ups in Europe operate with a social, community or environmental goal as a primary organizational purpose. Many of these ventures innovate and create novel approaches to address such challenges.
However, even the best innovations can only unfold their impact potential when they are brought to scale. In light of the many pressing challenges global society is facing and the limited availability of resources, time and attention to solve them, scaling of the most effective and efficient solutions has been argued to be an ethical imperative. As popular quote, attributed to former US president Bill Clinton, puts it:
“Nearly every problem has been solved by someone, somewhere. The challenge of the 21st century is to find out what works and scale it up.”
In spite of this clear need for internationalising innovative social enterprises, the vast majority of social entrepreneurs operate only on a local scale. A survey of social entrepreneurs we conducted in the global Impact Hub Network showed that only 5.7% of early-stage social entrepreneurs declared having been actively internationalising their work in the past year, and only about 17% of organisations reported attempts to scale their activities overall (locally or internationally).
Why internationalisation is a challenge for social entrepreneurs
These small numbers of internationalisation and scaling efforts among social entrepreneurs can be attributed to a number of reasons. First, there are fewer monetary incentives for growth in social entrepreneurship than in commercial entrepreneurship. Unlike for-commercial entrepreneurs, social entrepreneurs often serve disadvantaged groups and address problems affecting disenfranchised groups or future generations – in these cases the need for their services does often not translate into (financial) demand. Second, in comparison with commercial enterprises, growth is not as strongly driven by investors and shareholders, who often have more space-bound interests or mandates. Similarly, founders’ motivations can be hard to scale as well, as they often stem from a sense of responsibility towards their local community and the desire to fix a problem that they experience themselves.
Social entrepreneurs who aim to scale nonetheless also face a variety of challenges. Social ventures are often embedded deeply in complex and regulated service systems (e.g. secondary education) which are organised along the bounds of federal or state-level administrative units. In contrast with commercial markets, these systems are often less permeable for non-local actors, which provides another barrier to internationalisation. The broader ecosystem perspective shows that international support networks are disjointed and differences between countries’ policy frameworks can hinder SE internationalisation. Finally, current research has identified a lack of skills and competences as well as templates about modes of internationalisation for social entrepreneurs. In their study of social enterprises across Europe, Weber et al. (2015, p.53) make the rather pessimistic prognosis that “scaling across national borders is a major challenge for the social entrepreneurs of Europe and will remain so for the immediate future”.
Key competences of social enterprise internationalisation: first impressions
Against this background, Euclid Network, materahub, Synthesis Center for Research and Education, the International SEPT Competence Center at Leipzig University, Social Impact Award and the Social Entrepreneurship Center at WU Vienna have teamed up in the framework of an Erasmus+ KA 2 Project. The main objectives of this project are to identify the skills and competences gap impeding social entrepreneurs to internationalise. Building on these insights, we aim to develop an innovative training curriculum for internationalising social entrepreneurs, as well as support national social enterprises support organisations’ and advise European and national policy-makers to enhance the capacity of social entrepreneurs’ to internationalise.
As a first step, we used the past months for a deep dive into the topic. While data collection and analysis are still on their way and will help us gain a deeper understanding of the competences needed for internationalisation, some first insights are already worth noting.
Amongst others, we build our analysis on a reading of over 150 research papers, seven case studies and an analyses of 579 social enterprises from the Impact Hub network, as well as insights and experiences in the consortium.
1. Internationalisation is mastered by generalists and teams, not savants
Internationalisation is a complex process that can take several years and requires a lot of attention. Rather than being yet another job to be done, internationalisation can present a set of new tasks and processes that remain with the organisation, including understanding one’s own services on a very deep level, building and maintaining relationships abroad, impact measurement, managing distributed workflows, and more. In addition, entrepreneurs face a myriad of new questions associated with working in a different country, from language, social and legal differences to the big and small cultural differences.
Given the breadth of these demands, internationalisation is fairly demanding. As one of our interview partners, a social entrepreneur in the field of social inclusion put it:
“We were facing questions like ‘how to build a working micro-climate with our partners’, ‘how to navigate cultural differences’, ‘how to develop strategy’… we never received external support, we had to learn these skills the hard way.“
Our reading of prior research confirms this point, with dozens of (sometimes very different) skills and competences highlighted as “important” or “critical” by respective articles that look at the phenomenon from their respective angle. This suggests that, as it often is in entrepreneurs, there is no one single silver bullet. Instead, expanding a social enterprise across borders requires a broad set of different competences in the entrepreneurs’ team and ecosystem.
2. It takes a village to internationalise
Given the many differences competences needed for successful internationalisation, social entrepreneurs typically seek external support to make it happen. This support is not limited to funding, but often includes aspects of learning and building social capital. Our survey of internationalising social entrepreneurs in the Impact Hub networks provides us with some valuable clues (Table 1). Respondents indicated many areas in which external support was very important, including “building visibility and credibility” in the target country as well as its ecosystem, “feeling part of a larger community and network”, “find and keep good talent and staff” and “accessing new clients and beneficiaries”.
Accessing these resources and competencies requires require a broad network of relationship. Some resources can be best provided by expertise in the respective target market, others by training institutions, again others by advice from strong peer-networks. Therefore, any intervention aimed at supporting social entrepreneurs in international scaling will need to provide access to diverse networks of skill and expertise.
3. Different paths require different vehicles
Internationalisation can take different forms. Social entrepreneurs can decide to openly disseminate their knowledge by open sourcing their information and sharing their learnings live with anyway who wishes to replicate their learning. A good example of this is provided by Cola Life, a successful innovator in health and development who has recently codified and shared freely their key insights in an open source “playbook”. Social entrepreneurs can also disseminate their knowledge internationally by offering trainings, advocacy and consulting, as exemplified by the Viennese food bank Wiener Tafel, member of a European network of food banks, which has provided consulting to dozens of entrepreneurs replicating their approach across borders.
Other paths to internationalisation can provide more control and participation in the upsides of the venture. For example, the Styrian social enterprise atempo has pioneered franchising as a tool to grow their innovations in the field of inclusion and learning beyond country borders. Setting up and managing a franchise relationship requires a lot of investment and risk-taking from the entrepreneurs, but allows scaling atempo’s services and the tacit knowledge embedded in them while providing opportunities for mutual learning and quality assurance.
Our survey data shows that these different approaches call for different competences. Organisations that internationalise though branching (i.e.: open subsidiaries abroad) reported high levels of support needs in many areas, in particular with respect to “gaining visibility and credibility”, “accessing new clients and beneficiaries” and as “finding and keeping new talent”. Entrepreneurs who chose more open approaches to internationalisation showed different priorities. While gaining access to communities and networks was reported as highly important by many respondents, topics related to funding and human resources were important to only a few respondents.
Taken together, these findings underline the need to provide targeted support for internationalising social entrepreneurs. Support provision needs to be tailored to the respective internationalisation path chosen by the entrepreneurs, as well as to the challenges that arise from the fact that they scale impact and not merely commercial operations. Such support structures need to embrace different forms of learning, including learning from experts as well as successful peers. Doing so can have an essential effect on entrepreneurs, their ventures and their subsequent social impact.
As one respondent put it in an interview:
“What would I do differently if I were to do internationalisation all over again? I would allow myself or the team to reach out to people who have done it before, instead of thinking we need to go through the process all by ourselves.”
Going forward, creating and communicating such learning opportunities will be the main goal for the ESESII consortium.