A Proposal for a Standard With Innovation Management System

Teresa Costa and Luísa Carvalho
across the nonprofit, business, or government sectors”. These authors consider three primary ways to
distinguish between commercial and social entrepreneurship.
First, new commercial and social ventures diverge in terms of overall mission. While commercial
entrepreneurs are primarily concerned with private gains, social entrepreneurs are more interested in
creating social value. Nevertheless, commercial entrepreneurs may also produce social value in the
process of creating private gains, and on the other hand, social entrepreneurs may produce private
gains in the process of creating social value (Emerson and Twersky, 1996). However, with the
exception of secondary gains, these two types of organizations are guided by two very different
missions.
Second, commercial and social entrepreneurship differ severely in terms of performance
measurement (Austin et al., 2006). In the first type the performance is measured in terms of financial
performance (i.e., profitability, sales growth) and in the second type performance measures is less
standardized and more particular to a certain organization (the measure can vary by type of
organization, i.e., eduaction ou other). However, an effort has been made to minimize this difficulty,
through the development of mechanisms that can help to alleviate this subject and the creation of new
metrics to quantify value in the social sector (Young, 2006). The performance metrics, such as, sales,
profits, or other traditional financial measures are mostly more suitable to commercial
entrepreneurship. Social entrepreneurship includes more esoteric measures, such as, lives touched,
trees saved, or percent of emissions reduced. However it’s important that social entrepreneurship
measure their impact in society or environment. Most social projects must identify their own nonfinancial
metrics of success based on mission, industry, and ideal impact. Clearly, metrics measured
need to be positively correlated with the traditional financial measures, or the venture will not sustain
over time.
Third, commercial and social entrepreneurship diverge in terms of resource mobilization (Austin et al.,
2006). Regarding the ability to obtain financial resources, business entrepreneurs have an advantage
over those social entrepreneurs: the perspective of potential profits. That is the motivation of business
angels and venture capitalists. Other advantage is related with human resources, commercial
entrepreneurs are able to hire employees based on the same factor: potential returns. When
individuals decide to work for commercial entrepreneurs, they hope to expect to be in turn of their
performance financial rewards such as wages, benefits, future windfalls (i.e., stock options), or others.
Costa and Carvalho, 2011, tried to group the various definitions of social entrepreneurship having
found three major groups:
� First group: social entrepreneurship refers to the initiatives of social organizations in the search
for alternative financing strategies or as a way of creating social value through management
practices (Dees, 1998a; Austin, Stevenson and Wei-Skiller, 2006; Boschee, 1998).
� Second group: social entrepreneurship considers the independent initiatives of social
entrepreneurs who seek to alleviate a social problem and catalyze social transformation (Alvord,
2002; Alvord, 2004).
� Third group: social entrepreneurship includes a set of practices of social responsibility of
companies involved in partnerships with other sectors (Sagawa and Segal, 2000; Waddock,
1988).
In conclusion, and despite the differences between social and commercial entrepreneurship,
organizations can pursue commercial entrepreneurship, social entrepreneurship, or some
combination of both (Austin et al., 2006; Peredo and McLean, 2006). In fact, some scholars advocate
that organizations can have both commercial and social objectives, can be as hybrids (Davis, 1997)
and in this case have two bottom lines, one related with profits and other related with social value.
2. Social entrepreneurship and social innovation
Phills Jr., Deiglmeier and Miller (2008) expand the field of investigation from social entrepreneurship
to “social innovation”. According with these authors social innovation is a novel answer to a social
problem that is more effective, efficient, sustainable, than the existing solutions, that creates value
added to society as a whole rather than to private individuals. This first approach creates a great
differentiation between private problems and social problems, as well as between private value and
social value. This restricted view of social innovation evolved. This evolution was made through the
defining of social value of these authors. They defined social value as the creation of benefits or
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