Bangladesh Social Enterprise Project - Bangladesh Enterprise Institute

The Bangladesh Social Enterprise Project (BSEP) took a deliberately agnostic view of the
debates around ownership, legal structure and dividends, believing that different social
enterprise opportunities may benefit from different approaches. We believe that a more useful
definition is supplied by Professor Jose Santos of INSEAD business school in his paper ‘A Positive
Theory of Social Entrepreneurship’ 5 . His definition makes clear the economic role of social
enterprise and clarifies how it relates to conventional commercial activity, charities,
Governments and social activism.
Santos argues that conventional business focuses on value creation followed by value
appropriation. However there may be situations where positive externalities are created,
where a business could create significant value but be unable to appropriate it. These sorts of
activities would tend to be under‐supplied by the market as business people would have
insufficient incentive to do them. Whilst Government may seek to correct such market failures,
it often will not do so on behalf of groups which lack power or representation. The opportunity
for social entrepreneurs therefore arises from a combination of market and political failure, and
a social enterprise is defined as an activity which focuses primarily on value creation rather
than value appropriation.
5 2009. Available at
http://www.insead.edu/facultyresearch/centres/social_entrepreneurship/research_resources/documents/2009‐
23.pdf
BSEP: Policy Brief
Page 4