Manajemen | Fakultas Ekonomi Universitas Maritim Raja Ali Haji joeb.84.5.290-296
Journal of Education for Business
ISSN: 0883-2323 (Print) 1940-3356 (Online) Journal homepage: http://www.tandfonline.com/loi/vjeb20
Socially-Oriented Ventures and Traditional
Entrepreneurship Education Models: A Case
Review
Matthew M. Mars & Sharon Garrison
To cite this article: Matthew M. Mars & Sharon Garrison (2009) Socially-Oriented Ventures
and Traditional Entrepreneurship Education Models: A Case Review, Journal of Education for
Business, 84:5, 290-296, DOI: 10.3200/JOEB.84.5.290-296
To link to this article: http://dx.doi.org/10.3200/JOEB.84.5.290-296
Published online: 07 Aug 2010.
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Socially-OrientedVenturesandTraditional
EntrepreneurshipEducationModels:A
CaseReview
MATTHEWM.MARS
SHARONGARRISON
THEUNIVERSITYOFARIZONA
TUCSON,ARIZONA
ABSTRACT.Asanacademicareaof
study,entrepreneurshiphasbecomeinstitutionalizedandnowincludesstudentsfroma
diverserangeofdisciplinaryfields
(M.M.Mars,2006,2007).Consequently,
students’rangeofentrepreneurialinterests
hasalsobecomemorediverseinscopeand
nature.Specifically,morestudentsstudying
entrepreneurshipareexpressinginterestin
socially-orientedventures,whichchallenge
theestablishedinstructionalmethodsand
strategiesthatfacultyhaveusedinteachingentrepreneurshipcourses.Thepresent
articleoutlinessuchchallengesthataprofessorfacesinteachingaventurefinance
coursethatincludesentrepreneurshipstudentspursuingasocially-orientedventure
aspartofayear-longexperientialproject.
Theauthorsalsoprovide2complementary
casestomoreadequatelyframerecommendationsforpractice.
Keywords:entrepreneurshipeducation,
financeeducation,socialentrepreneurship
Copyright©2009HeldrefPublications
290
JournalofEducationforBusiness
A
lthough entrepreneurship is relatively new to higher education,
itisamongthemostrapidlyexpanding
fields of study in colleges and universities in the United States (Kuratko,
2006).TheKauffmanCenterforEntrepreneurial Leadership Staff (2001)
indicated that the growth of entrepreneurship education had resulted in
the following: (a) an endowed chair
with a salary averaging $2.16 million
establishedevery13days,(b)program
enrollments as high as 1,500 students
persemesterperinstitution,(c)student
case competitions with prizes as high
as $10,000, and (d) a significant rise
inthenumberofstudent-foundedcompanies. Recently, significant efforts to
integrateentrepreneurialprinciplesinto
disciplinesandfieldsofstudyoutsideof
business schools have emerged across
the higher education landscape (Katz,
2003;Kuratko,2005;Mars,2007).The
growth and evolution of entrepreneurshipeducationhasalsostrengthenedthe
entrepreneurial capacity of the student
tolaunchbusinessventures—botheconomic and social—out of colleges and
universities and into the marketplace
(Mars, Slaughter, & Rhoades, 2008).
Inshort,theexpansionofentrepreneurship education warrants ongoing attention from scholars, administrators, and
practitioners.
The standard components comprising
entrepreneurshipcurriculaarecommonto
themanagementfieldsandincludestrategy,marketing,businesslaw,newventure
finance, and corporate entrepreneurship
(Benson, 1993). The move to integrate
entrepreneurshipeducationintodisciplinaryfieldsnotcommontobusinessschools
presents the faculty teaching entrepreneurship and entrepreneurship-related
courses with instructional challenges
(Katz, 2003). Specifically, entrepreneurshipinstructorscurrentlyfaceavarietyof
challengeslinkedtothediversificationof
theentrepreneurshipstudentdemographic. These challenges have led scholars
such as Levenburg, Lane, and Schwarz
(2006) to argue the need for the development of instructional approaches and
strategiesfordeliveringentrepreneurship
educationtostudentsacrossawiderange
ofdisciplinaryfields.
The present article explores the
instructional challenges related to
socialentrepreneurship,manyofwhich
students in the McGuire Center for
Entrepreneurship in the Eller College
of Management at the University of
Arizonapresentedtoaseasonedprofessor in a new venture finance course.
Specifically, these students sought
to create a public venture targeting a
social crisis: the financial exploitation
ofelderlypeople.Althoughthepursuit
of a socially-oriented venture provided
a rich and dynamic laboratory for students engaged in entrepreneurial studies, the same complexities challenged
those faculty offering traditional entrepreneurship courses and who were not
accustomed to addressing enterprise
creationinthepublicsector.Thepresent
articlerevealsanddiscussessuchcomplexitiesthroughanalysisoftheUniversityofArizonacaseandconcludeswith
recommendations applicable to other
faculty engaged in cross-disciplinary
entrepreneurshipeducation.Inaddition,
the concluding recommendations are
strengthenedthroughthebriefconsiderationoftwoadditionalcasesofstudentdrivensocialentrepreneurship.
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BackgroundandLiterature
The entrepreneurial domain of the
public-sector economy has recently
received more attention from scholars
andpolicymakers.Specifically,theterm
social entrepreneurship has been used
widely by academics, policymakers,
public-sectorleaders,andsocial-change
activists. Thompson, Alvy, and Lees
(2000) described social entrepreneurship as the process of applying entrepreneurial principles to creative vision,
leadership, and the will to succeed in
inducing social change. In providing a
sophisticated multicase study analysis,
Alvord,Brown,andLetts(2004)argued
themeritsofusingentrepreneurialprinciples and practices to create sustainableandscalablesocialtransformation.
Thompson(2002)specifiedsocialentrepreneurshipasavehicleforaddressing
socialneedsthatwerenotaccountedfor
andwerebeingundermanagedbylocal,
state, or national governments. Bornstein(2004)provideddetailedaccounts
of social entrepreneurs who were successful in influencing global social
change. Dees, Emerson, and Economy
(2001) mapped out the skills and techniquesthatthoseentrepreneursentering
socially-orientedventuresneed.Hebert
and Link (1989) described entrepreneurship as a process that engages the
marketasalevertosolvemyriadproblems that face economies and societies
atlarge.Therefore,theconceptofsocial
entrepreneurship is not new but does
remainwidelyundertreatedintheentrepreneurshipandrelatedliteratures.
Entrepreneurs pursuing socially-orientedventuresdonotdosoatthecost
of personal financial compensation.
Although no data on the salaries of
socialentrepreneursareknowntoexist,
incomedataforleadersofnot-for-profit
organizations indicate that administrativesalariesinthepublicsectorarereasonably competitive. For example, in
PimaCounty,Arizona,themeanannual
salary of a nonprofit organization’s
executive director during the years of
2006 to 2007 was $77,667, with 25%
of executive directors reporting annual
incomesofmorethan$91,600(Arizona
State University Center for Nonprofit Leadership & Management, 2007).
The salary range of this professional
group was competitive relative to the
2004medianfamilyincomeof$38,687
in Pima County (U.S. Census Bureau,
2007).Whenconsideringtheformalization of social entrepreneurship and the
relativelycompetitivesalariesofleaders
ofpublic-sectororganizations,sociallyorientedentrepreneurshipismorelikely
to capture the attention and interest of
entrepreneurial-minded students in a
widerangeofdisciplinaryfields.
Lounsbury and Strang (in press)
identifiedsocialentrepreneurshipasan
emergentinstitutionallogicthatlargely
took hold through the academic movementtoestablishnonprofitresearchand
degree programs across American colleges and universities. In 1978, Yale
University pioneered this movement
with the creation of the Program for
Non-Profit Organizations. Other early
institutional leaders in the creation
of nonprofit management programs
included the State University of New
York, Stony Brook; University of Missouri at Kansas City; and Carnegie
MelonUniversity.By2003,therewere
242 colleges and universities offering
graduateprogramsspecifictononprofit
management. Lounsbury and Strang
also indicated that academic offerings
in social entrepreneurship, which now
includestand-alonecourses,certificates,
andformaldegreeprograms,originated
with the nonprofit management educationmovement.
The emergence of social entrepreneurshipasapointofscholarlyinterest
andinstructionalvaluehasbeendiverse
and widespread. For example, the
Center for the Advancement of Social
Entrepreneurship in the Fuqua School
of Business at Duke University main-
tains a robust set of research activities
and curricular offerings (including an
MBA concentration) specific to social
entrepreneurship. Similarly, Yale University School of Management has the
Program on Social Enterprise, which
produces research and offers courses
and extracurricular programs specific
to social entrepreneurship. Babson
College, which is a widely recognized
institutional leader in entrepreneurship
education, offers a degree concentration in social entrepreneurship at the
undergraduate and graduate levels.
Sterling College, a faith-based college,
offersanundergraduatemajorinsocial
entrepreneurship.Inadditiontooffering
courses on social entrepreneurship, the
University of California at Berkeley’s
HaasSchoolofBusinessannuallyhosts
theGlobalSocialVentureCompetition,
whichprovidessocially-mindedstudent
entrepreneurs from around the world
with the opportunity to compete for
seed funding for emergent social ventures.Inaddition,nationalandinternational professional organizations, such
as the University Network for Social
Entrepreneurship(2008),haveemerged
to provide a venue for academics to
discussandsharethebestpracticesspecific to social entrepreneurship. In the
presentarticle,weofferexamplesofthe
many diverse academic programs and
scholarlyeffortsspecifictosocialentrepreneurship that have emerged across
theAmericanhighereducationsystem.
Despitethecreationofcurricularand
experiential programs and centers specific to social entrepreneurship, many
socially oriented students seeking to
enhance their education by acquiring
entrepreneurial training must do so
through more traditional entrepreneurship education models. In accordance,
faculty members who use traditional
models to teach have been challenged
to adapt entrepreneurship curricula to
theincreasinglydiverseinterestsofstudents.Inshort,theongoingexploration
of innovative pedagogical approaches
specific to socially oriented entrepreneurshipisrequired.
SettingandCourse
TheMcGuireCenterforEntrepreneurshipintheEllerCollegeofManagement
May/June2009
291
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attheUniversityofArizonaisnationally
andinternationallyrecognizedforexcellence in entrepreneurship education.
The reputation of the McGuire Center
as a leader in entrepreneurship education was reflected best by its ranking
as the fifth-best undergraduate program
in entrepreneurship by the U.S. News
& World Report (2009) rankings. The
philosophyandmissionoftheMcGuire
Center program rests on the principles
andstrategiesassociatedwithdeveloping
innovativeconceptsintoviablebusiness
solutions and ventures. The McGuire
Centerstudentpopulationisdiverseand
comprises of undergraduate and graduate students pursuing primary degrees
in business administration, natural sciences,engineering,opticalsciences,fine
arts, and liberal arts (see Table 1). As
expected, the majority of McGuire studentsareinterestedinmarketventuresin
private-sectorindustriesthatrangefrom
informationtechnologytoopticstobiotechnology. In addition, the McGuire
Centerseeks,inpart,toleverageitshighqualitystudentbodytopromoteuniversity entrepreneurship and the transfer
of knowledge out of laboratories and
into the marketplace.1 Considering the
heavy emphasis placed on the transfer
of knowledge and the development of
high-techenterprises,anonprofitventure
conceptisnotthenormattheMcGuire
Centerprogram.Thestudentventurefeaturedinthepresentarticlewasthesingle
nonprofitconceptofthe19studentteams
comprisingtheMcGuireCenterclassof
the2006–2007academicyear.
The McGuire curriculum is highly
structured and constructed using the
well-established principles of traditional entrepreneurship. The 1-year (twosemester) program requires students
to form teams of four, each of which
is required to develop an investmentquality new-venture plan. The primary
criteria for projects approved by the
McGuire Center are that the concepts
areinnovativeandscalableandthatbarrierstothemarketexist(e.g.,protection
ofintellectualpropertythroughpatents,
copyrights, and trademarks). The followingsequentialbenchmarksguidethe
venture-development process: formulation, validation, strategies, businessplanauthorship,funding,andoutcomes.
Thesebenchmarksrequirethateachstudentteamidentifyasocialoreconomic
problem that can be solved through an
entrepreneurialsolution.Thissolutionis
thenvalidated,whichleadstothedevelopment of a venture plan that includes
critical marketing, finance, and strategy data. At the conclusion of the fall
semester,eachstudentteamshouldhave
a well-defined, comprehensive venture
planthatisthencontinuouslyrefinedand
introducedtoaudiencesintheuniversity
andoutsidebusiness-plancasecompetitionsthroughoutthespringsemester.
Theprecedingbroadbenchmarksand
venture-plandevelopmentprocessesare
appropriate to the entrepreneurial formationofanonprofitventure.However,
theintricaciesofthepublicsectorvary
in significant ways from the standard
practices and procedures common to
the private sector. Examples of such
intricacies include the development of
a board of advisors, community buildingandsupport,relianceonpublicand
philanthropic funding, and the regulated financial infrastructure inherent to
a nonprofit start-up effort. The present
articledealswiththedevelopmentofa
financial infrastructure that meets state
andfederalregulationrequirementsfor
TABLE1.McGuireCenterforEntrepreneurshipStudentDemographic,
2006–2007AcademicYear
Numberofstudents
Primaryfieldofstudy
Business
Engineering
Finearts
Liberalarts
Naturalorhardsciences
Opticalsciences
292
Undergraduate
Graduate
45
1
2
3
0
0
20
0
0
0
2
1
JournalofEducationforBusiness
anonprofitorganizationandisspecific
to the experiences and observations of
theinstructorofthenewventurefinance
course that is required coursework for
allMcGuireCenterstudents.
The venture-plan development process is supported in part by more traditionalacademiccourses.Specifically,
students are required to complete a set
of three courses that include entrepreneurialenvironmentsandanalysis,marketing new ventures, and new-venture
finance.Thispackageofcoursesequips
students with the skills and knowledge
requiredtomoreeffectivelyexecutethe
development of the venture plan. The
entrepreneurship courses are anchored
in the philosophies and principles of
traditional profit-seeking entrepreneurship.Although the theoretical concepts
framing the courses are applicable to
socially-orientedventures,thetechnical
knowledge does not inherently support
social entrepreneurship. The course,
Finance for New Ventures, is part of
thesenior-yearcurriculumandmustnot
onlyfacilitatethepreparationofstudent
venture-plan projects but also satisfy
curricular requirements of the finance
department(seeAppendix).
Venture-DevelopmentProjects
Working in teams of four, students
wererequiredtodevelopsimulatedventures according to a set of prescribed
deliverablesthatcorrespondedwiththe
previously described entrepreneurial
benchmarks. The venture-plan development process constitutes a robust
experiential-learningexperience,which
iscommontothefieldofentrepreneurshipeducation(Jones&English,2004;
Solomon, Duffy, & Tarabishy, 2002).
The McGuire Center has numerous
resources, including databanks, mentors, and advisors. The entrepreneurial finance class, which is completed
during the first of the two semesters
of the entrepreneurship program, is an
importantelementintheoverallproject
becausestudentsarecoachedonpreparingthefinancialcomponentsoftheplan
throughouttheclass.
Thestepsstudentstookinpreparation
for their projects in the new-venture
finance course included forecasting
sales, determining relevant costs, and,
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forecastingmonthlyfinancialstatements
for5yearsandthenyearlytoperpetuityorwhenbusinessisharvested.Students were also required to determine
freecashflows,preparecommon-sized
statements, and calculate ratios and
other performance benchmarks. Studentsdrewindustrycomparisons,analyzedfinancingalternatives,andcalculatedandanalyzedvariousmeasuresof
value. Students prepared preliminary
components, presented to classes and
outside judges, and then revised their
work throughout the duration of the
course. Students also received ongoing support throughout the following
semesterfromthefinanceinstructoras
they refined their ventures in preparationforregionalandnationalbusiness-
plan competitions and, in some cases,
actual market launches. The venturedevelopmentprojectsfocusedonmany
types of startup ventures, but the corporate form of ownership was typical
for the plans. Although the industry
andproductvariedformostplans,studentsusedarelativelystandardmodel
of financial component preparation in
the development of the venture plans.
The case framing this study was the
exception and was not the corporate
form,asstudentschosetofocusonthe
developmentofanonprofitventuretargeting the widespread social and economic problem of financial exploitationoftheelderly.Thecasepresented
tothestudentsandtheprofessorofthe
entrepreneurialfinancecourseincluded
numerous challenges and complications related to the financial aspects
ofsocialentrepreneurship.Thesechallenges are likely to be evident across
entrepreneurship education programs
asthefieldcontinuestobeinstitutionalizedandmorestudentscometoview
entrepreneurshipasaleverforcreating
socialchangeandadvancingthepublic
good.Therefore,thepresentcasestudy
was timely and highly relevant to the
workoffacultyinthefieldsoffinance,
entrepreneurship,andmanagement.
Case:SeniorAdviceand
FinancialEducation(S.A.F.E.)
Likemostentrepreneurs,thestudents
whocreatedS.A.F.E.identifiedaproblemwarrantingasolution.Theproblem
thesestudententrepreneurstargetedwas
the national epidemic of the elderly
being financially victimized through
a number of manipulative strategies.
AccordingtotheS.A.F.E.ventureplan
(Gillingham, Ripley, & Nunez, 2007),
14,000 elderly Americans are financially exploited each day. The student
entrepreneurs used an entrepreneurial
strategy to develop a nonprofit venture
thattargetedandpreventedtheongoing
exploitationoftheelderly.Accordingly,
thestudentsfollowedthestandardsteps
of entrepreneurship, which included
identifying a problem, formulating a
solutionmindfulofthemarketthatthe
problem affects, validating the principles of the solution, strategizing the
implementationofthesolution,authoring a comprehensive venture plan, and
considering the steps to launching the
venture into the market. However, the
socialorientationofthestudentventure
required alternative approaches to the
financialaspectsoftheirventures.
Thefollowingdescriptionanddiscussionsummarizesnotonlythechallenges
facing students interested in becoming
social entrepreneurs, but also the real
financial barriers to establishing actual
social ventures aimed at solving some
of the most pervasive problems facing
society today. Following the presentation of the case, we discuss potential
methodsofintegratingsocially-oriented
projects into the more standard, corporate-minded entrepreneurial finance
curriculum.Oneofthefirstassignments
duringtheventurefinancecoursewasto
presentpreliminaryfinancialstatements
and to calculate the return on owners’
equity.Thenonprofitteamstruggledin
determining a means by which to calculatereturnswhentheyhadnoowners
or equity for their enterprise. This was
the first of a number of finance-related
difficulties that the team encountered
overthecourseoftheprogrambecause
ofthepursuitofasocially-orientedventure.Although the team members were
advised that they would have to step
awayfromthestandardfinancialmodels
anddomuchoftheresearchandanalysis on their own, they were committed to their project and readily took on
thechallengesthattheyfaced.Inshort,
these social-minded student entrepreneurs were committed to their venture
conceptandtenaciousintheirapproach,
whicharecommondenominatorsofall
successful entrepreneurs. Among the
challengesfacedbytheaspiringsocial
entrepreneurs was to learn about the
chart of accounts for nonprofit organizations (NPO) and how they differed
from other accounting practices that
the students had learned in previous
courses. To this end, the finance professorencouragedthestudentstointern
withalocalNPOtogetasenseofthe
differencesinaccountingpractices.As
part of that internship, they performed
research on the NPO segment of the
economy and how it impacted various
economicfactors,suchasemployment.
The team members also researched
which financial indicators would be
moreappropriateforanendeavorsuch
astheirs,eventothepointofdevising
some ratios that would be more relevant for their plan. Difficulties arose
when the students attempted to gather
financialdataoncomparableventures.
Different from other teams in the program, the S.A.F.E. venture-plan team
was not able to use the McGuire Center,asithadnodatabankforgathering
informationoncomparables.Theteam
members contacted numerous organizations,gatheredinformationbyhand,
and compiled the data on their own.
They were faced then with the prospect of how to pin a value on their
entity. Many of the typical academic
models for valuation posed difficulties
fortheteam,secondarytotheabsence
of ownership and equity. In response,
thestudentsdemonstratedvalueonthe
basisofthemoresubjectivebutmeaningful dimensions. For example, the
value of the emerging social venture
wasforecastedonthebasisofpotential
loss prevention and the minimization
of public funds needed to offset the
losses incurred by the elderly because
offinancialexploitation.
S.A.F.E.Outcomes
InspiteofthechallengestheS.A.F.E.
team members faced, they completed
theirfinancecourseandeventuallycompleted the McGuire Center program
requirements. Through an internship at
a local NPO, the students were able to
derivecomparativefinancialinformation
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293
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forsimilarnonprofitventures.Usingthe
comparative information, the students
completed ratio analyses and meaningful performance forecasts. The income
forecastsledthestudentstodecideona
discountedcash-flowapproachtovaluationoftheiremergingsocialenterprise.
Thediscountratewasanissue,butthey
used a risk-adjusted discounted rate by
using risk premia of comparable forprofitentities.
In follow-up discussions, the team
expresseditsfeelingofaccomplishment
for completing the project in spite of
theobstaclesithadfaced.Inadditionto
thelearningoutcomesachievedbyother
teamsintheprogram,thesocialentrepreneurs reported gaining a deeper understanding of a variety of financial topics
as a result of gathering financial information specific to public-sector organizations and the use of valuation, which
were approaches somewhat unconventionalfortheMcGuireCenterprogram.
The S.A.F.E team performed well in
end-of-term presentations. The dean of
theEllerSchoolmadetheteamthefocus
ofaconsortiumoflocalNPOrepresentativesandacademics.Moreover,theteam
received recognition in the local press
and was able to establish a succession
planwithanestablishedNPOlocatedin
Californiathattargetedfinancialexploitationofelderlypopulations.
DiscussionandComplementary
Cases
Despite the challenges of pursuing
anunconventionalsocially-orientedventure, the S.A.F.E. students more than
satisfiedthelearningobjectivessetforth
by the McGuire Center for Entrepreneurshipandthefinancedepartment.In
addition,theteam’stenacityresultedin
an external network with the potential
tobringanelderlyfinancialexploitation
prevention program to the community
surrounding the University of Arizona.
At the conclusion of the project, the
teamofsocialentrepreneurswasworking toward formalizing partnerships
with several Southern Arizona banks
and credit unions, and with theTucson
Police Department’s Economic Crime
Prevention Unit. The S.A.F.E. experience points to the need for entrepreneurshipeducationprogramstoprovide
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JournalofEducationforBusiness
moreflexibilityinexistingcurriculathat
are rooted in the dominant entrepreneurial framework centered on wealth
creation and accumulation. In particular, innovative value indicators specific
to the social impacts of entrepreneurial
conceptsshouldbedevelopedandintegrated into entrepreneurship curricula.
For example, avoiding senior citizens’
displacement from preferred housing
because of financial exploitation was a
potential outcome of the S.A.F.E. conceptthatheldsocialvalue.Concurrentto
developing socially-oriented valuation
measuresandtechniques,facultyteachingentrepreneurshipshouldcontinueto
encourage students to explore innovative approaches to embedding socially-
oriented venture models into existing
for-profitentrepreneurialmodels.
Thenumberofsocially-orientedenterprisesthathavebeencreatedbycollege
students has grown. One of the most
well-known student-led social ventures
is Teach for America, which emerged
outofanundergraduatethesisconductedbyWendyKoppwhilecompletinga
degree at Princeton University (Kopp,
1994). To complement our description
andenhanceourdiscussionofthevaluation challenges presented throughout
the S.A.F.E. project, we briefly outline
two examples of socially-oriented venturesthathaveemergedfromacademia
andthroughtheeffortsofentrepreneurial-mindedstudents.
The first complementary case to the
S.A.F.E.projectisWorldofGood.World
of Good is a profit-seeking enterprise
with a socially-oriented underpinning
thatwascreatedin2005bythreeMBA
studentsattheUniversityofCalifornia
at Berkeley’s Haas Business School.
The three entrepreneurial-minded
graduate students were interested in
creating a fair-trade retail platform for
artisans, in particular female artisans,
located in developing countries (World
of Good, 2008). The company was
launchedusing$35,000inseedmoney
earnedfromstudentbusiness-plancompetitions,modestinvestmentsfromfaculty supporters, and more significant
investmentsbyventurecapitalists.
Thestudentschosetopursuethetraditional entrepreneurial path of creating a for-profit venture, but with the
underlying goal of creating and sus-
tainingsocialchangethroughfair-trade
practices.Thestudentsgainedtheconfidence of investors and startup funding through a combination of business
trainingandexperience,asolidventure
developmentplan,andtheoverarching
merits of their innovative approach to
leveraging the market for the purpose
ofcreatingsocialchange.
Today, the business has proven to
besustainableandscalable,with1,000
retaillocationsacrosstheUnitedStates
anda300%jumpinsalesfrom2005to
2006. Further momentum has recently
beengainedthroughanemergentposition as an eBay retail community. In
addition, the company has formed a
NPO arm that promotes fair-trade policy development at the international
level. By 2006, the efforts of the sister
organization had reached 142 artisan
groups in 34 countries and produced
tangible results that included the creation of a computer lab for artisans in
SouthAfricaandafiltrationsystemthat
suppliescleanwatertoartisansinGuatemala.Inshort,theWorldofGoodcase
demonstrated the merits and efficacies
of socially-oriented students engaged
in mainstream for-profit avenues and
strategies for creating sustainable and
scalable social change through entrepreneurship. In such circumstances,
traditional valuation techniques remain
applicable to the socially-conscious
efforts of students pursuing an entrepreneurship education. Thus, we recommend that entrepreneurship faculty
challenged with the task of supporting
socially-orientedstudentsexploretraditionalprofit-drivenapproachestocreating new ventures that are underpinned
with social agendas. Furthermore,
we encourage faculty teaching entrepreneurship to challenge the common
assumptionthatsocialentrepreneurship
can occur only through the creation
of NPOs. By broadening the scope of
traditional entrepreneurship to include
socially-orientedventures,studentsand
facultyareprovidedwithabroaderplatformonwhichtodevelopentrepreneurialsolutionstosocialproblems.
Our second concluding case aligns
more closely with the commonly held
conceptions of social entrepreneurship.
Specifically,thecasecentersonaNPO
developed at the University ofArizona
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bytwograduatestudentsinthefinearts
college;thesestudentsaugmentedtheir
training with entrepreneurship education. The venture, SharMoore Children’sProductions,makesauniqueand
innovativetheatrecurriculumaccessible
to10elementaryschoolsinfourpublic
school districts located across theTucson, Arizona metropolitan area (SharMoore Children’s Productions, 2008).
Thecurriculumwasdesignedtoengage
students in the arts and to encourage
betterperformanceinallaspectsofeducationthroughthedevelopmentofcreativethinkingandself-confidence.
The venture was created as a 501(c)
tax-exemptorganizationin2005bythe
twostudententrepreneurs,withhelpfrom
theMcGuireCenterandtheuniversity’s
technology transfer office. Initial funding for the venture’s launch consisted
ofamodest$30,000tosupportresearch
onthecurriculum,whichwasanchored
in the fine arts college. Following the
development of the curriculum and the
creation of an implementation model,
theemergentsocialentrepreneursbuilta
$40,000operatingbudgetthatsupported
the implementation of the curriculum
andatwo-personstaff.
SharMoore’snow-expandedoperating
budget is diverse and comprises grant
awardsandprivatedonations.Although
this patchwork finance structure represents risk and uncertainty, SharMoore
Children’s Productions has proved to
be a viable and scalable venture. In 3
yearsofoperation,theorganizationhas
expandedfromonly4schoolsacrossone
schooldistrictto10schoolsacrossfour
schooldistricts.Inaddition,SharMoore
Children’s Productions has increased
its operating budget to $100,000 and
retains contracts with 25 artists who
deliverthecurriculumtochildren.This
exampledemonstratestheentrepreneurial potential of nonprofit venture conceptsandthecapacityforsuchventures
togrowandbecomesustainable,albeit
through diverse and sometimes modest
fundingresources.
WorldofGoodandSharMooreChildren’sProductionsunderscorethevalue
ofcreativeandlessconventionalstrategiestostudentsinterestedinaddressing
thesocialproblemsthroughthedevelopment and implementation of entrepreneurialsolutions.InthecaseofWorldof
Good,creatingsocialchangebyengaging the private market through a traditional profit-seeking entrepreneurial
approachwasanunconventionalmodel.
Similar to the subjective value measurestheS.A.F.E.teamusedtodevelop
the discounted cash flow model, the
entrepreneurs behind World of Good
and SharMoore Children’s Productions
faced challenges in finding alternative value indicators that attracted the
attentionandeventualbuy-inofventure
capitalistsortheinterestandsupportof
thoseparticipatingingrantfundingand
individualphilanthropists.Thesociallyoriented value indicators of World of
Goodcenteredonthepositiveoutcomes
associatedwithprovidingdisadvantaged
artisanswiththeopportunitytorealizea
fair wage. In the case of SharMoore
Children’s Productions, we can understandvalue,inpart,throughthenumber
of students exposed to the arts who
otherwise would not have had such an
opportunity.Inbothcases,wecanestimateexpostsocialvaluethroughsuch
indicators as the community improvements made byWorld of Good artisan
beneficiaries because of earning fair
wagesandtheexpectedincreasesinthe
academicperformanceofthosestudents
who were exposed to the arts through
SharMooreChildren’sProductions.The
expostestimatesofsocialvaluelinked
toWorld of Good and SharMoore provide guideposts for professors seeking
valuation techniques and strategies for
their students’ entrepreneurial projects
that center on socially-oriented venture concepts. Although far less scientific, faculty should also work with
socially-oriented student entrepreneurs
todevelopsubjectiveforecastmeasures
to communicate to external audiences
thepotentialimpactofproposedsocial
venture concepts on those in targeted
markets. Subjective but well-thoughtoutforecastsarealsolikelytoattractthe
attention of forward-thinking venture
capitalistsandhighlyresourcedphilanthropic organizations such as the Skoll
Foundation and the Bill and Melinda
Gates Foundation. On the basis of the
S.A.F.E.projectandtheWorldofGood
and SharMoore Children’s Productions
cases, we conclude with the following
recommendationstofacultyengagedin
entrepreneurship education or working
with entrepreneurial-minded students:
(a) Do not automatically reject a studentproposalthatdoesnotfitthemold
of an established norm; (b) maintain
openlinesofcommunicationwithother
instructors, program leaders, and professionals; (c) be willing to consider
applying academic theory in new and
innovativeways;and(d)whenstudents
areenthusedaboutanidea,trytomatch
orevenexceedtheirenthusiasm.Failure
occurs only when learning objectives
arenotmet,whichisindependentofthe
overallfeasibilityandlikelysuccessof
asimulatedventure.
The present case introduces further
to the business education literature the
need to consider more sophisticated
instructional strategies for integrating
asocialdimensionintotraditionalmanagementpedagogy.Weforecastthatthe
developmentofsuchstrategiesholdsthe
potential for replication and advancement,whichisparticularlyimportantin
light of the growing trend of developing social agendas through the innovative channels that have emerged from
today’s entrepreneurial economy. In
addition,theongoinginclusionofpublic dimensions in business curricula
stands to provide further substance to
thegrowingemphasisbusinesscolleges
now place on corporate integrity and
socialresponsibility.
NOTES
1. Although centered on for-profit models of
entrepreneurship,theoutcomesofuniversitytechnology and knowledge transfer include socialvalue outputs (Mars, Bercovitz,&James,2009).
However,thepresentarticlefocusesontheapplicationofentrepreneurialstrategiestodirectlyand
primarilyinducesocialchange.
MatthewM.Marsisthedirectorofknowledge
management in the McGuire Center for Entrepreneurship at The University of Arizona. His
research focuses on the entrepreneurial dimensions of contemporary higher education environments with particular emphasis on student
entrepreneurship.
Sharon Garrison is a senior lecturer in the
departmentoffinanceattheEllerCollegeofManagementatTh
ISSN: 0883-2323 (Print) 1940-3356 (Online) Journal homepage: http://www.tandfonline.com/loi/vjeb20
Socially-Oriented Ventures and Traditional
Entrepreneurship Education Models: A Case
Review
Matthew M. Mars & Sharon Garrison
To cite this article: Matthew M. Mars & Sharon Garrison (2009) Socially-Oriented Ventures
and Traditional Entrepreneurship Education Models: A Case Review, Journal of Education for
Business, 84:5, 290-296, DOI: 10.3200/JOEB.84.5.290-296
To link to this article: http://dx.doi.org/10.3200/JOEB.84.5.290-296
Published online: 07 Aug 2010.
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Socially-OrientedVenturesandTraditional
EntrepreneurshipEducationModels:A
CaseReview
MATTHEWM.MARS
SHARONGARRISON
THEUNIVERSITYOFARIZONA
TUCSON,ARIZONA
ABSTRACT.Asanacademicareaof
study,entrepreneurshiphasbecomeinstitutionalizedandnowincludesstudentsfroma
diverserangeofdisciplinaryfields
(M.M.Mars,2006,2007).Consequently,
students’rangeofentrepreneurialinterests
hasalsobecomemorediverseinscopeand
nature.Specifically,morestudentsstudying
entrepreneurshipareexpressinginterestin
socially-orientedventures,whichchallenge
theestablishedinstructionalmethodsand
strategiesthatfacultyhaveusedinteachingentrepreneurshipcourses.Thepresent
articleoutlinessuchchallengesthataprofessorfacesinteachingaventurefinance
coursethatincludesentrepreneurshipstudentspursuingasocially-orientedventure
aspartofayear-longexperientialproject.
Theauthorsalsoprovide2complementary
casestomoreadequatelyframerecommendationsforpractice.
Keywords:entrepreneurshipeducation,
financeeducation,socialentrepreneurship
Copyright©2009HeldrefPublications
290
JournalofEducationforBusiness
A
lthough entrepreneurship is relatively new to higher education,
itisamongthemostrapidlyexpanding
fields of study in colleges and universities in the United States (Kuratko,
2006).TheKauffmanCenterforEntrepreneurial Leadership Staff (2001)
indicated that the growth of entrepreneurship education had resulted in
the following: (a) an endowed chair
with a salary averaging $2.16 million
establishedevery13days,(b)program
enrollments as high as 1,500 students
persemesterperinstitution,(c)student
case competitions with prizes as high
as $10,000, and (d) a significant rise
inthenumberofstudent-foundedcompanies. Recently, significant efforts to
integrateentrepreneurialprinciplesinto
disciplinesandfieldsofstudyoutsideof
business schools have emerged across
the higher education landscape (Katz,
2003;Kuratko,2005;Mars,2007).The
growth and evolution of entrepreneurshipeducationhasalsostrengthenedthe
entrepreneurial capacity of the student
tolaunchbusinessventures—botheconomic and social—out of colleges and
universities and into the marketplace
(Mars, Slaughter, & Rhoades, 2008).
Inshort,theexpansionofentrepreneurship education warrants ongoing attention from scholars, administrators, and
practitioners.
The standard components comprising
entrepreneurshipcurriculaarecommonto
themanagementfieldsandincludestrategy,marketing,businesslaw,newventure
finance, and corporate entrepreneurship
(Benson, 1993). The move to integrate
entrepreneurshipeducationintodisciplinaryfieldsnotcommontobusinessschools
presents the faculty teaching entrepreneurship and entrepreneurship-related
courses with instructional challenges
(Katz, 2003). Specifically, entrepreneurshipinstructorscurrentlyfaceavarietyof
challengeslinkedtothediversificationof
theentrepreneurshipstudentdemographic. These challenges have led scholars
such as Levenburg, Lane, and Schwarz
(2006) to argue the need for the development of instructional approaches and
strategiesfordeliveringentrepreneurship
educationtostudentsacrossawiderange
ofdisciplinaryfields.
The present article explores the
instructional challenges related to
socialentrepreneurship,manyofwhich
students in the McGuire Center for
Entrepreneurship in the Eller College
of Management at the University of
Arizonapresentedtoaseasonedprofessor in a new venture finance course.
Specifically, these students sought
to create a public venture targeting a
social crisis: the financial exploitation
ofelderlypeople.Althoughthepursuit
of a socially-oriented venture provided
a rich and dynamic laboratory for students engaged in entrepreneurial studies, the same complexities challenged
those faculty offering traditional entrepreneurship courses and who were not
accustomed to addressing enterprise
creationinthepublicsector.Thepresent
articlerevealsanddiscussessuchcomplexitiesthroughanalysisoftheUniversityofArizonacaseandconcludeswith
recommendations applicable to other
faculty engaged in cross-disciplinary
entrepreneurshipeducation.Inaddition,
the concluding recommendations are
strengthenedthroughthebriefconsiderationoftwoadditionalcasesofstudentdrivensocialentrepreneurship.
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BackgroundandLiterature
The entrepreneurial domain of the
public-sector economy has recently
received more attention from scholars
andpolicymakers.Specifically,theterm
social entrepreneurship has been used
widely by academics, policymakers,
public-sectorleaders,andsocial-change
activists. Thompson, Alvy, and Lees
(2000) described social entrepreneurship as the process of applying entrepreneurial principles to creative vision,
leadership, and the will to succeed in
inducing social change. In providing a
sophisticated multicase study analysis,
Alvord,Brown,andLetts(2004)argued
themeritsofusingentrepreneurialprinciples and practices to create sustainableandscalablesocialtransformation.
Thompson(2002)specifiedsocialentrepreneurshipasavehicleforaddressing
socialneedsthatwerenotaccountedfor
andwerebeingundermanagedbylocal,
state, or national governments. Bornstein(2004)provideddetailedaccounts
of social entrepreneurs who were successful in influencing global social
change. Dees, Emerson, and Economy
(2001) mapped out the skills and techniquesthatthoseentrepreneursentering
socially-orientedventuresneed.Hebert
and Link (1989) described entrepreneurship as a process that engages the
marketasalevertosolvemyriadproblems that face economies and societies
atlarge.Therefore,theconceptofsocial
entrepreneurship is not new but does
remainwidelyundertreatedintheentrepreneurshipandrelatedliteratures.
Entrepreneurs pursuing socially-orientedventuresdonotdosoatthecost
of personal financial compensation.
Although no data on the salaries of
socialentrepreneursareknowntoexist,
incomedataforleadersofnot-for-profit
organizations indicate that administrativesalariesinthepublicsectorarereasonably competitive. For example, in
PimaCounty,Arizona,themeanannual
salary of a nonprofit organization’s
executive director during the years of
2006 to 2007 was $77,667, with 25%
of executive directors reporting annual
incomesofmorethan$91,600(Arizona
State University Center for Nonprofit Leadership & Management, 2007).
The salary range of this professional
group was competitive relative to the
2004medianfamilyincomeof$38,687
in Pima County (U.S. Census Bureau,
2007).Whenconsideringtheformalization of social entrepreneurship and the
relativelycompetitivesalariesofleaders
ofpublic-sectororganizations,sociallyorientedentrepreneurshipismorelikely
to capture the attention and interest of
entrepreneurial-minded students in a
widerangeofdisciplinaryfields.
Lounsbury and Strang (in press)
identifiedsocialentrepreneurshipasan
emergentinstitutionallogicthatlargely
took hold through the academic movementtoestablishnonprofitresearchand
degree programs across American colleges and universities. In 1978, Yale
University pioneered this movement
with the creation of the Program for
Non-Profit Organizations. Other early
institutional leaders in the creation
of nonprofit management programs
included the State University of New
York, Stony Brook; University of Missouri at Kansas City; and Carnegie
MelonUniversity.By2003,therewere
242 colleges and universities offering
graduateprogramsspecifictononprofit
management. Lounsbury and Strang
also indicated that academic offerings
in social entrepreneurship, which now
includestand-alonecourses,certificates,
andformaldegreeprograms,originated
with the nonprofit management educationmovement.
The emergence of social entrepreneurshipasapointofscholarlyinterest
andinstructionalvaluehasbeendiverse
and widespread. For example, the
Center for the Advancement of Social
Entrepreneurship in the Fuqua School
of Business at Duke University main-
tains a robust set of research activities
and curricular offerings (including an
MBA concentration) specific to social
entrepreneurship. Similarly, Yale University School of Management has the
Program on Social Enterprise, which
produces research and offers courses
and extracurricular programs specific
to social entrepreneurship. Babson
College, which is a widely recognized
institutional leader in entrepreneurship
education, offers a degree concentration in social entrepreneurship at the
undergraduate and graduate levels.
Sterling College, a faith-based college,
offersanundergraduatemajorinsocial
entrepreneurship.Inadditiontooffering
courses on social entrepreneurship, the
University of California at Berkeley’s
HaasSchoolofBusinessannuallyhosts
theGlobalSocialVentureCompetition,
whichprovidessocially-mindedstudent
entrepreneurs from around the world
with the opportunity to compete for
seed funding for emergent social ventures.Inaddition,nationalandinternational professional organizations, such
as the University Network for Social
Entrepreneurship(2008),haveemerged
to provide a venue for academics to
discussandsharethebestpracticesspecific to social entrepreneurship. In the
presentarticle,weofferexamplesofthe
many diverse academic programs and
scholarlyeffortsspecifictosocialentrepreneurship that have emerged across
theAmericanhighereducationsystem.
Despitethecreationofcurricularand
experiential programs and centers specific to social entrepreneurship, many
socially oriented students seeking to
enhance their education by acquiring
entrepreneurial training must do so
through more traditional entrepreneurship education models. In accordance,
faculty members who use traditional
models to teach have been challenged
to adapt entrepreneurship curricula to
theincreasinglydiverseinterestsofstudents.Inshort,theongoingexploration
of innovative pedagogical approaches
specific to socially oriented entrepreneurshipisrequired.
SettingandCourse
TheMcGuireCenterforEntrepreneurshipintheEllerCollegeofManagement
May/June2009
291
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attheUniversityofArizonaisnationally
andinternationallyrecognizedforexcellence in entrepreneurship education.
The reputation of the McGuire Center
as a leader in entrepreneurship education was reflected best by its ranking
as the fifth-best undergraduate program
in entrepreneurship by the U.S. News
& World Report (2009) rankings. The
philosophyandmissionoftheMcGuire
Center program rests on the principles
andstrategiesassociatedwithdeveloping
innovativeconceptsintoviablebusiness
solutions and ventures. The McGuire
Centerstudentpopulationisdiverseand
comprises of undergraduate and graduate students pursuing primary degrees
in business administration, natural sciences,engineering,opticalsciences,fine
arts, and liberal arts (see Table 1). As
expected, the majority of McGuire studentsareinterestedinmarketventuresin
private-sectorindustriesthatrangefrom
informationtechnologytoopticstobiotechnology. In addition, the McGuire
Centerseeks,inpart,toleverageitshighqualitystudentbodytopromoteuniversity entrepreneurship and the transfer
of knowledge out of laboratories and
into the marketplace.1 Considering the
heavy emphasis placed on the transfer
of knowledge and the development of
high-techenterprises,anonprofitventure
conceptisnotthenormattheMcGuire
Centerprogram.Thestudentventurefeaturedinthepresentarticlewasthesingle
nonprofitconceptofthe19studentteams
comprisingtheMcGuireCenterclassof
the2006–2007academicyear.
The McGuire curriculum is highly
structured and constructed using the
well-established principles of traditional entrepreneurship. The 1-year (twosemester) program requires students
to form teams of four, each of which
is required to develop an investmentquality new-venture plan. The primary
criteria for projects approved by the
McGuire Center are that the concepts
areinnovativeandscalableandthatbarrierstothemarketexist(e.g.,protection
ofintellectualpropertythroughpatents,
copyrights, and trademarks). The followingsequentialbenchmarksguidethe
venture-development process: formulation, validation, strategies, businessplanauthorship,funding,andoutcomes.
Thesebenchmarksrequirethateachstudentteamidentifyasocialoreconomic
problem that can be solved through an
entrepreneurialsolution.Thissolutionis
thenvalidated,whichleadstothedevelopment of a venture plan that includes
critical marketing, finance, and strategy data. At the conclusion of the fall
semester,eachstudentteamshouldhave
a well-defined, comprehensive venture
planthatisthencontinuouslyrefinedand
introducedtoaudiencesintheuniversity
andoutsidebusiness-plancasecompetitionsthroughoutthespringsemester.
Theprecedingbroadbenchmarksand
venture-plandevelopmentprocessesare
appropriate to the entrepreneurial formationofanonprofitventure.However,
theintricaciesofthepublicsectorvary
in significant ways from the standard
practices and procedures common to
the private sector. Examples of such
intricacies include the development of
a board of advisors, community buildingandsupport,relianceonpublicand
philanthropic funding, and the regulated financial infrastructure inherent to
a nonprofit start-up effort. The present
articledealswiththedevelopmentofa
financial infrastructure that meets state
andfederalregulationrequirementsfor
TABLE1.McGuireCenterforEntrepreneurshipStudentDemographic,
2006–2007AcademicYear
Numberofstudents
Primaryfieldofstudy
Business
Engineering
Finearts
Liberalarts
Naturalorhardsciences
Opticalsciences
292
Undergraduate
Graduate
45
1
2
3
0
0
20
0
0
0
2
1
JournalofEducationforBusiness
anonprofitorganizationandisspecific
to the experiences and observations of
theinstructorofthenewventurefinance
course that is required coursework for
allMcGuireCenterstudents.
The venture-plan development process is supported in part by more traditionalacademiccourses.Specifically,
students are required to complete a set
of three courses that include entrepreneurialenvironmentsandanalysis,marketing new ventures, and new-venture
finance.Thispackageofcoursesequips
students with the skills and knowledge
requiredtomoreeffectivelyexecutethe
development of the venture plan. The
entrepreneurship courses are anchored
in the philosophies and principles of
traditional profit-seeking entrepreneurship.Although the theoretical concepts
framing the courses are applicable to
socially-orientedventures,thetechnical
knowledge does not inherently support
social entrepreneurship. The course,
Finance for New Ventures, is part of
thesenior-yearcurriculumandmustnot
onlyfacilitatethepreparationofstudent
venture-plan projects but also satisfy
curricular requirements of the finance
department(seeAppendix).
Venture-DevelopmentProjects
Working in teams of four, students
wererequiredtodevelopsimulatedventures according to a set of prescribed
deliverablesthatcorrespondedwiththe
previously described entrepreneurial
benchmarks. The venture-plan development process constitutes a robust
experiential-learningexperience,which
iscommontothefieldofentrepreneurshipeducation(Jones&English,2004;
Solomon, Duffy, & Tarabishy, 2002).
The McGuire Center has numerous
resources, including databanks, mentors, and advisors. The entrepreneurial finance class, which is completed
during the first of the two semesters
of the entrepreneurship program, is an
importantelementintheoverallproject
becausestudentsarecoachedonpreparingthefinancialcomponentsoftheplan
throughouttheclass.
Thestepsstudentstookinpreparation
for their projects in the new-venture
finance course included forecasting
sales, determining relevant costs, and,
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forecastingmonthlyfinancialstatements
for5yearsandthenyearlytoperpetuityorwhenbusinessisharvested.Students were also required to determine
freecashflows,preparecommon-sized
statements, and calculate ratios and
other performance benchmarks. Studentsdrewindustrycomparisons,analyzedfinancingalternatives,andcalculatedandanalyzedvariousmeasuresof
value. Students prepared preliminary
components, presented to classes and
outside judges, and then revised their
work throughout the duration of the
course. Students also received ongoing support throughout the following
semesterfromthefinanceinstructoras
they refined their ventures in preparationforregionalandnationalbusiness-
plan competitions and, in some cases,
actual market launches. The venturedevelopmentprojectsfocusedonmany
types of startup ventures, but the corporate form of ownership was typical
for the plans. Although the industry
andproductvariedformostplans,studentsusedarelativelystandardmodel
of financial component preparation in
the development of the venture plans.
The case framing this study was the
exception and was not the corporate
form,asstudentschosetofocusonthe
developmentofanonprofitventuretargeting the widespread social and economic problem of financial exploitationoftheelderly.Thecasepresented
tothestudentsandtheprofessorofthe
entrepreneurialfinancecourseincluded
numerous challenges and complications related to the financial aspects
ofsocialentrepreneurship.Thesechallenges are likely to be evident across
entrepreneurship education programs
asthefieldcontinuestobeinstitutionalizedandmorestudentscometoview
entrepreneurshipasaleverforcreating
socialchangeandadvancingthepublic
good.Therefore,thepresentcasestudy
was timely and highly relevant to the
workoffacultyinthefieldsoffinance,
entrepreneurship,andmanagement.
Case:SeniorAdviceand
FinancialEducation(S.A.F.E.)
Likemostentrepreneurs,thestudents
whocreatedS.A.F.E.identifiedaproblemwarrantingasolution.Theproblem
thesestudententrepreneurstargetedwas
the national epidemic of the elderly
being financially victimized through
a number of manipulative strategies.
AccordingtotheS.A.F.E.ventureplan
(Gillingham, Ripley, & Nunez, 2007),
14,000 elderly Americans are financially exploited each day. The student
entrepreneurs used an entrepreneurial
strategy to develop a nonprofit venture
thattargetedandpreventedtheongoing
exploitationoftheelderly.Accordingly,
thestudentsfollowedthestandardsteps
of entrepreneurship, which included
identifying a problem, formulating a
solutionmindfulofthemarketthatthe
problem affects, validating the principles of the solution, strategizing the
implementationofthesolution,authoring a comprehensive venture plan, and
considering the steps to launching the
venture into the market. However, the
socialorientationofthestudentventure
required alternative approaches to the
financialaspectsoftheirventures.
Thefollowingdescriptionanddiscussionsummarizesnotonlythechallenges
facing students interested in becoming
social entrepreneurs, but also the real
financial barriers to establishing actual
social ventures aimed at solving some
of the most pervasive problems facing
society today. Following the presentation of the case, we discuss potential
methodsofintegratingsocially-oriented
projects into the more standard, corporate-minded entrepreneurial finance
curriculum.Oneofthefirstassignments
duringtheventurefinancecoursewasto
presentpreliminaryfinancialstatements
and to calculate the return on owners’
equity.Thenonprofitteamstruggledin
determining a means by which to calculatereturnswhentheyhadnoowners
or equity for their enterprise. This was
the first of a number of finance-related
difficulties that the team encountered
overthecourseoftheprogrambecause
ofthepursuitofasocially-orientedventure.Although the team members were
advised that they would have to step
awayfromthestandardfinancialmodels
anddomuchoftheresearchandanalysis on their own, they were committed to their project and readily took on
thechallengesthattheyfaced.Inshort,
these social-minded student entrepreneurs were committed to their venture
conceptandtenaciousintheirapproach,
whicharecommondenominatorsofall
successful entrepreneurs. Among the
challengesfacedbytheaspiringsocial
entrepreneurs was to learn about the
chart of accounts for nonprofit organizations (NPO) and how they differed
from other accounting practices that
the students had learned in previous
courses. To this end, the finance professorencouragedthestudentstointern
withalocalNPOtogetasenseofthe
differencesinaccountingpractices.As
part of that internship, they performed
research on the NPO segment of the
economy and how it impacted various
economicfactors,suchasemployment.
The team members also researched
which financial indicators would be
moreappropriateforanendeavorsuch
astheirs,eventothepointofdevising
some ratios that would be more relevant for their plan. Difficulties arose
when the students attempted to gather
financialdataoncomparableventures.
Different from other teams in the program, the S.A.F.E. venture-plan team
was not able to use the McGuire Center,asithadnodatabankforgathering
informationoncomparables.Theteam
members contacted numerous organizations,gatheredinformationbyhand,
and compiled the data on their own.
They were faced then with the prospect of how to pin a value on their
entity. Many of the typical academic
models for valuation posed difficulties
fortheteam,secondarytotheabsence
of ownership and equity. In response,
thestudentsdemonstratedvalueonthe
basisofthemoresubjectivebutmeaningful dimensions. For example, the
value of the emerging social venture
wasforecastedonthebasisofpotential
loss prevention and the minimization
of public funds needed to offset the
losses incurred by the elderly because
offinancialexploitation.
S.A.F.E.Outcomes
InspiteofthechallengestheS.A.F.E.
team members faced, they completed
theirfinancecourseandeventuallycompleted the McGuire Center program
requirements. Through an internship at
a local NPO, the students were able to
derivecomparativefinancialinformation
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293
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forsimilarnonprofitventures.Usingthe
comparative information, the students
completed ratio analyses and meaningful performance forecasts. The income
forecastsledthestudentstodecideona
discountedcash-flowapproachtovaluationoftheiremergingsocialenterprise.
Thediscountratewasanissue,butthey
used a risk-adjusted discounted rate by
using risk premia of comparable forprofitentities.
In follow-up discussions, the team
expresseditsfeelingofaccomplishment
for completing the project in spite of
theobstaclesithadfaced.Inadditionto
thelearningoutcomesachievedbyother
teamsintheprogram,thesocialentrepreneurs reported gaining a deeper understanding of a variety of financial topics
as a result of gathering financial information specific to public-sector organizations and the use of valuation, which
were approaches somewhat unconventionalfortheMcGuireCenterprogram.
The S.A.F.E team performed well in
end-of-term presentations. The dean of
theEllerSchoolmadetheteamthefocus
ofaconsortiumoflocalNPOrepresentativesandacademics.Moreover,theteam
received recognition in the local press
and was able to establish a succession
planwithanestablishedNPOlocatedin
Californiathattargetedfinancialexploitationofelderlypopulations.
DiscussionandComplementary
Cases
Despite the challenges of pursuing
anunconventionalsocially-orientedventure, the S.A.F.E. students more than
satisfiedthelearningobjectivessetforth
by the McGuire Center for Entrepreneurshipandthefinancedepartment.In
addition,theteam’stenacityresultedin
an external network with the potential
tobringanelderlyfinancialexploitation
prevention program to the community
surrounding the University of Arizona.
At the conclusion of the project, the
teamofsocialentrepreneurswasworking toward formalizing partnerships
with several Southern Arizona banks
and credit unions, and with theTucson
Police Department’s Economic Crime
Prevention Unit. The S.A.F.E. experience points to the need for entrepreneurshipeducationprogramstoprovide
294
JournalofEducationforBusiness
moreflexibilityinexistingcurriculathat
are rooted in the dominant entrepreneurial framework centered on wealth
creation and accumulation. In particular, innovative value indicators specific
to the social impacts of entrepreneurial
conceptsshouldbedevelopedandintegrated into entrepreneurship curricula.
For example, avoiding senior citizens’
displacement from preferred housing
because of financial exploitation was a
potential outcome of the S.A.F.E. conceptthatheldsocialvalue.Concurrentto
developing socially-oriented valuation
measuresandtechniques,facultyteachingentrepreneurshipshouldcontinueto
encourage students to explore innovative approaches to embedding socially-
oriented venture models into existing
for-profitentrepreneurialmodels.
Thenumberofsocially-orientedenterprisesthathavebeencreatedbycollege
students has grown. One of the most
well-known student-led social ventures
is Teach for America, which emerged
outofanundergraduatethesisconductedbyWendyKoppwhilecompletinga
degree at Princeton University (Kopp,
1994). To complement our description
andenhanceourdiscussionofthevaluation challenges presented throughout
the S.A.F.E. project, we briefly outline
two examples of socially-oriented venturesthathaveemergedfromacademia
andthroughtheeffortsofentrepreneurial-mindedstudents.
The first complementary case to the
S.A.F.E.projectisWorldofGood.World
of Good is a profit-seeking enterprise
with a socially-oriented underpinning
thatwascreatedin2005bythreeMBA
studentsattheUniversityofCalifornia
at Berkeley’s Haas Business School.
The three entrepreneurial-minded
graduate students were interested in
creating a fair-trade retail platform for
artisans, in particular female artisans,
located in developing countries (World
of Good, 2008). The company was
launchedusing$35,000inseedmoney
earnedfromstudentbusiness-plancompetitions,modestinvestmentsfromfaculty supporters, and more significant
investmentsbyventurecapitalists.
Thestudentschosetopursuethetraditional entrepreneurial path of creating a for-profit venture, but with the
underlying goal of creating and sus-
tainingsocialchangethroughfair-trade
practices.Thestudentsgainedtheconfidence of investors and startup funding through a combination of business
trainingandexperience,asolidventure
developmentplan,andtheoverarching
merits of their innovative approach to
leveraging the market for the purpose
ofcreatingsocialchange.
Today, the business has proven to
besustainableandscalable,with1,000
retaillocationsacrosstheUnitedStates
anda300%jumpinsalesfrom2005to
2006. Further momentum has recently
beengainedthroughanemergentposition as an eBay retail community. In
addition, the company has formed a
NPO arm that promotes fair-trade policy development at the international
level. By 2006, the efforts of the sister
organization had reached 142 artisan
groups in 34 countries and produced
tangible results that included the creation of a computer lab for artisans in
SouthAfricaandafiltrationsystemthat
suppliescleanwatertoartisansinGuatemala.Inshort,theWorldofGoodcase
demonstrated the merits and efficacies
of socially-oriented students engaged
in mainstream for-profit avenues and
strategies for creating sustainable and
scalable social change through entrepreneurship. In such circumstances,
traditional valuation techniques remain
applicable to the socially-conscious
efforts of students pursuing an entrepreneurship education. Thus, we recommend that entrepreneurship faculty
challenged with the task of supporting
socially-orientedstudentsexploretraditionalprofit-drivenapproachestocreating new ventures that are underpinned
with social agendas. Furthermore,
we encourage faculty teaching entrepreneurship to challenge the common
assumptionthatsocialentrepreneurship
can occur only through the creation
of NPOs. By broadening the scope of
traditional entrepreneurship to include
socially-orientedventures,studentsand
facultyareprovidedwithabroaderplatformonwhichtodevelopentrepreneurialsolutionstosocialproblems.
Our second concluding case aligns
more closely with the commonly held
conceptions of social entrepreneurship.
Specifically,thecasecentersonaNPO
developed at the University ofArizona
Downloaded by [Universitas Maritim Raja Ali Haji] at 22:54 11 January 2016
bytwograduatestudentsinthefinearts
college;thesestudentsaugmentedtheir
training with entrepreneurship education. The venture, SharMoore Children’sProductions,makesauniqueand
innovativetheatrecurriculumaccessible
to10elementaryschoolsinfourpublic
school districts located across theTucson, Arizona metropolitan area (SharMoore Children’s Productions, 2008).
Thecurriculumwasdesignedtoengage
students in the arts and to encourage
betterperformanceinallaspectsofeducationthroughthedevelopmentofcreativethinkingandself-confidence.
The venture was created as a 501(c)
tax-exemptorganizationin2005bythe
twostudententrepreneurs,withhelpfrom
theMcGuireCenterandtheuniversity’s
technology transfer office. Initial funding for the venture’s launch consisted
ofamodest$30,000tosupportresearch
onthecurriculum,whichwasanchored
in the fine arts college. Following the
development of the curriculum and the
creation of an implementation model,
theemergentsocialentrepreneursbuilta
$40,000operatingbudgetthatsupported
the implementation of the curriculum
andatwo-personstaff.
SharMoore’snow-expandedoperating
budget is diverse and comprises grant
awardsandprivatedonations.Although
this patchwork finance structure represents risk and uncertainty, SharMoore
Children’s Productions has proved to
be a viable and scalable venture. In 3
yearsofoperation,theorganizationhas
expandedfromonly4schoolsacrossone
schooldistrictto10schoolsacrossfour
schooldistricts.Inaddition,SharMoore
Children’s Productions has increased
its operating budget to $100,000 and
retains contracts with 25 artists who
deliverthecurriculumtochildren.This
exampledemonstratestheentrepreneurial potential of nonprofit venture conceptsandthecapacityforsuchventures
togrowandbecomesustainable,albeit
through diverse and sometimes modest
fundingresources.
WorldofGoodandSharMooreChildren’sProductionsunderscorethevalue
ofcreativeandlessconventionalstrategiestostudentsinterestedinaddressing
thesocialproblemsthroughthedevelopment and implementation of entrepreneurialsolutions.InthecaseofWorldof
Good,creatingsocialchangebyengaging the private market through a traditional profit-seeking entrepreneurial
approachwasanunconventionalmodel.
Similar to the subjective value measurestheS.A.F.E.teamusedtodevelop
the discounted cash flow model, the
entrepreneurs behind World of Good
and SharMoore Children’s Productions
faced challenges in finding alternative value indicators that attracted the
attentionandeventualbuy-inofventure
capitalistsortheinterestandsupportof
thoseparticipatingingrantfundingand
individualphilanthropists.Thesociallyoriented value indicators of World of
Goodcenteredonthepositiveoutcomes
associatedwithprovidingdisadvantaged
artisanswiththeopportunitytorealizea
fair wage. In the case of SharMoore
Children’s Productions, we can understandvalue,inpart,throughthenumber
of students exposed to the arts who
otherwise would not have had such an
opportunity.Inbothcases,wecanestimateexpostsocialvaluethroughsuch
indicators as the community improvements made byWorld of Good artisan
beneficiaries because of earning fair
wagesandtheexpectedincreasesinthe
academicperformanceofthosestudents
who were exposed to the arts through
SharMooreChildren’sProductions.The
expostestimatesofsocialvaluelinked
toWorld of Good and SharMoore provide guideposts for professors seeking
valuation techniques and strategies for
their students’ entrepreneurial projects
that center on socially-oriented venture concepts. Although far less scientific, faculty should also work with
socially-oriented student entrepreneurs
todevelopsubjectiveforecastmeasures
to communicate to external audiences
thepotentialimpactofproposedsocial
venture concepts on those in targeted
markets. Subjective but well-thoughtoutforecastsarealsolikelytoattractthe
attention of forward-thinking venture
capitalistsandhighlyresourcedphilanthropic organizations such as the Skoll
Foundation and the Bill and Melinda
Gates Foundation. On the basis of the
S.A.F.E.projectandtheWorldofGood
and SharMoore Children’s Productions
cases, we conclude with the following
recommendationstofacultyengagedin
entrepreneurship education or working
with entrepreneurial-minded students:
(a) Do not automatically reject a studentproposalthatdoesnotfitthemold
of an established norm; (b) maintain
openlinesofcommunicationwithother
instructors, program leaders, and professionals; (c) be willing to consider
applying academic theory in new and
innovativeways;and(d)whenstudents
areenthusedaboutanidea,trytomatch
orevenexceedtheirenthusiasm.Failure
occurs only when learning objectives
arenotmet,whichisindependentofthe
overallfeasibilityandlikelysuccessof
asimulatedventure.
The present case introduces further
to the business education literature the
need to consider more sophisticated
instructional strategies for integrating
asocialdimensionintotraditionalmanagementpedagogy.Weforecastthatthe
developmentofsuchstrategiesholdsthe
potential for replication and advancement,whichisparticularlyimportantin
light of the growing trend of developing social agendas through the innovative channels that have emerged from
today’s entrepreneurial economy. In
addition,theongoinginclusionofpublic dimensions in business curricula
stands to provide further substance to
thegrowingemphasisbusinesscolleges
now place on corporate integrity and
socialresponsibility.
NOTES
1. Although centered on for-profit models of
entrepreneurship,theoutcomesofuniversitytechnology and knowledge transfer include socialvalue outputs (Mars, Bercovitz,&James,2009).
However,thepresentarticlefocusesontheapplicationofentrepreneurialstrategiestodirectlyand
primarilyinducesocialchange.
MatthewM.Marsisthedirectorofknowledge
management in the McGuire Center for Entrepreneurship at The University of Arizona. His
research focuses on the entrepreneurial dimensions of contemporary higher education environments with particular emphasis on student
entrepreneurship.
Sharon Garrison is a senior lecturer in the
departmentoffinanceattheEllerCollegeofManagementatTh