Why India is the perfect country to foster the growth of social enterprise

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By Nikhil Gampa

Recent growth of the industry in the country has been due to a combination of factors

Although the concept of social entrepreneurship – enterprises and organisations which aim to solve societal problems for profit or non-profit – has existed for years, it has recently gained global prominence.

Forms of social enterprise

While the development and emergence of social entrepreneurship have taken different paths in different regions in the world, but they can be broadly clustered to two main forms: the market-based form of social enterprise, and the hybrid-based form of social enterprise.

The market-based form emerged in North America and Africa largely as a reaction to the political withdrawal of the state due to economic conditions or due to external conditions combined with institutional support imposed by foreign actors. On the other hand, the hybrid-based form emerged in Europe and Latin America due to active effort and support of the state which emphasizes on social entrepreneurship/ enterprises as a key approach toward solving the massive economic problems.

Factors affecting the emergence of social entrepreneurship

Regardless of the form of social enterprise, two common factors are the presence of a strong civil society culture and the legal environment perpetuated by the political power in the region. As we examine these factors further, we note there are five main factors which impact the emergence of a social entrepreneurship as a sector in a country.

The first being the political environment, which refers to the outreach and extent of government or state power. Secondly, the legal environment is another key factor, which refers to the policies or legal framework which determines the ease of experimentation. Both these factors are highly dependent on the condition of the government.

Other factors include the social environment, which is the extent of focus on socio-economic issues in society as well the cultural environment, which essentially means the presence of an active civil society and linkages with other countries. Lastly, another important factor is the institutional environment of the country, which refers to the presence of a supportive environment which enables organizations to work on the socio-economic issues.

Rise of social enterprise in India

Over the past few years, India has been a hotbed of social entrepreneurship, due to the impactful and lucrative nature of social enterprises in the country. The emergence of the social enterprise industry has been due to several reasons.

India has the necessary prerequisite of limited state role which allows for the development of the third sector and the private sector in addressing various socio-economic issues. The inefficiencies of the historic Planning Commission led to the large-scale withdrawal of governmental projects in the country, increasing the prominence of other sectors since the 1980s. In fact, after the seventh five-year plan was announced, India embarked on massive deregulations and privatization, shrinking the role of the government while empowering non-state actors to take on a larger role.

Another factor that contributed to the rise of social enterprise is the limited regulation and oversight of the industry by the government in India. Although India is in no ways a global leader in business-friendliness, for the social enterprise sector, the government has simple procedures for NGO formation and operations. There are also a wide variety of non-profit structures available to choose from. Due to the same, it is possible for social enterprises to experiment within India to test pilot programs and improving upon them subsequently. Experimentation is critical for the growth of social entrepreneurship ecosystem.

The social-economic issues apparent in the nation also attract a significant amount of attention, not only in the domestic sphere but also from foreign individuals and organizations interested in Indian development. Perhaps the cultural environment in India is arguably one of the most important factors fostering the growth of the social enterprise industry.

India has an extremely strong NGO culture which provides a perfect base for social enterprises to emerge from; and secondly, the widespread use of the English language has established a strong linkage with the foreign countries which has played an important role in facilitating the transfer of expertise, resources and manpower. The pervasive NGO culture provides an extremely large pool of individuals working to address the socio-economic problems in the country.

Lastly, another very important factor which has contributed to the growth of the sector is the existence of a significant network of social enterprise incubators, consulting service providers, and research organizations to provide the necessary support to social entrepreneurs in developing their own organizations.

The Indian social enterprise space is populated by a strong network of organizations providing invaluable support to social entrepreneurs in the form of expertise, resources, and networks in helping them to start and grow their social enterprises. The invaluable contribution of social entrepreneurship to society cannot be emphasised enough. With the vital role of the government in pushing the industry and the increase of socio-economic problems across the nation, it is imperative for the government to support the formation of such enterprises.

Nikhil Gampa is studying Social Entrepreneurship at the Tata Institute of Social Sciences.

Source: Qrius

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