Introduction
This chapter explores the concept of good in entrepreneurship. The debate upon the implication of pursuing good purposes while doing business is vast. Research in entrepreneurship has underlined the importance of personal motivation and values in entrepreneurial behaviour. Background literature confirms that ethical and social awareness can strength company vision: they can reinforce the system of relationships with stakeholders; they can help to define corporate image and value proposition; they can support the achievement of competitive advantage.
The approach to “good” has evolved and changed over time: initially, the pursuing of good was a philosophy disconnected to the business culture. The changing of markets, society and business models required top managers and entrepreneurs to include social responsibility within the spectrum of their strategic choices. New needs have emerged from society, and the social landscape reconfiguration has renewed the interest in the pursuit of good.
The Concept of Good in Entrepreneurship
What does it mean for an entrepreneur doing the good? And, as a consequence, what does it mean for an entrepreneur to be good?
Answering this question is extremely challenging.
Generally speaking, we can say that an entrepreneur can do something right if he or she realises something good for the company.
If we change the word “good” with the word “profitable”, we overturn the sense of the previous sentence: entrepreneurs do something right for the company when his or her actions bring profits. The provided example introduces the next debate.
Our investigation aimed to maintain a comprehensive perspective; the consideration of good can be extended to other stakeholders than the firm. A broad examination about doing the good includes a reflection upon society, community or consumers. The pondering of ethical issues in entrepreneurship goes in this direction.
The debate reflects somehow the discussion upon stakeholder value and shareholder value that has animated scholars for a long time.
Shareholders, in general, perceive of primary importance rent generation: in fact, they receive a rent based on the firm’s profit (Charreaux & Desbrières, 2001). The concept of value, as we can guess, changes following the characteristics of the firm’s strategic perspective: firm’s scope is to maximise rents when stakeholders are the primary focus of the company. Therefore, scholars have underlined that creating value for a company can’t be reduced to the management of transaction between firms and shareholders (Charreaux & Desbrières, 2001). The academic debate grew, and scholars have highlighted the role of stakeholders in value creation, in corporate governance and strategic choice. Stakeholders put companies under pressure and influence strategic orientation. In some cases, stakeholders can establish a set of rules or regulations that, even if they do not find recognition at an institutional level, can shape firms’ behaviour. For what concerns the theme of sustainable development, self-regulatory programmes promoted by stakeholders find a broad diffusion (Perez-Batres, Doh, Miller, & Pisani, 2012).
The perspective of analysis has progressively changed. If initially there was a dualism between shareholder and stakeholder focus, today there is a newer approach that analyses the impact that stakeholders have in the definition of shareholders’ set of values, and consequently in shaping the perception of rent and value. Green (1993)—in a paper entitled “Shareholders as Stakeholders: changing metaphors of corporate governance”—outlines that the borders between stakeholders and shareholders are vanishing.
When citing the work by Kenneth Goodpasters, Green (1993) underlines the critical issue in the debate shareholders-stakeholders: “orienting corporate decisions by values that go beyond the long-term maximization of shareholder gain seems essential, yet in some ways illegitimate”.
We have dedicated a space to the debate stakeholders-shareholders because we intended to outline similarities in the approach that scholars have had when studying entrepreneurship. We can say that the perception of good, initially, was shaped by a profit-driven approach, and today, it is broader: now it includes a set of values and issues that involve community, environment and other stakeholders.
The Good Entrepreneur, A Matter of Standards
In the literature, we can find many descriptions of good entrepreneurs.
In an article by Casson and Wadeson (2007), we can read that: “Overall, a good entrepreneur, with good judgment, will tend to select good projects, while a bad entrepreneur, with bad judgment, will select bad projects. Of course, given the prohibitive cost of collecting full information, there will always be residual uncertainty; good judgment shortens the odds but does not guarantee success. The new projects promoted by a good entrepreneur will tend to be true opportunities. In contrast, the projects promoted by a bad entrepreneur will be false opportunities—i.e. projects that appear promising to people who use over-simplified theories and poor information. Investing in false opportunities represents a waste of resources because the opportunities do not belong to the optimal project portfolio. The key to entrepreneurial success is to possess sufficient judgment to recognize true opportunities and screen out false ones” (p. 288).
A good entrepreneur is someone able to recognise excellent opportunities.
The problem is the meaning given to the word opportunity: seizing a chance can provide a monetary reward, or it can represent a way to improve the company’s ethical orientation. At a personal level, entrepreneurs can evaluate to catch all the opportunities they have to transform their vision into practice.
In any case, according to this definition, to be a good entrepreneur means to be able to catch excellent opportunities.
Nevertheless, for many scholars, a good entrepreneur is someone who owns a set of unique skills (Ray, 1993). The ability to identify new products and opportunities means to be able to see what other people don’t recognise, and it is a distinguishing trait of the entrepreneur who is a visionary. Also, persuasive communication skills, together with negotiation skills, are fundamental for spreading entrepreneurs’ business idea; they help to share a vision and to attract funds, partners or customers. The ability to achieve effective interpersonal communication—or people skills, as defined by Ray (1993)—is crucial for an entrepreneur to succeed. The problem-solving skills are a distinctive trait of a good entrepreneur.
Many scholars have outlined the traits of the entrepreneurs and the related set of distinctive competences. Researchers have highlighted the importance of putting in action some specific behaviours; it remains unsolved the problem of the effectiveness of entrepreneurial behaviour.
Ray (1993) highlights the critical point of the match being a good entrepreneur and owning a set of skills: “there is no ideal-type personality or marginal set of attributes that guarantee success for a new venture” (p. 354).
Fitting the standards of a good entrepreneur doesn’t guarantee that the entrepreneur is a really good one.
This approach introduces further reflection and questions. A big issue is the definition of effectiveness. We could translate “being effective” with “avoiding failures”.
It appears that a good entrepreneur is someone who avoids failures and achieves corporate aims. There is another issue that emerges from a reflection on the standard-based approach to “entrepreneurship”. If we think about entrepreneurship as alignment to a standard, we facilitate the definition of entrepreneurs, but we also introduce some limits.
The adoption of some models that are undoubtedly successful can create some problems. Our reflection emerges from the insights published by Gerosa and Tirapani (2013) who introduce a phenomenon defined “Silicon Valley Paranoia”.
Given the favourable outcomes of the Silicon Valley model, researchers and industries have been attracted by the outstanding example of local high-tech start-ups.
The Silicon Valley model was a source of inspiration for many entrepreneurs but also for many scholars who have pointed to the vibrant community of Californian start-ups for design development paths. In particular, Gerosa and Tirapani (2013) write “We should get rid of the very European idea that we will improve only by copying successful US models, especially that of trying to establish a ‘European Silicon Valley’. We think that this ‘Silicon Valley paranoia’ is what inhibits us from finding a European way for entrepreneurship that better fits our competitive advantage” (p. 212).
The success of entrepreneurs in a defined area can promote stereotype models of entrepreneurship, and the risk is to forget that the success of entrepreneurs in a particular context can be fostered by location. The cultural, social and economic context strongly influences entrepreneurs (Sastre‐Castillo, Peris‐Ortiz, & Danvila‐Del Valle, 2015): this suggests that some “standard models” of entrepreneurs may not work at a global level.
Values and Beliefs
The set of values that belong to an entrepreneur shapes the entrepreneurial idea of good.
In general, the theory supports the idea that entrepreneurial set of values shapes entrepreneurial orientation.
As it emerges in this work, two critical questions for an entrepreneur are: “what does it mean doing the good?” and “what is good?”. To answer the above question means to evaluate the entrepreneurial cultural background, set of values and beliefs.
Values are “desirable transituational goals, varying in importance that serve as guiding principles in the life of a person or other social entity” (Schwartz 1992, in Kaesehage et al. 2019).
From this definition, two new issues emerge.
The first is that values are subjective: not all people share the same set of values. We must underline that some authors have highlighted that, given the commonality of human nature, “a set of universal values and standards does exist” (Tsalikis & Seaton, 2007: 230). When a value is shared among the majority, it becomes a norm (Hofstede, 2016). Values can become part of the culture when a collective is involved (Morris & Schindehutte, 2005).
The second issue is that the relevance of value can be different among people.
The intensity of a value (Hofstede, 2016) describes the importance that the value has in an entrepreneur’s life. Scholars have tried to develop a taxonomy of values, and in the literature, we can find different classifications that can be employed in the study of human—and entrepreneurial—behaviour.1 In general, values can be arranged into a hierarchy (Morris & Schindehutte, 2005): some values can be defined as “universal” while others are more specific. Specific values are determined by a set of conditions, such as the political context, institutions or social class. Personal values impact entrepreneurial behaviour since they guide human decisions and actions (Fayolle, Liñán, & Moriano, 2014). Furthermore, every individual establishes a scale of priorities for values. The pyramid of values relates to individual personality traits, attitudes and behaviour (Fayolle et al., 2014).
Therefore, in some cases, it emerges that inputs emerging from the context influence the degree of importance attributed to some issues: the control played by norms or by aggregate cultural values, as well the role of location and local culture, is widely recognised (Fayolle et al., 2014).
The literature in this field is endless; in this paragraph, we want to outline an aspect that underlines the potential involvement of an entrepreneur in some specific issues.
Once we have understood the dynamics that explain entrepreneurial behaviour, a question remains open: Why some entrepreneurs are more willing to pursue the good than others?
We know that in some countries, there are conditions that create a breeding ground for an alignment between communities, social or environmental priorities and firms’ strategic goals (Fayolle et al., 2014).
Nevertheless, we recommend exploring other problems concerning entrepreneurial awareness further.
Entrepreneurs must be willing to consider needs and motivations that arise from the context (community, market and so forth) and to adopt a stakeholder perspective when defining what is right and valuable for the company.
We have reviewed the literature; the aim was to understand the dynamics that explain the role of personal motivations, values, believes and subjective drivers in shaping the entrepreneurial perception of what is good. The academic literature is extensive, and it touches several aspects including entrepreneurial, ethical motivations and factors (subjective and environmental) that affect moral evaluation and ethics.
Cultural factors affect ethical beliefs and behaviour (Jackson & Artola, 1997; Tsalikis & Seaton, 2007). So, being located in specific area influences also the openness that entrepreneurs might have towards some issues, such as the role of community needs when defining the strategy pursued by the company.
It is in work by Kaesehage et al. (2019) that we find the concept of “distance” to explain the degree of entrepreneurial involvement in proper concerns. The social distance from the object of concern influences the priority given to the problem: “The greater the social distance from the object of concern—i.e. future climate variability—the greater the intellectual doubt, personal sense of helplessness, and uncertainty about the likely success of individual action” (Kaesehage et al., 2019: 1093).
Yet, the intensity of the importance given to the object of concern depends on individual values and beliefs. The perception of the relevance of personal contribution to the well-being of a place or community shapes entrepreneurial priorities’ scale. In other words, if people don’t consider themselves able to “make the difference” and to contribute to the creation of the well-being of a place, then they would be less motivated to adopt good practices. Background literature supports the presence of a linkage between entrepreneurial orientation and the pursuit of the good; it is also relevant the degree of importance that has within a business contributing to the social, economic and environmental well-being of a community or place (Kaesehage et al., 2019; Thomas & Cross, 2007).
Therefore, in our view, the importance of adopting some socially desirable behaviours shapes the entrepreneurial scale of priorities.
We know about the relevancy of norms; entrepreneurs can be influenced in their conduct by the set of norms and by the desire to align to social standards and external environment. Entrepreneurs, in other words, might feel the pressure to conform to social and political convictions.
The work by Kaesehage et al. (2019) shows the results of some interviews whose focus is sustainability; from this article, we can get a clear idea of the influence of social pressures. The authors write: “Social desirability bias could have influenced the research findings because entrepreneurs might believe it to be socially desirable to wilfully conform to the social, political, and environmental pressures produced by the research (witnessed by the researchers and other entrepreneurs). Entrepreneurs may, for example, respond to interview questions about themselves or their behaviour as a ‘positional good’ by emphasizing behaviour that is regarded as socially desirable, and thereby underreport behaviour that is perceived as socially inappropriate (see Callegaro, 2008; Densten & Sarros, 2012)” (p. 1105).
The idea of aspiring to what is socially desirable—or to avoid socially inappropriate behaviours—has represented an enlightening insight to us. Academic literature supports the hypothesis that entrepreneurs with their responses seek for social appropriateness.
Yet, the concept of pressure is not new: scholars agree on the role that stakeholders have in shaping the firm’s strategy. The relationship between stakeholders’ pressure and strategic choices is well described in the paper by Perez-Batres, Doh, Miller, and Pisani (2012). They examine the role of different types of stakeholders in the definition of a corporate social responsibility strategy by firms.
Why Being Good?
The question of why being good is not new to research.
Bryant (2009) suggests that this question introduces the following one: who am I?
When answering this question, we need to consider personal issues and the role of the external context. More specifically, entrepreneurs try to be good for many reasons. Entrepreneurs can feel a personal compelling or feel external pressure to adopt specific behaviours; it can happen to have a combination of the two situations.
The literature that explores this issue is endless, and it includes contributions from different fields. What emerges from the multifaceted analysis is the importance covered by the entrepreneur in choosing what relevance give to inputs he gets.
Entrepreneurs have to manage many inputs; they must define a scale of priority and attribute a degree of relevance to the information they perceive.
In other words, the entrepreneur acts like a “filter”: he/she collects all the observation that emerges from the external environment and combines them with the personal sphere of motivations and beliefs; then, the decision-making process starts.
This process is well described by Bryant (2009) when he introduces the concept of self-regulation.
When talking about self-regulation, we describe a mechanism that disciplines “the selection of ends and means within a framework of moral ideals and norms” (Bryant, 2009: 506).
Self-regulation promotes human thoughts and stimulates a behavioural response; there is a solicitation of individuals for the setting of personal goals and for the definition of paths that steer people towards the achievement of planned objectives. Therefore, self-regulation deals with moral awareness: it determines the strength of ethical awareness among entrepreneurs. There is no doubt that personal issues and cultural background shape entrepreneurial moral consciousness.
Personal Motivations
When carrying this research, we have read many works that explore the role of personal issues and personality traits in entrepreneurship. The importance of entrepreneurial background is pivotal in many publications that explore the theme of awareness concerning social responsibility or openness to social issues.
Entrepreneurs can be more or less receptive to ethical stimuli; it depends on their culture, their background and their sense of belonging to a community. The importance that entrepreneurs give to social issues and the feeling that their decision can improve the well-being of a community shape their approach to social responsibility.
Therefore, the literature makes a further step in the intimate aspects of entrepreneurs as individuals. We think we should make a reflection on mindfulness or emotions because we must underline how complex this issue is. Second, we should reflect on the role covered by different disciplines (such as psychology).
Emotions can influence entrepreneurial mindfulness, and consequently, they influence opportunity recognition (Kelly & Dorian, 2017). Yet, the feeling of compassion (self-compassion and compassion for others) affects entrepreneurs’ mindfulness and ethical orientation. The importance of having emotional self-regulation is critical for entrepreneurs who often feel under-pressure; having high levels of emotional regulation means having significant social competences (Kelly & Dorian, 2017).
The approach that focuses on emotional and personal issues of entrepreneurship contributes to filling the gaps in that part of the theory that sees in entrepreneur a rational decision-maker. What emerges from the described approach is an individual with limits from a sociological point of view (Goss, 2005).
Entrepreneurs establish a system of relations that rely on some particular aspects of entrepreneurial charisma and personality. The presence of such a system of relationships can shape the strategic orientation of the firm. Some entrepreneurs can succeed in achieving financial support because they have strong charisma and a dominant personality (Goss, 2005); this means, in other words, that a shadow of subjectivity influences the relationships that involve entrepreneurs.
Words as passion, motivation or emotions are often employed to describe entrepreneurs.
Passion is a dynamic feeling that arises when entrepreneurs are engaged in something “that relates to a meaningful and salient self-identity for them” (Cardon, Wincent, Singh, & Drnovsek, 2009: 516).
Motivations drive entrepreneurs: they decide to undertake something because they are motivated to do it. They can have intrinsic motivations, and they choose to pursue an activity because it is pleasant; sometimes entrepreneurs are engaged in achieving aims, because they represent standards of excellence or because they are a step for a future benefit (Locke & Baum, 2019).
Charisma and Doing Good
Charisma is an aura that encourages followers through emotional and ideological contamination (Goss, 2005). Cultures have idealised charisma (Jacquart & Antonakis, 2015), and background literature has explored its relevance in leadership and entrepreneurship.
The definition of the results of charismatic leaders and entrepreneurs is controversial: a hypothetical “evaluation” index can focus on results and performance. In this case, the charisma helps entrepreneurs (or leaders, in general) to promote a valuable operational organisation and to achieve the expected return. Thus, if we think about the role that charisma can play in building relationships, given the ability to generate followers, we adopt a different parameter for evaluating charisma. Jacquart and Antonakis (2015) underline that in the case of a follower-centric perspective, charismatic leadership (or entrepreneurship) is a social construction.
Scholars have explored the role of charisma. Charismatic entrepreneurs and leaders are inspiring, expressive and have the capacity of sharing their intimate vision; they can “touch” people with their message. In their work, Jacquart and Antonakis (2015) depict how the entrepreneurs strategically manage their charismatic skills: entrepreneurs articulate their ideological vision and employ persuasive techniques to deliver a message to followers. Charismatic entrepreneurs “typify the prototypicality that followers seek; they are liked and influence followers because followers identify with them” (Jacquart & Antonakis, 2015: 1054).2
The sentiment of correspondence between entrepreneurs and followers is an intriguing issue.
When researching the role of charisma in entrepreneurship, we have found an inspiring input in a publication by Goss (2005). The scholar writes: “the charisma that arises from deference- pride interactions is likely to be inherently fragile, and this often appears the case with businesses developed on this basis: devotion easily turns to disillusionment” (p. 628).
This sense of alignment, correspondence, mutual feeling or identification can turn to disillusion, and the strategy of consensus can quickly fail.
There is no doubt that charisma can be a valuable resource for a company and entrepreneurs. Still, they have to be able to build a strategy that exploits their charismatic skills so to ensure the sustainability of the strategy itself.
Some people may object to recognise the strategic importance of charisma. Yet from the literature, it emerges the decisive role that charisma has in fundraising (Yusuf, 2011); this is only one of the many areas of interest of charisma. Furthermore, charisma can help entrepreneurs to build a stable relationship with other stakeholders.
The critical issue, as it emerges from (Goss, 2005), is to avoid the danger of turning devotion to disillusion. Thus, when entrepreneurs show to care about ethical issues or about issues that are connected to people’s health or welfare, it is easier to build relationships with followers that are going to be long-lasting over time.
Therefore, charismatic entrepreneurs can promote a sensitisation towards the aims of their vision.
In the literature about green entrepreneurship, the association between charisma and entrepreneurs often emerges. Visionary entrepreneurs, also defined as “sea-change”, are charismatic persons that, in the cases explored by (Walley, Taylor, & Greig, 2010), promote a vision of their business that encompasses sustainable principles.3
When the charisma is based upon the ability of an entrepreneur to embrace principles and values that stand at the basis of the social welfare or that encounter the common sense of good, here stand the premises for the establishment of a long-term relationship with followers.
An entrepreneur whose charisma derives from a personal orientation towards what is considered ethical can reduce the risk of failure, connected to followers’ disillusion.
Personal Culture and Doing Good
There is no doubt that there is a link between entrepreneurship and culture. In 2010, Naughton and Cornwall published an article entitled “Culture as the Basis of The Good Entrepreneur” that explores the linkages between culture, entrepreneurship and good. The perception of what is right is influenced by culture.
Among the various definitions of culture, we refer to the one by Naughton and Cornwall (2009) who write: “culture is a common way of life” (p. 11).
This immediate definition quickly highlights the inspiring sharing principle of culture formation; culture permeates all the aspects of life, so it is a way of life.
Therefore, culture is determined by a set of issues, and family and education are two of its pillars. Even religion can actively shape culture.
Many researchers have demonstrated how religion can inspire entrepreneurial behaviour: it is the case of Muslim entrepreneurs in India or Malaysia. In both instances, entrepreneurs in the light of their religious orientation have developed a sense of responsibility towards the whole community (Osella & Osella, 2009). Several scholars have explored the relationship between religion and entrepreneurship. It emerges that no matter what is the faith, but entrepreneurs who are inspired by religious motives embrace similar patterns (Dana, 2009) and in general develop an inner sensitivity for the community and its needs. As well as religion, a strong personal motivation that derives from a solid educational background can foster openness to the pursuit of good.
Empathy and Philanthropy
We have highlighted the importance of personal motives in pursuing the good. We know that feelings play a central role in the development of a doing-well-by-doing-good strategy. We also know that entrepreneurs might feel the urgency of doing something right. We can find entrepreneurs who dedicate time and money to some good causes. Some entrepreneurs personify the essence of patronage; in some cases, philanthropic entrepreneurs support local communities, or they offer their financial aid for helping people that are encountering difficulties in a specific period. In other cases, we find entrepreneurs who create an enterprise whose aim is to fulfil social needs: it is the case, among the others, of non-profit businesses.
What we want to outline is that entrepreneurs can find different ways to put in practice their willingness to help people; social context, location and personal motivations can play an essential role in defining how to help people.
In our view, location nurtures a philanthropic aptitude.
In some countries, some conditions promote corporate philanthropy; the presence of a favourable context—due to a mix of legal, political-economic and cultural factor—can improve philanthropy (Gautier & Pache, 2015).
Some countries, such as the USA or UK, have a long tradition with philanthropy; this is because donators can benefit from a set of norms and legal conditions that ease and favour financial support. If we take a virtual tour of the Chronicle of Philanthropy, we can have a clear idea of the measures that support a philanthropic approach in the USA, from an organisational, legal and financial point of view. In 2019, in the USA, giving reached 400 billion USD and new needs and trends emerged.
This book wants to explore the relationship between entrepreneurs and the pursuit of the good; in the light of this, we want to point out a few issues that are reshaping the concept of giving and donating. We take as a benchmark the report published by the Jhonson Center4 that highlights the emerging transformation in the sector of giving. As it emerges from the document, we are witnesses of a “blurriness of sector boundaries”; it becomes difficult to distinguish between for-profit and non-profit or business and philanthropic sectors.
We cite a part of the report that depicts the dynamics of giving: “More non-profits are looking for profitable revenue streams and borrowing business jargon and tactics. More donors are talking about their giving and grantmaking as “social investing,” and are conducting “due diligence” on these investments. On the corporate side, Milton Friedman is rolling in his grave as “corporate social responsibility” is becoming a requirement for businesses of all sorts. Even Super Bowl ads are touting each company’s charitable or environmental commitments as much as the quality of their products (Schultz, 2018). If you aren’t a double- or triple-bottom-line company, you can’t compete anymore. (…) In short, philanthropy is increasingly adopting business means, while business is increasingly pursuing philanthropic ends” (p. 5).
Philanthropic entrepreneurs are turning into social entrepreneurs. The introduction of due diligence in donation suggests us a further question: Why the need for a set of standards emerges? Why people need due diligence in donations? We have found illuminating one consideration that appears from the article by Frumkin (2003) who writes: “Many donors, particularly those who have made money in business, find the lack of standards and benchmarks in the world of philanthropy particularly troubling” (p. 13).
Entrepreneurs are shaped by their experience in business that stimulates their approach to donations: personal traits, that are strictly related to skills, competences and way of organising roles and duties, unavoidably shape the way entrepreneurs behave and conceive the management of donations. The emerging insights from Frumkin (2003) provide a useful perspective for “reading” the report published by the Jhonson Center.
Therefore, as we already have underlined, some conditions stimulate an orientation towards donation and philanthropy. In addition to the set of favourable circumstances that emerge from location, companies with a higher net income tend to give more (Gautier & Pache, 2015).
Then, there are personal motivations that drive entrepreneurs and managers to adopt altruistic behaviour. The imperative of doing something right and giving space to ethical motives is particularly high when entrepreneurs don’t get much exposure from their philanthropic decisions. Yet, self-identification of entrepreneurs as philanthropists promotes a humane approach (Gautier & Pache, 2015). As we can observe, again, a mix of factors concurs in shaping the orientation towards giving and donating. It is incredibly challenging to define how altruistic and philanthropic attitude shapes entrepreneurial behaviour. We can say that the input of doing something good for others can turn into giving financial support and that there is a set of condition that facilitates altruistic behaviours.
Doing Well and Good
The combination of doing well and good (DWDGG) is an issue that is quite popular among scholars. Researchers’ attention has focused on the following questions: How can we combine doing well and good? The problems explored vary from the struggle between the necessity to gain profits and the need to pursue something good, to the role of CSR in entrepreneurial decisions.
The debate about doing well and doing good is “one of the dominant themes of business ethics” (Nguyen & Cragg, 2012: 53).
Scholars have explored the strategic importance of ethical issues that can be a way for achieving competitive advantage (Porter & Kramer, 2006).
Yet some authors have been extremely sceptical when analysing the motto “Doing Well by Doing Good” (DWDG).
Karnani (2011) writes: “while appealing DWDG is also a fundamentally wrong proposition” (p. 70). The motivations why the author expresses critiques to the DWDG preposition are rooted in the theoretical background. In particular, market efficiency should ensure the alignment between private profits and public interests.
This insight finds further explanation in what Karnani (2011) writes: “In an efficient market, every profitable firm is doing good. Customers who buy from the company do so voluntarily and must derive value greater than the price paid; this is the consumer surplus, which contributes to social welfare. Companies provide employment and pay taxes—all good for society. However, this is trivializing the notion of “doing good”; all this social value is a by-product of firms maximizing profits. For the CSR proposition to have any real substance, the firm has to produce more social value than a normal profit-maximizing firm; there has to be a divergence, a trade-off between profit-maximizing strategies and social welfare” (p. 71).
The system of causal nexus outlined by Karnani (2011) proposes a further reflection on the effectiveness of some theoretical background issues. If everything went smoothly, probably, there would not have been a debate on the importance of pursuing the good. What is extremely interesting to us is the role that scholar’s approach has in shaping theoretical contributions. The cited article has, at its foundation, the power of the regulatory structure of the market. The debate vigorously emerges in a paper published in the same journal, The California Management Review, the same year. The article is entitled “The grand misapprehension. A response to Doing Well by Doing Good: The Grand Illusion” and it is a critical essay by Rivoli and Waddock (2011).
The authors underline that the equation that correlates market efficiency to profitable firms that seek for good is not so immediate. According to Rivoli and Waddock (2011): “good goes beyond economics to encompass well-being, health, equity, and sustainability, to name a few “goods.” That is, the societal perspective argues that things beyond (but including) economics are essential goods for a wide variety of stakeholders, many of whom contribute to the wealth creation potential of firms (e.g., employees, customers, suppliers, and communities—in addition to investors)” (p. 114). Reading the two article is an exciting experience since it highlights the importance of this debate and the theoretical questions and approaches that emerge when dealing with this issue.
To give an idea about the relevance of the topic “doing well and doing good”, we have performed a basic search on WOS database to highlight in how many journal articles the DWDG sentence appears in the title.
The first articles appear in 2009, and out of the 53 records, 24 belong to the category “business”. The majority of the cited articles focuses on corporate social responsibility. The problem of DWDG is often related to corporate social responsibility; in general, what emerges from a very rough analysis is the well-known contraposition between profits and ethical or social issues. In our opinion, the critical question for scholars is to do something right while doing well or in other words, to pursue noble goals while making money.
In our research, we have had the chance to read an interesting article by Margolis (2008) published on the Harvard Business Review. In this article, we can understand that among the various forms of social responsibility, “cash contributions to charities have shown a stronger correlation with success than have socially responsible corporate policies or community projects” (p. 18).
Pursuing the good by doing well is not so easy: it requires the development of a mindset, the creation of corporate culture and the implementation of ethical issues in corporate management. If we analyse the quotation from Margolis (2008) with this perspective, we can fully understand the proposed message. We can say that it is more comfortable doing well and doing good than doing well by doing good.
Entrepreneurs as Change Agents
Many scholars see entrepreneurs as change agents. This assumption arises from the direct observation of entrepreneurs in action or from an analysis of the consequences of entrepreneurial activities.
Entrepreneurs hold a responsibility, given their power of changing the social or economic reality they experience. They can trigger a good or an adverse change: everything depends on their behaviour and the aims they pursue.
Why entrepreneurs become changing agents?
Under what conditions they can make the difference and change a scenario?
A good starting point for answering these questions is a consideration of the characteristics of entrepreneurs as leaders. There is no doubt that entrepreneurs should have certain credibility to gain followers. In an article on social entrepreneurship, Waddock and Post (1991) describe the dynamics of change—more precisely “catalytic change”—undertaken by social entrepreneurs. Entrepreneurs have some features that make it possible to engage with others “in such a way that leaders and followers raise one another to higher levels of motivation and morality” (p. 395).
The ability to create a connection with other people, based on personal credibility and commitment, together with a strong motivation to pursue collective purpose, is a crucial asset for managing the innate complexity of some social problems. The creation of a relationship, leader-follower, is vital for facing the multiple complexity—or multiplicity—of social issues: this is because entrepreneurs who are engaged with everyday purposes or social issues must adopt a step-by-step strategy, since “The initiatives generated by these entrepreneurs are necessarily viewed as the first of one of many steps needed to actually resolve the problem” (Waddock & Post, 1991: 395).
In the light of the above consideration, we can say that entrepreneurs can act as change agents if they can establish relationships with other people who are willing to follow them. The more complex the problem is, the stronger this relationship built on credibility and shared commitment should be.
There is another interesting aspect that emerges, and it deals with the capacity of social entrepreneurs to vehicle different types of resources to a social aim.5 In some cases, entrepreneurs combine companies whose primary objective is to not social, to participate to some social purposes; in other words, they indirectly share their visions with other companies and make them part of a social change. Under this perspective, entrepreneurs can instil in other business partners the desire to make the difference.
In this paragraph, we have explored the “social side” of entrepreneurs; thus, entrepreneurs can make change happen even if they are not social entrepreneurs. The linkage between a switch and entrepreneurship overwhelmingly explodes when we think about social entrepreneurship, and it helps us to add other pieces to the puzzle.
Entrepreneurs can become changing innovators because of the innovativeness of their ideas, products, businesses or approaches. Some volcanic entrepreneurs have literately revolutionised an industry, or a community, by introducing innovative technologies, for example. The academic literature that deals with the “disruptive power” of entrepreneurs is endless. We have performed a basic search on the specialised press, and we have checked some publications such as Forbes.
There is an abundance of articles that depict successful stories of entrepreneurs that have changed the business; these entrepreneurs, in some cases, have created opportunities for increasing stakeholders or communities’ well-being. Yet, there is a linkage between entrepreneurial success and the chance to make a change: successful entrepreneurs might reinvest their profit locally. Under this perspective, successful entrepreneurs can shape the local environment and create the condition for change happening.