I’ve written before about my disquiet about the way in which VCs seem to be driving entrepreneurship today. Jeff Bezos famously argued in one of his annual letters that he wants entrepreneurs to be missionaries rather than mercenaries, yet the VC-led model pushes founders towards rapid growth and rapid exits rather than sustainable ventures that leave a positive societal impression.
What’s more, evidence suggests that this rapid growth approach often neglects the region the startup was created in and forces founders to relocate to the biggest market possible, whether for customers or talent.
Societal benefits
Could the skills such entrepreneurs have ultimately benefit society regardless, however? That was the question posed by a recent study from INSEAD, which explored whether the skills entrepreneurs develop through their startup journey could be put to social use after they exit.
The researchers explore what characteristics successful entrepreneurs can use in so-called “active philanthropy”, which is when they are doing more than just writing checks. In total, the researchers analyzed 673 Indian entrepreneurs who had secured an exit from their startups between 2003 and 2013. The quantitative analysis was then supplemented with qualitative interviews to try and understand what it was about the entrepreneurs’ backgrounds that could make them good social entrepreneurs.
The results suggest that entrepreneurs who were either from a lower-class background or who had studied overseas in a first-world country were most likely to try and become a social entrepreneur and encourage social change.
Need for change
In many ways, this makes sense, both because people from higher-class backgrounds are probably less aware of the need for change. Previous research also suggests that such people also presume that the world is a just and fair place that awards them their status based on hard work and merit rather than any systemic advantages.
Similarly, the researchers suggest that entrepreneurs who have studied abroad might also have suffered the systemic disadvantages of being in the “out group”, which enhanced their empathy for the less fortunate.
Time spent abroad also affords entrepreneurs the ability to observe different social behaviors. If their host country is sufficiently advanced compared to their homeland they can be extremely motivated to enact change when they return.
Of course, one could question why we have to distinguish between doing good and doing well, but perhaps that’s for another discussion. If some entrepreneurs could choose to embark on social entrepreneurial careers later in life then that is no bad thing.
