What is entrepreneurship? What does it mean to be an entrepreneur? What is the basic purpose of being an entrepreneur?

Instrumental social responsibility

The topic is entrepreneurship, and I will first borrow a thought from theory of social responsibility to get my message across. There are several levels of socially responsible behaviour. In simplified terms, I will illustrate three. 1) At a basic level, socially responsible behaviour is respect for the law. Laws are a social contract between us. Because we live in a common system, we have agreed to abide by some basic rules so that the system (despite our differences) can be effective. And these rules are called laws. 2) Next level is to recognise the impact of our own actions. Through its operations, a company has an impact (to a greater or lesser extent) on the lives of its employees, on economic situation, on natural environment, etc. The company accepts this responsibility by being aware of these impacts and by acquiring the knowledge and skills to act accordingly in these areas. 3) The highest level is philanthropic behaviour. Different companies support projects that are not related to their business, either financially (e.g. sponsorship, donations) or by lending staff. They often like to say they want to “give something back to the community”.

Researchers have identified two variations of CSR behaviour (abbreviation stands for Corporate Social Responsibility), which differ significantly in their intent. Certain companies are i) socially responsible because they want to contribute to the environment in which they operate. Others act in a socially responsible way because they ii) have found it financially worthwhile. The difference is, of course, significant, with the former practising social responsibility where they see it as important (and, of course, it can also bring them financial gains) and the latter is focuses solely on calculated financial benefit. The former is true corporate social responsibility, while the latter has been called instrumental corporate social responsibility.

Instrumental entrepreneurship

Entrepreneurship is, at its core, problem solving. When there is a group in society with a problem (a lack, an inability to meet a need), we can help them by creating a solution. To be able to maintain that help, we try to make it generate money – we economise the problem-solving venture. In this way, we create a business idea and can create an enterprise. If our solution turns out to be a good one, the business will make a profit, and an inherent purpose of profit is to grow and develop the business. So if the help (i.e. value we create) is desirable to a wider circle of people, we will expand the business to reach that new, wider circle: we will hire new staff, invest more in equipment, infrastructure and so on. If we compare this with the theory of social responsibility, this is what we would call true entrepreneurship.

But businesses often become something else. They become tools for generating revenues and profits. Problem solving (when we translate this into organisational language, we are talking about a mission of the organisation) is no longer primary, but earnings and making fortunes take over. Money is, of course, the central medium of exchange, and it is used to acquire the goods we need to satisfy our needs – our personal needs, and organisations behave in the same way. But when the two elements change positions, entrepreneurship becomes something else. Activity in which we find ourselves is no longer problem-solving. Following the example of social responsibility theory, we can call it instrumental entrepreneurship.

Business as car, money as fuel

Simon Sinek (best known as the author of Start with Why) has put forward a very similar idea. He illustrates a picture, in which a company is like a car, and money is the fuel. We buy ourselves a car so we are able to drive ourselves to a desired location. A company exists to make a contribution or to create value for someone. We have fuel to keep the car running and to serve its purpose. We have money in a company for the same general purpose: so that our company can serve a purpose and so that members can persist in making a contribution. We do not have a car to buy fuel and we do not have a company to make money.

This sort of true entrepreneurship is possible when we have within the company all the vital expertise to join both fulfilling a purpose and be financially stable and successful. When we lack certain expertise, we start to distort these businesses into something else that they are inherently not and that they should not be.

Conclusion

Businesses are complex systems. And they are certainly also social or sociological entities. If we want to have companies or work in jobs where relationships will be important and orderly, where the quality of working conditions will be at a higher level, then one of the problems we need to target is understanding entrepreneurship in this instrumental sense (entrepreneurship as a tool for making money).

When companies are (among other things) social units, then we want individuals at the top who are the so-called social architects. We want individuals who will enter the managerial role in order to build the company – that is, to build all the fundamental organisational elements, including the design and nurturing of the culture. This is management in the professional sense. This is management modelled on the model of institution builders.