More Social Entrepreneurs In The Caribbean Region Turn To Sales For Income

Panos Caribbean

An analysis of data by the Global Entrepreneurship Monitor (GEM) for the period 2009 to 2011 shows that, regionally, as much as 60 per cent of all enterprises engage in income generation or the selling of products in order to assure independence and survival capacity.

But, there are 38 per cent which are still fully dependent on grants, charity, philanthropy, donations, government transfers and other resources.
The report, released on October 3, 2012, also reveals that the propensity to form social enterprises increases as education levels rise. Among the people with graduate experience, Social Entrepreneurial Activity (SEA) reached 3.55 per cent in the Caribbean.

GEM defines social entrepreneurship as any effort made by a group or person or organisation to create a new business, expand an existing one with the express purpose of improving social or community welfare and where benefits are invested with the same aim, instead of returning them to investors.

The report also shows that globally more men than women are engaged in creating social enterprises, but Jamaican women show the highest propensity to develop new social enterprises.

SEA is defined as the total adult population aged 18 to 64 years who are actually involved in a social enterprise which has been paying salaries for less than 42 months. Globally the proportion is highest in Tonga and lowest in Trinidad and Tobago where there are none.

For Jamaica the SEA rate is 1.6 per cent for women followed by Venezuela at 1.5 per cent and Colombia at 1.3 per cent. Jamaica, Colombia, the Dominican Republic, Venezuela, Panama and Guatemala participated in the global research which is intended to measure, characterise and compare social entrepreneurship in the region and around the world.

In terms of enterprise type, Dr. Rodrigo Varela, director of GEM Caribbean, notes, “most of the social enterprises identified have given priority to economic value generation. Organisations with social objectives tend to generate more revenue than those committed to environmental objectives.”

The Global Entrepreneurship Monitor (GEM) project is an annual assessment of the entrepreneurial activity, aspirations and attitudes of individuals across a wide range of countries. Initiated in 1999 as a partnership between London Business School and Babson College, it is the largest on-going study of entrepreneurial dynamics in the world.

GEM Caribbean is a three-year project, supported by Canada´s International Development Research Centre (IDRC) that will establish, train and strengthen entrepreneurship research teams in five Caribbean countries: Colombia, Jamaica, Trinidad & Tobago, Haiti, and Barbados.

Research by these GEM teams measures the levels, underlying factors, and environmental constraints of entrepreneurship within each national environment and comparatively within the region by using the Global Entrepreneurship Monitor (GEM) methodology.

“The findings are intended to assist policymakers, educators, and researchers in creating supportive environments that encourage job creation and inclusive economic development through growth in entrepreneurship,” Dr. Rodrigo Varela states.

GEM recommends that more organisations add an income earning component for sustainability. From the data provided for 2009 to 2011, Established Social Enterprises (ESE) presented the highest values for income generation, with more than 50 per cent of them securing in excess of 60 per cent of funds required for their budget from sales.

In new enterprises however, only 50 per cent make as much as 30 per cent of budget from sales.

The results also indicate that new social entrepreneurial activity is still low in all countries and well below the total entrepreneurial activity (TEA) measured by GEM.

The Unites States has a SEA/ESE of 7.31 and compared well to Western Europe with a ratio of 2.13. The Caribbean region ranked high, placing second with an SEA of 2.81 per cent. Regionally Venezuela and Colombia had the highest ratio, with Trinidad and Tobago and Guatemala presenting the lowest.

The report notes that in relation to age, the propensity to start a new social enterprise has a similar distribution to TEA and established businesses in general.

The group of 25 to 34 years old present the highest propensity followed by 35 to 44 in new social entrepreneurial activities. For established entrepreneurs however, the group 45 to 54 ranks highest followed by 35 to 44 years old.

But high levels of management commitment are not present in this type of enterprise. Less than 40 per cent of entrepreneurs dedicate themselves full time to social enterprise.

“the usual scheme is to attend social enterprise as a part time job or even as something done in the entrepreneur’s free time. Similar behaviour was observed for established enterprises. The level of commitment of management within enterprises whether new or established also is not high, because just 30 per cent of entrepreneurs consider themselves as the manager, with 60 per cent committing to managing half and 10 per cent not involved in management at all.” Dr. Rodrigo Varela, Director of GEM Caribbean

Three quarters of all social enterprises had less than ten full time employees, while in 78 per cent there were as many as ten volunteers working. The research indicates that enterprises which transition to the established phase have more than ten full time workers. It was also noted that innovative practices were higher in established enterprises compared to new ones.

GEM cites the need for continued research and the inclusion of social entrepreneurship as a subject to be taught in business schools. “At the university level it is very important to start offering courses about the subject for students in all academic areas.”

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