A Realistic Theory of Social Entrepreneurship A Life Cycle Analysis of Micro-Finance Foreword by Muhammad Yunus A Realistic Theory of Social Entrepreneurship Arvind Ashta A Realistic Theory of Social Entrepreneurship A Life Cycle Analysis of Micro-Finance Foreword by Muhammad Yunus Arvind Ashta CEREN Burgundy School of Business Dijon, France ISBN 978-3-030-32141-3 ISBN 978-3-030-32142-0  (eBook) https://doi.org/10.1007/978-3-030-32142-0 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 This work is subject to copyright All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar 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Cham, Switzerland To my mother, my family, my school, and their patience Foreword I welcome this book by Dr Arvind Ashta He focuses on storytelling and goes from microfinance theory to social entrepreneurship theory After about forty years of microfinance, the range of interest has broadened to define social business microfinance and the much broader concept of social business Social business is a very pure form of social entrepreneurship where none of the stakeholders takes any profit other than recouping the investment The businesses run for a purpose Finance, just like in any other business, plays a very important role in social business Finance is important for initiating a social business and to grow The easier it is to access finance by the social business entrepreneurs, the more will be social business start-ups and growth of existing social businesses Dr Ashta rightly argues that social business entrepreneurship becomes highly efficient and effective because of fast-changing technology Technology is a big help in finding solutions to social problems if used appropriately For example, social business may induce and use advanced research in medical sciences to combat rare diseases and addressing universal primary health care which the profit-seeking businesses would not have gone into vii viii      Foreword The door opened by microfinance in the banking sector will continue to transform the financial sector in a fundamental way It will become the most effective tool in turning unemployed young people into entrepreneurs Entrepreneurship will become the primary starting point for most of the young people Microfinance will expand into insurance, micro-equity, social business venture capital and many more directions Social businesses will play the most critical role in ending wealth concentration, bringing an end to global warming, ending unemployment, bringing health care to all, ending modern-day slavery, human trafficking, migration and all other directions of human misery that exist today The key to the future will be in the role of the emerging new generation who will be equipped with the concepts of new economics to achieve their life purposes Life for them will no longer be limited to jobs and retirement, but a life of creativity and action to create a world they imagine Life for them will not be a boring routine of repetitive daily life duties-attending offices, shops and factories, but a journey of each person discovering the ultimate boundary of his/her creative power Social business will be the tool to make it happen I would encourage all young people to read this book of Dr Ashta to get introduced to social business entrepreneurship Dhaka, Bangladesh Summer 2019 Professor Muhammad Yunus Nobel Peace Laureate Preface This book is a purely theoretical work A theory explains why or how a phenomenon occurs and the interrelationship between the variables that affect or are affected by the phenomenon under study Theory building adds to earlier theories or supplants them Often, researchers add to their own theories, as they go along their own learning curve This work first develops a life cycletheory of microfinance The perspective gleaned from this development adds to my initial approach to a realistic theory of social entrepreneurship that I outlined earlier, elsewhere People often ask me why I called it a realistic theory rather than a grounded theory The answer is simple: My father was a pilot, and, in airline jargon, being grounded means that an airplane is not fit to fly So, I have preferred to call it a realistic theory As I researched microfinance, I noticed that not-for-profits transformed into for-profits in this sector As I broadened my research interests to social entrepreneurship, social enterprises and social innovation, I found that this transformation, with which microfinance researchers are very familiar, was not well researched in other sectors Most academic research focuses on specific stages rather than explain evolution between stages So, I decided to delve into the dynamics of this change This led ix x      Preface me to consider the life cycle concept, since it deals with stages A growing interest in history of business and economics helped me see the patterns of the lives of institutions There is a wide range of theoretical work At one extreme, a group of people who indulge in this exercise spend a good amount of time clarifying what they are not saying In between all the exclusions, they slip in a sentence on what they are saying Searching for this sentence is often tough As a result, one does not know what they have added At the other extreme are people who go for it directly They leave their readers incredulous Their theory, if it were to be believed, would be applicable everywhere Hopefully, the reader finds that this book has avoided these extremes, both in applying the life cycle concept to microfinance and in using this for developing the realistic theory of social entrepreneurship Theory building often emanates from lateral thinking Such thinking applies knowledge from one domain to another It is creative and can be revelatory by changing the perspective and paradigm However, in addition to lateral thinking, theory building needs to be logical and this requires a dose of vertical thinking This mixing of creativity and rigorous logic is another characteristic of theory building Trying to use a purely logical approach to existing theory may be scientifically rigorous but is unlikely to be innovative unless new assumptions or new variables are introduced These additions allow incremental originality Trying to use a purely lateral approach may lack rigor and may even be absurd, but it may also provide a fresh perspective Therefore, most work requires some combination of the two In this book, the lateral thinking is applied by looking at microfinance from a life cycle lens This provides an original perspective to microfinance These insights are integrated into the realistic theory of social entrepreneurship to make it more dynamic since most theory in social entrepreneurship has been static Theory building could be inductive or deductive or some mix of these Those in favor of logical thinking prefer deduction Often, this translates into checking up hypothesis based on existing theory Therefore, the theoretical innovations from a deductive approach are usually incremental Those who prefer to ground their work on some Preface     xi reality are more inductive This inductive approach is useful when observing new phenomena, and it may lead to more significant theoretical contributions The logical deductive derivations are considered only as strong as the initial limiting assumptions These limiting assumptions are necessary because the writer and the reader both suffer from bounded rationality and can handle only a limited number of variables However, minor tinkering with the assumption means that the contribution to theory is often not strong enough The inductive theorizing usually suffers for the sample not covering the population or because of other limitations of using the case study approach This book, inductive in nature, focuses on one sector of social entrepreneurship: microfinance Microfinance is considered as an exemplar of social entrepreneurship by both academics and investors This book looks at the academic literature on microfinance to see how it can be integrated into the larger social entrepreneurship theory, leading to broad propositions Certainly, the next researcher is free to see if these insights work for other entrepreneurship sectors such as education or health If so, the theory becomes general; if not, the theory building would add caveats Theory building should be useful, not only for researchers but also for practitioners, because the latter can benefit from new interpretations of professional practices This book has been written in a style that can be understood by practitioners It is hoped that the perspective provided by this work will help them understand where they are going, how they can get their faster and how they could anticipate the different stages of their venture An alternative perspective in an under-studied field may increase the probability of success of social entrepreneurs by making them prescient Dijon, France Summer 2019 Arvind Ashta .. .A Realistic Theory of Social Entrepreneurship Arvind Ashta A Realistic Theory of Social Entrepreneurship A Life Cycle Analysis of Micro-Finance Foreword by Muhammad Yunus Arvind Ashta CEREN... Not-for-profit · Microfinance · Life cycle © The Author(s) 2020 A Ashta, A Realistic Theory of Social Entrepreneurship, https://doi.org/10.1007/97 8-3 -0 3 0-3 214 2-0 _1 · For-profit · A Ashta 1.1 The... self-governing; (iv) voluntary; and (v) transparent and accountable (Bátiz-Lazo and Billings 2012) A large majority of social enterprises are not-for-profits (Ingham and Assadi 2016) There may