What Motivates Social Entrepreneurs?

What Motivates Social Entrepreneurs?

Amazon founder Jeff Bezos famously remarked that whenever he spoke with entrepreneurs interested in working with the tech giant he was always looking for “missionaries” rather than “mercenaries”. He believed that the best startups had founders that were focused on making great products or services that would fundamentally change the world for the better. The money side would then largely take care of itself.

One might imagine that such intrinsic motivation is even more prevalent among social entrepreneurs, who by their very definition are focused primarily on improving various social, environmental, or cultural issues. It’s a heuristic that’s examined in recent research from HEC Paris, which sets out to understand what motivates social entrepreneurs.

Finding motivation

The researchers worked with a major support agency for social entrepreneurs in the United Kingdom to try and get to the bottom of what it is that motivates entrepreneurs to pursue this path.

“The experiment encouraged 431 nascent social entrepreneurs to submit an application for a 12-month grant program that provides cash and in-kind mentorship support to social entrepreneurs, through a one-time mailing sent by the support agency via email after they had indicated initial interest in the program,” the researchers explain.

“The individuals were randomly assigned to three groups: one group received a standard mailing emphasizing the intrinsic incentives only – the opportunity to do good (Social treatment), and the other two groups received a mailing that emphasized the extrinsic reward incentives – either the financial rewards (Cash treatment) or the in-kind rewards (Support treatment) that the grant program provides.”

Missionary entrepreneurs

The results suggest that Bezos was kind of on the money with his remark, as extrinsic rewards led to fewer candidates applying to the program, with those that did apply tending to be more interested in money than social good.

Interestingly, however, these extrinsic reward cues also resulted in the entrepreneurs putting more effort into their applications, which led to those applications receiving the grant more frequently. While the extrinsic rewards encouraged entrepreneurs to apply, however, they were less successful after a year in the program.

“Our results provide evidence that extrinsic incentive cues can promote effort and performance in the context of grant competition for social entrepreneurial start-ups, yet they may also carry (unintended) costs,” the researchers say. “We found that these extrinsic incentive cues, primarily the monetary cues, crowded in the relatively more money-oriented applicants while crowding out their more prosocial, less money-oriented counterparts.”

Indeed, it’s interesting that those projects proposed by more extrinsically-motivated applicants were also 20% less likely to benefit disadvantaged groups. What’s more, these applicants were generally less successful as social entrepreneurs, despite appearing to have superior proposals.

“Our results highlight the critical role of intrinsic motives to the performance of social entrepreneurial start-ups and provide evidence that typically-used extrinsic incentives to promote the development of successful social enterprises may in fact be counterproductive,” the researchers conclude.

Female entrepreneurs

While the paper didn’t examine gender per see, research from Carnegie Mellon last year most definitely did. They found that women tend to be the most successful social entrepreneurs.

The researchers conducted three field experiments to understand fully just what motivates entrepreneurs. In total, they quizzed 15,000 or so entrepreneurs who had participated in the Inclusive Innovation Challenge (IIC) at the Massachusetts Institute of Technology, as well as a bunch of entrepreneurs from the AngelList website.

Each of the entrepreneurs was sent either a social impact message (related to the social impact of IIC projects), a financial message (related to the financial benefits of participating in IIC), or a neutral message focused primarily on technology. The motivation of each entrepreneur was inferred from the response each gave to their particular message.

The feedback revealed clear differences between respondents, with women far more responsive to the social impact message than they were the financial message, with men typically the reverse. The authors believe this difference is likely to be driven by the differences in the social impact message specifically.

“Our findings suggest that it’s important to have a broader conceptualization of the motivations of innovative entrepreneurs that focuses on motivations beyond profit, and that accounts for fundamental dimensions of heterogeneity such as gender and culture,” the researchers conclude. “The results can inform interventions that foster innovative entrepreneurship policies and programs.”

If we want to encourage entrepreneurs to truly make a difference to the world rather than trying to get rich quick, then this kind of understanding of just what it is that motivates entrepreneurs could be crucial in drafting programs to best support them.

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