During the pandemic, 70% of surveyed social entrepreneurs were able to maintain and increase income from the sale of goods and services, and 85% retained and increased the number of employed personnel. This is shown by the results of joint research by Impact Hub Moscow and experts from the Graduate School of Management SPbU (GSOM SPbU) and the University of Massachusetts, Boston, which was conducted from June 2020 to January 2021 with the support of the Friedrich Ebert Foundation among owners and leaders of social enterprises, as well as at community of experts. The research aimed to identify the changes that have taken place in social entrepreneurship during the pandemic, as well as the strategies and innovations that helped to cope with the crisis and lay the foundation for future growth. The study was carried out in two stages based on the collection of quantitative and qualitative data.
Social entrepreneurship is an activity aimed at solving social and environmental problems using business approaches and tools. The survey data show that the majority of Russian social enterprises are small (12%) and micro businesses (82%). The average age of companies is 5-6 years. At the time the pandemic began, two-thirds of them were in the growth and development stage, and about 34% were at the launch stage.
The vast majority of organizations that took part in the study (74%) are focused on creating sustainable business models and maintaining a balance between mission and commercial income. Among the respondents, 41% of the enterprises are "commercial" organizations, in which the bulk of income is generated from the sale of goods and services, and the other 41% are of the "hybrid" type, combining income from commercial activities with the receipt of donations and grants. Interestingly, among the surveyed social enterprises of the "commercial" type, 74% were able to maintain or increase income from the sale of goods and services during the pandemic, while among organizations of the "hybrid" type, this figure was 61%. The volume of subsidies and grants increased more for those social enterprises that, even before the pandemic, relied heavily on grants and donations.
Key trends identified in the Social Entrepreneurship in a Pandemic Era research:
- Social entrepreneurs working mainly on income from the sale of goods and services, for the most part, were able to maintain or increase the number of employees (78%). However, in the best position were organizations that operate on a hybrid basis (89% of them retained or increased the number of employees) or predominantly external funding (94% retained or increased the number of employees).
- The pandemic has become a catalyst for the expansion of the geography of activities. This was noted by more than 50% of respondents. 78% believe that this was made possible by working online. During the pandemic, the number of social entrepreneurs working in several regions and nationwide has grown by 50%.
- The most popular and successful strategies of social entrepreneurs in the pandemic were aimed at increasing efficiency; strategies for growth and interaction with stakeholders were less in demand: 89% of respondents were aimed at improving existing products (64% of them consider these strategies to be successfully implemented), 87% of respondents engaged in the creation of completely new products (53% - successfully), 87% of enterprises optimized business processes (40% - successfully), 86% engaged in improving the professional competencies of the team (60% - successfully) and 83% - attracting new partners (50% - successfully).
- Social entrepreneurs focused more on developing online sales channels than on creating new digital products: 58% of those surveyed were aimed at launching online sales (75% of them are testing or successfully implementing online sales), 46% were aimed at launching digital versions of existing products (70% are testing or successfully implementing), and 47% were aimed at creating digital versions of new products (79% are testing or successfully implementing).
- The pandemic has become a time of innovation: 53% of surveyed social entrepreneurs have launched a radical new product for their company or for the market as a whole. 82% of respondents have implemented innovations using their own resources. 50% of respondents noted that the period of the pandemic was the most innovative period during the existence of the organization.
- Social entrepreneurs have a particularly positive attitude, with more than 50% of them expecting their organization to be profitable in 2020 despite the difficulties of the pandemic during the survey. 64% believe the pandemic has become a window of opportunity for business restructuring.
“Social entrepreneurs have shown incredible resilience in a very difficult time,” said Yulia Aray, one of the authors of the research, Academic Director of the Master in Management program at the Graduate School of Management. — "There are many reasons for this, but the main ones are the increased responsibility to the beneficiaries and the entrepreneurial spirit that helps them find new solutions. It is important that many were not only able to "stay afloat", but also to create new products and services, both for their companies and for the market as a whole. We see that over the years of work, social entrepreneurs have accumulated resources and competencies, some of which they began to use and develop precisely during the “coronavirus crisis” — it pushed many to do what they had been planning for a long time. Most social entrepreneurs point out that the period of a pandemic is a time of invaluable experience. It is important to use this experience and move on."
The study shows that social entrepreneurs actively used the resources of the entrepreneurial ecosystem in the face of the pandemic crisis. But not all types of support have proven to be equally in demand and useful. The results of quantitative and qualitative analysis show that it is necessary to expand support measures that meet the real needs of social entrepreneurs:
- During the pandemic, social entrepreneurs used the support of mentors and trackers (72% of the respondents), educational / outreach activities (75%), as well as meetings with other entrepreneurs (81%). Most of the respondents find these types of support useful.
- Less demand was for networking with potential investors and partners (62%), financial support from the state and private foundations (63%), tax incentives (63%), accelerators for business development (64%), PR opportunities and access to Mass media (65%).
- The least popular were crowdfunding (46%), property support (47%) and assistance in selling products through specialized sites (47%).
“The results of the research have shown that social entrepreneurs organize their business in different legal forms and rely both on income from the sale of goods and services and on additional sources of funding. Thus, we are seeing a new class of entrepreneurs who can be called impact entrepreneurs. Their goal is primarily to achieve a public good or impact on the environment, and they choose the commercial and non-commercial models available to them to achieve their goals. For the successful development of this young sector, complex support of entrepreneurs is required — expertise, mentoring and a loan to start a business or impact investments in growth. Based on the results of the research, our team is now developing complex products to support impact entrepreneurs at different stages of development,” commented Ekaterina Khaletskaya, Co-founder and Director of Impact Hub Moscow.