sustainable development in developing countries: the role of social entrepreneurs

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International Journal of Public Administration, 36: 293–304, 2013 Copyright © Taylor & Francis Group, LLC ISSN: 0190-0692 print / 1532-4265 online DOI: 10.1080/01900692.2012.756891 ARTICLES Sustainable Development in Developing Countries: The Role of Social Entrepreneurs Fara Azmat School of Management and Marketing, Deakin University, Melbourne, Australia This article adds to the ongoing debate on the relationship between poverty reduction, profits, and environmental sustainability. Drawing from the literature, it presents a conceptual model with propositions to explain how social entrepreneurs can lead to sustainable development in developing countries. These propositions are further strengthened by using a descriptive case of Waste Concern—an initiative of social entrepreneurs—in Bangladesh. Findings illustrate that, despite contextual constraints in developing countries, it is possible to have sustainable development with no trade-off between poverty reduction and environmental sustainability. This win-win outcome is possible through the innovative approaches and creative thinking of social entrepreneurs who, rather than being hindered by contextual constraints, act as catalysts for sustainable development. The findings have implications for academics and policy-makers, highlighting the significance of supporting social entrepreneurs to come up with innovative methods for sustainable development. Keywords: bottom of the pyramid (BoP), environmental sustainability, poverty reduction, social entrepreneurship, sustainable development INTRODUCTION With the increasing attention on the global problems of poverty and environmental degradation, the need for balanc- ing economic growth and environmental sustainability has become greater than ever. The importance of the issue is fur- ther reflected in the Millennium Development Goals of the United Nations, where eradication of extreme poverty in the world and ensuring environmental sustainability have been included as Goals One and Seven, respectively, among their eight goals (United Nations, 2010). Consequently, the term “sustainable development” has emerged as a hot topic to balance economic growth and environmental sustainability while making profits. Although defined in many ways, most of the defini- tions of sustainable development define it as including three interdependent and mutually reinforcing pillars of social Correspondence should be addressed to Fara Azmat, School of Management and Marketing, Deakin University, 70 Elgar Road, Burwood, Victoria 3125, Australia. E-mail: [email protected] development, economic development, and environmental sustainability (Background Paper, 2002). There is a gen- eral consensus that poverty reduction is linked with achieving economic development (Dollar & Kraay, 2002; Roemer & Gugerty, 1997). However, the relationship between poverty reduction/economic development and envi- ronmental sustainability is a debated one. On one hand, it is argued that economic development is linked with envi- ronmental pollution and exploitation of natural resources (Bosselmann, 2006). This indicates a potential trade-off between poverty reduction and environmental sustainability, creating a dilemma regarding sustainable development. On the contrary, some authors report the possibility of a decoupling of growth and environmental sustainability (Hahn, 2009). Research further suggests that the private sector and businesses have the potential to play a positive role in reduc- ing poverty rather than traditional development efforts such as development aid, donations, and charity (Hahn, 2009; Newell & Frynas, 2007; Seelos & Mair, 2005). This repre- sents a major shift in the development paradigm, stressing

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Page 1: Sustainable Development in Developing Countries: The Role of Social Entrepreneurs

International Journal of Public Administration, 36: 293–304, 2013Copyright © Taylor & Francis Group, LLCISSN: 0190-0692 print / 1532-4265 onlineDOI: 10.1080/01900692.2012.756891

ARTICLES

Sustainable Development in Developing Countries:The Role of Social Entrepreneurs

Fara AzmatSchool of Management and Marketing, Deakin University, Melbourne, Australia

This article adds to the ongoing debate on the relationship between poverty reduction, profits,and environmental sustainability. Drawing from the literature, it presents a conceptual modelwith propositions to explain how social entrepreneurs can lead to sustainable development indeveloping countries. These propositions are further strengthened by using a descriptive caseof Waste Concern—an initiative of social entrepreneurs—in Bangladesh. Findings illustratethat, despite contextual constraints in developing countries, it is possible to have sustainabledevelopment with no trade-off between poverty reduction and environmental sustainability.This win-win outcome is possible through the innovative approaches and creative thinking ofsocial entrepreneurs who, rather than being hindered by contextual constraints, act as catalystsfor sustainable development. The findings have implications for academics and policy-makers,highlighting the significance of supporting social entrepreneurs to come up with innovativemethods for sustainable development.

Keywords: bottom of the pyramid (BoP), environmental sustainability, poverty reduction,social entrepreneurship, sustainable development

INTRODUCTION

With the increasing attention on the global problems ofpoverty and environmental degradation, the need for balanc-ing economic growth and environmental sustainability hasbecome greater than ever. The importance of the issue is fur-ther reflected in the Millennium Development Goals of theUnited Nations, where eradication of extreme poverty in theworld and ensuring environmental sustainability have beenincluded as Goals One and Seven, respectively, among theireight goals (United Nations, 2010). Consequently, the term“sustainable development” has emerged as a hot topic tobalance economic growth and environmental sustainabilitywhile making profits.

Although defined in many ways, most of the defini-tions of sustainable development define it as including threeinterdependent and mutually reinforcing pillars of social

Correspondence should be addressed to Fara Azmat, School ofManagement and Marketing, Deakin University, 70 Elgar Road, Burwood,Victoria 3125, Australia. E-mail: [email protected]

development, economic development, and environmentalsustainability (Background Paper, 2002). There is a gen-eral consensus that poverty reduction is linked withachieving economic development (Dollar & Kraay, 2002;Roemer & Gugerty, 1997). However, the relationshipbetween poverty reduction/economic development and envi-ronmental sustainability is a debated one. On one hand, itis argued that economic development is linked with envi-ronmental pollution and exploitation of natural resources(Bosselmann, 2006). This indicates a potential trade-offbetween poverty reduction and environmental sustainability,creating a dilemma regarding sustainable development.On the contrary, some authors report the possibility ofa decoupling of growth and environmental sustainability(Hahn, 2009).

Research further suggests that the private sector andbusinesses have the potential to play a positive role in reduc-ing poverty rather than traditional development efforts suchas development aid, donations, and charity (Hahn, 2009;Newell & Frynas, 2007; Seelos & Mair, 2005). This repre-sents a major shift in the development paradigm, stressing

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the need to have innovative ways of addressing social prob-lems, driven by the ownership of positive outcomes for indi-viduals rather than aggregate or average positive outcomes(Seelos & Mair, 2005). Reducing poverty through innova-tive and creative approaches of individuals/groups bringstogether the concepts of bottom of the pyramid (BoP) andsocial entrepreneurship (SE). The BoP approach is increas-ingly being viewed as offering businesses the opportunity toreduce poverty and be profitable at the same time throughinnovative strategies (Hahn, 2009; Newell & Frynas, 2007Prahalad, 2005).

However, much of the focus on the BoP to date hascentered around large companies particularly multinationalcompanies (MNCs) with little or no attention being paid tosocial entrepreneurs who have the potential “to change thelives of real people and to change the systems that create andsustain poverty” (Seelos & Mair, 2005, p. 5). Also, the cur-rent discourses on BOP and social entrepreneurship have apredominant focus on economic and social aspects with rel-atively little attention paid to environmental aspects. In thiscontext, this article attempts to fill the void in the literature bycontributing to three different but inter-related discourses onsustainable development, BoP, and social entrepreneurshipto answer the question, “Is it possible to reduce povertyat the BoP with environmental sustainability and stillmake profits particularly in the context of developingcountries?”

The article starts by defining the concepts of sustainabledevelopment, social entrepreneurship, and BoP, and investi-gates their current discourses. Drawing from the literature,a conceptual model is presented with certain propositionsto provide insights into the link between poverty allevia-tion, profit making at the BoP, social entrepreneurship andsustainable development. Next, Waste Concern—an initia-tive of social entrepreneurs in Bangladesh—is used as acase study to substantiate the suggested propositions. Theconclusion and implications of the article follow.

UNDERSTANDING THE CONCEPTS OFSUSTAINABLE DEVELOPMENT, BoP, AND

SOCIAL ENTREPRENEURSHIP

Sustainable Development

There is no universally accepted definition of the termsustainable development as it has been defined in many ways.The definitions range from, “a narrow focus on preservingnatural resources and the environment to broader quality oflife visions encompassing economic opportunity, diversityand access to health care, just to name a few” (Long, 2008,p. 316). The most widely used definition views sustainability,“as a form of development that meets the needs of the presentwithout compromising the ability of the future generations tomeet their own needs” (UNCSD, 2001).

Sustainable development is also synonymous withtriple-bottom-line (TBL) (Hart, 2005; Patzelt & Shepherd,2010; Vanclay, 2004). Like sustainability, TBL refers notjust to the economic value, but also to the environmentaland social value that businesses add (SustainAbility Website,2003; Commission of the European Communities, 2001).Despite its similarity with the concept of sustainable devel-opment, TBL is mostly used as a mechanism for accountingand reporting, and as a framework for measuring and report-ing corporate performance against economic, social, andenvironmental parameters (Vanclay, 2004). The definitionsof sustainable development require the integration of envi-ronmental and social concerns with economic goals, aligningit to the concept of corporate social responsibility (CSR).

Sustainable development, as defined by the UnitedNations Commission on Sustainable Development (UNCSD,2001), includes two components—meeting the needs ofthe present; and this is to be done without compromis-ing the ability of the future generations to meet their ownneeds—which emphasize the notion of intragenerational andintergenerational justice respectively (Hahn, 2009). Whileintragenerational justice is based on the concept of fulfill-ing the essential needs of the world’s poor, intergenerationaljustice derives mainly from the “ecological perspective ofpreserving the basic life resources for successive generationson an equivalent level to previous generations” (Hahn, 2009.p. 315). The definition of sustainable development there-fore implies the need for poverty reduction without adverselyaffecting the environment.

Research suggests that economic development leads topoverty reduction; however, economic growth presents adilemma as some authors argue that economic growth cannotbe separated from environmental impacts and is linked withenvironmental pollution and exploitation of natural resources(Bosselmann, 2006), thus limiting sustainable growth. Thedefinition of sustainable development is also based on theassumption that economic development in some ways cre-ates adverse impacts on the environment and ecologicalsystems. Poverty reduction therefore requires environmentalmanagement, however, in developing countries, environ-ment and natural resource management have apparently notyet been given high priority. This is consistent with thefindings of Visser (2008) who argues that, in developingcountries, social issues are generally given more political,economic, and media emphasis than environmental, ethical,or stakeholder issues. Although having a balance betweenpoverty reduction and environmental protection, particularlyin the context of developing countries is a major chal-lenge, research indicates it is possible and, in particular,entrepreneurial actions have the potential to preserve ecosys-tems, prevent climate change, and reduce environmentaldegradation and pollution (Cohen & Winn, 2007).

Recently, conventional thinking about alleviating povertyis challenged and there has been a renewed emphasison integrated governance, involving all the players—the

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state, the private sector, and the civil society—to strike theright balance between private profits and public welfare inaddressing major societal problems for sustainable develop-ment (Karnani, 2011). The concept of integrated governanceis defined as including both better integration and collabora-tion between government (inter- and intra-) with other actorsto increase efficiency and improve transparency (Azmat,Alam, & Coghill, 2009). It is emphasized that networks inintegrated governance draw their strength from the compara-tive advantages of the resources, capabilities, and knowledgeof the actors involved (Steets, 2003; Wright, 2000).

Networked or integrated governance has gained impor-tance as governments worldwide are increasingly turning toopportunities for working jointly to create synergies and tobe efficient and effective (Szirom, Lasater, Hyde, & Moore,2002). Despite its potential to promote sustainable develop-ment, integrated governance is yet to emerge as a functionalmodel in developing countries, in terms of efficiency, trans-parency, effective coordination, and provision of sustainabledevelopment (Azmat et al., 2009).

Bottom of the Pyramid (BoP)

Since its initial articulation (Prahalad & Hammond, 2002;Prahalad & Hart, 2002), the concept of BoP has attractedboth interest and controversy as a means for poverty allevi-ation through innovative business strategies (London, 2007).The BoP “represents the poor at the base of the globalsocio-economic ladder, who primarily transact in an infor-mal market economy” (London, 2007, p. 11). The populationincludes four billion low-income people around the world,who survive on incomes below US $3,000 per annum inlocal purchasing power (World Resources Institute, 2007).The BoP involves the world’s poorest population, yet it isincreasingly being seen as an important emerging marketthat remains untapped and which businesses apparently can-not afford to ignore. Despite their relatively poor income,the BoP population collectively has substantial purchasingpower, constituting a US$5 trillion global consumer market(World Resources Institute, 2007).

The BoP proposition has attracted a lot of interest withthe argument that the poor, who lie at the bottom of theeconomic pyramid are potential customers, and provide avast, untapped, and unexploited opportunity (Karnani, 2009).The BoP proposition is based on the argument that bytapping the vast BoP markets through designing and devel-oping customized products, MNCs can simultaneously makemoney and also curtail poverty (Jaiswal, 2008). For exam-ple, Prahalad and Hart (2002, p. 14) argue that “pursuingstrategies for the bottom of the pyramid dissolves the con-flict between proponents of free trade and global capitalismon one hand, and environmental and social sustainability onthe other.” However a recent research study also indicatesthat the BoP approach is associated with unrealistic expec-tations (Karnani, 2011). Karnani (2011) further argues that

the BoP is misunderstood and that solutions to date have notmet the true needs of this population as it comprises of muchsmaller critical mass of poor people—who have very lit-tle disposable income to purchase anything other than basicneeds. In order to help the poor Karani (2011) challengesconventional thinking about poverty and proposes an eclecticapproach to poverty reduction that emphasizes the need forbusiness, government, and civil society to partner together tocreate employment opportunities for the poor.

While the BoP proposition has received considerableattention, much emphasis has been placed on the economicand social potential with environmental aspects receiving lit-tle attention, thus presenting a major gap in the literature. Forexample, research on the BoP is mainly focused on who is inthe BoP (Hammond, Kramer, Katz, Tran, & Walker, 2007)and how BoP ventures need new market entry strategies, andon how to explore business development (Hart & London,2005). Also, much of the focus of the BoP literature hasbeen on large MNCs; individual social entrepreneurs havenot attracted much attention, despite having the potential tocreate economic, social, and environmental impacts at theBoP level. This article aims to fill this gap in the literature.

Social Entrepreneurship

Social entrepreneurship, although not a new concept, hasgained increasing attention recently, both in the litera-ture as well as in the media (Thompson, Alvy, & Lees,2000). This can be attributed to the assumed potential ofsocial entrepreneurs to address persistent social problems,and enrich communities and societies by adopting inno-vative strategies and creative solutions (Zahra, Gedajlovic,Neubaum, &. Shulman, 2009). The concept of socialentrepreneurship appears to have been attracting a lot ofattention recently, however, it has existed for quite some timewith differing initiatives in an attempt to address social prob-lems (Alvord, Brown, & Letts, 2004; Thompson et al., 2000).The initiatives have differed in the nature of the actionsbeing represented by programs and interventions, charitiesand donations, but have not proved to be effective in terms ofaddressing the social problems in a sustainable way (Alvordet al., 2004). Social entrepreneurs, like other entrepreneurs,also create value through innovation and creativity, however,they differ from business entrepreneurs as they focus on bothsocial and economic goals rather than just economic goals.

Leadbetter (1997) defines social entrepreneurship as theuse of entrepreneurial behavior for social ends rather thanfor profit objectives or, alternatively, generating profits frommarket activities that are used for the benefit of a specific dis-advantaged group. Similarly, Fowler (2000) describes socialentrepreneurship as the creation of viable socio-economicstructures, relations, institutions, organizations, and prac-tices that yield and sustain social benefits. Austin, Stevenson,and Wei-Skillern (2006, p. 2) further broadly conceptualizesocial entrepreneurship as “innovative, social value creating

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activity that can occur within or across the non-profit, busi-ness, or government sectors.” In addition to the aspectsof innovation and value creation, the definitions of socialentrepreneurship mostly focus on economic and social goalsand, therefore, refer to a double bottom line, rather thana triple bottom line which has an additional focus on pre-serving the natural environment (Patzelt & Shepherd, 2010).Patzelt and Shepherd (2010, p. 4) further point out that thesocial entrepreneurship literature predominantly “focuses onthe development of social gain and not issues of sustain-ing current states of the natural and communal environmentas outcomes of entrepreneurial action.” Although the defi-nitions of SE emphasize that the double bottom line placessocial and economic aspects on an equal footing, most exist-ing definitions imply that social entrepreneurship “relates toexploiting opportunities for social change and improvementrather than traditional profit maximization” (Zahra et al.,2009, p. 521).

Social entrepreneurs share a passion for pursuing socialissues, yet there remain major differences among them interms of how they discover social needs, pursue social oppor-tunities, and make an impact on the broader social system(Zahra et al., 2009). Consequently, social entrepreneurshiphas been described as having multiple meanings leadingto three main approaches (Alvord et al., 2004). For exam-ple, some authors have depicted social entrepreneurship ascombining commercial goals with social impacts; that is,using business skills and knowledge to create enterprisesthat carry out social purposes (Emerson & Twersky, 1996).On the other hand, other authors (Dees, 1998), view socialentrepreneurs as focusing on innovative initiatives that placegreater emphasis on social rather than economic gains, whilefor others (Alvord et al., 2004) social entrepreneurship is acatalyst for social transformation, producing small changesin the short-term which, in turn, lead to larger changes long-term. This article aims to fill the existing gap in both theBoP and social entrepreneurship literature by linking socialentrepreneurship with the triple bottom line at the BoP withan economic, social, and environmental focus.

INTEGRATING THE CONCEPTS—BOTTOMOF THE PYRAMID, SOCIAL

ENTREPRENEURSHIP AND SUSTAINABLEDEVELOPMENT

The Role of Social Entrepreneurs in SustainableDevelopment

The BoP approach has contributed to shifting the prevail-ing view about poverty to seeing the poor as customers andnot merely as recipients of charity (Seelos & Mair, 2007).However, the social, cultural, and institutional characteristicsof the BoP make it a unique market, implying that traditionalproducts, services, and management processes will not work

and need to be changed, and that businesses need to come upwith innovative strategies as well as radically rethinking thewhole supply chain (Prahalad, 2005). Research evidence hasestablished the case for businesses and companies servingthe BoP by fundamentally rethinking their existing strate-gies and business models as well as acquiring and buildingnew resources and capabilities and forging local partnerships(Seelos & Mair, 2007). However, much of the focus of BOPliterature has been confined to achieving economic and socialgoals, and the discourse remains relatively silent about howbusinesses can promote sustainable development by includ-ing an environmental focus in addition to the economic andsocial dimensions.

Amid the rhetoric on poverty reduction, it was reportedat the United Nations Summit (2010), that poverty ratesdropped from 46 percent in 1990 to 27 percent in 2005 indeveloping regions of the world, and this progress is beingsustained in most developing countries. Despite these posi-tive trends, it is estimated that in 2015, roughly 920 millionpeople will still be living under the international povertyline of US$1.25 a day (United Nations Summit, 2010). Thisreflects the increasing gap between the rich and the poor, andthe existing state of income inequality. This rising inequal-ity, therefore, emphasizes the need for the intragenerationaljustice construct of sustainable development which calls forpoor people to be enabled to meet their needs and is achievedthrough economic growth.

However, increased economic growth often implies anincreased use of energy and resources, which gives rise toenvironmental degradation through emissions and pressureon ecosystems. With increased emphasis on poverty reduc-tion, the issue of climate change is particularly high on thepolitical agenda of international agencies, MNCs, and devel-oped countries as the world is increasingly being threatenedby a number of serious and complex environmental chal-lenges requiring urgent action (OECD, 2008; World Bank,2003).

Research indicates that the relationship between eco-nomic growth and environmental degradation is debated withinconclusive findings. Some authors argue that as economicdevelopment continues, the environment will be even morethreatened. For example, Daly (1991) contends that grow-ing economic activity is associated with the requirements oflarger inputs of energy and material, which leads to the gen-eration of larger quantities of waste. The increased use ofnatural resources, along with accumulation of waste and pol-lutants, further affects the carrying capacity of the biosphereresulting in not only the degradation of the environmentbut also a decline in human welfare, despite rising incomes(Daly, 1991). Consistent with this, Hahn (2009) reports thatan improvement in the living standards at the BOP will leadto rising demand for food, water, energy, resources, and dis-posal potential, which will create further pressure on theenvironment and the resource base. In addition, it is alsorecognized that, initially, industrialization and urbanization

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lead to environmental degradation through waste and pollu-tion, thus compromising intergenerational justice for futuregenerations (Seelos & Mair, 2005). As a result, it is arguedthat “development of the BoP on the basis of the Westernmodel of living is ecologically not acceptable mostly due tolimited resources and lack of assimilation capacity” (Hahn,2009. p. 320; Sachs, Santarius, & Aßmann, 2005. p. 44).This is simply due to the fact that the natural environmenthas limits to its capacity to meet our increasing needs andwants, making it essential to manage our resources in asustainable manner for future generations. Therefore, in the-ory, development at the BoP compromises the concept ofintergenerational justice as it is likely to have a detrimentaleffect on the ecological environment rather than preserv-ing it for successive generations. Similarly, Hahn (2009.p. 320) reports that efforts to reach intra- and intergener-ational justice sometimes may result in trade-off patternswhich “could lead to moral dilemmas when pursuing theBOP approach.”

On the contrary, some authors offer a contrasting perspec-tive. Beckerman (1992), for example, argues that environ-ment can be improved as people become richer. Adopting aslightly different perspective, others (Giles & Mosk, 2003;Panayotou, 1993; Shafik & Bandyopadhyay, 1992) arguethat the relationship between economic growth and environ-mental quality is dependent on a country reaching a levelof income at which people demand and afford more effi-cient infrastructure and a cleaner environment. Referringthis as the structural effect, Stern (2004; cited in Song,Zhen, & Tong, 2008) explain that as economic developmentgoes through the stages of preliminary, rapid-developmentand high-grade, industrial structure first upgrades fromagriculture to a high-pollution industry, and then finallyturns to information-concentrated industry, which leads tothe improvement of the environmental quality. Similarly,Panayotou (1993, p. 46) explains that as agriculture andresource extraction intensify and industrialization takes off,there is increased pressure on both resource depletion andwaste generation. However, “at higher levels of development,structural change towards information-based industries andservices, more efficient technologies, and increased demandfor environmental quality result in leveling-off and a steadydecline of environmental degradation.”

Recent studies also indicate the possibility of a decou-pling of growth and environmental sustainability (Luken &Van Rompaey, 2007). In fact, there have been experienceswhich indicate that economic growth and environmentaldegradation can be decoupled to a considerable extent andthe decoupling process can be accelerated by sustainabledevelopment (Smith, Hargroves, & Desha, 2010). Theauthors further argue that prudent policies, market innova-tion, and sheer common sense can lead to environmentalsolutions that cost less, destroy less, and benefit all (Smithet al., 2010). In a similar vein, Hahn (2009) further arguesthat positive correlations of poverty alleviation and an easing

of the environmental burden seem to be possible by integrat-ing sustainable development and the BoP concept.

Research evidence suggests that in developing countriesentrepreneurial actions can lead to both economic and socialgoals by reducing poverty and improving social indicatorssuch as health and well-being, education, and self-reliance(Patzelt & Shepherd, 2010). Social entrepreneurs, throughtheir innovative and creative strategies, are transformingsocial problems in developing countries into manageableproblems (Seelos & Mair, 2005). It is also reported thatsocial entrepreneurs generally have a more positive outlookthan the population as a whole and, therefore, are less likelyto be discouraged by contextual constraints (Haugh, 2005).Haugh (2005, p. 4) further contends that in the environmentalcontext of financial limitations, bureaucracy, and inflexibilityof the market—common in developing countries—marketopportunities fail to attract mainstream entrepreneurs, how-ever, “in these conditions, social enterprises perform a resid-ual function and are instrumental in garnering resourcesand capitalizing sub-market opportunities.” Consistent withthis, Seelos and Mair (2005) also report that in the contextof developing countries where the government and marketstructures are not effectively developed, social entrepreneurscome up with innovative initiatives which not only expandand grow on an impressive scale but, at the same time,also promote sustainable development by addressing a widerange of human, social, economic, and cultural problems.Similarly, Austin et al. (2006) also argue that market fail-ure creates differing entrepreneurial opportunities for socialentrepreneurship.

The recent interest in social entrepreneurship can alsobe explained by the fact that, social entrepreneurs recog-nise opportunities in innovative ways and “their intendedoutcomes occupy a wide range of types (e.g., reducingpoverty, promoting education, or feeding the hungry) com-pared to traditional entrepreneurs” (Murphy & Coombes,2009, p. 333). This is in line with the arguments madeby Thompson et al. (2000) that social entrepreneurs caninfluence four separate types of capital—financial, social,environmental, and aesthetic—where the aesthetic capitalrepresents intangible things that can make us feel good orbrighten up our life with respect to homes, landscapes, andso on (Thompson et al., 2000).

The BoP approach establishes a business case for com-panies by rethinking strategies and models, acquiring andbuilding new resources and capabilities, and forging multiplelocal partnerships (Seelos & Mair, 2007). The authors fur-ther draw our attention to the fact that existing capabilitiesand local BoP models can be leveraged to build new mar-kets to cater to the poor and be profitable at the same time.This can be applied to social entrepreneurs, as they leverageexisting capabilities to cater to the poor in developing coun-tries. By forging multiple partnerships, these entrepreneurscome up with innovative strategies to address the economicand social problems. In addition, their unique and innovative

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strategies also have the potential to achieve economic andsocial development with environmental sustainability thusleading to sustainable development. This is supported byMurphy and Coombs (2009, p. 332) who contend that “socialentrepreneurial discoveries allow economic, social, and envi-ronmental resources to reinforce one another in novel ways.”

Developing countries present a number of contextualchallenges for businesses in terms of bureaucracy, lack ofaccess to finance, other tangible resources, and inflexibility.Research suggests that social entrepreneurs are not discour-aged by these challenges (Haugh, 2005); however, they arelikely to start their initiatives on a small scale by produc-ing small changes in the short term. With the passage oftime, these small changes act as a catalyst for social trans-formation which, in turn, leads to bigger changes in the longterm (Alvord et al., 2004). Based on the above discussion,a conceptual model with the following three propositionsis presented that shows how social entrepreneurs influ-ence the link between poverty alleviation, environmentalsustainability and sustainable development (see Figure 1).

Proposition 1: Social entrepreneurs have the potential toplay a positive role in the link between poverty allevia-tion and environmental sustainability leading to sustainabledevelopment.Proposition 2: Social entrepreneurs have the potential to playa positive role in sustainable development which leads toenvironmental sustainability which in turn leads to povertyreduction.Proposition 3: Social entrepreneurs are likely to act as cata-lysts for sustainable development in developing countries.

WASTE CONCERN AS A CASE STUDY

The case of Waste Concern—a social business enterprisecomprised of both “for profit” and “not-for-profit” com-ponents, based in Bangladesh—demonstrates how socialentrepreneurs are contributing to sustainable developmentby alleviating poverty and promoting environmental

sustainability, despite the contextual constraints.Bangladesh, a developing country in South Asia, isparticularly interesting as a case study because it faces myr-iad problems, with the combination of population, poverty,environmental degradation, a depleting resource base, andpoor governance, all creating developmental challenges.

Bangladesh is geographically slightly smaller than thestate of Iowa in the United States, yet is one of the most pop-ulous countries in the world, with 160 million people resid-ing in 143,998 square km (CIA Factbook, 2011). Despite theproblems of political instability, poor infrastructure, corrup-tion, insufficient power supplies, and slow implementationof economic reforms, the Bangladeshi economy has grown5–6 percent per year since 1996 (CIA Factbook, 2011). As aresult of this growth, the poverty reduction rate is estimatedto be 2 percent per annum (Department for InternationalDevelopment, 2010). A nationwide survey sponsored by theWorld Bank, reports that roughly 46.8 million people wereclassified as “poor” in Bangladesh at the end of 2010, downfrom more than 60 million in 2005. This is, no doubt, aremarkable achievement, yet having 46.8 million or roughlyone-third of the population designated as poor also suggeststhat despite decades of assistance provided by internationaldevelopment agencies, Bangladesh has been unable to elimi-nate extreme poverty, thus creating the opportunity for socialentrepreneurs to address the problem. Bangladesh’s eco-nomic problems have resulted in a huge income disparitybetween standards of living in urban and rural areas of thecountry.

In terms of population, Dhaka, the capital city ofBangladesh, is 11th largest city in the world, with12.3 million people. The city is projected to be the fourth-largest city in 2015, with the population growing at therate of 1.56 percent per year (Sinha & Enayetullah, 2010;CIA Factbook, 2011). The increase in population is alsoassociated with an increase in the generation of waste. Theurban population in Bangladesh is reported to generate, onaverage, 14,000 tons of waste per day (Rahman, 2011),creating a major challenge for waste management. Dhaka

Social Entrepreneurs

Poverty EnvironmentalSustainable

P1 P1 +

+

P3

+

Poverty

Alleviation

Environmental

Sustainability

Sustainable

Development

++

+

Social Entrepreneurs

P2P2

P3

FIGURE 1 A conceptual model showing how social entrepreneurs influence the link between poverty alleviation, environmental sustainability and sustainabledevelopment (color figure available online).

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City Corporation (DCC), a public sector agency responsi-ble for managing waste, can only collect 50 percent of thewaste. Due to lack of adequate financial and non-financialresources, DCC is not even capable of disposing of thecollected waste in a hygienic way. The problem is com-pounded by the fact that Dhaka has only one official landfillsite (Sinha & Enayetullah, 2010). The remaining waste isoften piled up in the streets and in unmanaged landfillsites. It is reported that around 70–80 percent of the wastegenerated in Dhaka is composed of organic materials whichare biodegradable and generate greenhouse gases, pollutingthe environment (Sinha & Enayetullah, 2010).

The accumulation of waste on the streets and in unman-aged landfill sites has various social and environmentalimpacts. These range from the spread of disease, insufferableodor, and leakage of pollutants into water sources, to green-house gas emissions. In addition, the waste also exposesthe “waste pickers,” who are mostly women and childrenat the extreme end of the BoP, to toxic and other hazardoussubstances (Seelos & Mair, 2007).

With the unique motto, “Waste is a Resource,” WasteConcern (WC) was founded by two entrepreneurs, MaqsoodSinha and Iftekhar Enayetullah, in 1995. WC had a vision topromote sustainable development by contributing to wasterecycling, environmental improvement, and poverty reduc-tion through job creation (Waste Concern, 2012). Despiteinitial problems with bureaucracy and lack of resources andtechnology, and the absence of a conducive policy for recy-cling, over the years since its foundation, WC has managedto overcome these constraints. It has been able to create asystem that allows the community not only to dispose ofwaste effectively but also for it to contribute to improvingeconomic and social standards at the BoP, with positive envi-ronmental impacts. It is interesting to note that WC has beensuccessful in not only decoupling economic growth fromenvironmental pressure, but has also taken the whole con-cept to the next level by making a positive impact on theenvironment through very simple, cost-effective, and flex-ible but innovative strategies. As a result, the WC modelhas been replicated in a number of countries such as Nepal,Pakistan, Sri Lanka, and Vietnam, and is expected to be repli-cated in 10 African cities by 2012 (Waste Concern, 2012).The initiatives of WC have been widely recognized and thetwo entrepreneurs have earned a number of awards, notably,being selected as outstanding social entrepreneurs by theSchwab Foundation for Social Entrepreneurship, foundedby Klaus Schwab, President and Founder of the WorldEconomic Forum (Seelos & Mair, 2007).

The Waste Concern Model: Linking BoP, SocialEntrepreneurship and Sustainable Development

Using a community-based waste collection system, the WCmodel is simple yet innovative. The main concept of WCis to recycle and convert the organic matter in the urban

waste to organic composts without emitting greenhousegases, thus earning carbon credits to sell in the interna-tional market. Initially, being discouraged by the govern-ment’s response to support their novel idea of convertingwaste into organic fertilizers, the founding entrepreneursstarted with a pilot plant from their own initiatives inMirpur, a suburb in the Northwest of the capital city Dhaka(Foreign and Commonwealth Office, 2009). WC initiallyused community-based composting where the residents inthe community deposited their food waste in huge metal bar-rels that could hold up to 400 pounds of waste. The barrelswere shared among three to seven families, and were aer-ated to allow the waste to compost more effectively (Sinha &Enayetullah, 2010). This not only made the families respon-sible for disposing of their waste responsibly, thus helping tokeep the streets cleaner, but it also benefitted them with theopportunity to make an income by sharing the profits fromselling the compost to Waste Concern. Later WC slightlymodified its strategy by hiring the poor and marginalized—particularly women—to collect organic kitchen waste fromhouseholds within the community and vegetable market anddeliver it to the composting plants. These plants are generallybuilt close to the community in order to give that commu-nity a sense of ownership of the project as well as a senseof participation in improving their quality of life (Ashoka’sCitizen-based Initiative, 2007).

The waste is delivered to composting plants where thewaste is converted to organic compost/fertilizers withoutany emission of greenhouse gases. The resulting high-yield,lower-cost organic compost is sold to rural farmers via fer-tilizer companies while the emission reduction is sold to theinternational market (Waste Concern, 2012). Figure 2 showsthe whole process of waste recycling through the WasteConcern model.

This process of recycling waste by WC is producingpositive economic, social, and environmental impacts asshown in Figure 3. WC is creating job opportunities forpoor people at the BoP as compost collectors for their area,as well as providing them with the opportunity (mostlywomen) to work in the plants that recycle the waste intocompost. According to Waste Concern (2012) in the period2001 to 2006, 124,400 tons of waste was processed, produc-ing 31,100 tons of compost that benefited about 2.9 millionpeople. The total value of the compost sold in the localmarket in that period was US $1.10 million and a fur-ther US $1.24 million in foreign currency was saved byavoiding the import of chemical fertilizers (Waste Concern,2012).

In addition, there are environmental benefits as well.The organic compost—which is cheaper than chemicalfertilizers—does not drain the soil of nutrients the waychemical fertilizers do and thus leads to better productiv-ity and higher yields (Waste Concern, 2012). It is reportedthat in the period, 2001 to 2006 the compost plants reducedemissions of greenhouse gases by 17,000 tons, created jobs

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FIGURE 2 Waste recycling through Waste Concern Model (color figure available online).

Economic aspects Social aspects Environmental aspects

-Provides job opportunities, i.e., waste collectors and for those working in the compost plant

-Reduces the costs incurred for collection, transportation and disposal of waste by DCC

-Carbon Financing as an extra revenue

-Reduces the cost of importing chemical fertilizers

- Higher yields resulting from the use of organic composts

-Facilitates community participation in reducing and managing waste

-Creates conscious awareness among the community

-Helps the BoP employees to work in safe working conditions

-Focuses on waste collectorsat the extreme end of BoP -Provides BoP employees with facilities such as health insurance, day-care centre, free meals

-Involves poor women in the community at a reasonable wage rate which leads to their empowerment

-Improved food security leads to better social outcomes

Reducing greenhouse gas emission

Clean streets, preventing the spread of diseases

Creating organic compost (better than chemical fertilizers as they are cheaper and do not drain the soil of nutrients)

Soil quality improved

More productivity leading to improved food security

Innovative

Aspects

of Waste Concern

• Simple, and easy for the users • Can be adapted to any situation in both urban and rural areas • Can be implemented on a small scale, medium scale, or large scale • Low-cost and easily available local materials along with labor-

intensive technology • Urban-rural symbiosis • Public, private and community partnership

FIGURE 3 Waste Concern model and how it contributes to sustainable development.

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for 986 urban poor, and saved a landfill area extending33.12 acres and 1 meter deep (Ashoka’s Citizen-basedInitiative, 2007).

Based on the positive economic, social, and environmen-tal impact of Waste Concern, a total of 47 compost plantsthroughout Bangladesh were functional until 2006, that hadeither been implemented, or supported, by Waste Concern(Waste Concern, 2012).

DISCUSSION

The case of WC exemplifies that sustainable development indeveloping countries is possible with no trade-off betweenpoverty reduction and environmental sustainability. The con-textual constraints of developing countries, in terms of pooraccess to finance and other non-financial resources, as wellas the struggle with bureaucracy, can all act as challengesto start something new and innovative. In this case, despitethe contextual constraints, the social entrepreneurs were ableto overcome the challenges and come up with an innovativeapproach to benefit the society and the environment, whilemaking profits at the same time. This case, therefore, sup-ports the findings of Haugh (2005) that social entrepreneursgenerally have a more positive outlook and are less likely tobe discouraged by environmental constraints.

The idea underlying the WC model, as mentioned, isinnovative and unique in a number of ways (see Figure 3).It is simple and involves low-cost and locally availableresources. The beauty of the model further lies in the factthat it can be adapted to both urban and rural areas and canbe implemented on a small, medium, or large scale. Themodel is also a classic example of a successful integratedgovernance approach, with a partnership between the publicsector (the DCC) which provides land and waste supply, theprivate sector (Waste Concern), and the community throughtheir participation.

It is argued that prior approaches to poverty reduc-tion have not been effective partly because they empha-sized, for one sector, the government taking on the primaryresponsibility in most cases, despite the importance of eachsector—government, business, and civil society—workingtogether in an integrated way (Karnani, 2011). Althoughintegrated governance is yet to emerge as a functional modelin developing countries, in terms of efficiency and promot-ing sustainable development (Azmat et al., 2009), the caseof WC provides evidence that integrated governance link-ing the state, the private sector, and the community can leadto a functional model. As this case shows, the integratedpartnership approach among the DCC, Waste Concern, andthe community is leading towards sustainable developmentby the pooling of resources, capacities, and knowledge ofeach of the players involved. Over time, this partnershipis expanding to involve international agencies, such as theUnited Nations Development Program (UNDP), that are

providing financial assistance for implementing the modelon a larger scale (Waste Concern, 2012).

Consistent with earlier findings (Austin et al., 2006;Leadbeater, 1997), social entrepreneurs in this caseresponded to the problem by filling the market gaps leftby the traditional private and public sectors. As mentionedearlier, around 50 percent of the waste in Dhaka remaineduncollected and was left in the streets as the governmentagency, DCC, did not have enough resources to collect anddispose of it effectively. The gap left by DCC, in this caseto dispose of waste effectively, failed to attract traditionalprivate sector efforts due to contextual constraints and thelack of innovative ideas. Considering waste as a resource,WC filled this gap left by the public and the private sectors.WC is helping the DCC to manage waste and also to reducethe costs of waste collection by collecting the waste free ofcharge.

The collected waste is further recycled, leading to theproduction of organic composts and carbon credits. Whilethe carbon credits are sold in the international market andcover the entire cost of the project, the organic compostis used as fertilizer in rural areas, with a number of bene-fits. It reduces the need for chemical fertilizers at least by30 percent, and also leads to increased yields and improvedfood security. In doing so, the project is also creating anurban-rural symbiosis by producing organic compost fromthe waste generated in urban areas for use by farmers in ruralareas to increase their yields.

This case illustrates that poverty reduction in develop-ing countries is possible in conjunction with environmentalsustainability, which in turn leads to sustainable develop-ment. Figure 3 shows the economic, social, and environ-mental benefits of the WC model. In addition to economicbenefits, WC is addressing a number of social problemswhich include job creation at the BoP level, awareness gen-eration, community participation, and empowerment of thepoor, particularly women. The WC model is economicallyviable through the sale of carbon credits to the interna-tional market. In this case, the economic and social benefitsare achieved by contributing to environmental sustainability,presenting a win-win outcome in all aspects and leadingto sustainable development. These points, in theory, con-firm Proposition 1, which proposes that social entrepreneurshave the potential to play a positive role in the link betweenpoverty alleviation and environmental sustainability leadingto sustainable development.

As put forth in Proposition 2, sustainable developmentleads to environmental sustainability which, in turn, influ-ences poverty reduction in a number of ways. First, theWC model recycles the organic waste into organic fertilizersor compost in an environmentally sustainable way, withoutany greenhouse gas emissions. This not only is solving amajor urban problem of waste management but is also con-tributing to food security—a major challenge in the contextof Bangladesh—through the use of composts and organic

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fertilizers. The use of the compost helps in addressing theproblem of the depletion of organic materials in the soil,thereby increasing the productivity and yield of the soil.Second, the manufacture of compost from the recycling ofwaste, which would otherwise be left lying in the streets,also leads to a decrease in the spread of various diseases.Finally, the positive effect on environmental sustainabilitythrough the effective management of waste also leads topoverty reduction by improving human rights at the BoPlevel through offering improved access to the basic rights tolife and health.

The success of WC in the context of Bangladesh hasbeen huge; it has acted as a catalyst for sustainable devel-opment. It has been effective in confronting the persistentproblem of poverty, and has involved communities whilecreating awareness, promoting environmental sustainability,and making profits at the same time. This process high-lights certain factors that differentiate social entrepreneursfrom mainstream entrepreneurs and are supported by ear-lier research. Consistent with earlier findings (Austin et al.,2006; Haugh, 2005), social entrepreneurs in this case iden-tified new opportunities which had failed to attract main-stream entrepreneurs. Through their positive outlook, andunlike mainstream entrepreneurs, these entrepreneurs werenot hindered by the contextual constraints described in ear-lier findings (Austin et al., 2006; Haugh, 2005). Rather, theyleveraged existing capabilities and partnerships to cater tothe poor (Seelos & Mair, 2007). Further, their innovativeinitiatives have multi-dimensional outcomes (i.e., economic,social, and environmental) which also resonate with earlierfindings (Austin et al., 2006; Seelos & Mair, 2005). Finally,the fact that they started with a small initiative that laterexpanded and grew in scale as the result of its huge suc-cess, also concurs with earlier findings (Alvord et al., 2004;Seelos & Mair, 2005).

CONCLUSION

This article strengthens and deepens our understanding ofsocial entrepreneurship and how it can lead to sustainabledevelopment in the context of developing countries. It con-tributes to the on-going debate about economic development,poverty alleviation, and environmental sustainability, andhighlights the fact that it is possible to have sustainabledevelopment in developing countries, reducing poverty whilesustaining the environment, and making profits, all at thesame time. Sustainable development, in turn, leads to envi-ronmental sustainability and poverty reduction, thus creatinga positive cycle. As illustrated, a win-win outcome is possi-ble through the innovative approaches and creative thinkingof social entrepreneurs who are not hindered by contextualconstraints.

Through the case study of WC, this article also reinforcesearlier findings that social entrepreneurs, with their positive

approach to innovative initiatives, differ from mainstreamentrepreneurs and are not hindered by contextual constraints(Haugh, 2005) such as lack of financial and non-financialresources, bureaucracy, inappropriate technology, lack ofsupport, and inflexibility. As this case shows, the socialentrepreneurs, instead, took advantage of market opportu-nities that had failed to attract mainstream entrepreneurs.Through their innovative approach and creative thinkingthey overcame the hurdles, thus acting as a catalyst forsustainable development. Research also suggests that socialentrepreneurs’ initiatives, although often small in the begin-ning, continue to expand gradually and make significantcontributions to transforming society (Alvord et al., 2004).This resonates with the WC model which started as asmall initiative, but is now spreading globally. The modelis already being replicated in a number of developing coun-tries with its economic, social, and environmental benefitsand the potential to transform societies. The WC model,as discussed, addresses all the pillars—economic, social,and environmental—of sustainable development, while theenvironmental sustainability further contributes to reducingpoverty at the BoP level.

The findings of this article could be generalized andapplied to other developing countries, as Bangladesh repre-sents a typical developing country with its large population,low per capita income, and an agriculture-dominated econ-omy (World Bank, 2009). Therefore the article providesvaluable insights for academics and policy-makers as wellas practitioners, particularly in developing countries, bydemonstrating that it is possible to address social and envi-ronmental obligations while making profits. The findingsalso reinforce earlier suggestions (Seelos & Mair, 2007)about the need for innovative ways of addressing socialproblems rather than the traditional efforts such as devel-opment aid, donations, and charity, in developing countries.Social entrepreneurs, through their innovative approach havethe potential to play a positive role in reducing povertyand sustainable development, even in the difficult contextualconstraints of developing countries.

This article has some limitations which lead to areas offuture research. Although there are other examples of suc-cessful social entrepreneurs, only one case of successfulentrepreneurs has been used in this article to substantiatethe propositions. Similarly it can be argued that it is likelythat not all social entrepreneurs are successful in promot-ing sustainable development while it is also possible thatsome might fail. Further research is needed to explore othercases as well. In addition, there is a need to explore thestrategies and motivation that drive social entrepreneurs tograpple with the inevitable contextual constraints, and alsohow they identify the market opportunities left unutilized bythe private sector, to provide a better understanding of socialentrepreneurs and their success particularly in developingcountries. Finally the article is theoretical and empiricalresearch is needed to test the proposed model.

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