During the pandemic, 70% of the surveyed social entrepreneurs managed to keep and increase their income from selling goods and services, while 80% kept and increased the number of employees. Such results have been demonstrated by the joint research of Impact Hub Moscow and experts from the Graduate School of Management at St Petersburg University (GSOM SPbU) and the University of Massachusetts, Boston. The survey of the owners and managers of social enterprises was conducted from July 2020 to January 2021 with the support of the Friedrich Ebert Foundation. It was aimed at finding changes in socially responsible business during the pandemic, as well as defining the strategies and innovations that helped to survive the crisis and set the foundation for future growth. The research was conducted in two stages based on the collected quantitative and qualitative data.
Socially responsible business is an activity aimed at solving social and environmental problems with the use of business approaches and tools. The research data shows that the majority of Russian social enterprises that took part in the survey belong to small (12%) and micro business (82%). The average age of the company is 5 or 6 years. At the start of the pandemic, two thirds of them were at the stage of growth, while 34% were just being launched.
The absolute majority of organisations taking part in the research (74%) focus on creating sustainable business models and keeping balance between their mission and commercial profit. Among the respondents, 41% of companies are commercial, where the main part of income is generated from selling goods and services. The other 41% are hybrids combining income from commercial activity with donations and grants. Interestingly, 74% of the surveyed social businesses of a commercial type managed to retain and increase their income from selling goods and services during the pandemic, while only 61% of the hybrid organisations demonstrated the same. The volume of subsidies and grants grew for those social enterprises that had mostly relied upon grants and donations before the pandemic.
The key trends revealed in the course of ‘Social Entrepreneurship in the Pandemic Age’ research are as follows:
- Social entrepreneurs mostly relying on the income from selling goods and services, predominantly managed to keep and increase their number of employees (78%). However, the organisations relying on hybrid funding or external funding were in a better position: 89% of the former and 94% of the latter kept or increased the number of employees.
- The pandemic stimulated geographical expansion of the company activity, which was noted by over 50% of respondents. 78% of the respondents consider that it became possible due to distant work. During the pandemic, the number of social entrepreneurs working in several regions and all over the country grew by 50%.
- The most popular and successful strategies of social entrepreneurs during the pandemic were aimed at increasing efficiency. The strategies of growth and interaction with the stakeholders were less popular. 89% of the respondents focused on improving their existing products, of which 64% considered these strategies successfully implemented. 87% of the respondents started creating completely new products (53% demonstrated success). 87% of the companies improved business processes (40% demonstrated success). 86% improved professional competence of their teams (60% demonstrated success). 83% started to attract new partners (50% demonstrated success).
- Social entrepreneurs mostly focused on online sales channels rather than the creation of new digital products. 58% of the respondents pursued launching online sales (75% of them are testing or successfully implementing online sales). 46% pursued launching digital versions of already existing products (70% of them are testing or successfully implementing it). 47% of the respondents pursued creating digital versions of new products (79% of them are testing or successfully implementing it).
- The pandemic has become the time for innovation. 53% of the respondents launched a product that was radically new for their company and for the market in general. 82% of the respondents implemented the innovations using internal resources. 50% of the respondents noted that the time of the pandemic became the most innovative period during the entire life of the organisation.
- Social entrepreneurs demonstrate a distinct positive attitude. During the survey over 50% of the respondents expected that their company would be profitable in 2020 despite the difficulties caused by the pandemic. 64% considered that the pandemic offered a window of opportunity to transform their business.
‘Social entrepreneurs have showed incredible stamina during difficult times,’ noted Yulia Aray, one of the research authors, Academic Director of the Master in Management Programme at the Graduate School of Management at St Petersburg University, coordinator of social entrepreneurship projects at the PwC Centre for Corporate Social Responsibility. ‘There are many reasons for it, but the main ones are the increased responsibility to the beneficiaries and the entrepreneur spirit that helps to find the right solutions. It is important that many organisations have managed not only to survive, but also to create new products and services both for their companies and for the whole market. We can see that over the years of operation, social entrepreneurs have accumulated significant resources and competence, but they started using and developing them only during the time of «corona crisis». The pandemic motivated many businessmen to implement what they had kept in mind for a long time. The majority of social entrepreneurs confirm that the time of the pandemic has offered invaluable experience. It is essential to use this experience and move forward.’
The research demonstrates that social entrepreneurs actively used the resources of business ecosystem during the pandemic crisis. However, not all types of support happened to be equally popular and useful. The results of the quantitative and qualitative research show that the support measures that meet the real needs of social entrepreneurs should be expanded.
- During the pandemic, social businessmen used the support of mentors, trackers and supervisors (72% of the respondents), educational events (75%), and meetings with other entrepreneurs (81%). The majority of the respondents consider these means useful.
- The following support types were found less popular: networking with a potential investor (62%), financial support from the public and private foundations (63%), reduced payments of taxes and fees (63%), accelerators for business development (64%), PR-possibilities and mass media access (65%).
- The least popular activities were crowd-funding (46%), donation of property (47%) and help in selling product via specialised platforms (47%).
‘The research results have demonstrated that the entrepreneurs, who identify themselves as «socially responsible», organise their business in various legal forms and rely on selling goods and services as well as on additional sources of funding. Thus, we see a new class of people that can be called impact-entrepreneurs. Their primary goal is to achieve public good and improve the environment, for which they select accessible commercial and noncommercial models. Successful development of this young sector of entrepreneurs requires comprehensive support including expertise and mentorship together with loans to launch the business or impact investments to help it grow. Based on the research results, our team is developing complex support products for impact-entrepreneurs at various stages of their life cycle,’ comments Co-founder and Director of Impact Hub Moscow Ekaterina Khaletskaya.
Impact Hub Moscow
Since 2014, Impact Hub Moscow has been developing the medium to solve social and environmental problems by means of social entrepreneurship. It is a part of an international network of 100 centres all over the world. During 6 years of partnership with large business and charity foundations, Moscow Hub has supported the launch and development of over 300 socially important start-ups affecting over 1 million people in Russia.
Friedrich Ebert Foundation
German social-democratic Friedrich Ebert Foundation has operated in Moscow since 1989 and has had a branch in St Petersburg since 2015. Our projects contribute to establishing a society of equal opportunities, social and democratic development, as well as enhancing the dialogue between Russian and Germany.