Difference Bettwen Ordinary and Philantropic Entrepreneurs

Traditionally, entrepreneurs are known to be individuals who create value. (Schumpeter, 1963) However, further research classifies motivation into entrepreneurship as the “push” or “pull” theory. The “push” theory indicates that the entrepreneur is motivated into starting a business due to external factors including but not limited to difficult living environment or insufficient salary. On the other hand, the “pull” theory suggests that entrepreneurs are lured into entrepreneurial activities for desirable outcomes such as independence. (Gilad & Levine, 1986) Nonetheless, models of entrepreneurship place emphasis on creating value that can be measured and quantified by financial profits.

The divergence between ordinary entrepreneurs philanthropreneurs occurs when the value philanthropreneurs goes beyond mere financial profits. More than just the numbers on their balance sheet, these entrepreneurs yearn to seize a permanent benefit for a disadvantaged population who lack the financial means for self-support so as to create a new stable equilibrium. (Schwab & Hartigan, 2006) This additional motivation can otherwise be seen as creating profits to the society as a whole. Moreover, it was also discovered that many philanthropic actions by entrepreneurs are largely associated with organization whose services directly benefit these individuals. (Schervish, 1998) The motivations of philanthropreneurs can also be analyzed using the Maslow Hierarchy of Needs, whereby the physiological needs have fulfilled through their financials. Their profitability from their businesses realized their basic needs, allowing them to strive towards achieving the other needs higher up in the pyramid. This includes but does not limit to self-actualization which can be derived from doing acts of philanthropy. Pierre Bourdieu’s Forms of Capital Theory (Harvey & Maclean, 2008) is yet another conceptual framework that can be used to scrutinize the motivations behind entrepreneurial philanthropy. This framework revolves around four main capitals: namely economic, cultural, social and symbolic.

The economic capital can be attained by these individuals through their business operations, reflected through their profit margins. However, as philanthropreneurs, these individuals tend to attain symbolic capital, alongside the economic capital they achieve. Contrary to economic capital that is easily quantifiable through the returns on investments, symbolic capitals are immeasurable by financials. They are indicated through the reputation, honor or even networks of an individual. This provides the philanthropreneur with substantial benefits beyond the financials which offers potential for additional monetary benefits. As suggested by researchers, symbolic capital is the core to the other capitals in the framework as it provides access to relationships and networks that attracts other forms of capital. (Shaw, Gordon, Harvey, & Henderson, 2010)