The promises of community-oriented entrepreneurship

Wednesday, February 24, 2021 - 18:47

One of the key ingredients of SPEED-You-UP is community orientation. Young people start a pop-up business that creates value for their community. The idea is that their business contributes to the community by making it more attractive, answering to local needs or gaps, or offering employment opportunities.

In what ways can businesses or enterprises be community oriented? What are the benefits of working in a community-oriented manner? What is the difference between social enterprises, community-oriented businesses and community-based businesses? And what can existing businesses do to become more community-oriented?

Six students in International Office Management at Artevelde University of Applied Sciences set out to investigate these questions. They performed desk research on the topic of community-oriented entrepreneurship. In addition, in-depth interviews were performed with existing businesses and organisations in Belgium (N = 5), France (N = 3), the Netherlands (N=1) and the UK (N = 6).

There is a distinction between community-oriented and community-based organisations. Community-oriented businesses are for-community businesses. These businesses show respect for the local community, they involve local residents and stakeholders and aim to contribute to the attractiveness of the neighbourhood. Community-based businesses, on the other hand, are by-community businesses. They are really rooted in the local community. For instance, the staff consists mainly of members from the community or the company uses community resources. These businesses ensure that there is a return to the community, they redirect their profits to the community, and create employment opportunities. Because community-based business opt to invest their profit in the community, they are often non-profit. Some core characteristics of these businesses are:

  • a local focus: based in a specific geographical location and trying to solve local challenges.
  • trade for the greater good: they are not solely focused on making profit, but contribute to the community and to society in general.
  • local liability: the businesses is accountable to the community they work in or with, for instance by involving community residents in their board of advisors, or creating other participation opportunities for community stakeholders.
  • broad results: there is a focus on improving the community and quality of life in the community, this can be through the core activity of the business or through side activities such as providing lessons in life skills, sharing infrastructure etc.

(Bailey, Kleinhans, & Lindbergh, 2018)

If both types are combined, we speak of a hybrid company. In this case, work is done by and for the community.

The students involved in this research project were very curious to learn why and how businesses become community-oriented. How do they decide this? What drives them to community orientation over ‘normal’ business models? Interviews were performed with small, medium and large companies. All companies worked in a community-oriented manner and had a link with the social sector. Most were non-for-profit businesses.

What are the main triggers for companies to become community-oriented?

Besides opportunity (funding, location, a group of motivated people sometimes organised in a commons) the main trigger for companies to work community-oriented or -based is having societal impact. These businesses want to contribute to the community in a positive manner. They stand for sustainability, they care for the environment and for the people who live in the community.

“I started my business to make money and provide for myself and my family. But my priorities have completely shifted, and since 2014, my main incentive is to create a better world by having a bigger impact. Everything I do is to contribute to that bigger picture.” (quote from one of the interviews, 2020)

Some of the interviewed people also refer to wanting to give back to the community and sharing their luck.

”He was able to find out how to help homeless people in Paris. Hence the idea of creating a network of solidarity-based local shops offering free services and products to homeless people.” (quote from an interviewee about the founder of a chain of community-based shops in Paris, 2020)

What do businesses expect from becoming community-oriented?

Companies switching to a community-oriented focus often have high expectations. They make the switch from a certain ideology or an image of the impact they want to create. In reality, it asks effort and time to get to a fully functioning community-oriented business, with active community involvement. One of the main challenges is securing funding, which takes effort and time.

“Finding funding is one of the main challenges, but we have a business model where we are financed 50% by private patronage and 50% by public tenders, which allows us to diversify our funding.” (quote from an interviewee, 2020, France)

How is the community involved?

This varies widely, from having occasional input from the neighbourhood through having the business actually run by the community. Sometimes community members work as volunteers in the organization, they take part or organize activities, or they can be part of the board of advisors.

Other examples include giving back to the community through offering the service or goods at a lower price to members of the community, or specifically targeting people in need.

Benefits

Organisations learn a lot from becoming more community-oriented. Working in a community-oriented manner is not only beneficial for the community, but also for the company. As stated by one of the interviewees, the diversification of staff has benefits to the company itself.

“We have highly qualified people who cannot find jobs because their cultural differences are seen as a defect rather than an asset and that is a mistake. In today's world we should promote the integration of foreign people because it allows an exchange of knowledge that benefits both sides.” (quote from an interview, 2020, France)

Research has also shown that successful cooperation with the community increases employee motivation and decreases attrition.

It of course also has benefits for the community: it helps to raise awareness about social issues, it will have a positive impact on the appearance and attractiveness of the community, on the level of solidarity and employment.

To conclude, there are many benefits to working in a community-oriented manner. It asks for an open mind, flexibility and an entrepreneurial mindset. What can the SPEED-You-UP project take home from this research?

First, that it can be interesting to start small and community-oriented. The needs you detect in one community, will often also be present in other communities. Once you’ve established your business in one community you can start to scale up. Second, that there are many different manners to involve the community. It does not mean that you have to work in and for the community. You can also provide business opportunities for the community, redirect profit, ask community members in your board of directors.

“We urge anyone with a sense of entrepreneurialism to take up the challenge, as communities are always willing to participate, the social market trades in competition for mutual support, and the best is yet to come.”

(Bailey, Kleinhans, & Lindbergh, 2018)