Ayman El-Tarabishy and Marshall Sashkin

Social Entrepreneurship
at the Macro Level:
Three Lessons for Success

Innovations Case Discussion: Sekem

In den vergangenen Jahren, the increasingly popular topic of economic entrepreneurship has
included a concern with entrepreneurial innovation in the not-for-profit sector. Es
seems to us that this sort of entrepreneurship is not yet generally or fully under-
stood. Zum Beispiel, a New York Times op-ed piece by Nicholas Kristof (2008) offers
examples of social entrepreneurship. We question whether some of these examples
really represent social entrepreneurship: Andrew Klaber’s charitable foundation
covers the school expenses of children orphaned by AIDS, while Jennifer Staple’s
organization collects old reading glasses in the U.S. and ships them to poor coun-
versucht.

These are, Natürlich, inspiring examples of young people who have created
charities that have done a great deal of good, but they are not examples of entre-
preneurship, let alone social entrepreneurship. A central reason is the fact that nei-
ther is truly innovative. Many charitable organizations, such as Orphans Against
AIDS, provide educational assistance to such children; Save the Children is a well-
known, long-standing example of this work. As for the mission of Staple’s Unite
for Sight, the Lions Club International has been collecting eyeglasses and distrib-
uting them to the poor for many years. One might argue that Kristof ’s examples
are innovative because they are Internet-based, but both of the much older chari-
ties we mentioned also have extensive Internet sites.

Ayman El-Tarabishy is Assistant Professor of Management at The George Washington
University in Washington, D.C. He is responsible for courses in entrepreneurship,
leadership, and an on-line executive MBA program for physicians and health-care
administrators. He is also executive officer of the International Council for Small
Business.

Marshall Sashkin is Professor Emeritus of Human Resource Development at The
George Washington University, where he continues to deliver lectures on leadership
and research methods in the Executive Leadership Program. His current research cen-
ters on leadership, entrepreneurship, and organizational performance.

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Social Entrepreneurship at the Macro Level

Some would argue that social entrepreneurship is characteristically different
from “ordinary” entrepreneurship. Gordon Shockley (2008), Jedoch, has point-
ed out that the fundamental attributes of entrepreneurship in the public and non-
profit sectors are actually no different from the fundamentals of entrepreneurship
in the private for-profit sector. His argument rests in good part on Joseph
Schumpeter’s (1934) classic definition of entrepreneurship: its core is defined by
Innovation, and the entrepreneur, whether a person, a nonprofit corporation, or a
government agent, is merely the carrier of the innovation into society. This is not
an unreasonable point, especially as few would care to argue against as respected—
and innovative—an economic theorist as Schumpeter. Shockley seems to be cor-
rect in asserting that some nonprofit and government-based entrepreneurial oper-
ations are really not much different from private-sector entrepreneurship.
Jedoch, we believe that the example of Sekem, detailed in the case written by
Ibrahim and Helmy Abouleish, teaches us that social entrepreneurship, while sure-
ly based in innovation, may—and perhaps must—go farther than the description
that Schumpeter applied to private-sector innovation and entrepreneurship.

First of all, when examined carefully, the case of Sekem makes it clear that at
least in some cases—specifically, large-scale or nationallyfocused social entrepre-
neurial efforts—the innovator is just as important to the success of an entrepre-
neurial effort as the innovation itself. The Sekem case also points out the impor-
tance of context for success in social entrepreneurship at what we might label the
macro level. We refer here to social entrepreneurship that successfully brings inno-
vation—or, more properly, many innovations—into a large social system ranging
from a community to a nation.

Speziell, Dann, the Sekem case points out three crucial elements of social

entrepreneurship at the macro level:

The innovation, without which there would be no entrepreneurial activity. Während
this is hardly a new idea, it is worth noting that a recent critique of entrepreneur-
ship (Shane, 2008) pointed out the high failure rate of new business ventures as
proof that entrepreneurship may not be, as Schumpeter (1939) declared three-
quarters of a century ago, the driving force of capitalism and economic develop-
ment. That proof, Jedoch, is in fact erroneous because new business ventures are,
to a large extent, mere replications of extant business operations. That is to say, als
Schumpeter and other entrepreneurship researchers such as Danny Miller (1983)
have observed, entrepreneurship is not entrepreneurship without innovation.

The entrepreneur, that person who is able to (A) develop (or identify) an innova-
tion, (B) take a highly active role in creating an organizational venture based on that
Innovation, Und (C) take high (but realistic) risks to successfully establish that venture.
As a macroeconomist, Schumpeter tended to downplay the role of the individual
entrepreneur. Modern researchers, especially in the U.S., have, Jedoch, tended to
overemphasize that role. This may be due to the extreme importance placed on
individualism in American culture. A realistic view lies somewhere between these
extremes, with the individual entrepreneur playing an important if not always cru-

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Ayman El-Tarabishy and Marshall Sashkin

cial role. Zum Beispiel, the sociologist Robert Merton (1973) observed that while
Innovationen, especially crucial innovations such as the calculus or the telephone,
are commonly identified with an individual “genius,” the fact is that those innova-
tions—and many lesser-known innovations—were actually “overdetermined,” that
Ist, developed quite independently by more than one individual at about the same
Zeit

The social context of entrepreneurship. Contextual concerns are, Natürlich, often
taken into consideration in terms of competition and/or organizational partner-
ships. Jedoch, to achieve a full understanding of social entrepreneurship, solch
concerns must be extended to include key aspects of the communities—the social
structures—within which innovations are adopted. Speziell, to obtain a com-
prehensive overview of entrepreneurship in general and of social entrepreneurship
in particular, one must incorporate within a viable theory of entrepreneurship
such social factors as education, Gesundheitspflege, and cultural values. Tatsächlich, this is not
a new idea. Zum Beispiel, in his classic book, Diffusion of Innovations, Everett

Rogers (2003) observes that innovations inconsistent with the values and beliefs of
potential adopters are unlikely to take hold on a large scale.

THE CASE OF SEKEM

Ibrahim and Helmy Abouleish, father and son, provide an inspiring account that
might appropriately be titled, “The Emigrants’ Return.” The idealism Ibrahim
Abouleish reflected in returning to his homeland to create innovative institutions
that would advance both economic and social needs is more than admirable. Es ist
the mark of one who, in terms used by the social psychologist David McClelland
(1987), functions at the highest level of development of the motive pattern that
characterizes leaders. McClelland and his associates (McClelland & Boyatzis, 1982)
identified this as an exceptionally high power motive. But at this level, leaders use
power not for their personal gain but, eher, to benefit the larger social system.
McClelland called this “institutional power” because such leaders work within an
organizational context, using organizations and institutions to apply power and
influence in socially positive ways. Social entrepreneurship of the sort described in
the Sekem case—that is, at the macro level—aims to create a sense of organization-
al community. It may even be aimed at creating change in a whole society, as did
Mohandes (Mahatma) Ghandi.

McClelland observed that such leaders see their power as deriving from a
greater or higher authority, often religion, as is true for Ibrahim Abouleish. Der
leadership scholar James McGregor Burns points (1978) out that leaders who use
power in the manner we have described engage followers in “a relationship of
mutual stimulation and elevation that converts followers into leaders and may
convert leaders into moral agents” (P. 4). Exhibiting a power need at this highest
level and using it to create communities of the type just described—and of the type
developed by Ibrahim Abouleish—may well require that the entrepreneur have

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Social Entrepreneurship at the Macro Level

personal character of a most uncommon kind.

Wir haben, the reader may note, already begun to focus our comments on the
three elements of macro-level entrepreneurship that Sekem teaches are crucial for
success. That is, we have already started to describe and discuss the nature of
Abouleish, the entrepreneur in this case. Before going further, Dann, let us proceed
in a more organized fashion. First we will attend to the innovation—and its many
extensions—that is at the heart of this fascinating case. Nächste, we will return to the
nature of the entrepreneur (and his successors), with a focus on several important
aspects of the entrepreneur that extend beyond his inspiring and idealistic goals.
Endlich, we will turn to aspects of the context that this case teaches us are crucial
for success of macro-level social entrepreneurship.

THE INNOVATION

In his history of the development of Sekem, which he founded in 1977, Ibrahim
Abouleish describes his goal of developing a farm that used only organic farming
Methoden. This was a response to the massive use of nonorganic fertilizers and,
especially, pesticides in Egyptian agriculture. He barely notes the severe toll this
widespread use of pesticides on produce of all types had on public health.
Jedoch, as the former director of a medical institute in Austria, Abouleish must
surely have recognized this problem.

But it is clear, from the beginning, the innovation behind Sekem was not sim-
ply the use of organic farming methods. Abouleish describes how, right after he
had purchased the land for his farm, he began to plan for houses for workers, A
school for workers and their children, a medical center to meet the health-care
needs of his planned community, and a social-activities center.

As the farm, and the multifaceted entity named Sekem, took form and grew, Also
did the nature of the project’s innovations. Production of an extract of a medici-
nal herb for an American firm was actually Sekem’s first innovative venture. It did
not in fact involve farming, but the construction on the farm property of a chem-
ical laboratory to produce the extract that was sent overseas. Later, In 1986, Atos, A
joint venture between Sekem, a German bank, and a German firm, was set up. Atos
first marketed plant-based German drugs to Egyptian physicians. Later still, In
1992, another German firm became a partner in the production and sale of natu-
ral cosmetics in Egypt. Libra, a Sekem subsidiary established in 1988 to supply raw
Materialien (such as the plants from which extracts were obtained) to other Sekem
Operationen, began organic cotton production in 1994. Organic vegetable farming,
another addition to Sekem’s innovation set, was conducted by the firm Hator, A
Sekem subsidiary founded in 1996 that partnered with a firm based in Cyprus.
Much of the produce went overseas. It seems that each time a new product line was
added, a new company was formed under the Sekem umbrella. Zum Beispiel,
Naturetex, a separate subsidiary, collaborates with Egyptian textile firms to pro-
duce fabrics without using dangerous chemicals. Naturetex also produces chil-
dren’s clothing for export.

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Ayman El-Tarabishy and Marshall Sashkin

The success of the organic vegetable crops was clear, yet it was hindered by the
continued pesticide spraying by nearby cotton producers, which left a residue on
Sekem’s products. A massive public relations campaign led to an agreement with
Egypt’s agriculture ministry to “test” the yield per hectare of the organic approach
to cotton growing and compare it to that of farms using fertilizer and pesticides.
Year after year of testing repeatedly demonstrated the advantages of Sekem’s
Ansatz. Eventually, reluctantly, pesticide spraying was discontinued on nearby
farms. According to the Abouleishes’ historical account, all cotton production in
Egypt eventually ceased to use pesticides! This alone would have made Sekem a
success, due to the significant advance in public health achieved by reducing or
eliminating the use of pesticides.

But there is much more to the story. Under the Sekem Development
Foundation, a wide range of social services are provided to both employees and the
community at large. A medical center and clinic serves 120 patients daily, not only
employees but members of the local community. The Sekem School serves 300
K–12 students; many are the children of employees but the school is open to all.
Education for child workers is provided, as is a program of education for the hand-
icapped, programs in adult literacy and career skills, and programs in art, Musik,
and sports. In expanding its activities, Sekem’s initial training for workers has mor-
phed into career-development training. Vocational training is offered to individu-
als who may or may not become Sekem employees. There are also courses for
adults who want to start businesses.

We have repeated some of the detail presented in the Abouleishes’ case in order
to emphasize both the wide variety and the extensive interconnectedness of the
innovations that make up Sekem, but the point is clearly made by Ibrahim and
Helmy Aboulesih: successful macro-level social entrepreneurship requires the inte-
gration of multiple social elements, including but not limited to business innova-
tionen.

THE ENTREPRENEUR

Born in Egypt, Ibrahim Abouleish went to Europe for graduate study. He earned a
PhD in pharmacology and became a researcher, generating more than a few drug
patents and eventually becoming head of the Division of Pharmaceutical Research
at the University of Graz in Austria. During these years he also married an Austrian
woman, Gudrun Erdinger, and they had two children, a boy, Helmy, and a girl,
Mona. A visit to Egypt in 1975 impressed upon Abouleish the need to deal with
problems of pollution, Ausbildung, and poverty, unter anderen. Also, In 1977, he and
his family returned to his homeland to establish an organic-based farm. As we have
already noted, if that were the true and sole focus of his efforts, it would hardly
qualify as an innovation; organic farming was not a new idea, even in 1977. Aber
Abouleish had a far broader, multifaceted goal: to create a comprehensive develop-
ment initiative.

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Social Entrepreneurship at the Macro-Level

Abouleish’s first aim, Jedoch, was to enlist the entire family in his dream.
With that goal attained, he could begin a process that was to extend far beyond
farming. As he writes, “I would move to Egypt, establish a self-sustaining farm, Und
then over time add additional projects focused on education, Gesundheit, and culture.”
To begin to this process he needed funding. Abouleish was apparently reasonably
well-to-do, with funds adequate
to purchase the initial 70 hectares
of land, but he needed a large
infusion of capital in order to
begin
Operationen. He had
arranged for an American firm to
purchase a plant extract needed to
manufacture an herbal drug rem-
edy, but he still required funds to
obtain the extract and build a
chemical laboratory to process the
plants. Perhaps a surprising
beginning, when the overt aim was to establish a farm using organic methods—an
aim that was not initiated until 1994, more than 15 years after the founding of
Sekem.

Abouleish’s commitment to
his values and his faith was a
constant driving force behind
his personal efforts and his
step-by-step successes.

What we see in this account is Abouleish’s pragmatism. His real aim was not
limited to farming but was truly multifaceted, yet where he started depended on
opportunity, not a rigid plan. Many years ago, Herb Shepard (1975), a highly
regarded American organization development and change consultant, wrote that
one of his key rules of thumb for successful change was, “Light many fires!” That
Ist, rather than emphasizing a single major project, Shepard recognized that suc-
cessful organizational change calls for many small but interconnected efforts that
will eventually produce major change. Abouleish realized this instinctively.

Abouleish’s pragmatism did not extend to a willingness to violate ethical prin-
ciples. In a land where bribery and baksheesh are accepted as basic elements of
doing business, Abouleish refused to participate, despite the difficulties this creat-
Hrsg. Here again we see a crucial aspect of the successful macro-level social entrepre-
neur: goals are not approached by doing “whatever it takes” but by doing what is
known to be right. Abouleish’s commitment to his values and his faith was a con-
stant driving force behind his personal efforts and his step-by-step successes in
lighting many fires.

THE CONTEXT

The successful entrepreneur rarely forgets the context of his or her entrepreneur-
ial activities. Context is, Jedoch, most often thought of as government regulation,
funding opportunities, and competition. Abouleish had many run-ins with gov-
ernment agencies and bureaucrats. He faced severe problems in obtaining initial
funding, which were only overcome slowly and often with painful difficulties and

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Ayman El-Tarabishy and Marshall Sashkin

setbacks. Even competition was a factor, in that the chemical companies that pro-
duced fertilizer and pesticides had no interest in being put out of business and had
no scruples about paying off anyone who could help them. Regulation, funding,
and competition are relevant issues for all entrepreneurs, including social entre-
preneurs. Dealing effectively with these issues calls for the recognition of addition-
al contextual elements. One of these is high-level contacts with power and influ-
enz.

Early on in his development project, Abouleish was confronted by an army
general who wanted to take his land. Abouleish had friends and contacts in high
places, including then-president Anwar El-Sadat, with whom he had gone to
Schule. Abouleish used his influence with Sadat to stop what otherwise would have
been the end of his dream. The general was transferred and forced to apologize to
Abouleish—a deeply humiliating circumstance for the officer. Key influential con-
tacts are part of the “working capital” of the macro-level social entrepreneur. Bei
least some of these contacts must have not only strong positions of power but also
a degree of honest concern for people and development. This is asking a lot in
many situations, perhaps more than is possible.

Chemical companies, as noted above, were quick to catch on to Abouleish’s
aim of ending, as much as possible, the use of chemical fertilizer and the spraying
of pesticides. They used spies and they paid government bureaucrats to foster false
rumors about Sekem, asserting that the organization—and Abouleish in particu-
lar—were not true Muslims but actually worshipped the sun! (Sekem is the
transliteration of an ancient Egyptian hieroglyph meaning “vitality of the sun.”)
They used Imams in local mosques to spread this lie.

Abouleish then set up a meeting, bringing together a wide variety of local offi-
cials, religious leaders, and influential sheiks. At that meeting, he used his deep
knowledge of the Koran to explain to those present how what he was doing not
only was consistent with Koranic teaching but was specifically aimed to carry out
the principles expressed in the Koran. He used concrete examples to illustrate this,
demonstrating to those present, slowly, step-by-step,
that “Islam lives deeply in
Sekem.”

What we refer to here is not simply Ibrahim Abouleish’s evident religious
knowledge but his understanding of the sociocultural context within which his
development projects had to function. Abouleish’s awareness of the cultural con-
text and his ability to make social innovation congruent with local custom and cul-
tur (in diesem Fall, religion) were crucial factors in the success of Sekem. Recall, zu,
that in describing individuals at the highest level of leadership development,
McClelland observed that they often see the source of their vision and goal as being
based in and deriving from their religious belief. One implication here is that one
who is not native to the social context in which he or she attempts macro-level
social entrepreneurship may be unlikely to succeed in ventures of the sort
described in the Sekem case.

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Social Entrepreneurship at the Macro-Level

CONCLUSION

Let us briefly consider a third example of social entrepreneurship offered by
Nicholas Kristof, one that really is social entrepreneurship, perhaps even macro-
level social entrepreneurship. In Mexico, Ariel Zylbersztejn founded Cinepop to
project free movies in parks using inflatable screens because the vast majority of
Mexican citizens could not afford the price of admission to a movie theater. If that
was all he had done, Zylbersztejn would have simply founded another charitable
venture. Jedoch, his model is based on finding sponsors who pay to have adver-
tisements included in the free show. These funds not only support the free movies,
they are used to supply microcredit, in partnership with other agencies, to individ-
uals and families hoping to start small businesses, as in the model pioneered by
Nobel laureate Muhammad Yunus, founder of the Grameen Bank in Bangladesh.
The money raised is also used to partner with social-welfare groups to help impov-
erished families who show up to see the movies. Cinepop is now three years old,
Und 250,000 people attend their movie screenings each year. Zylbersztejn’s goal is
to use the Cinepop model in other nations with mass poverty, such as Brazil, Indien,
and China.

Note that Zylbersztejn has developed a real innovation. This innovation is not
simply showing free movies to the poor in public parks; that is not new. His inno-
vation is, eher, the way he has “bundled” his free movie plan with a complex,
interactive, and community-focused set of partners, Ziele, and activities. In this
case it is clear that the innovative entrepreneur is just as important as the innova-
tion. In der Tat, it is hard to separate the two. We also see that the Abouleishes’ third
lesson—the crucial involvement of community and culture—is a key aspect of the
Cinepop model. After all, what defines culture more than the movies people go to
sehen?

We see clearly that the lessons presented by Ibrahim and Helmy Abouleish may
not be limited to Sekem, yet we cannot conclude this analysis without noting the
true difficulty of success in such social entrepreneurial ventures. One of us, Ayman
El-Tarabishy, is a citizen of Egypt. His father emigrated, much like Ibrahim
Abouleish, and founded a successful international import-export business. And,
again like Abouleish, he subsequently returned to his native Egypt. His hope and
aim was to establish a factory that would create prosperity for his employees and
the surrounding community, and thus demonstrate the real possibilities of eco-
nomic development and change. His idea was innovative, though perhaps not to
the degree of Abouleish’s concepts. Darüber hinaus, his past efforts demonstrated that he
had the personal character required for entrepreneurial success. Jedoch,
Tarabishy lacked the sort of network of
influential personal contacts that
Abouleish describes, almost in passing. He could not go to Sadat or Mubarek when
faced with uncooperative bureaucrats or generals with hidden agendas. The larger
Kultur, in which this man had little influence, defeated his efforts and his dreams,
and he suspended his entrepreneurial efforts in Egypt.

We do not mean to cast a pessimistic veil over the likelihood of success of

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Ayman El-Tarabishy and Marshall Sashkin

macro-level social entrepreneurship efforts. Such efforts are desperately needed
and they can succeed, as demonstrated by Abouleish and, for that matter,
Muhammad Yunus. dennoch, our own experience tells us that we must attend
carefully to all three elements of successful macro-level social entrepreneurship as
defined and demonstrated in the Sekem case. When we do, we may be able to more
successfully identify situations in which this form of social entrepreneurship can
succeed and situations that are best avoided. For this we must express great appre-
ciation for Abouleish’s teaching with respect to this sort of social entrepreneurism.
The lessons we have extracted from the Sekem case seem to us to be crucial for
both understanding and successfully engaging in macro-level social entrepreneur-
ship. We have much for which to thank Ibrahim and Helmy Abouleish—as does
Egyptian society.

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