Applying the Stakeholder Model to Social Entrepreneurship – A Practitioner Approach

Abstract

A community development project in northern Haiti involving coffee farmers grew into a co-operative community engagement with widespread participation from the local community. A different area in northern Haiti witnessed the development of women artisans learning skills and increasing economic attainment, enabling them to afford schooling for their children. The partnership with an American institution of higher education afforded both students and faculty opportunities to assist these communities to further grow as well as provide real-life social entrepreneurial experiences and research gleaned by students. A SWOT (strengths, weaknesses, opportunities, and threats) analysis with stakeholder model applied to these community groups demonstrates a successful model with continuity for all stakeholders benefiting from the partnership.

Headnote

Abstract

A community development project in northern Haiti involving coffee farmers grew into a co-operative community engagement with widespread participation from the local community. A different area in northern Haiti witnessed the development of women artisans learning skills and increasing economic attainment, enabling them to afford schooling for their children. The partnership with an American institution of higher education afforded both students and faculty opportunities to assist these communities to further grow as well as provide real-life social entrepreneurial experiences and research gleaned by students. A SWOT (strengths, weaknesses, opportunities, and threats) analysis with stakeholder model applied to these community groups demonstrates a successful model with continuity for all stakeholders benefiting from the partnership.

Keywords: social entrepreneurship, entrepreneurship, stakeholder model, Haiti, intrapreneurship, higher education

Introduction

One of the most challenging tasks is sustaining social enterprise over the long term. Statistically, about 50% of traditional for-profit businesses fail within the first five years of their existence (United States Bureau of Labor Statistics, 2016). For social enterprises, where the highest priority is not profitability, but instead, the fostering of a worthy concept into a business activity that can positively impact society, the failure rate is likely to be even higher. Even with the most admired social advancement goals, one cannot overlook the importance of adequate funding to establish the business and working capital. This scenario becomes exacerbating due to limited funding when the social enterprise is located in a lesser developed country mired in infrastructural deficiencies and other extreme environmental resource challenges.

This article examines challenges for a potentially successful social enterprise in Haiti, the poorest country in the Western hemisphere. This social enterprise began in 2008 as a partnership between an institution of higher education in the United States of America (U.S.), and a group of farmers and artisans in the Northwestern region of Haiti. It involves the establishment and strategic development of an organic coffee industry and artisan projects. The authors identify routes to overcoming these challenges, showing the value-added potential for the various stakeholders integral to sustainability for these nearly forgotten communities.

Background

Vinciguerra (2014), a leader in the field of community-based projects, shared in-depth background regarding the birth, growth, and establishment of specific ventures during the initial five-year period. The projects inspired the desire to deepen the relationship between an institution of higher education's religious affiliation, which happens to be based in a relatively wealthy, very advanced economy, and its sister organization operating in a nearby, lesserdeveloped nation. Despite the disparity in wealth, the intentional approach was one that emphasized a partnership of equals. Integral to the development were honor and mutual respect, frank open discussion of issues, and joint decision-making. This is contradictory to the influence wielding typical of an advanced economy (Vinciguerra, 2014). Project ideas came from the partners in the lesser-developed nation, given their knowledge of the local environment. This aspect of the project was instrumental as it provided the community leaders a chance to share needs from their perspective and fully identify skill sets available, infrastructure, challenges, and other essential information of which the other party would not necessarily be aware. These project ideas, with careful discussion and exploration, resulted in final decisions coming from joint agreement between both parties. This process resulted in the establishment and development of coffee and artisan projects (Vinciguerra, 2014).

Institutions of higher education have the dual purposes of educating and training people in both knowledge and technology necessary to pursue career paths that meet the demands of society. Antoncic and Hisrich (2003) refer to the concept of intrapreneurship as "entrepreneurship within an existing organization" (p. 9). Therefore, intrapreneurship is "employees using their creative talents to develop new products or services, or both, to enhance their organization" (Gringarten, Knowles, Fernández-Calienes, & Grandmont-Garibiold, 2011). The partnership with the institution of higher education and community-based engagement is an intrapreneurial endeavor from the perspective of the institution of higher education.

The SWOT (strengths, weaknesses, opportunities, and threats) analysis technique examines how these projects have evolved since the Vinciguerra's (2014) seminal publication. This detailed review of SWOT, and how they relate to each project follows. Prospective direction for sustainability and suggestions to continue the project follow, tied to the stakeholder model.

SWOT of Social Enterprise in Lesser-Developed Nation

Since 2014, a number of obstacles arose and continue that potentially could push desired developments of these fragile social enterprises off track, which is not unusual for a typical social enterprise. Problems arising in these projects include poor crop yields (quality, or quantity, or both); land ownership dispute, unstable market demand to match supply of artisans' crafts, logistics problems, limitations in funding, and personnel challenges. Separate SWOT analyses of the coffee and artisan projects follow.

Coffee

The most prominent strength in the coffee project is the worldwide recognition of high quality Haitian coffee. The quality highlights include great taste, organically grown, and highly in-demand by coffee aficionados. The reputation of Haitian coffee stands on a rich heritage. The unique benefit originates from the soil found at high elevations resulting in a rich, unique, highly flavored bean (Carmichael, 2011). The traditional dry method used for processing also increases the tartness of the coffee. The institution of higher education provided additional strength to the coffee project because its students, faculty, and staff volunteered on a seasonal basis to market the coffee via sales at churches and schools, family and friends, and occasionally in stores.

An exasperating weakness lies in the production levels that may not always meet increasing demand. Methods of reaping, drying, and processing are still rudimentary, resulting in possible damage to some beans. Although the coffee is in demand, there are challenges in procuring adequate amounts from Haitian farmers and shipping the product to the United States of America consistently. Consequently, at least one major commercial buyer no longer lists the Haitian coffee on its menu, although willingly sells it when available. Limited availability has also resulted in the inconsistent promotion for online purchase of Haitian coffee.

Lack of irrigation and proper infrastructure to take care of the plant during the extended dry season poses a major problem due to the health of the plants and attached fruit. On the contrary, the wet season leads to other problems due to inadequate drainage and in extreme cases, land slippage. Limited access to pest control facilities is also a challenge, especially with the constant threat of the coffee beetle borer.

As with most social enterprises, access to adequate funding for long term development is quite difficult to attain, especially when a project is not 100% self-sustaining. There is a shortage of adequate funding for equipment, supplies, and wage compensation in Haiti. Limited funding also contributes to a dearth in leadership, and training in required functional areas, such as crop management, business management, and accounting.

Opportunities lie in the potential development of the coffee brand, providing growth opportunities for the gourmet organic fair trade coffee. The U.S. market - where increasingly conscious customers are willing to pay higher prices for coffee that meets specific criteria with respect to growth, reaping, and processing - provides great potential for connoisseurs of fine coffee. Goodwill toward Haiti is also a strong selling point, as people aware of the devastating poverty will sometimes make purchases, knowing they are contributing toward helping to improve the critical situation.

Threats are inevitable, with poor crop yields due to hurricanes or storms, and consequential challenges that cause coffee berries to detach prematurely from trees before ripening. This is perhaps the greatest threat having a negative impact on the livelihoods of the farmers, who depend on coffee farming as their main source of income to maintain their families. Reaping lower levels of mature coffee beans means less income for the farmers and their families.

An issue that has plagued the farmers for some time is the coffee borer beetle. This insect reduces the quality of the coffee bean, causing bean loss. Unpredictable weather conditions, such as too much or too little rain, also may have an impact the quality of the final product.

Another threat arose over a recent land ownership dispute that caused a devastating negative impact on the overall Haitian operations. Ownership of recently purchased land for the construction of an office, coffee storage, and processing facility is the focus by someone else claiming to own the land, although the seller had already presented proof of ownership. There appear to have been discrepancies regarding the genuine landowner. Haiti has no central land ownership database, making it very difficult to establish ownership. The judicial system is also extremely slow; therefore, it may be many years before resolution. This unfortunate turn of events aggravates the fact that the construction project had already begun.

Artisans

One of the strengths of the skilled artisans is they are more than willing to work in order to make products for the United States market, where payment is higher for their products than what they could earn in the Haitian marketplace. A committed work ethic demonstrates the desire for those in the community to find meaningful career paths and provide for their families. A second strength is the existing reputation of Haiti for affordable, good quality, colorful artwork over the years, innovatively making use of the limited resources and available discarded products (McFadden, 2016).

Logistics remains an enduring weakness especially since the artisan project is located in a rather remote northwestern area with challenging road conditions. This makes the inflow of raw materials and the outflow of finished products to market a continual challenge.

Another concern is the procurement of reasonably priced raw materials. Generally, some supplies may be difficult to find in Haiti or are more expensive, so needed materials at relatively low cost continue to pose a challenge.

Artisan work faces similar challenges regarding easily accessible finished products to match market demand. There is no consistent source (offline or online) from whom one can purchase the products in the United States of America. The challenge of consistent and adequate project funding makes it difficult to continue a consistent growth trajectory. Student groups cannot always be as actively involved in the projects due to their inability to visit the production sites as previous funding needs new donors and pipelines.

A major opportunity remains in the production of customized pieces. Reaching markets for desirable products in small quantities of unique handcrafts places a premium on the products themselves. Haitian art, with worldwide recognition for its unique vibrancy and use of bright colors (McFadden, 2016), is fast becoming marketable.

Threatening the artisan projects is the concern of unstable market demand. Finding customers in the U.S. has proven to be challenging. Chinese and other mass production alternatives constantly undermine small production capabilities existent in small, less developed countries.

As with most social enterprises, access to adequate funding for long-term development is quite difficult, especially when a project is not self-sustaining. There arises inconsistent funding availability for equipment, supplies, and compensation of personnel in Haiti.

Stakeholders: Institution of Higher Education and Haitian Community

The stakeholder model, typically applies in a business environment, identifies exactly who has a stake in seeing the success of a business, with the organization as the center. Primary stakeholders in a business environment include the business principals, clients, management and employees, communities and governments (Steiner & Steiner, 2006, pp. 16-17). Secondary stakeholders, though impacted to a lesser degree, remain cognizant of the organization's development, sustainability, and growth. Secondary stakeholders may include educational and religious institutions, political parties and interest groups, trade associations, unions, creditors, suppliers, and even the natural environment and future generations (ibid, p. 17). Figure 1 below illustrates primary stakeholders in accordance with Steiner and Steiner's (2006) Stakeholder Model.

Daft (2015) provides a business stakeholder model with the functioning organization in the center. The functioning organization is a three-part process that includes the inputs (raw materials, people, information, and financial resources); proceeds into a transformation process, that is, what the organization actually does or performs; and outputs follow, which represent some product or service (p. 14).

The full-scale stakeholder model consists of the functioning organization hub with spokes that include employees, customers, creditors, management, government, union, community, suppliers, owners, and stockholders (ibid, p. 24). Clearly, each of the spokes on the stakeholder wheel have a vested interest in seeing the organization continue to perform, maintain sustainability, and grow as their existence depends upon the functioning organization.

A theoretical application uses the stakeholder model, typically describing organizations, and is applicable to social-entrepreneurial, Haitian community-based engagement projects. This article further develops the stakeholder theoretical approach for the Haitian community-based project. This stakeholder model helps identify the various parties who participate and actually benefit from this long distance relationship between the institution of higher education and the Haitian community groups: artisans, coffee growers, solar energy project participants, and future community-driven endeavors. Taking the concept of the stakeholder model and applying it to the unique community-education partnership, with the Haitian community as the center of the model, both community and university stakeholders emerge.

University Stakeholders

For the university, the main beneficiaries include students, faculty, special departments that may participate directly within the institution of higher education, and the institution as a whole. In addition, the institution's branding embraces a wider reach. Stakeholder benefits identify each of the university's groups.

Students

Student beneficiaries are first and foremost the most prevalent with priority as the university seeks to "develop leaders for life" through its degree programs. Students from all majors stand to benefit. Business majors opt to develop marketing opportunities or help develop other aspects of the supply chain. Science majors employ state-of-the-art technology for solar energy solutions, while biology, environmental, and natural sciences majors seek new ways to improve the coffee crop or other environmental needs. Education and communication majors provide doors for second language learners and community-based lifelong learning opportunities. Theology majors glean from seeing the how church-impacted communities depend upon their religious institutions while witnessing the effectiveness of their community efforts and even the power of prayer as evidence in the improved lives of individuals in the overall community. Law school students gain access with opportunities to produce contracts and other legal documents that evolve with the partnership's growth.

Student experiences range from working with community development, entrepreneurship, and social enterprise projects while developing and applying skills with problem solving opportunities that apply to real life situations. Thus, the students' learning experiences themselves provide deeper participation and understanding of their educational worth throughout their studies at the university. Placing real-world problems while seeking solutions and developing processes to do so, is an invaluable educational learning experience highly suitable to students in higher education.

Student participation in research projects gleans application while synthesizing learning opportunities. Student research further benefits the institution of higher education, with theoretical application to students' real-life situations and experiences. These student experiences bring value to the institution of higher education for being a social entrepreneurial encouraging institution for both faculty and students. This may create a completely new branding to incentivize future students.

Faculty

Faculty opportunities range from integrating subject matter, research projects, and reallife problem-solving activities designed for student learning and engagement. In addition, faculty obtain opportunity to research, publish, and be on the team helping grow students in social entrepreneurship activities. The valuable connections in the real world bring to life the theoretical dimensions so prevalent in higher education today. Bringing the world to the students makes it more valuable for both the learners and faculty who design these learning experiences in preparation for tomorrow's decision-makers and leaders.

An Institute for Innovation and Entrepreneurship

The institution of higher education is launching a new state-of-the-art building, slated for opening in late 2019. An institute for innovation and entrepreneurship has potential to tackle real-world challenges and will have a place in the new facility. Scenarios for the Haitian community projects to work toward discovering solutions offer real-world value to students. An institute for innovation and entrepreneurship has the potential to become an incubator for growing community-based entrepreneurial projects. In addition, other institutions of higher education may emulate this model for developing their projects.

A natural growth from a community-based engagement foundation is the need to employ more advanced business skills as the community-based projects evolve. Knowledge, networks, and skills involved, such as growing a market or developing efficiencies in the supply chain, make this type of project a unique experience for students and faculty within the entire institution of higher education.

Launching a multidisciplinary approach welcomes other subject disciplines into a center for innovation and entrepreneurship that draws from the strengths of other disciplines within the institution of higher education. Helping science projects find a market or finding ways to raise capital can now become a more holistic learning experience for students and faculty alike - all while helping those in difficult life circumstances. A multidisciplinary approach provides the institution of higher educaiton working toward real world solutions that, in turn, will benefit the Haitian community with teams from a deeper knowledge-value base.

Institution of Higher Education

We carve out a distinct niche with a strategic South Florida location due to convenient geographical proximity to Haiti. Culturally, we have much in common, as many expatriates in the South Florida area have Haitian connections. The institution of higher education has an opportunity to brand itself in a unique way to become a leader in social entrepreneurship, a new strength opportunity in a forward SWOT analysis.

Haitian Community Stakeholders

For the Haitian community, beneficiaries include the actual participants in the projects. Initially, that includes coffee growers, artisans, and their families. As families grow into greater self-sufficiencies, the community as a whole grows in ways that prompt future initiatives. These close-knit communities have the opportunity to continue to help each other grow once they learn the processes of becoming a bit more self-sustaining, making them organically-generated. Community growth leads to greater economic potential such as tourism products, or fishing and boating opportunities. Growth of various projects has the potential to lead to improved infrastructure, which in turn, may help influence greater sustainability for coffee producers. Wider community-based needs, such as improved educational institutions, grow as the economic vitality of the community expands.

Basic economic growth has exponential opportunity as the communities continue to apply lessons learned while developing their markets and network. Cultural fusions may erupt as traditional ways yield to sound economic direction for individual and community growth.

Haitian stakeholders start small with individuals and their families, quickly branching out to the wider community bringing about a surge in education, transportation infrastructure development, and overall community moving forward. A transformational change starting in the grassroots, northern separated communities has the potential to ignite real change in this impoverished nation. The model starts with its people, brings about only those needs they define that require outsiders' help only until they become strong enough to sustain themselves in the global village, for which they have much to contribute.

Discussion

The dire situation in Haiti has been a wound for humanity for far too long. Developed nations that have made our creature comforts such as we see in the 21st century should be all the more cognizant toward our fellow human beings still struggling just to feed themselves and their families. Community-based projects that help the communities identify and develop their own ways of becoming sustainable are most valuable when they receive the assistance they themselves have identified in trusted relationships with enterprises that seek to provide assistance, not on their terms, but on those the community desires. An institution of higher education working in social enterprise projects has demonstrated slow but steady progress for communities to grow themselves organically. After sorting out the specific strengths, weaknesses, opportunities, and threats, a stakeholder model approach reveals just how many actually can benefit from these social-entrepreneurial, community-based projects bringing students, faculty, and people in need together in a way that all benefit while gaining self-efficacy as a result of putting their learned efforts into play. An intrapreneurial product, such as this social enterprise, becomes a branding enhancement for the institution of higher education (Gringarten, et al., 2011). The key here was establishing a sustainable relationship between an institution of higher education community engagement team and viable Haitian community leaders.

Conclusion

This article highlights community-based projects established in a lesser-developed nation in conjunction with an institution of higher educaiton. An in-depth analysis identifying strengths, weaknesses, opportunities, and threats applies to the community-based project. The traditional stakeholder model describes and illustrates beneficiaries. Application of the stakeholder model to the community-based projects and institution of higher education provides a renewed perspective of beneficiaries on both sides of the social enterprise. The combined stakeholder benefits for both the institution of higher education and those in the community-based projects reveals that support for this continued partnership grows as the community evolves with both entities moving forward. A successful intrapreneurial project meeting community needs while utilizing the proficiencies of an institution of higher education create a true win-win scenario for all stakeholders.

Sidebar

About the Authors

Justin Peart, Ph.D. ([email protected]), is an Associate Professor of Marketing at St. Thomas University. Dr. Peart has travelled to Haiti a number of times as part of an immersion team comprised of students, faculty, and staff of the university partner. He has witnessed firsthand the extreme courage and determination of Haitian partners as they try to beat overwhelming odds in order to succeed in various small business projects. The most challenging of these obstacles to progress include extremely poor infrastructure and ineffective political governance regarding the welfare of average Haitian citizens.

Lisa Knowles, Ph.D. ([email protected]), is an Associate Professor of Management at St. Thomas University. She too has traveled to Haiti to witness the projects first-hand. Her research interests include the recreation marine industry, entrepreneurship, intrapreneurship, organizational behavior, and organizational culture.

Discussion Questions

1. What strategic approaches should non-governmental organizations (NGOs) use to develop sustainable projects that foster long-term improvements in Haiti's standard of living?

2 How can stakeholders in developed countries collaborate with lesser-developed nations to develop markets efficiently for goods from these lesser-developed countries that meet developed countries' discriminating tastes and legal requirements?

3. Can you think of other ways that applying the stakeholder model benefits those it serves? What are they?

4. Are there any areas the stakeholder model demonstrates that may actually not serve those it seeks to benefit? What are they?

To Cite this Article

Peart, J., & Knowles, L. (2018, Spring-Summer). Applying the stakeholder model to social entrepreneurship: A practitioner approach. Journal of Multidisciplinary Research, 10(12), 85-95.

References

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