Why innovation and enterprise are a driving force for social impact

Traditionally innovation and entrepreneurship are seen as drivers of jobs and competitiveness, however we think it can also be an important driver of inclusiveness and social development.

We see how private actors are driving social development – the example of the Development Marketplace and its spin-off Social Enterprise Innovations program demonstrate the potential for scaling inclusive businesses, grassroots innovations and social entrepreneurship to solve development challenges like sanitation, clean water, early childhood nutrition, health-care services, and many more. We have examples in our portfolio of how social enterprises are delivering low cost TB treatments in poor communities, delivering clean water to urban and rural poor, and offering education opportunities to girls.

Developing countries are beginning to see innovation and entrepreneurship as a solution to their social challenges as it continues to drive most of the significant improvements in quality of life. However, in most instances developing countries are not leveraging social enterprise innovations to their full potential. Multiple challenges exist including policy and regulatory constraints, lack of financing, gaps in the value chain, lack of capacity both in the government and in the social enterprise sector, and so on. The government can help address most of these constraints, the question is how?

We see that the speed of innovation and the extent to which social impact is achieved also depends on the opportunities for public-private dialogues and collaboration. We see innovation happening despite the lack of a conducive policy environment in many countries. To achieve larger impact it’s important for countries to pursue policies that promote partnerships between governments and the private sector for solving social issues and delivering services to = citizens.

It’s also important to think how emerging technologies can be used by developing countries to leapfrog development paradigms of the North (think landline versus mobile telephony), that allow us to bridge the last mile service delivery gap, and that leads to innovative solutions for pressing development challenges.

One example of such technology that may allow leapfrogging is 3D printing (also known as additive manufacturing). It allows for low cost prototyping (great for developing new products and facilitating entrepreneurship), reduces waste and need for carrying large inventories (thereby reducing capital investment and storage space), and may significantly reduce transportation of materials over long distances (reducing cost and carbon footprint).

We are also seeing another wave of mobile adoption coming to developing countries, with cheaper smartphones and ubiquitous connectivity. India just became the fastest growing mobile smartphone market in the world. It’s safe to assume that other developing countries will follow a similar trend. More people go online on mobile phones than using computers in many developing countries. This creates an unprecedented opportunity for innovation and entrepreneurship, and may allow entrepreneurs to also compete globally, benefiting the global North through the spread of reverse innovations.

Another way to transform how innovations are defined, sourced, supported, and funded is by leveraging impact finance through approaches like crowdfunding and impact bonds. Micro-finance platforms like Kiva.org, Rangde.org, Indiegogo.com and others have already financed millions of dollars in support of social entrepreneurs in many developing countries. Development impact bonds are another example for enticing impact investors into funding through the promise of a third party to pay for performance, which provides investors with the higher prospect of a financial return in highly risky bottom of the pyramid markets.

Combination of these grassroots social entrepreneurs, technologies, connectivity, and platforms may offer an unprecedented opportunity to democratize and harness innovation and entrepreneurship in emerging economies.

We therefore encourage positioning the innovation and entrepreneurship agenda as one of the important driving forces in development. From the World Bank Group’s point of view, we would need to work across the boundaries of technical expertise on social issues (like Health, Sanitation, Education), and expertise in private sector development (Trade and Competitiveness, IFC, MIGA).

This article was first published by The World Bank’s Development Marketplace blog. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Adarsh currently leads the World Bank Innovations Labs. Natalia Agapitova worked extensively with operational and analytical aspects of innovation and social entrepreneurship since 1997, including twelve years at the World Bank.

Image: Traditional Incandescent light bulbs are seen at an apartment in Munich August 31, 2009. REUTERS/Michael Dalder.