The UN has set itself 17 sustainability goals - including: quality education and clean water for all, climate action, and peace and justice. These are big goals that nonprofit organizations can't achieve on their own. This is exactly where social entrepreneurs - i.e. social business start-ups - come in. They are not interested in making a big profit; they want to improve the world and solve social problems. Prof. Raith talks about whether they can save the world and how they can finance this without making big profits in the new episode of "Knowledge whenever you want".

Guest today

Prof. Matthias Raith has held the Chair of Entrepreneurship at the University of Magdeburg for 23 years. Together with his team, he created the Social Entrepreneurship Monitor and implemented it for the first time in Magdeburg. This survey is now being conducted throughout Europe. In his lectures, bachelor's and master's students from economics, engineering or computer science learn how to combine entrepreneurial with social and ecological action.

*the audio file is only available in German
 

The Podcast to read

Prof. Dr. Matthias Raith: I see more and more new companies that identify themselves as social entrepreneurs. My vision is that in maybe ten years the term social entrepreneurship won't even exist because it will go without saying that every company must have this multidimensional value creation in mind.

Intro voice: Knowledge when you want it. The podcast about research at the University of Magdeburg.

Ina Götze: Imagine founding a company that does not turn a profit. Sounds illogical at first. But that is exactly what social entrepreneurs are all about. They want to improve the world and solve social problems. But how can non-profit enterprises survive at all? What distinguishes them from corporations that are socially committed? And how much success do social enterprises have with their ambitions? Professor Raith will answer these questions today. He holds the Chair of Entrepreneurship. A warm welcome! How many times have you gotten tongue-tied when pronouncing social entrepreneurs?

Prof. Dr. Matthias Raith: Well, I have been practicing entrepreneurship for a long time. That was important because my chair is called "Chair of Entrepreneurship". In this respect, it works quite well now to put the social in front of it, which is relatively easy. Explaining that is more difficult.

Ina Götze: Hopefully you will be able to do that today. After all, most of us have used a social enterprise before, that is, the service. Perhaps also the best-known one, namely Wikipedia. What other well-known social entrepreneurs are there?

Prof. Dr. Matthias Raith: If I just look around in Germany, there are of course well-known names like Dialogue Social Enterprises, which launched the Dialog in the Dark project, where visually impaired guides take you through a world of darkness. There is Discovering Hands, which trains blind women as tactile experts for breast cancer screenings. Auticon, which works with autistic software specialists. But then there is the search platform Ecosia, which plants trees. Patagonia, which combines outdoor clothing and environmental projects. Arbeiterkind, which also operates in Magdeburg, trying to get children from working-class families into academic training. Great diversity. Wheelmap in Berlin, who mark wheelchair access on city maps, so to speak, a great company. A very diverse mix. So when you first look around, you’ll find a lot of names.

Ina Götze: I also just noticed when you were listing them: I've heard of some of them before, and then you become aware of them.

Prof. Dr. Matthias Raith: Soulbottles, Viva con Agua. These are big companies now that are very successful.

Ina Götze: Even as a child, we learn that if I want to buy a toy, I first must earn the money to do so. Social enterprises do not want to make a profit, but they still have to earn money to stay in the picture, to be able to buy the toys, to make investments or to pay their employees. How can they do that?

Prof. Dr. Matthias Raith: For any company to exist in the long term, it has to be economically sustainable. That is, they want to be able to do what they do in the long term. That means that if you have expenses, you also have to have income. You have to get money from somewhere. You can make that money in different ways. It depends on the business model, which is a very exciting topic, especially for social enterprises. You can make money in the market by selling something. Selling services, selling products. Or you can make money by selling the mission. And when you sell the mission, you say: I am doing something great here, is there anyone who wants to pay for it? And those who want to pay for it, they are called donors. Large organizations like Greenpeace have existed very successfully in this way for decades. The WWF exists in this way. But there are also other companies, smaller companies, that simply say we are doing something good. And then they hope for stakeholders who say this has to stay alive. Similar to Wikipedia that does this every Christmas - asks their users, will you support us? And take a look around your circle of acquaintances to see how many people actually support Wikipedia financially. Very few. What is amazing is how heavyweight this company has become with the few donations they get. It is a very big company now.

Ina Götze: Then my guilty conscience does not have to be quite so big because I have not donated yet.

Prof. Dr. Matthias Raith: You can also transfer your donations to other companies. If you look at donors like customers, donation financing is not so different from revenue financing in the marketplace, where they sell products or services. If you sell something, then the question is also like that in the value creation approach: do you want to sell something in order to then do something good with the money, to invest in social projects? Or do you want to earn money with the social project itself, for example, by productively involving a disadvantaged social target group, in order to then actually earn money commercially on the market with this target group? These are all very different approaches. But money has to be made, either financially or through donations in kind. This is volunteer help. Arbeiterkind, for example, works a lot with volunteer support. And in this way, a company like Arbeiterkind has been on the market, I think, for 15 years now.

Ina Götze: The example of "I involve the affected group in producing something" would that be something like workshops for people with disabilities, for example?

Prof. Dr. Matthias Raith: That is how we know it from the past. But a company like Discovering Hands is highly professional in the market. We are talking about breast cancer examinations here, and you can't just experiment a bit. Of course, patients want something very professional. Auticon, they earn real money on the market, they are software specialists. So this is not just a job to get people involved. That is also very important. But we are talking about the inclusion of people, where we used to say that is a disability. Now we are talking about focused talents. We see, so to speak, that autism is not a disability, it is a focus talent and we can use that to create value, of course. Visual impairment is a disability on one hand, but because the other senses are heightened, these people are experts at certain things, like being a guide in the dark, or their tactile expertise, that they are very good in that area. People with Down syndrome have been found to be extremely friendly in the customer area and very successful in restaurants that way. They are successfully used for city tours. In other words, people understand inclusion very differently today than they did in the past. You do not try to just do something good for them, but you really try to fully integrate them productively, so that what is done in the market can actually realize a full commercial market price.

Ina Götze: But this means that social enterprises can also generate profits?

Prof. Dr. Matthias Raith: Absolutely. So profits are not a bad thing, and these companies are not trying to avoid profits, they are trying to make profits, but not to sort of siphon off those profits for personal gain, but to use those profits to reinvest, to expand their mission. So that means no company is trying to make zero profits or losses, but the question is, what do you do with the profits? And there are also different legal forms that then force the company to reinvest the profits, so to speak. Ecosia has such a legal form. That means that the managing directors are not allowed to earn very much. They do okay, but they do not pocket high profits for themselves, but this money is deliberately used to plant trees.

Ina Götze: And how successful are social enterprises in solving social problems in the end?

Prof. Dr. Matthias Raith: It depends on the mission how successful they are. If you want to save the world, you have more to do than if you want to engage a specific target group in some way. It is very different. How you measure your success is not without problems because there are investors who support you, and investors are not donors. Donors give their money and say: we are using it to finance this project. Investors also finance, but they also want to get something back. They want to get a return. That is what most investors want. But there is a new group of investors, social investors, who say: We also want a social return or an ecological return. Measuring those is a very big challenge, because it is very hard to define at first: What do we mean by social impact? And when we look at how successful they are. Then we can look at: How many employees do they have? How many projects of this kind have they initiated? How many sites do they have? You can measure all that. But it is more difficult to measure what impact they have at the sites. In social entrepreneurship research, we already have a logic chain like that. It starts with output: How much do you produce? And let us say, for example, you want to build wells in Africa. Then your output is the number of wells you implement. That is what we call output, so to speak. And after that comes outcome. How many households can you serve with this well? That is, with one well you can supply maybe 60 households or small businesses or agricultural businesses. And then comes the big leap, so to speak, to impact. How does that change their lives? Are people in better health? That is not directly related to the well. It is not an immediate result either. But the question is, why do you do it? Why do you build wells? It is mostly to create a certain effect. Of course, this effect happens after a certain time, but there are other things happening in the villages in the meantime. And the question is, how much of that impact can you attribute to the company, so to speak? That is a big problem for the companies that have to prove impact. But also, of course, for the investors who also want to direct their investments depending on levels of impact.

Ina Götze: We know a bit about corporate communication. In the end, it is always difficult to say how much the communication has contributed to the image and the perception. Yes, so I can empathize with that. Young companies like Koro and Purematics, for example, want their products to produce less packaging waste or sustainable cosmetics. So they pursue an ecological and therefore also a social purpose. Could these companies be described as social enterprises?

Prof. Dr. Matthias Raith: More and more companies are setting themselves ecological goals and also social goals, which is important and absolutely necessary. We actually only talk about social enterprises when the mission comes to the fore. In other words, does a company do good in order to be better positioned in the market, in order to earn money with it? Or does a company earn money in order to do good? That is, is the mission a means to an end or is the mission the primary end?

With social entrepreneurship, we are really talking about businesses that are built around a mission. The mission is the primary focus. It is the change that I want to bring about. And in order for me to bring that about in the long run, I need a company, and the company is set up for that purpose. And of course, there are companies that are increasingly saying, yes, we need to be more environmentally sustainable, and they are tweaking their business model at that point or at that point. That is quite important. It is absolutely important, vital. But the main purpose, so to speak, is to be successful in the market monetarily in business terms, because customers demand that. That is why I do it, so that I can still sell my stuff. The main purpose is to sell and, so to speak, doing good is a means to an end. I do not mean to belittle it, but it is not what we call a social enterprise. And most of the time, social enterprises are also active in areas where we observe market failures, where the market solution, for example, leads to visually impaired people not having good opportunities in the primary labor market. That is where you intervene and say: We are specifically trying to solve this market problem by creating our own market. So you are a market maker. You try to create your own market to serve this target group. In other words, these companies focus on areas where the state has failed, where the market has failed, which makes it very challenging.

Ina Götze: You said yourself that more and more companies are advertising that they want to serve ecological or social purposes, for example. It is not so surprising that sometimes more is advertised than is actually behind it. Every now and then, however, companies that are actually socially responsible turn out to be fakes. The most recent examples are Got Bag and Fynn Kliemann's company. How much do such scandals damage the image and credibility of social enterprises?

Prof. Dr. Matthias Raith: Scandals always harm companies, always harm an industry. Just as the diesel scandal has damaged the entire automotive industry. That was scandalous. Customers are outraged, and I hope that the companies in question have suffered damage so that they can learn from it. I think you always have to distinguish between companies that intend something good and then it goes wrong. For example: I want to do something ecologically sustainable and then it turns out that I have created much more pollution in another area. Then it went wrong. Mistakes like that happen. It is unintentional, it is unpleasant. But I wouldn't call that scandalous yet. That needs to stop. And then, of course, there are companies that deliberately lie in order to deceive. That is really scandalous. And of course, that harms every company that is exposed in the process. But I think that the entire social entrepreneurship scene is so diverse that I believe that if an individual company is exposed and rightly so, and it is then also sanctioned by customers, by the law, then the damage is limited. I do not believe that this will harm the social entrepreneurship scene in any way. Just as the diesel scandal has not led to fewer cars being bought. It is just that different cars are bought made by different companies.

Ina Götze: You also said that some companies also miss the ecological mark, for example. I just read that recently: In addition to greenwashing, a new phenomenon is now emerging, companies first conceal what ecological or social goals they actually have so that they do not run the risk of being accused of greenwashing if they do not achieve this goal. This is also an interesting development.

Prof. Dr. Matthias Raith: It is an interesting development. And that is also one reason why this impact measurement is so important, so that we can actually establish criteria. How can we measure what the company is doing? How the company presents itself is of course a strategic question. What do my investors want to see? And we know from the social entrepreneurship scene that - because this is so difficult to measure - they naturally advertise a lot with colorful stories, a lot of emotional things, and simply find that this satisfies the investors. And if it satisfies them, then it is good. If the investors say: No, we need hard facts. Then it becomes more difficult. And this depends a lot on the investors. What kind of people are they, are they private, are they professional investors? Of course, you always try to make yourself seem better than you might be, simply for marketing reasons. That is not what distinguishes social enterprises from conventional companies. And now it is important whether you have a company that does good in order to earn more money, where the motivation is sort of a means to an end. Or whether they are making money to do good, so the mission is the main purpose. I think that companies that make money to do good, where the mission is front and center, are simply more credible.

That means that if I make an effort to design companies in order support my social or ecological mission, those have a higher credibility from the outset than a company that says: We are doing something good now, as an aside, hoping that I will make more money. Ecosia has an Internet search platform like Google, but they use it to earn money through advertising, just like Google, but they commit to investing this money in tree campaigns. Krombacher says: For every case of beer we will save one square meter of rainforest. That is also a great campaign, I think it is great. But then you also think: Why only one square meter? Why not two square meters? Could they do more? And why are they doing that? To protect the rainforest or to sell more beer? Now you might say, the rainforest does not care. But with for-profit companies, it is always like, couldn't you do more? Procter & Gamble, where they say, for a pack of Pampers you finance a vital vaccination for a child in Africa. Great campaign. Every time you buy a box of Pampers, you save a child in Africa. Why just one? Why not two? If you look at the fraction of Procter & Gamble's profit that goes to the vaccination campaign it is vanishingly small. And then, of course, there are critical voices that say they could do a lot more. Nevertheless, 5 million children are saved. But with commercial companies, you always have to ask: What is the reason why they are doing this? With social enterprises, the company wouldn't even exist if the mission wasn't being pursued. Of course, there are fakes there, too, and hopefully they get busted. But I think we have a new type of company here that is simply more credible, and for the many social and environmental problems, I think this reversal of purpose is very helpful.

Ina Götze: You mentioned Patagonia yourself, the Californian outdoor brand. They donate 100 million dollars to environmental projects every year. An incredible amount of money. Now they have a new cooperation with the Albanian government and want to build a national park around the Vjosa River, the last wild river in Europe. I was there, it needs it. Things end up in this river where you think: Guys, why? Would social enterprises achieve more if they made an insane amount of profit like such a large company, thought more economically and could then put this money towards their mission in the end?

Prof. Dr. Matthias Raith: So not Patagonia now?

Ina Götze: Exactly, but a social enterprise.

Prof. Dr. Matthias Raith: Well, as I said, there are the social enterprises that are founded for this purpose. And then, of course, there are more and more large companies that have to assume social responsibility and say: But that is not our main purpose; instead, we use all the money we earn and put it into these projects. So the rainforest does not suffer from the Krombacher campaign, it benefits from it. And in the same way, when REWE joins forces with a food bank, the food bank benefits from it. The food bank actually does the social part. REWE sells the products and is a commercial company, but the partnership means that customers who shop at REWE every day can also put some of their money into social projects. I believe that more and more large companies are moving in this direction. And there are very many large companies, large commercial companies, that simply say that others can do it better than we can. But we earn so much money that we will simply support this with a lot of money. And there are now large corporations like Google Alphabet that simply say: We support social projects without initiating them ourselves.

Ina Götze: But it wouldn't necessarily be more beneficial for the social enterprises if they thought and acted like a business enterprise and then made more money, more profits, which they could then invest again, because then the actual purpose would be...?

Prof. Dr. Matthias Raith: That is indeed an important question when it comes to evaluating social enterprises, and it is posed. How do they weight the social and ecological aspects? And we had this discussion in Germany: Yes, we really only want to record companies that place more emphasis on the social than on the economic. When we expanded our Social Entrepreneurship Monitor in Germany to the European level, we received a lot of opposition from the Scandinavian countries, which said: All our companies that are designated as social enterprises place a great deal of emphasis on profit, because they operate with profit. That is, it is in those areas where social enterprises have become very successful, very large, and in some cases make very large profits. They use those, of course, to expand even further. They would say: No, we can’t downplay profit orientation, that is our lifeline. The fact that we are so successful with what we sell is good. And we try, so to speak, to keep reinvesting that. But they would never want to cut back on profit. So the profit orientation, if you approach it the right way, is not a problem, it is a driver for the social projects. The question is always, so to speak, is it implemented in a controlled way? Is it implemented in a transparent manner? When does it get watered down? That is a difficult question. But I believe that in countries that also have had a certain head start in terms of time - so we see for example in the Scandinavian countries, there is a higher proportion of social enterprises that productively integrate a target group in order to be profit-oriented in the market. That is the idea of inclusion is integrated into production more effectively than in other European countries. And that is the real goal. And then they should also make profits with it. They should also be successful with it. We must not try to downplay this in any way.

Ina Götze: Your chair has been with us for 23 years. How has the start-up of social enterprises changed over that time? Can you perhaps see a difference between the generations?

Prof. Dr. Matthias Raith: Yes, when the chair was endowed by KfW at that time, the goal was of course to build up something like a start-up culture in the New German states, because there was simply very little here. I offer two major courses, one in the bachelor's program, one in the master's program. And before I even start teaching, even in the first semester, I conduct a survey every year to simply see, who do I have here? What kind of people come to my lectures and want to hear about entrepreneurship, and also about social entrepreneurship? The interest in start-ups has increased significantly compared to when I was a student. No one was thinking about that then. We were happy if we could somehow position ourselves on the job market. In my lectures, I find that about two thirds of young people already have concrete product or service ideas, new ideas that they carry around with them. But about two thirds - not necessarily the same two thirds - are thinking about starting their own business. In every lecture there are between 15% and 20% students who are already doing it or have done it, even done it several times. Nearly three quarters of students find entrepreneurial self-employment more interesting than being employed. That is a high percentage.

So those are the people I run into without even saying a word. And then on top of that, I have the great honor now of having the Fridays for Future generation, the climate activist generation in the lecture hall. These are young people who are dissatisfied with the status quo, who distrust politics, who distrust society, who want to change something, who are very dissatisfied, and where I say if these people have an interest in shaping things, that is exactly the target group that I need in order to teach them shaping skills. So that has changed a lot. That is more of a growth trend. As positively or negatively as the startup scene is actually developing, the interest in start-ups, the entrepreneurial interest of the young generation is incredibly high. And these are not just business students. In these large lectures, I get a lot of students from the other faculties in the master's program. A lot of engineers attend, too, or computer scientists. But I also have a lot of people among, so to speak, humanist students who are interested in social commitment. And if you can convert this into an entrepreneurial interest, I think that is very fertile ground.

Ina Götze: Do you know of any former students who have started a company that is perhaps well-known or with which they are very successful?

Prof. Dr. Matthias Raith: Well, when I started, we wanted to increase the general interest in start- ups with various projects, and for the first ten years, I was mostly involved in start-up support, and over the years, my staff and I have supported over 800 start-up projects in university sphere, a third of which have gone to market. Those are in all areas, some are also quite well-known, some of which have moved to settle somewhere else. A platform like LinkedIn makes it very easy for me to stay in touch with my former students. And there, of course, you can see in the messages: Oh, someone has started their own business again, or here is a new company in the field, so to speak. When I think of social entrepreneurship, my very first project were three crazy guys who wanted to start a cultural center next to the university, in a ruin, and they called it Festung Mark. That was very visionary, very crazy, and we thought: Well, let us take what we have and go with them, and for me it is impressive that they had this very first vision - we were walking over a ruin when we looked at it. They really implemented this very first crazy vision one-to-one. And today, that is one of our major cultural centers. It is like our extended university campus, but it is really a social project. You can't really get rich with a project like that. It clearly has a social mission at its core, and the founders at that time implemented that. And one of the founders, Christian Sieber, is still involved and appears to be very happy with what he has built. He can be very proud of that. So I am really impressed because that was not apparent at the time. Not at all.

Ina Götze: I've never thought about that before. For me, the Festung Mark is simply such an institution.

Prof. Dr. Matthias Raith: There were a lot of stumbling blocks. So when he gives a lecture about the ups and downs of this project, that is very exciting, and how he managed it, with connections in the city. Here it is something political, here it is something legal, here it is something economic. And with my chair, with my projects, I had the great pleasure of being able to accompany them in various phases, right at the beginning. But at that time, we also founded the Enactus Team, at that time it was called SIVE. This year is their 20th anniversary. Enactus has existed at the University of Magdeburg for 20 years. We founded the team back then, and one of their first projects was the Festung Mark, which was very successful.

Ina Götze: Very nice. I am really pleased that it worked out so well. What is your forecast for the next few years? As we have already established, we are facing many social challenges. Will more people become social entrepreneurs, and in which areas could they be most successful?

Prof. Dr. Matthias Raith: In order to identify the areas, the 17 UN Sustainable Development Goals have been used as a starting point since 2016 at the latest. At that time, they were adopted by almost 200 countries, and that is something quite crazy to begin with. They range from economic areas, ecological areas, social areas, and practically every one of these grand challenges that exist worldwide, so to speak, each of these challenges is very well-defined in its goals and in its indicators. This means that we can very clearly see what needs to be done. And we can see very well, so to speak, with the sustainability goals within the framework of our annual Social Entrepreneurship Monitor, which of these goals are being pursued, in which area, by which type of company, also in combination. These are all the areas that are necessary, and something has to happen there. More and more, I see new companies that identify themselves as social entrepreneurs that are trying to do that. At the same time, as you’ve said, there are more and more companies that see the need to take social responsibility, whether they want it from within. A famous example is Rügenwalder Mühle, a traditional sausage company, where suddenly the successors said: We can't go on like this. We have to make a different kind of food and then released the vegetarian salami, which was so successful that they took the traditional salami off the market, simply because of the production capacities, and they are now, so to speak, one of the market leaders in the vegetarian/vegan sector. Whether this comes from the company itself or whether a niche is seen here on the customer side, so that the companies say we have to do this because the customers want it. But there are more and more companies that want to do it for whatever reason, that want to take on social responsibility, so that the question is, so to speak: Are they socially motivated because that is the focus or because it becomes a means to an end? That is becoming more and more blurred. Then there are the original social enterprises, but they are so successful - Dialogue in the dark. That is where they say, if we can make money, we will make money. Of course. Then we will do that. My vision is that in maybe ten years the term social entrepreneurship won't even exist because it will go without saying that every company must have this multidimensional value creation in mind. In other words, purely profit- oriented entrepreneurship will tend to be a degenerated form that is no longer talked about so much, because society will simply expect it. It will expect sustainable production. It will expect sustainable products. You can see it again with Rügenwalder. As soon as they released the salami, the customers got upset about the packaging. Why does it have to be plastic? Now there is a lot of thought about packaging being sustainable. So these are all things that are increasingly demanded by customers, and where companies have to cater to that, want to cater to that. And what is fascinating, if they can make money with it, that is actually what we intend, that we bring these necessary challenges, we bring them into the value creation process in such a way that you can make money if you manage it. And that is actually the main goal. Whether it is social issues or environmental issues or a combination, it does not matter.

Ina Götze: Now I am hungry for the vegetarian salami from Rügenwalder (laughs).

Prof. Dr. Matthias Raith: It actually tastes very good. Just look at the patties, at the hamburgers. In the past, they were pressed vegetables, but today they taste very similar. The meat substitute industry in particular is experiencing a boom, where people are saying: Yes, that is exactly what we need, if we want to feed the world, we have to get away from meat consumption. Do we have to eat pure vegetables for that, or is meat substitute a viable alternative? And it seems to work.

Ina Götze: I have just now eaten an excellent Beyond Meat Burger on vacation, even my boyfriend was convinced.

Prof. Dr. Matthias Raith: Yes, it is certainly the case that some meat eaters may not even notice. That is the direction the future is going, and Beyond Meat I do not even think is a social enterprise. They want to make money. They see a market and they are trying to serve that market and great.

Ina Götze: How can you check that? Because if the future goes in the direction that, in principle, all companies will also pursue a social and ecological purpose, for whatever reason. How can you check whether that is really the case, so that not too many fake companies come onto the market? Is it possible to check at all?

Prof. Dr. Matthias Raith: As I said, investors want to see that. So when I invest my money, I want to be convinced. What convinces me? What kind of reports, what kind of numbers do I need to see to be convinced? That is becoming more and more challenging. Digitalization also helps social enterprises to check what they do much better. Also to check in real time, so to speak. So that is feasible. But of course, as in every area where something grows, growth leads to grievances. And the grievances do not even have to be fake. Look at companies like Airbnb, where we used to say: Here comes a couchsurfing company now, which finally leverages hotel prices, so to speak, where we have an alternative. Everyone thought that was something very exotic, socially important. But when a company like Airbnb becomes so big that it destroys the housing market, it becomes a social problem. That is, growth is definitely a problem for growing social enterprises. Uber has shaken up the cab market, which all of us actually really liked. That it could be a threat to public transit, that is a consequence of growth, and it does not even have to be fake, it can just be growth successes. Too much of a good thing can possibly be problematic. A famous company, Tom’s Shoes, became famous for - an American company - when you buy a pair of shoes at Tom's they donate a pair of shoes to people in South America who do not have them, who can't afford them. But that is great. So it is a commercial enterprise. Until you realize that the regional shoe industry in South America has gone bust because they are not making a profit anymore, so to speak. Being a do-gooder is not without its dangers, even in social areas, and you have to be very careful, you have to look very closely. Are we really doing something? If water wells reduce the groundwater level, and then the grain fields dry up or the cattle die of thirst, that has something counterproductive about it. That is an experience that has been made. You have to take a close look. But social media, as problematic as they are with fake news, are also very valuable from an investigative point of view, I think, so that grievances can be uncovered very quickly. Like fake social or like mask scandals during the Corona period. Those happened, but they were also exposed.

Ina Götze: Every two years, the Social Entrepreneurship Monitor is published, which you initiated here in Magdeburg and also conducted for the first time. What are the latest findings?

Prof. Dr. Matthias Raith: Yes, we initiated it in the first place. It was at a workshop in Magdeburg. We had invited social entrepreneurship researchers from the German-speaking scene, and also various projects. And two founding members of the future social entrepreneurship network in Germany, SEND, came. And we said, how can we do more research on social entrepreneurship? And there was an idea that we first had to record who this is in Germany. And that is where the idea for the monitor came from. SEND was started in early 2018. In the summer of 2018, the first monitor was launched. We were involved with the questionnaire. We provided the platform so that it could start, so to speak. So, we were very much there as a cooperation partner. And for the first time we actually recorded, in addition to the well-known companies that we listed at the beginning, how many others there are, and in how many areas they are actually active. And that is where we got our first colorful picture of social entrepreneurship in Germany. First of all, I think 400 companies participated, and we were actually able to completely evaluate 250. So that was a relatively small number, but it gave us the first colorful picture. This was very important for SEND, who are based in Berlin as an interest group, in order to say to the politicians: This is social entrepreneurship in Germany. The realization in the following years was that this colorful picture has not changed, but it has become denser. The number has doubled every year. And that is why it was important to do it annually. And because the questionnaire was quite comprehensive, we did not just see: How are you positioned? How do you make your money? Are you doing something for a target group, with a target group? Are you ecological? Are you socially focused? What SDGs? What hurdles do you see? Are you satisfied with politics? Those were all questions that were important to sort of expand on that theme - what makes them tick. Then at some point there was the need, if we can do this in Germany, why don’t we take it to other countries? And SEND had good contacts to a European organization, Euclid Network, which is located in the Netherlands, and they said: Yes, then let us turn it into the European Social Enterprise Monitor. And they took the German questionnaire, which was then translated into several languages. That was the third round of the German Social Entrepreneurship Monitor, which became the first round of the European Social Entrepreneurship Monitor in seven European countries in different languages. And there we got a European picture. And the last Social Entrepreneurship Monitor, that was in 21 European countries. Again, with the questionnaire that came from the DSEM, so to speak. And there is the finding that there are more differences within a country than between countries. That means that the picture we have in Germany, where we have the most data, the picture we got in Germany, we see repeated in other European countries, with slight shifts in the weighting. But we see this colorful mixture everywhere. And this is of course very important on a European level because Euclid is contacted almost weekly by the EU Commission, who then say, we need to have more information for this policy, we need to know more about social enterprises. Where do they get their information? From the social enterprise monitor. So it has become an important policy tool. That has changed, the perception in politics because of the monitor. The insights for policymakers have changed as well. And what I also find very impressive is that the first Social Entrepreneurship Monitor, which ran via our server here in Magdeburg, I said at the European level, I can't even handle that in terms of data protection law, it now runs via SAP. That means SAP is a big partner, Google.org is a big partner, Bertelsmann Foundation, BMW Foundation. The World Economic Forum in Davos is very interested. They are aware of the topic. Why are they interested in social entrepreneurship? Is it for their image? Why are they doing this? You could say, who cares? Maybe the social entrepreneurs are interested, we do not know. They are the bad guys. We do not want them in. But so far it seems to be working. Money is coming in. The project is expanding. And that is, which is the most important finding for us, we are capturing it relatively well by now. And we can see, so to speak, where the construction sites are. It is much more visible than it used to be. And, of course, that makes it much easier for policymakers if they are open to it. But in the meantime, there are state secretaries in the Federal Ministry of Economics who are focused on this. And in the Federal Ministry of Education, there are special representatives for social entrepreneurship who focus on this, so to speak, so that the funding policy can also be tailored much better to it. And these are, so to speak, important new findings that are very helpful in this area. And since we played a major role in this, I am of course very proud as a Magdeburg resident.

Ina Götze: You certainly can be. A fine development.

Prof. Dr. Matthias Raith: Yes, a very, very fine development. And it continues to grow. And if you want to know more about social entrepreneurs, you just have to go to the SEND homepage, because you just have to go to the member directory, which is the who's who of the social entrepreneurship scene, and there are also many students, researchers, who specifically go to the site when they come into contact with social entrepreneurship companies, who are looking for an internship, for a research project, whatever.

Ina Götze: How does Germany compare internationally? Are we still very much profit-oriented in our thinking, or do we have more social enterprises?

Prof. Dr. Matthias Raith: Well, in terms of proportion, we certainly still have a small proportion of social enterprises. And there is also the Green Startup Monitor, which looks at how many companies are sustainably oriented. This is always such an exciting dispute between us social entrepreneurship researchers and the sustainability entrepreneurship researchers. Is social part of sustainability or sustainability part of social? I couldn't care less. Of course, sustainability is a part of social, because the Social Entrepreneurship Monitor very specifically has companies that call themselves social entrepreneurs like Ecosia. And their mission is to plant trees. So that means they have an environmental mission. But I think that does not matter at all when you look at sustainability goals. Most of them pursue a combination anyway, and that is a good thing!

Most of the data in the European Social Enterprise Monitor is German. But that is because we have a head start in collecting it. And because we have SEND as a partner, who do an incredible job of promoting this and processing it afterwards. This is always done at the federal level with members of the German Parliament, launched every year and very media-savvy. Other countries are not as far along at the moment. As far as the development of social entrepreneurship is concerned, we tend to be slower than other countries because in Germany we still have the charitable associations from the 19th century, going back to Bismarck. They have traditionally taken on very important major social tasks in Germany. And in international comparison, Germany is a country with a very tight social network. Unlike the USA, for example, so there wasn't much room for entrepreneurial ambition in that area. It was very different in the USA. If you do not have a good social safety net, you have more companies saying: now we have to do something. That is, social entrepreneurship as an entrepreneurship topic emerged much more in the USA, and in Germany there was not the need to have it on the radar. It first came to Germany with organizations like Ashoka. Ashoka is an international organization for the promotion of social entrepreneurship, which was founded by a former McKinsey consultant who said: I have to do something good now. He founded Ashoka, and when Ashoka came to Germany. And Ashoka does not promote projects but people, and through the Ashoka Fellows companies like Dialog in the Dark suddenly become visible, Discovering Hands, Arbeiterkind. The founder of Arbeiterkind is one of the first Ashoka Fellows, so to speak, and they became very prominent as a result. Then there was the Schwab Foundation, which also supported a lot of social projects, and that is when corporate social responsibility first came onto the radar in Germany. And that has only happened in the last decade and a half. That is, we started a little later, but then there has been a booming development in Germany. In recent years quite clearly by lobbyists such as SEND, who constantly approach members of the German Parliament and the ministries, pointing to the coalition agreement. The term Social Entrepreneurship, that is thanks to SEND. They did not let up until it was included. And that is gradually having an effect.

Ina Götze: We also train social entrepreneurs at our university. What do they learn here?

Prof. Dr. Matthias Raith: First and foremost, I can tell you what they learn from me. I include this subject in all my courses, because I believe that any other kind of entrepreneurship makes no sense. So that is the focus. When I started, around 2006, it was more of an exotic side chapter in entrepreneurship education, and it has become more and more of a focus. Now it is sort of a central element. I experience entrepreneurial interest, interest to shape society in the big courses. And I try to implement that in entrepreneurship education through entrepreneurial design approaches. And that means creative processes. How do I turn an idea into a business idea, a great business idea, a multidimensional business idea, not only a product, but also something social, something ecological.

That is followed by a lot of evaluation techniques. I have to see if the idea is good enough to go to market. As I said, of the hundreds of business projects we have supported, one third has gone to market. Why do two thirds not go to market? Because they were not good enough. The entrepreneurs themselves realized that. In other words, they did not fail, but withdrew to do something else. That is, this evaluation aspect must be taught using techniques. How can you plan something like this from a business perspective? And then, the third aspect is strategic. Because when I move forward with a company, I interact with various stakeholders. These are stakeholders who want to support me, where I am then competing with others for these stakeholders, but they are also competitors in the market. Even with social enterprises, it is not like they are saying everybody is happy about a new social enterprise. The other social enterprises, what are they competing for? Not for the customers. The target group is happy. And if I can serve the target group, everybody is happy. It is about funding, it is about the supporting stakeholders. Which funding am I going to get? And that is where I am in competition with other projects. The charitable associations certainly feel threatened in some areas by these new companies. And here, of course, they keep trying: No, it is about working together instead of working against each other. These are all strategic aspects. That is, the creative, the business planning, the strategic, these are all aspects that can be taught in this area using business management methods. I do not teach business administration as a management science, but as a design science. That can be taught. We have the Technology and Start-up Center to provide direct support for start-ups. So, when we see concrete start-up ideas, we usually send them there. And then, of course, in seminars, project events, I interact a lot with regional companies that need help, because they are often very small companies. And there we have a lot of project seminars, where students learn, working on real projects, how to get involved strategically, so to speak, to solve ecological issues, social issues, whatever. And then, of course, there is research. Since we co-initiated the Social Entrepreneurship Monitor. I am a research board member of the European Social Enterprise Monitor. We are the very first in the world to work with this data. And that is what I've been telling the students in my seminar in the past semesters. They are the very first people to work scientifically with this data. That is a lot of fun. So that is the more scientific aspect, showing that entrepreneurship is also a very exciting social science research topic. A lot of young students are interested in that. And we show them that they can work with projects or with data or we also do a lot of qualitative research. That means you have to interview. You have to talk to people. And we are now, for example, also accompanying a start-up in Kenya, which is setting up kiosks in rural Kenya. And there, for example, if you want to record the impact, you have to actually talk to the kiosk operators. How does that change your life, what do you do with the new income? Who are your customers? How does it change their lives? That is field research, which is very exciting. And if you can integrate students or employees, that is also a new research scene that is growing in Germany and attracting a lot of people.

Ina Götze: Now I am not only in the mood for Rügenwalder Salami, but also for going to university again. Sounds very exciting. Finally, one last personal question: What social challenge would you like to solve?

Prof. Dr. Matthias Raith: Well, I am still active in the role of researcher and educator. And that is also where I see my highest impact, so to speak, because I simply realize now towards the end of my career how many tens of thousands of students I actually had in front of me and hopefully touched in some way. At least a small percentage. We live in one of the richest countries in the world. And I believe that the prosperity that we have today, economically, environmentally, and socially, has also come about in large part at the expense of many countries that are very poor today. That has grown historically, where you could say: What do I care about colonialism? I was not involved in it. But that is the way it is, it is our heritage, so to speak. I do not think we are allowed to simply dismiss it. I do not think we are able to dismiss it either because the consequences are now catching up with us. In the shape of ecological crises, in the shape of social crises. We have people in the world living on less than two dollars a day, that is the so-called bottom of the pyramid, which is primarily in the southern hemisphere. And we are seeing migratory movements that we haven't dealt with very professionally so far. And we have to deal with that. We have to get a grip on this social divide in some way. That is the biggest challenge for me. And I, of course, belong to a generation that has lived very well in this divide. And I think we have to manage that, we have to manage that in the coming years, because of course the migration movements also bring important labor into our country. But the better the workforce we attract, the bigger the brain drain, so to speak, in the countries of origin, which does not help with the problems there. And if we want to solve that, we have to solve it locally. That is why we are also involved in research with a company in Kenya, because we say that is increasingly important research. We find that traditional development policy hasn't really been able to get that right. And because we are seeing in the other sustainability goals that companies are in demand there, I also believe that for this social challenge, companies will be in demand. And I think it is the biggest challenge, combination of challenges that we have to overcome. And that is why I am trying to bring that more and more into focus, so to speak, in my role as an educator, especially with a generation that is itself dissatisfied and can hopefully fix that. That is my biggest hope. Of course, there are many other crises, and we are neglecting the generations that come after us in our own country. But I still believe that this social divide is the more urgent thing.

Ina Götze: Super exciting topic! Thank you very much for being here.

Prof. Dr. Matthias Raith: Thank you for having me.

Ina Götze: It was a lot of fun! I learned a lot. I hope you all out there with your headphones or in front of your speakers did, too. I look forward to the next episode and wish you all the best until then.

Outro voice: Knowledge when you want it. The podcast about research at the University of Magdeburg.