Interview. Social entrepreneurship in Armenia

[The researcher of “Enlight” Heghine Aleksanyan’s interview with Suren Mkhitaryan, an expert in the field of social entrepreneurship and the Project Manager of the “Community Development through Social Entrepreneurship” program. (14.08.2019)]

The concept of Social Enterprise Development is already available in the Unified website for publication of legal acts’ drafts (e-draft.am); which not only provides the definition of social entrepreneurship[1], but also refers to the current situation and problems of the field, the main directions of problem solving and the necessary measures.

In general, in Armenia people have started to talk about this sphere in recent years. Initially, these enterprises were not fully established and were closed after the end of the grant, so many did not take it “seriously” and did not believe that social entrepreneurship (hereinafter referred to as SE) could work in Armenia. Today, however, the availability of existing examples shows how much potential the SE has  for the development of various spheres, especially for promoting community development. The solution of social problems has ceased to be exclusively  the “job” of the state. Actually, the SE very often takes on the burden of the state, so it must be recognized by the state. SE has a “special status”  in many countries around the world, buthat problems it solves? What development prospects it has in Armenia? What are the challenges in the field, and what is the experience so far, especially in the context of SE education? Why the need for the development of social entrepreneurship has matured? And what problems it can solve? are still not clear. We have talked about these issues with Suren Mkhitaryan, an expert in the field, trainer, Project Manager of the “Community Development through Social Entrepreneurship” program. 

The idea and the education of social entrepreneurship are becoming more and more widespread in the modern world. There are various manuals, courses, sources of financing, of which Armenia is not left out. In your opinion, what is the main “added value”  that  social entrepreneurship   creates and “forces” to think about the SE education and its institutionalization? 

Speaking about the role and the value of social entrepreneurship, we must pay attention to what impact it has on the individual, the country and society. Despite the fact that in this case I separate these concepts, we must not forget that community, society and country primarily are a group of people. 

“To want more for others and less for us, to limit our self-centeredness and to have a positive impact – The perfection of human nature consists of these.”

But firstly let’s talk about traditional entrepreneurship. For centuries, the main moving forces of the business owner have been personal motivation and making a profit. To understand why this is so, we must turn to its origins. Adam Smith who is considered as the “father” of economics and capitalism, hugely emphasized the importance of personal interest, however his main idea was that if every person in society thinks about their own interests, and so does each individual, society will develop and prosper. But the business sphere mainly focused on the misunderstanding of this thesis and we can say that it deviated from his main goal, because the same Adam Smith equally, alongside with people’s own interests, valued the importance of being directed towards others’ benefits. In this context, it is worth remembering one of his statements. “To want more for others and less for us, to limit our self-centeredness and to have a positive impact – the perfection of human nature consists of these.”

I think this is natural, because such is human nature. We want it to be good not only for us, but for others as well. This is why there are characters in history like Gandhi, Mother Teresa, Lincoln that serve as a vivid example of inspiration.

And the realization of all this allows us to understand which  the role of  social entrepreneurship is. In this case, at first, a person gains adequate abilities and knowledge in order to do business and to create something instead of thinking to work for others for providing her (his) livelihood. But besides  this aspect, a person equally and even more thinks about such activities that can be useful for other people making their lives more prosperous. From a person’s point of view, the major question is how to serve people and do it through  entrepreneurship.

And if we look at it from the point of view of the society and the country, we must pay attention to the existing problems (social, environmental, etc). Although private organizations, the international donor community and the state are trying to solve these problems, we see that it is not done effectively. Many problems remain open or are unsolved. And here we see the   role and importance of social entrepreneurship, because social entrepreneurs try to create such enterprise around one of the problems, that will solve the problem, provide profit and develop sustainably. Realizing this potential, many countries, national and international organizations began to support this sphere,  because the investments made here have much more effect in the long term without being limited with the short-term programs. 

Talking about SE education in Armenia, we should recur to the representation and formats of SE education in our education system. What are the main sources for our citizens to get acquainted with the idea of social entrepreneurship in general? 

Considering that the sphere is new, providing education is one of the key aspects. It is mainly provided in the field of non-formal education, in other words, various non-governmental organizations, foundations, including our organization(“Community Development through Social Entrepreneurship”)organize training programs where people get acquainted with the idea of social entrepreneurship and understand how they can deal with it. Here we need to separate two aspects. The first is related to business thinking, tools, planning, marketing, and other components, the second aspect is social thinking. This implies a change of mindset, a desire to do something useful for our friends, relatives, community, country so that it will become our major motivation. In other words, both earning money and serving others should be in balance, because the social enterprise is in the balance of those two. 

But it is clear that it should develop in the formal education field as well. Of course we have entrepreneurship programs that different universities provide in Armenia, but they are mainly focused on traditional business ideas. In recent years, there has been an attempt to provide entrepreneurial education at schools. It is about the “Junior Achievement of Armenia” program, which started  piloting projects with entrepreneurial orientation and from a certain stage became a required subject for different classes. However, there is very little reference to social entrepreneurship.

Another example is the Association of Social Enterprises of Armenia, which also implemented a small pilot program. The organization developed modules that planned to create SE laboratories within a semester in 9 different educational institutions: –  3 schools, 3 colleges and secondary vocational institutions and 3 universities. It was one of the first steps, from which the success of the next attempts would depend. This pilot program would have helped to understand how social entrepreneurship education can be incorporated into the education system as a separate subject or as a part of another subject, or whether it is necessary to begin from the school system or the university? In addition, it is important to consider the development of an online education system. Our team (Community Development Through Social Entrepreneurship) together with the “KASA”  Swiss Humanitarian Foundation has created an online training platform for SE, where about 600-700 people are currently involved from different communities of Armenia. This is a pretty good project because it is available for people who do not have the opportunity to participate in those courses. In the end, the number of participants in them is limited. In this context the existence of such a platform is a good opportunity to get acquainted with the idea of social entrepreneurship and all the training stages, that the participants of the same course usually go through, already in online format, in Armenian. Different video tutorials, reading materials which are developed by the best professionals are available in the platform and cover all aspects of social enterprise, from the development of an idea and  marketing to the legal aspect and the search of funding sources. Registration on the platform is mainly done by us or by the “KASA” Foundation. The site is called elearning.kasa.am.

There is also a course that we have developed for the training of trainers. All these materials are now fully available, and everyone can register on the platform.

Talking about courses, I cannot avoid their content aspect. Among the social entrepreneurship courses, there are many , where everything seems to be well explained,  examples are given from international experience, which however does not fit to the socio-cultural context of Armenia. Are there any examples used in your courses from Armenia?

Actually, it is a very important note, because that is the problem. Many times, when there were not enough examples in Armenia, examples were brought from different countries, even from India, Bangladesh, where the SE is in the development stage, but the problem still remains. Many people thought that what is being done there  is impossible to do here.  A few years ago, in October, 2015, when we started our program called “Community Development through Social Entrepreneurship”, our goal was that. We understood that if we wanted the sphere to grow, the most important thing was to have these examples not only in Yerevan but also in other communities, because if such examples were possible there, the sphere would develop faster.  We have helped many people in the framework of the program. Helping includes the training of the team, the  development of the idea, its implementation and even giving grants. We provided grants of an average of 7,000 Euros. As a result, we gave grants  for the idea of 10 entrepreneurs. At first, the number of participants in the program was about 260, of which 10 participants were chosen during the training and expert works.

For instance, I will highlight the “The Good of the Mountains” («Սարերի բարիքը») located in Vardenik. They collect and sell various herbs, sorrel, teas, and about 17 types of flowers. After two months from the establishment, about 70 families were already earning relatively much money for the rural community. At that time,  the company even received the RA Presidential Award for its services. This is a very interesting experience, which is still active and has wide opportunities for development. For example, at this moment only 1-2 restaurant nets buy almost all of their products, which have great demand not only in Armenia, but also in Russia, Great Britain, Canada and other countries.Tons of products are expected from them,  while they are not producing that much. Now they attempt to involve other communities and increase the size of sales. 

Such examples are very important and they show that in Armenia it is also possible to be engaged in social entrepreneurship.

The field of the social entrepreneurship sphere, like business entrepreneurship, is regulated by various public administration bodies, in accordance with the legislations of the countries. It is interesting how is the sphere regulated by the legislation of RA? And how can the state and society support the development of SE? 

There is no settlement system yet, no law or document that will regulate the Social Entrepreneurship sphere in Armenia. Therefore, as an entrepreneurial activity, it is regulated by the laws of the relevant sphere, i.e acting as a sole proprietor, LTD, etc. Now it can also be specific to NGOs, because about two years ago, after the change of the relevant law, NGOs were given the opportunity to do business right away. This means that the non governmental organization,   that used to have to create a separate LLC to carry out certain  business activities, now  can do business at once. To be honest, it is not a significant change, but it provides some psychological support for people who have such a desire.

Recently, together with the Business Support Center, we created a working group, where we developed a preliminary concept  for the SE sector. It should have already been in circulation, that is to say it should  have been  e presented to the government by a certain state body, then entered the National Assembly and had to pass all the necessary procedures. The process was already in progress, but it stopped because of the revolution and now it has started again. As a result, at least  we will have a concept,the state will recognize the SE sphere in Armenia and will emphasize its importance. As a specialist, I would say that it is too early  to pass a law regulating the sector, because the sector should first  self-regulate,  develop a little more until a certain law will be needed.

Now let’s imagine that I am a potential social entrepreneur and before taking my first steps I want to clarify a few questions with your help. Firstly, what are the key necessary steps for starting a social entrepreneurship?

In the case of any organization, the most important are people who undertake all this, so we cannot bypass the direct connection of the SE with the social entrepreneur. “

Let me give you some information. A few months ago together with my colleagues we have created a small nearly 70-page guidebook called “Methodological guidebook on how to create a social enterprise”. It shows how a person can achieve it step by step. There are also QR codes through which the reader can reach to larger sources of information. If we try to divide this path, then in my opinion, the first step will be  self-development, the person must work on himself because the established SE is first of all connected  with the social entrepreneur. Let me give you an example from management, where the term organization means two or more groups of people who are united around a specific goal. In the case of any organization, the most important are people who undertake all this, so we cannot bypass the direct connection of the SE with the social entrepreneur. 

Thus, an individual’s self-analysis should be one of the first steps. We need to understand why we want to be a social entrepreneur, to clarify the main goal. For example, in our definition, which we have presented in the concept, first of all SE is defined as a business activity, it assumes that a person has to earn money, produce something, provide a service and receive money from the customer  in return. Secondly, it should be aimed for solving a certain social problem. In other words, the whole business model is based on the solution of this problem, and even if the organization does not make any profit, only by its existence it solves many problems both in the community and in the country. Thirdly (which caused skepticism among many), SE of course, should make a profit, but more than 50 percent of that profit will be allocated to the solution of a certain social problem. It can also be aimed at expanding the impact of the enterprise in other communities or just invest in community school renovations or children’s education.

Self-education will also allow to understand which are the strengths of a person and to discover talents, that every person has and which can be useful for others.

To emphasise the importance of this step, let me give you an example. Seeing that the SE sector is developing and  grants are provided, many people decide to do it themselves. They turn their organizations into SE so that they can get a grant. There are many such examples today, but everyone should understand what she (he) wants from this field. And it’s this circumstance that changes everything.

I need to talk about some other factors. It is natural that doing something alone is difficult for a person and from this point of view, the team is one of the key factors in SE. The team must be at least on the same path with the same motivation and mindset as the social entrepreneur. 

The next important factor is the idea. The main axis of  idea development becomes the problem that concerns us the most: education, health care, etc. We begin to look deeper into the problem, understand its  causes and  think about a certain business idea that will allow not only to solve the problem but also to provide a certain product or service, earn money and become self-sufficient. Of course, there are still many steps after this. A traditional business process begins:business planning, fundraising, etc. 

What are the main obstacles for the development of social entrepreneurship in Armenia? What additional calculations does a social enterprise require, unlike usual business? 

First, it is very important for the state to recognize the sphere. In this case, the sector will have a completely different development, like in the United States or Great Britain, where a lot of support is provided to the SE. In that case, people will look at the sphere in a completely different way and will want to do it.

In general, there is a certain problem of doing entrepreneurship  in Armenia. Especially until recently, there were many stereotypes that some people will take a part of the business or the tax authorities will disturb their activities. I would not say that such things did not exist at all, but mostly it did not concern the small and medium businesses. If everything is done within the law limits, the taxman could not “say anything” to the business. I want to say that such thoughts are mostly stereotypes than reality, and although business is risky, in this case, it’s all about making it more literate. The business obeys certain clear rules, and if we follow them we can move forward. I think the first task is to start, so, firstly we must get rid of stereotypes, which may have nothing to do with reality. They can come from a certain bad example that we have seen and which we generalize saying that it is common all over Armenia. I think this is the main obstacle for doing entrepreneurship in Armenia.

The second is to have  proper education, which reduces the number of risks and increases the level of success. Of course, we should take into account that SE is a little different from regular business. When a social entrepreneur earns income, in this case, let’s call it revenue, it is natural that it deducts all expenses including salary, rent, etc, and only  after all those expenses, the remaining amount   makes up the profit, most of  which is  directed to the solution of a specific social problem. In this case, the risk is a little higher. For instance, if the social enterprise has a need for investment, the entrepreneur has to invest that money not in the solution of a social problem, but at that stage, like any business, direct it to its development. Otherwise, the SE will be  in an unequal position in terms of competition. Therefore, it is necessary to look for some ways to solve the primary problems and of course every problem has a solution. 

In general, if we get rid of stereotypes,get the proper education, find people who will do everything competently (law, accounting), the enterprise will develop automatically. 

What are the main mistakes made by social entrepreneurs  toward which you try to form vigilance during trainings?

Several things come to mind at once. There are people who come to the training with a clear understanding of why they want to start a social enterprise, but there are also people who do not know what they want to get from the course. In that case, it becomes more difficult, we spend more time to understand that person’s motivation. Although It is only the first stage, but it takes a lot of time. Very often, people come without realizing properly why they came and then they find that  this is something they don’t need, they do not really want to do it and as a result it is a wrong investment of time for both of us. And if a person really wants to go with  social entrepreneurship, then we  draw attention to several aspects. As we have already mentioned, it is very important to have a good team. Many people think that teamwork is not specific to our culture, that we are not a team player, and they bring the example of our football clubs. But these  are also stereotypes, and they can be broken too. 

In the same football sphere, we had Ararat-73, which was a champion during the Soviet Union years. This means that we can work as a team. This leads to the fact that even at this moment we have very good examples of SE, where actually only one person works. Usually that person is a social entrepreneur who works 20 hours a day, but it is impossible to sustain so for a long period of time. For example, in the field of agriculture we have an example when a person sows, collects, produces, packs, buys, sells, participates in training by only himself and this is absurd. I will not say that it is impossible, but it is not effective, because no matter how motivated a person is, he will ruin his/her health. During the training we help to understand where to gather a team.

Another problem is the idea. Very often people come with standard ideas. We can get 200-300 applications that are very similar to one another. They are not bad, but almost everyone goes in that same direction. In the case of SE, we need to understand that social innovation is important here, so we need to find new solutions. If this problem is still not solved, it means that the current solutions do not work well or they worked wrong. During training, we help people develop interesting ideas. 

Many people think that teamwork is not specific to our culture, that we are not a team player, and they bring the example of our football clubs. But these also are stereotypes, and they can be broken too.

I do not want to refer  to the legal side, because it is easy to solve with the relevant specialists, who are well acquainted with the tax field, know how to register, etc.

The next problem is specific to both beginners and existing social enterprises. Sometimes people have a very interesting idea, a good team and everything seems fine, but they do not manage to sell their products. Hence, the other important aspect is sales and marketing.  There are cases when people come and decide that such a thing can be done, they find it interesting, but they don’t talk to their customers, they don’t consult whether they need their products. Whereas, customers can give a lot of advice, indicate what product features they need and offer to change the pattern of the product.  As a result, we understand how to improve the product. Interestingly, people often do not even know who their customer is, they say that they work for the whole society, but that is not real. In the case of both business and SE, the person should understand whom she or he sells the product. When we have a clear description of the customer, it means we know who can be offered our product. This is true, especially for the beginners when you need to take a very small target group.

And how do you see the prospects for the development of social entrepreneurship in Armenia? What situation and dynamics do we have in Armenia?

Currently, the field is developing much more. In the past, the first projects were experimental and when there were some examples of success, more and more people became involved in this field. As a result, there are more investments, more organizations are involved, more people are interested and of course this is a positive tendency. But on the other hand, you need to be careful, because the large number of investments leads different organizations to think about changing their business idea, receive a grant and use it for their own purposes. 

Moreover, we often see competition between different SEs, which is not a good leaning, because the goal is to unite and do something together.

The same is for NGOs, whose primary goal is not social entrepreneurship, but they try to use such opportunities and enter into that field. So there are quite big risks. Actually, this is a serious problem not only for the sphere, but also for those organizations, because they do something that does not interest them. While they could invest that time and resource in another area where they would achieve more results and the field would stay in balance. 

Second problem is that when two or more organizations are focused on solving the same social problem, instead of cooperating they act separately, which is less effective. Moreover, we often see competition between different SEs, which is not a good leaning, because the goal is to unify. This problem is also due to the large number of grant opportunities. So the question is whether we need grants. This is a hypothesis, maybe I’m right, maybe not. Our experiments have often shown that they can weaken SEs more than they help. For a person who really wants to solve a specific problem, money is just a resource. And those who enter the field for the money, they do something they do not need and even at that stage they damage the field. Of course, there is an association which tries to unite the representatives of the SE, but there are still organizations that do the same thing but do not cooperate with one another. So, organizing that communication and bringing everyone together in one field are also a serious task. 

And at the end,  if you could give 2 pieces of advice to people who want to work in the field of social entrepreneurship, what would they be? 

In general, the most important thing for me is motivation. Anyone who wants to start a social business, firstly must think about her (his) real motivation not only in this field, but also in life. This question helps to understand whether we should deal with that field or not. It is true that social entrepreneurship is a very good thing, but firstly it is just a tool. For me, it is important that a person does something that he likes and that makes him happy. Making that decision is the most important. Everything starts from that point. 

My second advice comes from the first. When a person understands what she (he) wants to do, she (he) just needs to start. Starting is the most difficult part. There are people who can spend years, go to trainings, gather a team, discuss many issues, but as a result they do not take any steps. I think that the effects of small steps are very important for starting something. As one famous saying states“even a journey of 1000 miles begins with a single step.” In other words, you need to start with the opportunities, resources, finances, partners, team, that are available at this moment. Very often we think that we do not have resources, but that is not true.  

“When a person understands what she (he) wants to do, she (he) just needs to start. Starting is the most difficult part.”

For instance, during our trainings we give an exercise to our participants to map out 10 people who can donate 100 dollars for their ideas or 10 people who can give them 2000-3000 dollars interest-free loan, or introduce a person who can provide a free office, do free accounting, etc. So we try to make people understand how many people are around them that can help to achieve something with their skills. 

Mostly  these two tasks are – to understand what we want to do and to start doing. Interestingly the same investors or different NGOs, when they see that a person has started to implement an interesting idea, which is quite useful, they also want to be a part of it and help implement that idea. All this starts from doing, not vice versa. You do not have to wait for the opportunity, you need to create it and start working.

  1. Social  entrepreneurship is a type of organization, which is established in order to solve any social problem for amplifying the frames of solution and for providing stability, it is often done through innovative solutions creating additional income and even profit. (See՝ Սոցիալական Ձեռնարկատիրություն: Աշխարհը վերափոխող ձեռնարկությունների ստեղծման և զարգացման ձեռնարկ, Երևան, 2016 թ. էջ 3)


Author: Heghine Aleksanyan © All rights reserved. 

Translator: Marieta Stepanyan

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