The concept of social entrepreneurship is relatively new and may not be thought of as a theory. It is more like a domain or niche phenomenon that may deserve attention.
According to Dees (2017), social entrepreneurship has largely emerged out of discontent with the performance of government and charitable organizations in tackling social problems. Governments are often underfunded, ineffective, and too political to do what is right for all. Charities are busy fighting for funds and justifying their existence and many successful such organizations use many of their donors funds for internal development purposes.
If governments and charities would be more effective at tackling poverty, health issues, and inequality, then there would not be a need for social entrepreneurs to try to pick up the slack. This is also a core idea in the stakeholder theory of entrepreneurship.
Social entrepreneurs bring market logic and business acumen to bear in combating social problems. They are change agents in the social sector. They aim to make a profit (even a slim one) in order to be able to maintain and expand business operations and to do more good for their mission groups. Each social venture typically has a mission to aid a specific underprivileged sub-population or group. Social ventures mix for-profit and not-for-profit elements. Examples include food banks that providing job training, and development banks.
Social entrepreneurs have a strong sense of accountability toward their mission populations. Many of the social goods produced by social entrepreneurs are difficult to measure or quantify. This makes it difficult to ensure that social ventures are succeeding in their missions. Nonetheless, social ventures must try to demonstrate positive outcomes when they compete for support, donations, and volunteers.
Dacin et al. (2010) argue that social entrepreneurship may not need new theory at all and encourage researchers to look to existing entrepreneurship theories to help support the concept.