Social Entrepreneurship as a Resource for Managing Socio-Economic Issues in the North- Caucasus Region

Journal of Environmental Treatment Techniques

2019, Special Issue on Environment, Management and Economy, Pages: 1175-1179

J. Environ. Treat. Tech.

ISSN: 2309-1185

Journal web link: http://www.jett.dormaj.com

Social Entrepreneurship as a Resource for

Managing Socio-Economic Issues in the North-

Caucasus Region

Valery K. Shapovalov , Irina F. Igropulo , Marianna M. Arutiunian , Olga V. Minkina ,

Aleksandr E. Gapich⁵

¹Institute of Education and Social Sciences, North-Caucasus Federal University, Stavropol, Russia. E-mail:

shapovalov.v.k@gmail.com

Institute of Education and Social Sciences, North-Caucasus Federal University, Stavropol, Russia. E-mail: igropulo@mail.ru

Institute of Education and Social Sciences, North-Caucasus Federal University, Stavropol, Russia. E-mail: m.arutiunian@gmail.com

Institute of Education and Social Sciences, North-Caucasus Federal University, Stavropol, Russia. E-mail: olga_minkina@inbox.ru

Institute of Education and Social Sciences, North-Caucasus Federal University, Stavropol, Russia. E-mail: eversor@mail.ru

*Corresponding Author Email: shapovalov.v.k@gmail.com

Received: 13/09/2019 Accepted: 22/11/2019 Published: 20/12/2019

Abstract

The article presents an analysis of the socio-economic development of the North Caucasus Federal District, which is referred to as

a problematic region by some parameters. The authors show that innovative transformations in the Russian economy shift the

management center of regional development to the territorial level, which regards the socio-cultural features of the ethnic economy of

each region. The current situation in the North-Caucasus regionis characterized by a high level of social tension, acute socio-economic

problems, the settlement hereof is possible on owing to the potential of social entrepreneurship. The situation in the North-Caucasus

region is presented in a broad socio-cultural context, which made it possible to identify some barriers (administrative and managerial,

economic, social, ethnocultural) preventing the development of socially-oriented business practices.

Keywords: Social entrepreneurship, The North Caucasus, Socio-economic issues, Management of regional development, Resource

management, Barriers to the social business establishment

ethnopolitical situation in the region, according to experts, the

determining role was played by internal factors, the main of

which were regional economic problems (5).

Introduction

The levels of regional development in modern Russia are

much different due to various reasons of political, economic,

social, natural-geographical, and other nature.

The economic issues of the region generate a wide range

of social ones: high unemployment, the outflow of the most

talented youth out of the NCFD, curtailment of budget

expenditures on health care, education, culture, sports, social

welfare, which leads to crimes and increases the risk of social

tension. The conditions for the spread of extremist forms of

behavior and the escalation of inter-ethnic violence, etc.,

remain in the region (9). One of the essential resources for

effective management of socio-economic issues that reduces

the level of ethnopolitical tension in the region and prevents

youth extremism is social entrepreneurship.

The North Caucasus Federal District (NCFD) was

established in 2010. The same year, the Strategy of Socio-

Economic Development of the Region until 2025 was adopted,

which determines the main paths, methods and means of

achieving the strategic goals of sustainable development, as

well as ensuring the national security in the territories of the

Kabardino-Balkarian Republic Karachay-Cherkess Republic,

Republic of Dagestan, Republic of Ingushetia, Republic of

North Ossetia-Alania, Chechen Republic, and Stavropol

Territory (42).

Social entrepreneurship that existed according to the

director of the Center for the Development of Social

Entrepreneurship at Duke University (USA) J.G. Dees (2001)

throughout human history, became the subject-matter of

scientific reflection and conceptualization in the 1980s and

According to the data given in the Strategy of Socio-

Economic Development of the NCFD, as at the start of the

second decade of the 21st century, the region is characterized

by low industrialization; and lags far behind other federal

districts by the main socio-economic indicators and level of

economic development. In the development of the

1990s of the 20th century (4).

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2019, Special Issue on Environment, Management and Economy, Pages: 1175-1179

In current conditions, researchers and entrepreneurs are

genuinely interested in the very concept of the establishment

and development of social entrepreneurship. The study of

broad socio-cultural terms, the mechanisms of its influence on

the establishment and development of entrepreneurship as a

resource to manage social and economic issues in the region

become particularly important in modern interdisciplinary

research of social entrepreneurship in the North-Caucasus

region (12, 31, 39).

Research (11) shows that entrepreneurial behavior is

formed under the influence of economic factors (demand,

supply, affordability, and price of resources) and non-

economic ones (social, societal, institutional).

By the criteria mentioned above, the entities of the NCFD

(except the Stavropol Territory) are related to problematic

regions (8). Their economy is featured by high

underdevelopment in most socio-economic performances

against other regions and national ones in general (34). The

results of interdisciplinary research in the area of regional

economy (30, 32, 37, 38), social studies, social psychology, the

employment of general scientific methods of systemic,

structural-functional, institutional, factorial and comparative

analysis, generalization and systematization of academic

literature, legislative acts allow concluding that the following

quantitative and qualitative properties of problematic regions

are, to the full extent, are typical for the North-Caucasus

republics: low production rate, budget dependence on the

federal center, low living standard, high level of migration.

This situation is aggravated by an escalation of national issues,

high crime rate, corruption of officials and lack of power-

population engagement.

Materials and Methods

A great variety of social initiatives, complicated and

heterogeneous, synthetic nature of social entrepreneurship as a

phenomenon emerged at the intersection of different areas of

social and economic life determines the interdisciplinarity of

the problematic field and the conceptual framework of social

entrepreneurship, the evidence hereof is the appearance of

terms such as social investor, social angel, philanthropreneur,

engaged philanthropist, corporate citizenship, institutional

entrepreneurship, etc. (3, 10, 13, 14, 25).

3 Results

Analyzing the first results of the implementation of the

Strategy for the Socio-Economic Development in the NCFD,

researchers (2) note that, firstly, strategies and other programs

were developed in a completely different economic and

geopolitical situation (there was no such drastic drop in the

national economy, there were no sanctions and counter-

sanctions); secondly, strategies are mainly declarative and

image-political in nature and carefully bypass many acute

topics: shadow economy; clan system, establishment quality;

Islamic factor.

The issues of social entrepreneurship are presented in the

publications of both foreign authors and Russian academic

researchers. Comparative analysis of theoretical approaches

(

15, 27, 33, 41, 43, 44, 45), the systematization of the research

findings allow concluding that they consider social

entrepreneurship as a factor of social change intended to

resolve social issues such as global warming, social inequality,

environmental problems, demographic explosion, poverty,

illiteracy, and other problems of sustainable development. The

critical elements of sustainable development are human

welfare, environmental and economic well-being. Research

A qualitative leap in the development of problematic

regions is possible through the use of innovations, and this

refers not only to the economic life of the region (8). The

balanced development of the problematic region lies in the

introduction of innovations into production, public

consciousness, and public administration.

(

17, 26, 36) proved that social entrepreneurship assists the

achievement of universally accepted goals of sustainable

development and also substantially contributes to the

development of socially acceptable business practices in

particular regions. The constituent entities of the Russian

Federation included in the NCFD are among the least

At present, experts give a low assessment of the innovative

potential of the NCFD entities, especially within the shift to a

new technological system (22).

To date, the main goal of managing the socio-economic

development in the North-Caucasus region is the

establishment of such a national socio-economic system,

which, on the one hand, would have a high-competitive

economy, and on the other hand, a high living standard of the

population.

economically-developed regions with

a high level of

unemployment, crime rate, and a tense ethnopolitical situation.

According to economic theories (16), problematic regions are

commonly distinguished by qualitative features such as:



The existence of a problem, or several problems that

Academicians (20) stress that the emergence and diffusion

of new types of economic regulation in the traditional ethnic

environment are possible provided a sustainable development

of all components of social reproduction of ethnic groups that

have been established during their long historical

development.

We should pay special attention to the fact that the market

innovations of “shock therapy”, which were not appropriate

for the system of traditional economic practices and the

established system of their social organization during market

transformation of the economy of the peripheral multi-ethnic

regions caused the revival of traditional patriarchal relations

and clannishness, which finally resulted in naturalization of

economic relations and deepening of patriarchy and the “new

archaic”. Thus, the scholars conclude that the traditions,

pose a potential threat to political stability, the socio-economic

status of the region and the country as a whole, the ecological

balance;



In some situations, the geopolitical and geo-economic

status of the region may be of particular importance for the

country’s strategic interests (some entities of the NCFD are

frontier regions);



The availability of a specific resource potential

(

production, labor, scientific and technical, natural), the

utilization hereof is of particular importance for the national

economy;



The lack of own financial resources for the

management of issues.

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2019, Special Issue on Environment, Management and Economy, Pages: 1175-1179

supporting the social institutions that regulate the economic

life of an ethnic group, provide sluggish development and

preserve the existing technological system.



To flawed infrastructure system of small business

in the republics and the lack of facilitated access to financial

resources, consulting support, etc. (1).

Under the conditions of modern development institutions,

entrepreneurial activity arranged under ethnic principles is

non-competitive. In competitive respect, such entrepreneurs

will be inevitably inferior to innovation-oriented, globalized

and transnational rivals (7).

An analysis of the research conducted (20) allows

concluding that the North Caucasus do not have key factors for

the development of favorable institutional conditions for

economic modernization, which leads to negative trends in the

economy and business:

The destruction of the public economic sector and, to that,

the mass layoff led to the fact that illegal trade and service were

both new and prevailing forms of employment for the national

republics of the North-Caucasus region. People who have lost

their previous jobs often solve the issue of employment

through an adaptive resource in illegal trade and service,

which, as a rule, is not accounted and is not specified in official

statistical data.

This segment of the economy has become a particularly

large-scale (against the volume of the local economy) in the

North Caucasus and has turned into the only real way for tens

and hundreds of thousands of people to earn money in terms

of complete stagnation of public enterprises.



-the lack of entrepreneur’s interest in long-term

investments, since property rights are not guaranteed and can

be reassigned or withdrawn due to acts of competitors,

government authorities or criminals;



-unavailable conditions for the capitalization of

theresources accumulated by private households;

the pressure of unofficial practices depending on

4 Discussion

An analysis of institutional measures to improve the

population’s living standard in the NCFD regions allows

considering poverty and unemployment as factors that

constrain economic growth and development in the region.

The resolution of social problems in the NCFD concerns both

the increase in the budget funding of the social area with a

simultaneous enhancement in their efficient use and

entrepreneurial activity — through the development of

partnership mechanisms between the government and business

(18). Given the attitude of the population and the high

corruption of public authorities in the NCFD regions, the

development of small business in all sectors of the economy

becomes of the highest priority. The cultivation of socially-

oriented small business should be foregrounded since it is that

it can ensure:



the positions of the clan, religious communities, belonging to

the titular nation, etc. on the mechanisms of judicial protection.

The governmental refusal of the support of past social

standards in the term of market transformation predetermined

the renewal of archaic social institutions of ethnic economy: a

large family, a numerous and influential group or clan, out-of-

date forms of community regulation of property and land,

increasing influence of adat structures and others (6).

The ethnic economy is generally interpreted as a

traditional (pre-industrial) type of labor activity developed in

the respective ethnic communities and closely related to the

traditional way of life, economic orientation, and everyday

family life of the population in the territory (19).

At the same time, the modern ethnic economy is not

immune to high-tech and high-skilled forms of activity



The development of self-employment, the creation

of jobs with a flexible schedule, which will allow students, the

disabled, women with small children and other socially

vulnerable groups to gain a particular income;

(

especially in the service sector), anyway related to the

traditions, customs, and everyday family life of the

corresponding ethnic group (21).

The ethnic economy in the challenging terms of the current

economic development of the North-Caucasus republics is

designed to perform several particular functions, also in the

management of social and economic issues:



Creation of labor-intensive jobs that will help to

engage a large number of the rural population in unreported

employment. Labor-intensive jobs are mainly focused on the

production of utilitarian products of folk-art crafts, which are

historically manufactured with the use of manual labor;

1) Socio-economic (absorbing labor resources released



Increased investment in the economy through the

mobilization of social funds.

from other economicsectors, the ethnic economy contributes

to tension relief in the employment of the population);

As academic researchers think (24, 28), the blurred lines

of the concept and the corresponding term “social

entrepreneurship” used in the context of any socially useful

activity prevents the institutionalization of this phenomenon.

In this relation, the issue of defining the conceptual fields of

social entrepreneurship, the socially responsible practice of

commercial business, the activities of non-profit

organizations, charity, etc. is currently being stated.

According to the concept (13), social entrepreneurs are

agents of positive changes in institutional, social and economic

areas because:

2) Shock-absorbing (ethnic economy mitigates the

destructive impact of crisis phenomena on the economy of the

North-Caucasus republics);

3) Retaining the traditions and customs of ethnic groups

(

1).

In addition to the apparent advantages of the ethnic

economy (relatively low investments, often owing to private

household’s self-investment; possible utilization of domestic

labor; preservation of traditional folk crafts, etc.), it also has

many weak points related, in particular:



To low adjustment possibilities of entrepreneurs in

) They determine their mission in such a way that it

ensures the creation and stable maintenance of social effect

benefit);

the transition period;



To a strong dependence on natural and climatic

(

factors, which threatens economic losses (without any

government reimbursement);

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2019, Special Issue on Environment, Management and Economy, Pages: 1175-1179

) They are able to recognize and use new opportunities

for the implementation of the mission;

) They are involved in the continuous process of creating

innovation, adjustment, and training;

) They act decisively and do not regard the factor of

limited resources currently available;

) They have an enhanced responsibility for the results

its influence on the resolution and prevention of socio-

economic issues in the North-Caucasus region:

administrative and managerial barriers: imbalances of

spatial development; high corruption; low development of the

market of financial and credit services; lack of modern

business support infrastructure; low investment attractiveness

of the region;

achieved to their target group and society as a whole.

economic barriers: low technological and organizational

level of the economy; a high proportion of the “shadow

Academic researchers of business practices in different

areas of activity (35, 40) more broadly define

entrepreneurship, namely as a particular type of proactive

behavior, the outcomes hereof can be goods, ideas, and

institutions. In addition to the knowledge of the technology of

a particular industry, any business activity needs universal

detectors of new chances and the ability to fulfill them,

attracting the required resources (31). As researchers suppose

economy”;

technological

backwardness;

insufficient

investment in the region; a high number of natural and small-

scale production; low effective public demand;

social barriers: low living standard of the population; high

unemployment rate; loss of skills by labor force; low

professional and social mobility of the population; outflow of

talented youth from the region; low level of education;

ethnocultural barriers: peculiarities of the national

attitude; high religious commitment; the risk of loss of national

handicraft traditions; isolation, lack of developed

communications; the diffusion of xenophobia and religious

extremism.

(

24), social entrepreneurship as an activity includes the

following three components:

1) Identification of a persistent but unfair balance, which

(

determines social exclusion, marginalization or suffering of a

part of society;

(

2) Revealing the opportunity to make social benefit within

The most critical role in the establishment and

development of social entrepreneurship as a resource for

managing socio-economic issues in the North-Caucasus region

belongs to educational institutions that implement the

programs of training young people for social entrepreneurship

and promote it on the youth market concerning ethnic and

cultural features of each republic.

unfair balance — through inspiration, ingenuity, direct acts, and

courage of the entrepreneur;

(

3) The gradual achievement of a new balance that releases

a hidden potential or alleviates the suffering of the target group

through the creation of a stable ecosystem in the vicinity of the

new balance. The latter is designed to ensure a better future for

the target group and society as a whole.

Thus, the main distinguishing feature of social

entrepreneurship is the generation of social transformation and

aim for the implementation of the essential mission (creation

of social value). The study of social entrepreneurship allowed

the authors to make a conclusion: social entrepreneurship is

seeking to resolve social troubles with an innovative method,

inventing or combining social and economic resources in such

a way that to establish a self-reproducing mechanism enabling

the expansion of production and the provision of targeted

social benefits.

Socially-oriented business behavior is included in a

broader socio-cultural context, and therefore in the study of

this phenomenon, it is necessary to regard the contextual

factors (29). Thus, researchers (13) argue that social

entrepreneurship is differently manifested depending on socio-

economic and cultural conditions. In this relation, it is relevant

to study the features inherent in specific social communities,

relations, and ties between their members.

6 Acknowledgments

The research was conducted in the framework of the RFBR

project 19-013-00551 “Ethno-cultural determinants of the

establishment and development of

entrepreneurial education ecosystem in the North Caucasus

region in terms of global and local challenges.”

a socially-oriented

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