Social Entrepreneurship and Broader Theories: Shedding New Light on the ‘Bigger Picture’
Societies around the world are facing significant social problems for which they often do not have cost-effective solutions. They also face uncertainty and rapid changes (in everything from technology to migrating populations) that lead to new, complex, and shifting problems, and open the door to new approaches to solutions. In order to improve their efficiency and effectiveness at solving social problems now and in the future, societies need to be more innovative and adaptive. They need what Nobel Prize winning institutional economist Douglass North calls ‘adaptive efficiency.’
Unlike the traditional notion of allocative efficiency, which is static, ‘adaptive efficiency’ is dynamic and concerns a society’s ability to solve problems and adjust over time. As North puts it, ‘‘Adaptive efficiency’’, therefore, provides the incentives to encourage the development of decentralized decision-making processes that will allow societies to maximize the efforts required to explore alternative ways of solving problems’ (North 1990, p. 81).
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