New Dawn or False Promise?
A critical perspective on Social
Enterprise
Being a Devils Advocate - Critical reflection is called
for in order to assess different perspectives and
provide some challenge to the dominant view:
• Definitions
• History, Legal and Culture
• Governance and Finance
• Observations and Conclusion
The Dominant View
• “ Many of the challenges social enterprise aims to resolve are the
greatest challenge faced by humanity – Poverty, Climate Change,
Conflict”
• The saviour of public and private business
• The answer to “worklessness” social isolation and inequality
• Social Enterprise, and in particular its “undisputed star” microfinance
has demonstrated its capacity to deliver
• Social enterprises are at once looking at ways to make micro-impacts
on local populations, while also working to shift entire systems of
production, consumption and even government
Definition- what is a Social Enterprise?
• Social Enterprise remains a very broad and often quite vague
concept – referring primarily to market orientated economic
activity serving a social goal
• Social enterprise is an innovate response to the funding
problems of non-profit organisations
• The concept of Social Enterprise includes a wide spectrum of
organisations from businesses engaged in social benefit
activities to non-profit organisations engaged in mission trading
activity.
The Official UK Government Definition
• BIS defines social enterprises as those businesses that selfidentify as a social enterprise and as a “business with primarily
social or environmental objectives, whose surpluses are
principally re-invested for that purpose in the business of the
community or community rather than mainly being paid to
shareholders as owners “; and further require that they
generate at least 25% of their turnover from trading and
distribute less than 50% of their profits to owners or
shareholders
Does Definition matter?
• - Surely its about the work?
• - but no definition:
• What and How do you measure?
• Comparison and Impact?
• Mission Drift and Undermine values – re how “Green” has
been abused?
• Confusion – other terms “ SE is a new way to run business, not
a new way to run Charity” – Dai Powell HCT Group
• Problem – all sorts of activities are now being called social
enterprises
History
• Recognised term from the 1990s – but were/are these Social
Enterprises?
• The Foundling Hospital
• The Rochdale Co-operative
• Armitage and the Blind
• Peabody and Octavia Hill
• Oast House Trust
• Bluebell Railway
Legal and Regulation – a confused picture or a
richness in diversity?
• The arrival of the CIC Company – now 4905 but:
• “ Just over one-quarter (26%) of small and medium employers
said they are social enterprises, but only 7% met the full
definition, with a further 19% self-identifying as social
enterprises but not meeting all the criteria – nearly half of
registered charities(45%) two thirds of companies limited by
guarantee (67%) and nine tenths (90%) of CICs are social
enterprises” (NCVO Almanac 2012)
International - UK a compromise of ideas!
• To further complicate matters there are differences in
interpretations of social enterprise across the globe:
• USA – social enterprise embraces the entrepreneurial culture,
where the individual, the entrepreneur, is focused upon far
more than the collective or the community
• Europe – stakeholder democracy – benefit the community and
are autonomous organisations, with group objectives, shared
aims and decision making power that is not based on capital
ownership
Cultural and Political Issues
How different from modern charities and public benefit?
Are they really enterprises? – “They restrict me from creating real value
which doesn’t make any sense” – quote from a previous winner of the
Apprentice
“Ten or so years ago it would have seamed like an oxymoron to
amalgamate the terms social and enterprise” (Arthur 2006) – a leap of
faith – assumption that if business a success, social aims will follow?
Relationship with the Public Sector?
Criticism from Unite – are social enterprises a “spin” away from the real
issues of full employment and the welfare state?
Financial Issues
The issues of scalability? – are SEs really social SME’s? – can
they be templated?
Access finance and capital – social bonds still an emerging area
External business support services to SMEs?
Marketing and Pricing products
Governance
• Theory and models – Stakeholder or Stewardship?
• Regulation confused – no one regulator – how effective is the
CIC regulator? – “The Government expects the Regulator to be
a “light touch regulator” who will encourage the development of
the CIC brand and provide guidance and assistance on matters
relating to CICs.”
• The Trade Mark – how many have joined? – is it a money
making exercise?
Governance Issues
• To Get the CEO on the Board?
• Short term fix to underlying governance problems?
• Q – is it really true that traditional governance structures of
charities do not fit the Social Entrepreneurial nature of Social
Enterprises?
Conclusion
• Could get lost in terminology – responsible capitalism –
collaborative entrepreneurship – and lose identity
• Resilience to criticism? – impact and other studies may suggest
no longer flavour of the month or not delivering– i.e. micro
finance impact studies questioning how effective
• Social value and impact – lack of a research evidence base –
“the social entrepreneur as a heroic figure is a myth!
Lose the hype – a real research agenda
• Social Value creation
• Risk taking
• Managing a social venture
• Effects of change process
• Social Venture formation
• Motivation of social entrepreneurs
• Social and economic values