Varieties of and social : A review of selected articles

Edited by: Andy Brady, Lord Ashcroft International , Anglia Ruskin University and Helen Haugh, Cambridge Judge Business School

Introduction Varieties of social enterprise and social entrepreneurship have existed for centuries, perhaps even millennia (Bornstein, 2007; Hudson, 2017; Doherty et al., 2014); however, it is generally acknowledged that usage of these labels assumed greater prominence in the 1990s (Ridley-Duff and Bull, 2016; Doherty et al., 2014). The resurgence of interest in varieties of social enterprise and social entrepreneurship was led by practitioners, and then policy makers, seeking entrepreneurial solutions to endemic social and environmental challenges in the global North (Leadbeater, 1997; Dees, 1998; Borzaga and DeFourny, 2001) and South (Yunus, 2007). Academic interest in the fusion of business, social and environmental missions has been longstanding and the papers in this virtual special issue span a thirty year period and reflect the international scope of social enterprise and social entrepreneurship enquiry.

In an early contribution to the literature Cornforth (1988) described the mission and operating principles of the Mondragon co-operative in the Basque region (Spain) and suggested how lessons from Mondragon could be applied in the United Kingdom (UK). The most recent paper in our collection (Rispal and Servantie, 2016) is a longitudinal analysis of social entrepreneurship business models dating from 2005 in Colombia. Also featured in the collection are studies from Denmark, Vietnam, Australia and the UK, thus reflecting the widespread scholarship that social enterprise and social entrepreneurship have stimulated.

Distinguishing between social enterprise and social entrepreneurship Definitions understandably feature in most of the papers and, even if we accept the often- cited definition of social enterprise as ‘…a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community…’ (DTI, 2002:14), there are further distinctions to be made between social enterprise and social entrepreneurship. The crux of social enterprise is the way in which such ‘create value, for example, for the community, whereas entrepreneurial businesses primarily create

1 wealth and accumulate capital growth’ (Chell, 2007:11). Institutionally however, social enterprises present a categorical challenge in that they occupy ‘the ill-defined space between the for-profit and non-profit worlds’ (Vickers and Lyon, 2012:450). The negative impacts on the reputation of private firms attributed to the 2008 financial crash and subsequent economic recession (Porter and Kramer, 2011) are among the factors which lead Shaw and Bruin (2013:738) to explore the discourse around social enterprise from two perspectives: as ‘an alternative to profit-seeking counterparts’ on the one hand, or as part of a set of ‘neo-liberal ideologies which espouse the benefits of transferring the of resources away from state ownership’ on the other. The institutional complexity in which social enterprise and social entrepreneurship are situated means that these debates have not yet been concluded.

The distinction between social enterprise and social entrepreneurship is central to the analysis of nongovernmental organizations (NGO) in Vietnam in which social enterprise is framed as a ‘form of social business or venture’ (Luke and Chiu, 2013:765). In Vietnam social entrepreneurship, ‘involves seizing opportunity for the market-changing innovation of a social purpose’, embracing risk and ‘the development of new and creative solutions’ (Luke and Chiu, 2013:765). In contrast, social enterprise, they advance, is characterised by adopting commercial approaches in an arena which is traditionally reliant on grants and donations. The ambiguity between social entrepreneurship and social enterprise rests on their observation that it is not necessary for a social enterprise to be innovative or indeed entrepreneurial.

Conceptual anchors for social entrepreneurship and social enterprise research The conceptual anchors for social entrepreneurship and social enterprise research featured in our collection range from theories that explain entrepreneurship, organizations and organizing, business models, and resource acquisition and dependence. The aim of the paper by Luke and Chiu (2013) is to contrast social enterprise and social entrepreneurship and this is accomplished by employing concepts of opportunity identification, innovation, risk and outcomes from the entrepreneurship literature. Outcomes are treated more expansively by Korsgaard and Anderson (2011) in their analysis of the social outcomes of broader entrepreneurial activity. Arguing that entrepreneurship has been shown to be a social process (in distinction to theories placing emphasis on the individual entrepreneur), Korsgaard and Anderson (2011) suggest that entrepreneurship can only be understood when all forms of value creation (type and level of impact) are taken into account.

2

Two papers in our collection allude to theory constructs in their analysis of social entrepreneurship. First, for Cornforth (1988) the challenge of social entrepreneurship is to encourage entrepreneurs to adopt an organisational form, the co-operative, which would not necessarily be a natural one, and to then encourage existing co-operatives to foster entrepreneurial activity and increase the formation rate of new co-operatives from within their business. Second, the interplay of context and practice of social value creation appear to be important for understanding social entrepreneurship. In addition to considering the sites of socially entrepreneurial activity, the practice implications and specifically discourse, are noted to shape (social) entrepreneurship: ‘If people collectively construct their community or place as problematic for enterprise activity, top-down efforts to stimulate or support entrepreneurship may be ineffective.’ (Parkinson et al., 2016:2). The context in which they gathered empirical data was described as ‘tight-knit’ and ‘no place for business,’ values which the authors argue characterize the business landscape and in turn constrain enterprise creation and success.

Business models also feature in three papers in our collection. Business models to flourish, prosper, grow and scale up are key themes for supporting social enterprise and social entrepreneurship (Shaw and Bruin, 2013). Entrepreneurial behaviour can provide one route to such growth; however, a challenge faced by social enterprise concerns how to achieve commercial and social impact growth simultaneously. In a longitudinal analysis of the activities of a foundation established to tackle problems of drug addiction, gang membership, and unwanted pregnancies in Columbian communities, the foundation’s business model combines value generation, value capture, and value sharing (Rispal and Servantie, 2016). Drawing on the concept of social value proposition, the longitudinal method allows the authors to track the development of the enterprise through launch, growth, and eventually replication stages, with the business model mutating at each stage. In their study of environmental social enterprises, Vickers and Lyon (2012) also investigate business models and barriers to social enterprise growth. The results find that attitudes towards social enterprise growth vary from modest and a preference to remain ‘small and beautiful’, to ambitions to be a ‘green collar army’ to achieve scale and capitalize on pro- environmental government initiatives.

Turning to resources, Vickers and Lyon (2012) analyse the resources and capabilities of environmental social enterprises. In common with commercial enterprises, social enterprises

3 need resources, competences and ; in addition the authors note the importance of social enterprise specific skills such as volunteer , community engagement, and impact reporting. Overall, a picture emerges of social enterprises that learn and adapt in order to grow by scanning the environment, and evaluating and responding to opportunities (Vickers and Lyon, 2012). This developmental process is examined in more detail by Chalmers and Balan-Vnuk (2012), who highlight the ways in which social enterprises extract knowledge from their staff, users, and external agencies. The intelligence gathered then fosters innovation, albeit within resource constraints and a sometimes risk averse value system.

Access to finance is fundamental to commercial entrepreneurship and this is also the case for social entrepreneurship. Maclean et al., (2012) examine the role of funders and supporters (specifically a local community foundation) in championing regeneration through . As funding for public services diminishes the authors argue that local entrepreneurs can, by telling their own story, encourage others to follow their example and fund local projects which provide a ‘cost-effective, efficient means of addressing some of the pressing social and environmental challenges that large government institutions, agencies and businesses do not appear to be able to solve’ (Maclean. et al., 2012:759). This paper endorses the market and government failures explanations for the resurgence of social enterprise and social entrepreneurship.

Future research directions In light of the continuing increased interest in social entrepreneurship, the growing population of social enterprises in many countries (e.g., SEUK, 2015), and the many aspects of their organization, management and performance that we do not yet fully understand, the potential for future research remains very promising. We conclude this introduction to our collection by suggesting five areas with theory development potential.

Context. The papers in this collection cover a variety of locations. Despite growth in social enterprise that is uneven across regions, the UK is held up as an example to other nations as a place in which social enterprise has been allowed to thrive (SEUK, 2015). With scarce public resources for supporting any kind of enterprise proliferation, and increasing demand for many services which charities, non-profits and social enterprises offer, the question: ‘how best to

4 foster the social economy?’ remains critical for scholars, policy makers, practitioners, philanthropists and pro-socially motivated businesses.

Business models. The interesting longitudinal work carried out by Rispal and Servantie (2016) brings into focus the importance of understanding how social enterprise business models are constituted, function, and evolve over time. The typology proposed by Alter (2007) delineated how different social enterprise business models, income generation strategies, and stakeholder relationships were constituted, but more research is needed to examine the relationships between social enterprise business models and commercial, social and environmental impacts.

Performance. The financial and environmental performance of social enterprise is more easily measured than the achievement of social impact and outcomes. Social impact can be assessed by a variety of tools – both qualitative (social audit and accounting) to quantitative (social return on investment) (Ridley-Duff and Bull, 2016). With no agreement in sight about which of these - or other - methods is more effective at measuring social impact, research is needed that examines their relative costs, benefits, and accuracy; this is particularly important in a climate of increased public scrutiny of organizations and societal demands for greater organizational accountability.

Governance. One potential route to improved social enterprise performance is to increase the role played by private finance and private sector expertise in the social economy. Benefit corporations, launched in the USA as a new legal structure and available as a quality mark in many other countries, are hybrids of for-profit and social purpose ventures. Hybrid ownership and governance is also permitted in the UK’s Community Interest Company structure, which allows up to 35% of profits to be distributed to private investors. As new organizational forms for social enterprise are established, their relative performance can be scrutinised in more detail, enabling us to test Porter and Kramer’s assertion that ‘Social enterprises that create shared value [profit and impact] can scale up far more rapidly than purely social programs, which often suffer from an inability to grow and become self-sustaining’ (2011:70).

Methodologies for researching social enterprise and social entrepreneurship. The GEM studies have provided valuable quantitative assessments of social enterprise and social

5 entrepreneurship (Bosma, Schøtt, Terjesen and Kew, 2016); however, the field is dominated by qualitative research findings. This is perhaps a necessary first step in new field development and the qualitative findings are valuable for developing hypotheses to explain and predict social enterprise performance and aspects of socially entrepreneurship. As social enterprise and social entrepreneurship inquiry become ever more firmly embedded in the academy, explanations based on rigorous quantitative testing of hypotheses are likely to find receptive scholar, practitioner and policy maker audiences.

References

Alter K (2007) Social Enterprise Typology (Version 1.5). Virtue Ventures: www.virtueventures.com/typology.

Bornstein D (2004) How to Change the World: Social Entrepreneurs and the Power of New Ideas. Oxford: Oxford University Press.

Borzaga C and DeFourny J (2001) The Emergence of Social Enterprise. London: Routledge.

Bosma N, Schøtt T, Terjesen S and Kew P (2016) Special Topic Report Social Entrepreneurship. GEM Global Entrepreneurship Monitor. Available at file:///C:/Users/haughh/Downloads/gem-2015-special-report-on-social-entrepreneurship- 1464768244.pdf

Chalmers DM and Balan-Vnuk E (2012) Innovating not-for-profit social ventures: Exploring the microfoundations of internal and external absorptive capacity routes. International Small Business Journal 31(7) 785-810.

Chell E (2007) Social enterprise and entrepreneurship: Towards a convergent theory of the entrepreneurial process. International Small Business Journal 25(1) 5-26.

Cornforth C (1988) Can entrepreneurship be institutionalised? The case of worker co- operatives. International Small Business Journal 6(4) 10-19.

Dees JG (1998) Enterprising non-profits. Harvard Business Review 76(1) 54-66.

Doherty B, Haugh H and Lyon F (2014) Social enterprises as hybrid organizations: A review and research agenda. International Journal of Management Reviews 16(4) 417-436.

DTI (2002) Social Enterprise: A Strategy for Success. London: HM Treasury.

Hudson M (2017) Managing Without Profit (4th edition). London: Directory of Social Change.

Korsgaard S and Anderson AR (2011) Enacting entrepreneurship as social value creation International Small Business Journal 29(2) 135-151.

6

Leadbeater C (1997) The Rise of the Social Entrepreneur. London: Demos.

Luke B and Chiu V (2013) Social enterprise versus social entrepreneurship: An examination of the ‘why’ and ‘how’ in pursuing social change. International Small Business Journal 31(7) 764-784.

Maclean M, Harvey C and Gordon J (2012) Social innovation, social entrepreneurship and the practice of contemporary entrepreneurial philanthropy. International Small Business Journal 31(7) 747-763.

Parkinson C, Howorth C and Southern A (2016) The crafting of an (un)enterprising community: Context and the social practice of talk International Small Business Journal Forthcoming.

Porter ME and Kramer MR (2011) Creating shared value: How to reinvent capitalism - and unleash a wave of innovation and growth. Harvard Business Review 89(1-2) 62-77.

Ridley-Duff R and Bull M (2016) Understanding Social Enterprise: Theory and Practice (2nd Edition). London: Sage.

Rispal MH and Servantie V (2016) Business Models impacting social change in violent and poverty-stricken neighbourhoods: A case study in Colombia. International Small Business Journal Forthcoming.

SEUK (2015) Leading the World in Social Enterprise. London: Social Enterprise UK.

Shaw E and de Bruin A (2013) Reconsidering capitalism: The promise of social innovation and social entrepreneurship. International Small Business Journal 31(7) 737-746.

Vickers I and Lyon F (2014) Beyond green niches? Growth strategies of environmentally- motivated social enterprises. International Small Business Journal 32(4) 449-470.

Yunus M (2007) Creating a World Without Poverty: Social Business and the Future of Capitalism. New York: Public Affairs.

Biographical information

Andy Brady is a senior lecturer at the Lord Ashcroft International Business School at Anglia Ruskin University, where he is course leader for the BA in Charity and Social Enterprise Management. Andy, who is currently studying for a PhD, has presented research papers at the EMES Social Enterprise Research Conference, and the International Society of Third- Sector Research Conference, and published research in the Journal of Finance and Management in Public Services. He has also contributed book chapters on social enterprise to The Big Society Challenge and Social Entrepreneurship and Enterprise.

7

Dr Helen Haugh is Senior Lecturer at Cambridge Judge Business School, Director of the Masters in Innovation, Strategy and Organizations and The Management of Technology and Innovation programme, and Research Director for the Centre for Social Innovation. Helen’s research interests focus on social and community entrepreneurship, family business and corporate responsibility. Her research in the social economy has examined community-led regeneration in rural communities, cross-sector and innovations in governance. Her research has been published in the Academy of Management Education and Learning, International Journal of Management Reviews, Organization Studies, Entrepreneurship Theory and Practice, Journal of , Cambridge Journal of Economics, and Entrepreneurship and Regional Development.

8