Eight Paradoxes of the Social Enterprise Research Agenda.

Professor Ken Peattie and Dr. Adrian Morley

ESRC Centre for Business Relationships, Accountability, Sustanability and Society (BRASS) Cardiff University 55 Park Place, Cardiff CF10 3AT Tel: [00 44] (0) 2920876562 Email: [email protected] www.brass.cf.ac.uk

1. Introduction.

During 2007, as part of the consultation process in the commissioning of a new ‘Third Sector’ research centre, a seminar series was organised by the Social Enterprise Coalition (SEC) and the ESRC (one of the new Centre’s funders). A research monograph and accompanying discussion paper (Peattie and Morley, 2008 a. and b.) were also commissioned to review the current state of research into social enterprise (SE1), and to consider the agenda that such a new centre might address. The BRASS Research Centre at Cardiff was asked to develop this monograph for two reasons: (a) as an ESRC Research Centre tackling an emerging area (in their case, business sustainability and corporate social responsibility), it had experience of the challenges involved in establishing a new centre and its research agenda, and (b) it had recently conducted several projects with a focus on SE. The authors accepted the monograph commission, partly because BRASS had conducted a SE literature review during 2005, within a project developing sustainability performance indicators for SEs. They would have accepted it rather less casually had they realised the extent to which the SE literature had expanded during 2006 and 2007! The final monograph ran to forty pages and summarised findings from more than 150 sources. It also benefited from insights generated during the research seminars and from the suggestions of a range of expert reviewers that drafts were circulated to, and who the authors would like to express their gratitude to.

1 SE is used throughout as an abbreviation of social enterprise for reasons of space.

1 The monograph focussed mostly on UK research and on SEs as organisations as the main level of analysis. It did not seek to give equal attention to social entrepreneurship and social entrepreneurs at a more micro level (for a comprehensive discussion see Nicholls, 2006; Mair et al., 2006; and Perrini, 2007), or to the social economy or ‘Third Sector’ at a more macro level (see for example Evers and Laville, 2004). This article seeks to extract some of the key issues that emerged whilst attempting to develop a holistic and systematic review of the existing research literature concerning SE. It tries to avoid presenting just a summary of the monograph, since that will be widely available online, and the authors would encourage those who would like to learn more to consult it. Instead this paper seeks to explore why, when SEs are a form of business (one of the most researched phenomena on the planet), they are often significantly different, and particularly challenging, to research, understand, develop and manage.

2. Background : The State of Research into Social Enterprise. Alter (2006) highlights as ‘paradoxical’ the contrast between SE as a relatively under-developed field of knowledge and thought, and yet as an area of practice with ‘vast potential’ that is experiencing an ‘explosion’ in practitioner numbers. The exact scale and scope of SE’s contribution to economies and societies worldwide is difficult to delineate and measure accurately, but there seems to be universal agreement that it has grown significantly. Commonly quoted figures from the UK Government’s annual Small Business Survey in 2005 suggested that there could be as many as 55,000 UK SEs (equating to 5% of businesses) turning over £ 27 billion. The economic, social and political value of SEs is reflected in increasing interest within the public policy-making arena, and underlined by increasing public investment into promoting and supporting them. Despite this, they remain an under-researched phenomenon, particularly when compared to the business ‘mainstream’. Desa (2007), searched the seven top-ranked academic business and management journals from 1985 to 2006, and found no articles on social enterprise or social entrepreneurship. The situation is gradually improving, with an increase in practical mapping exercises aiming to better understand the scale, scope, distribution and nature of SEs and growing academic interest in the field. Several distinct types of research contribution can be identified:

2 Over-arching reviews of the field. Some major edited collections have been published recently (e.g. Nyssens, 2006), along with other wide-ranging reviews such as Alter’s (2006) 100 page review which seeks to create a unified classification system and understanding of the field, based mainly on experience from Latin America; or the review by Jones et al. (2007) covering 111 SE orientated documents (from a Scottish policy perspective) structured around five key dimensions of the SE literature including definitions, regulation, policy, support and investment.

Regional studies. In addition to the report by Jones et al., there have been several studies investigating SE with a regional focus. Examples include Gordon’s (2006) research in South Yorkshire, the 2002 Social Economy Network/Welsh Development Agency review for Wales (Adamson, 2003), or Lloyd’s (2003) review across the English RDAs, Wales, Scotland and Northern Ireland. Borgaza and Defourny (2001) also provided a review of SE across Europe which revealed much about its geographical diversity.

SE sub-type reviews. There is a growing, and in some cases long-established, research literature dedicated to specific forms of SE such as FairTrade organizations, credit unions or cooperatives (and these sub-type reviews were not generally included within the monograph). A second amongst the paradoxical dimensions of SE research that this article highlights, is that SE is unusual in being a business discipline in which several sub-disciplines are significantly more mature and extensive than the over-arching ‘parent’ discipline. A crude proxy measure to demonstrate this comes from submitting the terms ‘Fair Trade’ and ‘Co-operatives’ into the Google Scholar search engine, which return four and five times as many studies respectively as a similar search conducted on ‘Social Enterprise’.

Key issue studies. A growing number of studies look at specific issues relating to SEs, and the monograph brought together key findings and future research needs from a number of these, including studies on:  Governance, particularly in terms of competing ‘stewardship’ and ‘stakeholder’ based approaches (e.g. Mason et al., 2007; Low, 2006);  Financing, particularly the challenges SEs face in accessing funding and their need for new forms of ‘patient’ capital (e.g. Brown and Murphy, 2003; Perrini and Marino, 2006);

3  Factors associated with SE success or acting as barriers to it (e.g. Sharir and Lerner, 2006);  Relationships with the public sector (e.g. Chapman et al., 2007);  External business support services for SE (e.g. Hines, 2006);  Marketing, particularly some of the difficulties SEs tend to have in marketing relating to their understanding of pricing dynamics and the need to be competitive in packaging and labelling quality and information provision for customers (e.g. Shaw, 2004; Bird and Aplin, 2007);  Human resource management, particularly the challenge of managing organisations typically staffed by a blend of volunteers and paid workers (e.g. Royce, 2007).

Research agenda setting studies. One of the most useful of these came in an earlier Social Enterprise Journal contribution by Haugh (2006), who listed eight broad thematic needs for future research. Although the authors didn’t seek to use Haugh’s analysis as a template for their monograph, her eight themes are difficult to improve upon as a ‘top eight’: 1. Defining the scope of social entrepreneurship: to help resolve some of the definitional problems referred to below and to make international comparisons more feasible; 2. The environmental context: in terms of the political, economic, social, cultural and technological trends that influence social enterprise and entrepreneurship; 3. Opportunity recognition and innovation: to better understand why SEs are able to innovate and seize opportunities, and also the barriers that sometimes prevent them from doing so. Despite the research that exists about the founding and early growth of SEs, Desa (2007) notes that there is relatively little research about where the initial ideas come from, and how particular opportunities are identified and evaluated. 4. Modes of organization: to better understand and compare different institutional forms and legal formats. The conventional business literature is dominated by a single business model, the public company with distributed ownership through shareholding. Although other legal forms of enterprise such as private companies, family companies or partnerships are acknowledged, and sometimes studied, the large publicly held company is the business school norm. SEs by contrast are predominantly small organisations, in which ownership is often distributed through community rather than public ownership,

4 and which are characterised by diversity. There are a number of different legal structures in the UK commonly associated with SEs including a Charity (that trades), Trust, Community Interest Company (CIC), Company Limited by Guarantee, Company Limited by Shares, Community Benefit Society, Industrial and Provident Society and Unincorporated Association. There are also forms that belong to particular sectors such as Housing Associations and Credit Unions. In some cases SEs exist as a trading-orientated departments or projects within a larger parent organisation such as a charity; 5. Resource acquisition: to understand the sources, management and sustainability of the physical, financial and human resources that SEs rely upon. Desa (2007) provides a particularly good analysis of the way resource constraints often shape the early development of SEs and the value of a ‘bricolage’ perspective to understand how they access and mobilize resources; 6. Opportunity exploitation: to understand how SEs are able to bring resources together, develop networks and formulate and implement strategies to develop a viable organization and exploit the market opportunity they have identified (e.g. see Hockerts, 2006); 7. Performance measurement: to create appropriate ways to measure the multi-faceted nature of the performance and contribution of SEs. There is a particular need to be able to systematically capture and express all aspects of their social value (e.g. Paton, 2003; Somers, 2005; Bull, 2006); 8. Training education and learning about social entrepreneurship: to understand how SEs learn, and how we learn about them.

Instead of attempting to encapsulate the analysis of future research needs provided by Haugh, and by the research monograph, this article reflects on some key themes that emerged while developing the monograph, particularly regarding some of the more paradoxical aspects of the SE research agenda and its future development.

3. The Definitional Minefield Although there is little value in trying to improve on Haugh’s research agenda setting commentary within this article, the first key theme she identified relating to definitions is worth

5 expanding upon. A distinguishing feature of the SE literature is controversy over definitions and classifications (Lloyd, 2002; Nicholls, 2006; Jones et al., 2007), which was also a recurring theme during the 2007 SEC/ESRC seminar series. The monograph used Pearce’s (2003) comprehensive model of the ‘three sectors’ of the economy, in Figure 1 below, as a starting point to consider the relevant labels, actors and sectors:

Figure 1.

6 The umbrella term ‘Social Enterprise’ includes many organisational types that vary in their activities, size, legal structure, geographic scope, funding, motivations, degree of profit orientation, relationship with communities, ownership and culture. The combination of diversity and definitional difficulties acts to hamper attempts to measure the SE sector (Shaw and Carter, 2007), to develop more differentiated policies and forms of investment to support its development (Jones et al., 2007), and to develop propositions that can be generalised from specific research projects. Some argue that trying to define SEs precisely is somewhat pointless (usually on the basis that ‘you know one when you see one’), or that it is more useful to talk in terms of ‘ideal types’ rather than clear-cut definitions (Defourny, 2006). However definitions are important both to differentiate SEs from other types of public or commercial organizations, and to help to differentiate between types of SE (Jones et al., 2007).

The definitional problems partly stem from a tendency amongst authors to describe SEs in terms of particular characteristics without attempting to differentiate between those that typify SEs and those that define them. For example not generating profits for distribution to shareholders is often used as a defining characteristic, yet longstanding SEs such as Traidcraft and many newer ones set up as Community Interest Companies are intended to distribute an element of profit to shareholders. SEs are also often described as being small and democratic, and as being participatory in the sense of involving those who they were established to benefit in decision making (Defourny and Nyssens, 2006). However there is nothing that prevents them from being large and there is an emerging concept of ‘Corporate Social Entrepreneurship’ relating to larger businesses (Austin, et al., 2005). Similarly there is nothing to prevent a SE from being autocratically run by a founder with a strong sense of social mission, an in practice Aiken (2006) found low levels of worker involvement in governance issues in many types of SEs. Particularly when compared with forms such as cooperatives. Other suggested ‘defining’ characteristics of SEs include a high degree of autonomy, a minimum level of paid work and a significant level of economic risk (Defourny, 2004), yet all are characteristics also shared by organisations that plainly are not SEs.

The only clearly defining (rather than typical or desirable) characteristics are (a) the primacy of social aims and (b) that the primary activity involves trading goods and services. These

7 dimensions reflect the delineations in Pearce’s model between SEs and the private sector in one quadrant, and from the rest of the voluntary and public sectors in another. Perhaps helpfully, these characteristics are also encapsulated within the UK Government’s SE definition as: ‘a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners’ (DTI, 2001). In short, it concerns the use of business means to pursue social ends, and in many ways it is the interaction between the two that underpins the unique dimensions of the SE research agenda. How does having an agenda driven by social goals affect SEs as businesses ? What are the implications of choosing business processes as the means for pursuing particular social goals ? These are the macro level questions behind much of the SE research agenda.

4. Social Enterprises as Paradoxical Hybrids. The defining characteristics of SEs, of applying the methods of the private sector to achieve the types of primary social aims associated with the public and voluntary sectors, makes them distinctive as a form organisational hybrid (Defourny and Nyssens, 2006). SEs are typically portrayed as organisations that exist between private and public sector organisational forms and with characteristics that reflect both. Dees (1998) produced the SE hybrid spectrum model shown in Figure 2 below. The implication of this model is that the organisational dimensions and key stakeholder relationships of SEs will occupy a hybrid position representing a blend or compromise between the conventional commercial and public or non-profit positions. Whether SEs of different types and in different sectors and contexts tend to develop a hybrid position on all these organisational dimensions, or whether they create unique ‘mix and match’ blends of characteristics which are each more typical of either commercial or non-profit sector organisations would be an interesting issue for future research to explore.

8 Figure 2. Dees’ Social Enterprise Hybrid Spectrum.

Evers et al. (2004) take a slightly broader perspective to portray SEs as ‘three-dimensional’ hybrids, which combine elements of the goal sets and mixed resource structures from three different spheres – the market, the state and civil society (reflected in terms of resources as income, grant support and voluntary contributions). Hockerts (2006) views the hybrid nature of SEs, and their ability to create public benefit through running a profitable business that incurs private costs, as counterintuitive to the point of virtual paradox, and comments that: “Management research has no theoretical explanation for these phenomena, nor does it offer guidance for social entrepreneurs who need to navigate the fault line delineating for-profit strategies from the domain of public and non-profit management.”

Certainly one observation from the process of developing the monograph was that the nature of SEs often contained curious elements which, if not always completely paradoxical, were often counterintuitive or at least ironic. These are presented below as six further interlinked ‘paradoxes’ of SE research:

The Research Tradition Paradox. It is ironic that the two strongest foundation stones of the SE literature base appear to be lodestones with an opposing philosophical charge. One is the literature on social entrepreneurship, a branch of the entrepreneurship literature with a strong

9 emphasis on individualism and the social entrepreneur as an ‘heroic’ individual. The other is drawn from the literature of the co-operative movement with its fundamental emphasis on collectivism and co-operative effort. These opposing traditions create some very different ideas about where the entrepreneurship in SEs comes from. Some authors emphasise the role of the social entrepreneur as a bold, opportunist, individualistic change agent applying business skills to create and sustain social value (Dees, 2001). Others suggest that it may also be inappropriate to think of the social entrepreneur only as an individual, because entrepreneurship in some places and cultures may emerge more from groups and communities (Peredo and McLean, 2006). Spear (2006) suggests that the image of the social entrepreneur as an ‘heroic individual’ may be something of a myth, and that success often comes from teams and groups who used ‘distributed entrepreneurship’ and ‘circles of entrepreneurial activity’ involving a range of internal and external stakeholders. One curious observation from the literature relates to the ‘direction’ from which social entrepreneurs and social enterprises emerge. Individual social entrepreneurs can emerge either from a background in the social issue in question, or from a commercial background as they seek to apply their business skills to a new field, either because they are ‘serial entrepreneurs’ (Vega and Kidwell, 2007), or are seeking to make a social contribution having achieved their ambitions in financial or business terms. As organisations, the SE literature shows many examples of voluntary sector or public service organisations evolving to adopt the methods of business to become social enterprises, but very few commercial enterprises travelling from the other direction to adopt primarily social goals (Chew, 2008). This suggests that it may be easier for the priorities of individuals to be changed and reordered than it is for those of business organisations.

The Innovation Paradox. A common perception within the SE literature, and one strongly rooted in the entrepreneurship tradition, is that they are inherently innovative (see for example Dees, 2001; Bornstein, 2004; or Vega and Kidwell, 2007). Perrini and Vurro (2006) stress the innovative and entrepreneurial aspects of SEs by using the label ‘social entrepreneurial venture’. Others debate the extent to which SEs tend to be innovative and question why they are acknowledged to be innovative by nature (at least in process terms) when they are not widely involved in research and development activities and spending (Jones et al., 2007). One potential answer to this question may reflect that although both primarily-for-profit and social

10 entrepreneurship requires creativity and innovation, in the social context this is often manifested by applying novel market-based solutions to intractable social problems, rather than through technical innovations in products, services or technologies. In other words the innovations that SEs are good at tend to be social (particularly in terms of financial or commercial relationships) rather than technological. Another explanation is that a lack of resources often prompts SEs to be innovative on a ‘shoestring’ or by rediscovering or ‘translating’ old or existing technologies between sectors and applications. Elements of this paradox are apparent in the role of SEs in the housing and construction sectors. On the one hand innovations in social housing have been largely based on innovative financing solutions, ownership arrangements and stakeholder relationships, rather than on new types of buildings or building materials. On the other, experience from the construction sector suggests that many key innovations in building eco- design are emerging from a range of SEs including Hill Holt Wood, the Eden Project, Earthship Fife and the Centre for Alternative Technology at Machynlleth. What the future may hold is the opportunity for the construction technologies developed by these SEs to merge with the social, financial and commercial innovations of the Housing Associations. This could create innovative approaches to sustainable housing and communities in response to the mounting pressures relating to climate change, social cohesion and quality of life.

The ‘Like a Business vs. Business-like’ Paradox. Although SEs adopt the methods of business in pursuit of their social goals, they are often reluctant to adopt a business ‘mindset’. This may perhaps help them to be innovative and to think ‘out of the box’ in management and process terms, but it may also create some challenges. Several authors have highlighted the tension that exists between the maintenance of the primary social goals of the SE and the pressures to adopt increasingly entrepreneurial and ‘business-like’ practices and language (e.g. Seanor et al. 2007). The use of best practice case studies, the requirements of lenders, the advice provided by business support agencies and public procurement practices are just some of the social, organisational and market ‘isomorphic forces’ in the SE environment. These tend to promote certain models of SE over others, and push SEs towards conformity and away from their natural diversity. Nicholls and Cho (2006) highlight the irony of a sector that is celebrated for its creativity, diversity, innovation and ability to disrupt existing systems of service delivery, being ‘straight-jacketed’ into the relative homogeneity of particular organisational forms found in both the commercial and

11 voluntary sectors which SEs span across. Low (2006) sees growing pressures to become more ‘business-like’ as likely to push SEs towards the ‘stewardship’ style of governance associated with corporations and an emphasis on shareholders. This is despite the emergence of CICs and their intention to promote the more democratic ‘stakeholder’ style of governance more prevalent in the voluntary sector, and to promote community ownership of SE assets.

Paton (2003) observed that social enterprises operate in a world of meaning that is different to the conventional managerial discourse based on economics and enterprise. He warns that the unquestioning use of the language and ideas of conventional business could undermine the strengths that SEs have sought to nurture, and lead to the neglect of the social and political issues that form their raison d’être. This was observed in practice by Howorth et al. (2006) , when looking at the role of SE in community development, who found that an over-emphasis on the ‘business case’ and use of ‘business-speak’ in promoting SE could lead to some stakeholders feeling ‘locked out’ by a world-view and vocabulary they didn’t share. Parkinson and Howorth (2007) found that when social entrepreneurs used the lexicon of conventional entrepreneurship, it tended to be in a way that disparaged the mainstream and was used to distance the SE from it. Phillips (2006) suggests that culturally SEs demonstrate “a wariness bordering on antipathy towards mainstream business approaches”. Adamson (2003) found that this wariness extended to a reluctance on the part of some SEs, particularly those primarily serving communities and the public sector, to actively develop trading relationships with private sector organisations. This reluctance can inhibit growth and diversification.

The Competitiveness Paradox. A key implication of developing a SE and thereby adopting a business-based approach to the pursuit of social goals, is that it has to be able to compete within a market-place and satisfy the needs of customers at least as well as the competition. This can provide a challenge to SEs who can be relatively inexperienced or under-resourced when it comes to marketing. SE marketing usually depends on intense and informal personal promotion by the founding entrepreneur(s), but they often lack the time, skills and marketing orientation to develop more formal marketing strategies, plans and activities. SEs also produce relatively unique challenges relating to a reluctance to market themselves at all, and a fear of marketing themselves as ‘too successful’ for fear it might jeopardise future grant support for those with a

12 mixed income stream (Shaw, 2004; Bird and Aplin, 2007). A key topic of discussion during the 2007 SE Seminar Series was the competitiveness of SEs when pursuing public sector procurement contracts. Ironically whilst many SEs believed their social ‘added value’ would give them an advantage over purely commercial competitors, some of those managing the procurement contracts expressed a reluctance to purchase from SEs due to concerns about their professionalism, ability to scale up or sustainability. It was clear that the current procurement processes do not allow the full social and commercial value of SEs to be measured, expressed or considered.

The People Paradox. The human dimensions of the business produce some of the most interesting contrasts between conventional businesses and SEs, and some paradoxical dimensions. While generating employment might be an important social contribution for a conventional firm, it can be the raison d’être of SEs with a focus on ‘work integration’. Conventional firms battle for ‘talent’ by recruiting the most skilled and experienced staff they can find and afford, whereas many SEs are actively seeking to generate employment opportunities, including salaried training for the long-term unemployed, people with learning difficulties, ex-offenders, those lacking in qualifications or other groups with relatively low employment rates (which vary amongst countries but can include women or older workers; Defourny and Nyssens, 2006). One paradox in relation to human resources is that such work integration SEs tend to be unusually inclusive, yet other forms of SE and other third sector organisations reported particular problems with recruitment because they struggled to find candidates that combined the right skills with an appropriate cultural ‘fit’ with the organisation’s social mission (as highlighted in the 2005 CIPD Survey on Recruitment, Retention and Turnover).

Another paradoxical element is that although the emphasis amongst many SEs on generating employment is beyond criticism, there has been research that has questioned the quality of the employment that they generate in terms of the quality of the jobs and the levels of pay provided, and particularly the stability of the employment offered by SEs (Amin et al., 2002). These sustainability concerns are particularly true of SEs that continue to rely on grants within their funding stream (Phillips, 2006). Managing job insecurity caused by the episodic nature of grant

13 funding support for many SEs is one of the distinctive and challenging dimensions of human resources management for SEs highlighted by Royce (2007), along with balancing a workforce composed of both paid staff and volunteers; and managing volunteers alongside sometimes vulnerable staff. Similarly in the case of SEs employing a workforce that is in some way disadvantaged, whether and how to highlight this dimension in the marketing of the enterprise represents an unusual ethical conundrum which has received little research attention until very recently (Bird and Aplin, 2007). This provides another dimension of the competitiveness paradox outlines above.

The ‘Who?’ Paradox. Although the research monograph largely explored the future research needs for SE in terms of what issues needed to be researched and why, the accompanying discussion paper also considered the ‘Who?’ question of developing research capacity. Since SEs represent organisations that operate in business, albeit with primarily social aims, it would appear logical for business scholars to lead the way in SE research, particularly at a time when issues like corporate social responsibility and cause related marketing are moving social issues up the mainstream business agenda. In the USA for example, there is a concentration of SE expertise in one or two of the longest established and most prestigious business schools, particularly Harvard and Columbia. In the UK, although there is growing interest in SE amongst business schools, and particularly within some of the newer schools, it has often been the sociologists and the geographers taking the greatest interest. The curious lack of enthusiasm for SE research amongst many UK business schools may partly reflect the strictures of the recently completed Research Assessment Exercise (RAE). This acts to reinforce traditional disciplinary boundaries and push scholars to concentrate on the longest-standing management journals with a strong ‘RAE rating’ and which, as Desa (2007) noted, have generally been slow to recognise and respond to the growing importance of SE (with certain honourable exceptions, such as the 2006 special issue of the Columbia Journal of World Business dedicated to SE). It may also reflect the dominance of a single management paradigm which is strongly based around the concept of delivering shareholder value, and which SEs neither share nor fit comfortably within.

Developing SE as a field of scholarship will require more business and management scholars to take an interest. This may happen naturally as they become more aware of the scale, scope and

14 economic and political importance of SE and of its distinctive characteristics and the opportunities they provide for novel, interesting and socially valuable research. It is also likely to require other structural changes such as the provision of research funding, the development of better links between social enterprises and their local business schools, and for a stake to be driven through the heart of the RAE in its current form.

The Transatlantic Paradox. There is also a paradox for UK management scholars interested in SE in that, with the exception of a period in the 1980s when Japan was a key source of inspiration, the main drivers of the management discipline have been American based business schools, journals and corporations. Within the business mainstream, this is not particularly problematic, since there is relatively little to differentiate UK from US owned companies. The concept of an ‘Anglo-Saxon’ business culture which is distinct from that of continental Europe is often referred to, and takeovers have led to regular ownership exchanges between the two countries. The SE field is different, with the USA having a very different view of the role and nature of SE from researchers, practitioners and policy-makers in Europe. Kerlin’s (2006) comparison between the two revealed a relatively narrow American notion of the SE as a non- profit organisation existing for the social good in a way that complemented commercial enterprises, compared to a European notion of SEs as an engine for economic inclusion and reform that will compete with commercial enterprises and often disrupt the status quo (Borzaga and Defourny, 2001). SE in the UK has far more in common with the European traditions of research and practice, which may provide another obstacle to more UK business scholars embracing SE research. It is a field in which the usual sources of information, inspiration and answers are far less applicable, and it means that great care would need to be taken in seeking to apply lessons from American SEs to their counterparts in the UK.

5. Conclusions. The hybrid and sometimes paradoxical nature of SEs make them particularly challenging businesses to manage, to research and to develop effective policies for. The emphasis on ‘entrepreneurship’ has often focused attention on the roles of enterprising individuals and their characteristics, particularly in establishing SE ventures, rather than on the development of the management teams, competences and skills needed to develop and run them. SE managers face

15 challenges in managing the identity of a hybrid organisation, integrating the typical mix of employees and volunteers, balancing different currents within the income stream and responding to market pressures from customers and competitors and to pressures from customers and sponsors to ‘professionalise’. All this has to be accomplished whilst keeping a diverse range of stakeholders happy and maintaining the SE’s vision firmly on its original social mission and goals.

The need for more and better research to support practitioners, policy makers and those seeking to learn more about SE is obvious. The current developments underway to address this need, including the establishment of the new UK research centre and associated ‘capacity building clusters’ during 2009 and the Social Enterprise Journal’s re-emergence as a refereed journal within the Emerald stable, make this a very exciting time for the field. As well as more research, we also need more nuanced research to address a key theme that runs throughout the SE research literature concerning their diversity in terms of origins, aims, organisational characteristics, ways of operating and managing, development paths and market sectors. This diversity has a number of implications. It makes it important that SE scholars move beyond presenting definitions of SEs that reflect one particular type (or sub-set). SEs are often not-for-profit, community based, employment focussed, small, entrepreneurial, innovative, collaborative or democratically run. Such characteristics may be typical and even desirable, but they do not make an organisation a SE and the absence of any one of them does not preclude other forms of organisation from being considered a SE. Acknowledging the diversity within SEs, moving beyond the definitional debates and recognising particular sub-types of SE for what they are, will allow for a better understanding of different types of SE, and of the differences and similarities that exist amongst and between them, to emerge. This in turn will help in identifying more clearly areas of commonality with different types of conventional/commercial enterprises, and in identifying opportunities for the effective transfer of knowledge from the mainstream business literature. This could help to address the systematic weakness that Jones et al. (2007) note in the current SE literature, of a failure to transfer applicable knowledge from the literature on the private sector.

Understanding how much knowledge SE can draw from conventional business wisdom requires an understanding of another theme running through the SE literature concerning their

16 distinctiveness. There are many ways in which SEs tend to differ both from their conventional, commercial counterparts, and from other types of third sector organisations. The key defining difference from commercial sector organisations reflects the contrast in their primary objectives (towards the satisfaction of the needs of direct stakeholders, ie shareholders, customers and managers through the generation of customer satisfaction, profit and growth as ends, versus the furthering of social or environmental aims which may or may not be served through the generation of profit). This makes comparative research involving commercial, primarily-for- profit enterprises and social, primarily-for-social benefit enterprises crucial to determine where the differences and similarities lie. A clear understanding of these issues will answer the questions of (a) how much conventional business school wisdom can be translated and applied directly to SEs and (b) where the unique features of SE lie and where future dedicated research efforts need to concentrate. The comparative studies by Austin et al. (2005), Brown and Murphy (2003) and Shaw and Carter (2007) all provide important contributions to this understanding, but further comparative research is needed. Developing appropriate comparisons may also require a more nuanced understanding of conventional businesses amongst SE researchers. There tends to be a simplistic assumption that commercial businesses are profit maximising, and an emphasis on lessons drawn from the largest and most successful companies that may have little resonance with the broader business population which is dominated by smaller companies. It may be that SEs will have the most to learn, not from the ‘usual suspects’ in the commercial sector, but from small firms and family businesses in particular, and from commercial businesses which also try to balance non-commercial dimensions or values (e.g. many commercial firms in craft, creative or highly traditional industries).

Ultimately one aspect of the future development of the SE research agenda may include new opportunities for commercial businesses to learn more from innovative and successful SEs. The great management challenge for the 21st Century is to create more environmentally and socially sustainable economies, communities and enterprises. It is perhaps telling that emerging efforts to explore what a more sustainable society might look like (for example WWF’s One Planet Economy initiative) have an explicit and central role for SEs. We know that the old models of production, consumption and business have contributed to major increases in material wealth but also to a paradoxical failure to improve our perceived happiness and quality of life (Layard,

17 2005). Future SE research may hold the key to resolving that particular paradox, and in generating new concepts of business that we can all learn and benefit from.

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