Important problem and clear motivation: The study aims to provide descriptions and typologies of social enterprise models, as they have emerged in Indonesia as transformation process from non-government organization.
Theoretical grounding: Underpinning Gidden’s structuration theory, the process of transformation involves active constituting process along with active subjects (Gidden, 1984). To deal with mounting social problems, the valuable creation models of social enterprises have emerged in the context of social and environmental demand- and supply- side development (Nicholls, 2006). The country-specific typologies seems to be against the argument of a single typical model, while the worldwide level of comparison indicates that the aggregate model of social enterprise shed light on key divergences (Defourny & Kim, 2011). The complex landscape of social enterprise phenomenon calls for diverse approaches.
Method: This study uses interpretative approach to develop new phenomenon in social enterprise. Document review and in-depth interviews with nine social enterprises in Indonesia context are carried out to come up with content analysis. In order to get common features of the transformation process of social enterprise models, this study uses multiple case studies with two different political contexts: authoritarian and democratic regime. This approach allows open-ended questions to identify country-specific typologies of social enterprise model.
Contribution: The present analysis is part of ICSEM project for country report. This study responds research gap proposed by Defourny and Kim (2011) that various initiatives to promote social enterprise is part of the new “social enterprise phenomenon”, which call for research. The contribution to social enterprise theory building comes along with inductive research from Indonesia perspective.
It is clear that Asian financial crisis 1998 followed by South East Asia Tsunami 2005 raised a rapid growth in demand side, while post the collapse of the Indonesian authoritarian regime has brought more democratically elected governments. Thus, this circumstance provides support to the growth of new social goods in supply side along with international support. Hence, the transformation process from NGO to social enterprise springs from the exit strategy to gain organization sustainability. The initiatives came with the concept of social enterprise from Western Europe and the USA.
The government and funding organizations provide opportunity to the trading NPO model and cooperation. During the authoritarian regime, the government provided financial support to cooperation and hired trading NPO to extend public services. The concept of non-profit organization was more accepted for social activities during the Soeharto Era, which strongly against the communist principle. The emerging trading NPO model came from program-oriented activities provided by government agency, as education and health sector became the most popular activities during that time. In addition, cooperative was the only legal framework, which was allowed to make profit for boosting the welfare of its members. However, this type of business became political tools, as the government flooded financial support to control the organizations.
Turning the democratic era, the capacity building programs to strengthen civic social organizations emerged to respond the demand of democratic movements. A number of international funding organizations provided valuable resources to support the movement. As the funding organizations moved to other less developed countries, the local NGO found difficulty to be sustainable. Many NGOs closed their operation, while some others tried to leverage their social movement to make profit for a reason of sustainability. This seems to be relevant with previous study that market is characterized by a paucity of resources (Domenico, Haug, & Tracey, 2010). Hence, community development enterprise become the most popular one.
This study indicates that transformation of social enterprise model occurs in Indonesia for some reasons. First is the financial sustainability. The transformation from traditional revenue-generation model to entrepreneurial mindset may come from the competition for funding and budget constraint in the third sector (Germak, 2013). Second is demand side, which is associated with community identity. Hence, the typical models of social enterprise do not only refer to organizational matters, i.e. institutional model, initiative approaches, but also follow the nature of the targeted group, such as religion, gender, and other local entities. Third, the transformation occurs to meet legal institutional system. In fact many social enterprise approaches still consider informal institutions for their activities.
Keywords: transformation, social enterprise model, political turbulence
