Keywords: social enterprise, stakeholder, informal, social value, social cost Abstract Social entrepreneurship (SE) is defined as the processes and mechanisms to recombine resources in new ways to create social value with... [ view full abstract ]
Keywords: social enterprise, stakeholder, informal, social value, social cost
Abstract
Social entrepreneurship (SE) is defined as the processes and mechanisms to recombine resources in new ways to create social value with positive externalities at the societal or systemic level (Santos, 2012; Mair & Marti, 2006). While there has been no precise definition on what a social enterprise is (Short et al., 2009) and it remains a contestable concept (Choi & Majumdar, 2014), scholars more or less agree on the “social value” creation as its key defining characteristic. Although this consensus has been helpful in pushing the field forward, this also leaves many unanswered questions. In particular, when scholars refer to “social value creation”, there is a lack of articulation of: 1) from whose perspective the social value creation is being viewed (the vantage point issue); 2) for whom the social value creation is intended for (the stakeholder issue); and 3) in what ways are social value are created (the formality issue).
These questions are important as they ultimately influence how we classify the real social enterprises from organizations that appear to be like social enterprises; and critically what social performance indicators should be used. In this article, I argue that social enterprises are highly heterogeneous groups of organizations, a fact which often raises debates as to what social enterprises actually are. This heterogeneity is driven by a number of forces including 1) the clash of values that may arise in combining economic logic and welfare logic (Eikenberry & Kluver, 2004; Zahra et al., 2009), 2) the decoupling of organizational ethical principles and actual implementation (MacLean et al., 2014), 3) the degree of entrepreneurial orientation, and 4) the temptation of egoism (Longnecker et al., 1998).
Specifically, social enterprises may create social value and costs depending on the vantage point used to view their purposes, processes and consequences. I propose a social accounting view of social enterprises as broadly an equation of social value creation minus social costs, which generates net positive or negative social performance. I argue that social value creation is a continuum with a continuous value/scale rather than categorical (yes or no). At one extreme, social enterprises may create "net negative social value", when the social costs created are high or higher than the social value created. At the other extreme, they can create "net positive social value", when the social value created is higher than the social costs.
A Social Accounting Model of Social Enterprises
Social enterprises can be distinguished on the basis on how they manage their relations with stakeholders and which stakeholders they aim to satisfy. Some social enterprises focus on serving a limited and exclusive number of stakeholders while others aim to serve the broadest stakeholders in the society. Some aim to create win-win relations among various stakeholders in the society, while others create win-lose relations with most of the stakeholders in the society. This boils down to the distinction between a limited stakeholder orientation versus inclusive stakeholder orientation as a dimension to distinguish the various types of social enterprises above.
A second dimension of distinction is the extent to which a social enterprise is organized around informal versus formal mechanism in performing and delivering its hybrid mission (reference). The degree of formality of an organization may both reflect and influence the purpose, process and potential impact it will bring to the world. Moreover, the informality ways of organizing in social enterprises may open opportunities to pursue negative value creation and pursue the interests of exclusive stakeholders only.
Based on the stakeholder orientation and formality of organizing, I propose a typology of social enterprises, as shown in the figure below.
Figure 1
A Model of the Heterogeneity of Social Enterprises: A Social Accounting View
Word count: 595 (excluding title, references, figure)
