Building a Financially Sustainable Economic Ecosystem of Social Enterprise based upon a Community Development Approach

IssueEconomic sustainability is a major issue for social enterprises (SE’s). The reasons include: 1) Sustainability through earned income may not be an initial consideration because the SE has a source of non-earned income... [ view full abstract ]

Issue

Economic sustainability is a major issue for social enterprises (SE’s). The reasons include: 1) Sustainability through earned income may not be an initial consideration because the SE has a source of non-earned income through a grant, a subsidy, or a similar mechanism.  Sustainability becomes an issue if the non-earned income source is reduced or eliminated. 2) SEs are often under-capitalized with potentially successful businesses unable to overcome liabilities of newness and other “critical period” hazards (Freeman, Carroll & Hannan,1983; Stinchcombe, 1965).  3) SE businesses are often started by people with limited business experience, and the business selected may be based on factors other than financial viability, e.g., the skills and interests of the participant workers. 4) Social enterprise businesses often are created to employ or train people with workforce disadvantages. While the SEs can be a rewarding interpersonal and democratic work environment, the business itself still must be viable, especially when the social enterprise is competing with traditional businesses on price/efficiency.

Methodology 

Utilizing the research of the authors, this paper adds to the community development approach to SE.  The research is based upon semi-structured interviews with various participants in the production and sale of outsider art, and on site visits.

Argument

SEs commonly compete with traditional businesses and so face the same market and competitive pressures of their competitors.  However, social enterprise businesses are often started with subsidies that are time-limited and uncertain; are undercapitalized and so unable to overcome developmental hazards; are started by and populated by individuals with little business experience; and may create businesses that compete on efficiency and price, oftentimes employing social enterprise workers who have workforce disadvantages that affect efficiency.

Mandiberg & Warner (2012) described a community development model for choosing businesses that can be supported by a geographic and nongeographic community’s economy, specifically addressing economic sustainability.  This paper describes another community development approach through linked SEs that are built upon the untapped skills and products already produced within communities of social service recipients.

The serious collection of art produced by people with psychiatric and developmental disabilities (Art Brut/Outsider Art) in a systematic way first occurred with the publication in 1921 of Ein Geisteskranker als Künstler: Adolf Wölfi (A Psychiatric Patient as Artist: Adolf Wölfi) by Morgenthaler, the publication of Bildnerei der Geisteskranken (Artistry of the Mentally Ill) by Prinzhorn in 1922, and the collecting of this art by the French artist Jean Dubuffet in the late 1940s.  Dubuffet’s collection constitutes the core of the Collection de l’Art Brut, a museum founded in Lausanne, Switzerland, in 1976.  Art Brut (“raw art”) is the term coined by Dubuffet.  

Social enterprises must carefully evaluate the market in which they wish to participate. The market for outsider art has increased tremendously in the past 25 years (Tarmy, 2016), especially since the creation of the Outsider Art Fair in NYC and Paris beginning in 1992.  However, success in the market has been limited to well-known outsider artists or those promoted by traditional galleries. That is, there is a disconnect between the increasing production of outsider art and the increasing demand on the part of the market.

The paper presents a research-generated table that elaborates the infrastructure that exists for professional artists, including art schools, workshop space, galleries, agents/representatives, museums, etc., and what of that infrastructure also exists for outsider artists as a basis for then discussing SE infrastructure development. 

Conclusion

The paper elaborates a proposals on how to close the gap between “product and market,” using the example of outsider art.  The proposal builds upon existing SE infrastructure in communities of social service recipients and their service providers using examples from North America, Asia, and Europe.  The paper concludes with an abstracted model for developing linked social enterprises based upon a community development approach.  This approach avoids some of the hazards faced by some social enterprises, especially those competing with better capitalized businesses and businesses that have survived their own liabilities of newness.

 References

Freeman, J., Carroll, G. R., & Hannan, M. T. (1983). The liability of newness: Age dependence in organizational death rates. American sociological review, 692-710.

 Mandiberg, J.M. & Warner, R. (2012). Business Development and Marketing within Communities of Social Service Clients. Journal of Business Research, 65(12), 1736-1742.

Stinchcombe, A. L. (1965). Social structure and organizations. In J. G. March (ed.), Handbook of Organizations (p. 153-93). Chicago: Rand McNally.

Tarmy, J. (2016).  Outsider Art goes mainstream.  Bloomberg.  Retrieved January 6, 2017 https://www.bloomberg.com/news...