The Internationalisation of FairShares: where agency meets structure in UK and US company law

IntroductionA European Project (“FairShares Labs for Innovation in Blue and Social Enterprises”) creates an urgent need for further study of the FairShares Model (FSM) (Ridley-Duff, 2015). Between November 2016 and March... [ view full abstract ]

Introduction

A European Project (“FairShares Labs for Innovation in Blue and Social Enterprises”) creates an urgent need for further study of the FairShares Model (FSM) (Ridley-Duff, 2015). Between November 2016 and March 2019, enterprise hubs using the FSM to guide social enterprise development will be created in Hungary, Croatia, Germany, Netherlands and the UK. This paper develops knowledge of what happens during the internationalisation of the FSM based on a study of two early adopters.

Statement of the empirical or theoretical question

The FSM represents one of many attempts to frame the initiation and development of social solidarity enterprises (Ridley-Duff, 2015; Ridley-Duff and Bull, 2016). In single-stakeholder social enterprises, decision-making power is entrusted to philanthropists, social entrepreneurs, boards of directors or trustees that act as sovereign powers. Solidarity enterprises operate on a different logic, drawing primarily on the democratic traditions of the co-operative movement, but updating the concept to advance ‘new co-operativism’ as described by Vieta (2010):

• Responses by working people and local groups to failures in neo-liberalism;
• Innovations informed (but uninhibited) by pre‑existing co-operative sentiments;
• Wealth distribution mechanisms that achieve sustainable development goals;
• More horizontal labour relations, and more egalitarian distributions of surplus;
• A stronger community orientation, embracing social objects and goals.

A common argument against solidarity principles is conflicts between stakeholders that lead to less efficient resource use and cumbersome governance (Griffith, 2009). Nevertheless, the success of co‑operative and mutual enterprises that involve both savers and borrowers, both producers and consumers, and both individual and organisational members, provides a counter narrative (see Whyte and Whyte, 1991; Ridley-Duff and Bull, 2016). Arguments regarding the viability of multi-stakeholder enterprises have been strengthened through Nobel Prize winning work in the field of economics. Oström’s works on the institutions of collective action offer an articulate account of design principles that producers and consumers can follow to successfully collaborate in democratic assemblies. Lund’s (2012) argument goes further: solidarity can itself be the basis of a business model and this is now being realised through the creation of platform co-operatives (Scholz and Schneider, 2016).

Methodological approach

The Articles of Association (ByLaws) registered by the founders of two FairShares companies (a platform co-op and developmental coaching company) were compared to model rules sent to them by the FairShares Association Ltd. Following a process of naturalistic inquiry, each variation was coded with NVivo then sent to the company founders who were interviewed to develop a rich picture of the rationales for changing model rules. Findings were confirmed through a third round of coding email trails and document annotations during the finalisation of company registration documents.

Main argument

Articles of Association (Bylaws) represent an artefact in which the dialectical relationship between agency and structure is concretely expressed. The value of studying them goes beyond the generation of a rich description to the development of a theoretical perspective on the way solidarity enterprises practise new co-operativism (Vieta, 2010; Lund, 2012). This paper presents a rich description and conceptualisation of the factors that influence social entrepreneurs as they dis-embed and re-embed ideas (c.f. Jack and Anderson, 2002; Defourny and Nyssens, 2016). In doing so, a new - empirically-informed - conceptual framework emerges that can be deployed to sensitise practitioners and researchers about the transfer of social entrepreneurial ideas.

Main conclusions and relevance

The paper presents two contributions: a rich picture of the way social entrepreneurs can deploy the FSM in the legal contexts of the UK and US, and; a conceptualisation of the dialectical relationship between social entrepreneurial agents and institutional structures. These findings have a wider relevance as they explicate the agency-structure dynamic during the formation of multi‑stakeholder social enterprises.

References

Defourny, J. and Nyssens, M. (2016) ‘Fundamentals for an international typology of social enterprise models’, ICSEM Working Papers, No. 33, Liege: The International Comparative Social Enterprise Models (ICSEM) Project.

Griffith, J. (2009) ‘A cautionary note on stakeholder theory and social enterprise’, Philosophy of Management, 8(3): 75-78.

Jack, S. and Anderson, A. (2002) ‘The effects of embeddedness on the entrepreneurial process’, Journal of Business Venturing, 17(5): 467-487.

Lund, M. (2012) ‘Multi-stakeholder co-operatives: Engines of innovation for building a healtier local food system and a healthier economy’, Journal of Co-operative Studies, 45(1): 32-45.

Ridley-Duff, R. (2015) ‘The FairShares Model – an ethical approach to social enterprise?’, Econviews - Review of Contemporary Business, Entrepreneurship and Economic Issues, 28(1): 43-66.

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

Scholtz, T. and Schneider, N. (eds) (2016) Ours To Hack and Own: The Rise of Platform Cooperatives, New York/London: OR Books.

Vieta, M. (2010) ‘The new co-operativism’, Affinities, 4(1). Available at: http://affinitiesjournal.org/index.php/affinities/article/view/47/147.

Whyte, W. and Whyte, K. (1991) Making Mondragon. Ithaca, NY: Cornell University Press/ILR Press.