Sustainability in Social Enterprise: Enterprizing Organization or Enterprizing Manager?

Social Enterprises (SEs) have been conceptualised to be able to meet unmet social needs with innovative approaches, enabling them to deliver public services more effectively and profitably than ‘traditional’ third sector... [ view full abstract ]

Social Enterprises (SEs) have been conceptualised to be able to meet unmet social needs with innovative approaches, enabling them to deliver public services more effectively and profitably than ‘traditional’ third sector organizations. Whilst some examples have been published to support this ideal, a more critical literature is emerging, questioning the sustainability of SEs in the longer-term, due to tensions and complex strategies (Wallace, 2005; Lyon and Ramsden, 2009; Moizer and Tracey, 2010). Hence, the emphasis of our research has been to examine the factors and key issues which hinder social innovation within SEs and the implications for sustainability.

Two main research questions were proposed:
1. What are the factors and key issues which affect a SEs ability to be sustainable?
2. What characteristics enable social innovation within SE?

A multiple case study approach was adopted and ten English SEs were examined to identify factors affecting their profitability and financial sustainability. Data was collected via qualitative semi-structured interviews, with key informants from each SE. Five of the participating organizations were first-established by charitable organizations, and five by individual people. Additionally, an interview was conducted with a council commissioner to provide a policy context. Using a grounded theory approach, data collection and analysis occurred simultaneously.

Our findings indicated that the origins of the enterprise at start-up (i.e. whether it was established by a charitable organization or by an individual social entrepreneur) were significant. Charitable organizations which undertake SE activities were more prone to path dependent features of the parent charitable organisation, limiting social innovation. On the other hand, the public service providers established by individual people were in a more sustainable position and this appeared to be because of the role the entrepreneur played within the organisation. The social innovation occurring in the more sustainable organizations was attributed to the social enterprising activities implemented by the social entrepreneur and the relationships within their networks (Ayob et al., 2016). Therefore, it is the socially enterprising entrepreneurial activities, rather than the organisational form of ‘SE’, that was important.
We conclude that SE is a type of activity which hybrid organisations engage in to deliver a sustainable public service. Our findings are important because they question the usefulness of the current British model of SE which emphasises not the activities but the business form, i.e. that 50% or more of the enterprises total income comes from income generating activities rather than grant aid (Defourney and Nyssens, 2010). We recommend policy makers and researchers to place more focus upon exploring the SE activities which support innovation in public service delivery, rather than on the governance and legality of what constitutes an ‘SE’.

Consistent with this year’s conference theme, our findings shift the focus of research towards identifying and critically analysing organisational activities supportive of sustainable public service delivery, thus contributing to developing a more coherent theory of ‘SE’ grounded in public management theory.