EC15: Social Enterprise

1. Definitions Marcus Thompson University of Stirling

so·cial en·ter·prise (n.)

 Any earned-income business or strategy undertaken by a nonprofit to generate revenue in support of its charitable mission. "Earned income" consists of payments received in direct exchange for a product, service or privilege. ( SE Alliance , 2005)

Official Definition

 

“A social enterprise is defined as a business with primarily social objectives whose surpluses are reinvested for that purpose in the business or in the community (rather than being driven by the need to deliver profit to owners and shareholders). There is no single model, but social enterprises include cooperatives,mutuals, employee owned businesses and private companies limited by guarantee. They are seen as having the potential to play a key role in delivery of public services and generating wealth and improving life in disadvantaged communities.” DTI

Characteristics

        gaining independence and autonomy through trading; entrepreneurial, innovative, risk taking behaviour; flexible and adaptable practices; customers and community focus; stakeholder engagement; democratic and participative management; delivering socially and/or environmentally as well as financially; and financially viable, gaining their income from selling goods and services.

DTI 2002

Social Enterprise:

a strategy for success, p16

Social Firms and Social Disadvantage         A Social Firm is a business created for the employment of people with a disability or other disadvantage in the labour market. It is a business which uses its market-orientated production of goods and services to pursue its social mission.

A significant number of its employees will be people with a disability or other disadvantage in the labour market. Every worker is paid a market rate wage or salary appropriate to the work whatever their productive capacity. Work opportunities should be equal between disadvantaged and non disadvantaged employees. All employees have the same rights and obligations. A Social Firm pays wages to its employees at or above the standard market rate for that job and all employees should have a contract of employment.

The business will be a viable concern, which operates in the open market. Social Firms will seek to involve employees in decision-making, and create opportunities for training and development, whilst fostering mutual support amongst employees. (Social Firms Scotland)

The Role of Social Firms

 "The long-established role of the social economy also known as the voluntary, community, or third sector - lies in social and economic issues. The bulk of its resources are directed towards the support of disadvantaged areas and groups. Organisations within the social economy are motivated by social purpose rather than profit, and while they are independent of the State, they are often partners with the public sector in the delivery of services in such fields as health, welfare, housing, training and education."

Dissimilarities with Commercial Enterprises

      They have broader objectives than those of commercial businesses, which are sometimes harder to specify, quantify and monitor. They have a larger number of stakeholders, often leading to more complex management structures. There is often a lack of straightforward 'bottom line', leading to difficulties in financial appraisal and, therefore, investments. They are driven by mission rather than profit. There is significant use of volunteers.

Income is from a broader range than just the marketplace.

Role of Social Firms in UK

      helping to drive up productivity and competitiveness; contributing to socially inclusive wealth creation; enabling individuals and communities to work towards regenerating their local neighbourhoods; showing new ways to deliver and reform public services; and helping to develop an inclusive society and active citizenship.

DTI, 2005