Social enterprise (SE) has appeared as the new way to describe the variety of organizational forms and also the entrepreneur approach which mainly reflects the social responsibility in the activities of enterprise. It is defined as both economic aspects of the future and the approach related to the corporate social responsibility (London and Morfopoulos, 2010). Confusion has arisen in terms of its nature and contribution to the changes occurred in the business practice. Recently, numbers of attempts have been made in academic context for the purpose of defining the social enterprise sector.
There is issue in acknowledging the social contribution and there is also lack of recognition for innovative approach to the public service delivery (Dart, Clow and Armstrong, 2010). Arrival of social enterprise Mark in the United Kingdom takes place among these difficulties and concepts. In UK, it is very difficult to create the conceptualization of social enterprise that is adequate for the purpose of sector mapping, and there is understandable interest in the Social Enterprise Mark.
The social enterprise is defined as an organization that mainly applies the commercial strategies for enhancing the improvements in the financial, social, and environmental sector. In other words, these organizations mainly aim at enhancing the social benefit which is accompanied with the profit maximization of external shareholders.
The main aim of this assignment is to discuss the arguments in favor and against of view that social enterprises should be “promoting socialized and democratic ownership, governance and management”. Structure of this essay includes the arguments which favor this statement and the arguments which are against the statement. At the end, brief conclusion is stated which concludes the assignment.
Starting from the fact that social enterprise is completely different from the public, private and nonprofit organizations (Royce, 2007). The process of defining the concept related to the social enterprise within the literature takes into consideration the identification of different definitions of this concept, and the confrontation of the identified definitions by common and particular components and gives shape to the common definition, based upon the analysis results.
Social enterprise mainly represents the type of business or private activity which is accompanied with the social purpose such as it is the combination of the social exclusion or unemployment. It is based on producing and giving the public goods and services and it is sustainable in reinvesting the excess in this activity. It is characterized by the high level of social responsibility and also the particular participation at the level of stakeholders.
Social enterprise conduct its functions in every industry and sector in the UK such as from retail sector to recycling operations, housing to education, etc. these organizations exist at all the places such as in the communities, high streets, etc. These organizations give tough competition to other companies in their respective areas (Social Enterprise UK, 2011).
Social enterprise is deemed as hybrid organizations which mainly focus on combing their social mission with the business venture (Battilana & Lee, 2014). They are neither considered as non- profit organizations and not considered as only profit organizations, as it includes the aspects of both even though it is legally structured either as the non-profit or the profit organization. In other words, this organization reflects the element of both profit and non-profit organizations (Haigh & Hoffman, 2014). Those social enterprises which are successful embedded the passion, values, and social obligations of the non-profit organizations and efficiency of the profit organizations. It can be said that, SE gives the ray of hope in reducing and resoling the social problems such as moral and financial injustice, environmental degradation, poverty, etc. (Ebrahim, Battilana & Mair, 2014).
It must be noted that, Se are based on the recognition that it gives innovative solutions to different type of social issues, as these issues are not emerged from markets. There are number of SE which operates its function like the mainstream businesses but transfer their profits in terms of social causes. There are number of social enterprises which internalize their social mission, as their central driver is the social responsibility because it is the only aim for which they operate the business. SE makes efforts to give employment to those people who are long disconnected from their jobs, and because of this extra time and cost is involved in this business. Sometimes, social enterprise is the most complex format and also costly to run the business. Other easier methods and formats are present for conducting the business and make the profit.
SE are not considered as normal organization which mainly aims to create the profits, as it is the organization for which essential elements are framed by the government of UK. In other words, SEs needs to meet these essential elements for operating its functions-
SEs further reflects number of values and dimensions which fulfill its criteria of the social obligations. Some of these values which are reflected by the SEs are defined below—
From the above facts, one thing is clear that these organizations focus on the social innovation for ensuring the welfare of the society and individuals as whole. Social innovation is the overarching concept which incorporates the range of organizational and inter-organizational activity which is mainly designed for addressing the serious issues of the society. From the point of view of organizations, social innovation includes three core organizational processes that are social entrepreneurship, social intra-preneurship, and social extra-preneurship. Technology plays important role in reshaping this idea of social innovation, but question always arise that whether digital technology is the alternative to the face-to-face relationships that have been considered as the most important element for the social organizations. It can be said that, technology cannot be the alternative for the same but it is the important element which explores the functioning area of the SEs and help them in connecting with the maximum people. This can be understood with the help of example, one of the biggest shifts in the social entrepreneurship landscapes over the past two decades as it have been move from thinking about the SE as rooted in the communities of place, which is exemplified by the local issues and local solutions to the SE in the form of technology entrepreneurship which is concerned in developing the inspired digital solutions to the social challenges across the globe (Tracey & Stott, 2017).
There are number of debates occurred on the public sector reform in terms of political, academic, administrative, and business areas which mainly aims at identifying the successful models in developing the public sector. These debates result in the formulation and application of the emergent models in the public sector reform from the traditional formulations of the public administration to the new public management model.
While referring to the social enterprise literature, the authors consider the opinion of the renounce authors, which mainly places the concept of social entrepreneurship among the three different societies of sector that are public, private, and non-profit sectors. This address the following proposals-
Some important literature findings consider the integration of the social enterprise domains within the models of new public management and the new public governance. Through the framework of the new public management, literature states the argument that the social enterprise is the product of the tension between the attempts to reform the public sector through the introduction of the private sector management rhetoric and radical responses to those which make attempts by local politicians and community entrepreneurs accompanied with the social sympathies.
On the other hand, Italian literature proposes the consolidation related to the public governance which is paradigm through the development of social enterprises incubators. By recognizing these two perspectives and models, the present research adopts the second perspective of consolidating the public governance through the SE. This approach is argued by the approach of SE at the crossroad between public, private, and non-profit sectors. That position which goes in line with the current theoretical debates related to the new public governance clearly reflects the governance and effective management of SEs.
There are number of reference models for governance or management of SE in UK, and these models are underlined by European Commissions in Europe 2020 strategy. This strategy is the one of the three priorities of European governance for smart, sustainable, and inclusive economy. These models ensures the inclusive growth, a high employment economy delivers the economic, social, and territorial cohesion (European Commission, 2013). In terms of achieving the stated objective, this strategy not only integrates the social economy and its basic institutions that is SE. SE is deemed as medium and long term solutions for the good governance at the time of crises and post crises, as it is elaboration of action plans in the domain of SEs at European level which has its background in the national experience and traditions. This happens by recognizing the fact that British, Italian and French models are references models in the region ((European Commission, 2013).
The most important model in this context is the British model, as this model of SE represents the reference model at both European and international level. This status of governance of SE is explained by the expansion of SE in UK, the majority members of SE choose the third way in context of achieving the goals related to social and environmental. These organizations are not prioritizing the financial profit. The SE has clear goal at national level, and this is mentioned in reports and networks-
SE does not aim to create the shareholder value, as these organizations exist to create the social or environmental value. They create the value through trading activities and focus on generating the wealth for the communities. However, like any other business organizations, these organizations also seek to create the profit. The actual difference occurred in the fact that why these organizations trade, how these organizations work, and what these organizations do with the profit. In other words, most important element of success for SEs is the social impact of these organizations.
Support is declared by the British Government in terms of developing the SEs in the year 2001 by creating the SE unit in the Department of Trade and Industry. In the year 2011, department of business, innovation an skills elaborate the guides in terms of the legal forms of SE. This guide highlights the following categories such as Category 1 – Unincorporated forms and Category 2 – Incorporated forms.
On the basis of the above facts, it can be said that all these arguments clearly state that social enterprises promotes the socialized and democratic ownership, governance and management.
However, there are some issues also in terms of aims and objectives of SE, which means, there are number of the major issue now is to build on this through the opening up of public procurement on a wider scale, especially major institutions like local authorities and the NHS responsible for billions of pounds worth of contracts, but which are criticized as reluctant to look beyond their, mainly private sector suppliers, because of (unwarranted) concerns that social enterprises lack financial viability and scale. Besides these legal forms of SE, literature identifies the philosophical structures as the modality of self-perception within the organizations such as social firms, development trust, community enterprises, and credit union (Brown, 2006). The actual perception of this model is that, SE gets the benefits from the maximum trust and support from the governments in all the areas of public service delivery and other reforms. The capacity of giving the improved public services, by combining the enterprise elements, social purpose, and customer focus, innovation at local level, impact, variety, and high quality services. Social and financial inclusion further includes the employment and training facilities for the marginalized persons (Chomsky, 2005). This is the major concern for the SE, because lack of financial resources narrows down the reach and approach of these organizations, as it directly or indirectly affects the growth of the business.
There are number of social enterprises which are generally conducted by passion, as owners find the new idea for resolving the social issues and they have capability to influence others by their vision. However, the biggest issue in this context is the innovations. As these individuals are sticks to their own idea and resist the innovation. This Approach of individual’s results in the lack of innovation and resist the growth of the SE. Owners are so deeply connected by their own ideas that they believe that budget lines will be created to fit their products. The owners want to others to follow only their idea and do not consider the idea of any other person effective. In other words, they create the invisible autocratic leadership in the society.
Conclusion
Social enterprise (SE) has appeared as the new way to describe the variety of organizational forms and also the entrepreneur approach which mainly reflects the social responsibility in the activities of enterprise. Arrival of social enterprise Mark in the United Kingdom takes place among these difficulties and concepts.
Social enterprise is deemed as hybrid organizations which mainly focus on combing their social mission with the business venture (Battilana & Lee, 2014). They are neither considered as non- profit organizations and not considered as only profit organizations, as it includes the aspects of both even though it is legally structured either as the non-profit or the profit organization. It must be noted that, Se are based on the recognition that it gives innovative solutions to different type of social issues, as these issues are not emerged from markets. There are number of social enterprises which internalize their social mission, as their central driver is the social responsibility because it is the only aim for which they operate the business. Social innovation is the overarching concept which incorporates the range of organizational and inter-organizational activity which is mainly designed for addressing the serious issues of the society.
Some important literature findings consider the integration of the social enterprise domains within the models of new public management and the new public governance. On the other hand, Italian literature proposes the consolidation related to the public governance which is paradigm through the development of social enterprises incubators. By recognizing these two perspectives and models, the present research adopts the second perspective of consolidating the public governance through the SE. This strategy is the one of the three priorities of European governance for smart, sustainable, and inclusive economy. These models ensures the inclusive growth, a high employment economy delivers the economic, social, and territorial cohesion. Support is declared by the British Government in terms of developing the SEs in the year 2001 by creating the SE unit in the Department of Trade and Industry. In the year 2011, department of business, innovation a skills elaborates the guides in terms of the legal forms of SE. This guide highlights the following categories such as Category 1 – Unincorporated forms and Category 2 – Incorporated forms.
References
Battilana, J., Fuerstein, M. & Lee, M. (2016). New Prospects for Organizational Democracy? How the Joint Pursuit of Social and Financial Goals Challenges Traditional Organizational Designs. Available at https://www.stolaf.edu/people/fuerstei/Battilana-Fuerstein-Lee-New%20Prospects%20for%20Democracy.pdf. Accessed on 3rd November 2018.
Brown, J. (2006). “Designing Equity Finance for Social Enterprises”, Social Enterprise Journal, vol. 2(1): 73-81.
Chomsky, N. (2005). Government in the Future, New York: Seven Stories Press.
Dart, R., Clow, E. and Armstrong, A., (2010) “Meaningful difficulties in the mapping of social enterprises”, Social Enterprise Journal, 6(3): 186 – 193.
Ebrahim, A., Battilana, J. & Mair, J. (2014). The Governance of Social Enterprises: Mission Drift and Accountability Challenges in Hybrid Organizations. Research in Organizational Behavior, vol. 34, 81–100.
European Commission, Directorate General of Employment, Social Business and Social Inclusion, (2013), Social Economy and social entrepreneurship. Social Enterprise Guide, Vol. 4, Luxembourg.
Haigh, N. & Hoffman, A.J. (2014). The New Heretics: Hybrid Organizations and the Challenges They Present to Corporate Sustainability. Organization & Environment, vol. 27 (3), 223–241.
London, M. and Morfopoulos, R. G. (2010). Social Entrepreneurship, New York: Routelege.
Nicholls, A., (2006). Social Entrepreneurship. New Models of Sustainable Social Change, Oxford University Press, New York, SUA.
Royce, M., (2007). Using human resource management tools to support social enterprise: Emerging themes from the sector, Social Enterprise Journal, Vol. 3(1).
SE-Code, (2018). The Code. Available at https://www.se-code.net/wp-content/uploads/2018/04/SE-Code-Flyer18.pdf. Accessed on 3rd November 2018.
Social Enterprise UK, (2011). Fight back Britain. A Report on the State of Social Enterprise survey 2011, Social Enterprise UK.
Tracey, P. & Stott, N. (2017). Social innovation: a window on alternative ways of organizing and innovating. Innovation: organization & Management, 2017, vol. 19(1), 51–60.
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