group of enterprises which had an economic impact but which had not been supported by LEDU and the emergence of a vocabulary to describe them(‘ notforprofit’,‘ social’ etc). Had social enterprises been excluded because there was perceived to be a clear boundary between those enterprises which might be classed as‘ third sector’ and other enterprises considered to be in the‘ private sector’?
The new perception may have dispelled that previously held assumption but has it nevertheless created new myths? Have we gone from a position of presuming that social enterprises have no real economic significance and therefore are not worthy of serious consideration to one of crediting them with special powers which make them different from other businesses?
Have we adopted some misleading assumptions about profit?
Is there still a feeling that businesses classed as being in the private sector are essentially profit driven and others are not?
Milton Friedman once famously proclaimed that‘ the social responsibility of businesses is to increase their profits’ – but how many supposedly private sector businesses do pursue financial returns above all else?
Even the detail of Friedman’ s original article made it clear that he was talking about the hired executives of large shareholder owned corporations so his remarks only applied to relatively few businesses.
Is there still a feeling that social enterprises somehow don’ t to have to conform to the same rules and are therefore easier to sustain?
For instance because it seems to be thought that they are not profitdriven it is also supposed that, unlike private sector businesses, they don’ t have to make a profit. Instead the reality is that, if they are to survive, all enterprises have to generate enough income to cover their costs, including the remuneration of those working for them, and even among private sector businesses many do no more than that.
Nevertheless, and somewhat perversely, this supposed absence of a profit imperative is often combined with the belief that social enterprises can, and often do, make enough money to fund other activities which allows some people to see them as the answer to grant reductions.
Thus community and voluntary sector bodies which have been accustomed to receiving grant funding are instead being urged and supported to start social enterprises to generate the income they need.
And also is there now a perception that somehow, because of their social aspect, social enterprises can directly help to address social disadvantage? One way it has been suggested that this might happen is through the creation of social capital, and the thinking
behind that might be summarised as:
• Disadvantaged communities lack social networks and addressing that lack has been highlighted as the main method to empower communities.
• Social capital is what is needed to build social networks and social enterprises facilitate the development of social capital by encouraging mutualism amongst communities through grassroots empowerment based on“ active participation” and a“ stakeholder society”.
• Therefore, in a somewhat circular conceptualisation, the establishment of social enterprises should help to address community disadvantage.
This claim, in effect, reduces to the assumptions that the key lack is often social capital and that the social economy creates social capital.
From these assumptions the conclusion is drawn that the social economy will therefore help disadvantaged communities.
However the relationship between social capital and disadvantaged communities depends on just what is meant by social capital, because it is a very diverse concept.
There may be grounds for saying that there is something which can be referred to as social capital which is often lacking in disadvantaged communities and which is probably an essential component for improvement.
Whether it alone can effect improvement is much less certain and whether social enterprises create such social capital is also debatable.
Again, depending on which meaning of social capital is used, it might be argued that all enterprises can create social capital, just as all businesses can create financial capital, but they can also lose it and generally they only create it when the conditions are particularly favourable.
Examined in this way therefore the“ social enterprises help disadvantage” claim does not seem to be particularly strong.
Indeed a counter argument is that social capital is needed to start any enterprise, just as financial capital is needed, and, as disadvantaged communities often lack social capital, they are not good places in which to start any enterprise, even a‘ social’ one.
Therefore, while there are good reasons to mark 30 years recognition for social enterprise, is this also a good time to correct our views on what we have recognised?
Despite lingering presumptions, social enterprises are not a distinct, easier to manage, part of the economy which is subject to different rules and somehow able to address social disadvantage.
Instead they are part of the broad heterogeneity of enterprise – and, when distinguishing between types of enterprise, size is often a more meaningful mark of difference than sector. Small‘ social’ enterprises have much more in common with other small businesses than they do with large organisations supposedly in the same sector.
They are enterprises and often the label‘ social’ conveys a distinction which can be very misleading.
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