Social Enterprise in the United Kingdom

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Social Enterprise in the United Kingdom

• Bob Doherty (Sustainable Enterprise Research
  Group ) Liverpool Business school LJMU.

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Overview

• Growth
• Key Definitions
• Positioning
• Size
• UK Forms
• Training Needs Analysis

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Why Growth?

• Renewed expression of civil society
• Throughout Europe increasing number of
  initiatives led by a new entrepreneurial spirit
  based on social aims (Defourny Borgaza 2001)
• Economic and social inequality (Tickel and Peck
  2003).
• Demographic and social changes

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Definitions

• A social enterprise is a business with
  primarily social objectives whose surpluses are
  principally re-invested for that purpose in the
  business or in the community, rather than being
  driven by the need to maximise profit for
  shareholders and owners
• DTI, Strategy for Success 2002

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Definitions

• Peattie and Morley (2007) argue SEs are
  distinguished from other organisations by two
  attributes
• SEs trade in goods and/or services in a market
  (so that they are an enterprise and not simply
  a voluntary or community organisation)
• SEs primary purpose lies outside the commercial
  outcomes related to their trading of goods and/or
  services in a market (i.e. beyond the generation
  of profit or the growth of the enterprise
  itself). This is what makes them social.

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Key Issues

• There is no necessary reason why the standard
  business or plc should be the only enterprise
  model - Andrea Westall 2002 (Deputy Director
  NEF formerly Head of Policy at the Foundation for
  entrepreneurial Management)

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UK Diversity

• Social Enterprises are competing in a diverse
  number of market sectors including, health and
  social care, housing, childrens services,
  transport, food and farming plus environmental
  services and leisure (Westall and Chalkley 2007).
  

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Overview of the social economy

• Collection of organisations between the
  traditional private sector and the public sector
  (some times called Third Sector)

Social Economy
Social Enterprise
Socially Rep.Business
Private Sector
Gov.
Charities
VCOs
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The Locus of social enterprise
Source AMION Consulting 2001
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Social Enterprises

• Jones et al (2007) propose a distinction between
  established SEs (50 plus income from trade) and
  emerging SEs (lt50 or 25-49 income from trade).

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Social Entrepreneur

• Somebody who identifies and brings to life new
  business opportunities but who is motivated by
  public and social good rather than the need for
  personal profit
• Social Enterprise Coalition UK

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Social Entrepreneurship

• Global phenomenon
• Driven by new breed of pragmatic, innovative and
  visionary social/environmental activists and
  their networks
• Uses a mix of business, charity and social
  movement models to reconfigure sustainable
  solutions to community challenges (Nicholls 2006)

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Common Characteristics of Social Enterprises

• Enterprise Orientation- directly involved in
  producing goods or providing services to market,
  part of third sector but characterised as more
  entrepreneurial and self financing
• Social Aims- have explicit social aims such as
  job creation, providing goods or services.
• Social Ownership- based on participation by
  stakeholder groups
• (DTI- Strategy for Success SE Coalition 2002)

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Size of Social Enterprise in UK

• 55,000 social enterprises in the UK
• Generating more than 27 billion turnover
• More than 8 billion to GDP
• Social enterprises account for 5 of all UK
  businesses with employees
• (Cabinet Office 2006)

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Types of Social Enterprise in UK

• Development Trusts (www.dta.org.uk) community
  based regeneration
• Co-operative - associations of persons united to
  meet common economic and social needs
  www.cooperatives-uk.coop
• Intermediate Labour Market-providing training and
  work for the long-term unemployed.
• Trading arm of charities

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Types of Social Enterprise in UK

• Social Firms- providing employment and training
  to people with disabilities and other
  disadvantaged groups e.g COPE on Shetland
  (www.socialfirms.co.uk)
• Employee owned businesses are companies that are
  wholly or substantially owned by the people who
  work in them (www.employeeownership.co.uk)
• Community enterprises- geographical focus
• Environmental Community Enterprises

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Types of Social Enterprise in UK

• Leisure trusts- local authority in-house leisure
  services turned into social enterprises.
  (www.sporta.org)
• Housing associations social enterprises in
  charge of managing housing stock for socially
  excluded people www.housingcorp.gov.uk
• Credit Union providing access to finance for
  socially excluded, financial co-operatives owned
  and controlled by their members
• www.abcul.org/page/about/intro.cfm
• 100 Fair trade companies (www.fairtrade.org.uk)

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What are Community Interest Companies?

• Limited liability companies for social
  enterprises
• New Legal Form for social enterprise
• secure an asset lock for the community and
  focus on community benefit (Dunn and Riley 2004).
  
• Created by the Companies (Audit, Investigations
  and Community Enterprise) Act 2004 and the
  Community Interest Company Regulations 2005

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Why were CICs introduced?

• To protect the companys assets.
• To provide a strong new brand.
• To create a legal form specifically to meet the
  needs of social enterprises.
• Now over 2,000 CICs registered

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Social Economy is important because

• Job creation in new enterprises
• Contributes to efficient competition
• Offers potential for new forms of
  entrepreneurship
• Meets new needs especially of marginalised
  communities
• Favors local participation and voluntary work
• Enhances solidarity and cohesion
• Provides training and employment to disadvantaged
  communities

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Divine Chocolate Ltd
Philip Kumea
The story of how small scale cocoa farmers came
to own an equity share in a Fairtrade chocolate
company and its brands Divine and Dubble
Fairtrade Chocolate
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Political context

• Pearce explained The striking development of the
  last five years has been the growth in political
  and administrative support for Social Enterprise
  in the UK, especially since the 1997 General
  Election (Pearce 2003, pg. 91 )
• Third Way strategy
• Reform of public services, move towards
  contracting out services
• For voluntary and charity sector to become Social
  Enterprises

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SEJ

• To submit a paper please go to www.emeraldinsight.
  com/sej.htm
• Contact editorial team
• Editor R.doherty_at_ljmu.ac.uk
• Publisher Richard Whitfield rwhitfield_at_emeraldinsi
  ght.com
• Double blind peer review

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Ethics

• Ed Milliband (2007) also proposes that social
  enterprises put ethics at the centre of a
  business and not just as a bolt on. He argues for
  social enterprises to compete on the basis of
  ethical values

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Training Needs Analysis (TNA)

• Questionnaire sent to excellent range of
  stakeholders, over 50 organisations
• All different social enterprise forms and all key
  parts of sector represented
• 23 returned to date

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TNA Skills Pilot Results

• 15 different skill areas emerged

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Areas for improvement via Training

• Further explored by ranking

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Q3 Ranking of training

• Ethical Marketing came out as the most important
  area for skill improvement through training
• 20/23 respondents ranked it amongst their top 5
  areas
• Financial and social accounting Project
  Management also faired well
• with 11 / 23 respondents ranking these in their
  top 3
• Creativity and innovation appeared 7 times in
  respondents top 3 choices.

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Concluding Thoughts

• Social enterprises challenge the myth of the
  superiority of the private sector in efficiency
  and innovation
• The definition creates space and impetus for
  exploring new innovative models

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References

• The Emergence of Social Enterprise (2001)
  Defourny, Jacques Borgaza, Carlo Borzaga, Carlo
  (University of Trento, Italy), Defourny, Jacques
  (University of Liege, Belgium)
• Managing and Measuring Social Enterprises (2003)
  Paton, Rob Sage Publications SAGE PUBN INC
• Social Concern and Social Enterprise (2000)
  Gulliver, Kevin Brewin Books Limited
• Social Enterprise in Anytown (2003) Pearce John,
  Calouste Gulbenkian Foundation
• Value led Maket Driven, Social Enterprise
  Solutions to Public Policy Goals (2002), Andrea
  Westall
•  

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References

• Crane. A Matten. D (2004)
• Business Ethics, Oxford University Press
• Johnson, G Scholes K (2005) Exploring
  Corporate Strategy Prentice Hall, Europe
• http//www.accountability.org.uk
• Freeman, R.E. (1984) Strategic Management A
  stakeholder Approach. Boston Pitman
• Naylor J. (2004) Management, Second Edition
• Prentice Hall
• Weiss W. J. (2003) Business Ethics a
  stakeholder and Issues Management Approach, 3rd
  Edition, Thomson.

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Websites

• www.ippr.org
• www.socialenterprise.org.uk
• www.neweconomics.org
• www.dti.gov.uk/socialenterprise
• www.msei.org.uk
• www.theinnercity100.org/research
• www.kpk.pwp.blueyonder.co.uk
• www.concise.mdx.ac.uk