A recognition that socially responsible entrepreneurship can enhance the contribution of employees has existed as a concept for many years.
As far back as the mid 19th century, the pioneering philanthropist and entrepreneur, William Hesketh Lever built a village for his workers outside of Liverpool, called Port Sunlight, setting out to provide utopian quarters for his workforce, sharing his prosperity by creating the village around his factory paid for and maintained by the company's profits. This in return would create the best of relationships between the company and its employees: they would work hard as it was in their own as well as his interests.
At the end of world war II, and the heightened prosperity, coupled with the growth of the multinational corporation, many believed the corporation would become the new ‘community’, through which individuals would belong and social tasks (e.g. health, education) would be undertaken. What this did not take into account was that the majority of social problems lay outside of the corporation.
With the government stretched to capacity, a new form of organisation needed to emerge to tackle these social problems – the social enterprise.
The social enterprise was a catch all phrase used to describe many forms of organisation with a social mission, which tended to encompass those organisations with a not for profit status, but trading as if they were a business. Some organisations were not for profit, others were however wealth generators or for profit. What made social entrepreneurs different to social enterprises was the entrepreneurs ability to reform, revolutionise and make fundamental changes in the way things were done, i.e. rather than just supplementing the delivery of government services, they were able to act as change agents, re-defining their products, markets and processes in response to changes in the social, environmental and ethical conditions of the market. Social entrepreneurs make commercially viable businesses out of being socially responsible to the very core of the business - they invigorate business propositions through the reading of market signals in the context of social, environmental and ethical movements.
The formalisation of the ‘Community Interest Company’ (CIC) by the UK government is a step forward in legally recognising the role of not for profit social enterprises who deliver government services, including benefits such as reduced costs of borrowing. Social entrepreneurs typically will trade as limited by guarantee.
What makes social entrepreneurship different to traditional entrepreneurship?
The defining differentiator between social entrepreneurs and traditional entrepreneurs is that the mission of a social entrepreneur is of social improvement in one form or another. Making a profit may be part of the business model, but fundamentally, social impact is the gauge for value creation, rather than profit.
The difference in the mission affects the way social entrepreneurs perceive and interpret opportunities. Social entrepreneur’s solutions to problems are systemic and sustainable by their very nature – after all they are tackling underlying problems through innovative solutions to create fundamental changes in the way things are done, engaging with social, environmental and ethical fluxes in society to create change, rather than responding to market changes to create wealth, which need not necessarily imply sustainable solutions.
What are the implications of the growth of social entrepreneurs for government policy?
In 1997, Tony Blair praised the innovation and imagination of the social economy. In referring to the social economy, he was largely referring to social enterprises in their not for profit guise.
The recent relocation of the DTI’s social enterprise unit to the control of the Small Business Service (SBS) is seen as a blow to the social economy sector, as the SBS recognises social enterprises in regard to their role in social inclusion, rather than tackling wider social, environmental and ethical issues.
Added to this the restrictive definition of social enterprise, which often excludes the ‘entrepreneurial’, for profit element of social entrepreneurs, and the government would appear to be missing a trick. Social enterprise are vital in delivering public services and creating positive change in deprived communities, but the role of social entrepreneurs as the dynamic part of the social economy sector cannot be overlooked.
The combination of a social mission, with wealth creation is a powerful symbol of what business can be in both alleviating social exclusion, but also tackling other social, environmental and ethical issues of our time.
The government is on the right track, with its realisation that social entrepreneurs can deliver essential services to the public, but its thinking must progress beyond the not for profit mentality, as well as developing support programmes and systems to assist the development of social entrepreneurs within our society.