Strategic Management Assignment: Social Enterprise Report - China

This report analyzes the development and challenges of social enterprises (SEs) in China, drawing on two provided articles. It begins with an introduction to social enterprises, defining their purpose and highlighting their role in addressing social and environmental issues. The report then delves into the key themes from the articles, including the evolving definition of SEs in China, the debate over their profit-making status, and their income sources. It examines the driving and resisting forces behind SE growth, such as government support, media representation, and economic disparities. The report also discusses the operational models adopted by SEs, their lack of specific legal status, and the various challenges they face, including resource shortages, lack of community knowledge, and the materialistic mindset of the population. Finally, the report concludes with recommendations for SEs, emphasizing the importance of awareness campaigns, financial support, and government collaboration. It highlights the unique socio-economic and legislative contexts in China that influence SE development, and the need for tailored strategies to overcome the challenges and foster growth.

STRATEGIC MANAGEMENT ASSIGNMENT

Table of Contents
1. Introduction............................................................................................................................3
2. Keynotes in the articles..........................................................................................................3
3. Conclusion..............................................................................................................................5
Bibliography...............................................................................................................................7
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1. Introduction
Social enterprises are organizations, which apply different commercial strategies for
maximizing improvements in social and environmental well-being. Primary purpose of these
organizations is to achieve its social objectives and maximizing benefits to society. Profits of
these organizations are used for funding social programs. In this report, two articles about
social enterprise are explained and linked, which are in the context of China. In this country,
these organizations are facing different challenges, which are impacting on their
development. Different social issues such as drug abuse, racism, gender disparity can be
mitigated through the help of these organizations. Both articles have described the
environment upon which these organizations are thriving in China.
2. Keynotes in the articles
Development of Social enterprise in China
Until 2004 there was little information about SE in China. Presently, there is a debate
regarding its definition1. Some practitioners define it as a non-profit organization but some
others consider SE as profit-making organizations but they use the profit for solving social
issues. The debate is also there regarding their source of income, some consider the market as
a source of income while others think social and government donation as the origin of
resources. In one article, the development dynamics of SEs are defined under different
categories, which include social mission, organizational nature, and others. Moreover, the
other article states that the development of SE in china is limited due to favoring a planned
economy model and less concern about social issues among people2. China has seen rapid
economic development in the past few decades that has boomed urban sprawling and
increased wealth of people. Different social issues like internal migration, employee
exploitation have been ignored by both the government and the population of the country. SE
in China has adopted different operational models that include service subsidization, the fee
for service and others3. Moreover, in this country, they have no specific legal status that is
hindering its growth and operation.
Critical discussion about driving forces and challenges faced by SE
1 Jacques Defourny et al. "Social enterprise in China: driving forces, development patterns and legal
framework." Social enterprise journal 7, no. 1 (2011): 9-32
2 Babita Bhatt, et al. "Social entrepreneurship in non-munificent institutional environments and implications for
institutional work: Insights from China." Journal of Business Ethics 154, no. 3 (2019): 605-630.
3 Jacques Defourny et al. "Social enterprise in China: driving forces, development patterns and legal
framework." Social enterprise journal 7, no. 1 (2011): 9-32
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The two chosen articles have mentioned both driving and resisting forces behind the growth
of SEs in China. At present, there are few numbers of SEs there that are serving
disadvantaged communities. The Chinese government has encouraged the development of
SEs since 1980, by launching the income-generated reforms4. It has been mentioned that the
government of China is providing this effort to involve SEs to solve emerging social issues.
However, the SEs is facing a major challenge due to the gap in the government's role to
support them5. On the other hand, misrepresentation by media coverage has hampered the
image of current SEs in China. At present, China is experiencing rapid economic growth.
However, it has impacted differently in rural and urban communities. Urban people are
enhancing their wealth through businesses. On the other hand, the level of poverty, internal
migration, and other social issues are increasing in rural communities6. This situation is
impacting some people and they are being interested in investing money for social causes.
The economic growth between 2011 and 2015 has provided the opportunity to many people
from the non-profit sector to serve disadvantaged people for free. On the other hand, since the
year of 2004, many international agencies have tried to raise awareness about the importance
of developing SEs7.
In 2005, China included the provision of CSR within the Corporate Law8. In the market
sector of this country, at present, people are concerned about social issues and they are
investing money in CSR activities. On the other hand, non-profit firms have mentioned that
the shortage of resources has become one of the major barriers to serve the communities9.
Additionally, environmental non-munificence including lack of efficient labor, insufficient
business cost, and enhancing competition are major challenges that are being faced by SEs.
Some of the SEs is hybrid by nature and it is preventing them from being entirely dedicated
to contributing to society10. It means that the management of some firms is not determined
about either being categorized as business or charity.
4 Jacques Defourny et al. "Social enterprise in China: driving forces, development patterns and legal
framework." Social enterprise journal 7, no. 1 (2011): 9-32
5 Babita Bhatt, et al. "Social entrepreneurship in non-munificent institutional environments and implications for
institutional work: Insights from China." Journal of Business Ethics 154, no. 3 (2019): 605-630.
6 Tonia Warnecke. "Social entrepreneurship in China: Driving institutional change." Journal of Economic
Issues 52, no. 2 (2018): 368-377.
7 Jacques Defourny et al. "Social enterprise in China: driving forces, development patterns and legal
framework." Social enterprise journal 7, no. 1 (2011): 9-32
8 Jacques Defourny et al. "Social enterprise in China: driving forces, development patterns and legal
framework." Social enterprise journal 7, no. 1 (2011): 9-32
9 Meng Zhao and Jun Han. "Tensions and risks of social enterprises’ scaling strategies: The case of
microfinance institutions in China." Journal of Social Entrepreneurship (2019): 1-21.
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Another challenge is the lack of knowledge of the community about emerging social issues.
The government is not taking initiatives to encourage more people to be involved in
developing SEs. It has been found that the materialistic thought process of people has
marginalized the role and contribution of SEs. Lack of clearly stated rules for running SEs is
making these companies face more legal challenges11. China has not introduced a separate
legislative framework for SEs yet. It is creating trouble for SEs to support people to help
them to improve their lifestyle. Support from all community levels is not properly there to
encourage development of SEs in China.
Recommendations to SE
There are many challenges that SEs are facing in this country among which ignorance of
social issues by the people is significant. Hence, it is essential to raise awareness among them
by conducting different campaigns. Media can play an essential role in this process by
communicating the message of SEs to a large mass of people12. Thus, the challenge of lack of
media cooperation can be eliminated and spreading misinformation about these organizations
can be controlled. Moreover, financial challenges of SEs can be sorted through collection of
funds or donations from different people and organizations that are aware of social issues13.
Regular discussions with the government can help to gain their helping hands through
provision of allowances and providing legal security.
3. Conclusion
From the above discussion, it can be concluded that for mitigating different social issues,
social enterprises can perform a valuable role. Due to China's market transition, typical socio-
economic and legislative contexts have been created, which has slowed the growth of SE.
The growth pattern of SE in China is quite different from its western counterpart. This is due
to many challenges such as lack of separate legal entities and misinformation among people.
Lack of funds, labors, and support from the all community level are major challenges faced
by SEs. Still, a large mass of people trusts the government and thinks that they have all the
necessary resources to mitigate social issues.
10 Xiaomin Yu. "Social entrepreneurship in China’s non-profit sector. The case of innovative participation of
civil society in post-disaster reconstruction." China Perspectives 2016, no. 2016/3 (2016): 53-61.
11 Qingjiao Chen and Zhi Tang. "Conceiving of Sustainable Development Strategy of Social Enterprises in the
New Age of China--A Theoretical Framework." (2019): 2-12.
12 Christopher Durkin and Robert Gunn, eds. Social entrepreneurship: A skills approach. Policy Press, 2016.
13 Hiu-Kan Wong and Wing Lam TSE. "Social media, networking, and marketing performance: a study of
social enterprises in Hong Kong." (2016): 1-26.
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Bibliography
Bhatt, Babita, Israr Qureshi, and Suhaib Riaz. "Social entrepreneurship in non-munificent
institutional environments and implications for institutional work: Insights from
China." Journal of Business Ethics 154, no. 3 (2019): 605-630.
Chen, Qingjiao, and Zhi Tang. "Conceiving of Sustainable Development Strategy of Social
Enterprises in the New Age of China--A Theoretical Framework." (2019): 2-12.
Defourny, Jacques, Yu‐Yuan Kuan, and Xiaomin Yu. "Social enterprise in China: driving
forces, development patterns and legal framework." Social enterprise journal 7, no. 1 (2011):
9-32
Durkin, Christopher, and Robert Gunn, eds. Social entrepreneurship: A skills approach.
Policy Press, 2016.
Warnecke, Tonia. "Social entrepreneurship in China: Driving institutional change." Journal
of Economic Issues 52, no. 2 (2018): 368-377.
WONG, Hiu-Kan, and Wing Lam TSE. "Social media, networking, and marketing
performance: a study of social enterprises in Hong Kong." (2016): 1-26.
Yu, Xiaomin. "Social entrepreneurship in China’s non-profit sector. The case of innovative
participation of civil society in post-disaster reconstruction." China Perspectives 2016, no.
2016/3 (2016): 53-61.
Zhao, Meng, and Jun Han. "Tensions and risks of social enterprises’ scaling strategies: The
case of microfinance institutions in China." Journal of Social Entrepreneurship (2019): 1-21.
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