Social Enterprises: Democratic Ownership, Governance & Management

This essay delves into the multifaceted role of social enterprises (SEs) and their approach to social responsibility, examining arguments both for and against the concept that SEs should actively promote socialized and democratic ownership, governance, and management. It begins by defining social enterprises as organizations blending commercial strategies with social missions, operating distinctly from public, private, and non-profit sectors. The essay then presents arguments in favor, highlighting how successful SEs integrate the values of non-profits with the efficiency of for-profit businesses to address social problems. It emphasizes that SEs often prioritize social and environmental benefits over shareholder value, reinvesting profits into the community. It also explores the role of social innovation and technology in expanding the reach and impact of SEs. Counterarguments are not explicitly stated, but the essay implicitly acknowledges the complexities and challenges in balancing social goals with the need for financial sustainability and effective management. The essay concludes by underscoring the importance of social impact as a key element of success for SEs, supported by governmental initiatives and frameworks.

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Ethnic and Corporate Social Responsibility

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Introduction:
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.
Discussion
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

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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).
Arguments in favor
Socialized and corporate dimensions
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 is those business organizations which operates in market and sell the goods and
services, but its main objectives are to achieve the social and environmental benefits.
 Constitution of these organizations mainly includes the regulation that profits are
reinvested in the business or in the beneficiary community. In other words, it is not
distributed to the owners/shareholders/investors.
 The constitution will always state that at the time of dissolution, assets of the
organization are redirected in appropriate manner.
 Asset lock is the most important feature of the SE, as from this component it is
distinguished from the private organizations.
 These organizations are different from the public sector, and these organizations cannot
be the subsidiary of the public body (SE-Code, 2018.

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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—
 Values- It is the business which is based on the fundamental core values, which means,
social fairness and environmental protection must be the pre-conditions for all these
organizations. In other words, it is expected from them that they must conduct honest and
fair business activities.
 Good Employers- SEs are the good employers and further try to offer the good workplace
experience, which mainly aims to pay the living wage in fair manner to their employees.
 Democratic- SEs mainly reflects the common ownership and democratic governance.
 Empowerment- It ensures the development of trusts and business movement in
community, as these organizations resolve the social issues and empower the local
communities (SE-code, 2018).
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).
Governance and Management
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

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different societies of sector that are public, private, and non-profit sectors. This address the
following proposals-
 Importing business methods within the public sector.
 Social benefits are the center purpose of the business.
 Entrepreneurial approaches are within the non-profit sector (Nicholls, 2006).
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-

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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.
Arguments in Against
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

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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
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How the Joint Pursuit of Social and Financial Goals Challenges Traditional Organizational

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