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The Social Enterprise: An alternative in the face of global unsustainability

The Social Enterprise: An alternative in the face of global unsustainability


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By Soledad Parra

The first trend pushed traditional private companies or for-profit organizations ( for profit) and / or the so-called "entrepreneurship by opportunity", so that they slowly turn their gaze towards solving social and environmental problems, through "Corporate Social Responsibility". Although there is a consensus that this impulse towards CSR is largely due to the search and need to create a positive image towards its stakeholders, therefore, this concept and its corresponding actions are based only on good intentions, without any control or regulation that allows the efforts to be measured and made sustainable.

A second trend has encouraged traditional non-profit organizations ( non-profit), which are usually called NGOs, which can be associations, corporations, foundations, cooperatives, etc., which belong to the Third Sector or the so-called Social Economy, inserted within the «social enterprises», and which used to be financed mainly by private donations and / or public subsidies, so that they join the business world with the aim of generating their own income, due to the decrease in those amounts of donated or subsidized money due to greater competition for obtaining them, which also allows them to be more independent and achieve self-subsistence.

A third global trend generated by an environment of deprivation (poverty, unemployment, etc.) has promoted the creation of organizations that are born out of necessity within the so-called «entrepreneurship by necessity», either to overcome poverty or to improve quality family life or to achieve an income that has not been able to be achieved through paid employment. And here are all the microenterprises born mainly in developing countries through microcredits, although this phenomenon can also be observed in developed countries at a different level where professionals become autonomous or independent, due to the great financial crisis and its consequence in terms of unemployment and lack of opportunities.

And a fourth and incipient global trend largely motivated by the future scarcity of natural resources (e.g. water, arable land, etc.) and latent social conflicts (e.g. inequality, famine, etc.) is pushing towards the creation or transformation of existing organizations into sustainable entities, that is, towards the so-called "sustainable or sustainable enterprises". This means that they must meet three conditions: solve or at least not create any social problem, respect the environment and if possible improve it in their environment, and also be economically profitable and self-sufficient.


If we analyze the previous trends, we can see that all organizations tend to become hybrids to some extent, within a continuous line that at one end has its economic mission and at the other end its social / environmental mission. In other words, they are among a "for-profit organization" that is financed through the generation of income derived mainly from the sale of products and services, and in which the measurement of its success is carried out, through the annual result of your benefits; and a "non-profit organization", in which the measurement of its results is observed through social / environmental improvement, which is difficult to evaluate because among other things it is not standardized, while it is financed with donations and / or state grants (Fig. 1 and 2).


So, because the current unfettered markets within the globalized free economy system, although they are sources of inspiration and freedom for all (creative energy, efficiency and dynamism), have not been significant in solving the great complexity of the social problems that are Through their aid systems, and instead they have been able to exacerbate poverty, pollution and inequality, a new type of organization has been generated that corresponds to a hybrid between the for-profit organization and the non-profit organization: the Social Enterprise ( Social business; Social Enterprise; B Corp) (Fig. 3). The one that is recognized to have had rapid growth in number, type and social impact throughout the world and is expected to continue to grow in number and importance.

There is no commonly accepted definition of "Social Enterprise". The OECD - Organization for Economic Cooperation and Development, has defined it as any private activity directed towards the public interest, organized with an entrepreneurial strategy, but whose main purpose is not the maximization of profit but the achievement of certain economic and social goals, and which has a capacity to deliver innovative solutions to problems. In other words, they are value-based businesses that directly emphasize the satisfaction of social needs that build value for stakeholders. The criterion on what percentage of financing has to come from own income (not from donations or grants), for an organization to be classified as a social enterprise, is still under debate, although as a general rule a minimum of 50% is assumed, which is that has made it possible to call multiple types of hybrid organizations (among for profit Y non-profit) engaged in various types of activity at the same time.

It is because of the above that it is worth highlighting within the category of social enterprises, a definition with much clearer and more limited limits, which the economist Muhammad Yunus, 2006 Nobel Peace Prize winner, has called the social business or « social business». This is a sustainable, self-sustaining business, whose mission is to provide social / environmental benefits (competing in the market with those who seek only to maximize their profits), in which surpluses are reinvested in the same company (because it has to be profitable, without losses), which does not deliver dividends to its investors, only returns the investment made without interest and encourages the creation of a shareholder market separate from the rest of the businesses (of those that only seek to maximize their profit), to attract "social" investors.

This means that this sustainable organization has a social / environmental mission as a priority (it recognizes the multidimensional nature of the human being, not just the economic dimension), without neglecting the economic profitability that is essential for its survival. And of course, to carry it out in some countries it is necessary to encourage changes in legislation to support its development.

It is this latest and new paradigm, which allows reordering and integrating the extreme poles between private vs. public, for-profit vs. non-profit, etc., an alternative model that is envisioned with the potential to help solve the problems. economic, social and environmental problems that we face globally. And for this to happen, it is necessary to promote a change of values, so that more and more new entrepreneurs and already entrepreneurs are committed and have as a priority the social / environmental mission of their organization, which only uses the economic as a means, not as an end. As Yunus says, we can reconfigure our world if we can reconfigure our minds.EcoPortal.net


Figure 3

References

- Block, J. and Wagner, M. (2010) Necessity and Opportunity Entrepreneurs in Germany: Characteristics and Earning s Differentials. SBR, 62, pp. 154-174

- Bosma, N. and Levie, J. (2009) GEM - Global Entrepreneurship Monitor: 2009 Global Report. Babson College (USA), Universidad del Desarrollo (Chile) and Reykjavík University (Iceland), pp. 1-73

- Dean, T. and McMullen, J. (2007) Toward a theory of sustainable entrepreneurship: Reducing environmental degradation through entrepreneurial action. Journal of Business Venturing, 22, pp. 50-76.

- Fowler, A. (2000) NGDOs as a moment in history: beyond aid to social entrepreneurship or civic innovation? Third World Quarterly, 21 (4), pp. 637-654

- Kadol, N. (2011) The social business undertakings as a basis for the sustainable development economy. Human Resources: The Main Factor of Regional Development, 4, pp. 89-97

- Madill, J., Brouard, F. & Hebb, T. (2010) Canadian Social Enterprises: An Empirical Exploration of Social Transformation, Financial Self-Sufficiency, and Innovation. Journal of Nonprofit & Public Sector Marketing, 22, pp. 135–151

- Spear, R., Cornforth, C. & Aiken, M. (2009) The governance challenges of social enterprises: evidence from a UK empirical study. Annals of Public and Cooperative Economics, 80 (2), pp. 247–273

- Waddock, S. and Post, J. (1991) Social Entrepreneurs and Catalytic Change. Public Administration Review, 51 (5), pp. 393-401

- Yunus, M. (2007) Creating a World without Poverty, Social Business and the Future of Capitalism. New York, PublicAffairs

- Zietlow, J. (2002) Releasing a New Wave of Social Entrepreneurship. Nonprofit Management & Leadership, 13 (1), pp. 85-90

- Zietlow, J. (2001) Social Entrepreneurship: Managerial, Finance and Marketing Aspects. Journal for Nonprofit & Public Sector Marketing, pp. 19-43


Video: Social Enterprise 101 (June 2022).


Comments:

  1. Alhsom

    Very amusing opinion

  2. Julio

    What can he have in mind?

  3. Iain

    I recommend to you to come for a site on which there are many articles on this question.



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