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Exploring the social enterprise potential for substainability in the uk

Abstract

Social enterprise is a dynamic and sustainable business model of choice which is able to bring social, economic and environmental benefits to the UK. It operates across all sectors of the economy, serving individuals in the private, public and third sectors. Through out this research will identify the increase levels of understanding of the role and value of Social Enterprise, given that a lack of understanding of the role and value of social enterprises was cited as a major barrier to the acceleration of the use of the business model. I will further state that social enterprises compete in the marketplace like any other business, but they use their business skills to achieve social aims. The purpose of this research will identify the key barriers faced by Social Enterprise and explore how these barriers have/could potentially be overcome to achieve sustainability. There is also a need to recognise that some social enterprise activity will need an element of finance through public funds, particularly because they are operating in areas of market failure or a non-commercial market such as providing services to vulnerable people, including supported employment in many cases. This paper is intended to create an environment which will lead to opportunities for social enterprise to grow successfully in the future.

 

Chapter 1: Introduction

A brief overview of social enterprise is introduced in the first chapter. Then, the purpose of the study will be next discussed which will end with a specific research question. In the end of this chapter the contribution of this research and limitation of the study are also presented.

1.1 A Brief Overview of Social Enterprise

Social enterprises are organisations that supply goods and services as part of the social economy sector; this group constitutes a collection of organisations that exist between the traditionally private and public sectors and has a stronger relationship with the Community and Non-profit sector. This sector has a key role to play in achieving many of its goals, including overcoming social injustice and exclusion

Today's completive business world defining social enterprise is a challenging task, according to OECD (1999, p.10) “there is no universal, commonly accepted definition of Social Enterprise.” However, the OECD (1999, p.10) has defined social enterprise as:

“any private activity conducted in the public interest, organised with an entrepreneurial strategy but whose main purpose is not the maximisation of profit but the accomplishment of certain economic and social goals, and which has a capacity of bringing innovative solutions to the problems of social exclusion and unemployment”.

Social enterprises are becoming a recognised part of the local and national economy in the UK, and the organisations operating in this sector are aware that becoming sustainable businesses is the path to independence both financially and in mission. However, social enterprises, in common with many small businesses, find growth difficult, and this could impact negatively on their sustainability. These should be supported and encouraged to grow - both as a sector and as individual organizations - so as to become more sustainable organizations.

1.2 Purpose of the Study

My paper has been developed to explore how the term social enterprise has acquired meaning in England and to illustrate how practitioners, policymakers and academics influence each other in the development of new sustainable ideas, given that a lack of understanding of the role and significance of social enterprises was cited as a major barrier to the acceleration of the use of this business model.

These challenges come in many forms. Some are the same as those affecting any other business including access to business support and finance, a lack of affordable premises and finding skilled staff. However, social enterprises also face one huge barrier that seriously affects their ability to assume a position within the market. That barrier is a lack of understanding of how social enterprises work and of their potential value. This lack of understanding exists across the public, private and voluntary and community sectors. The confusion and conflict about what the model could or should be for results all too often in misrepresentation and exaggeration of its potential, fragmentation in the provision of support and real and perceived barriers to accessing contracts and mainstream funding opportunities.

So my dissertation will identify the key barriers faced by Social Enterprise and explore how these barriers have/could potentially be overcome in order to achieve sustainability. It examines critical incidents that have shaped the meaning of social enterprise in England and reflects on these incidents to draw conclusions about the future sustainable development of social enterprise practice. Through out this paper I will also examine the potential conditions for the growth of social enterprise through a set of outline scenarios. The aim is to inform both policy-making and the wider debate about social enterprise: what its potential might be and how that potential can be realised in different settings. So my research question is:

To explore how the social enterprise is potential for sustainability in the UK.

1.3 Limitations of the Study:

During conducting the research I came across certain limitations and among them the

foremost one is time constrain. The interviewed person could not provide all necessary

information due to lack of time. The research timeline also reveals that time constrain was actually a barrier as there was plenty to find about this research topic. A huge portion of the report is based on primary data collected through interviews which is very lengthy process.

The key point here is that social enterprise cannot be identified solely by legal form or pre-set categories. Social enterprises can often see themselves as belonging to more than one category, leading to problems of double counting. For example, a social enterprise may be a charity registered with the Charities Commission or an ‘exempt' charity which is also an Industrial and Provident Society. There is also much variation in the categories which have been used in studies to date, making aggregation and comparison very difficult.

1.4 Structure of the Report:

This research is divided into five chapters: the first chapter is an introduction with purpose and limitation of the study. In the second chapter, literature based review of definitions of social enterprise, roots of social enterprise, discussion relevant to the sustainability of social enterprise, the nature of their contribution and their sponsors and sources of funding. The third summarises the background information of social enterprise in the UK and the fourth and fifth chapter contain the methodology and the summary of the main findings of the study with implications for policy.

Chapter 2: Literature Review

This chapter will give an overview of literature and models that are related to the research problem presented in the previous chapter. This chapter will introduce the roots and concepts of social enterprise in order to give a clear idea about the research area.

2.1 Roots of social enterprise

Scott specified (Market, Schmarket : Building the Post-Capitalist Society,2006, p50) “The roots of social enterprises and community enterprise overall can be found in the mutual, self help and co-operative sector which goes back, in the UK, at least to the Fenwick Weavers in Ayrshire 1769 and Dr William King of Brighton in the 1820s (Trimingham, 2007), with earlier antecedents.” Within the development of this movement there has always been an important strand which has focused on the local community-based nature of these organisations and also on the economic development of poorer communities including the need to maintain paid work. For example between the two world wars, local community activists such as Harry Cowley campaigned for housing and work for returning service people and support for small local businesses. He organised marches to demand public works ‘job creation' programmes from the local council for unemployed people with some success.

2.3 General Discussion on Social Enterprise

Social Enterprises combine the need to be successful businesses with social aims. This is a competitive business, owned and trading for a social purpose. They seek to succeed as businesses by establishing a market share and making a profit and emphasise the long-term benefits for employees, consumers and the community.

Bob Doherty and John Thompson mentioned in the journal ‘The diverse world of social enterprise stories' (p.362) that social enterprises are organizations which are seeking business solutions to social crisis. These are needed to be differentiated from other socially-oriented organizations. These also need to take initiatives that can promote to communities but which are not wanting or seeking to be “businesses”. In this esteem these latter organizations remain dependent on endowments and donations rather than build up true paying customers.

According to DTI report 'A Progress Report on Social Enterprise: A Strategy for Success' (2003, p.6), social enterprise is such a business which reinvests its surpluses in the business or in the community rather than increases profit for shareholders or owners.

Peter Drucker argues that social entrepreneurs “...change the performance capacity of

society” (Gendron, 1996, p. 37) while Henton et al. (1997: p.1) speak of ‘civic entrepreneurs' as “...a new generation of leaders who forge new, powerfully productive linkages at the intersection of business, government, education and community” .

Ali B. Somers (Shaping the balanced scorecard for use in UK social enterprises, p.46) stated “Social enterprise emphasise creating social and/or environmental value at all stages of their production process, as an intrinsic part of their identity”. Figure:1 describes the production process of social enterprise.

Inputs

Production Process

Outputs: Goods and Services

Labour Employee/ Client

Raw Materials: from Environmental Sources

Can Include: Democratic Governance or training for employee/ client Base

Goods and services sold to market: Economic Profit, Social Profit and Environmental Profit

Economic Profit flows back to Social Enterprise and Ethical Investors

Social and Environmental profit flow to Community

Indicates environmental and social motives affect production

Figure: 1 Production of Social Enterprise

Source: Somers, A.B., 2005. Shaping the balanced scorecard for use in UK social enterprises. Social Enterprise Journal, 1(1), p.46

2.4 Discussion Relevant to the Sustainability of Social Enterprise

There has been an unprecedented wave of growth in Social Entrepreneurship globally over the last ten years (Bornstein 2004, pp.3-6). For Example, as part of the 2004 Global Entrepreneurship Monitor (GEM) report a survey was conducted of social entrepreneurship activity in the UK; these data suggested that new ‘social' start-ups are emerging at a faster ate than more conventional, commercial ventures (Harding and Cowling, 2004, p.5)

There are three sides to sustainability in business activity: environment, economy and community. When aiming for sustainable practice all three factors must be given equal consideration from a local through to a global level.

Environment - Ensuring that business engages in the proper and careful use of finite resources and the management of waste so as to minimize the negative and maximize the positive impact of human activity.

Economy - Ensuring that business is financially viable, engages in good employment practice and is of benefit to the economy as a whole.

Community - Ensuring that business is overall of benefit to communities, their culture & heritage and does not endanger them.

Figure2: Sustainable Social Enterprise

Schulyer (1998: p.3) describes social entrepreneurs as “...individuals who have a vision for social change and who have the financial resources to support their ideas....who exhibit all the skills of successful business people as well as a powerful desire for social change”

Greater flexibility in the use of public resources to respond to innovative community proposals, and venture investments from foundations and the private sector could be used to stimulate innovation in areas thought to be too risky for government as the sole investor. As Catford (1998, p. 96) argues that “...social entrepreneurs...will only flourish if they are supported by the right environment, which will be created largely by governments together with the private sector”.

Social Enterprise seeks surplus generation in order to achieve financial sustainability. The need to financial sustainability is fundamental to social enterprises. Emphasizing financial sustainability in addition to profit distribution becomes a way to account for all activities the organization engages in, including advocacy and in support of bono work. Sacrificing one cause and effect chain for another can have significant implications for both the quality of work and social enterprise's financial sustainability.

Profit Distribution

(Increase Income)

Increase Revenue

Use Resource Efficiently

Trading Revenue

Non Trading Revenue

Manage Cost

Track Advocacy

Financial: Promote Sustainability of organization

Social: Increase value to target community

Whilst many may rely on combination of grant and trading income, ultimately, if an organisation is not financially sustainable, it cannot deliver its social and environmental impact. Fig3. shows how the profit of social organisation is distributed to the organization itself and community.

Figure: 3 Financial Sustainability

Source: Somers, A.B., 2005. Shaping the balanced scorecard for use in UK social enterprises. Social Enterprise Journal, 1(1), p.50

2.5 Policy Reform and Good Governance

DTI report 'A Progress Report onSocial Enterprise: A Strategy for Success' (2003, p.6) describes the three key goals for government as creating an enabling environment, making social enterprises better businesses and establishing the value of social enterprise.

The danger in not supporting social entrepreneurship is obvious to Reis (1999: p. 4) who calls for systematic intervention to accelerate and improve philanthropic efforts. Without this he argues that substantial numbers of potential donors and social entrepreneurs could be “...discouraged, turned-off, and lost from philanthropy and social change work”.

So, in recent years, the boundaries between the private sectors (in term of market thinking and managerial practices) have impacted the public and voluntary sectors and started to blur traditional distinctions between them (Bull, 2006, 2007). The emergence of radical business alternatives with a strong social orientation, democratic organisation, and positive attitude to 'profitable' trading has led to formal recognition and academic scrutiny (Seanor, Bull and Ridley-Duff, 2007).

Brown, H and Murphy, E (2003: p.57) mentioned on Bank of England report that “Social enterprises, like all businesses, need access to a range of financial products appropriate to their activity and stage of development”

An HM Treasury report on Enterpriseand Social Exclusion (1999, p 108) came to the

conclusion, arguing that social enterprise was “less understood and rarely promoted in a consistent way by the existing infrastructure for business support”.

Thompson et al. (2000: p. 328) describe “...people who realize where there is an opportunity to satisfy some unmet need that the state welfare system will not or cannot meet, and who gather together the necessary resources (generally people, often volunteers, money and premises) and use these to ‘make a difference'”.

It is more useful to consider and develop social enterprise capabilities rather than skills and capacity building. The fact that social enterprises need to combine commercial objectives with social mission as well as internal governance, means that a “capabilities approach” is more comprehensive. This is a useful way of recognising factors additional to individual skills that inter-play to determine the effectiveness and impact of a specific enterprise. It also moves away from limited considerations of a key person or group within the organisation, and their specific skills, towards a more holistic view of what the organisation is capable of doing, irrespective of the location of particular skills.

Laville and Nyssens (2001: p 325) argue that while the origins of social enterprises are based in reciprocity and thus form part of the third system, their strength is based in their ability to tap into all three economic principles and systems. They are different from private enterprise in that their goal is not the maximization of profit to benefit owners, although they do develop market activities and generate profits. They are also different from the public sector in that they are independent from direct control by public authorities. But they benefit to a greater or lesser extent from public subsidy. Thus they mobilize market relations to sell services or goods, and can use redistributive relations by utilizing government funding to finance their services. Their long-term sustainability depends on their ability to ‘continuously hybridise the three poles of the economy so as to serve the project'. Their complementary use of monetary and non-monetary relations guarantees autonomy of service based on their connections within communities and economic viability. This view of social enterprises offers an insight into their complexity in terms of the roles they must juggle and of the many forms - from cooperatives, community enterprises, social firms, fair-trade companies and more - that they take.

Dees (1998: p.4) identifies five criteria that social entrepreneurs possess: adopting a mission to create and sustain social value; recognizing and relentlessly pursuing new opportunities to serve that mission; engaging in a process of continuous innovation, adaptation and learning; acting boldly without being limited by resources currently in hand; and exhibiting a heightened sense of accountability to the constituencies served and to the outcomes created.

Catford (1998, p.97) who articulates the issues and one possible solution most eloquently: “Traditional welfare-state approaches are in decline globally, and in response new ways of creating healthy and sustainable communities are required. This challenges our social, economic and political systems to respond with new, creative and effective environments that support and reward change. From the evidence available, current examples of social entrepreneurship offer exciting new ways of realizing the potential of individuals and communities...into the 21st century”.

The Progress Report on Social Enterprise: A Strategy for Success(2003, p.68) concludes that there is little hard evidence to demonstrate the impact and added value of social enterprise. The report points out that one of the reasons for the lack of statistical evidence is that social enterprises create a range of social and environmental impacts, beyond their financial return (the ‘double' or the ‘triple' bottom line) that are hard to measure (even by the social enterprises themselves). Limited information on their social and environmental, as well as financial, impact also means that policy makers, business support providers and finance providers find it difficult to assess the value of targeting social enterprises or of including them in their activities.

2.6 Concluding Remarks

Academic writing about modern social entrepreneurship skills is relatively limited, compared to mainstream business or charities. The concept of ‘social enterprise' has been rapidly emerging in the private, public and non-profit sectors over the last few years. Currently, the non-profit sector is facing increasing demands for improved effectiveness and sustainability in light of diminishing funding from traditional sources and increased competition for these scarce resources. At the same time, the increasing concentration of wealth in the private sector is promoting calls for increased corporate social responsibility and more proactive responses to complex social problems, while governments at all levels are struggling with multiple demands on public funds.

Chapter 3: Background Information of Social Enterprise

This chapter will give the idea about the social enterprise types and size in the UK along with the impact, barriers and sources of fund in this organizations.

The UK government has been at the front position of enabling and encouraging the increase of social enterprises as part of both welfare services delivery and community regeneration at the policy level. The impacts and influence of public, private, and citizen are empirically proven and exhibit that these conventional sectors of society are playing a part in re-evaluating the value creation opportunities offered by market (or quasi-market) mechanisms.

[Brief overview of types]

According to the UK policy-making community, social enterprises play a vital role in the creation of economic and social value.

Social enterprise is a varied activity and can include a range of organisations working on different scales and at different levels of trading. Some work at community level, while others work nationally. They can work in public services or commercial markets. They often work in the most disadvantaged areas and work with the most disadvantaged groups. Some organisations work only as a social enterprise while in other organisations social enterprise is often a part of their activity. This most commonly applies in a voluntary organisation or a housing association.

According to Bob Doherty and John Thompson (The diverse world of social enterprise stories, p.362) the common characteristics for a Social Enterprise are:

Social enterprise makes an important contribution to the social, economic and environmental development of Scotland. This can be summarised as follows.

Fig 4: Beneficiaries of Social Enterprise

Source:

Social enterprise is extremely varied but, importantly, it works in a number of key priority areas for the UK economy- these include:

“…often have boards of directors or trustees who come from a voluntary sector rather than a business background. This can lead to a lack of business focus and prevent social enterprise from truly reaching their potential (DTI 2002, p.62)

Several challenges remain before the full potential of the third sector can be realised. First, the Government must carry through its commitment to provide a constructive partnership with the sector and resist the temptation to treat it as one of the instruments for the marketisation of the Welfare State. Amicus, a trade union with workers in the public, private and third sectors, is concerned that an expansion of the third sector will be a ‘stepping stone' to the privitisation of the public sector (Maskell quoted in Little, 2007, p.31). Second, the majority of third sector organisations are small and under-capitalised and they are constrained in the growth aspirations by limited access to capital (Bank of England, 2003; SQW, 2007).

Insufficient capital can lead to either under-investment, or a re-orientation towards market objectives in order to obtain finance, and the consequent re-prioritisation of economic over social and environmental outcomes. To enable third sector organisations to maintain the balance between economic, social and environmental outcomes, the Government must ensure that a pragmatic and realistic assessment of the financial costs of service delivery is incorporated into their policies and strategies (HM Treasury, 2006).Third, a curse of successful activities in the third sector is that they themselves are prone to being privatised and consequently turned into capitalist ventures that adopt orthodox business practices, as has been the case with the demutualisation of the Building Society movement in the UK.

According to UK Government and various literatures review shows that there are mainly four significant barriers to accessing appropriate business support and finance for social enterprises throughout the region.

1. Cultural barriers between those setting up social enterprises and mainstream business advisors. 2. Lack of clarity about where to access business support at the local level, largely due to the huge diversity of routes into starting up social enterprises.

3. Limited numbers of accredited technical specialists in key business advice areas where social enterprises require specialist support, for example on legal structure, potential investors or taxation.

4. Limited sources of affordable equity and loan finance of all sizes.

All of these barriers inhibit the use of available business support by social enterprise. Many of the issues are cultural, but there are also skills issues, with mainstream business advice agencies not being adequately equipped to address more technical aspects of social enterprise business development. Specialists do exist within the region but many of them are funded through short-term grant finance. This enables the free provision of services but a lack of long-term sustainability for the advice services themselves.

To grow and develop social enterprise in UK, we must tackle a range of challenges and issues which have been highlighted by the research and consultation carried out to develop this strategy. Tackling these challenges, which are summarised into five key areas in this chapter, will be a major part of this strategy:

The key factor in an enterprise's development is access to appropriate sources of finance. Social enterprises are more likely than SMEs to have been rejected for finance, although the majority of those rejected by one lender appear subsequently to be successful with another. In addition, a large minority of social enterprises perceive access to external finance as a major barrier to expansion, including some of those that have successfully accessed finance in the past. While there is no one, clear reason to account for the higher rejection rates among social enterprises than SMEs, this report explores possible contributory factors, which include: lack of available security and personal financial stake; use of organisational structures and grant funding streams with which lenders may be unfamiliar, and which may result in lengthy arrangement times; some elements of credit and behavioural scoring; reputational risk to the lender; and low levels of investment readiness among some social enterprises.

{{{Access to finance is not the only factor that restricting the development of the sector. Bank of England (2003, p.10), took the survey of Social enter 32% of social enterprises mentioned the problems in obtaining external finance and 25% problems in getting grants as major barriers to expanding their trading activities. However, other problems are lack of qualified staff (14%); lack of appropriate premises (16%); and lack of cash flow (10%)

Most interestingly, 16% of the SMEs interviewed said that there were no barriers to expanding their trading activities, compared with just 1% of social enterprises. Clearly, initiatives to improve social enterprises' access to finance would have to be accompanied by efforts to address the other difficulties encountered by social enterprises.}}}

[http://www.bankofengland.co.uk/publications/financeforsmallfirms/financing_social_enterprise_report.pdf]

Impetus Trust is a UK “venture philanthropy” organisation providing long term financing of charities' infrastructure, hands-on management support and capacity building delivered through projects run by volunteer associates.

Chapter 4: Methodology

This chapter will present detailed idea about the research were conducted. This includes the research design, research approach, sample selection methods, data collection methods and summery of the 5 organizational case studies . At the end of this methodology part validity and reliability issues will be discussed to follow the quality standards of the research.

4.1 Research Design

The present study endeavoured to explore the sustainability of social enterprise for the development of the UK and its future prospects. Exploratory research is selected as research design as little information exists about the social enterprise of the UK. The aim of exploratory research is mainly to gain enough information before doing more thorough research. We basically start by gathering as much information about the object as possible and with a vague impression of what we should study (Cooper & Schindler, 2003).

Exploratory research is useful when the research questions are vague or when there is little theory available to guide predictions. At times, research may find it impossible to formulate a basic statement of the research problem. Exploratory research is used to develop a better understanding (Hair, Babin, Money & Samoel 2003). Exploratory studies are a valuable means of finding out what is happening, to seek new insight, to ask questions and to assess phenomena in a new light. It is particularly useful if researcher wish to clarify the understanding of a problem. There are three principle ways of conducting exploratory research: a search of the literature, talking to experts in the subject, conducting focus group interviews (Saunders, Lewis & Thornhill 2003)

4.2 Research Approach

Qualitative Approach

Qualitative research is multi method in focus, involving an interpretive, naturalistic approach to its subject matter. This means that qualitative researchers study things in their natural settings, attempting to make sense of, or interpret, phenomena in terms of the meanings people bring to them (Newman & Benz 1998).

Qualitative approach is one in which the inquirer often makes knowledge claims based primarily on constructivists perspectives (i.e., the multiple meaning of individual experiences, meaning socially and historically constructed, with an intent of developing a theory or pattern) or advocacy/participatory perspectives (i.e., political, issue-oriented, collaborative or change oriented) or both. It also uses strategies of inquiry such as narratives, phenomenology, ethnography, grounded theory studies or case studies. The researcher collects open-ended, emerging data with the primary intent of developing themes from the data (Creswell 2003).

It is rather difficult to analyze data obtained through interviews, especially when there is more qualitative data in response to open-ended questions. Qualitative interviews are argued to be an appropriate and valuable method for gathering data that lays its emphasis on depth, nuance, complexity and roundedness (Yin 1994; Fontana and Frey 2003; Denscombe 2007). This method allows the researcher to probe and reveal the deeper and hidden meaning that would be difficult to extract by using other methods like surveys and observations (McNeill and Chapman1985).The authors also argued that validity is enhanced as face to face interviews promote rapport and allows interviewees to open up and respond truthfully.

Qualitative interviews would be best in achieving and addressing the questions that I am looking forward to address in this research project. The project requires data that is both rich and varied as I am to extract the opinions and insight about practices, insights and expectations of leaders and beneficiaries in the social sector. By adopting this methodology I will extract this data without limiting the responses of the respondents, I am mostly interested in their innate insights, opinions and organisational beliefs.

4.3 Sampling

The basic idea of sampling is that by selecting some of the elements in a population, researcher may draw conclusions about the entire population. There are several compelling reasons for sampling, including: lower cost, greater accuracy of result, greater speed of data collection and availability of population selection (Cooper & Schindler 2003).

The sample would be selected nationally from Social Enterprise that generate annual

income of less than £100000 and are actively fund raising (excluding educational, health and religious institutions). This is to allow some comparison and a fairer analysis of the data as organisations of the same size are most likely to follow related

trends and are also affected by the same factors. Due to the complexity of the sector, the samples would be drawn from the wider England and Wales, this is to widen the population from which to select the qualifying sample.

For this project this sampling technique would be appropriate as the research is about drawing out quality and richness of the data .As such I would be able to select organisations that I am likely to extract such data as the research is not entirely based on generalisation of the findings.

4.4 Data Collection

There are two major approaches to gathering information about a situation, person, problem or phenomenon. Sometimes, information required is already available and only need to be extracted. However there are times when the information must be collected. Based upon these broad approaches to information gathering data are categorized as: Secondary data and Primary data. For collecting secondary data, various books, websites, newspapers, annual reports, monthly reviews and significant articles were chosen. Also for collection of primary data in-depth interviews with a range of designated professional, related to this field, were taken. Case studies of 5 social enterprises, using a combination of face-to-face and semi-structured interview methods, selected to reflect the variety of different types of social enterprise. To be interviewed are the senior managers, board members and beneficiaries of the 10 selected Social enterprises operating in the UK. (including members of the Social Economy Taskforce for London). The interviews would be tape recorded for ease of storage and transcribing. I contacted with all Business Links by letter and telephone to identify the extent of local business support provision for social enterprises. According to Creswell (2003) data collection procedure in qualitative research involve four basic types: Observations, interviews, documents and audio-visual materials.

A questionnaire was prepared to get idea about the customer's experiences in online shopping. The questionnaire divided into three parts and published which is an Iranian online club. About 7 persons out of 26 replied. A survey is a procedure used to collect primary data from individuals. The data sought can range from beliefs, opinions, attitudes and lifestyles to general background information on individuals such as gender, age, education and income as well as company characteristics like revenue and number of employees. Surveys are used when the research involves collecting information from a large sample of individuals (Samuel et. al., 2003).

The questionnaire was developed based on research question and frame of reference. Some of the research questions associated to this research topic are as follows:

Once came up with the first draft of questionnaire, ten questionnaires were handed out to the local social enterprise and they were asked whether the questions made sense to them and were they easy to understand. After refining questions, the well-improved questionnaires were developed.

4.5 Summary outline of the five organisational case studies

The Seven organisations selected for the main focus of this research provide a good example of the breadth and scale of social enterprise activity. Together they directly employed about 220 people, and their sub-projects provided employment for approximately another 200. Their total annual turnover was over £7m, and their income came from a number of sources including trading, service contracts from local authorities, central government and its agencies, European and UK regeneration funds, grants from charitable foundations, loans from commercial banks and from other public and charitable finance providers.

The organisations took a variety of legal forms, including registered charity, company limited by guarantee, and industrial and provident society (workers' co-operative). Between them they provided services for the unemployed, the homeless, young people, children with special needs, ex-offenders, prisoners, artists, refugees as well as members of their local communities: they aimed to alleviate poverty, ameliorate unemployment, provide employment, reduce homelessness, educate excluded school pupils, house refugees, rehabilitate offenders, aid those with disabilities and to engage marginalised groups in creative arts. In all these activities they were aiming at varying degrees of financial sustainability and independence.

Chapter 5: Data Analysis and Implementing the Recommendations

Chapter 5 brings the analyzed data according to the research question which tries to implement . Finally, we have the conclusion and a discussion about possible areas that further research could be conducted.

After collecting all the data, the process of analysis begins. To summarize and rearrange the data several interrelated procedure are performed during the data analysis stage (Zikmund 2000).

For quantitative data analysis, statistical tools of Microsoft excel were used for data input and analysis. The statistics results were presented by graphical form with detail description.

However, the approach risks missing smaller, emerging social enterprises which make up a more significant proportion of the enterprise population than for ‘mainstream' businesses. It also relies on a sample survey approach for qualitative aspects, which needs to be carefully targeted if it is to be representative. The response rates from surveys used in this approach can be poor, interviews with key social enterprise stakeholders including representatives of

local government, infrastructure agencies covering finance, training and other support at local and regional levels, other social enterprises relevant to the case-studies, funders and independent consultants.

More than half the case study enterprises secured soft loans and/or some form of grant in their early years, typically from specialist support institutions. Although several had obtained start-up loans from commercial banks, more typically a combination of status and collateral issues had restricted access to finance from this source.

Some of the issues and support needs faced by social enterprises are shared with private sector firms of similar size and sector characteristics, such as in marketing, financial management and the use of ICT, whilst others are affected by the distinctive characteristics of this type of enterprise.

5.1 Implementing the Recommendations

Awareness and skills

Awareness-raising and encouraging behaviour change amongst staff is key to Social Enterprise being seen as an ‘exemplar' on sustainable development. Our latest staff survey12 shows encouraging increases in the number of people in Social Enterprise who understand sustainable development and how to apply it in their jobs. But the results - particularly for the questions on senior management - still fall well short of expectation for a department with sustainable development at its core.

This will help Social Enterprise to develop policies that benefit society, the environment around us and local economies. Sustainable development can be viewed as a social movement—“a group of people with a common ideology who try together to achieve certain general goals.”

Expectations of businesses are growing. In the past, a company's traditional community investment profile centred on charitable giving or grant giving, but that has now changed. Companies want to make meaningful partnerships and are searching for partners that match their values, and are more entrepreneurial. Social enterprise is more than ownership, more than just a social aid. It is about a mindset that isn't restricted to the third sector.

We have to beware of people jumping on the and ensure we really do get viable businesses. Finally, I think there is a difference between social enterprise and social responsibility. They are both needed, but the former does not exist to build shareholder value.

The problem was, and still is, the lack of a viable business plan. And that plan - though this, too, may be controversial - has to be better than that of an ordinary business.

There has been a lot of talk about scale and the assumption that you have to start small and have to grow. What you also need to think about is how you transform organisations that are already at scale to a different form in line with the ethics of social enterprise. You take people out of the private sector, take shareholding away and create another form. There is something different required in the culture and the mindset of this thing called social enterprise,

and to say, “Well, the private sector knows about management and efficiency”, is a myth. With 25 years of experience in the private sector, I can tell you it is not necessarily efficient or effective. The same applies to the voluntary and charity sectors, which are appallingly managed, in my experience. It is all very well to talk about mentoring, but just because they are from the voluntary or charity sector doesn't mean that they can bring something of

importance.

My idea would be for a National Lottery Venture Capital fund, where money is invested in those businesses or social ventures that either give exceptional returns or dramatically reduce the need for state provision.

Both techniques involve the qualification of some cases or data and the total rejection of data or cases that are seen to be deviant or non-conforming. I believe as researchers we should not be subjectively selecting the data to use or reject in its entirety. I believe that all data is important and such practices would lead to conducting research that is merely to confirm what we want or what. It illuminates the way people view and interact with their society, perceptions and relationships. This project entails an understanding of people perceptions, beliefs and organisational behaviour. As such I want to analyse the data that I generate in its entirety as I seek for themes, patterns, relationships and effects. I am interested in the very deviant observations or cases as these will strengthen my findings and save as test mechanism for theory that develops or contradictions to previous theory.

5.2 Making sense of social enterprise

The research established that the current wide and sometimes conflicting range of social enterprise definitions reflects a real diversity of activity in practice. This diversity, however, is not often acknowledged by policy-makers, advisors and trainers. Support needs to be adapted to accommodate the ‘hybrid' nature of social enterprise organisations, some of which are more rooted in the public sector, some in the private sector and some in the voluntary sector. Individual organisations blend these different traditions, sources of funding and connections in varying ways: strategies for development should be specifically related to the needs of individual organisations, including their social and economic characteristics and dynamics.

5.3 Funding entrepreneurial growth

There is still not enough of the right support for entrepreneurial growth, particularly at early stages when organisational survival may be fragile. Long-term funding strategies should be developed. These need to be geared to support throughout the growth process, both when there is risk or when one success appears only to lead to new challenges. They should complement the innovative staged approaches to funding developed by CDFIs such as the London Rebuilding Society, which are generally based on a model of linear business growth.

5.4 Taking risk and stimulating experimentation

Funders and policy makers need to recognise that the growth of enterprise may depend on failure as well as success; finance is needed for a generally enabling environment, and not only for specific projects. Ideas for mechanisms to provide organisational space to grow might include pooled social investment funds based on a mix of high and low risk, more funds of the Venturesome type which carry medium to high risk and more core funding. It would also be helpful if the various different funders involved in one organisation or enterprise had joint contractual agreements about their mutual expectations in relation to risk, roles and returns.

5.5 Clarifying mission and expectation

Funders should assess how far their particular investments or grants can realistically be tied to the achievement of specific outputs or returns which potentially involve an organisation in integrating incompatible funding streams. Imaginative alternatives to the current model of compartmentalised funding packages need to be explored, to reduce conflicts of expectation between different funders. For example, commercial lenders might be able to provide for both social and economic returns by supplementing commercial loans with grants from community investment budgets.

5.6 Measuring social return

There will be little real progress in assessing social enterprise activity and achievement without better mechanisms for social audit. Annual or funder reports should include at least some inexpensive social audits which supplement output figures. These might include, for example, stories and illustrations, if necessary independently ‘audited' by informed external and stakeholder views. Such social audits could provide a basis for setting targets both for individual organisational achievements and for local social and economic gains. Realistic criteria for the measurement of social returns should be agreed with funders.

5.7 Adapting support and training

There is a considerable need for more social enterprise support and training materials.

Funders should consider grants for support and training based on peer learning and

review, including the generation of critical and reflective social enterprise case

studies. Existing practitioners should be involved in providing training. One example

might be to fund a minimum of three agencies to produce pilot paper and web-based

materials, and conduct peer mentoring and training exercises.

5.8 End note on risk-taking and trust

Finally, it is important to understand the relationship between risk-taking and trust. The stories in this research are not only about highly prized success in attracting funding or generating income - they are about risk, trust and social gain. The achievement of economic and social gains through social enterprise in the voluntary and community sectors requires potential funders to engage more closely with organisations. Financial support mechanisms should be developed within a context of understanding, involvement, realistic expectation and trust.

Scenario 1: socialisation of business : Social enterprise will create new ways to do business.

Social enterprise is often defined as finding business and market based solutions to systemic social issues, such as social exclusion, long-term unemployment and sustainability. A social enterprise puts a higher premium on its social mission and its social returns which moderate the way it runs its business.

Factors at play in this scenario include changing consumer perceptions of business (continued rise of ethical consumption); changing attitudes of workers and staff who seek more responsible business; campaigns by NGOs and pressure from government; possible new reporting regimes; corporate social responsibility as a feature of competition; more pervasive, transparent, open and critical media. Other pressures may include attitudes in financial markets and investors' perceptions of reputational risks.

One way social enterprise could grow is through a further socialisation of business culture, governance, norms and accountability. More mainstream businesses may try to model themselves as social enterprises in the way they operate and hold themselves to account. The spread of fair trade from a marginal campaign into the business mainstream might be a good example. Corporate approaches to ‘carbon neutral' business might provide another example.

Entrepreneurial social enterprises often open up markets or ways of doing business that mainstream businesses do not see, in part because social enterprises are driven to innovate in marginal markets even when there is little profit to be made. Social enterprises could be an important source of disruptive innovation, for example in the environmental services and technology sector.

Finally changing attitudes among young entrepreneurs who seem to favour a new mix of making money and social purpose could produce a new wave of social start-ups: commercial businesses with a stronger sense of social mission at their heart, along the lines of Innocent drinks. Policy could play several roles in furthering the socialisation of mainstream business through: helping open up new ethical markets; regulation, for example on environmental standards; changes to corporate governance towards more social forms of accountability

Scenario 2: socialising public services : The socialisation of the state and public services.

The UK social enterprise sector is heavily dependent upon state funding and contracting out, especially in social care and local government services. In some respects the social enterprise sector has become a creature of public funding and an alternative to in-house public services.

The main forces behind this scenario will be: the growth of more open markets in public services, for example through individual budgets; decentralisation to local government and communities; innovation to tackle emerging social challenges. A good example of the first is the potential for the voluntary and social enterprise sector to play a much larger role in provision of social care as individual budgets come to play a larger role. As public services allow more choice and personalization, so social enterprises could play a larger role as service providers, brokers and navigators. If individual budgets spread into health and education then it's likely there will be growth in public social enterprises in these sectors as well.

Moves towards more decentralisation and community ownership of assets could allow new growth of local mutuals, for example owning local assets such as parks. Environmental policy might create new social carbon trusts to manage local carbon budgets.

Another possibility is growth of social enterprises around public priorities such as community safety and long term health conditions.

Scenario 3: politics - social enterprise and social movements: Social enterprises often emerge as the business expression of a social campaign or movement addressing a social need. The original cooperatives and mutuals emerged alongside the growth of trade unions and the Labour Party. Movements around child care, mental health and learning disabilities for example have produced both campaigns to change legislation but also new services for client groups. One way to plot the future of social enterprise is to examine the possible development of the social movements and campaigns that could spawn them.

Scenario 4: social enterprise and new forms of volunteerism: Social enterprises are sometimes based on a charity or a form of volunteering, for example a charity's commercial arm.Time Banks are another model for organised volunteering.

5.9 New Models for Sustainability

Today, the social enterprise field is at a defining moment. We can't expect to operate our current enterprises as-is over the long term, so we must find new solutions to sustainability or face eventual disappearance. There are two distinct options for moving in a direction that has the potential for long-term sustainability. The first is to develop new social enterprise business models that can scale to a size where they generate sufficient revenue to cover both direct and indirect business costs, as well as the incremental costs that are a function of the social mission. It's a business axiom that it takes revenue growth to mask operating cost inefficiencies, and the social enterprise approach will always have inherent inefficiencies.

The second option is to acknowledge that the vast majority of existing social enterprises will never generate sufficient net income on their own, and to develop stable, ongoing funding sources to subsidize the shortfall. When social enterprises are repositioned in this way, the argument can be legitimately made that they are perhaps the world's most effective employment programs for people who lack access to mainstream employment opportunities. And when one considers that social enterprises often fund 80 to 90 percent of their total costs with revenue that the businesses generate, a compelling case can be made that these ventures are among the most efficient as well. I believe that a compelling case could be made for providing ongoing funding subsidies to sustain social enterprises. The challenge with this approach is in the communication and education process, because foundations, government agencies, and individual donors are not conditioned to support continual losses at social purpose businesses.

Support for sustainable Social Enterprise is one element of the Agency's overall approach to improve the competitiveness and growth of existing businesses and encourage the creation of new business throughout the region.

Social enterprise takes many forms and serves a variety of prepossesses. Different hypothetical and appropriate sustainable study would help us grasp a fuller understanding of social enterprise. Organizational identity theory is one framework that can be help helpful for understanding the different types of social enterprise and their implications for organisational form, financing of services, management practices such as outsourcing and strategic

collaborations, and framing of public policy issues. Studying the variants of social enterprise can put into perspective how social objectives can be achieved in different ways, through the

market place and non profit and for for-profit organisations. Future research should be more precise about sustainable social enterprise and social entrepreneurship and help clarify how different forms of each, operating in different cultural and economic contexts, can contribute

to the solution of social issues and problems.

Recognizing that the concepts of sustainability will evolve over time through experience, research, economic analysis, and technological advances, the University will continue the work that led to the development of the Sustainability Principles by appointing a standing sustainability advisory group consisting of members of the faculty, administration and student body. This group will be charged with advising in the development of sustainability indicators, monitoring progress and providing recommendations for improving the Sustainability Principles and Implementation Framework.

We recognise that social enterprises help those traditionally disadvantaged in the labour market, by providing opportunities and delivering better services to deprived or excluded communities. Therefore, support for social enterprises is key element of sustainable approach towards creating opportunities for economically excluded individuals and communities

Adam Smith famously wrote that when a man offers a product in a competitive market place “he intends only his own gain, and he is in this….led by an invisible hand to promote an end which is no part of his intention…By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it” (Soule, 1952, p.42). I believe there is good reason to be enthusiastic about the future of social enterprise. This field is still in its very early stages of development and I expect that the coming years will bring continued innovation and increasingly positive social and financial outcomes.

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[This article was published in the April 2005 issue of Environment: Science and Policy for Sustainable Development, Volume 47, Number 3, pages 8-21. Robert W. Kates, Thomas M. Parris, and Anthony A. Leiserowitz, 2005. For more information about Environment, see http://www.heldref.org/env.php]

[http://www.cabinetoffice.gov.uk/third_sector/Research_and_statistics/Key_statistics.aspx]

[http://www.cabinetoffice.gov.uk/third_sector/Research_and_statistics/Key_statistics.aspx]

List of acronyms

CDFICommunity Development Finance Initiative

CICCommunity Interest Company

COSLAConvention of Scottish Local Authorities

CDSCo-operative Development Scotland

CVSCouncil of Voluntary Service

DTIDepartment of Trade and Industry

HICCaPHighlands and Islands Community Capacity Partnership

HIEHighlands and Islands Enterprise

HISEZHighlands and Islands Social Enterprise Zone

LECLocal Enterprise Company

LSEPLocal Social Economy Partnerships

RISE Regional Infrastructure for Social Enterprise

RSLRegistered Social Landlord

NCVONational Council for Voluntary Organisations

SFEDISmall Firms Enterprise Development Initiative

SISSocial Investment Scotland

TERUTraining and Employment Research Unit


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