Social Enterprise: Balancing Social and Financial Goals

Rebecca Pieniazek
Lecturer in Organizational Psychology and Behaviour

Do you want to live in a more socially inclusive world, in which people do good?

Given presumably that people do, we believe business schools have a moral responsibility to help tackle pervasive and adverse social problems, including: ensuring environmental sustainability; improving people’s life chances; providing training and community support; and boosting employment opportunities for the most vulnerable in society.

One approach to addressing these challenges is social enterprise. Like traditional commercial businesses, social enterprises must achieve financial success to ensure continued operation, yet they must also simultaneously do social and/or environmental good. Examples of social enterprises exist across the world, such as Better World Books that uses sales of donated books to fund reading programmes, and the Houston-based Prison Entrepreneurship Program that teaches prisoners skills required to start new ventures upon their release. Even Bill Gates champions a new form of capitalism in which profits are used to help those who do not typically benefit from market forces.

The more successful social enterprises are, the greater the positive impact on humanity and/or the environment, and the greater the input to regional jobs and productivity (these organisations are, after all, a key contributor to our economy).

Various bodies exist to support and promote social enterprises both within the UK (UnLtd.org; School for Social Entrepreneurs; Social Enterprise UK) and worldwide (GSEN.global), but what are academics doing to help?

Academics and practitioners have focused on social enterprises as a new form of organisation, blending together for-profit and non-profit principles. They are tasked with two major goals, one financial and one social. So how do they achieve both when other organisations are predominantly doing one or the other? Whilst advances have been made in terms of understanding and better advising how social enterprises should interact with the market, how to improve relationship based initiatives, and how they can become procedurally more viable and fit for purpose, we must remember that behind every social enterprise is actually an entrepreneur – a human being with their own mind and world view.

Older research assumed that the incompatibility between financial and social logics cannot be avoided and so the best that can be hoped for was to respond effectively with organisational processes. However, research has since challenged this assumption of incompatibility, explaining that they are only as incompatible as the social enterprise, or the social entrepreneur makes them. For example, some social entrepreneurs align the two missions and do not perceive this prickly notion of incompatibility, whereas others do yet refuse to be held back by it. Hence they strive to separate the financial and social missions in terms of times and situations so both can be achieved, but they do not contaminate one another.

My colleague Professor Kerrie Unsworth and myself believe one-size-fits-all guidelines for social enterprises are always going to fall short. Instead social entrepreneurs need to receive evidence-based practical advice which is fit for purpose relative to the individual ways they frame and deal with the social and financial requirements.  As such, we are undertaking research to better understand how different social entrepreneurs work, so we can uncover how to best to advise them on how to better manage both their social and financial goals. Our research, which is a work in progress, currently focuses on:

1) Identifying different ways social entrepreneurs perceive their social and financial missions, and the interplay between the two.

2) Explaining why they perceive the two missions as they do. In turn, this explains why some struggle with their missions, feeling like they were not compatible, whereas others were not.

We remain committed to researching the role psychology can play in enabling successful work by social entrepreneurs, whilst not being at the detriment to their wellbeing, and are always keen to hear from people with similar interests.

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  • Asset 25 If you are interested in finding out more and connecting with this research please contact Dr Rebecca Pieniazek
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