Defining Social Enterprise

Social Enterprise has become something of a buzz word of late. With the arrival of the Mark there is an attempt to consolidate the identity of our sector. But have we got it right? A catch-all term has some serious draw backs.

A recent survey concluded that there are a lot more social enterprises around than are usually acknowledged: it was able to say this because it included in the broadest definition, any businesses whose founders said that they wanted to make a difference.

With such inclusive criteria, almost any business might be said to have a social dimension, since in a market-economy firms meet our needs at prices we can afford, and are able to provide both employment, dividends to our pension funds and revenues to government in the process.

At the other end of the spectrum, charities and grant-dependent voluntary-sector bodies are being claimed as social enterprises. Although more and more they are taking on contracts to deliver services instead of the state itself, such bodies are essentially economically passive entities, rather than enterprises, creators of financial wealth.

An inclusive definition of social enterprise has its uses, making all economic actors aware of what they have in common, and of their collective and individual responsibility for our welfare and environment. But the term was originally coined to embrace enterprises with a particular set of characteristics that separated them not only from the public sector and the private sector, but also from the charity and voluntary sector.

In the European context, the term social economy embraces the set of autonomous collective self-help bodies - co-operatives, mutuals and associations - which are democratically accountable to their beneficiary stake-holder group: they are mutually-owned trading organisations. So they differ from private enterprises where neither customers nor employees are included in the control of the business, and from charities, which by definition are not run for the benefit of those that run them.

At a time when both private sector markets and state provision are seen to have their weaknesses and limitations, people are keen to find alternatives, and “social enterprise” is held up as a solution. There is the danger however, that a vague definition, that does not acknowledge the different characteristics of a socially responsible private business, a charity, and a co-operatively-run facility will not allow us to see the benefits and disadvantages that each model has in particular circumstances, industrial sectors, and relations of production and delivery.