Academic journal article Review of Business

The Duality of Social Enterprise: A Framework for Social Action

Academic journal article Review of Business

The Duality of Social Enterprise: A Framework for Social Action

Article excerpt

Executive Summary

Social enterprises are organizations intent on using the power of the marketplace to solve social and environmental problems. Although their popularity as an approach to business is growing, they are beginning to face a variety of challenges. To help ensure their survival, the paper argues that key business and ethical criteria need to be considered at key stages of the social-action selection process. The Social Action Framework (SAF) is introduced as mechanism to help managers make more effective social-action choices. It is explained using anecdotal evidence from a variety of organizations. In addition, the criteria of the SAF are used to generate an action-based definition of social enterprise and differentiate it from other organizational approaches to social-welfare enhancement.

Introduction

Defined as organizations seeking to achieve social goals through sustainable profits, social enterprises are becoming a popular new approach to business (Hamm, 2008; Lynch and Walls, 2009; Meyskens, Robb-Post, Stamp, Carsrud, and Reynolds, 2010). They propose to use the power of the marketplace to solve all types of social and environmental concerns. Take, for example, Tom's Shoes, a rapidly growing social enterprise. Every time it sells a pair of shoes to a paying customer, it gives a pair to a needy individual (www.toms.com). Its business model is based on a one-donation for one-sale arrangement, altering traditional approaches to both corporate social responsibility (CSR) and not-for-profit charities (Lynch and Walk, 2009). Its sales are directly linked to charity and it must remain profitable to survive. Because this novel approach has the potential to change the way business is done, the current paper explores social enterprise as a concept and introduces a framework to help manage social action within organizations.

While the notion of social enterprise has an obvious appeal for many, its ultimate impact in the marketplace has yet to be established (Trexier, 2008, Paris Tech Review, 2011). Challenges are emerging that may prevent the concept from realizing its full potential (Akwagyiram, 2008). First, the bleak economic outlook has not only decreased access to credit and investors but has also reduced the availability of donors and customers (Strom, 2010). Now everyone has to do more with less.

Second, traditional enterprises, firmly grounded in free-market, profit-seeking practices are responding to societal pressure by stepping up their own efforts to help the environment, reduce poverty, and make the world a better place (Werner, 2010). For example, Wal-Mart has not only begun using renewable energy sources to power its retail stores (Wal-Mart's Public Image, 2009) but has also begun encouraging customers to purchase more energy-efficient light bulbs (Wal-Mart Surpasses Goal, 2007). Perhaps a more focused, better funded CSR effort by traditional enterprise is all that is needed to secure the long-term welfare of humanity (Schuler and Cording, 2006). We may not need a new organizational form to solve our social problems.

Third, governments, organizations, researchers, and other relevant parties have been unable to reach consensus regarding the fundamental differences between CSR efforts, not-for-profit charity work, and social enterprises (Warwick, 2008; Spence, 2007; Nehme and Wee, 2008). Without a consistent, agreed-upon way to determine what is and is not a social enterprise; the potential of the concept is weakened (Kerlinger and Lee, 1999).

At present, there is no comprehensive guidance mechanism for connecting social concerns with capitalism drivers to enhance social welfare. Therefore, the current paper introduces a framework for dualistically analyzing social action within organizations. It can be used by any organizational form and is designed to support a variety of social-action decisions. Its aim is to improve the social performance of all organizations. …

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