Ken Peattie and Adrian Morley

Eight paradoxes of the socialenterprise research agenda

Ken Peattie and Adrian MorleyESRC Centre for Business Relationships, Accountability,Sustainability and Society, Cardiff University, Cardiff, UK

Abstract

Purpose – This paper summarises key issues arising from a comprehensive research monographand accompanying discussion paper on social enterprise that reviewed over 150 sources. It aims toprovide insight into the future development of the social enterprise research agenda, and how to attractscholars new to the field to contribute to it.

Design/methodology/approach – The paper seeks to identify and address some of the difficultiesfaced by social enterprise researchers, in terms of defining their field, overcoming institutionalpressures that may deter scholars from tackling the social enterprise research agenda and in dealingwith some of its complexities.

Findings – In developing the monograph, two key themes were diversity and distinctiveness. Socialenterprise is a form of business that is distinctly different to conventional commercial enterprise andthat has an extraordinary diversity in organisational form, legal structure, purpose, culture, scale andscope. There are also a number of “paradoxical” elements to the research agenda for social enterprisesarising from their “hybrid” nature.

Research limitations/implications – These findings create many challenges for researchers,practitioners and policy-makers, not least in terms of defining social enterprises consistently, and alsoin terms of understanding what makes them different to commercial enterprises and what theimplications of those differences are.

Originality/value – The insights provided by this discussion should help to resolve and explainsome of the debates and conceptual and practical difficulties that have hampered the development ofthe social enterprise research agenda.

Keywords Business enterprise, Corporate social responsibility, Enterprise economics, Research

Paper type General review

1. IntroductionDuring 2007, as part of the consultation process in the commissioning of a new “ThirdSector” research centre, a seminar series was organised by the social enterprise coalition(SEC) and the ESRC (one of the new Centre’s funders). A research monograph andaccompanying discussion paper (Peattie and Morley, 2008a, b) were also commissionedto review the current state of research into social enterprise (SE[1]), and to consider theagenda that such a new centre might address. The BRASS Research Centre at Cardiffwas asked to develop this monograph for two reasons:

(1) as an ESRC Research Centre tackling an emerging area (in their case, businesssustainability and corporate social responsibility), it had experience of thechallenges involved in establishing a new centre and its research agenda; and

(2) it had recently conducted several projects with a focus on SE.

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1750-8614.htm

Paradoxes of thesocial enterpriseresearch agenda

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Received May 2008Accepted May 2008

Social Enterprise JournalVol. 4 No. 2, 2008

pp. 91-107q Emerald Group Publishing Limited

1750-8614DOI 10.1108/17508610810901995

The authors accepted the monograph commission, partly because BRASS hadconducted a SE literature review during 2005, within a project developing sustainabilityperformance indicators for SEs. They would have accepted it rather less casually hadthey realised the extent to which the SE literature had expanded during 2006 and 2007!The final monograph ran to forty pages and summarised findings from more than 150sources. It also benefited from insights generated during the research seminars and fromthe suggestions of a range of expert reviewers that drafts were circulated to, and who theauthors would like to express their gratitude to.

The monograph focussed mostly on UK research and on SEs as organisations as themain level of analysis. It did not seek to give equal attention to social entrepreneurshipand social entrepreneurs at a more micro level (for a comprehensive discussion seeNicholls, 2006; Mair et al., 2006; and Perrini, 2007), or to the social economy or “ThirdSector” at a more macro level (Evers and Laville, 2004). This paper seeks to extractsome of the key issues that emerged whilst attempting to develop a holistic andsystematic review of the existing research literature concerning SE. It tries to avoidpresenting just a summary of the monograph, since that will be widely availableonline, and the authors would encourage those who would like to learn more to consultit. Instead this paper seeks to explore why, when SEs are a form of business (one of themost researched phenomena on the planet), they are often significantly different, andparticularly challenging, to research, understand, develop and manage.

2. Background: the state of research into social enterpriseAlter (2006) highlights as “paradoxical” the contrast between SE as a relativelyunder-developed field of knowledge and thought, and yet as an area of practice with“vast potential” that is experiencing an “explosion” in practitioner numbers. The exactscale and scope of SE’s contribution to economies and societies worldwide is difficult todelineate and measure accurately, but there seems to be universal agreement that it hasgrown significantly. Commonly quoted figures based on the UK Government’s annualSmall Business Survey in 2005 suggested that there could be as many as 55,000 UK SEs(equating to 5 per cent of businesses) turning over £27 billion. The economic, socialand political value of SEs is reflected in increasing interest within the publicpolicy-making arena, and underlined by increasing public investment into promotingand supporting them. Despite this, they remain an under-researched phenomenon,particularly if compared to the business “mainstream”. Desa (2007), searched the seventop-ranked academic management and business journals from 1985 to 2006, and foundno articles on either social enterprise or social entrepreneurship. The situation isgradually improving, with an increase in practical mapping exercises aiming to betterunderstand the scale, scope, distribution and nature of SEs and growing academicinterest in the field. Several distinct types of research contribution can be identified.

2.1 Over-arching reviews of the fieldSome major edited collections have been published recently (Nyssens, 2006), along withother wide-ranging reviews such as Alter’s (2006) 100 page review which seeks tocreate a unified classification system and understanding of the field, based mainly onexperience from Latin America; or the review by Jones et al. (2007) covering 111 SEorientated documents (from a Scottish policy perspective) structured around five keydimensions of the SE literature including definitions, regulation, policy, support andinvestment.

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2.2 Regional studiesIn addition to the report by Jones et al., there have been several studies investigatingSE with a regional focus. Examples include Gordon’s (2006) research in SouthYorkshire, the 2002 Social Economy Network/Welsh Development Agency review forWales (Adamson, 2003), or Lloyd’s (2003) review across the English RDAs, Wales,Scotland and Northern Ireland. Borgaza and Defourny (2001) also provided a review ofSE across Europe which revealed much about its geographical diversity.

2.3 SE sub-type reviewsThere is a growing, and in some fields long-established, research literature concerningspecific forms of SE such as FairTrade organizations, credit unions or cooperatives(and for reasons of space these sub-type reviews were not generally included within themonograph). A second amongst the paradoxical dimensions of SE research that thispaper highlights, is that SE is unusual in being a business discipline in which severalof its sub-disciplines are significantly more mature and extensive than the over-arching“parent” discipline. A crude proxy measure to demonstrate this comes from submittingthe terms “Fair Trade” and “Co-operatives” into the Google Scholar search engine,which return four and five times as many studies, respectively, as a similar searchconducted on “Social Enterprise”.

2.4 Key issue studiesA growing number of studies look at specific issues relating to SEs, and themonograph brought together key findings and future research needs from a number ofthese, including studies on:

. governance, particularly in terms of competing “stewardship” and “stakeholder”based approaches (Mason et al., 2007; Low, 2006);

. financing, particularly the challenges ses face in accessing funding and theirneed for new forms of “patient” capital (Brown and Murphy, 2003; Perrini andMarino, 2006);

. factors associated with se success or acting as barriers to it (Sharir and Lerner,2006);

. relationships with the public sector (Chapman et al., 2007);

. external business support services for SE (Hines, 2006);

. marketing, particularly some of the difficulties SEs tend to have in marketingrelating to their understanding of pricing dynamics and the need to becompetitive in packaging and labelling quality and information provision forcustomers (Shaw, 2004; Bird and Aplin, 2007); and

. human resource management, particularly the challenge of managingorganisations typically staffed by a blend of volunteers and paid workers(Royce, 2007).

2.5 Research agenda setting studiesOne of the most useful of these came in an earlier Social Enterprise Journal contributionby Haugh (2006), who listed eight broad thematic needs for future research.


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Although the authors did not seek to use Haugh’s analysis as a template for theirmonograph, her eight themes are difficult to improve upon as a “top eight”:

(1) Defining the scope of social entrepreneurship. To help resolve some of thedefinitional problems referred to below and to make international comparisonsmore feasible.

(2) The environmental context. In terms of the political, economic, social, culturaland technological trends that influence social enterprise and entrepreneurship.

(3) Opportunity recognition and innovation. To better understand why SEs are ableto innovate and seize opportunities, and also the barriers that sometimesprevent them from doing so. Despite the research that exists about the foundingand early growth of SEs, Desa (2007) notes that there is relatively little researchabout where the initial ideas come from, and how particular opportunities areidentified and evaluated.

(4) Modes of organization. To better understand and compare differentinstitutional forms and legal formats. The conventional business literature isdominated by a single business model, the public company with distributedownership through shareholding. Although other legal forms of enterprise suchas private companies, family companies or partnerships are acknowledged, andsometimes studied, the large publicly held company is the business schoolnorm. SEs by contrast are predominantly small organisations, in whichownership is often distributed through community rather than publicownership, and which are characterised by diversity. There are a number ofdifferent legal structures in the UK commonly associated with SEs including acharity (that trades), trust, community interest company (CIC), company limitedby guarantee, company limited by shares, community benefit society, industrialand provident society and unincorporated association. There are also forms thatbelong to particular sectors such as housing associations and credit unions. Insome cases, SEs exist as a trading-orientated departments or projects within alarger parent organisation such as a charity.

(5) Resource acquisition. To understand the sources, management andsustainability of the physical, financial and human resources that SEs relyupon. Desa (2007) provides a particularly good analysis of the way resourceconstraints often shape the early development of SEs and the value of a“bricolage” perspective to understand how they access and mobilize resources.

(6) Opportunity exploitation. To understand how SEs are able to bring resourcestogether, develop networks and formulate and implement strategies to developa viable organization and exploit the market opportunity they have identified(Hockerts, 2006).

(7) Performance measurement. To create appropriate ways to measure themulti-faceted nature of the performance and contribution of SEs. There is aparticular need to be able to systematically capture and express all aspects oftheir social value (Paton, 2003; Somers, 2005; Bull, 2006).

(8) Training education and learning about social entrepreneurship. To understandhow SEs learn, and how we learn about them.

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Instead of attempting to encapsulate the analysis of future research needs provided byboth Haugh and by the research monograph, this paper reflects on some key themesthat emerged while developing the monograph, particularly regarding some of themore paradoxical aspects of the SE research agenda and its future development.

3. The definitional minefieldAlthough there is little value in trying to improve on Haugh’s research agenda settingcommentary within this paper, the first key theme she identified relating to definitionsis worth expanding upon. A distinguishing feature of the SE literature is controversyover definitions and classifications (Lloyd, 2002; Nicholls, 2006; Jones et al., 2007), whichwas also a recurring theme during the 2007 SEC/ESRC seminar series. The monographused Pearce’s (2003) comprehensive model of the “three sectors” of the economy, inFigure 1, as a starting point to consider the relevant labels, actors and sectors.

The broad term “Social Enterprise” includes many organisational types that vary intheir size, activities, legal structure and ownership, geographic scope, funding,motivations, degree of profit orientation, relationship with communities and culture.The combination of diversity and definitional difficulties acts to hamper attempts tomeasure the SE sector (Shaw and Carter, 2007), to develop more differentiated policiesand forms of investment to support its development (Jones et al., 2007), and to developpropositions that can be generalised from specific research projects. Some argue thattrying to define SEs precisely is somewhat pointless (usually on the basis that “youknow one when you see one”), or that it is more useful to talk in terms of “ideal types”rather than clear-cut definitions (Defourny, 2006). However, definitions are importantboth to differentiate SEs from other types of public or commercial organizations, and tohelp to differentiate between types of SE (Jones et al., 2007).

The definitional problems partly stem from a tendency amongst authors to describeSEs in terms of particular characteristics without attempting to differentiate betweenthose that typify SEs and those that define them. For example, not distributing profitsto shareholders is used by some as a defining characteristic, yet longstanding SEs suchas Traidcraft and many others established as community interest companies areintended to generate an element of profit for shareholders. SEs are also often describedas being small and democratic, and as being participatory in terms of involving theintended beneficiaries in decision-making processes (Defourny and Nyssens, 2006).However, there is nothing that prevents a SE from becoming large, and indeed there isan emerging concept of “Corporate Social Entrepreneurship” that relates to largerbusinesses (Austin et al., 2005). Similarly there is nothing to prevent a SE from beingautocratically run by a founder with a strong sense of social mission, an in practiceAiken (2006) found low levels of worker involvement in governance issues in manytypes of SEs. Particularly, when compared with forms such as cooperatives. Othersuggested “defining” characteristics of SEs include a high degree of autonomy, aminimum level of paid work and a significant level of economic risk (Defourny, 2004),yet all are characteristics also shared by organisations that plainly are not SEs.

The only clearly defining (rather than typical or desirable) characteristics are:. the primacy of social aims; and. that the primary activity involves trading goods and services.

These dimensions reflect the delineations in Pearce’s model between SEs and theprivate sector in one quadrant, and from the rest of the voluntary and public sectors


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in another. Perhaps helpfully, these characteristics are also encapsulated within the UKGovernment’s SE definition as:

[. . .] a business with primarily social objectives whose surpluses are principally reinvested forthat purpose in the business or in the community, rather than being driven by the need tomaximise profit for shareholders and owners (DTI, 2002).

Figure 1.Three systemsof the economy

Market-drivenTrading

Planned EconomyNon-trading

Second SystemPublic Service

Planned Provision

First SystemPrivate

Profit Oriented

Third SystemSelf-helpMutual

Social Purpose

Formal

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VoluntaryOrganisations

CharitiesUnions

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that trade

Fair TradeCompanies

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CommunityEnterprises

Time BanksLETS

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LocalAuthorities

National andRegional

Government

CommunityCouncils

Small andMedium

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EuropeanUnion

UnitedNations

Mutuals

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In short, it concerns the use of business means to pursue social ends, and in many waysit is the interaction between the two that underpins the unique dimensions of the SEresearch agenda. How does having an agenda driven by social goals affect SEs asbusinesses? What are the implications of choosing business processes as the means forpursuing particular social goals? These are the macro-level questions behind much ofthe SE research agenda.

4. Social enterprises as paradoxical hybridsThe defining characteristics of SEs, of applying the methods of the private sector toachieve the types of primary social aims associated with the public and voluntarysectors, make them a form of organisational hybrid (Defourny and Nyssens, 2006). SEsare typically portrayed as organisations that exist between the private and publicsectors and with characteristics that reflect both. This is reflected in Dees’ (1998) SEhybrid spectrum model shown in Figure 2, which implies that the organisationaldimensions and key stakeholder relationships of SEs will blend those of theconventional commercial and public or non-profit positions. Whether different types ofSEs from different sectors will all occupy a central “blended” position on everyorganisational dimension, or whether they create more unique patterns ofcharacteristics which are each more representative of either commercial or non-profitsector organisations, would be an interesting issue for future research to explore.

Evers et al. (2004) take a slightly broader perspective to portray SEs as“three-dimensional” hybrids, which combine elements of the goal sets and mixedresource structures from the market, the state and civil society (reflected in terms ofresources as income, grant support and voluntary contributions). Hockerts (2006)views the hybrid nature of SEs, and their ability to create public benefit from running aprofitable business that also incurs private costs, as counterintuitive to the point ofvirtual paradox, commenting that:

Management research has no theoretical explanation for these phenomena, nor does it offerguidance for social entrepreneurs who need to navigate the fault line delineating for-profitstrategies from the domain of public and non-profit management.

Figure 2.Dees’ social enterprise

hybrid spectrum

PurelyPhilanthropic

PurelyCommercial

Appeal to self-interestMarket driven

Economic value

Market-rate prices

Market-rate capital

Market-ratecompensation

Market-rate pricesSpecial discounts,

or mix of in-kind and full-pricedonations

Below-market wages,or mix of volunteers and fully paid

staff

Below-market capital,or mix of donations and market-

rate capital

Subsidized rates,or mix of full payers and those

who pay nothing

Mixed motivesMission and market drivenSocial and economic value

Appeal to goodwillMission driven

Social value

Motives, methods, andgoals

Beneficiaries Pay nothing

Donations and grants

Volunteers

Make in-kind donations

Capital

Workforces

Suppliers

Key

stake-

holders


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Certainly, one observation from the process of developing the monograph was that thenature of SEs often contained curious elements which, if not always completelyparadoxical, were often counterintuitive or at least ironic. These are presented below assix further interlinked “paradoxes” of SE research.

4.1 The research tradition paradoxIt is ironic that the two strongest foundation stones of the SE literature base appear tobe lodestones with an opposing philosophical charge. One is the literature on socialentrepreneurship, a branch of the entrepreneurship literature with a strong emphasison individualism and the social entrepreneur as a “heroic” individual. The other isdrawn from the literature of the co-operative movement with its fundamental emphasison collectivism and co-operative effort. These opposing traditions create some verydifferent ideas about where the entrepreneurship in SEs comes from. Some authorsemphasise the role of the social entrepreneur as a bold, opportunist, individualisticchange agent applying business skills to create and sustain social value (Dees, 2001).Others suggest that it may also be inappropriate to think of the social entrepreneuronly as an individual, because entrepreneurship in some places and cultures mayemerge more from groups and communities (Peredo and McLean, 2006). Spear (2006)suggests that the image of the social entrepreneur as an “heroic individual” may besomething of a myth in many cases, and that success is often based on groups usingconcepts of “distributed entrepreneurship” and “circles of entrepreneurial activity” thatinvolve a range of internal and external stakeholders. One curious observation from theliterature relates to the “direction” from which social entrepreneurs and socialenterprises emerge. Individual social entrepreneurs can emerge either from abackground in the social issue in question, or from a commercial background as theyseek to apply their business skills to a new field, either because they are “serialentrepreneurs” (Vega and Kidwell, 2007), or are seeking to make a social contributionhaving achieved their ambitions in financial or business terms. As organisations, theSE literature shows many examples of voluntary sector or public service organisationsevolving to adopt the methods of business to become social enterprises, but very fewcommercial enterprises travelling from the other direction to adopt primarily socialgoals (Chew, 2008). This suggests that it may be easier for the priorities of individualsto be changed and reordered than it is for those of business organisations.

4.2 The innovation paradoxA common perception within the SE literature, and one strongly rooted in theentrepreneurship tradition, is that they are inherently innovative (Dees, 2001;Bornstein, 2004; Vega and Kidwell, 2007). Perrini and Vurro (2006) stress theinnovative and entrepreneurial aspects of SEs by using the label “socialentrepreneurial venture”. Others debate the extent to which SEs tend to beinnovative and question why they are acknowledged to be innovative by nature (atleast in process terms) when they are not widely involved in research and developmentactivities and spending (Jones et al., 2007). One potential answer to this question mayreflect that although both primarily-for-profit and social entrepreneurship requirescreativity and innovation, in the social context this is often manifested by applyingnovel market-based solutions to intractable social problems, rather than throughtechnical innovations in products, services or technologies. In other words the

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innovations that SEs are good at tend to be social (particularly in terms of financial orcommercial relationships) rather than technological. Another explanation is that a lackof resources often prompts SEs to be innovative on a “shoestring” or by rediscoveringor “translating” old or existing technologies between sectors and applications.Elements of this paradox are apparent in the role of SEs in the housing andconstruction sectors. On the one hand, innovations in social housing have been largelybased on innovative financing solutions, ownership arrangements and stakeholderrelationships, rather than on new types of buildings or building materials. On the other,experience from the construction sector suggests that many key innovations inbuilding eco-design are emerging from a range of SEs including Hill Holt Wood, theEden Project, Earthship Fife and the Centre for Alternative Technology atMachynlleth. What the future may hold is the opportunity for the constructiontechnologies developed by these SEs to merge with the social, financial and commercialinnovations of the Housing Associations. This could create innovative approaches tosustainable housing and communities in response to the mounting pressures relatingto climate change, social cohesion and quality of life.

4.3 The “like a business vs business-like” paradoxAlthough SEs adopt the methods of business in pursuit of their social goals, they areoften reluctant to adopt a business “mindset”. Phillips (2006) found that culturally SEsdemonstrated “a wariness bordering on antipathy towards mainstream businessapproaches” and Adamson (2003) found that this wariness extended to a reluctance onthe part of some SEs (particularly those primarily serving communities and the publicsector), to actively develop trading relationships with private sector companies.Parkinson and Howorth (2007) also found that when social entrepreneurs used thelexicon of conventional entrepreneurship, it tended to be in a way that disparaged themainstream and was used to distance the SE from it.

Thinking of themselves as a breed apart may help SEs to be innovative and to think“out of the box” in management and process terms, but it may also create somechallenges and inhibit growth and diversification. The existence of languagedifferences between SEs and the business mainstream might seem like a trivial issue,but it can have profound implications. This was observed in practice by Howorth et al.(2006), when looking at the role of SE in community development, who found that anover-emphasis on the “business case” and use of “business-speak” in promoting SEcould lead to some stakeholders feeling “locked out” by a world-view and vocabularythey did not share. This is very much in keeping with the observations of Paton (2003)that SEs operate in a different world of meaning to the conventional managerialdiscourse based on economics and enterprise. He warns that the unique roles andstrengths of SEs could be undermined by the unquestioning use of the language andideas of conventional business, pushing SEs away from the social and political issuesthat form their raison d’etre.

The tensions that SEs face in trying to maintain their primary social goals in theface of pressures to adopt increasingly entrepreneurial and “business-like” practicesand language is a theme picked up by several authors (Seanor et al., 2007). These“isomorphic forces” in the SE environment include the requirements of lenders, theguidance provided by business support agencies, the demands of public procurementprocesses and the reliance in research on best practice case studies. These forces


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combine to promote certain types of SE models, and to push SEs towards conformityand away from their natural diversity. Nicholls and Cho (2006) comment on the irony ofa sector that is celebrated for being creative, diverse, innovative and able to disruptexisting systems of service delivery, being forced towards the relative homogeneity ofparticular organisational forms. Low (2006) sees growing pressures to become more“business-like” as likely to push SEs towards the “stewardship” style of governanceassociated with corporations and an emphasis on shareholders. This is despite theemergence of CICs and their intention to promote the more democratic “stakeholder”style of governance more prevalent in the voluntary sector, and to promote communityownership of SE assets.

4.4 The competitiveness paradoxA key implication of developing a SE and thereby adopting a business-based approachto the pursuit of social goals, is that it must be able to compete within a market-placeand satisfy the needs of customers at least as well as the competition. This can providea challenge to SEs who can be relatively under-resourced and inexperienced when itcomes to marketing. SE marketing is usually based on intense personal promotion bythe founding entrepreneur(s), but they may lack the time, skills and marketingorientation to develop a more formal approach to marketing strategies and activities.SEs also produce relatively unique challenges relating to a reluctance to marketthemselves at all, and a fear of marketing themselves as “too successful” for fear itmight jeopardise future grant support for those with a mixed income stream (Shaw,2004; Bird and Aplin, 2007). A key topic of discussion during the 2007 SE SeminarSeries was the competitiveness of SEs when pursuing public sector procurementcontracts. Ironically whilst many SEs believed their social “added value” would givethem an advantage over purely commercial competitors, some of those managing theprocurement contracts expressed a reluctance to purchase from SEs due to concernsabout their professionalism, ability to scale up or long-term sustainability. It was clearthat the current procurement processes do not allow the full social and commercialvalue of SEs to be measured, expressed or considered.

4.5 The people paradoxThe human dimensions of the business produce some of the most interesting contrastsbetween conventional businesses and SEs, and some paradoxical dimensions. Whilegenerating employment might be an important social contribution for a conventionalfirm, it can be the raison d’etre of SEs with a focus on “work integration”. Conventionalfirms battle for “talent” by recruiting the most skilled and experienced staff they canfind and afford, they look for the people who will do the business most good. Many SEsby contrast actively seeking to generate employment opportunities, including salariedtraining for the long-term unemployed, people with learning difficulties, ex-offenders,those lacking in qualifications or other groups with relatively low-employment rates(which vary amongst countries but can include women or older workers; Defourny andNyssens, 2006). They seek the employees the business can do the most good for. Oneparadox in relation to human resources is that such work integration SEs tend to beunusually inclusive, yet other forms of SE and other third sector organisations reportedparticular problems with recruitment because they struggled to find candidates thatcombined the right skills with an appropriate cultural “fit” with the organisation’s

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social mission (as highlighted in the 2005 CIPD Survey on Recruitment, Retention andTurnover).

Another paradoxical element is that although the emphasis amongst many SEs ongenerating employment is beyond criticism, there has been research that has questionedthe quality of the employment that they generate in terms of the quality of the jobs andthe levels of pay provided, and particularly the stability of the employment offered bySEs (Amin et al., 2002). These sustainability concerns are particularly true of SEs thatcontinue to rely on grants within their funding stream (Phillips, 2006). Managing jobinsecurity caused by the episodic nature of grant funding support for many SEs is one ofthe distinctive and challenging dimensions of human resources management for SEshighlighted by Royce (2007), along with balancing a workforce composed of both paidstaff and volunteers; and managing volunteers alongside sometimes vulnerable staff.Similarly in the case of SEs employing a workforce that is in some way disadvantaged(and which may impair competitiveness in terms of productivity), whether and how tohighlight this dimension in the marketing of the enterprise represents an unusual ethicalconundrum which has received little research attention until very recently (Bird andAplin, 2007). This provides another dimension to the competitiveness paradox outlinedabove.

4.6 The “Who?” paradoxAlthough the research monograph largely explored the future research needs for SE interms of what issues needed to be researched and why, the accompanying discussionpaper also considered the “Who?” question of developing research capacity. Since SEsrepresent organisations that operate in business, albeit with primarily social aims, itwould appear logical for business scholars to lead the way in SE research, particularly ata time when issues like corporate social responsibility and cause related marketing aremoving social issues up the mainstream business agenda. In the USA for example, thereis a concentration of SE expertise in one or two of the longest established and mostprestigious business schools, particularly Harvard and Columbia. In the UK, althoughthere is growing interest in SE amongst business schools, and particularly within someof the newer schools, it has often been the sociologists and the geographers taking thegreatest interest. The curious lack of enthusiasm for SE research amongst many UKbusiness schools may partly reflect the strictures of the recently completed ResearchAssessment Exercise (RAE). This acts to reinforce traditional disciplinary boundariesand push scholars to concentrate on the longest standing management journals with astrong “RAE rating” and which, as Desa (2007) noted, have generally been slow torecognise and respond to the growing importance of SE (with certain honourableexceptions, such as the 2006 special issue of the Columbia Journal of World Businessdedicated to SE). It may also reflect the dominance of a particular managementparadigm which is strongly based around the concept of delivering shareholder value,and which SEs neither share nor fit comfortably within.

Developing SE as a field of scholarship will require more business and managementscholars to take an interest. This may happen naturally as they become more aware ofthe scale, scope and economic and political importance of SE and of its distinctivecharacteristics and the opportunities they provide for novel, interesting and sociallyvaluable research. It is also likely to require other structural changes such as theprovision of research funding, the development of better links between social


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enterprises and their local business schools, and for a stake to be driven through theheart of the RAE in its current form.

4.7 The transatlantic paradoxThere is also a paradox for UK management scholars interested in SE in that, with theexception of a period in the 1980s when Japan was a key source of inspiration, the maindrivers of the management discipline have been American-based business schools,journals and corporations. Within the business mainstream, this is not particularlyproblematic, since there is relatively little to differentiate UK from US-owned companies.The concept of an “Anglo-Saxon” business culture which is distinct from that ofcontinental Europe is often referred to, and takeovers have led to regular ownershipexchanges between the two countries. The SE field is different, with the USA having avery distinct view of the role and nature of SE to that of most researchers, practitionersand policy makers in Europe. Kerlin’s (2006) comparison between the two revealed arelatively narrow American notion of the SE as a non-profit organisation existing for thesocial good in a way that complemented commercial enterprises, compared to aEuropean notion of SEs as an engine for economic inclusion and reform that will competewith commercial enterprises and often disrupt the status quo (Borzaga and Defourny,2001). SE in the UK has more in common with the European traditions of research andpractice, which may provide another obstacle to more UK business scholars embracingSE research. It is a field in which the usual sources of information, inspiration andanswers are far less applicable, and it means that great care would need to be taken inseeking to apply lessons from American SEs to their counterparts in the UK.

5. ConclusionsThe hybrid and sometimes paradoxical nature of SEs make them particularlychallenging businesses to manage, to research and to develop effective policies for. Theemphasis on “entrepreneurship” has often focused attention on the roles of enterprisingindividuals and their characteristics, particularly in establishing SE ventures, ratherthan on the development of the management teams, competences and skills needed todevelop and run them. SE managers face challenges in managing the identity of ahybrid organisation, integrating the typical mix of employees and volunteers,balancing different currents within the income stream and responding to marketpressures from customers and competitors and to pressures from customers andsponsors to “professionalise”. All this has to be accomplished whilst keeping a diverserange of stakeholders happy and maintaining the SE’s vision firmly on its originalsocial mission and goals.

The need for more and better research to support practitioners, policy makers andthose seeking to learn more about SE is obvious. The current developments underway toaddress this need, including the establishment of the new UK Third Sector researchcentre and associated “capacity building clusters” during 2009 and the Social EnterpriseJournal’s re-emergence as a refereed journal within the Emerald stable, make this a veryexciting time for the field. As well as more research, we also need more nuanced researchto address a key theme that runs throughout the SE research literature concerning theirdiversity in terms of origins, aims, organisational characteristics, ways of operating andmanaging, development paths and market sectors. This diversity has severalimplications. It makes it important that SE scholars avoid presenting definitions of

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SEs that only reflect one particular type (or sub-set). SEs are often not-for-profit,community based, employment focussed, small, entrepreneurial, innovative,collaborative or democratically run. Such characteristics may be typical and evendesirable, but they do not make an organisation a SE and the absence of any one of themdoes not preclude other forms of organisation from being considered a SE.Acknowledging the diversity within SEs, moving beyond the definitional debates andrecognising particular sub-types of SE for what they are, will allow for a betterunderstanding of different types of SE, and an appreciation of their differences andsimilarities. This in turn will help in identifying more clearly areas of commonality withdifferent types of conventional/commercial enterprises, and in identifying opportunitiesfor the effective transfer of knowledge from the mainstream business literature. Thiscould help to address the systematic weakness that Jones et al. (2007) note in the currentSE literature, of a failure to transfer applicable knowledge from the literature on theprivate sector.

Understanding how much knowledge SE can draw from conventional businesswisdom requires an understanding of another theme running through the SE literatureconcerning their distinctiveness. There are many ways in which SEs tend to differ bothfrom their conventional, commercial counterparts, and from other types of third sectororganisations. The key defining difference from commercial sector organisationsreflects the contrast in their primary objectives (towards the satisfaction of the needs ofdirect stakeholders, i.e. shareholders, customers and managers through the generationof customer satisfaction, profit and growth as ends, versus the furthering of social orenvironmental aims which may or may not be served through the generation of profit).This makes comparative research involving commercial, primarily-for-profitenterprises and social, primarily-for-social benefit enterprises crucial to determinewhere the differences and similarities lie. A clear understanding of these issues willanswer the questions of:

. How much conventional business school wisdom can be translated and applieddirectly to SEs?

. Where the unique features of SE lie and where future dedicated research effortsneed to concentrate?

The comparative studies by Austin et al. (2005), Brown and Murphy (2003) and Shawand Carter (2007) all provide important contributions to this understanding, but furthercomparative research is needed. Developing appropriate comparisons may also requirea more nuanced understanding of conventional businesses amongst SE researchers.There tends to be a simplistic assumption that commercial businesses are profitmaximising, and an emphasis on lessons drawn from the largest and most successfulcompanies that may have little resonance with the broader business population whichis dominated by smaller companies. It may be that SEs will have the most to learn, notfrom the “usual suspects” in the commercial sector, but from small firms and familybusinesses in particular, and from commercial businesses which also try to balancenon-commercial dimensions or values (e.g. many commercial firms in craft, creative orhighly traditional industries).

Ultimately, one aspect of the future development of the SE research agenda mayinclude new opportunities for commercial businesses to learn more from innovative andsuccessful SEs. The great management challenge for the twenty-first century is to create


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more environmentally and socially sustainable economies, communities and enterprises.It is perhaps telling that emerging efforts to explore what a more sustainable societymight look like (for example WWF’s One Planet Economy initiative) have an explicit andcentral role for SEs. We know that the old models of production, consumption andbusiness have contributed to major increases in material wealth but also to a paradoxicalfailure to improve our perceived happiness and quality of life (Layard, 2005). Future SEresearch may hold the key to resolving that particular paradox, and in generating newconcepts of business that we can all learn and benefit from.

Note

1. SE is used throughout as an abbreviation of social enterprise for reasons of space.

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Further reading

GHK (2007), Review of the Social Enterprise Strategy, GHK/Small Business Service, London.

Hare, P., Jones, D. and Blackledge, G. (2006), “Understanding social enterprise and its financing:a case study of the child-care sector in Scotland”, Social Enterprise Journal, Vol. 3 No. 1,pp. 113-25.

Corresponding authorKen Peattie can be contacted at: [email protected]


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