I was lucky enough to complete the University of Surrey’s Masters module on Corporate, Social and Environmental Responsibilities alongside my work at Eterna.
To conclude the module, I wrote an essay on social enterprises. I am posting the essay below. If you want to see the final submitted PDF, with references, please follow the link below.
I’d like to thank the module convener Dr Walter Wehrmeyer for putting together an excellent course. Your feedback has been invaluable. I will be sure to swot up on Friedrich Hayek’s Law, Legislation and Liberty!
Will Social Enterprises change mainstream business.pdf
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Will Social Enterprises change mainstream business? Why and how?
“Eventually, all things merge into one, and a river runs through it”.
In Brazil, near the city of Manaus, two tributaries of the Amazon River confluence. One is light coloured, filled with sandy sediment, while the other is much darker, carrying black soil. When the two streams collide, they run parallel to each other for several miles, creating an extraordinary visual spectacle, before eventually mixing. The phenomenon is popularly called the Meeting of Waters.
It is tempting to see mainstream business as the dark, dirtied water, stubbornly resisting the light of social enterprises, before finally succumbing. Unfortunately, the waters are, forgive the pun, murkier.
The academic study of social enterprises is flourishing, as the sector booms. Despite much toil, a conclusive and substantive definition proves elusive. All definitions acknowledge social enterprises are mission orientated organisations aiming to create social value. However, the acceptability of profit is contentious. Originating in America, there is a growing belief that profit can be a means to an end, with the likes of N. Sladden going as far to suggest that profit maximising operations can be ringfenced. We can agree on the essentials, UK social enterprises are organisations that operate to achieve defined social value, and this aim is integrated throughout the business. The existence of profit is therefore inconsequential.
This is an era of unprecedented opportunity for social enterprises. Mainstream business, the culture of traditional big business, was humiliated by the Financial Crisis and is determined to demonstrate its social value. Stumbling in the dark in search of purpose, it has fallen at the steps of the social enterprise church. Social value is in vogue and social enterprise is the zeitgeist.
But are social enterprises really driving this change? There is limited evidence to suggest mainstream business’ recent conversion has had anything to do with social enterprises. Indeed, due to its own actions the impact of social enterprises has been frustratingly neutered for years. The effects of social enterprises’ inability to influence mainstream discourse is all too evident in the flaws of mainstream business’ new model.
But after all, “no force on earth can stop an idea whose time has come”. While top-down attempts by social enterprises to affect change have failed, this revolution will succeed in its second act. Post Financial Crisis culture will eventually be reflected in the public sphere through a bottom-up groundswell. The defining lines between government, business and society will blur and social enterprise will cease to be a meaningful category of description, as its principles transcend into the universal.
Business has symbiotic relationship with society, both reflecting and shaping cultural norms. In the last quarter of the twentieth century, economists led by Milton Friedman ushered in an era of shareholder capitalism, where profits were prioritised over all other outputs. The rugged individualism of Ayn Rand became a state religion. Greed was good, there was no such thing as society, nor any alternative.
Suddenly, it all came crashing down. The Financial Crisis of 2007/08 was a watershed moment. Greed was bad, and it was everywhere. Business went from good to evil in months as its legitimacy as a creator of innovation, wealth and jobs was questioned.
Change was not immediate. Despite the foresight of the likes of Lord Turner, most mainstream business continued an ill-fated quest for businesses as usual. But society had changed, making the status quo untenable. The global protest movements of 2011 signalled a new political economy that demanded equity. Since then, business has undergone a radical transformation as it came to understand it needed to play a greater role in society, epitomised by Larry Fink’s leadership of BlackRock.
This presents a monumental opportunity for social enterprise, as mainstream business pivots towards social value. Many in the movement recognise the opportunity. As early as 2006, Abagail McWilliams and Donald Siegel realised there was significant crossover between corporate, social responsibility and social enterprise values, while Social Enterprise UK repeatedly talks of the movement’s growth. There is a sense of inevitability about mainstream business looking to existing models that suit the zeitgeist.
It seems as if all roads lead to social enterprise. The Financial Crisis was not the only spur towards social value orientated organisations. The rise of anti-globalisation movements, existent before the Financial Crisis, have led to a returning admiration for small is beautiful. This was reinforced by COVID-19 lockdowns, cultivating new localism movements while rebalancing the relationship between employer and employee. The rise of the internet has led to an era of pluralism and awareness, creating a generation more motivated by social issues. As millennial and Gen Z generations are entering the workforce and becoming consumers, they are demanding change.
This multi-pronged zeitgeist funnelling society towards social enterprises means we must lift our heads from the narrow confines of the literature to recognise the panorama of movements drawing on similar themes. Principles of social value have deep roots in the progressive tradition. What of the Levellers, the Diggers and the Chartists, the seedling Christian socialists and even the proto anarchists of Against the Grain and The Dawn of Everything? Surely, we must rescue them from “the enormous condescension of posterity”, recognising social enterprises are providing the contemporary framework for a perennial propensity.
This change is possible. While scalability is a controversial issue in the literature, there are real-world examples showing social enterprises can go big in the mainstream. Grameen Bank founder Muhammad Yunus pioneered the concept of microlending in Bangladesh to customers too poor to qualify for loans from traditional banks. Through his mantra of “social development from below”, Yunus showed organisations can deliver social value at a national scale, while also solving the problem of insufficient capital. Social enterprises are also proven competitive suppliers. AB InBev enjoyed an “impact premium” from Brazilian social enterprise Green Mining. Lastly, alternative business models are dependable value creators and innovators. Seetec’s Ann-Marie Conway describes how improved employee wellbeing translates into innovation. There is conclusive evidence that social enterprises can provide systems level change.
This is offers the contemporary social enterprise movement three reasons for optimism. Firstly, it suggests the current movement towards social value in business is a glacial, long-lasting shift akin to those studied by the Annales School, rather than a flash in the pan fad. Secondly, it adds legitimacy and recognition to the principles of the movement, as a sense of social value has been a permanent feature of the human experience. Finally, its strong track-record shows social enterprises can be trusted to deliver. It is their time.
The recent business trend of corporate purpose exemplifies this. By answering the fundamental question of ‘why does this business exist’, it challenges mainstream business to put social value at the heart of all operations. If implemented fully, corporate purpose is a synonym for social enterprise. While many mainstream businesses will admit the integration of their purpose is an ongoing process, given their intent to deliver social value, perhaps social enterprises have already won.
“So we keep on waiting, waiting on the world to change”. Without meaningful action, the social enterprise movement is relying on the zeitgeist to drag mainstream business towards its model. Any public relations professional would tell you that is not enough, you need to deliver a narrative.
Unfortunately, mainstream business is changing independently of the social enterprise movement. Proving an absence is challenging. Here, we must look for where we should be seeing social enterprises. For instance, a social enterprise representative has never spoken at PRWeek’s annual Purpose Summit. McKinsey & Company, Bain & Company and the Boston Consulting Group all fail to mention social enterprise in any of their corporate purpose research. Likewise, PwC neglects social enterprises in its corporate purpose material, despite creating a “Social Entrepreneurs Club”, apparently a separate endeavour. Unsurprisingly, Harvard Business Review (HBR) does not mention social enterprise in any of its corporate purpose or corporate, social responsibility content, despite churning out a glut in recent years. Corporate purpose and social enterprise should be kindred spirits, but there is no evidence of dialogue between the two movements.
This is social enterprises’ own fault. They have not capitalised on the widespread public support for the movement. In 2019, a YouGov poll found that nine out of 10 people would prefer public services to be delivered by social enterprises as opposed to the private sector, while a whole litany of polls show the public want social value business. However, Social Enterprise UK, the representative body of UK social enterprises, has failed to mobilise a meaningful campaign to affect change. Its content does not articulate why this is the moment of the social enterprise. To make a revolution, you need to declare one. Even its members, who should be its fiercest advocates, are disengaged. Social Enterprise UK claims there are over 100,000 social enterprises in the UK, while having only 3,000 members. Despite having over 60,000 Twitter followers, its engagement is terrible as its content fails to resonate. A pinned tweet announcing its keynote annual awards is waiting to receive its tenth like at the time of writing.
Beyond poor communications, the movement is disappointing because of its narrow understanding of itself. There is a conspicuous refusal to place social enterprises within the rich tradition of progressive business models and social movements, and as such it lacks the touchpoints to convert latent support into political capital. Contemporary alternative business models such as cooperatives and mutuals are no better. Resisting scale, innovation and globalisation means they fail to realise their “heroic” self-images. Even their advertising has the meek messaging, ‘we’re old fashioned, but nice’.
This failure of branding has made it hard for successive governments to boost the sector, despite political will. Tony Blair placed social enterprise within his Third Way ideology, creating the Social Enterprise Unit to help the movement deliver competitive services and enable active citizens to create inclusive communities. Gordon Brown increased funding despite the Financial Crisis, while David Cameron placed social enterprises within his Big Society vision. Similarly, Theresa May believed social enterprises were part of the citizenry obligations central to her One Nation conservativism. More recently, however, Boris Johnson has expressed limited interest in the model, to the movement’s frustration.
Not capitalising on a receptive political class has led to the social enterprise movement being shunted around government. Blair’s Social Enterprise Unit was subsumed into the Office of the Third Sector, then into the Office for Civil Society, before entering the weak named Civil Society and Youth Directorate. During this time, it has been relegated from the Cabinet Office to the Department for Digital, Culture, Media & Sport. Despite initial zeal, the social enterprise movement has driven itself into political irrelevancy.
The failure of social enterprises is a tragedy for society. Without the guidance of a strong social enterprise movement, mainstream businesses’ actions are falling short of their bold new promises. Shell’s CEO Ben van Beurden promises to turn the company into an environmental force for good drew derision from campaigners. Similarly, PepsiCo received widespread ridicule for its 2017 advert featuring Kendall Jenner handing a can of Pepsi to a Black Lives Matter protestor, supposedly a solution to systemic racial police brutality. From greenwashing to ‘wokewashing’, the public is becoming understandably sceptical about mainstream business’ new attempts to deliver social value.
This threatens the opportunity in its entirety. If the public’s hopes for good business are dashed as mainstream business pursues profit over purpose, despite claiming otherwise, then the public will become disillusioned. Carl Rhodes’ Woke Capitalism suggests this process may have already begun. Social enterprises are wasting the chance of a lifetime.
But looking for the impact of social enterprises in contemporary mainstream business is misguided. “The revolution will not be televised”, nor declared by Larry Fink, written in HBR, or discovered through government consultation. But it might just be tweeted.
If we put our ear to the ground and listen for subtle shifts in the moral economy of the English crowd, we can make predictions where the political economy will move next. However, even the extended literature lacks a convincing model for change. As such, we must rely on common sense assumptions about causation.
The public’s shift towards social value is glacial, meaning short-term failures from the social enterprise movement do not spell disaster. Just as the public forced business to change in the wake of the Financial Crisis, they will do so again when the corporate purpose movement is deemed to have failed. Indeed, the public, made up of both consumers and employees, is likely to become less forgiving as millennial and Gen Z generations take centre stage.
This time, mainstream business will not be able to go it alone. The distinctions between business, society and government are already blurring. The Government has now made social value a key component of outsourced bidding applications, while alternative business models are increasingly collaborating. This change is not yet meaningful, but it will accelerate. The coming “mission economy” will see an integration of business, government and society towards social value goals.
This could manifest as a wellbeing economy. Based on metrics such as the Genuine Progress Indicator, currently unmet community needs would be delivered by hybrid organisations, inspiring community ethos, reintegrating socially excluded individuals as projects avoid mission drift. Society will move away from a dog-eat-dog “favela” mindset towards Amartya Sen’s concept of “flourishing”. Academics of neoliberalism study Chile for a glimpse into the future. For us, Scotland’s rich communitarian culture could offer a surprisingly useful portal.
These changes would render social enterprise a redundant category of description. If society becomes an integration of structures towards social value principles, then it has rather outgrown the term. We do not need a social enterprise in every town, we need every town to be like a social enterprise. Recognising this as the end goal would be a sign of maturity from the movement.
In conclusion, social enterprises have failed to change mainstream business despite its key principle of social value fitting the zeitgeist informing new business ethics. This is due to the movement’s inability to communicate effectively and failure to conceive itself as part of broader progressive traditions which has hamstrung government attempts to support it. Yet social enterprises may still succeed despite themselves. Both as employees and customers, the public’s commitment to social value is unlikely to waver. They will not accept “blah blah blah” for long. Existing trends towards an integration of business, society and government will accelerate, aligning structures with the key social enterprise principle of social value. Voltaire’s Candide: The Best of All Possible Worlds would take on new sincerity.
There are key areas for future research. We need a rigorous model of how change happens. Only then can we understand causation and make objective assessments on how social enterprises will change mainstream business. Similarly, we must understand the timeframe which this social shift will happen in. These two areas of research will be twin pursuits.
This essay has put forward a radical, if millenarian, integration of business, government and society towards social enterprise principles. An understanding of what this will look like will cross disciplinary divides. Social enterprise scholarship must recognise its unique voice in these discussions.
Lastly, this analysis places the social enterprise movement within the long history of progressive movements. It is surprising this has not already happened, but an exploration of this history would undoubtedly be fruitful.
This long list of areas for further research suggests an essay with limitations. There is one more worth mentioning. The question asks for a prediction on the impact of social enterprises on mainstream business, whereas this essay makes a broad prediction about the future of the economy within the context of social enterprise principles. This makes causation difficult to ascertain, yet it is as close as we can get before future research is undertaken.
A more empowering question to ask may be, what should happen? We live our lives in one great river. Disparate currents can separate us temporarily, but we must always remember, “this is water”. We must use this knowledge to shape our collective destinies.
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