The Corporate and Social Enterprise
Learning Outcomes:
– Gain an understanding of Corporate Enterprise and Social Enterprise and the different types of enterprise that make up each category
Enterprise refers to a for-profit business. The roots of the word lie in the French word entreprendre (from prendre), meaning ‘to undertake’, which in turn comes from the Latin “inter prehendere” (seize with the hand).
Entrepreneurs usually start an enterprise to make a profit, and for one of several reasons:
– Problem-solving. They see a particular issue that they feel they can solve.
– Exploit ideas. They have a new idea or product they believe will be successful.
– Filling a gap. They see a gap in the market they believe they can fill.
– Competitive pricing. They believe they can produce something on the market cheaper and offer it at a lower price.
– Knowledge-based. Where they believe they can supply specialist knowledge that customers will pay for.
Types of Enterprise
1. Sole Proprietorship
Although often the smallest of companies, these represent the foundation of of many market economies. These can include ‘trade’ business, such as painters and decorators, or the owners of a single retail unit. Many online businesses comprise this category, from smaller enterprises selling products online through organisations like amazon, to larger ones with their own website and app.
2. Partnership
Partnerships usually consist of a small number of individuals who share ownership and decision-making (as well as profits). In some cases, such as legal firms, each partner may bring a particular speciality to the business to expand the overall services. In some cases, there may be a type of hierarchy where there are senior and junior partners.
3. Private Limited Companies (Ltd.)
This sort of free enterprise has been legally incorporated and will have its own legal identity. It will have a set of shareholders who shoulder a limited amount of liability for any debts the enterprise incurs. Those shareholders appoint directors to oversee operations and decisions in the business, though individual managers will oversee the day to day operations of the business units.
4. Public Limited Companies (PLC)
Often confused with private limited companies, PLCs differ in that shares in the enterprise can be sold to the general public. To do this, they have to meet certain regulatory and legal criteria regarding the business’s financial health, transparency of their accounts, how long they have been trading, and more. Being able to sell public shares can be useful in raising funds for things like expansion.
The Social Enterprise
The broadest definition of a social enterprise is a revenue-generating business with a twist. Whether operated by a non-profit organization or by a for-profit company, a social enterprise has two goals:
1. to achieve social, cultural, community economic and/or environmental outcomes
2. to earn revenue.
On the surface, many social enterprises look, feel, and even operate like traditional businesses. But looking more deeply, one discovers the defining characteristics of the social enterprise: mission is at the centre of business, with income generation playing an important supporting role (from The Centre for Community Enterprise).
One test for a non-profit or charity that believes it is operating a social enterprise: what are you selling? It could be that you are operating with an entrepreneurial mindset within your organization, but if you are not selling goods or services into the marketplace, you aren’t running a business: you may be running a social program, but not a social enterprise.
And a test for a traditional business that believes it is operating a social enterprise: to what degree do social / environmental goals steer your ship? If profit is paramount (the owner(s) or shareholders are personally benefitting), you may be engaging in socially conscious purchasing or corporate social responsibility, rather than operating a social enterprise.
Another possible definition: A social economy enterprise operates like a business, produces goods and services for the market, but manages its operations and redirects its surpluses in pursuit of social and environmental goals.
An equally noble goal of social enterprise (aside from generating revenues to pursue a mission) is the training and/or employment of people who are typically excluded from the mainstream economy, thus creating capacity and self-sufficiency for individuals, and impacting their communities and lessening reliance on the social safety net. This element alone can denote a social enterprise.
Additional Social Enterprise Defintions
– Social enterprise applies an entrepreneurial approach to addressing social issues and creating positive community change.
– A social enterprise is a business that uses entrepreneurial methods to accomplish social goals and/or feed profits to a parent charity or non-profit to enable it to fulfill more of its own social mission.
– A social enterprise is a revenue-generating business with primarily social objectives whose surpluses are reinvested for that purpose in the business or in the community, rather than being driven by the need to deliver profit to shareholders and owners.