Wooden tiles spelling 'blog' with a pen and pad in the background

How the ecosystem can enable social enterprises to build back better

/in /by

Dr SalBy Dr Sally Kah, social entrepreneurship researcher and lecturer in business

Build Back Better should win the popular slogan of the year. In fact, we should call 2020: We Failed, But We Will Build Back Better. Now that we are slowly coming out of lockdown, how might we begin to build back better? What do we need to do to build back better? In the context of social business, what mechanisms are required to build back better? These are critical questions we must answer if we are truly going to build the local and regional economies back better.

Before I talk about how social enterprises can build back better, let me briefly explain why social enterprises are better equipped to address the implications of the global health pandemic. Social enterprises are organisations established to address social, economic and environmental issues. They use dual logics, that is, for-profit and not-for profit initiatives to create social change in society. These institutions can adopt any legal structure, operate through any organisational size and, in any sector of the economy – at least in the UK. Their fundamental principles and framework for doing business are about tackling complex societal problems. Therefore, social enterprises understand the social and economic implications of the pandemic and the interventions required to address them. However, these institutions face internal challenges, namely, changing workspaces and the financial constraints due to the lack of business (e.g. for-profit social enterprise). They also face external pressures in terms of the increased need for their social interventions, especially in deprived localities.

Therefore, building back better will require comprehensive mechanisms and a dose of cognitive processing. The social enterprise ecosystem is a framework that will enable social enterprises to build back better. The purpose of the ecosystem is to provide specific blocks to demonstrate important enablers for developing the organisation. In research authorised by the European Commission on 29 European countries, six dimensions of social enterprise ecosystem were identified:

  • certification systems, marks and labels;
  • legal framework;
  • social (impact) investment markets;
  • impact measurement and reporting systems;
  • networks and mutual support mechanisms;
  • specialist business development services and support
Certification systems, marks and labels

Certification systems, marks and labels are formal ways to validate systems and processes in an organisation. Certifying systems are vital for adding value to the technical and non-technical elements of the enterprise. For example, obtaining certification from Social Enterprise Mark CIC (or a national equivalent) is a value proposition and competitive advantage for procurement. Research has shown that implementing management or accreditation standards improves performance. It also exposes accredited organisations to different networks and supply chain opportunities.

The legal framework can also determine the opportunities and constraints that social enterprises face; therefore, consideration must be given to different actors and regulatory frameworks. For instance, opportunities may arise for social enterprises with a specific legal structure that determines their social identity, such as the Community Interest Company (CIC) in the UK. Many countries are now developing innovative legal frameworks to support social enterprises and the social economy more widely. In Spain, Sociedad Laboral was designed to facilitate the buyouts of employees from failing businesses. This framework presents an opportunity for social organisations in Spain.

Social investment

Another dimension of the ecosystem to enable social enterprises to build back better is social (impact) investment markets. Social investment is a common theme in the world of policy, particularly in Europe. The UK is the world’s largest social investment market, worth £3.5 billion. There are many investments and funding opportunities for social enterprises and Big Society Capital is working to increase access to investment. It is imperative that social organisations understand the finance systems in their region and the relationship between the typology of social impact and the investment.

Social impact measurement

Regardless of the significance of the social intervention, evidence of the impact created is crucial to funders, policymakers and the wider society. Impact measurement and reporting systems are vital instruments to establish legitimacy. Although many social enterprises face the challenge of identifying the right tool or framework for measuring impact, there are organisations and research papers that identify tools to capture the impact created. The New Economic Foundation is one such organisation, with a list of over twenty social impact tools for organisations in the third sector.

Networks

Networks and mutual support mechanisms differ across regions; however, they are important resources for collaboration. Networks can be formal (i.e. the School for Social Entrepreneurs) or informal (i.e. social networks). Networks that serve as incubators tend to provide resources through Corporate Social Responsibility funds, mentoring and workspace for innovation. The Global Social Entrepreneurship Network is one organisation that supports early stage social start-ups. More established social enterprises can network through membership at Social Enterprise UK, the British Council for social enterprise reports, and initiatives across the UK Commonwealth countries.

Specialist business development support

Finally, the specialist business development services and support dimension recommends seeking tailored business support for enterprise development or growth. Specialist support is now offered by universities and independent research centres, whose primary role is to contribute to knowledge on this topic. One of the most popular research centres is the Skoll Centre for Social Entrepreneurship at the University of Oxford. Collaborations between universities and social innovation hubs are becoming popular and more accessible. For example, in Rotterdam, a foundation and the city established a network of specialist advisors to train students from a business school to provide six-month mentorship programme for start-ups.

To conclude, social enterprises are game-changers and social impact creators can succeed and fail like any other business model; however, their fundamental principle for addressing social, economic and environmental issues places them in the best position to tackle the implications of COVID, both at local and regional levels. To address these challenges, the six dimensions of the social enterprise ecosystem discussed above are pivotal to building back a better and fairer society.

Dr Sally Kah is a social entrepreneurship researcher, and lecturer in business. She investigates the social impact of social enterprise in the UK.

Sally is currently working on projects that examine the social impact of vocational education and training programme on young women and, the social impact practice of social enterprises in specific regions of the UK. She has presented her research at recognised conferences – International Social Innovation Research Conference, Institute for Small Business and Entrepreneurship and the British Academy of Management.