Metrics and reporting, while still highly variable across the industry, are also becoming a core competency for teams as they increasingly attempt to determine and communicate their business impact. We also see that community managers tend to form the core staff of emerging social media centers of excellence. Specifically, we see these three broad trends:. While some of this is not necessarily surprising certainly the rise of analytics has been perhaps the most obvious trend of all in social business , the interesting bits are often in the specific details and I urge you to read the SOCM report carefully.
Enterprise Irregulars. Specifically, we see these three broad trends: Sophisticated new engagement strategies. Engagement at scale is increasingly the name of the game, from cultivating and orchestrating advocates to real-time tool-assisted processes that greatly boost the reach and relevance of community managers while reducing the individual task time required to engage widely. The strategic use of data to guide community management activities and goals. Community managers today can operate analytic tools that derive tactical situations as well as strategic business intelligence, and doing so is part of their core training and an integral part of their playbook.
A focus on eliciting valuable business outcomes. Post Views: Share: Twitter Facebook LinkedIn. Dion focuses on the topics of digital engagement, customer experience, enterprise collaboration, digital workplace, digital transformation, social business, Service-Oriented Architecture SOA , open business models, and next-generation enterprises. Social enterprises have often been started as self-help groups of local communities. Rather than advocating more effective local government interventions, these new initiatives organized concrete responses themselves, by instigating entrepreneurial initiatives and mobilizing a mix of resources.
They have responded to new and unmet needs, often relying on voluntary work as well, especially in the start-up phases. So far, social enterprises have mainly developed in the production of welfare services and work integration. Nevertheless, they are also expanding into other fields of interest to local communities. Social enterprises have followed various evolutionary trends, according to their ability to interact with government players.
The dissemination of social enterprises has been especially dynamic in countries that have implemented decentralization policies in the sphere of social services, in contexts of growing pressure on public finances. Responding to fiscal crises and the declining legitimacy of welfare systems, social enterprises offer an appealing alternative to public agencies in terms of providing services.
The resulting decentralization generated a new field for intervention by social enterprises and for public resources to flow to. These developments helped to consolidate the organizational models of social enterprises under construction and stimulated a progressive concentration of social enterprises in public markets, particularly welfare markets.
The increasingly high percentage of income generated from public contracting can accelerate the dissemination and consolidation of social enterprises, but simultaneously it may have the unintended consequence of increasing the dependence of social enterprises on public resources and policies, thereby reducing the propensity of social enterprises to innovate. The search for new and diversified types of relationships among social enterprises, public institutions, and private-sector enterprises is widening and deepening.
One important issue is whether contracting mechanisms can better exploit the general-interest goals that characterize the mission of social enterprises and the nature of the goods and services that they produce. At the same time, social enterprises are increasingly engaged in those structures in which socio-economic development policies are discussed and defined, especially at the local level. When looking at the activities conducted, one can identify new trends when it comes to investing in product and process innovation.
Social enterprises appear to be especially eager to identify new products and fields of activity. These new fields may border on the traditional core activities of social enterprises, such as health and education, but may also involve completely new spheres, including culture, environment, social tourism, and social housing. Process innovation has also occurred as social enterprises resort increasingly to networking through company groups and agreements.
These include consortia, groups, product societies, project partnership, and temporary enterprise associations that aim to clarify and coordinate the roles and interdependency among the various players of the production chains. These initiatives have involved social inclusion initiatives targeting disadvantaged people by means of agreements between social and for-profit enterprises. Since the s, the dissemination of social enterprises has been linked to the introduction of a set of regulations that have resulted in institutionalization.
Regulations have played a part in defining the social enterprise sector. From an international perspective, despite similar identity connotations, social enterprises are extremely diverse as far as both their fields of activity and legal-organizational forms are concerned.
What is social enterprise?
The first involves the creation of legal forms designed specifically for social enterprises; these have generally been created by adjusting existing legal forms, usually those of cooperatives. The new regulations have specified goals, activities, constraints, governance assets and incentives. Italy's Law on social cooperatives, passed in, was the first such law to be instated and it was subsequently regarded as a benchmark reference by other countries that followed a similar route, such as France, Korea, Portugal, Spain, Poland and Greece.
The main features of the Italian Law are that it defines a general-interest goal that social cooperatives are expected to pursue, focusing on the types of services 1 , the possibility of engaging a plurality of stakeholders including remunerated workers, beneficiaries and volunteers , and the imposition of severe constraints on the distribution of profits, in addition to the typical features characterizing cooperative enterprises, namely, the assignment of both collective ownership and democratic governance according to open-door and one-person, one-vote cooperative principles.
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The second path does not link social enterprises with a specific legal form, pinpointing instead a number of structural and mission characteristics that could, in principle, be satisfied by any type of private-sector legal form. These three laws are quite similar and follow the definition provided in this paper.
All three identify the main goal of the enterprise as the pursuit of general interest. All three establish precise and severe profit distribution constraints. There are, however, two main differences among the three laws: the fields of activity that social enterprises are entitled to engage in and the collective and participatory dimension. In terms of activities, the Italian law identifies the sectors in which social enterprises can operate, while in other cases United Kingdom, Belgium and France the law leaves it up to the enterprise to choose which general-interest activities to carry out.
In terms of participation, the Italian and French laws admit only collective social enterprises and governing bodies in which workers and clients participate.
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In the United States, where the definition of social enterprise generally focuses on generating income for organizations that provide services typically thought of as belonging to the non-profit sector, social enterprises were, until recently, stuck between the choice of being set up as for-profit entities with some social objectives or as non-profit entities with some commercial objectives.
However, several states are now passing laws enabling the registration of low-profit limited liability companies L3Cs , which are meant to bridge the gap between non-profit and for-profit organizations. L3Cs could in principle revitalize the provision of social services in the United States, provided that appropriate supporting policies stimulating capital flows to these organizations and building public awareness are adopted DOERINGER, The emergence and dissemination of social enterprises challenge both the dominant model of welfare systems, which is based on the action of the State and Market, and conventional economic theory, which assumes that enterprises promote only the interests of their owners and minimize production costs.
From this point of view, there are two main concerns worth mentioning: on the one hand, some authors are concerned about the commercialization of social enterprises, claiming that their productive ends could endanger their original social missions DIAZ, ; on the other hand, other authors contest the sustainability of social enterprises and question their existence independently from substantial public interventions. In order to address these concerns, one must acknowledge the limits of the traditional definition of enterprise and revise it accordingly. Conventional enterprises created and managed for profit maximization have a narrower scope.
They can contribute to general well-being only if the markets in which they operate are perfect or almost perfect; in other words, markets must be sufficiently developed to avoid high transaction costs, provided that all agents have the resources needed to purchase the goods and services that can meet their needs. As can easily be ascertained, situations of perfect or at least sufficiently high competition are not as common as is usually stated.
Most importantly, they rarely occur for several goods and services, including welfare and, more broadly, general-interest services. Depending on the specific case, these services cannot be provided by for-profit enterprises for at least three reasons. When goods and services are influenced by one or more of these limitations, the production and exchanges carried out by conventional enterprises turn out to be insufficient, with respect to either the quantity or the quality of needs.
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As a result, part of the population will unavoidably be left unsatisfied. According to mainstream economic theory, public authorities can solve these problems by regulating markets and enterprises; redistributing resources to the advantage of those who would not otherwise be able to satisfy their needs; or arranging for the direct production of services by public agencies. These strategies, however, have proved to be increasingly ineffective. Over the last three decades, public interventions have been increasingly unable to confront all these problems.
Over the same period, social enterprises have autonomously emerged as an alternative player. Their development per se confirms the shortcomings of the dominant interpretation. Consequently, a different interpretation of the enterprise and its functioning is required to understand the rationale of social enterprises.
This new interpretation must be based on a more in-depth analysis of both human behavior and the role of enterprises. In contrast to the claims of conventional economic theory, individuals make their own decisions - including those related to production, work, and consumption - not simply to obtain maximum individual advantage, but with a plurality of motivations, including intrinsic ones the interest in the action per se and social ones the interest in other people's well-being.
Concerning the role of enterprises, their scope ought to be enlarged and they should be conceptualized as institutional mechanisms coordinating the activity of a plurality of stakeholders, whose aim is to solve a specific problem, usually of a collective nature, through the continuous production of goods or services. Bridging both interpretations, a successful enterprise does not necessarily have to maximize profit; generally, it aims to coordinate individuals driven by different motivations.
As a result, the enterprise will tend to structure itself as an incentive mix that can succeed in attracting various human and financial resources. The resources attracted contribute to achieving the goal set, although they do not exclusively benefit the owners. By looking into the definition in greater depth, one finds that any enterprise must fulfill two conditions: it has to produce goods or services that satisfy human needs and it hast to breakeven, thereby ensuring a minimum of financial autonomy and guaranteeing its long-term survival.
While it is true that all enterprises must fulfill both social needs and economic and financial sustainability constraints, the two conditions can be combined and met to varying extents by different types of enterprises. At one end of this continuum , economic and financial objectives predominate and the social aim is simply a constraint. At the other end, general-interest objectives predominate, and financial and economic aims represent constraints. The left-hand end of the continuum identifies the classic model of the for-profit firm, exclusively devoted to profit maximization i.
Yet it represents only one possible rationale for the creation of entrepreneurial ventures and it does not necessarily apply to all enterprises. The opposite end of the continuum 2 identifies pure social enterprises. Their activity is entirely devoted to public-benefit objectives, while financial and economic equilibrium is merely a means to this end. The financial and economic equilibrium is ensured by attracting resources from a variety of sources, including public agencies, the market, donors and volunteers. These constraints help to ensure the long-term efficiency of the enterprise and do not conflict with the non-profit nature of the firm.
Profits are in fact accumulated to lock in assets for future members and users, with an intergenerational social benefit. A variety of types of enterprise falls between the two extremes, such as the cooperative enterprises, which promote the interests of specific categories of stakeholders. The positioning of social enterprises and the individuation of heterogeneous aims of organizations explain the diverse governance and management structures of these organizations.
Specifically, the prevalence of social over self-interested aims explains why social enterprises have distinctive control and governance mechanisms, characterized by democracy and fair treatment. Furthermore, social goals also include the well-being of employees and require all stakeholders to share the organizational mission.
This inter-relation with stakeholders explains the endeavor to involve people and emphasize their non-monetary motivations. Inclusion and the sharing of common procedures may be juxtaposed with hierarchy, control, and the use of powerful monetary incentives as coordination mechanisms. One can therefore conclude that, for all the types of organization considered, especially social enterprises, organizational objectives and control rights condition the features of the production process.
For example, they may influence how information circulates, how knowledge is created and used, and how competences and human capital are accrued and retained HODGSON, In social enterprises, reduced hierarchy and control favor the circulation of information that sustains the creation and spread of non-coded and tacit knowledge. This system of knowledge production is supported by the development of more informal and horizontal models of governance in which trust and personal interaction play a more fundamental role than they do in other organizational forms FREY and OSTERLOH, Against this backdrop, one can propose a more compelling interpretation of the social enterprise.
It can be regarded as an incentive structure that is consistent with the goal of producing goods or services to the advantage of the community a common good or of a group of citizens. Through the consistent coordination of goals, ownership structure and constraints, this incentive structure helps to overcome problems generated by monopolistic action and the insufficient or asymmetric distribution of information. Indeed, given the impossibility of distributing profits to the owners and the fact that social enterprises are often managed by users, social enterprises are not interested in exploiting market power or information advantages to achieve a higher profit.
At the same time, they stimulate the involvement of stakeholders with social or preferences that concern others. These include workers that commit to the enterprises goal and accept lower remuneration relative to that of conventional enterprises, and funders that are happy to get remuneration of capital below the market cost of capital.
Consequently, social enterprises can also distribute part of the product to users who do lack the funds to purchase goods and services at market prices, but who are not acknowledged as needy people by the public administration. In these cases, social enterprises, as compared to for-profit enterprises, stand out for their distributive natures BACCHIEGA and BORZAGA, , because they manage to combine the production function with that of voluntary and systematic distribution of part of the value produced to people who would not otherwise be able to satisfy their needs.
Although they are private-sector entities, social enterprises fulfill functions traditionally ascribed to public authorities.
Community management: The 'essential' capability of successful Enterprise 2.0 efforts
At the same time, they are also more flexible in activating responses and addressing the new needs of small groups of citizens. This approach to interpreting social enterprises challenges conventional assumptions that are mainly centered on the action of private-sector enterprises and the State.
These assumptions regard private-sector enterprises as being responsible only for the production and allocation of private goods because they promote the interests of producers and the State, and only marginally nonprofit organizations, as responsible for redistributing the income generated. However, production and distribution that benefit marginal groups can both be managed by social enterprises. Acknowledging the existence of social enterprises implies that private citizens should not simply be regarded as philanthropists that can use part of their income to the advantage of third parties; they can also organize enterprises that perform totally or partially in the market, and that consequently operate according to allocation rationales other than equivalence.
Realizing that social enterprises are a new form of enterprise driven by different motivations also helps one to understand their positioning in societies and in economies. First, one can say that social enterprises are categorically different from other types of enterprises and organizations. They differ from public enterprises because they are managed by private-sector entities according to an entrepreneurial logic.
They differ from conventional for-profit enterprises because they are characterized by goals, ownership assets, constraints, and types of governance that exclude the maximization of owners' monetary advantages. They also differ from traditional cooperatives, which are owned by non-investors and which aim primarily to promote the interests of their owners.
Social enterprise management skills
Nevertheless, social enterprises are close to cooperatives in terms of assets ownership, democratic governance structure, and common origins. This explains why social enterprises often decide to adopt cooperative forms. Social enterprises are not expected to replace existing institutions such as conventional enterprises, traditional non-profit organizations and public agencies. Instead, they should be seen as additional players that strongly contribute to innovation from at least two standpoints.
First, the development of social enterprise initiatives calls into question conventional economic paradigms, including the traditional interpretation of the enterprise, and paves the way for new theoretical explanations of economic behavior. Second, the experience of social enterprises corroborates that activities traditionally characterized by redistributive goals can be managed according to entrepreneurial modalities. Social enterprises pay particular attention to social and interactional dynamics. When relating to their different stakeholders, they tend to base their exchanges on relationships rather than on market dynamics.
While for-profit firms typically relate to their stakeholders through market transactions, based on price exchanges, social enterprises rely on personal transactions with all their stakeholders. Trust, relationships, knowledge, information and involvement are the keywords of these transactions.
Moreover, social enterprises are by definition more closely embedded in the local community; they enhance cooperative behaviors among stakeholders, and enjoy a higher reputation in the community. These traits are particularly important for three elements at least: the achievement of the organizational goal, the economic efficiency of the organization, and the production of externalities and the increased well-being of the society. Concerning the organizational mission, one can demonstrate that the governance structure of social enterprises allows for the achievement of higher social goals.
These organizations usually involve in their membership heterogeneous local stakeholders, mainly volunteers and users other than workers. This governance structure facilitates the provision of community services, since the members of social enterprises aim to satisfy localized needs, which have idiosyncratic features linked to a specific community and may not be satisfied in the same way in other contexts.
Furthermore, by enhancing the well-being of marginal classes of citizens, social enterprises reduce negative spillovers. Negative social effects linked to poverty and marginality can be mitigated by the ability of social enterprises to solve social dilemmas within their boundaries without resorting to imperfect and often unusable contractual relations, which would inflate transaction costs, limit the circulation of information, and exacerbate contrasting interests.
Inclusive and multi-stakeholder governance serves the purpose of coordinating the various participants in solving social dilemmas. Furthermore, governance structure and social aim guarantee better alignment of services and clients' needs, besides preventing the inefficiencies of other types of organization, especially public agencies, because they are less bureaucratic and more flexible. A second advantage typical of social enterprises is their ability to reduce inefficiencies and transaction costs with internal agents, from users to donors, from volunteers to workers DEPEDRI, In general, these enterprises increase non-self-interested behaviors and cooperation among peer members, as well as the sharing of rules and sanctions, which are fundamental elements for the management of common resources in a self-organized manner OSTROM, Specifically, the strength of the relationships among the various stakeholders provides social enterprises with several direct advantages in the management of exchanges with their constituent parties.
Self-regarding preferences and opportunistic behavior that usually hinder organizational performance and the achievement of the organization's goals are drastically reduced in social enterprises, through the implementation of self-managed organizational processes. Reducing opportunistic behavior and sharing the organization's goals are particularly important, especially in exchanges with clients. Social enterprises tend to build their reputations through fair communication and stakeholder participation. Therefore, clients' sense of trust and reputation vis-a-vis social enterprises are enhanced, with advantages for both the organization, which gets complete and symmetric information on users' preferences, and the said users, who are better satisfied with the organizational services.
This positive outcome is further improved in social enterprises by their higher degree of innovation and the elasticity of supply. Similar dynamics also concern relations with donors and volunteers: the reduction of self-interested behaviors in social enterprises, due to the organizational mission, the multi-stakeholder governance and the embedding of the organization in the territory, functions as a guarantee for people willing to donate time or funds.
This allows social enterprises to gather new resources from the local society to a greater extent than other organizations. However, the main advantage of the non-opportunistic behavior of social enterprises concerns the management of its employees. To attract people that are intrinsically motivated and interested in the social dimension of the job, social enterprises first tend to offer wages lower than the market level, which therefore exclude applications from indifferent employees and managers, drawing only dedicated people HANDY and KATZ, As already stated, these behaviors and dynamics generate advantages both for the employees, in the form of high job satisfaction e.
Thanks to all of these improved relations with their stakeholders, social enterprises seem to be managed and designed to encourage innovation in the organizational and production domains, when it comes to new services and new organizational solutions. Differences in the inputs used and in the outcomes achieved support the efficiency of these organizations and hence their ability to respect financial constraints and to pursue their long-term existence.
Three main factors specifically improve output. First, the services produced by social enterprises tend to be more flexible and innovative, and can satisfy a greater number of users and a larger share of local needs. Second, the employees of social enterprises strive harder and ensure production stability, despite their often lower wages. Third, the mobilization of local resources and the transmission of social standards to the community specifically to agents belonging to the community create a virtuous circle: they enhance relationships, increase cooperation and trust, disseminate knowledge and ideals, and reduce the opportunism of the people involved.
Specifically regarding inputs, social enterprises seem to have four main advantages in achieving cost savings. First, they benefit from free resources and enjoy advantages in obtaining funding in the market. Second, they benefit from lower transaction costs e. Third, they incur lower costs in controlling the performance of managers and employees by using control and penalty mechanisms that differ from those employed by other types of organization. Fourth, when compared to other types of organization, the mix of incentives provided to employees by social enterprises is less expensive.
Thus, in theory, efficiency seems to be sustainable for social enterprises in terms of an input-saving and or output-increasing analysis. Finally, it one should mention that social enterprises not only enable better relations with their stakeholders, but also leverage the effects of welfare by their productive activity.
The allocation and distribution mechanisms of social enterprises are unique and well adapted to increasing the production of socially beneficial goods and to reducing poverty TORTIA, Moreover, they seem to produce higher levels of positive externalities: they raise local well-being, enhance the production of social capital, and solve marginalization issues. Concerning local economic development, they help to improve the employment level by also offering work to those who are disadvantaged in the job market.
As for social capital, social enterprises promote voluntary work, enhance the dissemination of knowledge and social norms within the community, spread trust and cooperation, and strengthen relations and social cohesion. Finally, relations with the local community strengthen fairness principles, collective actions, and altruistic behavior, which also have an impact on the social marginalization of users and of the disadvantaged workers of social enterprises.
Social enterprises constitute a new, complex and multi-sided phenomenon that is still difficult to interpret. However, one can understand their characteristics, specificities and behavior better when they are regarded as mechanisms through which a group of people can autonomously manage production activities that benefit the entire community or groups of disadvantaged people. This approach can explain why these enterprises have developed so quickly and will continue to spread.
Moreover, it provides insights into the specific conditions under which social enterprises develop, especially in a historical stage when it is increasingly evident that for-profit enterprises that focus primarily on short-term profit maximization and public authorities are unable to keep pace with the escalating needs. This brief interpretation of social enterprises is not comprehensive and does not consider the broad range of products and services that they can provide.
However, the identification of salient issues can help to determine strategies, contractual relations, membership, and policies for recruiting and incentivizing investors and employees. It can also help to define appropriate public policies and legislative frameworks, since social enterprises can only thrive if their distinctive ownership and governance mechanisms are suitably acknowledged and exploited.
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The most common of these are cooperatives, which are explicitly mutual-benefit organizations, since their primary objective is to satisfy the needs of a group of members that control the organization by virtue of individual rights, not ownership of capital shares.
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