Social Enterprise

Accountability and Evaluation around the World

Simon Denny, Frederick Seddon

• Publisher: Routledge
• Year: 2013
• Print ISBN: 9780415626101
• eBook ISBN: 9781136242281
• Topic: Business
• Subtopic: Business General
• Index: Business

Social enterprise has become a much discussed term in recent years, often in conjunction with the public sector - the idea that entrepreneurship might somehow step in and save the public purse has taken hold in a number of areas.

This book introduces and explains the terminology surrounding social enterprise and brings much-needed rigour to proceedings by demonstrating how this can be measured, evaluated and held accountable. A range of validated evaluation measures, tools and techniques, such as 'SROI', the 'Outcomes Star' and randomised control trials, are presented in individual research projects, conducted by an exciting and eclectic mix of international authors who are recognised experts in the field of social enterprise.

Wrapping up with the ground-breaking use of a General Self-Efficacy scale, a reflective critique of social finance and a challenge to the actual concept of social enterprise, the book discusses the potential disadvantages that can arise from the commodification of social enterprise activities, resulting in a fascinating summary of current thinking surrounding this topic.

Part I

Overview

1

Evaluating Social Enterprise

An international perspective

Simon Denny and Fred Seddon

Social enterprise is not new. In the UK Thomas Firmin (1632–97) provided employment for London’s tradesmen thrown out of work as a result of the plague of 1665. Later, and more ambitiously, from 1676 until the 1690s he ran a purpose-built factory employing up to 1,700 of London’s poor in linen manufacturing. Sadly the scheme never paid its way, but we can see Firmin as one of the earlier British social entrepreneurs, running a business with overtly social values. Some 350 years after Firmin social enterprise has become a subject of global interest. Politicians from all parts of the Western political spectrum are looking to social enterprise to deliver existing, and new, services that have been provided by the state for the past several decades. The global financial crisis and the increasing unaffordability of the services we in the West have given ourselves, has led to social enterprises (including cooperatives) being seen as a ‘way out’ as well as an attractive model for politicians to support. Public sector managers are increasingly looking to contract with social enterprises and to work with them. More directly, many public sector managers are, willingly or unwillingly, becoming social entrepreneurs themselves, spinning out their unit or function into a new, more commercial form. Private sector managers are starting to seek to gain competitive advantage by partnering with social enterprises (either as part of the supply chain, or as partners in the delivery of services). Others are perhaps seeking to ‘steal the clothes’ of social enterprises by using the same language. High profile business leaders, including Sir Richard Branson, have warned in 2012 that large corporations have to change their business models and contribute more to society. It would seem that the business of business is no longer simply about maximizing profit.

Business school academics with an interest in social enterprise, previously marginalized by their more traditional and mainstream colleagues, have suddenly found themselves in demand for media appearances, conferences and new accredited course development. Academia faithfully follows the curve, and we invite people to count the number of undergraduate and postgraduate courses for existing and would-be social entrepreneurs that have sprung up since 2010. Our employer, the University of Northampton, has gone so far as to position itself as the UK’s number one HEI for social enterprise, and has put huge resources into achieving its mission.

Given the attention increasingly being paid to social enterprise, the time is ripe and right for a new book with a broad and critical scope. We have set out to challenge the all too often implicit assumption that social enterprise must be good because it sets out to do good. We have been determined to review the evidence and to examine what works, and what does not. Here we present and add to the work of eminent authors from six countries to make a contribution to the policy, practice and study of social enterprise.

Following the global financial crisis in 2008, governments are increasingly moving towards alternative methods of financing their social services (Pearce 2003; Doherty et al. 2009; SEC 2009, 2011). The global growth in social enterprise (SE) is accompanied by a ‘wind of change’, which is developing a demand for more ethical ways of financing, producing and making available goods and services, especially to the more disadvantaged members of society. Increases in the amount of finance directed towards SE demands rigorous forms of evaluation to ensure finances are being directed effectively. In order to be able to perform essential micro and macro evaluative functions, it is first necessary to establish a clear concept of exactly what SE is. Part II of this book (Chapters 2–4) explores definitions of SE from a theoretical perspective with authors drawing distinctions between the concepts of SE, SE organizations, actors, management and SE identity. Moving on from issues of definition, Part III (Chapters 5–9) examines the variety of ways SEs can be evaluated. This section focuses on evaluation and involves contributing authors drawing from prior and emerging research, while reporting the findings of their own research conducted in the UK, Italy and Australia. In Part IV of the book (Chapters 10–12), authors from the UK, Germany and New Zealand examine SE through a critical reflection in relation to issues of finance, management and social construction.

On the surface, the term ‘social enterprise’ would seem to be the juxtaposition of two opposing phenomena (Cooper 1989). The term ‘social’ can be perceived as, and related to, notions of caring, collaboration and support whereas the term ‘enterprise’ can have connotations of competition and profit-making. How do these two potentially diametrically opposite concepts comfortably coalesce to form what is currently perceived as social enterprise? Defining SE is an activity that has occupied academics for some time now without resolution (Stayaert and Dey 2010; Curtis 2008; Haugh 2012) and in the first section of the book, three well-established and authoritative authors from the UK and Australia offer their perspectives on SE. In Chapter 2, John Thompson and Jonathan Scott explore the intricacies of defining social enterprise, social enterprises, social entrepreneurs and social entrepreneurship. The authors provide a detailed and well-referenced account of these concepts and their complex interactions, drawing from examples of well-known international businesses. The purpose of social enterprises, what they are, their desired outcomes and values are discussed in relation to SE actors and organizations. In Chapter 3, Bob Doherty examines SE from a management perspective and considers how SEs can manage the balance between social and commercial objectives when competing against larger, resource-rich rivals. Doherty applies Resource Advantage (R-A) theory, a recently revised competition theory, to explain how SEs can maintain a balance between social and commercial objectives within their limited resources. In the chapter, R-A theory is applied to three case studies of leading farmer-owned fair trade SEs: Liberation CIC (Community Interest Company), Divine Chocolate Company and Cafedirect plc. Doherty’s research identifies ‘social resources’ consisting of three interrelated components: ethical and social commitments, connections with partners and consistency of behaviour. Doherty argues that in SEs, strategic choices are influenced by social and ethical values more so than in private or public sector organizations. In Chapter 4, Chris Mason seeks to define SE by focusing on SE ‘identity’ and the importance of discourse in shaping that identity. Mason critically reviews research by Parkinson and Howorth (2008) and Jones et al. (2008), which connects SE discourse and identity. Within this framework, Mason argues that spoken articulations of SE identity are inherently incomplete. Based upon prior research (Jones et al., 2008), Mason proposes that SE identity is dynamic, fragmentary and unstable and argues that social entrepreneur self-identity has a distinctive political dimension. Mason employs notions of ‘self’ and ‘the suppressed self’ (Jones et al. 2008; Parkinson and Howorth 2008) and Derrida’s concepts of différance and supplementarity (Derrida 1967) to emphasize meaning-making processes, which he argues are political, discursive, asymmetrical and open-ended. Mason embraces the openness of SE debate but is mindful of the inherent challenges of the discursive process.

SE evaluation can be conducted on different levels, depending upon whether the focus of the evaluation is on output, outcome or impact as defined in the SIMPLE methodology (McLoughlin et al. 2009). For example, when evaluating a work integration social enterprise (WISE), output can be defined as the relationship between the number of unemployed individuals accessing the programme and the number who subsequently gain employment. Considering output as a method of evaluation is useful for tracking the success of a programme from this particular perspective. However, if output is employed as a singular measure, the evaluation will not include important longer-term participant and societal benefits, i.e. outcome and impact. In the context of our WISE example, an outcome represents positive psychological changes (e.g. increased self-efficacy) that can enhance participants’ future employability. Impact is an even longer-term benefit and is the impact on society resulting from the reduction of unemployment. For example, reduced unemployment benefits payments, lower costs to the criminal justice system and the health service, and higher income tax receipts. As will be demonstrated in Part III of this book (Chapters 5–9), there are numerous methods and focuses of evaluation, and the section begins with a chapter reporting a research project that examines the role of altruism in the motivation of employees working in UK community development finance institutions. The section continues with a research study that proposes new indexes of evaluation for evaluating Italian work integration social cooperatives (WISC) and continues with a further three chapters that consider outcome and impact measures based upon research studies conducted in Australia and the UK. Two of the studies report on outcomes for the individuals and the impact on society and the other draws comparisons between social return on investment (SROI) and two further impact measurement tools. The research studies reported in Part III of the book employ a mixture of quantitative and qualitative measures, which are fully described and evaluated.

Chapter 5, by Belinda Bell and Helen Haugh, reports an interesting UK study that examined employee motivation influencing employees who worked in community development finance institutions (CDFI) having previously worked in private sector financial services. Bell and Haugh found that the majority of their research participants earned less working in CDFI than they did when previously working in the private sector. According to Bell and Haugh, a combination of personal factors and the characteristics of the organization the participants worked for, indicated some employees were motivated by altruism. The study adopted a qualitative methodology collecting interview data from 17 employees currently working in CDFI. Interview data was analyzed following the principles of grounded theory, and concepts of altruism, job satisfaction, employee engagement and psychological empowerment are presented to support the proposition that some of the research participants were motivated by altruism. Chapter 6, by Carlo Borzaga and Sara Depedri, brings an Italian perspective to SE evaluation with an evaluation of Italian work integration social cooperatives (WISCs). This highly informative chapter reports a research study conducted by the authors, which examined the efficiency and efficacy of Italian WISCs. The study focuses on evaluating how WISCs support the integration of disadvantaged workers (e.g. individuals suffering from addiction problems, ex-prisoners, people with mental health problems and young people with low levels of education) into the labour market, particularly during the current economic crisis. A comprehensive description of Italian WISCs, their beneficiaries and the supportive legal structure is provided along with proposed indexes of evaluation based on commercial, personal and social dimensions. Borzaga and Depedri present the results of an investigation conducted in 2011 by Euricse (European Research Institute on Cooperative and Social Enterprises) in the Trento province of Italy. The results of this quantitative study, undertaken with ten social cooperatives and 194 disadvantaged workers, present a comprehensive cost-benefit analysis including guaranteed cost savings for the public sector gained as a result of disadvantaged workers being employed by WISCs and therefore placing lower demands on public services. Chapter 7, by Jo Barraket, examines the outcomes and impact of work integration social enterprise (WISE) this time in Australia. Barraket draws from an evaluation conducted by Adult Multicultural Education Services (AMES) on seven WISEs in the Australian state of Victoria. The WISE programmes, which provided an alternative training and employment model, were designed to facilitate employment for highly disadvantaged individuals (referred to in Barraket’s chapter as enterprise operators) through skill development and employment creation. Participants in the WISE programme were immigrants and refugees experiencing multiple barriers to economic and social participation. The evaluation focused on outcome and impact measures and data was gathered through semi-structured interviews with 33 people (thirteen enterprise operators; eleven staff; two programme volunteers; one contractor; four representatives from partner organizations; and two representatives from the main funding body). Results of the evaluation reported positive outcomes in terms of improvement in self-esteem and self-efficacy for all the enterprise operators with improved impact in terms of positive intergenerational and intercultural effects in their local communities. Richard Hazenberg, in Chapter 8, provides us with a comparative intervention study, comparing outcome benefits of employment enhancement programmes (EEP) delivered by a ‘for-profit’ private company and a WISE. The EEP programmes were designed to help and support young people not in employment, education or training (NEET). Hazenberg employs a general self-efficacy (GSE) scale and semi-structured interviews in an intervention-style study to measure the changes in GSE before and after NEET engagement in the EEPs. Results from the analysis of quantitative and qualitative data are triangulated to provide a rigorous evaluation of the outcome benefits provided by the EEPs for the NEET clients in both the ‘for-profit’ and WISE organizations. Hazenberg furthers the comparison between the ‘for-profit’ company and the WISE by investigating the organizational factors (e.g. aims, values and structures) of the two entities via further interviews and focus groups discussions with their owners and staff. Results of the study suggest that although no significant difference between the outcome benefits perceived for the NEETs at either organization were revealed, the WISE had outcome improvement with more socially excluded individuals when compared with the ‘for-profit’ organization’s clientele. In Chapter 9 the authors Kelly Hall and Malin Arvidson discuss the importance of the evaluation of impact and focus on the choices of impact evaluation tools available to different organizations. Hall and Arvidson discuss how these tools are perceived by the SE community, commissioners, grant-making bodies and social investors. Three specific impact evaluation tools are considered, Social Return on Investment (SROI), Outcomes Star (OS) and Randomized Control Trials (RCT). Analysis of the use of these impact evaluation tools informs the authors’ proposal that the tools do not merely assess achievement but influence value systems in current debate surrounding assessing SE performance. Detailed description and critique of the three impact evaluation tools are provided by the authors prior to the presentation of insightful comparisons between the measures and how they can influence definition of impact, the role evaluation plays and what counts as evidence.

The three chapters (Chapters 10–12) in Part IV provide an overarching critique of the evaluation of SE from social, political and financial perspectives. Together, these three chapters engage in a broad philosophical debate that informs the reader about past and current developments in SE. The contributing authors also indicate potential future developments for SE and raise issues of ethics and morality in the development of social finance, management, organizational challenges and support for disadvantaged individuals in society. In Chapter 10, Alex Nicholls performs a forensic examination of ‘social finance’ in a wide-ranging critical review of past, current and future developments in the landscape of social finance. Nicholls argues that ethical financial investment can support SEs in achieving...

Table of contents

• Cover Page
• Half Title page
• Title Page
• Copyright Page
• Contents
• List of illustrations
• Notes on contributors
• Foreword by Lord Victor Adebowale CBE
• Part I Overview
• Part II Defining social enterprise: a theoretical perspective
• Part III Evaluating social enterprise: international research studies
• Part IV Evaluating social enterprise: a critical perspective
• Part V The future for evaluation of social enterprise
• Index