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Challenges of Social Enterprises
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Challenges of Social Enterprises
Introduction
Social enterprise has drawn different stances from a wide range of scholars. Some scholars hold that Social enterprises are social organizations formed purposely to raise income (Borzaga & Defourny 2004). In these social organizations, entrepreneurial skills are notably employed. From this viewpoint, social enterprises are distinct from other social organizations because they seldom depend on government, public and other donors for funding (Cabinet Office 2006). In these social organizations, grants and donations primarily facilitate their social objectives. In this sense, social enterprises tend to consolidate their efforts towards the realization of social objectives (Roper & Cheney 2005). The social enterprises can easily be distinguished from other social organizations based on their objectives. Social organizations have set their goals based on wealth maximization. The social enterprises have incorporated entrepreneurial skills along side their social objectives.
The social sector has dramatically been stunned by recent growth. This has attracted countless social organizations that also rely on donations and grants from similar sources (Roper & Cheney 2005). This move caused uproar as competition stiffened among different social organizations. For instance, in the United Kingdom, labour government supported social sectors comprehensively. This tendency attracted more social organizations to transform themselves into social enterprises (Borzaga & Defourny 2004). The outraged debates over the UK labour government’s intense entrepreneurial assistance to the social sector were seldom brought to a halt. The concept of social entrepreneurship is traced back to the United Kingdom. Victorians initiated the establishment of social entrepreneurship within health institutions. During this time, the health institutions provided health services to the people at cost shared fees. The facilities also provided other services and products at affordable fees. The amounts of income realized in these endeavours were channelled to charity (Cabinet Office 2006).
These activities formed the basis of different charitable organizations founded thereafter. According to some scholars, charities have currently been used to auger grants and donations that have formed the basis of social enterprises. It is claimed that before the formation of current social enterprises, current social enterprises operated as trading charities (Kingston & Bolton 2004). The support programs which these charitable organizations operated remained an illusion in social sectors. Social entrepreneurial skills were introduced in an effort to bring clarity. Therefore, social enterprises were born (Wise 2001). Definitively, they were tagged as organizations which try to achieve their primary social goals using business entrepreneurial methods. This paper intends to identify operational challenges facing social enterprises and the possible strategies that they can use to combat competitive forces in the social sector.
Social Entrepreneurship
In the 1990s, a new field in the social sector was introduced. This was social entrepreneurship. Different people were obsessed about the field and vowed to study it. During this time, the studies ensnared around social charity organizations and private social organizations which were viewed as embroiling social aspect in the society. Thereafter, there was an upsurge formation of social enterprises (Cabinet Office 2006). Different charitable organizations transformed to social enterprises after borrowing an olive branch in entrepreneurial methods. It was reported that several organizations congested social offices to register as community interest companies (Roper & Cheney 2005). By the end of 2008, there were over 2000 companies already established in the United Kingdom. This forced the government to devise new legal procedures to reduce the registration pace of different organizations.
Different support mechanisms have been employed to modify social entrepreneurship support. For instance, in Europe, the European Social Funds Scheme had been established to fund various social entrepreneurships in Europe. This revealed that social entrepreneurship was taking centre stage in Europe at local, national and regional levels. In the United Kingdom, the government established the Office of Third Sector to facilitate relevant support to the social enterprises (Cabinet Office 2006). Inclusion of entrepreneurial ideas in social enterprises complicates their operations. This was attributed to their efforts which were occasionally skewed towards real entrepreneurial activities. They notably dealt in mere business activities including charity shop trading, educational activities and car park businesses. Some of the social enterprises engaged in recycling projects to sustain their operations. As a result, various scholars comprehensively aimed their focus towards social entrepreneurships (Cabinet Office 2006). The scholars’ works were directed towards kinks that different social enterprises encounter in pursuing their primary objectives.
Social Capital
According to Bull (2008), social enterprises were primarily brought into force to ensure that organizations met their social values for their clients. Scholars viewed these organizations differently. Some scholars held the belief that social enterprises had special influences designed to distribute public resources equitably to the people. Social was defined in terms of altruistic motives. The same was poised by capital aspect. To Chell (2007), social and capital were real sources of contradiction. However, different scholars agreed that social capital involved development based on corporation, solidarity, trust, reciprocity and many other propositions. In addition, development from social capital could only be realized in an event where mutual understanding and commitment among stakeholders existed. Social capital ensured that all unquantifiable resources were brought on board using every possible economic theory (Borzaga & Defourny 2004).
Social capital had elicited great different opinions among scholars. A section of scholars viewed it as an inter-organizational relationship while others saw it as being dependent on circumstance. Bull (2008) argued that both solidarity and collectively were terms usually employed by those perceived to be politically alienated people. On the other hand, those who viewed themselves as politically correct viewed social capital to be part of family values, ethical values and community issues. But to other scholars, social capital was used in references to class relations. Chell (2007) emphasised that social capital could be used to empower different social groups towards taking drastic social actions, such as an action meant to change authority or government. In such a case, it may easily benefit the entire society (Wise 2001).
It had been assumed that social capital relates to good society. Different critics emerged to challenge this assumption. The critics maintained that social capital enabled think-tanks to make elusive decisions (Cabinet Office 2006). Other think-tanks viewed social capital as a mere social policy involving networks, corporations, relationships and norms which facilitated social interactions in society. Essentially, different contextual approaches were used to explain social capital. This was meant to enlighten people on the importance of social capital to communities. Bull (2008) discovered that social networking was completely important in initiating positive prospects of social enterprises. This was attributed to the relationship the networking established among different stakeholders. Trust also became a chief prospect of social enterprises. This was attributed to potential relationships in the business environment (Borzaga & Defourny 2004).
Challenges of Social Enterprises
Social enterprises have registered great growth since their inception. As different governments across the globe increased their efforts towards their development, new organizations were transforming themselves to social enterprises. This drew real competition in the social sector. Owing to this, several social enterprises confronted numerous challenges which needed immediate redress. Myriad challenges that confronted these social enterprises include governance, finance, connection, cultural implications, attitude and mistrust, strategy and training and tension in childcare. These challenges have been discussed below.
Governance
Social enterprises were governed by individuals. The board of directors was entitled to managing these organizations. Challenges notably arose since board members’ interests often conflicted with the enterprise objectives. Both stewardship model of governance and stakeholders’ governance models were notably unveiled (Cabinet Office 2006). In different organizations, different models of governance were employed. Their employment sometimes conflicted with operations of the board. Every social enterprise was thwarted in developing comprehensive models that were in tandem with their objectives. Social entrepreneurship remained in place for several decades. This experience in the social sector seemed to resolve governance issues attributed to social enterprises. According to Chell (2007) and Roper and Cheney (2005), organizational needs formed the foundation footing in setting a specific structure of governance.
With reference to the stake-holder’s model, democracy was very important in governing social enterprises (Low 2006). Some of the social enterprises had their governance officials appointed based on their expertise and experience. The stewardship model championed for selection of officials using the best criteria where experience and expertise formed an epicentre (Wise 2001). Governance and expertise were distinct cases. Some times, social enterprise used their board of directors to fulfil this task. The directors’ interests normally flared as they offered opportunities for their close allies and relatives at the expense of expertise.
Finance
Funding had remained one of the major challenges social enterprises confronted. According to Kingston and Bolton (2004), as governments supported their programs, the future of social enterprises funding remained bleak. This is because, funding policies have continuously shifted. Due to this, most of the social enterprises seldom secured even start-up capital. The capital providers had initiated policies which galvanized their enterprise capital base (Cabinet Office 2006). This tended to limit their initial capital requirements. Some providers had also restricted their capital to immovable assets. In most cases, local, central and regional governments had eased the financial uphill facing social organizations. Several social enterprises had referenced European Union’s program as their capital venality. From the financial statements of different social enterprises, it seemed that they remain relevant in their charity operations. This justified their strong financial base (Roper & Cheney 2005).
According to Bull (2008), different financial models employed by social enterprises regurgitated their financial positions. However, some social issues have proved beyond their efforts. Due to this, different social enterprises opted for grants and donations to supplement their financial needs. The most challenging bit of financing was that the majority of social enterprises mixed up both grants and donations with their earnings. This complicated their accounting processes as charity income and donations were included as their returns. In 1999, policies which backed social enterprises funding were changed and were affected by labour government. During this time, most organizations transformed to social enterprises as the labour government had eased funding policies. Some current social enterprises which previously operated in charity trading acknowledged their current state with mixed reactions. Some viewed the social enterprise model as a sigh of relief yet others were in contrast (Roper & Cheney 2005).
Changes in the funding system for social projects were related to favourable parameters laid down by government. For instance, involvement of the European Social Fund had easily catapulted social enterprises’ endeavours (Cabinet Office 2006). The scheme provided capital to social enterprises to enable them facilitates for their development objectives. Therefore, government played a critical role in developing social entrepreneurship. The policy shifts helped social enterprises in reverting financial challenges confronting them (Kingston & Bolton 2004). For example, when the labour government ascended to power, it favoured social enterprises development in the UK. The government efforts of financing social projects through social enterprises revealed the laxity of financial institutions in lending to social organizations (Boschee 2006).
Connections
The aspect of connectivity was very crucial in the realization of organizational objectives. Most social enterprises which had better connectivity with stakeholders capitalized their objective prosperity. This implied that organizations realized their social benefits through networking with all stakeholders (Kingston & Bolton 2004). This reduced any chances of resistance that might cause more harm to the organization than good. Therefore, support organizations were very important to special enterprises. When their support ceased enterprises could achieve stability. This revealed probable powers that support organizations had over social enterprises. For instance, it had been noted that such support organizations provided crucial i...
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Challenges of Social Enterprises
Introduction
Social enterprise has drawn different stances from a wide range of scholars. Some scholars hold that Social enterprises are social organizations formed purposely to raise income (Borzaga & Defourny 2004). In these social organizations, entrepreneurial skills are notably employed. From this viewpoint, social enterprises are distinct from other social organizations because they seldom depend on government, public and other donors for funding (Cabinet Office 2006). In these social organizations, grants and donations primarily facilitate their social objectives. In this sense, social enterprises tend to consolidate their efforts towards the realization of social objectives (Roper & Cheney 2005). The social enterprises can easily be distinguished from other social organizations based on their objectives. Social organizations have set their goals based on wealth maximization. The social enterprises have incorporated entrepreneurial skills along side their social objectives.
The social sector has dramatically been stunned by recent growth. This has attracted countless social organizations that also rely on donations and grants from similar sources (Roper & Cheney 2005). This move caused uproar as competition stiffened among different social organizations. For instance, in the United Kingdom, labour government supported social sectors comprehensively. This tendency attracted more social organizations to transform themselves into social enterprises (Borzaga & Defourny 2004). The outraged debates over the UK labour government’s intense entrepreneurial assistance to the social sector were seldom brought to a halt. The concept of social entrepreneurship is traced back to the United Kingdom. Victorians initiated the establishment of social entrepreneurship within health institutions. During this time, the health institutions provided health services to the people at cost shared fees. The facilities also provided other services and products at affordable fees. The amounts of income realized in these endeavours were channelled to charity (Cabinet Office 2006).
These activities formed the basis of different charitable organizations founded thereafter. According to some scholars, charities have currently been used to auger grants and donations that have formed the basis of social enterprises. It is claimed that before the formation of current social enterprises, current social enterprises operated as trading charities (Kingston & Bolton 2004). The support programs which these charitable organizations operated remained an illusion in social sectors. Social entrepreneurial skills were introduced in an effort to bring clarity. Therefore, social enterprises were born (Wise 2001). Definitively, they were tagged as organizations which try to achieve their primary social goals using business entrepreneurial methods. This paper intends to identify operational challenges facing social enterprises and the possible strategies that they can use to combat competitive forces in the social sector.
Social Entrepreneurship
In the 1990s, a new field in the social sector was introduced. This was social entrepreneurship. Different people were obsessed about the field and vowed to study it. During this time, the studies ensnared around social charity organizations and private social organizations which were viewed as embroiling social aspect in the society. Thereafter, there was an upsurge formation of social enterprises (Cabinet Office 2006). Different charitable organizations transformed to social enterprises after borrowing an olive branch in entrepreneurial methods. It was reported that several organizations congested social offices to register as community interest companies (Roper & Cheney 2005). By the end of 2008, there were over 2000 companies already established in the United Kingdom. This forced the government to devise new legal procedures to reduce the registration pace of different organizations.
Different support mechanisms have been employed to modify social entrepreneurship support. For instance, in Europe, the European Social Funds Scheme had been established to fund various social entrepreneurships in Europe. This revealed that social entrepreneurship was taking centre stage in Europe at local, national and regional levels. In the United Kingdom, the government established the Office of Third Sector to facilitate relevant support to the social enterprises (Cabinet Office 2006). Inclusion of entrepreneurial ideas in social enterprises complicates their operations. This was attributed to their efforts which were occasionally skewed towards real entrepreneurial activities. They notably dealt in mere business activities including charity shop trading, educational activities and car park businesses. Some of the social enterprises engaged in recycling projects to sustain their operations. As a result, various scholars comprehensively aimed their focus towards social entrepreneurships (Cabinet Office 2006). The scholars’ works were directed towards kinks that different social enterprises encounter in pursuing their primary objectives.
Social Capital
According to Bull (2008), social enterprises were primarily brought into force to ensure that organizations met their social values for their clients. Scholars viewed these organizations differently. Some scholars held the belief that social enterprises had special influences designed to distribute public resources equitably to the people. Social was defined in terms of altruistic motives. The same was poised by capital aspect. To Chell (2007), social and capital were real sources of contradiction. However, different scholars agreed that social capital involved development based on corporation, solidarity, trust, reciprocity and many other propositions. In addition, development from social capital could only be realized in an event where mutual understanding and commitment among stakeholders existed. Social capital ensured that all unquantifiable resources were brought on board using every possible economic theory (Borzaga & Defourny 2004).
Social capital had elicited great different opinions among scholars. A section of scholars viewed it as an inter-organizational relationship while others saw it as being dependent on circumstance. Bull (2008) argued that both solidarity and collectively were terms usually employed by those perceived to be politically alienated people. On the other hand, those who viewed themselves as politically correct viewed social capital to be part of family values, ethical values and community issues. But to other scholars, social capital was used in references to class relations. Chell (2007) emphasised that social capital could be used to empower different social groups towards taking drastic social actions, such as an action meant to change authority or government. In such a case, it may easily benefit the entire society (Wise 2001).
It had been assumed that social capital relates to good society. Different critics emerged to challenge this assumption. The critics maintained that social capital enabled think-tanks to make elusive decisions (Cabinet Office 2006). Other think-tanks viewed social capital as a mere social policy involving networks, corporations, relationships and norms which facilitated social interactions in society. Essentially, different contextual approaches were used to explain social capital. This was meant to enlighten people on the importance of social capital to communities. Bull (2008) discovered that social networking was completely important in initiating positive prospects of social enterprises. This was attributed to the relationship the networking established among different stakeholders. Trust also became a chief prospect of social enterprises. This was attributed to potential relationships in the business environment (Borzaga & Defourny 2004).
Challenges of Social Enterprises
Social enterprises have registered great growth since their inception. As different governments across the globe increased their efforts towards their development, new organizations were transforming themselves to social enterprises. This drew real competition in the social sector. Owing to this, several social enterprises confronted numerous challenges which needed immediate redress. Myriad challenges that confronted these social enterprises include governance, finance, connection, cultural implications, attitude and mistrust, strategy and training and tension in childcare. These challenges have been discussed below.
Governance
Social enterprises were governed by individuals. The board of directors was entitled to managing these organizations. Challenges notably arose since board members’ interests often conflicted with the enterprise objectives. Both stewardship model of governance and stakeholders’ governance models were notably unveiled (Cabinet Office 2006). In different organizations, different models of governance were employed. Their employment sometimes conflicted with operations of the board. Every social enterprise was thwarted in developing comprehensive models that were in tandem with their objectives. Social entrepreneurship remained in place for several decades. This experience in the social sector seemed to resolve governance issues attributed to social enterprises. According to Chell (2007) and Roper and Cheney (2005), organizational needs formed the foundation footing in setting a specific structure of governance.
With reference to the stake-holder’s model, democracy was very important in governing social enterprises (Low 2006). Some of the social enterprises had their governance officials appointed based on their expertise and experience. The stewardship model championed for selection of officials using the best criteria where experience and expertise formed an epicentre (Wise 2001). Governance and expertise were distinct cases. Some times, social enterprise used their board of directors to fulfil this task. The directors’ interests normally flared as they offered opportunities for their close allies and relatives at the expense of expertise.
Finance
Funding had remained one of the major challenges social enterprises confronted. According to Kingston and Bolton (2004), as governments supported their programs, the future of social enterprises funding remained bleak. This is because, funding policies have continuously shifted. Due to this, most of the social enterprises seldom secured even start-up capital. The capital providers had initiated policies which galvanized their enterprise capital base (Cabinet Office 2006). This tended to limit their initial capital requirements. Some providers had also restricted their capital to immovable assets. In most cases, local, central and regional governments had eased the financial uphill facing social organizations. Several social enterprises had referenced European Union’s program as their capital venality. From the financial statements of different social enterprises, it seemed that they remain relevant in their charity operations. This justified their strong financial base (Roper & Cheney 2005).
According to Bull (2008), different financial models employed by social enterprises regurgitated their financial positions. However, some social issues have proved beyond their efforts. Due to this, different social enterprises opted for grants and donations to supplement their financial needs. The most challenging bit of financing was that the majority of social enterprises mixed up both grants and donations with their earnings. This complicated their accounting processes as charity income and donations were included as their returns. In 1999, policies which backed social enterprises funding were changed and were affected by labour government. During this time, most organizations transformed to social enterprises as the labour government had eased funding policies. Some current social enterprises which previously operated in charity trading acknowledged their current state with mixed reactions. Some viewed the social enterprise model as a sigh of relief yet others were in contrast (Roper & Cheney 2005).
Changes in the funding system for social projects were related to favourable parameters laid down by government. For instance, involvement of the European Social Fund had easily catapulted social enterprises’ endeavours (Cabinet Office 2006). The scheme provided capital to social enterprises to enable them facilitates for their development objectives. Therefore, government played a critical role in developing social entrepreneurship. The policy shifts helped social enterprises in reverting financial challenges confronting them (Kingston & Bolton 2004). For example, when the labour government ascended to power, it favoured social enterprises development in the UK. The government efforts of financing social projects through social enterprises revealed the laxity of financial institutions in lending to social organizations (Boschee 2006).
Connections
The aspect of connectivity was very crucial in the realization of organizational objectives. Most social enterprises which had better connectivity with stakeholders capitalized their objective prosperity. This implied that organizations realized their social benefits through networking with all stakeholders (Kingston & Bolton 2004). This reduced any chances of resistance that might cause more harm to the organization than good. Therefore, support organizations were very important to special enterprises. When their support ceased enterprises could achieve stability. This revealed probable powers that support organizations had over social enterprises. For instance, it had been noted that such support organizations provided crucial i...
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