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Module Nr' 1, Developing managers to develop social enterprise

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Title: Module Nr' 1, Developing managers to develop social enterprise


1
Projekt delno financira Evropska unija
  • Module Nr. 1, Developing managers to develop
    social enterprise
  • Bob Doherty
  • Liverpool Business School
  • E-mail R.Doherty_at_ljmu.ac.uk


2
Module OneUnderstanding the concepts forms of
Social Entrepreneurship and CSR
3
Day One outline
  • Introductions
  • Short Film
  • Group Discussion on Growth of Social Economy
  • Key Definitions
  • Forms and positioning
  • UK Perspective

4
Why social entrepreneurship?
  • Significant growth of the social economy in most
    industrialised countries (Defourney and Borgaza
    2001).

5
Group Task Brainstorm
  • Working in groups spend 10 minutes discussing why
    the significant growth of the social economy in
    most industrialised countries?
  • This will be presented by the group on a
    flipchart.

6
Why Growth?
  • Renewed expression of civil society against a
    background of..?
  • Throughout Europe increasing number of
    initiatives led by a new entrepreneurial spirit
    based on social aims (Defourney Borgaza 2001)

7
Key Issues
  • There is no necessary reason why the standard
    business or plc should be the only enterprise
    model - Andrea Westall 2002 (Deputy Director
    NEF formerly Head of Policy at the Foundation for
    entrepreneurial Management)

8
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9
Overview of the social economy
  • Collection of organisations between the
    traditional private sector and the public sector
    (some times called Third Sector)

Social Economy
Social Enterprise
Socially Rep.Business
Private Sector
Gov.
Charities
VCOs
10
Social Entrepreneur
  • Somebody who identifies and brings to life new
    business opportunities but who is motivated by
    public and social good rather than the need for
    personal profit
  • Social Enterprise Coalition UK

11
Social Entrepreneurship
  • Global phenomenon
  • Driven by new breed of pragmatic, innovative and
    visionary social/environmental activists and
    their networks
  • Uses a mix of business, charity and social
    movement models to reconfigure sustainable
    solutions to community challenges (Nicholls 2006)

12
Social Entrepreneurship
  • Higher employment rates at lower cost
  • 2.1 billion Fairtrade Certified goods market
  • For social entrepreneurs the social mission is
    explicit and central, mission related impact
    becomes the focus not wealth creation (Dees 1998)

13
Definitions
  • A social enterprise is a business with
    primarily social objectives whose surpluses are
    principally re-invested for that purpose in the
    business or in the community, rather than being
    driven by the need to maximise profit for
    shareholders and owners
  • DTI, Strategy for Success 2002

14
Social Entrepreneurship
  • Innovative and effective activities that focus
    strategically on resolving social market failures
    and creating new opportunities to add social
    value systemically by using a range of resources
    and organisational formats to maximise social
    impact and bring about change
  • (Nicholls 2006)

15
Definitions
  • Social enterprise means an organisation that
    trades in the market for a social purpose
  • Social Enterprise Coalition Theres more to
    Business than you thinkA guide to Social
    Enterprise 2003

16
The Social Enterprise Alliance in the USA
  • Defines social enterprise as
  • An organisation or venture that advances its
    social mission through entrepreneurial earned
    income strategies

17
Organisation for Economic Co-operation and
Development (OECD 2006)
  • Broad international definition
  • Organisations with different legal forms in
    different countries, which are organised in an
    entrepreneurial spirit to pursue both social and
    economic goals. Social goals prioritise solutions
    to unemployment, social cohesion and social
    exclusion. These organisations can be urban or
    rural based.

18
Definitions
  • Social Enterprise is a loose umbrella term
    which raises the awareness of a variety of
    organisations that highlight alternative ways to
    do business that directly incorporate social and
    environmental concerns. This gives the
    possibility of creating revenue streams that
    enable an organisation to create sustainable
    social change without being reliant on time
    limited funding or charitable donation
  • Andrea Westall 2002 (Deputy Director NEF)

19
Definition Community Enterprise
  • Those social enterprises located at
    neighbourhood or district level and rooted in the
    locality they seek to benefit, a subset of social
    enterprise
  • (Pearce 2003, Chp 2, pge 28)

20
Corporate Social Responsibility
  • CSR means that a corporation should be held
    accountable for any of its actions that affect
    their people, their communities and their
    environment. It implies that negative business
    impacts on people and society should be
    acknowledged and corrected if at all possible.
    It may require a company to forgo some profits if
    its social impacts are seriously harmful to some
    of the corporations stakeholders or if its funds
    can be used to promote a positive social good 
  • Post, Lawrence and Weber 1999

21
Corporate Social Responsibility
  • CSR is the degree of (ir) responsibility
    manifested in a companys strategies and
    operating practices as they impact stakeholders
    and the natural environment day to day. Some
    level of responsibility is integral to any
    corporate action or decision that has impacts.
    CSR cannot be avoided because it is the root or
    foundation of Corporate Citizenship.
  • Waddock (2004)

22
British Governments Definition of a responsible
Organisation (DTI CSR Report 2007)
  • A responsible organisation does three things
  • Recognises that its activities have a wider
    impact on society in which it operates
  • Takes account of the economic, social,
    environmental human rights impact of its
    activities across the world not just narrow
    economic focus
  • Seeks to achieve benefits by working in
    partnership with other groups organisations
  • http//www.csr.gov.uk/

23
Sustainable development
  • Most common usage of sustainability is in
    relation to sustainable development
  • Sustainable development is development that meets
    the needs of the present without compromising the
    ability of future generations to meet their own
    needs (World Commission on Environment and
    Development (WCED))
  • Intragenerational equity
  • WCED aim of eradicating world poverty and
    inequity Intergenerational equity

24
Sustainable development broadening of the concept
  • Roots in environmentalism environmental
    sustainability
  • Expansion to include social ad economic aspects
  • The Triple Bottom Line
  • Elkington, J. (1997) Cannibals with Forks, the
    Triple Bottom Line in the 21st Century

25
Components of sustainability
Triple bottom line (TBL)
Social
Economic
Environmental
26
Triple Bottom Line
  • Many issues e.g.
  • Environmental can future generations enjoy the
    same living standards as us without a reversal of
    the trend towards ever more production and
    consumption. Carrying capacity of the Earth, see
    for instance, Pearce, D. (1991) Blueprint 2,
    Greening the World Economy. Earthscan
    Publications Ltd
  • Economic short term explosions of profit at the
    expense of long term shareholder value e.g.
    dot.com bubble in 2000. Bribes undermining
    market mechanisms. Corporate accounting tricks
    to avoid tax payments
  • Social approaches less mature. Social justice
    is the key issue. Contrast of living standards
    and quality of life between developed and
    undeveloped countries and within developed and
    undeveloped countries

27
Common Characteristics of Social Enterprises
  • Enterprise Orientation- directly involved in
    producing goods or providing services to market,
    part of third sector but characterised as more
    entrepreneurial and self financing
  • Social Aims- have explicit social aims such as
    job creation, providing goods or services.
  • Social Ownership- based on participation by
    stakeholder groups
  • (DTI- Strategy for Success SE Coalition)

28
The locus of social enterprise
Source AMION Consulting 2001
29
Spaces of social enterprise
GOVERNMENT
VOLUNTARY SECTOR
MAINSTREAM BUSINESS
SOCIAL ENTERPRISE
30
Size of Social Enterprise in UK
  • 55,000 social enterprises in the UK
  • Generating more than 27 billion turnover
  • More than 8 billion to GDP
  • Social enterprises account for 5 of all UK
    businesses with employees
  • (Cabinet Office 2006)

31
Social Economy is important because
  • Job creation in new enterprises
  • Contributes to efficient competition
  • Offers potential for new forms of
    entrepreneurship
  • Meets new needs especially of marginalised
    communities
  • Favors local participation and voluntary work
  • Enhances solidarity and cohesion
  • Provides training and employment to disadvantaged
    communities

32
Types of Social Enterprise in UK
  • Development Trusts (www.dta.org.uk) community
    based regeneration
  • Co-operative - associations of persons united to
    meet common economic and social needs
    www.cooperatives-uk.coop
  • Credit Union providing access to finance for
    socially excluded

33
Types of Social Enterprise in UK
  • Intermediate Labour Market-providing training and
    work for the long-term unemployed.
  • Trading arm of charities
  • Social Firms- providing employment and training
    to people with disabilities and other
    disadvantaged groups e.g COPE on Shetland
    (www.socialfirms.co.uk)
  • Employee owned businesses are companies that are
    wholly or substantially owned by the people who
    work in them (www.employeeownership.co.uk)

34
Types of Social Enterprise in UK
  • Community enterprises- geographical focus
  • Housing associations social enterprises in
    charge of managing housing stock for socially
    excluded people www.housingcorp.gov.uk
  • Leisure trusts- local authority in-house leisure
    services turned into social enterprises.
    (www.sporta.org)
  • 100 Fair trade companies (www.fairtrade.org.uk)

35
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36
FAIRTRADE  The definition of
Fairtrade is  " Fairtrade is a trading
partnership based on dialogue, transparency and
respect, that seeks greater equity in
international trade". It contributes to
sustainable development by offering better
trading conditions to and securing the rights of,
disadvantaged producers workers- especially in
the South. The Fairtrade Foundation (FTF)
Annual Review (2003)
37
Commodity Prices in Real Terms Cocoa
Figures from FAO The State of Agricultural
Commodity Markets 2004
38
THE DAY CHOCOLATE COMPANY
Philip Kumea
The story of how small scale cocoa farmers came
to own an equity share in a Fairtrade chocolate
company and its brands Divine and Dubble
Fairtrade Chocolate
39
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40
The Day Chocolate Company (set-up in 1998)
  • The overall strategic aim of Day and its
    partners is to improve the livelihoods and
    opportunities for smallholder cocoa producers in
    West Africa by establishing their own branded
    proposition in the UK chocolate market and paying
    a Fairtrade price for all the cocoa used. (Tiffen
    1998).

41
Figure 1. The DAY/KKU Value network
Cocoa farmers Village Societies (1200 in 2006)
  • LEGEND
  • Ownership
  • Flow of goods and cash
  • One way cash flow

Kuapa Kokoo Farmers Union (KKFU) Village
societies elect a Society Executive from these 7
member Regional Executive Councils elected, and
from these a 13 member National Executive Council
(NEC) is elected.
Independent retailers (UK)
  • Kuapa Kokoo Ltd (KKL)
  • 97 of shares held by KKU
  • (founders hold rest)
  • Board of Directors
  • 6NEC farmers
  • 1 Managing Director
  • 4 Senior managers
  • Staff of 26 Society
  • Development Officers

PROFITS
PROFITS
Day Chocolate Company KKFU (45 shares, 2
seats) Twin Trading (42 shares, 2
seats) Oikocredit (12 shares, 1 seat) Comic
relief (1 seat) Christian Aid (1 seat)
Wholesalers, ATOs etc
Kuapa Kokoo Farmers Trust Disburses FT
premiums, DCC/KKL profits and other funds as
decided by board of trustees - 4 NEC farmers - 1
KKL manager - 4 local professionals
Storage and distribution
Cocoa Marketing Company (CMC) Monopoly
exporting Subsidiary of the Parastatal
cocoa marketing board (COCOBOD)
Supermarket distribution depots
Chocolate Manufacturer
UK Supermarkets (Tescos, Sainsburys, Co-op)
FLO approved Cocoa Processors
FAIRTRADE PREMIUMS
Sole European Importer
Adapted from Ronchi (2001)
42
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43
What are Community Interest Companies?
  • Limited liability companies for social
    enterprises
  • New Legal Form for social enterprise
  • Created by the Companies (Audit, Investigations
    and Community Enterprise) Act 2004 and the
    Community Interest Company Regulations 2005

44
Political context
  • Pearce explained The striking development of the
    last five years has been the growth in political
    and administrative support for Social Enterprise
    in the UK, especially since the 1997 General
    Election (Pearce 2003, pg. 91 )

45
Political Context
  • Strategy for Success (2002) and Scaling New
    Heights (2006)
  • New Office of the Third Sector (OTS) within the
    Cabinet Office.
  • Futurebuilders for VCS development
  • Partnership in public services- Third sector
  • Strong and Prosperous communities- The local
    Government White Paper
  • Regional Government Support

46
UK Government
  • Cross parliament interest in social enterprise
  • Minister responsible for social enterprise- Ed
    Miliband MP

47
Values of The Social Economy
  • Co-operation
  • De-centralisation- investing power in people
    communities
  • Inclusivity- stakeholder approach
  • Good work
  • Sustainability
  • People centered embracing people, culture,
    environment

48
Stakeholder theory
  • Stakeholders a definitions
  • A stakeholder is any individual or group who can
    affect or is affected by the actions decisions,
    policies and practices, or goals of the
    organisation Freeman 1984
  • Stakeholders are all the people and groups
    affected by, or that can affect, an
    organisations decisions, policies and
    operations.
  • Post Lawrence and Weber 1999
  •  

49
What is a Stake?
  • An interest or share or right that a group or
    individual has in the outcome of an organisations
    actions

50
Stakeholder Approach
  • Method of identifying multiple political, social,
    legal, economic and ethical claims of many
    constituencies

51
Traditional Management Model (Crane. A Matten.
D (2004) Business Ethics, Oxford University Press
pg 51)
Suppliers
Customers
FIRM
Employees
Shareholders
52
Stakeholder Model (Crane. A Matten. D (2004)
Business Ethics, Oxford University Press pg 51)
Local Government
Suppliers
Employees
EU
FIRM
Competitors
Customers
Government
Civil Society
Shareholders
53
Major Questions
  • Who are our stakeholders?
  • What is their stake?
  • What responsibilities (economic, legal, ethical,
    political,) do we have to our stakeholders?
  • What strategies, actions or decisions should we
    take to best deal with those responsibilities?

54
Stakeholder Management
  • What is equitable just fair and good for our
    stakeholders?

55
Group Task
  • Draw stakeholder map for The Day Chocolate
    Company
  • Take 10-15 minutes to develop this on flipchart

56
Concluding Thoughts
  • Social enterprises challenge the myth of the
    superiority of the private sector in efficiency
    and innovation
  • The definition creates space and impetus for
    exploring new innovative models

57
References
  • The Emergence of Social Enterprise (2001)
    Defourney, Jacques Borgaza, Carlo Borzaga, Carlo
    (University of Trento, Italy), Defourny, Jacques
    (University of Liege, Belgium)
  • Managing and Measuring Social Enterprises (2003)
    Paton, Rob Sage Publications SAGE PUBN INC
  • Social Concern and Social Enterprise (2000)
    Gulliver, Kevin Brewin Books Limited
  • Social Enterprise in Anytown (2003) Pearce John,
    Calouste Gulbenkian Foundation
  • Value led Maket Driven, Social Enterprise
    Solutions to Public Policy Goals (2002), Andrea
    Westall
  •  

58
References
  • Crane. A Matten. D (2004)
  • Business Ethics, Oxford University Press
  • Johnson, G Scholes K (2005) Exploring
    Corporate Strategy Prentice Hall, Europe
  • http//www.accountability.org.uk
  • Freeman, R.E. (1984) Strategic Management A
    stakeholder Approach. Boston Pitman
  • Naylor J. (2004) Management, Second Edition
  • Prentice Hall
  • Weiss W. J. (2003) Business Ethics a
    stakeholder and Issues Management Approach, 3rd
    Edition, Thomson.

59
Websites
  • www.ippr.org
  • www.socialenterprise.org.uk
  • www.neweconomics.org
  • www.dti.gov.uk/socialenterprise
  • www.msei.org.uk
  • www.theinnercity100.org/research
  • www.kpk.pwp.blueyonder.co.uk
  • www.concise.mdx.ac.uk
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