Social Enterprise in the Near Future - Essay Example

Social Enterprise in the Near Future Executive Summary The essay discusses about the roles play by social enterprises in present society. Social enterprises are businesses that concentrate on dealing with various social issues and enhancing community. Over years, social enterprises are progressively being used as a substitute way of delivering public services. In the UK, such social enterprises comprise community organisations, credit unions, charities and developmental trustees among others. However, owing to the happening of the recent economic recession, government spending has reduced, resulting in imposing negative impact on the entire performance of the social enterprises. Still, there are several ways through which social enterprises can enhance their respective performance. These ways include establishing strong network and attracting international capital among others. At present, social enterprise segment has vast possibility for growth and the development is this segment is subjected to innovative thoughts and capability of leaders to ensure accomplishment of social change at large. Table of Contents Executive Summary 2 Introduction 4 Social Enterprise Defined 4 Current and Changing Role of Social Enterprises in Society 5 Social Enterprise in the UK 7 Future Direction of Social Enterprises 9 Further Development of Social Enterprises 10 Conclusion 11 References 12 Introduction In recent years, ‘social enterprise’ has become accustomed to academics and policymakers and is increasingly becoming an imperative aspect to the general public as a new and innovative business model, satisfying both social and financial objectives. It is worth mentioning that social enterprises support employment market incorporation, social inclusion and financial improvement. Nowadays, the term social enterprise is used in order to address the structural problems of society and also for providing solutions to mitigate various social problems (Noya, 2009). With this concern, the essay intends to analyse and determine the near future of social enterprises in the context of the UK. Social Enterprise Defined Social enterprises are businesses that tend to address social and environmental requirements. This sort of enterprises usually ranges from local and community oriented organisations to national and global organisations. They fulfil number of activities such as maintaining community constructions or open spaces and providing services to the community such as healthcare services among others. On further note, a few of the social enterprises are also capable of generating revenue by selling products that are developed through social assets. Social enterprises are more probably to innovate and experiment in comparison with traditional organisational model, since they are usually designed to fill the gaps in existing services. Social enterprises can reach socially omitted individuals by delivering training and employment opportunities. These types of organisations can generate a sense of local identity and assist in developing self-possession of local citizens. Social enterprises are basically set up to recollect and plough profit back to the local economy (Young Foundation, 2009). Social enterprises perform through extensive range of segments, ranging from primary and social care to the areas of renewable energy, accommodation and retail among others. Every social enterprise possesses certain communal and environmental objectives. Although several private organisations also possess certain social objectives, social enterprises are noted to be quite different from them as their social objectives are central to the operation, whereas in case of other organisations, profit making is central to the operation (Directorate of Commissioning and System, 2008). Current and Changing Role of Social Enterprises in Society Social enterprises are progressively being used as a substitute way of providing public services. Social enterprises deliver vital resources to the society. They exist in such areas where public services are weak or lack to fulfil the requirements. Sometimes, these organisations fill massive social gaps in regions, wherein resources become exceptionally scarce, population gets condensed and customised requirements to be met for avoiding exacerbation of societal problems (McElnea, 2005). Social enterprises in every segment such as healthcare and education among others are much reliant on public or private fund and hence, require changing the services based on accessibility of resources. Social enterprises provide little assurance against public policy alterations, government budget reduction, change in private preferences and corporate reformation among others. However, by generating revenue, which can be focussed towards assisting the bottom-line services, social enterprise can serve as a pioneering way of economic improvement. The long-run role play by social enterprises are: To enhance general talents of local employees To minimise variation in access to healthcare and social services To make quality accommodation for people who exist in below standard circumstances To minimise social segregation for idle individuals To generate wealth and additional advantages To enhance labour efficiency by capitalising on skill improvement and To allow community oriented rejuvenation and revitalisation (McElnea, 2005) The tradition of social enterprises has long history throughout the world. Although at present, numerous social enterprises receive money and other form of support from the respective governments, they possess individuality in terms of functionality. While there exists generally shared understanding regarding social enterprises as a combination of economic institution with certain form of social objectives, the universally approved explanation of social enterprise is quite vague in nature. The social enterprise segment is frequently observed as having its roots for non-profit and charitable organisations, having the mission of offering social advantage. This type of organisations often uses trading functions in order to provide monetary support for fulfilling social mission (Duniam & Eversole, 2013). Social enterprise has varied and argued inheritance owing to its different historical and cultural origins in diverse settings. Social enterprise is an old thought and it stems from organisational generosity to development of human and environmental welfare. Social enterprise has yielded mixed concept, based on legal, functional and social limitations of the nations where they exist. There are distinctive social enterprises in different nations and the development of such enterprises is determined by specific political landscape, economic condition, tradition and culture. These aspects influence the interpretation of social enterprise in different settings. Since the thought of trading function to accomplish social mission is interpreted into diverse national context, it gives rise to extensive range of social organisational potentials under the banner of social enterprise (Duniam & Eversole, 2013). Social Enterprise in the UK Social enterprise segment in the UK typically comprise community organisations, credit unions, charities, developmental trustees, housing associations and social firms among others. This segment is intensely associated with ‘third sector’ whose philosophies are embedded in delivering social, environmental and economic advantages to the society. In the UK, social enterprise drive started since the year 1998, when ‘Social Enterprise London’ was developed in order to support evolving businesses and reflected a pledge towards mitigating the particular societal cause. In the year 2002, the ‘UK Department of Trade and Industry’ propelled a cohesive strategy in order to support several governmental objectives. This strategy was followed by ‘Social Enterprise Action Plan’ in the year 2006 (Duniam & Eversole, 2013). The social enterprise segment of the UK play a decisive role in the overall welfare of the social system. It is being argued that the rapid improvement of social enterprise segment in Britain has been the outcome of political determination. Social enterprise in the UK is observed to be as a substitute policy approach, reacting towards the economic and social burdens, with an anticipation that social enterprise segment would increase the portion of service delivery within the existing gaps in the services. Alongside the decentralisation of service from central government to local government, social enterprise segment tends to move from public segment to private and local government segment. Simultaneously, it has also been argued that social economy must not be considered as one of the effective solutions for solving complex social problems at the local level (Duniam & Eversole, 2013). The perception of social enterprise is not extensively acknowledged or understood throughout the UK. One of the major components of social enterprise in this nation is the diversity of legal forms approved in each state and the functional boundaries forced by legal structures. For example, within Europe, social enterprises in both the UK and Italy are decisively entrenched in the ‘third segment’. Remarkably, Italian regulation necessitates a specific governmental structure for social enterprises, while the UK relies on business model for smooth functioning of the social enterprises (Duniam & Eversole, 2013). In general, legal necessities that impose by the central government of the UK provide managerial philosophies for effective functioning of the social enterprises. Social enterprises are also viewed as option for fixing the economic issues. The notion of social enterprise in the UK comes across extensive range of organisational potentials, legal structures, social missions and commercial activities (Duniam & Eversole, 2013). According to the report of BMG Research, in the year 2013, in excess of 68,000 social enterprises operated in the UK. These organisations contributed nearly about £24 billion to the economy and provided employment to about one million individuals. Recent review reveals that in the UK, one third of the social enterprises are only in ‘first three years of operation’. With respect to their emphasis, social enterprises are most often performing for providing commercial support and consultancy services, education, employment opportunities and skill along with accommodation. Other activities of social enterprises comprise retail, culture and leisure support, social care services, financial support, healthcare services and solution of environmental issues among others. Although there are extensive trends at the national level, about 38% of UK’s social enterprises perform in 20% of disadvantaged societies. Since different societies have dissimilar requirements, it indicates that social enterprises face challenges and also opportunities (Dowsett, 2013). Future Direction of Social Enterprises Presently, the growth in social enterprise segment has arrived at a greater requirement of finance. The recent economic crisis of 2008 had generated a crucial concern for the performance of social enterprises due to cut in government spending. Minimisation in government spending in recent days has increased the demand of the services delivered by the social enterprises. The report of Grover & Piggott (2012) advocate that reduction in government spending is reflected in shift to benefit prerogatives, reduced availability of food and increasing pervasiveness to psychological health problems among others. Reductions in public expenditure and constant borrowing signify that the UK government would no longer possess enough funds to pay for the extent of public services that the people have grown familiar to having access with. In the UK, the requirement of establishing social enterprises is incessantly growing that can create new social segment resources in order to pay for and maintain the services that have always been one of the robust traditions of the UK in comparison with other nations of the world (Rangan & et. al., 2008). Given the apparent challenges and opportunities of social enterprises, there are various future possibility of social enterprise segment. While some social enterprises with attractive mission and strategies have received plentiful funding, general trend suggests that demonstrating good performance is challenging than it seems to be and that funding resources will be hard in near future (Rangan & et. al., 2008) However, in more optimistic viewpoint, existing and new social enterprises will use strategies in order to reap various significant opportunities as well as advantages. They will certainly develop network and make partnership in order to enhance the effectiveness, thereby creating a transformed social segment. The growing requirement for the services of social enterprises could tremble new resources and thus funders would start to spend their bequests and collaborate on joint venture charity. If organisations can successfully demonstrate high performance, then new sources of funding will flow and the social enterprise segment will expand. However, such expansion requires increased attention to the aspects of leadership and management (Rangan & et. al., 2008). Further Development of Social Enterprises Since social enterprises in the UK is continuing to grow and raising their influence, it would be advantageous to extent their regional scope of functioning. In terms of recommendations, it can be affirmed that social enterprises should not only look to raise capital from government and other local funders, but should also attract more regional and international capital in order to enhance their effectiveness. Since, the UK is regarded as one of the centre for innovations due to social enterprise development, British social enterprises should also think of franchising, so that social enterprises of other nations can use such successful business models. By establishing replicable and effective business models, social enterprises can further scale their influence (Asian Development Bank, 2012). Moreover, social enterprises and funders are required to form British network so that they can have a community for sharing different thoughts. This aspect can assemble global policy negotiation in order to share different experiences and formulate activities for forming and developing a supportive society. Establishing partnership with other organisations, foundations and intermediary institutions along with universities and colleges can also provide funding as well as mentoring support to social enterprises. These activities will certainly assist the entire British social enterprises to grow their respective scope. By accessing external capital and mutually pushing the social enterprise scope, the UK can continue to become a pioneer in this segment and have considerable influence in investment (British Council, 2014). Conclusion In conclusion, it can be stated that no single measure exist for the improvement of social enterprises. Thus, there lays the need of finding proper combination of measures by evaluating financial and social outcomes. Social enterprises have several opportunities to provide for the enhancement of community. These can provide active support towards making greater economic development with the execution of variety of measures such as creating employment opportunities, enhancing the skills of workforce and generating wealth for nation. Identifiably, momentous changes are occurring in the segment of social enterprises comprising flow of funding and shift of role of the government to provide support to such organisations. Presently, this segment remains on the edge of potential futures comprising alliance, innovative growth and expressive investigation. The future of social enterprises will depend on the capability of the organisational leaders to bring new thoughts and invest substantially for achieving positive social transformation. References Asian Development Bank, 2012. India Social Enterprise Landscape Report. Sankalp Forum. [Online] Available at: http://www.sankalpforum.com/wp-content/uploads/2013/05/india-social-enterprise-landscape-report.pdf [Accessed April 19, 2014]. British Council, 2014. Social Enterprise. Our Work in Society. [Online] Available at: http://www.britishcouncil.org/society/social-enterprise [Accessed April 19, 2014]. Directorate of Commissioning and System, 2008. Social Enterprise – Making a Difference: A Guide to the ‘Right to Request’. Social Enterprise Coalition. [Online] Available at: http://www.socialenterprise.org.uk/uploads/files/2011/11/social_enteprise_making_a_difference_guide.pdf [Accessed April 19, 2014]. Dowsett, O., 2013. 21st Century Innovations in Social Enterprise Practical Insights for the Lancaster District. Shared Future CIC. [Online] Available at: http://www.sharedfuturecic.org.uk/wp-content/uploads/2014/02/21st-Century-Innovations-in-Social-Enterprise-Jan-2014-web-version.pdf [Accessed April 19, 2014]. Duniam, M. & Eversole, R., 2013. Social Enterprises and Local Government: A Scoping Study. Australian Centre of Excellence for Local Government. Grover, C. & Piggott, L., 2012. Economic Crisis, Need & Voluntary Organisations in the Lancaster District. Lancaster University. [Online] Available at: http://www.lancastercvs.org.uk/publications/economic-crisis-and-need.pdf [Accessed April 19, 2014]. McElnea, W., 2005. The Role of Social Enterprise in Economic Development. University of Michigan. [Online] Available at: http://www.umich.edu/~econdev/socialenterprise/ [Accessed April 19, 2014]. Noya, A., 2009. The Changing Boundaries of Social Enterprises. Local Economic and Employment Development. [Online] Available at: http://www.fcssbc.ca/sf-docs/socent/oecd-social-enterprise.pdf?sfvrsn=0 [Accessed April 19, 2014]. Rangan, V. K. & et. al., 2008. The Future of Social Enterprise. Harvard Business School Working Paper. [Online] Available at: http://www.hbs.edu/faculty/Publication%20Files/08-103.pdf [Accessed April 19, 2014]. Young Foundation, 2009. The Role of Social Enterprises in New Communities. Future Communities. [Online] Available at: http://www.futurecommunities.net/ingredient/49/role-social-enterprises-new-communities [Accessed April 19, 2014]. Read More