Sustainability of Micro and Small Scale Social Enterprises in the Philipines (topic Proposal with Rrl)

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From the definitions above, we see that there are certain agreements and disagreements among them. All have either an explicit or implicit sense of combining or balancing business and profit motives. However, each seems to have a definitional variation. Borschee defines social enterprises as inherently non-profit organizations that simply “pay increased attention to market forces.” It is not specified whether these actually generate profit outside of sustaining the project. Dees goes further and defines these institutions as strictly non-profit but with the utilization of “business-like” features and practices. Similarly, Nicholls does not explicitly mention profit, defining these enterprises as those that address market failures and “add social value.”

For the purposes of this study, Santos’ definition of social enterprises of prioritizing value creation over value capture will be utilized (though the other variations will be cited for comparison as well). This definition not only offers a more concrete explanation on the purpose and characteristics of social enterprises but also includes within its parameters having a social mission and profit motives, no matter the extent. Moreover, it covers all the distinct forms of social enterprises (especially the specific forms that will be used in the study). Apart from the numerous definitions of social enterprises, there are also various forms of such institutions. This makes defining the concept a much more complex task.

Distinct forms of social enterprises

There is limited literature that focuses on making distinctions regarding the forms of social enterprises. However, a notable contribution was made by Young and Lecy (2013) in their journal Defining the Universe of Social Enterprise: Competing Metaphors, in which they proposed 6 major “species” or forms of social enterprises. The first of these is (1) For-profit business corporations, which “explicitly engage in programs of corporate social responsibility, environmental sustainability, or corporate philanthropy for the overall purpose of maximizing long term profits for their private owners. Social goals play a strategic role in these corporations, helping them to improve public relations, build markets, or enhance the motivations and talents of their work forces.”

The next form is (2) Social businesses which “explicitly seek to balance profit-seeking with the achievement of a social mission. These animals take various forms including traditional for-profit businesses whose owners formally declare their intent to balance social and commercial goals, new legal forms of business enterprise…which include specific provisions for such balance in their charters and legal documents. Subspecies also include privately held businesses versus publicly owned stock corporations, each of whose intent is to balance social and commercial goals in some way. The difference between the latter subspecies can be important, however, since public corporations may have stockholders who resist initiatives by directors who try to pursue social goals at the sacrifice of profits, whereas private owners may have greater discretion to do so.”

Third, the authors cited (3) Social cooperatives which “explicitly include some dimension of general public benefit in their missions in addition to benefits to their members. This is a popular form of social enterprise in Europe, building on strong traditions of consumer and producer cooperatives. Given the collective character of cooperatives in general, there may only be very subtle distinctions between social cooperatives and many traditional cooperatives.”

Also, (4) Commercial nonprofit organizations “are organized specifically to address some explicit social mission. Commercial goals are instrumental to the success of these organizations. Given that nonprofit organizations (at least in the United States) are generally more heavily reliant on market-based revenues than other sources of income (including government support or philanthropy), this category will include most charitable nonprofit organizations, including traditional institutions such as nonprofit theaters, hospitals, schools, and social service providers”

The authors then cited (5) Public-private partnerships (PPPs) which “consist of contractual arrangements among for-profit, nonprofit and governmental entities designed to address some designated public purpose such as community development or the needs of a particular groups such as the homeless. Each partner in a PPP will have its own goals and objectives—profit seeking by business partners, mission pursuit by nonprofit partners, public welfare by government partners, etc. Some partners may themselves qualify as social enterprises, but not necessarily. However, a PPP as a whole will combine the commercial and social goals of its partners in an effort to achieve its social mission. Subspecies of PPP include those with a separate organizational infrastructure (e.g. a nonprofit organization) and those which operate more informally as cooperating groups bound together by a formal agreement or contract.”

Finally, (6) Hybrids “constitute new forms that internalize the features of other forms of social enterprise by explicitly combining organizational components with commercial versus social goals.”

For the purposes of this study, the parameters will be limited to social businesses and perhaps, hybrids, which will be the specific forms of social enterprises that will be evaluated in terms of sustainability (‘micro’ and ‘small’ scale enterprises in the Philippines). As mentioned above, a social business explicitly express for-profit motives while attempting to achieve a social mission. These seem to be quite prevalent in Philippine society, with the rise of Human Nature, Rags2Riches, and many others. Hybrids, on the other hand, may be a combination of the several forms mentioned above. For instance, there are social cooperatives that have for-profit motives, which classifies it as a hybrid of a social cooperative and a social business.

Why is it important to discuss the sustainability of social enterprises? As mentioned earlier, some scholars and experts consider such enterprises to be a means for achieving inclusive growth, though there are conflicting views.

Social enterprises: means for inclusive growth?

According to McMullen (2011) in his article Delineating the Domain of Development Entrepreneurship: A Market-Based Approach to Facilitating Inclusive Economic Growth, entrepreneurs from least developed countries (LDCs) have “taken matters into their own hands” and put up social enterprises to make for government failures