Is social enterprising the new economic engine? (3 of 5)


Though the concept of social entrepreneurship goes back to medieval guilds, we have not experienced its renaissance since the past few decades. Mainly due to the lack of an agreed definition, the sector has taken its time to become established. Finally, however, it seems social enterprises can start being considered the new economic engine –or at least, they are definitely here to stay and break the hegemony of conventional businesses.

The term ‘social enterprise’ started being widely used in the 1990s to define organisations using the economic and commercial strategies of traditional businesses to pursue a social mission and make the world a better place. In the UK’s Department of Trade and Industry’s words, it includes any enterprise “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”. Such companies comprise the third and the forth sector: nonprofit businesses and not-for-profit activities, civil society organisations and NGOs to name a few.

The growth in the presence of social enterprises in Western countries translates into an increasing impact in the global economy. On the whole, not only has the number of charities and volunteers risen significantly, but so have their financial benefits. In fact, the community sector embraces now a larger amount of social services –health care, housing, food, leisure, environment. In developing countries, the third sector has also a more relevant role today, especially thanks to international humanitarian initiatives like fair trade.

As a fast-growing sector, European social enterprises are believed to surpass the private sector in terms of job creation. In addition to this inspiring figure, social enterprises present many other advantages as well, including more efficient, sustainable and creative solutions to social problems. Moreover, social entrepreneurs find it easier to raise capital, promote their organisations and gain people’s support.

In a capitalist society like ours, a people-centred economy becomes even more important. The need for social enterprises pushes them to face a bunch of different challenges. Communication is a key aspect to consider and so are the levels of innovation, attention and collaboration your social enterprise is going to use to bring a positive change to community while facing the same risks as all businesses.

Overall, the social enterprise sector shows differences between countries but, as stated, its impact clearly helps achieve both social and economic objectives regardless of its origin.

But to going back to our question, is social enterprising the new economic engine?

We completely believe so, in fact just in the UK, social enterprises (as estimate in the report below from “A map of social enterprises and their eco-systems in Europe” by the European Commission) produced £46.6bn in 2012, the market is growing exponentially and this trend was also confirmed in 2015.

Screen Shot 2015-08-14 at 12.46.36

When reporting on the number of social enterprises in the UK, the Government and other stakeholders often report that there are approximately 70,000 in the UK. This is in fact the estimated number of SME employers (micro, small and medium firms with 1-249 employees) that are social enterprises and excludes the sole traders (zero employees) and large businesses (250+ employees) that also meet the criteria.

We would like to know your opinion.

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Maurizio Gioli