Co‐operative social enterprises: company rules, access to finance and management practice

Abstract

PurposeIn light of the faster than expected take up of the community interest company (CIC) in the UK, the purpose of this paper is to revisit findings from a study undertaken in 2000 on the impact of asset‐locks on the longevity, growth and management styles in co‐operative social enterprises.Design/methodology/approachThis paper is both conceptual and empirical. It examines different worker co‐operative traditions and develops a meta‐theory that explains underlying assumptions in different forms of co‐operative social enterprise. Using empirical data from five common ownership co‐operatives and five equity‐based co‐operatives, this exploratory study finds differences in management style, access to finance and growth prospects both within and between the two groups.FindingsDevolution of management responsibilities is more prevalent in co‐operatives permitting both individual and collective ownership, as opposed to common ownership. Access to external finance is less problematic for organisations where individuals have made investments. Despite this, it is not established that organisations with external equity or loan finance grow quicker or fare better over the longer term.Originality/valueThe value of the paper lies both in the development of a meta‐theoretical framework for differentiating forms of worker co‐operative, as well as empirical evidence on the impact of asset‐locks in the management and development of social enterprises. The study suggests that the companies limited by share (CLS) version of the CIC, or abandonment of the CIC in favour of an appropriately structured CLS or Industrial and Provident Society model, may be appropriate for social enterprises wishing to grow, but makes little difference in small service oriented social enterprises.