Corporate governance practices and outcomes in social enterprises in the UK

Walter Mswaka,Olu Aluko

doi:10.1108/ijpsm-03-2014-0048

Walter Mswaka, Olu Aluko

Open Access

https://doi.org/10.1108/ijpsm-03-2014-0048

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Abstract

Purpose– The purpose of this paper is to explore the growth of social enterprise in the UK in the context of the renewed interest in the creative use of organisations with a social mission to complement public service delivery. Given the impact of globalisation and increased demands for effective social welfare interventions, this paper specifically focuses on the nature and type of social enterprise governance models and how they influence their outcomes.Design/methodology/approach– The study utilises a mixed method approach involving the complementary use of quantitative and qualitative data collection methods.Findings– The paper finds that the way in which the social enterprise governance structure is designed ultimately influences its outcomes. In particular, those with stewardship governance models tend to perform better than those with democratic models of governance. This leads to a conclusion that in the social context of the UK, social enterprise should aim for a paradigm shift in the design and selection of governance models.Research limitations/implications– Comparative regional experiences in other regions or social contexts could enrich our understanding of whether these results are applicable across the board.Practical implications– This paper is of potential benefit to researchers and particularly those designing policies for the governance of social enterprise.Originality/value– The study employs innovative analytical theoretical lenses not normally associated with the social economy, namely agency, stewardship and resource dependency theories to provide a more in-depth analysis of the governance of contemporary social enterprise.

Highlights

Social enterprise is an emerging concept that still suffers from largely unresolved conceptual and definitional issues (Martin and Thompson, 2010)
This paper argues that democratic governance models of social enterprise are still relevant in the social economy as they conform to the philanthropic ideology underpinning the concept of social enterprise, with a clear desire to protect assets of the organisation on behalf of the community and an aversion to trading
This results in a multiplicity of functional problems and organisations with such models struggle to compete in the market for resources and expertise

Summary

Introduction

Social enterprise is an emerging concept that still suffers from largely unresolved conceptual and definitional issues (Martin and Thompson, 2010). Scholars generally agree that a social enterprise is a business that seeks to bring people and communities ‘together for economic development and social gain’ (Martin and Thompson, 2010:6). Social enterprises have been governed through democratic models that emphasise the development of trust and solidarity among those involved and are not necessarily geared towards supporting commercial activities (Low, 2006; Child and Rodrigues, 2004). Cornforth (2003), Mason et al (2006) and most recently Harradine and Greenhalgh (2012) argue that this development is a result of the changing economic climate as well as complexities and shortcomings associated with democratic governance models. The key question, though, remains whether the shift from democratic to other forms of governance models of social enterprise makes any difference with respect to success or failure of a social enterprise. This paper examines whether the corporate governance model adopted by an enterprise can influence its outcomes

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