Management challenges for social enterprises C . BORZ AG A AND L . SOLARI

Abstract

As the number of social enterprises in Europe grows, the managers who run them are faced with an increasingly difficult task. Not only must they establish their organisations and legitimate them, but they must also find suitable ways to manage their key assets including their social mission and efficiency constraints, committed volunteers and employees, and enlarged governance structures. As shown in previous chapters, social enterprises are different not only from forprofit and public-sector organisations, but also from traditional non-profit ones (Steinberg 1997). While traditional non-profit organisations still struggle with problems related to their multi-faceted identities (Young 2000), social enterprises are faced by tougher challenges. They embody a new form emerging in an institutional and competitive arena which appears to be rapidly changing, and in which they must frequently compete with public sector, for-profit and traditional non-profit organisations. They share with traditional non-profit organisations the problem of defining a perceived and recognised external and internal identity (Young 2000) which is harder to bring into focus because of the hybrid and poorly defined nature of the social enterprise form. This hybrid nature is reinforced by various factors among which the following are prominent:• A social enterprise is ‘essentially a (private) organisation devoted to achieving some social good’ (Young 2000: 18) and which must furthermore incorporate, besides the traditional resources of non-profit organisations (donations and voluntary participation), commercial revenue (originating both from public and private customers and founders) and business activity. As Preston (1989a) shows, when modelling the behaviour of for-profit and non-profit organisations, non-profit organisations end up specialising in the production of goods with some positive externalities. This is consistent with the view set out in the theoretical chapters of this book insofar as social enterprises provide private goods with positive externalities or with a redistributive component, and therefore increasingly allow ‘for private sector firms to compete by selling a similar good in the market’ (Kingma 1997: 140). For-profit organisations may in fact provide the same good byinternalising positive externalities without undertaking any social role. For example, a for-profit organisation can compete with social enterprises in the provision of home-care services financed by a local authority, fulfilling the contractual agreement but without caring for the well-being of customers should they need an enriched service, such as more hours of care or a different interpersonal approach. It is for this reason that several authors argue that social enterprises should receive at least partial support from the public sector in dealing with these externalities which in themselves could be valued as positive outcomes of the actions of social enterprises.