Abstract
Social Enterprise (SE) is an increasingly important sector for generating employment and distributing wealth in market structures. The social business type two (SB2)—a very specific type of SE—is a category that has challenged orthodox theoretical elements in its main assumptions and behavior in the markets. SB2 is mainly classified within the category of microenterprises because they have a very small number of employees. A new official business classification is important to differentiate enterprises not only by size, but also by type of behavior. There is a new indicator that compares the profit levels of microenterprises with the poverty line as a representative tool to classify Mexican microenterprises into profit seekers and SB2. When these outcomes are contrasted with a discrete choice model under the logistic functional form, the probabilities that this indicator classifies a microenterprise with entrepreneurship by necessity, installed capacity maximization and no profit seeking as SB2 is 80% for microenterprises up to ten workers, and goes up to 92% for microenterprises with one person. With such a new classification, better policies could be promoted to support SB2, and help address both the lack of opportunities from the market economy and poverty menace.
Highlights
This article reviews the different business stratification approaches and criteria used to represent the heterogeneity of firms in markets, both in advanced and developing countries.With evidence from the economic literature on the need to continue the development of classification variables, this article distinguishes enterprises by size and by market behavior, with special emphasis on social enterprises, type two social businesses (SB2) [1], known in Mexico as microenterprises.With the current official stratification, social enterprises in Mexico lack a special classification and are commonly categorized within the microenterprise sector, based on the number of employees
In an effort to represent the business heterogeneity that exists in markets and to classify them according to their size, it is observed that the national statistical institutes of advanced and developing countries converge in considering variables such as employed personnel, level of sales and fixed assets
Business classification is mainly determined according to the size of the enterprise based on the indicator of the number of employees
Summary
This article reviews the different business stratification approaches and criteria used to represent the heterogeneity of firms in markets, both in advanced and developing countries. With evidence from the economic literature on the need to continue the development of classification variables, this article distinguishes enterprises by size and by market behavior, with special emphasis on social enterprises, type two social businesses (SB2) [1], known in Mexico as microenterprises. A new business categorization is proposed that distinguishes microenterprises into two groups: for-profit and social enterprises This would allow the current regulations to be strengthened. The fourth section presents the methodology detailing the construction of a classification indicator and defines a discrete choice model, under the logistic functional form, to estimate the probabilities of a microenterprise being classified as social, based on a series of characteristics related to the additional stratification variables. The fifth section discusses the results of the model and, the sixth section presents the conclusions and scope/limitations
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
