The Emergence and Development of Social Enterprise Sectors

Thesis Overview

<p><b>1.0 Introduction&nbsp;</b></p><p>The concept of integrating social aims with profit-making has been an emerging trend in the world today, especially in the wake of the 2007-2009 financial crisis which shone the spotlight on the problems of pure profit-maximization. Social Enterprise is at the very core of this new movement to integrate social aims with profits, taking root in an increasing number of circles today, ranging from the field of international development, to impact investing, and even public policy. In particular, Social Enterprise has grown spectacularly in India, with the country being referred to as “A Social Enterprise Superpower”1 by Think, a social action think tank and action hub, as well as “A hotbed for Social Enterprise” 2 by Beyond Profit magazine, a leading Social Enterprise magazine. Social Enterprises have been extremely effective in driving development in India, home to one of the world’s largest populations still living in poverty. On the other hand however, a country with seemingly similar characteristics in terms of large populations of poor rural folk, China, has seen only a nascent Social Enterprise sector. In contrast, 4 out of the 10 most innovative companies in India as ranked by Fast Company are social enterprises, an indicator of the maturity of the Social Enterprise sector domestically. The question that arises from this observation, is thus one of “why has Social Enterprise grown so strongly in some countries and yet not others?” In particular, with China’s large rural poor demographic which bears a striking similarity to India, what is holding back the development of Social Enterprise in China? As such, this paper will seek to understand how we can increasingly apply the tool of social entrepreneurship to address the many developmental problems we find in China. To do so, we will explore 4 key areas. First, to lay the foundations, this paper will address the wide range of Social Enterprise definitions to identify the specific definition relevant to our objective of the application of Social Enterprise to China. Second, this paper will look at Social Enterprise globally by individual regions to understand the conditions necessary for the emergence of a Social Enterprise sector. Third, the earlier understanding will subsequently enable us to apply these conditions to an analysis of India and China, to determine the reason for the divergence of social enterprise emergence in China and India. Fourth, and most importantly, this paper will examine the future of social enterprise development in China, and analyze what possible measures could facilitate the growth of the sector domestically. <br></p><p> <b>1) Introducing Social Enterprise Definitions&nbsp;</b></p><p>Social Enterprise is a term that has been widely used and loosely applied to a wide variety of institutions and organizations that it has become difficult to engage in a proper dialogue without first establishing the precise definition to which one alludes to in coining an organization as a social enterprise. A 2008 study commissioned by the Office of the Third Sector in the UK reveals that the term is “poorly understood”, and that such “confusion and lack of understanding is a major short term barrier to the growth of social enterprise.” 3 As such, before we begin our exploration of the factors behind social enterprise growth, particularly in China, we first need to examine the range of social enterprise definitions to determine which will be applied in this paper. J. Gregory Dees, Professor of the Practice in Social Entrepreneurship, founding faculty director of Duke University’s Center for the Advancement of Social Entrepreneurship, and often referred to as the “Father of Social Entrepreneurship Education”4 , categorizes the plurality of Social Enterprise definitions into two main types in a paper co-authored with Beth Anderson: (a) Social Enterprise, and (b) Social Innovation.5 The Social Enterprise school of thought as laid out by Dees and Anderson is centered on the notion of entrepreneurship as individuals who “start their own business”. As such, the corresponding definition of a social enterprise tends toward a more generic model here, with organizations focusing on the dual focus of economic and social value creation being classified as social enterprises. <br></p>