Social enterprises as local development actors

Introduction

Social enterprises have attracted growing policy and academic interest in recent years as an intriguing hybrid organisational form, and an emerging sector that does not fit the categories of private sector, public sector, and not-for-profit/NGO. Social enterprises are organisations that use enterprise or trading activities to fund the achievement of social or community goals: they are mission-led organisations that trade (Barraket et al., 2010). Located in ‘that sector of the economy that lies between the market and the State’, they ‘seek to reconcile market and non-market forces’ (OECD, 1999: 9). By blurring the established paradigm that distinguishes for-profit and not-for-profit as separate sectors of the economy, social enterprises challenge the accepted shape of the institutional landscape. In doing so, they emerge as a new set of organisational actors relevant to local development processes.

The idea of social enterprise is compelling, yet to what extent are social enterprises a definable organisational form, comprising a recognisable sector on the development landscape? Social enterprises are often portrayed as an emerging ‘fourth sector’ of the economy (see Leahy and Villeneuve-Smith, 2009: 8; Sabeti, 2009). The ‘social enterprise sector’ looks different, however, in different country contexts. In the UK it is highly visible, though arguably due in part to ‘an act of political will by the government’ (Daniela et al., 2009: 150). In Australia, as in many other contexts, social enterprise has been largely invisible; an influential 2010 study sought to ‘find’ Australia’s social enterprise sector (Barraket et al., 2010).

As a sector, social enterprises can be difficult to identify. The kinds of organisations that identify as social enterprises vary across cultural, historical, and regulatory contexts. Social enterprises in different contexts take different legal forms, undertake different kinds of ‘trade’, and emphasise different aspects of their identity and mission (see e.g. Barraket and Collyer, 2010; Borzaga and Defourny, 2001; Noya, 2009; OECD, 2006). For this reason, it has generally been deemed impossible to arrive at a single, mutually agreeable definition of social enterprise. Nevertheless, social enterprises are also understood to have important commonalities, in that they tend to combine characteristics of organisations in other sectors (see e.g. Mair and Noboa 2003; Moss et al, 2010; Noya, 2009).

Given that there are various published portrayals of social enterprises now available (see e.g. Borzaga and Defourny, 2001; Kernot and McNeill 2011; Leahy and Villeneuve-Smith, 2009; Noya, 2009), it is timely to explore what roles these organisations may be playing in local development processes. These studies provide evidence that social enterprises are more than just an interesting idea: they are real organisations working across a range of real-world contexts. Moreover, policy makers increasingly express interest in the kinds of development outcomes these types of organisational actors may generate. Social enterprises are often portrayed as having the potential to provide solutions to entrenched development challenges across both social and economic domains (see e.g. Noya, 2009: 14). While there has been limited documentation of the on-the-ground development outcomes from the work of social enterprises, preliminary evidence suggests that they can generate economic and social, as well as environmental and cultural outcomes (Berkes and Adhikari, 2006; Bertotti et al, 2011; Cameron and Gibson, 2005; Eversole et al., 2013; Sommerville and McElwee, 2011). Such studies suggest that there is merit to viewing social enterprises as a new set of organisational actors that are relevant to understanding and addressing local development challenges.

Nevertheless, while the naming of ‘social enterprises’ is quite new, social enterprises themselves are not. Organisations that combine trading activity with social benefits have been around for hundreds, if not thousands, of years. Cooperatives and friendly societies have a long history of working to generate social and economic impacts in marginalised communities. Many long-standing not-for-profit organisations have trading arms and fit the broad definition of social enterprises. Even many for-profit organisations have historically played important social development roles. Social enterprise as a concept has burst onto the scene in the past 20 years; yet social enterprise as practice stretches back much, much further. This raises the question of how older social enterprises – and newer ones – identify with this label ‘social enterprise’ and with an emerging ‘social enterprise sector’. Do organisations that simultaneously trade and pursue a social mission necessarily embrace a shared identity as social enterprises; and if so, upon what is this identity based? Within a single cultural and regulatory context, is social enterprise identity based upon similar organisational structures, similar missions, or other commonalities? How easy is it to recognise social enterprises on the ground, and what kinds of roles are they playing in development processes?

This article explores the dynamics of an emerging social enterprise sector in a particular on-the-ground context: the Australian island state of Tasmania. Tasmania is isolated and predominantly rural, with dispersed local communities facing a range of development challenges (RDA, 2012). The article reflects on the findings of applied research and local development work over the period October 2010 to June 2012 that sought to understand whether social enterprises were present in the Tasmanian context and if so, their characteristics and local development roles. The article draws on the findings of a collaborative community-based research project. It documents the emergence of the Tasmanian social enterprise sector from invisibility to growing recognition, and analyses the basis of the shared identity that brought diverse organisations together. The Tasmanian case suggests important insights about the nature of social enterprises and their potential contributions to local development.

Social enterprises as development actors

The naming of ‘social enterprise’ as a type of organisation – one that uses trading activities to fulfil a social mission – has led to a recent upsurge in scholarly interest in the nature and role of social enterprises. The concept originally emerged from practice, and most of the scholarly research on social enterprise has appeared very recently, in the last decade or so, attracted by ‘the novel and intriguing empirical context of social entrepreneurship … that combines for-profit and non-profit organisational activity’ (Dacin et al., 2011: 1203). A key recurring theme in the academic literature on social enterprise is the similarities and differences between social enterprises and mainstream organisational forms and sectors. Broadly, the literature on social enterprise to date can be described as falling into two main camps: the management and entrepreneurship literature, and the policy literature. The former is especially interested in the similarities and differences between social enterprise and private enterprise; as well as, to a certain extent, between social enterprises and the not-for-profit community sector (see for instance Borzaga and Defourny, 2001; Chell, 2007; Mair and Noboa, 2003; Moss et al., 2011). The latter has begun to explore the relationship between social enterprises and governments, and the potential role of social enterprises in addressing development policy challenges (see e.g. Daniela et al., 2009; DTI, 2002; Noya, 2009; OECD, 2006: 3, 2010).

Noya (2009: 22), in particular, highlights the policy relevance of social enterprises for local development, observing that theories of local development have ‘considered almost exclusively industrial firms and public bodies, and not enough weight has been given to the intermediate area between these two extremes in which non-profit organisations and social enterprises usually operate’. Social enterprises in particular sit outside the three-sector model of the economy: within their organisations they ‘blur’ or ‘bend’ the boundaries of public, private, and not-for-profit/NGO, tending to combine characteristics of different kinds of organisations (Mair and Noboa 2003; Moss et al., 2011; Noya, 2009) – thus pushing the limits of mainstream organisational categories. Yet much of the literature to date focuses on case studies of particular social enterprises, rather than exploring how social enterprises as a group define themselves and their development role. This article focuses on social enterprises as a group in a particular context – the island state of Tasmania – and illustrates how these organisations are not only intentionally blurring sectoral categories, but are doing so as a particular strategy to achieve local development outcomes.

Social enterprise in Tasmania: Background and approach

Approach

This article presents a case study of the Tasmanian social enterprise sector over the period October 2010–June 2012. It is based on the findings of the Tasmanian Social Enterprise Study (Eversole and Eastley, 2011) and action research accompanying the emerging Tasmanian social enterprise sector from the time of the publication of the study in May 2011 to June 2012. Overall, this work sought to understand whether ‘social enterprises’ were present in any number in the Tasmanian context and if so, their key characteristics, activities, and the roles they sought to play in addressing Tasmania’s social and economic issues. Did Tasmania have a social enterprise sector; if so, what did it look like, and what was its development role? An additional aim, beyond the scope of the present article, was to understand social enterprises’ own development aspirations, challenges, and needs. Social enterprises’ reflections about their aspirations, challenges, and needs did, however, shed important light on how they saw their role as emerging development actors in the Tasmanian context.

The Tasmanian social enterprise study aimed to provide a baseline snapshot of the size and characteristics of the social enterprise sector in Tasmania, and to engage actively with Tasmanian social enterprises to inform further research and support for the sector. The study used a Knowledge Partnering collaborative research approach (Titterton et al., 2011) and a jointly designed survey tool as the primary data collection instrument. This was supplemented by social enterprise narratives (‘social enterprise stories’) co-written by social enterprise representatives and researchers. As a knowledge partnership, the social enterprise study mobilised the expertise and networks of university, state government, and leading social enterprise practitioners to jointly define and answer the study questions. The study aimed to provide not only information about social enterprises, but also relationship building and mutual understanding that would allow the government, the university, and the ‘emerging social enterprise sector’ to work together to build capability over the long term. Thus, work with Tasmanian social enterprises did not conclude at the submission of the initial study report, but continued through an ongoing process of story collection, workshops, forums, meetings, and professional development opportunities held throughout the following months. The author, representing the Institute for Regional Development at the University of Tasmania, was involved in attending, and occasionally co-organising, a number of these workshops and meetings. By interrogating this experience as action research, informed by reflective practice enquiry (Schön, 1983), it is possible to capture the lessons learned from this on-the-ground practice.

The Tasmanian social enterprise study used a combination of ‘top-down’ and ‘bottom-up’ methods for identifying social enterprises, broadly following the approach taken by the national study (Barraket et al., 2010: 10–12). In the Tasmanian study, the top-down identification of potential social enterprises through desktop analysis provided a channel for strategic distribution of information about the study and the mobilising of knowledge networks to identify social enterprises from the bottom up. This process was assisted by the expertise of the project steering committee and advisory group and the use of a range of print and online communication materials (visual branding, flier, project blog) and media appearances by members of the project team. The primary data collection instrument was an electronic survey (also available in paper form) of Tasmanian social enterprises, conducted in early 2011.

Because the language of social enterprise was comparatively new, three questions were used to help organisations self-select into the project and the survey:

Is your organisation led by a mission to create public or community benefits? and

Tasmanian social enterprises on the ground

A common focus: Boundary spanning to meet needs

Tasmanian social enterprises were diverse; nevertheless, they had one characteristic in common: they shared a similar way of working. As social enterprises, they by definition used trading activities to create community benefits, a way of working that did not fit easily into accepted definitions of ‘private’ or ‘not-for-profit’ sector. This tendency to cross over and blur established organisational categories was manifest across various aspects of their work. In responding to the survey, Tasmanian social enterprises repeatedly characterised their organisations as located across rather than within established categories. Individual social enterprises worked across multiple industries, served a cross-section of beneficiary groups, and carried out a range of trading and community-benefit activities.

ANZSIC categories, for instance, were used in the survey to gain a picture of the key industries in which social enterprises were located. Many social enterprises categorised themselves across two or more industries: for instance, social enterprises that combined social assistance with education and training, or community education with arts and recreation services. Overall, Tasmanian social enterprises responding to the survey tended to position themselves across rather than within industry groups, in many cases choosing at least two categories to describe their work. In addition, about a fifth of all respondents described their industry of work as ‘other’: one that did not easily fit into any established industry category. These social enterprises included those involved in resource recovery and recycling, tourism and wilderness-related activities, and community development work (Eversole and Eastley, 2011: 30–35).

This tendency to work across industry categories at least in part reflects the fact that Tasmanian social enterprises were often involved in multiple activities with multiple groups. The survey results showed that individual social enterprises were serving multiple beneficiary groups and communities. In addition, they were often seeking to generate a range of outcomes for these groups, from providing specific services to advancing social inclusion (Eversole and Eastley, 2011: 42–46). Many of the social enterprise stories described how social enterprises were established at the local level in response to specific local needs, for instance: lack of employment opportunities for people with disabilities or people re-entering the workforce, isolation in rural areas, environmental sustainability challenges, and so forth. To meet needs and realise opportunities on the ground, these social enterprises regularly worked across established categories and boundaries. As they expressed it:

[We have learned] that nothing is out of reach. If something has felt right, or we have really wanted a project to work, it has happened. However, this has only been possible because we have had the business as a base to work from … . We can now tell our guests that they are contributing to all these worthwhile projects … . Social enterprise has given us the tools to achieve things that were beyond us when we were a normal business. (Eastley, 2012: 19)

Most people and organisations operate in and create silos. Community development and social enterprise depend upon finding and making the connecting linkages between these silos. (Eastley, 2012: 15)

Conclusions

Social enterprises have attracted scholarly and policy interest as intriguing organisations with the potential to deliver a range of development outcomes. But what does an ‘emerging social enterprise sector’ look like on the ground? Findings from the Tasmanian case suggest that social enterprises are a diverse group whose shared identity is more expressive of a similar way of working than of any set of identifiable organisational characteristics. Tasmanian social enterprises characterised their work as cross-boundary: sitting across rather than within typical organisational categories. The observation that social enterprises are hybrid organisations that blur sectoral boundaries is established in the literature. What is new is the observation that social enterprises are working in this way as an intentional strategy for achieving local development outcomes.

Tasmanian social enterprises recognise that this cross-boundary way of working is needed, particularly in isolated areas with high social needs and thin markets. They explain how they meet needs on the ground and leverage local opportunities by working across, rather than within, established categories and sectors. They also note that this sometimes means that their work is misunderstood or overlooked. Social enterprise is a term which came from elsewhere, but it says something important about what is happening on the ground in Tasmania. It has become a rallying point for diverse organisations to come together. And what is it that brings them together? It is not a common industry, a common target group, or a common social cause. Rather, it is their identity as boundary spanners, as organisations that dislike silos, seek connections with others across sectors, and see the potential for a ‘new way of working’ that can leverage multiple resources and generate multiple forms of value in local communities.

The story of the emerging Tasmanian social enterprise sector cautions us not to assume that social enterprises within a particular local context will necessarily look or act like each other, be easy to identify, or even be aware that they are social enterprises. Social enterprises in Tasmania have diverse organisational forms, legal structures, business models, and missions. What they share – their axis of common identity – is a common set of ideas and practices about how to generate development outcomes. In Tasmania, developing an identity as a social enterprise sector has been about naming up this way of working: bringing it from the realm of the marginal and invisible to become articulated, visible and recognised: to the point that ‘social enterprises are a sustainable, recognised and legitimate part of the broader economy and community’.

This case study suggests that social enterprises clearly merit the attention of local development policy makers; but that it may be less important to define, count or multiply social enterprises, than to support and learn from their way of working. Many social enterprises and their supporters highlight the value – indeed the pressing need – to ‘get the community to understand what a social enterprise is’ and gain recognition for the ‘social enterprise sector’: from the public, peers, clients, government and other sectors, and financial organisations. Yet, in many ways by mutual consent, this is a ‘sector’ without a clear definition of who is in and who is out. Efforts by decision makers to gain an answer to the question: ‘So how many social enterprises are there in Tasmania?’ have been difficult to answer. The survey found 111, and follow-up activities and conversations revealed many more. Yet exact numbers are impossible to define, because no easily observable organisational characteristic (e.g. legal form, structure) can be used to indicate social enterprise status.

Tasmanian social enterprises’ shared vision was not to be a distinctive sector with clear boundaries around what organisations are in and what organisations are out. The vision was simply to be recognised as valuable local development actors. An orientation toward social enterprise as a verb is perhaps more relevant than a focus on social enterprises as a noun. Yet at the same time, these social enterprises are real, on-the-ground organisational actors that are modelling new ways of working; their activities merit attention and support. Insights from their work can potentially benefit a range of organisations working to catalyse local social and economic change, regardless of whether or not those organisations ultimately identify themselves as social enterprises.