What is social enterprise?
Social enterprise is charity’s web 2.0—a would-be revolution as open to interpretation as a Rorschach blot. If commentators agree on anything in regard to social entrepreneurship, it’s the lack of a consensus as to what the concept means.
It is tempting to assume that the concept’s vagueness is a feature, not a bug, but as a programmatic strategy this is not without its risks. As NYU’s Paul Light has observed, the lack of an agreed-upon definition of social enterprise is likely to hurt the movement’s chances of long-term success. At the very least, he argues, measurement of the growth and impact of social enterprise will be impossible without a shared understanding of precisely what we’re supposed to measuring—an ironic situation for a field that exhorts nonprofits to use quantifiable metrics.
Making sense of the confusion is an all but impossible task so long as we try to work within the most common analytical frameworks. Words such as “change agents,” “social” and even “entrepreneurship” are so open to interpretation that any definition framed in such language borders on tautology. Trying to distill a set of common characteristics from disparate ventures is an analytical strategy that is sure to result in a model that is either too vague to be meaningful or too exclusionary to be accepted a wide swath of practitioners.
A more productive starting point would be to ask how a single concept could coherently serve as a nexus for so many contradictory forms. The goal: not to reduce social enterprise to a single controlling example, but to rationalize the emergence of so many distinct variations of a single term.
Systems theory provides a replicable model for explaining such patterns: namely, the potential for simple rules to give rise to complex forms. Just as the rudimentary decision-making rules in ants can give rise to a diverse array of ordered nests—some flourishing, some failing—social enterprise is a linguistic algorithm whose specific instantiations can differ widely depending on such variables as the user and the context. From this perspective we err by viewing social enterprise as a static category. It functions instead as generative code.
Although this may not be the traditional way of analyzing language, outside the humanities and law systems modeling is proving to be an invaluable tool for resolving otherwise intractable problems, most notably linguistic evolution. Take, for instance, Wittgenstein’s paradigmatic example of the complexity of the concept of “chair,” which is susceptible both of seemingly clear expressions and borderline cases. Rather than try to compile a list of similarities and outliers (e.g., “four legs and a seat except when it’s a beanbag”), we can now see a deeper logic beneath the vagueness and apparent contradiction, as a set of relatively simple weighted values—say, discrete shape, primarily for sitting, less for resting prone—takes shape in a diverse array of forms throughout differing environments.
A similar dynamic is at work with social enterprise, a phrase that in itself embodies a core decision-making rule. The operative word is hybrid: in a nutshell, social enterprise combines values from what various users perceive to be two seemingly distinct conceptual domains. Embedded within the “social” component is an array of values associated with behavior with an orientation beyond the market, state or self; likewise, the term “enterprise” relates to a range of values associated with business, cooperative action, purpose and corporate structure. Fused together, it is a deceptively simple mix with the potential to take shape in a wide range of forms. Viewing them at the macro-level to extrapolate family resemblances may make the concept appear to be a vague and confusing mess, but each specific instance flows from the same hybridizing impulse, albeit shaped by discrete environmental influences.
The clusters of competing definitions are not so much contested meanings as organically related clusters of similar patterns that one could describe as semantic attractors. Extrapolating from mainstream definitions we can describe these clusters in terms of three primary values, although there is a fourth that the movement itself tends not to embrace.
Arguably the most expansive pattern is one that results from perceiving entrepreneurship primarily in terms of entrepreneurial innovation. Whether an organization actually engages in commerce is beside the point; the key value is devising solutions to social problems that go beyond the limits of traditional philanthropy. For example, Ashoka defines social enterprise as disruptive innovation in resolving social problems, an expansive definition that encompasses groups from Planned Parenthood and Teach for America to Ethos Water and American Apparel.
Another approach reflects a more commercial vision, equating entrepreneurship primarily with earned income. From this perspective a social enterprise is a social business, distinct from mainstream charity in that it eschews grants and donations in favor of financial self-sustainability. This too is capable of bridging the for-profit and nonprofit divide, both in the form of a hybrid charity/business corporate family (e.g., Greyston Bakery and the Greyston Foundation), charitable micro-financing of businesses in disadvantage areas (Grameen Bank; Kiva.org; Harlem’s Abyssinian Development Corporation) and commercial corporate social responsibility, such as Project Red or Starbucks’ fair trade coffee.
The third is somewhat more narrow, at least in terms of its relation to corporate law. In this model, social enterprise is synonymous with nongovernmental nonprofit organizations, albeit groups that apply business practices and metrics to their work. Perhaps the most prominent example of this approach is venture philanthropy, which transforms the traditional rhetoric of giving into social investment; the Robin Hood Foundation, for instance, is charity funded by leading hedge funds that uses its grants to promote rigorous standards for social ROI.
The above three patterns or categories encompass many of the individuals and groups self-identifying as social entrepreneurs, although the fact that there are any number of outliers and shades of difference is perfectly consistent with the fundamental underlying model; at base, social enterprise is not category but an algorithm or generative code. Some will use the language of a double or triple bottom line (the difference being that the triple bottom line breaks out environmental sustainability as a separate social purpose), others will eschew financial rhetoric altogether, but regardless of the specific individual differences each flows from the hybridization of social and entrepreneurial values, whatever each user may believe these to be.
[What's the mysterious fourth archetypical value? All will be revealed in a later post . . . .]
