In the market economy
The boundaries between the private sector and the social sector are breaking down for many reasons. They include the continued growth of social industries – such as health, education and care. Social provision has also been opened up to business in many countries. And business has increasingly seen engagement in social issues as a source of new ideas, reputation and recruitment. Many businesses now see social innovation as a field for creating new business opportunities: for growing brand equity (through association with well known charities or social enterprises); attracting talent (particularly younger people who want to believe that their employer has a social conscience); and to stimulate cultures of innovation in the mainstream business through engagement with different types of organisation.
The most significant development has been in the growth of social enterprises. These are businesses which earn a profit but are focussed on their social goals. The main challenge for social enterprises is to maintain their commercial position in the market whilst staying true to their social goals. Many, being small, lack economies of scale and scope. Where their innovations are successful larger commercial organisations will tend to enter their markets and swamp them (as has been the case with organics, fair trade and recycling). In some cases, clusters of social enterprises have developed a network for collaboration and joint services which has enabled them to access services normally available only to large firms while remaining small themselves. Increasingly though, there are examples of social enterprises establishing themselves in the mainstream.
Inspirational examples and more information on successful business models are critical for the growth and sustainability of the social enterprise sector. There need to be more diversified capital markets, packages of support for social entrepreneurs, and more supportive regulatory and legislative frameworks. More broadly, business leaders also need to become aware of the growing importance of values to their business.