Social Enterprise Calls for a Businesslike Approach

By February 24, 2014

Social entrepreneurship is riding the crest of a popularity wave at the moment. However, we must not forget that a social enterprise still needs to operate as a business.

Social enterprises come in many guises and are not confined to just a few specific sectors. Moreover, a social entrepreneur still needs to demonstrate a desire to create a real business, getting into a given market and meeting a demand. At the Salon des Entrepreneurs (Entrepreneurs’ Fair) which took place in Paris in early February, speakers at a session entitled Innovez, devenez entrepreneur social (‘Innovate, become a social entrepreneur!’), took us down to the real nitty-gritty of the social enterprise phenomenon.  With the advent of legislation requiring companies to act with Corporate and Social Responsibility on the one hand and the tendency for charitable organisations to move towards greater business efficiency on the other, it appears that traditional enterprise and social enterprise may be starting to converge on the same model.

An end to ‘social versus business’ polarisation?

It is rather difficult to talk about social entrepreneurship without appearing to float off into an unrealistic, idealistic world. And it is true that most companies working on the social enterprise model do address a market and – perhaps more importantly – a section of the population that have been seriously neglected by the current economic system. Nevertheless, as Charles-Edouard Vincent, a graduate of France’s prestigious science and engineering college École Polytechnique who is General Manager of Emmaüs Défi, so succinctly put it during the session: “We have to get away from this polarisation, this idea that there are ‘good’ companies, i.e. the social companies, and ‘bad’ companies, i.e. the traditional firms with capitalist goals.” Mr Vincent stressed that the work he does through his social enterprise, which was set up specifically to help people reintegrate into society, could only succeed in cooperation with companies working on a traditional capitalist model that agree to take on the people who are developing their skills through the Emmaüs Défi programme. A glance at the list of speakers for this session would certainly tend to corroborate his view. Although all of them are working for social causes, the highly varied nature of their businesses, ranging from the bio food cooperative Biocoop to L’Effet Papillon, a provider of social and artistic activities for long-term hospital patients, serves to underline the fact that social entrepreneurship is a business model, which can nowadays be applied to any sector.

A genuine business model

Real ‘social entrepreneurship’ is neither a public service nor a charity, even though it might be underpinned by some of the same tenets of economic theory. As Charles-Edouard Vincent points out, social entrepreneurship can only work successfully on the basis of cooperation with all other economic agents. Indeed, the business model is often based on monetising what economists call ‘positive externalities’ – i.e. benefits which are usually free of charge, such as basic infrastructure provided by the State. For example, Mélanie Peron, the founder and CEO of L’Effet Papillon, argued that the medical system was benefiting from cost savings due to the services to patients provided by her social enterprise. “A patient who is stimulated is less depressed, needs less medication, gets better quicker and improves the overall efficiency of the health ecosystem,” she told the audience.  However, while a social enterprise can certainly benefit from the entrepreneurial approach, it also suffers from the difficulties that beset any business. Jean-Marc Maury, Director of the Economic Development and Social and Non-Profit Economy department at French public service financial institution Caisse des Dépôts, told the audience: “The term ‘social’ in no way justifies any amateurism. On the contrary, if a social enterprise is to be viable it requires skillsets in both fields – maintaining business efficiency and serving the public good.”

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