We in the ‘for good’ world often get in a twist about defintions and distinctions. To accommodate this we have developed a typology of organisational types - charities at one end and co-ops at the other with CICs, social firms and 57 other varieties inbetween.
Business doesn’t bother with this nearly as much. But there are as many different types of business, in my experience, as there are types of ‘for-good’ bodies. For a start, there are small, medium and large ones. There are private and public ones. Manufacturing and services. And there are some which are, essentially, values-driven and some which are excessively profit driven.
It is this ‘grey zone’ between exclusively profit focused business and the harder-nosed end of social business that is, I believe, little understood by our sector. It is most often found in the privately owned medium sized business sector, where owners are long-term engaged and also rooted in their own communities. In such companies, there is less short-termism, no remote shareholders and a relationship with staff that means that jobs are preserved where possible. We tend to lump these businesses in with the red-claw private sector, but, in reality, trust is high, employees involved and the business views itself in the round as an employer and a contributor to the local community.
This is a type of capitalism that was once prevalent in the UK but which has been slowly eroded by harder-edged shareholder- capitalism and its endless take-overs. Small and medium-sized firms do, of course, still exist in vast numbers, particularly in our smaller cities and towns, but they are not the force they are in, say Germany, where the 'Mittelstrand', of middle-level of family-owned business with up to 250 employees is still prevalent.
For me, this socially responsible form of capitalism - local, connected, balanced is actually not a million miles from social business. While ownership is still concentrated in a few hands, the modus operandi and social benefit of these ventures - employment, training, economic stimulation - often compares favourably to the charities and social businesses operating in the same space.
Here's a question for social enterprise to think about: Is it is better to run a 20 person business, private profit-making in Merthyr Tydfil...or set up a social enterprise? You would get grants for both, true, but which would need less long-term subsidy? Which would generate and sustain most jobs? Bring most money into the local economy? Train most people? Pay most tax? I think I know the likely answer.
This isn’t to say we shouldn’t set up social businesses in places like this. We should - business might fail to tackle specific problems that a social venture wouldn’t shy from - e.g. employing disabled people - but I think the social enterprise sector should get its head around the fact that not all businesses are the same and in terms of everything except ownership, some businesses probably deliver stronger social returns to capital than certain social enterprises.
Where would you put your money?