Small may be beautiful, but is bigger better? Global trends in social enterprise

Simon Denny
[file:field_file_image_alt_text]

Simon Denny reports from Prague and finds that globally social enterprises are getting bigger.

A couple of weeks ago I found myself sitting in a Communist era conference centre in Prague. Built to ensure delegates had no distractions, the windowless edifice, located in an industrial estate six miles from the centre of the city, certainly made me focus on the speakers and what they said – there was nothing else to look at.

The centre was jam packed with over 700 academics attending the 17th International Research Society for Public Management conference. This, snappily titled, event included dozens of presentations describing the results of research into social enterprise in six continents. Although each presentation was different, my colleagues from the University of Northampton and I discerned two consistent themes.
 
The first theme, highlighted best by research carried out into social enterprises in Australia, is that across the world the number of larger social enterprises is growing. At the same time there are getting to be fewer small-scale social ventures. In Melbourne, Australia there were over 300 social enterprises supporting the long-term unemployed 10 years ago, now there are fewer than 100. The consistent reason for this trend across the continents is that as governments are increasingly looking to contract with social enterprises, rather than give them grants, it is more efficient (cheaper, easier?) to contract with fewer, but larger, ventures. Social enterprises are responding to this trend by merging with, or taking over, their peers.
 
The second trend, this time best highlighted by some fascinating research carried out in Brazil, is that trust is being replaced by contracts. The public and private sectors have used contracts to manage relationships between organisations for years. The law of contract, and the ability to enforce that law in the courts (in some countries at least), has been crucial to the development of our modern society. Social organisations, often being smaller and founded on principles deliberately different from private or public sector organisations, have often stressed the importance of partnership and trust. However, across the world trust has been abused and is now increasingly being replaced by contracts. One telling example from Sao Paulo in Brazil described how two years into a major project, trust between social venture partners had broken down to such an extent that the chief executive had to be replaced and contracts to govern relations had to be introduced.
 
So, across the world we see that social enterprises are getting bigger, and trust is being replaced by contracts. Social enterprises need to hang onto their social mission or there will not be a difference between them and ‘normal’ businesses!
 
Forty years ago E.F. Schmacher’s Small is Beautiful: Economics As if People Mattered was published. I am certain social enterprises around the world believe that people matter. However, in our social enterprise world big is getting to be the norm. What does this trend imply for social entrepreners? Of course, what Schmacher proposed was not that small organisations were best, rather his point was that for a large organisation to work effectively, it should behave like a related group of small organisations, it's small but within big. We need to remember that point, for big to really be better, it’s how we run the social enterprises that really matters.