Published in: University of Cambridge Faculty of Law Research Paper Series
Cited as: Liptrap, J. (2020). “The Social Enterprise Company in Europe: Policy, Theory and Isomorphism.” University of Cambridge Faculty of Law Research Paper Series.
The last decade or so has witnessed a proliferation in the introduction of corporate organisational constructs to facilitate social enterprise across many European jurisdictions. The purpose of this paper is to investigate this phenomenon, and provide an (initial) analytical framework through which the social enterprise company can be understood, both on its own terms and with respect to the traditional business organisation. The paper begins by laying out policymakers’ collective intentions for designing the social enterprise company. From this departure point, the discussion then turns to theorising the social enterprise company’s organisational architecture. The social enterprise company is a hybrid organisational construct, which combines specific legal mechanisms and institutional logics of public, private and social economy organisations together. The social enterprise company is designed to create social value. For this reason it operates according to the principle of publicness. The intention was also for the social enterprise company to be resource flexible and attract altruistic investors and managers. The paper then further extends the theoretical discussion by examining the social enterprise company’s isomorphic prevention mechanisms, which encourage impact fidelity in the context of a conversion or a winding up. The paper concludes with some criticisms and suggestions for improvement.
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Recommendations from this resource
1. Reduce social policy deficits and make the social economy more sustainable.
2. One possible option for attracting more private capital to the social economy would be to impose a statutory limit on the amount of residual capital that may be extracted by a firm’s participants upon a conversion or a winding up at the outset. Each year the legislation could draw down the limit. For example, the figure could be set at 65-70 per cent initially. This could be reduced annually and incrementally until, after, perhaps, ten years, a firm’s participants would only be required to leave a small percentage of the remaining assets behind (e.g., 10 per cent). The drawdown feature could potentially appeal to a broader demographic of social entrepreneurs and investors interested in both social value creation and long-term financial returns, but it could also, gradually, lock more capital into the social economy.