THE SOCIAL ENTERPRISE MARK:

A CRITICAL REVIEW OF ITS CONCEPTUAL DIMENSIONS AND POTENTIAL

CONTRIBUTION TO CORPORATE SOCIAL RESPONSIBILITY

Rory Ridley-Duff

Sheffield Business School

Cliff Southcombe

Social Enterprise Europe Ltd

ABSTRACT

Social enterprise has emerged as a new way to describe a wide variety of organisational

forms and entrepreneurial approaches that advance corporate social responsibility. Touted

as both the economic engine of the future (Harding and Cowley, 2004) and the main vehicle

for corporate social responsibility (CSR) (London and Morfopoulos, 2010), considerable

confusion has arisen regarding its nature and contribution to changing business practice.

Recent attempts by academics to define the social enterprise sector have run into linguistic

and practical problems. Any definition, it seems, privileges one group of social enterprises

over another (Lyon and Sepulveda, 2009; Dart, Clow and Armstrong, 2010). Problems

include the failure to acknowledge co-operative and employee-owned enterprises (Ridley-

Duff and Bull, 2011) as well as lack of recognition for enterprises acting as pioneers of public

sector reform (Dart, Clow and Armstrong, 2010).

The arrival of the Social Enterprise Mark in the United Kingdom takes place amidst these

conceptual and practical difficulties. It has proved difficult to create a conceptualisation of

social enterprise that is adequate for the purposes of sector mapping. The purpose of the

Mark, according to its advocates, is to defend the social enterprise ‘brand’ from government-

funded bodies and voluntary sector organisations that are neither autonomous from the

state, nor pursuing their social objects through trading. Another argument for the Mark is to

prevent private corporations claiming they are social enterprises on the basis of CSR and

community-based activities (Finlay, 2010).

So far, there has been only limited discussion on the conceptual dimensions of the Social

Enterprise Mark, or the implications for the sector from its growing legitimacy (Allan, 2005;

Lyon and Sepulveda, 2009; Ridley-Duff and Bull, 2011). This paper makes a contribution to

knowledge by critically discussing the conceptual dimensions of the Social Enterprise Mark’s

and its potential contribution to CSR.

Keywords: Co-operatives, Social Enterprise, Governance, Corporate Social Responsibility,

Workplace Democracy

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1.INTRODUCTION

The motivation for writing this paper comes from a series of private conversations in the

social enterprise research community, and seminar discussions at co-operative and social

enterprise courses1 on the impact of applying the criteria in The Social Enterprise Mark to

existing social enterprises (hereafter referred to as ‚the Mark‛). The attitude in the academic

community to the idea of a normalising framework has been one of ambivalence (as a policy

option), mainly on the basis that it would decrease innovation and devalue the contribution

of social enterprises that do not fit neatly into standardised criteria (see Spear, Cornforth and

Aiken, 2007; Curtis, 2008; Teasdale, 2010). The feedback from seminar participants, on the

other hand, is frequently one of bemusement (and occasional anger) at the impact of

applying the Mark’s criteria (Clarke, Southcombe and Ridley-Duff, 2010).

It is the explication of this ambivalence, bemusement and anger that constitutes this paper’s

contribution to knowledge. By examining the conceptual dimensions informing the

development and application of the Mark, and their relationship to New Public Management

(Hood, 1995), any anti-social effects can be readily debated and discussed. The critical

perspective adopted in this paper, therefore, is motivated by concerns that are similar to

Curtis (2008). Critical theory supports the subversion of attempts to ‘normalise’ the

definition of social enterprise. In this paper – ironically - this perspective is adopted to

prevent subversion of perspectives on social enterprise that were considered important when

early social enterprise agencies were created (see Teasdale, 2010). By doing so, the paper

supports an argument (and proposes a research strategy) to guard against ‘executive

capture’ of the definition of social enterprise.

This paper is divided into five sections. In the first section, evidence on the origins of the

social enterprise sector in the UK is offered to support the argument that there has been a

substantial shift in the conceptualisation of social enterprise in the UK (and internationally)

over the last 15 years. This shift, it will be argued, is linked to the involvement of public,

voluntary and charitable sector agencies in the consultations for a Community Interest

Company (CIC). The second section explores how this shift is embedded in the Mark’s

evaluation criteria leading to the Mark itself becoming a part of New Public Management.

The third section provides an early indication of the likely impact of applying the criteria by

summarising discussions and participant feedback from co-operative and social enterprise

courses run by Sheffield Business School. This provides a justification for further research

involving more detailed explorations of the origins, management and effects of the Mark on

public perception and social enterprise practice.

1 Co-operative and Social Enterprise Summer School (July 2010) held at Sheffield Business School, and

the St Legers Co-operatives and Social Enterprise School held at St Mary’s Church, Sheffield (March

2011).

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2.FOUNDING MOTHERS AND FATHERS OF THE SOCIAL ENTERPRISE MOVEMENT

IN THE UK

Several authors have drawn attention to the mixed heritage of the social enterprise sector,

and the way it has attempted to balance the philanthropic impulse of US/UK ideas on social

entrepreneurship with the more commercial and democratic orientation of the EU’s social

economy and co-operative sector (Borzaga and Defourny, 2001; Kerlin, 2006, 2010; Ridley-

Duff and Bull, 2011).

The earliest known formalisation of social enterprise ideas in the UK came from the

development of a ‘social audit’ framework for worker co-operatives at Beechwood College

(Leeds, West Yorkshire). In the first social audit toolkit, Spreckley (1981:3) comments that:

“An enterprise that is owned by those who work in it and/or reside in a given locality, is

governed by registered social as well as commercial aims and objectives and run co-operatively

may be termed a social enterprise. Traditionally capital hires labour with overriding emphasis

on making a profit over and above any benefit either to the business itself or the workforce.

Contrasted to this the social enterprise is where labour hires capital with the emphasis on

social, environmental and financial benefit”

The early history - informed substantially by community enterprise movements in Scotland

and the North of England - is summarised in a report to the British Council (Southcombe,

2009). The language of social enterprise started to stabilise in 1994 after a conference of co-

operative and community business activists in Birmingham. The conference organisers later

incorporated the Social Enterprise Partnership (SEP) 2 and provided a stable definition of

social enterprise (still used today by Social Enterprise Europe) as trading bodies governed by

social objectives with distinct characteristics:

Being bound to a set of beneficiaries or community

Having a democratic structure

Having common and shared values

Being open and accountable

Concerned with empowering members

Using and developing volunteers

Offering workers ownership

Creating social wealth

Having an emphasis on co-operation and networking

Social Enterprise Europe, 2011, [online]

2 The founders of Social Enterprise Partnership Ltd (SEP) – Cliff Southcombe and Freer Spreckley –

traded from 1997 to 2001, then created Local Livelihoods (incorporated 2001) and Social Enterprise

Europe (incorporated 2003) to continue their work.

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Evidence that these ideas were spreading southwards throughout the UK is provided by the

rise of Social Enterprise London (SEL). It worked with the University of East London to

establish the country’s first social enterprise degree programme, then with the London

Development Agency to establish the field’s first academic journal (Social Enterprise Journal).

SEL’s first chief executive moved to the Social Enterprise Coalition (SEC) upon its

establishment, while the social networks of the founder members were instrumental in

persuading New Labour ministers to base their strategy for social inclusion on social

enterprise, and to consult on a new organisational form for social enterprise development

(see Westall, 2001; Teasdale, 2010).

SEL’s Memorandum and Articles, therefore, provides important clues to the early motives

and values of the people who established the UK’s most influential regional social enterprise

development agency. Figure 1 shows the company objects from its Memorandum of

Association (created autumn 1997, registered Jan 1998). In this statement of objects, the

influence of the co-operative movement and New Labour are evident. Participatory

democracy was a primary concern of the co-operative development agencies and worker

co-operatives supporting the creation of SEL, while the inclusion of objects regarding ‘equal

opportunity’ and ‘social justice’ is characteristically Blairite and ‘third way’ (Haugh and

Kitson, 2007).

Figure 1 – Memorandum of Association, Social Enterprise London

Memorandum of Association – Social Enterprise London – 26th January 1998.

C. Objects

(1) The objects of the company are:

(i) To promote the principles and values of the social enterprise economy in Greater

London and its environs.

(ii) To promote co-operative solutions for economic and community development.

(iii) To promote social enterprises, in particular co-operatives and common

ownerships, social firms, and other organisations and businesses which put into

practice the principles of participatory democracy, equal opportunities and social

justice.

(iv) To promote, develop and support local and regional economic resources and

opportunities.

(v) To address social exclusion through economic regeneration.

(vi) To create a regional framework to support and resource development of the social

enterprise sector.

Source: Companies House

Further insights can gleaned from examining the list of directors and initial subscribers (see

Appendix A). The initial subscribers to SEL are staff in four co-operative development

agencies, four worker co-operatives and The Co-operative Party. The directors include three

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co-operative development workers and the chair of a London-based charitable trust. The

first directors of The Social Enterprise Coalition (SEC) were Helen Barber and John Goodman

(both long-term members and supporters of the co-operative movement).

While others were already working in this field, it took a further two years for the School for

Social Entrepreneurs to incorporate. It was not until after the year 2000 that the vast majority

of other regional agencies formed and incorporated. In the context of the Social Enterprise

Mark, the incorporation of Regional Infrastructure for Social Enterprise Ltd (RISE) in March

2003, a social enterprise support agency for the South West of England, is particularly

relevant. Interestingly, and perhaps significantly, the Memorandum and Articles of both the

Social Enterprise Coalition and RISE contain simpler statements of support for social

enterprise with no mention of co-operatives or participatory democracy. The Social

Enterprise Coalition (registered in April 2002) lists only four objects which can be

summarised as:

1. To promote the principles and values of the social enterprise economy

2. To promote social enterprise solutions

3. To promote social enterprises

4. To promote regional access to resources for social enterprises throughout the UK.

When RISE registered itself in March 2003, the number of objects is reduced to just one:

1. To support development of the social enterprise sector in the South West of

England.

This move to vagueness in definition coincided with consultations on a Community Interest

Company throughout 2003. As a result, the government decided to jettison stakeholder

democracy as a statutory requirement (DTI, 2003). Given the objective of creating a ‘flagship’

legal form to ‘brand’ social enterprise, this decision paved the way for a charity-like (rather

than cooperative-like) company form suited to the needs of individual social entrepreneurs.

Statutory powers to ensure executive accountability and democratic control of capital were

transferred away from company members to the CIC regulator (Ridley-Duff, 2007).

Nevertheless, the connection of both SEC and RISE to the co-operative movement is

maintained through use of model rules created by ICOM (Industrial Common Ownership

Movement), and the registration of both organisations by Julie Woodfine at the Co-operative

Union in Manchester3. The founders of RISE, however, do not appear to have been as

embedded in the co-operative sector as the founders of SEL and SEP. This being the case, it

is less likely they would feel wedded to co-operative principles.

Andrew Shadrake is listed as one of RISE’s first directors. His occupation is listed as

Business Strategy Manager, with a directorship at The Protimos Foundation (a charity that

provides legal challenge and support for disadvantaged groups in international

development). His career history was later published (Blue Horizons, 2011) and this outlines

3 This was established by retrieving the incorporation documents for all companies from Companies

House.

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his professional background as a manager in three businesses, with legal qualifications that

help his work with ‚enterprises with charitable aims‛ and community finance initiatives.

The other director (and Company Secretary) was Judith Reynolds whose occupation is listed

as Agency Director, with directorships at Associated Training Practitioners Ltd (a Company

Limited by Guarantee that closed when RISE incorporated), and Plymouth SRB Partnership

Ltd (a support agency based in council premises). Judith was also the director of Co-Active

from 1997 onwards, providing support to social enterprises, and using strong links to a

regional development agency (RDA) and European funding bodies to develop her work.

As Ridley-Duff and Bull (2011) highlight, the traditions and ‘world view’ of charitable and

voluntary sector organisations are often strikingly different from that of the co-operative

sector, particularly when worker co-operatives are considered. It should be expected,

therefore, that the ‘social enterprise principles and values’ propagated by RISE will be

different from those advocated by SEL and SEP.

3.THE SOCIAL ENTERPRISE MARK

RISE was the initial champion of the Social Enterprise Mark. In the pilot programme (RISE,

2009, Issue 3), the statement of criteria cites two key bases of evidence:

In order to be eligible for the Social Enterprise Mark, applicants must demonstrate that they

are a social enterprise whose key driver is trading and that they operate for wider social /

environmental benefit.

Applicants will need to provide evidence in two key areas:

1. Show through their constitution that a sufficient proportion of the profit made by the

business is spent on socially beneficial purposes, and that, on dissolution of the

business, all residual assets are distributed for socially beneficial purposes.

2. Show by their activities and their accounts that trading is a key driver and that profit

generated is used for social or community benefit –whether by the social enterprise

itself or by another agency.

RISE, 2008: 1

In these statements, there is a clear orientation towards charity-like criteria based on an

external purpose, rather than participative democracy. Co-operatives UK recognise many

types of co-operative enterprise in which no statutory asset lock applies to assets. Indeed,

the essence of co-operativism is that members democratically control the capital of their

enterprise (ICA, 2005). Attempts to remove democratic control, to which a statutory

asset-lock contributes, places assets into the hands of industry regulators (and legal

professionals) rather than organisation members. Conceptually, therefore, the evidence

required by the Social Enterprise Mark pertains only to the organisation’s social purpose.

Moreover, the social purpose is framed as an external matter, with no specific obligations to

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put into practice ‚the principles of participatory democracy, equal opportunities and social

justice‛ (SEL, 1998).

As Ellerman (1990) argues, social institutions have two key characteristics. Firstly, they adopt

governance arrangements in which the people governed by them have the capacity to

influence both the governance system and the selection of governors. Secondly, they jettison

the master-slave norms of employment in favour of voluntary association and partnership.

This point is reinforced at considerable length by Erdal (2011) in his passionate book on the

orientation and constitutional arrangements for effective employee ownership. In short, an

enterprise that denies those governed any power to affect the governance system, and which

deploys master-slave norms to create employment contracts with the workforce, cannot

credibly claim to be a ‘social institution’.

Who, then, are ‚the governed‛? Turnbull (2002) considers this at length in an accessible

summary of his academic contributions to the future of (social enterprise) governance. The

‚governed‛, he argues, are primarily the workforce. Suppliers can deliberately (and legally)

diversify their customer base. Customers can (legally) ‘shop around’. Employees, typically,

have limited scope to do the same after they enter an employment contract. Unlike a

supplier (who is free to sell to whoever they like) and customers (who purchase from any

shop they choose), restrictions are usually added to employment contracts to prevent

employees from working for anyone else without their employer’s permission. They are,

therefore, subject to the governance systems in their workplace, and are continually affected

by them, in ways that other stakeholders are not. The lack of influence that governors have

over the daily lives of customers, suppliers and financiers means that these groups are not

‘governed’ by the enterprise in a meaningful sense. Their formal inclusion in governance,

while helpful to the pursuit of multi-stakeholder governance, is not sufficient to claim the

enterprise is ‘social’. For Turnbull, voluntary organisations, charities and co-operatives are

not ‘social’ unless they admit the workforce to membership of the organisation.

Furthermore, to be ‘social’ this membership must be accompanied by a ‘voice’ that enables

members to influence the design of the governance system, and the selection of (at least

some) governors.

A similar argument can be made in respect of charitable and voluntary organisations who

participate in the social economy. Given that charities (non-profits) and voluntary agencies

are frequently last ditch attempts to plug gaps created by market and state failure, they are

often the only provider of goods and services needed by their service users. The position of

service users, in these cases, is similar to most members of a workforce: there are no easy

options to switch to an alternative supplier (just as there are no easy options for most

employees to switch to another employer). Where the charity or voluntary organisation is

providing goods and services that no-one else will supply, the inclusion of those who receive

the goods and services provided by the organisation in the governance system, their capacity

to influence the development of the governance system, and their power to select (at least

some of) the governors, can all be seem as pre-requisites for that enterprise to claim it is

‘social’ (rather that ‘private’).

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With this theoretical perspective in mind, the following research question can serve as a

guide for further research into the Social Enterprise Mark:

RQ1. Do the criteria of the Social Enterprise Mark provide an effective framework

for evaluating an enterprise’s claim to be social?

4.METHODOLOGY

Table 2 contains the criteria developed to evaluate whether an applicant for the Mark has a

legitimate claim to be a social (rather than a public or private) enterprise.

Table 2 – The Conceptual Dimensions of the Social Enterprise Mark

Based on 2008 Pilot Project Based on Voice 2010 Launch

Be an eligible legal form (not a sole

trader, not a partnership or traditional

profit-distributing company, probably not

a co-owed [employee-owned] company

or limited liability partnership).

Adhere to shareholder restrictions (only

have shareholders that ‚constitute a

community benefit‛ or apply the

dividend cap set out in the Community

Interest Company legislation).

Have own constitution and governing

body

Profit predominately used / distributed

for social / environmental purposes

(including residual assets).

Have 50% or more income from trading,

and have traded for at least one year.

Evidence that social / environmental

evidence is being achieved.

Social and environmental objects can be

evidenced in constitutional documents.

Must be an ‚independent business‛,

legally constituted, with autonomous

governance.

Must earn 50% or more from trading,

evidenced using ‚standard accounting

practices‛

Devote 50% of more of the

organisation’s profits to

‚social/environmental purposes‛

Ensure that all residual assets are

distributed for ‘social/environmental

purposes‛ (if dissolved).

Can demonstrate that

social/environmental objects are being

achieved.

These criteria (both sets) were given to participants on two of Sheffield Business School’s

non-accredited open access Co-operative and Social Enterprise courses. These two cohorts of

students were invited to consider the impact of applying the Mark’s criteria to three

scenarios. The first cohort (of 16 participants) were drawn mainly from the co-operative

movement, with a minority of people coming from the wider social economy (e.g. registered

charities and CICs). Several worked in regional and national support bodies for co-

operatives and social enterprises. The second cohort (also comprising 16 participants) was

drawn primarily from the public sector, comprised of staff interested in supporting

tenant-led social enterprises in Housing Associations. This group included only two people

working directly for (or in) social enterprises.

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The participants were given three questions to consider.

1. ‚Would a democratically owned and controlled enterprise in which the workforce

decides for itself how to distribute its own surpluses (on a one-person, one vote basis)

be eligible for the Social Enterprise Mark?‛

2. ‚Would a trading charity with a range of social and environmental projects, but in

which members of the workforce are not permitted to participate in governance or

strategic decision-making be eligible for the Social Enterprise Mark?‛

3. ‚Would a sole trader making their living entirely from providing advice and

guidance to social enterprises at below market rates be eligible for recognition?‛

Feedback to these questions are based on classroom discussions rather than systematic data

collection and analysis. In research terms, it provides anecdotal evidence from a ‘focus

group’ type setting, and is not offered as conclusive evidence. The views presented are

provided as the justification for further research, and the rationale for a particular research

design, but not as validated research findings.

5.DISCUSSION

Although the groups were drawn from different backgrounds, participants in both groups

reached the same conclusions. Based on the Mark’s criteria, course participants felt that a

worker co-operative (Case 1) would not achieve Social Enterprise Mark status unless it

satisfied the additional requirement regarding the disposal of its residual assets, and

commitment to an externally focussed social objective that explicitly benefits a community or

a beneficiary group. Participants on the first course objected strongly to the way the criteria

would prevent award winning social enterprises that are genuinely employee-owned4, from

achieving recognition (such as Sunderland Home Care Associates). The Mark’s criteria

would also – quite bizarrely – disqualify an enterprise that is cited frequently by advocates of

social enterprise and employee-ownership as one of the world’s finest examples of social

enterprise, democratic participation, employee-ownership and community transformation

(the Mondragon Co-operative Corporation). Members of the Mondragon worker co-

operatives have capital accounts which they own personally. Profits are paid into these

accounts annually, and they can draw out this money when they leave or retire from their

co-operative (Whyte and Whyte, 1991). These accounts are regarded as personal property,

and are sufficiently ‘secure’ to act as security for bank loans and mortgages. Furthermore,

members retain democratic powers to decide on the future of their own organisation,

including the use and distribution of assets in cases of dissolution (see Ridley-Duff, 2005,

4 This is employee-owned in the sense of the workforce having an unambiguous entitlement to a share of

the wealth created by the organisation, and control over the distribution of the organisation’s assets in

cases of dissolution. This can be contrasted with worker co-operatives that have no share capital, and

dissolution clauses that prevent the transfer to assets to members in cases of dissolution.

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2010). Lastly, while reinvestment across the co-operative network is extremely high

(typically 90% of retained profits are reinvested), only 10% of profits are specifically devoted

to social and educational projects.

In the case of the charity that bars staff from involvement in governance (Case 2),

participants on both courses – on the basis of the criteria used – felt that the organisation

would still qualify for the Mark. This would be achieved despite the organisation failing to

meet Ellerman’s (1990) definition of a ‘social institution’, and its refusal to recognise either

workforce or service users formally in its governance processses. This caused more

consternation in the participants on the first course than the second, as they realised the

extent to which the definition of social enterprise had been reframed to advantage charity-

like enterprises rather than (worker) co-operative enterprises.

Whilst only some co-operatives were likely to obtain the Mark, and only then if they

modified their social objects and auditing processes to specifically acknowledge and address

external stakeholders, trading charities were likely to qualify for the mark even if they made

no changes to their internal governance and employee relations practices. It was this

realisation that prompted one participant (in dialogue with the authors of this paper) to start

work on the creation of an alternative ‘mark’ that emphasised ethical practice and

democratic accountability.

In the case of a sole trader (Case 3), both groups of participants felt they would never be able

to obtain the Mark because of the requirement to incorporate, the inability to demonstrate

‘autonomous governance’, and the inability to control distribution of residual assets because

there is no separate ‘legal person’. In practice, this means that a consultant, working solely in

the social economy providing advice and training – perhaps counter-intuitively – cannot

achieve recognition for their contribution to social enterprise. This is all the more surprising

when it is so easy to recognise the contribution of self-employed people to the development

of private enterprise. Conceptually, however, participants did recognise self-employed

people could engage in social entrepreneurship, and that there are bodies (such as UnLtd)

that do recognise and champion their work.

Taken together, these discussions crystalised how the conceptualisation of social enterprise

(as defined by the Mark) is framed to promote the incorporation and ‘autonomous’

governance of trading organisations that pursue social or environmental goals, but not to

promote ‘participatory democracy’ or the socialisation of ownership, management and

entrepreneurship in the manner advocated by Ellerman (1990 and Turnbull (2002). This

being the case, only the task of the enterprise is socialised, not its form, management or

governance practices.

This creates a paradox that the first group of participants found troubling. The pursuit of

democratic ownership and management practices is not, in itself, considered to be a social

purpose or to constitute a social benefit. In light of the company objects of SEL, it is clear

that the re-formulation of social enterprise using the Mark’s criteria removes participatory

democracy as a core characteristic, and subverts social enterprise discourse so that it ‘fits’

more neatly into the dominant discourses of business (Johnson, 2006) and the voluntary

sector (see Hudson, 2002). It highlights the extent to which charity concepts such as ‘social

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objects’ and ‘community/public benefit’, and private enterprise concepts such as ‘market

trading’, ‘incorporation’ and ‘accounting’ have penetrated the definition and criteria for the

recognition of social enterprise? Based on the early formulations of social enterprise, it would

equally relevant for an awarding body to seek evidence that stakeholder relationships are

recognised in Articles of Association, and that there is evidence of ‘participative democracy’,

‘social inclusion’ and/or ‘stakeholder engagement’ as guiding principles. As things stand,

trading, incorporation and profitability - previously the means (rather than purposes) of the

social economy - have succumbed and been reframed as the ends of social enterprise (Dart,

2004). While these ‘ends’ might be important for the evidencing ‘enterprise’ in voluntary

and charitable companies, they do not evidence ‘socialisation’ in a company limited shares,

or one limited by a members’ guarantee (Ellerman, 1990, Turnbull, 2002). This being the

case, the Mark does not provide a framework that meets the needs (or aspirations) of a

significant part of the social enterprise movement.

Curtis (2008: 280) highlights how normative frameworks (like the Mark) can be seen as

expressions of New Public Management (Hood, 1995). Curtis views attempts to ‘normalise’

the form and evaluation of social entrepreneurial efforts as part of a programme for ‚state-

sponsored social enterprise‛. This goes some way to explaining why the CIC regulations

give statutory powers of intervention to the regulator, but not to the organisation’s own

stakeholders. It also helps to explain why the Mark has a bias toward recognition of certain

legal forms (particularly the CIC) and ‘standard accounting’ practices. Curtis, however,

argues that this undermines ‚self-emerging‛ social enterprise development grounded in

voluntary action, community enterprise, employee-ownership and co-operative

development. In these cases, he argues, it is ‘grit that makes the pearl’, a metaphor for the

way that resistance to dominant acts as the catalyst for the creation of new legal forms,

information systems, and management practices that accept and value diversity, difference

and dialogue.

Unlike traditional knowledge development, in which a ‘critical perspective’ is seen as a

check and counter-balance to dominant ‘rationalist’ norms of knowledge, social enterprise –

at least in its progressive co-operative and employee-owned forms - takes a critical

perspective as its starting point for the development of alternative systems of ownership and

management (see Ridley-Duff and Bull, 2011, Erdal, 2011). Following the logic of Alvesson

and Deetz (2000), management systems can be designed to share and reveal information, not

obscure and tightly control it. Governance systems can be designed to encourage inclusion

of stakeholders, not facilitate exclusion and marginalisation. The Mark, albeit not obviously,

contains a clause that provides an escape route from ‘rationalist’ evaluation criteria which –

potentially at least – offers another pathway to participative democracy. The last criterion of

the Mark requires that applicants provide evidence that their social and environmental

objectives are being achieved. This requirement, depending on the way it is interpreted and

operationalised, requires some form of social audit and reporting.

Social auditing had been developed as a method for measuring social and environmental

impact at Beechwood College (Spreckley, 1981), and was subsequently used by many social

12

enterprises as a tool of governance and planning (Southcombe, 2009). The significance of the

‚Beechwood model‛ - and the SEN model that followed - is that it advocates a participative

and inclusive approach to governance. This regards employees, volunteers and beneficiaries

(i.e. customers and/or service users) as equal stakeholders in organisation development.

Even if social enterprises have hierarchal structures that initially exclude volunteers and/or

workers from policy development and strategic decision-making, social audit acts as the

catalyst for the protection and reintegration of co-operative management techniques. This, it

is claimed, protects (or re-establishes) the social nature of the enterprise by countering the

discourse of private enterprise management and providing a way to (re)establish social

enterprise management.5

In concluding this section, therefore, we have identified an urgent need to further explore the

motivations behind the developers of the Mark, and to assess its effects on stakeholder

involvement in governance, wealth sharing and commerce.

6.RESEARCH DESIGN

This paper represents the first stage of an ongoing project to research the conceptual

dimensions and effects of the Social Enterprise Mark. In this section, we take the arguments

outlined above and consider a research design that will enable further investigation of the

origins and effects of the Mark on social enterprise.

Firstly, the philosophical orientation of the study is to adopt a critical theory outlook

(Alvesson and Deetz, 2000). The reason for this is two-fold. Firstly, it places an obligation on

the researchers to ensure that knowledge is grounded firmly in the historical and political

contexts from which it springs. Secondly, critical theory encourages a perspective that the

Mark itself represents the development of a new social enterprise discourse. Whether

intentional or not, the new discourse may subvert key assumptions on which the social

enterprise movement was founded, and in doing so insidiously promote anti-social forms of

enterprise.

To better understanding the historical context, and explore the development of this counter-

discourse, interviews will be sought with the people who participated in the development of

the Mark. This can be achieved through unstructured interviews with the founders of RISE

and the Mark in order to gather background information on the context in which they were

working. This can be followed by a combination of snowball and purposive sampling to

conduct further semi-structured interviews. Face-to-face meetings may be impractical (from

a logistics point of view) and costly (from a financial and time point of view), so a strategy of

telephone interviewing with verbatim note-taking is regarded as a more viable approach to

preserve the breadth and depth of views.

5 A private enterprise in all but legal form.

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Following this, it will be necessary to explore the effects of the Mark. To do this, interviews

with applicants and holders of the Mark, as well as those who were not awarded (or did not

apply for) the Mark, will be needed to assess the impact of Mark has had on their

understanding and approach to social enterprise. Given the likely presence of Mark holders

and applicants in a given geographical region, a sample from a single area can be selected,

and face-to-face interviews recorded and transcribed. The sample of applicants would need

to include a range of social economy organisations, and ensure adequate representation of

employee-owned enterprises.

The analysis of data would be undertaken using a Grounded Theory approach (Glaser and

Strauss, 1967; Locke, 2001). In the first instance, interviews will coded in four ways.

Against the definition of the Social Enterprise Partnership

Against the objects of Social Enterprise London

Against the criteria established by the Social Enterprise Mark

Against emergent criteria identified by research participants using ‘in-vivo’ coding.

This strategy ensures that data is coded in such a way that early and emergent discourses on

social enterprise characteristics are given recognition, but that these do not limit analysis, or

the capacity of participants, to articulate alternatives.

In terms of the numbers of interviews needed, this is governed by the principle of

‘saturation’ rather than any strict research protocol. However, for the purposes of outlining

intentions, the aim is to identify 8 people involved in the early development of the Mark, and

a minimum of 6 applicants who have received the Mark, and 6 other social enterprises that

did not receive the Mark (or who took a positive decision not to apply for it). For the

purposes of selecting a sample, any organisation matching most of the characteristics

outlined by SEP, SEL and the Mark will be used. This will prevent the criteria embedded in

the Mark itself from limiting the sample, and ensure that characteristics valued by early

social enterprise agencies are given due recognition. The total sample, therefore, will include

a minimum of 8 telephone interviews, and 12 face-to-face interviews. Data from these

interviews will be used to deepen theoretical understanding of the origins, effects and

limitations of the Mark in its present form.

The third and final stage of the research will involve a survey that presents alternative sets of

social enterprise evaluation criteria to a sample of employee-owned, co-operative and social

enterprise members to establish whether there are patterns in their preferences for an

industry standard. If there are clear and consistent preferences that are statistically

significant, this will provide a body of empirical data to inform further development of the

Mark and increase its relevance and usefulness.

14

7.CONCLUSIONS

The Mark represents an historically important development in the conceptual definition of

(social) enterprise, with the potential to create a new standard for Corporate Social

Responsibility (CSR). The commercial success of the Mark, and the value placed upon it by

existing and aspiring Mark holders, remains unclear. This paper concludes that the Mark

appears to privilege charitable and voluntary organisations by framing criteria in such a way

that that it gives recognition to the external purpose and mission of an organisation, but not

the social transformations that are created through new labour relations, ownership

arrangements, and wealth distribution mechanisms. The criteria, at present, do not appear

to give much recognition to enterprises that transform people’s lives through changing the

relationship between employer and employee, or which offer stakeholders (workforce,

service users, customers and investors) democratic control over the design, characteristics

and uses of capital in their enterprise. The proposed research provides a strategy for

assessing the relevance and importance of the Mark’s criteria in different ‘sub-sectors’ of the

social enterprise movement (see Peattie and Morley, 2008).

Our theoretical perspective is that the Mark appears to be inappropriately named. While it

recognises and rewards social purpose enterprises (see Galera and Borzaga, 2010), it does not

yet recognise and reward socialised enterprises (see Ridley-Duff and Bull, 2011). As such, the

intellectual justification for further research is to explore the evolution of the Mark in the

words of its founders and potential users to see whether future iterations might be more

sensitive to the history of the movement, and more inclusive of the aspirations of the

founders of the UK’s social enterprise movement.

Appendix A

Founders and Initial Directors / Subscribers at Social Enterprise London

Initial Directors Occupation Employer

Sipi Hameenaho,

Director

Project Co-ordinator London Co-operative Training

Manuela Sykes,

Director

Director Doddington & Rollo

Community Association

(Charitable Trust)

Jean Whitehead Policy Officer Co-operative Union

Gregory Cohn Manager London Co-operative Training

Malcolm Corbett Sales Director Soft Solution Ltd (Poptel)

Signatory Name Subscribing Organisation Classification

Anthonia Faponnle Hackney Co-operative Developments

Ltd

Co-operative Development

Agency

15

S. M. Kelly Lambeth Co-operative Development

Agency

Co-operative Development

Agency

Malcolm Corbett Poptel Worker Co-operative

Rory Ridley-Duff Computercraft Ltd Worker Co-operative

Robert Smyth Calverts Press Worker Co-operative

J. Whitehead The Co-operative Party Political Party

I Saray Artzone Co-operative Ltd Worker Co-operative

Gregory Cohn Tower Hamlets Co-operative

Development Agency

Co-operative Development

Agency

Sipi Hameenaho Greenwich Co-operative

Development Agency

Co-operative Development

Agency

Founders and Initial Directors at Social Enterprise Coalition

Initial Director / Secretary Occupation Registered Office

Helen Barber Legal Officer Co-operative Union

John Goodman Policy Officer Co-operative Union

Founders and Initial Directors / Subscribers at RISE

Initial Director / Secretary Occupation Registered Office

Andrew Shadrake Business Strategy Manager

Also director of: The Protimos

Foundation

25 Wolseley Close

Judith Reynolds Agency Director

Also director of: Associated

Training Practitioners Ltd,

Plymouth SRB Partnership Ltd

25 Wolseley Close

Source: Companies House

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