When is a social enterprise a social enterprise?

Do we need a definition for social enterprise?  

At a recent debate I attended, three statements were boldly made. 

1. Definitions don’t matter – what matters is impact. 
2. Definitions exclude – messiness and fuzziness around definitions include. 
3. Certification is worse than defining – it regulates – what we need is a ‘free-market’. 

Back in 2014 there was a line of thinking in Europe that proposed social innovation could really be anything that was new in society. Keep it broad and keep it open. Keep it inclusive. Don’t define it. Don’t regulate it. Avoid ‘normative ethics’.

This approach allowed (somewhat unwittingly) the opportunity to include as social innovations: coal, McDonalds, nuclear weapons, work for the dole, single use plastic bottles, and tea towels – amongst others – all of which were at one time or another an ‘innovation’ and all of which had a ‘social’ impact.

This type of ‘free-market’ neoliberal openness concerned those of us who identified the term ‘social innovation’ more narrowly as ‘new solutions to social challenges that have the intent and effect of equality, justice and empowerment’. 

This prompted some of us in turn, to consider the place of definitions and how they give meaning to language, and what they are used for. Without wanting to be boring we categorised three types of definitions – definitions of ‘purpose’, definitions of ‘focus’ and definitions of ‘nature’.

To cut to the chase, we concluded that definitions do matter. They act in the same way as names do. They provide an external point of identification. If someone takes my full name and uses it to identify themselves, it is called ‘identity theft’. It is my name and it excludes others from using it. Imagine if everyone was called Andrew. Chaos. Imagine if everyone had no name. Chaos.

Like names, definitions have a purpose. The purpose of a definition can be to legitimate, to be theoretical, or to be distinctive. Distinctive definitions attempt to clarify what is not within the ambit of the definition and what is. These definitions focus on identifying the distinct factors or aspects of what is being defined in order to clearly mark out its differences to other similar or competing definitions. Distinctive definitions clearly identify what the definition does not include and what it does include. 

We also proposed that definitions can be categoriSed by their focus. In the case of ‘social enterprise’ this means a definition could focus on ‘social’ as the priority, or ‘enterprise’ as the priority or on ‘social enterprise’ equally. The focus on ‘social enterprise’ equally combines two activities into a way of doing something in society. Doing something in society introduces the question of ethics – the purpose of the doing, the outcomes it seeks, and the effect it has on others.

Social enterprise is an activity – a practice. It is a distinctive practice or way of doing something in society. Without being clear about what exactly we are seeking to do, it becomes very difficult to do it!  Having a definition helps. And it can also protect.

Without a clear definition, the practice of social enterprise becomes vulnerable to misuse – social washing. Certification as a social enterprise also protects the sector from ‘identify theft’. Being distinctive will and should exclude enterprises that want to wash their activities by claiming to be ‘trading for the good of society’. The recent withdrawing of B Corp certification from an unethical company serves as a real-world example.

With a clear definition, and certification, comes clarity and a combined identity that collectively amplifies impact. The social enterprise sector should be proud of its identity and impact. It should not be afraid of being defined. It should not be afraid of being distinctive. And it can be both defined and distinctive and inclusive of all genuine social enterprises.

In a world of truth-decay one would assume that there is no more a time in history when definitions do matter. In a world of spin and trumped up conspiracy theories, one would assume being crystal clear on one’s identity does matter. In a world where messiness and fuzziness is used to legitimate all types of systemic evil (yes let’s name it for what it is – human created evil), one would assume clarity of a defining purpose is critical to a practice that seeks to ‘trade for a social purpose’.

We concluded back in 2014 and continue to conclude that definitions do indeed matter. We also agree entirely that impact matters (although impact was not defined by those who did not want social enterprises defined). Perhaps, once again to ensure some distinction and clarity, we should consider talking more about social value creation along the lines argued by David LePage in Marketplace Revolution.

Every business, no matter what it peddles, has impact of one sort or another. But not every business or enterprise has social value in terms of addressing the ongoing challenges we all face locally and globally.