PART I RESEARCH FRAMEWORK
CHAPTER 2 – RESEARCH FRAMEWORK AND METHODOLOGY
2.5. Defining SEPPS as Target Population
The following working definition of social enterprises with the poor as primary stakeholders or SEPPS was used by this research in the beginning:
‘SEPPS are social mission driven wealth creating organizations that have at least a double bottom line (social and financial), explicitly have as principal objective poverty reduction/ alleviation or improving the quality of life of specific segments of the poor, and have a distributive enterprise philosophy’.
This definition was adapted from the results of the author’s earlier action research on social enterprises in Asia (Dacanay, 2004; 2009). Defining this specific type of social enterprise (SEPPS) as population is a refinement from the researcher’s earlier
52
research, where social enterprises in general was deemed the population (Dacanay, 2004; 2009). Conceiving of SEPPS as a specific type of social enterprise to serve as target population for this study overcomes the difficulty of unintentionally excluding within the social entrepreneurship (SE) domain, social enterprises that may not necessarily serve the poor as primary stakeholders. For example, some scholars, notably Hockerts (2006) have pointed to the importance of including initiatives in the realm of sustainability and ecological entrepreneurship as topics within the SE domain. More importantly, conceiving of SEPPS as a specific type of social enterprise serving as population for this research better clarifies the domain of the findings (Eisenhardt, 1989).
There are three aspects to the working definition of SEPPS as target population: Firstly, SEPPS are social mission driven organizations explicitly pursuing poverty reduction/alleviation or improving the quality of life of specific segments of the poor as primary objective. This social dimension is a tradition that SEPPS shares with third sector or civil society organizations. They are engaged not only as workers, clients or suppliers, but more importantly as partners in their own poverty reduction. In the thesis, this dimension was demonstrated to mean engaging the poor as transactional and transformational partners: as transactional partners, they are engaged to participate in social enterprise and value chain management; as transformational partners, they are engaged to effectively participate in social enterprise governance and to enact roles as change agents in their community, sector or society as a whole.
Secondly, SEPPS are wealth-creating organizations that have at least a double bottom line (social and financial). Just like business or private enterprises, and unlike the traditional non-profit organizations that are dependent on grants or public subsidies - or wealth created somewhere else - SEPPS are engaged in the production/provision and sale of goods and services. However, unlike business or private enterprises that principally produce/provide and sell goods and services to create profit for shareholders, SEPPS do so with the objective of financial sustainability. They create wealth to partially or fully cover their operations and to invest in other activities related to their social mission. Their financial bottom line plays a supportive role to their social bottom line of poverty reduction/alleviation or improving the quality of life of specific segments of the poor.
Thirdly, SEPPS have a distributive enterprise philosophy. Unlike in a business or private enterprise where payments or wages made to the poor are considered as financial costs to be minimized, these are considered as social benefits for primary stakeholders that need to be optimized. Moreover, the distributive philosophy is expressed in the surplus or profits accruing to the poor as dividends as well as being reinvested back to the enterprise to sustain the fulfillment of its social mission or in activities that benefit and assist the poor in overcoming poverty or improving their
quality of life. In the thesis, this dimension was elaborated to mean the provision by the social enterprise of transactional and transformational services for the poor to overcome poverty and capability deprivation. This is directly related to the first element in the definition, as it is the combination of transactional and transformational services provided by SEPPS that enable the poor to participate in social enterprise management, governance as well as community, sectoral and societal change.
The aforementioned definition of SEPPS adopted by this research may be considered a ‘strong’ definition relative to what may be considered a ‘weak’ definition from the perspective of Freeman et al., (2007; 2010). Using Donaldson and Preston’s (1995) aspects of stakeholder theory, the ‘weak’ definition of SEPPS considers the poor as primary stakeholders from a descriptive and instrumental perspective. As primary stakeholders, they are part of an inner circle of “groups without whose support the business would cease to be viable” (Freeman et al., 2010. pp. 25-26). This perspective is shared by many other scholars of stakeholder theory (Carrol, 1993; Clarkson, 1998; Gibson, 2000). The strong definition adopted by this research on the other hand has a normative perspective (Donaldson and Preston, 1995) of the poor as primary stakeholders in an enterprise principally governed by its social bottom line and distributive philosophy.
This research enhanced this strong definition and normative perspective by clarifying that SEPPS are responses to pervasive state and market failures to serve the needs of the poor in developing country contexts. As such, SEPPS provide a combination of services (transactional and transformational) aimed at assisting the poor overcome capability deprivation to enact both transactional and transformational roles. On one hand, the poor are assisted to enact transactional roles as workers, suppliers and clients, as well as partners in social enterprise or value chain management. On the other hand, the poor are assisted to enact transformational roles as full fledged owners of social enterprises and as organized partners practicing democracy not only in social enterprise governance but also in the pursuit of community, sectoral, and societal transformation.
These enhancements in appreciating the context and elements that define SEPPS are the subject of discussion in the cross case analysis, propositions and conclusions (Chapters 9-11) of the thesis.