Seeing social enterprise through the theoretical conceptualisation of ethical capital

Objectives: Current conceptualisations of social enterprise fail to fully satisfy an understanding of the movement. A focus on the economic implies a business model where deep tensions lie. A focus on social capital offers a different frame of reference, yet both these conceptualisations fail to fully identify the phenomena that is social enterprise. The objective of this paper seeks to fill that gap. Ethical capital is offered here as the missing conceptualisation in the field of social enterprise.

Prior work: Pearce (2003) describes social enterprises as part of the third system, closer to the first system (private business), than the second system (public provision), yet primarily social and secondly a business. Social Enterprises are described as trading organisations in a market (Pearce 2003). A focus and operationalisation for social enterprises to be ‘business-like’ and ‘entrepreneurial’ is well documented (Leadbeater 1997; Dees 1998; Nicholls 2006b).

Approach: Yet, if as part of the third sector, social enterprises are as Dart (2004) suggests; ‘blurring the boundaries between non-profit and profit’, but what blurs? What is compromised? What exactly is lost (or gained)? What challenges are there for social enterprises? And is a managerialist ideology taking precedence over the social? This paper provides a conceptual paper that seeks to outline the arguments on the table and develop an ethical capital conceptualisation of social enterprise.

Results: This paper very much aims at starting the process of intellectual debate about the notion of ethical capital in social enterprises. The conclusions of this paper outline further research questions that need to be addressed in order to fully develop this concept. Implications: The current ideology of the neo-classical economic paradigm it is argued in the paper pursues interests towards the self and towards the erosion of the moral basis of association. The outcome leaves society with a problem of low ethical virtue - the implications of this paper are that social enterprises maximise ethical virtue beyond any other form of organisation and as such hold great value beyond their missions and values.

Value: This paper offers great value in the understanding of social enterprise through fresh insight into the conceptualisation. A critical perspective to the current literature is taken and discussed but though the introduction of ethical capital this paper takes our understanding of the value of the sector into another light, providing practitioners, business support agencies and academics alike with a different level of conceptualisation that has not been explored before.