Wednesday, January 4, 2012

are co-ops the most sustainable form of social enterprise?

Ok, so by the title alone, I’ve already probably upset some people by inferring that co-ops are a form of social enterprise. And I’m not sorry about that – I’ve spoken at national conferences over the years on the relationship between the two, and there are plenty of articles published by academics on the question. For now, let’s just take it that co-ops are a type of social enterprise.

Anyway – back to the purpose of this post: sustainability in the financial sense. Social Enterprises are regularly touted as being the saviours of the economy, society, little kittens stuck up trees, etc and it’s implied from research figures released by Social Enterprise UK that as they’re outperforming private firms, they’re more successful, and by extension more sustainable.

But I was wondering recently about how ‘true’ this might be from the perspective of management cultures: privately owned businesses are about generating profit and so usually focussed on the short-term gains (at a cost of long-term benefit), but social enterprises have this ‘asset lock’ thingy - a mechanism in their legal forms that means in the event of being wound up, the assets its accumulated are given to the local community to ‘carry on the good work’. And that’s all good and proper – after all, the enterprise will have grown and prospered in part at least because of its commitment to doing the right thing by a specific community so those assets were generated in their name.

Now, co-ops kind of pioneered this asset lock thing back in the 19th century under the phrase “common ownership” as a tool to ensure that the members of a co-op could consider that they were only temporary custodians of the venture, that they were managing it on behalf of a future membership so needed to consider the (very) long-term benefits and interest of the business. Their focus is on the generations not yet with us, whereas social enterprises’ is on the here and now. With regard to the impact this has on management’s long-term thinking and considerations, are co-ops therefore playing the longest possible game and so most likely to be the more sustainable form of enterprise?

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