Recent years have seen an explosion of interest in the UK around social ventures, social innovation and new ways of responding to pressing societal challenges. Often at the heart of the debate is an ethical business and / or a social entrepreneur driven by a mission to address existing or emerging problems. This trend is demonstrated in the growing amount of public and private social investment, academic literature, reports, EU[1] and national[2] legislation and representative bodies. Indeed even our Prime Minister has recently been getting in on the act, stating on Twitter[3]: “Social enterprises contribute £55 billion to our economy and employ 2 million people”.
However, the truth is that new and growing social needs across the world and those of which affect our city region cannot be met by government and private sector intervention alone. Since the publication of the Manchester Independent Economic Review (MIER) it has been known that even in times where public sector spending was much higher, all areas of the conurbation did not enjoy the benefits of growth equally. Even with the ambitious developments and on-going transformation of Greater Manchester’s physical infrastructure, the danger remains that economic success and its associated benefits will fail to reach those who need it most. At the same time the traditional response to budgetary pressures – increasing local authority income through efficiency savings and budget cuts – are proving increasingly more challenging to implement.
Given the challenges of the pushed public sector and the fact that private business cannot always reach areas where there is market failure, who is best placed to come up with the answers? Social enterprise has increasingly been seen as having much potential to provide responses to pressing societal needs, by generating innovative responses to economic challenges which ease the negative effects of budgetary cuts in both an efficient and equitable manner.
The social economy –or the economy for common good[4] comes with high expectations to fill up this vacuum. Yet the support of a more social economy seems to make both political and economic sense.
So what is the state of the social economy in Greater Manchester? For a conurbation that spawned the Cooperative movement?
From a sample of 153 self-identifying social enterprises, gathered in the first quarter of 2014, we found their median income (where available) is just over £175,000, median net profit is less than £250 and median net asset value falls just short of £8,500. Granted, we do have some large and award winning social enterprises, but they are an exception rather than the rule.
So here are some questions for the strategic thinkers and dedicated social entrepreneurs alike. Is this sample of data indicative of the Greater Manchester system or of the constraints within social enterprises themselves[5]? Could this be a sign of an insufficient understanding of what constitutes sustainable social value creation[6] and the implications it will have for the Greater Manchester economy? How can we take the opportunity presented through EU funding or harness the flexibility offered by DevoManc to make social enterprise -and ethical place-based businesses for that matter – a larger part of our economic mix?
Comparative research from other areas[7] that have a more vibrant social economy has found that the level of development that social enterprises achieve is directly correlated to the nature of the supportive environment and government commitment through policy and funding. Although the Greater Manchester Strategy itself could arguably go further in expressing a specific role for social enterprise, the adoption of the Greater Manchester social value policy[8] is a huge opportunity for a step-chance in the region’s local authority areas. Locally, there are also many dedicated platforms, forums and financial players to fill some of the gap. But what is the missing ingredient?
Social exclusion, poverty, climate change, and unemployment are complex problems that cannot be solved in isolation. Without being able to connect the larger dots, for social enterprises and support agencies operating and often ‘fire-fighting’ at a neighbourhood level, social innovation becomes more of a romantic endeavour.
To achieve long-lasting change, social innovation by definition[9] requires a multi-disciplinary and collaborative solution. With this in mind, this year we will see the launch of two Greater Manchester EU funding calls as part of the Social Innovation Driver (SID) aiming to support social enterprises through a multi-stakeholder partnership approach. Successful proposals will need to be able to demonstrate direct leverage of the partners’ respective budgets, as well as external public and private sector support, to start driving real business opportunities at scale.
SID Business Support will be funded through the European Regional Development Fund and will concentrate on building business resilience and capacity, enabling enterprises to develop innovative solutions to the Greater Manchester Strategy. The European Social Fund intervention (SID Skills Fostering) will focus on a programme of high quality learning to build social enterprise capacity to create more economic and social inclusion for Greater Manchester residents.
Angeliki Stogia – Social Enterprise Lead
For further information about the SID projects, please contact Paul Evans Paul.Evans@neweconomymanchester.com
[1] http://ec.europa.eu/growth/smes/promoting-entrepreneurship/we-work-for/social-economy/index_en.htm
[2] Community rights https://www.gov.uk/government/policies/giving-people-more-power-over-what-happens-in-their-neighbourhood/supporting-pages/community-right-to-build
Mutualisation https://www.gov.uk/government/policies/transforming-government-services-to-make-them-more-efficient-and-effective-for-users
Social investment https://www.gov.uk/government/policies/growing-the-social-investment-market
[3] David Cameron on twitter – 11 Feb 2014 https://twitter.com/Number10gov/status/565590059714641920
[4] http://www.yorksj.ac.uk/erasmus-mundus/social-economy/what-is-the-social-economy.aspx
[5] Sinkovics, Noemi, Rudolf R. Sinkovics, and Mo Yamin (2014), “The Role of Social Value Creation in Business Model Formulation at the Bottom of the Pyramid – Implications for Mnes?,” International business review, 23 (4), 692-707. http://dx.doi.org/10.1016/j.ibusrev.2013.12.004
[6] Sinkovics, Noemi, Rudolf R. Sinkovics, Samia Hoque, and Laszlo Czaban (2015), “The Reconceptualisation of Social Value Creation as Social Constraint Alleviation,” Critical Perspectives on International Business, (forthcoming).
[7] http://siresearch.eu/social-enterprise/project/seforis
http://www.socialenterprisecanada.ca/
[8] https://democratic.trafford.gov.uk/documents/s6844/Item%206b%20GMCA%20Social%20Value%20Policy%20Framework.pdf
[9] http://ec.europa.eu/growth/industry/innovation/policy/social/index_en.htm
The New Economy Blog 
any research that takes a sample of social enterprises will doubtless invite criticism where its findings are at odds with the narrative of others, so it’s encouraging to see this blog being not only so open about not only its findings but also the approach it took;
I recently completed a comparable snapshot survey of social enterprises in another region through the sectors’ regional infrastructure body there, and one of the surprise findings from it was that most respondents didn’t identify themselves as being regional in scope – when held against the findings of this survey it makes me wonder if we also need to more clearly define ‘social enterprise’ in terms that include their reach in trading (local community, local borough, etc)?
In turn , might that also help us to better understand the relative pressures and scope of interventions that may be most appropriate, as well as better identifying where the clusters of innovation are likely to be coming from in the wider sector?