Size—the ally or enemy of Social Enterprise?

In our last Social Edge post we looked at the merger activity in social enterprise and suggested that it was sub-optimal, perhaps because of egos, or because the absence of a profit motive which, in theory, compels Boards and CEOs of “for-profit” companies, and is absent with SEs.  Implicit in this, is the presumption that bigger is better.

Many of the conferences I attend host a myriad of sessions on “getting to scale”, a particularly American phrase, but such thinking permeates Europe as well.  With size, organisations can achieve economies of scale.  Also, for SEs with models that operate effectively in alleviating hunger, teaching poor children, reducing CO2 emissions reductions, etc. there must surely be a strong moral case to expand rapidly.

From a funder’s perspective scale seems all-important.  Nearly all I know seek to engage in activities which are “high-potential”.  I have never been approached by an investor looking for something small which seeks just to continue serving a narrowly defined community well.  Foundations and social investors seek result they can measure—and results seem to mean growth.  The need for capital and the orientation of most investors creates a bias towards big, or at least bigger.  How should the non-scale oriented gain funding?

But some contend that as SEs grow their missions are diluted.  The purity of what drove the original team is sacrificed in the pursuit of growth.  How easy is it to stay social or ethical as the line between the CEO and the line staff becomes more attenuated?

Vertically “tall” organisations can suffer a “corruption” of sorts in their missions.  The CEO is focused on one set of objectives, whereas line staff is concentrated on another.  This can be especially true when the business becomes very large and the CEO becomes an important figure—I have seen several then lose sight of their original mission.  And how many really large social enterprises are there anyway?  Mondragon in Spain, John Lewis, The Coop and Welsh Water in the UK (and many of these would not fit many commentator’s definitions of social enterprise)—but the list gets very short, very fast.  Perhaps as SEs get big they become more valuable and greed or delusions of grandeur kick in.

  • Maybe it would be better if they just sold out, cashed in their chips and reinvested some of the proceeds in new social enterprises? Gordon and the late Anita Roddick did this to wonderful effect with the Body Shop.
  • Perhaps there is just a “life cycle” to SEs and we need to just accept that?
  • Will this fascination with size ever cease?

First published in The Social Edge in October 2010