Social enterprise as a socially rational business

This paper seeks to examine the discourses that influence policy and practice in social enterprises. In institutional circles, arguments are shaped by the desire to protect assets for the community, while entrepreneurial discourses favour a mixture of investment sources, surplus sharing and inclusive systems of governance. A critique is outlined that challenges policy‐makers and academics to move beyond the heated debate on “business‐like” activity through a deeper understanding of the social relations entered into (and created by) different social entrepreneurial activities.

The paper is wholly theoretical. First, contradictions are exposed through a review of practitioner and scholarly literature. Thereafter, empirically grounded studies are used to develop a theoretical model that accommodates and accounts for diverse practices.

A broader perspective, that views human behaviour as a product of, and support system for, our socio‐sexual choices, is deployed to extend understanding of social capital. By integrating this into governance theory, workplaces come to be seen as complex centres of community‐building, replete with economic and social goals. The concept of “social rationality” is elaborated as an alternative way to understand the legitimacy of social entrepreneurial activity and management practice.

The paper concludes by developing a framework and typology that theorises social enterprise as a heterogeneous business movement. Each form of social enterprise integrates socially rational thinking into its policies and practices. This suggests a different educational agenda for social entrepreneurs oriented towards the equitable distribution, and not accumulation, of social and economic capital.