Social enterprise is a new kind of hybrid organization that integrates social and economic logics, which has made a big contribution to solving complicated social problems. Therefore, it is regarded as a power of social governance. However, some scholars indicate that it is difficult for the social enterprise to integrate different institutional logics effectively. The institutional logics coexisting within the same organization will result in difficulties in the commercial operation of social issues and leading to inefficient social governance—“social enterprise failure”. Hence, is the social enterprise a useful approach for social governance, or has it really failed? This article intends to respond to this argument.
Given that the theory of social enterprise failure is taken from Benefit Corporation: A Desirable Organizational Paradigm for CSR Practice, this article firstly interprets the means of social enterprise failure, its inference logic and substitutive approach from that paper; secondly, this article diagnoses whether the social enterprise has failed through combining theories of typology and multiple institutional logics; finally, this article puts forward some suggestions to make a better understanding on the social enterprise and its social governance value.
The conclusion shows that social enterprise failure is a misjudgment. According to the failure theory, the social enterprise is a kind of hybrid organization dominated by social logic, which will lead to poor social governance effectiveness. In order to solve the low efficiency of social governance, the failure theory points out B Corporation as the substitutive approach because of its balanced institutional logic arrangement. There are two categories of misunderstanding in this theory. First, the starting point （what is the social enterprise） of inferencing social enterprise failure is flawed. In fact, the logic arrangement of mixed system of the social enterprise is more diversified than the failure theory. Second, there are some logical flaws in the substitutive approach of social enterprise failure. The failure theory adopts the way of “one part instead of the whole”, that is, a certain type of social enterprise with low degree of hybridity and low social governance effectiveness replaces the social enterprise population to demonstrate that B Corporation is a more desirable subject of social governance, but the similarities between the social enterprise and B Corporation are ignored.
To better reveal the social governance value of social enterprises, this article suggests that: （1） On academic research, we need to take actions to improve social enterprise paradigm establishment, especially pay attention to the social governance processes and consequences of social enterprises. （2） In practice, social problems can be solved by social enterprises through different forms, such as organization, organizational behavior, co-production, and so on.
The contributions are as follows: First, this article provides a lens to make a better understanding of social enterprises from dynamic and multiple perspectives. Second, some research suggestions are put forward to improve the social governance value of social enterprises. Third, the confusion among social enterprise, B Corporation and CSR is clarified to some extent through this article’s framework, and the forms of social enterprises participating in social governance are diversified.