Answer to Question #91184 in Microeconomics for Manu Karan

Question #91184
Social enterprise can be classified into three distinct categories. Describe each category, and discuss the efforts of entrepreneurs to become more socially responsible.
Expert's answer

Social enterprises are businesses or organisations that embrace both business and social goals and this differentiate them from other firms. The main purpose of social enterprises is to encourage, promote and advocate for social change in a financial sustainable way. From this perspective, social enterprises earn their revenue from service provision and sale of goods hence do not depend on philanthropist to sustain their operations. From these descriptions, the three categories of social enterprises include; trading enterprises, community organisations and financial institutions.

Trading enterprises are organisations formed by individuals or members who have a common goal or objective. For example, co-operatives, which are institutions that fall under this category hence an indication that trading enterprises can be employee owned or membership owned. Irrespective of how the members are acquired, trading enterprises formed must ensure that their operations are based on a collective social goal. Community organisations are social enterprises that are registered to trade commercially with their main focus being to reinvest the profits acquired into the community. Membership can be anyone who shares the social goal of the enterprise. Financial institutions that fall under the social enterprises are Savings and Loan organisations that help their members contribute to a common social good such as ownership of property or assets or even offering loans to members to help building their businesses or boast their source of income.

Entrepreneurs in 21st Century have realised the importance of society hence the decision to realign their strategies effectively.  Entrepreneurs have implemented strategies that focus on meeting the needs of the society through their corporate social responsibility (CSR) policy. It is through CSR that entrepreneurs have become more involved in meeting the needs of the vulnerable in the society since this provides them with the chance to gain a good reputation among its target customers. Investing more through CSR is an effort that entrepreneurs have embraced as a social goal.  

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