A Review of Effective Management of Social Enterprises: Lessons from Businesses and Civil Society Organizations in Iberoamerica

Seeking Success in Social Enterprise: Smart Practices by Social and Business Organizations in Iberoamérica

by | Oct 15, 2006

​Effective Management of Social Enterprises: Lessons from Businesses and Civil Society Organizations in Iberoamerica
David Rockefeller Center Series on Latin America and Inter-American Development Bank, 2006, 299 pp.

This excellent book is the product of a collaboration of leading universities in Latin America and Spain under the leadership of the Social Enterprise Knowledge Network and with support of the AVINA Foundation. Social enterprise is defined as the explicit intent to create social betterment by mobilizing and skillfully allocating the resources of an organization, independent of whether the efforts come from Civil Society Organizations (CSOs) or from business companies that seek to serve their communities in innovative and effective ways. Members of participating institutions in the network contributed their field-based research to a common database from which they collectively drew analyses and conclusions to answer two important questions: what are the key success factors and smart practices that lead social enterprises with superior social performance to excel?; and what are the differences and similarities between the social enterprise practices of CSOs and businesses?

To answer these questions, the team identified social enterprises regarded as excellent in a first round of inquiry. Then, using a common methodology and protocol, they developed in-depth case studies of the 20 CSOs and the 20 companies identified in Mexico, Central America, Venezuela, Colombia, Peru, Chile, Argentina, Brazil and Spain. These cases served to answer the questions posed. The overall goal was “to identify smart approaches and practices from which both academics and practitioners can learn, as well as to point to important avenues for further research” (p. 5). The book is structured around a “mapping framework” formed by a set of concentric circles that include key factors influencing social enterprise management according to the literature: in the outer-most circle are contextual forces (evidenced in all chapters); at the core of the circles is value creation (chapter 10); then there are three integrative drivers surrounding the core: leadership, strategy, and culture (chapters 2-4); and five implementing mechanisms: structure, human resources, funding, governance, and performance measurement (chapters 5-9). After these factors are addressed in Chapters 2 through 9, Chapters 10 and 11 return to the concern with value creation and attempt to integrate the findings.

All chapters follow a similar format: defining the key managerial factor and its relevance for social enterprise; developing the analytical framework for examining it; identifying smart practices and drawing lessons. The contributions are thus theoretical, empirical and practical. Each chapter’s analytical framework uses state of the art literature to engage the empirical discussions of how the management factor plays out in both types of organizations. For example, chapter 2 applies neo-charismatic leadership theory to social entrepreneurship. It offers an elegant overview of the key variables and contingencies that may affect leadership roles, abilities and styles in the context of the developmental stages of the social entrepreneurship effort.

Contrasting the two types of organizations further enriches the discussion. For example, chapter 3 increases our understanding of strategy for social entrepreneurship by illustrating the different challenges that business and CSOs face. While businesses need to improve on increasing social value, CSOs need to move toward building more economic value). Clearly, businesses and CSOs must look to one another to address their shortcomings. This is complemented with the argument in chapter 10 that the most promising way to generate sustainable social value in both types of organization is by aligning the social and economic value each has the potential to generate.

The “mapping framework” offers a holistic view of social enterprise through the lens of the most relevant management factors posed by organization and management theory. Each chapter makes rich contributions. Some less studied areas advance significantly our practical understanding. For example, the analytical matrixes presented in the Appendix of chapter 7 on financial viability describe the financial mechanisms used by each organization in the sample and offer practical detail that will delight a reader who appreciates concrete examples. In chapter 8 on governance, the authors discuss the practical implications of the finding that both CSOs and businesses feature an overlap between governance members and management teams, with board members engaged in managerial tasks and executives involved in governance processes.

There is also a broader learning around the research questions. In addition to the myriad smart practices described in each chapter, the first question is answered by proposing six “cross-cutting capabilities” that account for high performance in both CSOs and businesses: entrepreneurial innovation, capacity building, organizational adaptability, stakeholder management, alliance creation and strategic alignment. In answering the second question (about similarities and differences between CSOs and businesses) the authors recognize “differences in kind” and “differences in degree”, but highlight a “movement toward convergence” (p. 285) with some CSOs’ practices looking more business-like and some business agendas converging toward CSOs’ practices.

The key areas of convergence are: a trend to align purpose and means (with CSOs deepening economic value creation goals and companies deepening social value creation goals); ways of managing the risks of keeping a strategic focus (in the case of CSOs, mission drift; and for business, incompatibilities with the company’s economic value activities); mobilization of volunteer motivation and management as a new concern for business; a shift from a reactive to the proactive orientation in businesses; increased concern of CSOs with procedural formality; and finally, in both types of organizations, increased concern with accountability to stakeholders; problem diagnosis and planning around the social dimension of the work; and problems of performance measurement. These findings represent a solid platform to continue to develop a research agenda for the future. They also offer helpful ideas for practitioners.

The book also has a few weaknesses worth mentioning. For example, it is true that the eight management areas provide an overarching analytical structure and the common format in the chapters unify the book’s narrative. Yet one would have hoped to see much more cross-referencing of the ideas developed in each chapter throughout the book. While the analytical separation of management clusters by chapters is helpful, an explicit effort to show in each chapter some of the inherent interconnections—at least around the four clusters of the management framework—would offer an additional layer of analytical richness. Chapters 10 and 11 attain successful integration, but until then, the collective voice of the network members is absent from the individual narrative of each chapter. As a result, no coherent overall argument is weaved from beginning to end.

I would have also wanted to see a more consistent treatment of the cases used, both within and across chapters. The forty cases could have been treated in many different ways. The chosen formula was to draw examples from the cases that would help to move forward the ideas in each chapter. The result is a book driven by ideas that are then illustrated by cases, in contrast to a book driven by cases from which ideas and conclusions are drawn. This is a legitimate choice, but it has consequences. On the positive side, the examples drawn are highly applicable to the management topic under discussion. On the negative side, some cases are mentioned a lot while others are neglected. Furthermore, the degree of detail in the examples varies from chapter to chapter, so that the reader should expect disappointing variations in the depth and richness of the case descriptions throughout the book.

Finally, the outermost circle of the “mapping framework” of the book, which the authors call “contextual forces,” could have been more fully developed. While contextual forces were addressed in each chapter, it would have been helpful to find a deeper discussion of the implications of the fact that the lessons of this study come from Iberoamerica, as a cultural community with its own contextual idiosyncrasies. In other words, how do the regional and cultural contexts illuminate the answers to the questions posed? Are there critical differences between the Latin American and the Spanish efforts? What can we learn from these contexts that can be of help to people in other contexts, and why? And finally, what is the applicability of these findings for practitioners and researchers of other areas of the world?

To clarify, my query is about substance, not about methodology. The authors were cautious in indicating the limitations of their sampling strategy, and clarified their goals (to be useful to practitioners and to lay the groundwork for future research, not to offer final generalizations). Rather, my point is that not exploring particular economic, political, social and cultural trends diminishes the potential to better understand the direction of the smart practices, the nature of the managerial challenges, and the convergence of practices in organizations as distinct as CSOs and private companies. In the case of Latin America, for example, it would be quite legitimate to ask how recent trends in the region—such as democratization, state modernization (including the opening of countries to international markets) and decentralization—have played a role in promoting social enterprise or how they have or have not impacted differently CSOs and businesses engaged in social efforts. The absence of this broader discussion contrasts with the book’s rigor, breath and depth in the exploration of the micro-dynamics of the effective management of social enterprises. Granted, this is a management book. But isn’t the trend toward social enterprise itself an important historical development associated with macro and micro trends?

Perhaps I am asking too much from a single book that represents pioneering work in a field in formation, such as social entrepreneurship. The rich empirical detail drawn from the forty cases is itself sufficient to make the book worth reading. This is one of the few empirical studies of social entrepreneurship efforts in Iberoamerica. Furthermore, few studies—in any region—offer such a broad perspective based on systematic and rigorous analysis of multiple cases across multiple countries. Finally, the focus on two different types of social entrepreneurship—efforts in business and in civil society organizations—represents a valuable feature worth praising. The comparative angle helps to sharpen the distinct features of each type, while at the same time offering a view of what is common to social enterprise efforts independent of sector.

These accomplishments contribute to deepen considerably the knowledge base of the social entrepreneurship field. This is a first rate book on a topic of great importance which offers substantive contributions to the literatures on organizational performance, social enterprise and corporate responsibility, as well as to the literature on management in Latin America. I can foresee its promise as a compass for future research, as a tool for higher education management courses and as a source of wisdom for practitioners.

Fall 2006Volume VI, Number 1

Sonia Ospina is Associate Professor of Public Management and Policy and Faculty Director of the Research Center for Leadership in Action at NYU Wagner.

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