The Impact of Social Enterprises on Local Economies

Abstract

This essay discusses how social enterprises influence local economies, a topic of burgeoning academic and policy interest. It examines the key ways in which social enterprises have been said to have an impact on local economies and discusses some reasons why this impact might vary between institutions. Whereas most existing analyses have focused on data derived from interviews, surveys or case studies, this essay uses an original dataset of legal forms registering successful social enterprises in the aftermath of free-licensing of the UK. Drawing on previous literature, it suggests that for-profit social enterprises can exploit profits and provide similar services to non-profit enterprises costlessly.There is a strong argument that local economic regeneration might not be significantly supported by social enterprises. Subsumed under the wider rubric of social entrepreneurship, the concept of a ‘social enterprise’ has been the subject of growing interest among academics, policymakers, and practitioners over the past two decades.Social enterprise is ‘broadly understood to be businesslike organizations serving a social purpose, often embedded within local communities’. The field has a particular resonance with policy-makers searching for ways to encourage innovation, economic development, and community well-being. Various attempts have been made by policy-makers to harness these nascent forces, through increasing access to finance, professionalization, promotion, or by utilizing these businesses to deliver public services, usually under some form of contact arrangement since the 1980s.Given the mixed fortunes of local economies, these institutions have also been highlighted as a key aspect of place-based regeneration policies aiming to revitalize lagging regions.

Keywords social enterprises, local economies, economic regeneration, social entrepreneurship, community well-being, innovation, place-based policies, financial access