Why Social Enterprises are Asking to Be Multi-Stakeholder and Deliberative: An Explanation Around the Costs of Exclusion

26 Pages Posted: 15 Apr 2015

See all articles by Carlo Borzaga

Carlo Borzaga

University of Trento; European Research Institute on Cooperative & Social Enterprises (EURICSE)

Silvia Sacchetti, Phd

University of Trento; European Research Institute on Cooperative & Social Enterprises (EURICSE)

Date Written: April 14, 2015

Abstract

The study of multi-stakeholdership (and multi-stakeholder social enterprises in particular) is only at the start. Entrepreneurial choices which have emerged spontaneously, as well as the first legal frameworks approved in this direction, lack an adequate theoretical support. The debate itself is underdeveloped, as the existing understanding of organisations and their aims resist an inclusive, public interest view of enterprise. Our contribution aims at enriching the thin theoretical reflections on multi-stakeholdership, in a context where they are already established, i.e. that of social and personal services.

The aim is to provide an economic justification on why the governance structure and decision-making praxis of the firm needs to account for multiple stakeholders. In particular with our analysis we want: a) to consider production and the role of firms in the context of the “public interest” which may or may not coincide with the non-profit objective; b) to ground the explanation of firm governance and processes upon the nature of production and the interconnections between demand and supply side; c) to explain that the costs associated with multi-stakeholder governance and deliberation in decision-making can increase internal efficiency and be “productive” since they lower internal costs and utilise resources that otherwise would go astray.

The key insight of this work is that, differently from major interpretations, property costs should be compared with a more comprehensive range of costs, such as the social costs that emerge when the supply of social and personal services is insufficient or when the identification of aims and means is not shared amongst stakeholders. Our model highlights that when social costs derived from exclusion are high, even an enterprise with costly decisional processes, such as the multi-stakeholder, can be the most efficient solution amongst other possible alternatives.

Keywords: Social Value Chain; Governance; Multistakeholdership; Deliberation; Externalities; Impacts; Social Enterprise; Social Innovation; Social Services

JEL Classification: I14, I31, L21, L23, L31

Suggested Citation

Borzaga, Carlo and Sacchetti, Silvia, Why Social Enterprises are Asking to Be Multi-Stakeholder and Deliberative: An Explanation Around the Costs of Exclusion (April 14, 2015). Euricse Working Papers, 75 | 15. Available at SSRN: https://ssrn.com/abstract=2594181 or http://dx.doi.org/10.2139/ssrn.2594181

Carlo Borzaga

University of Trento ( email )

Via Giuseppe Verdi 26
Trento, Trento 38152
Italy

European Research Institute on Cooperative & Social Enterprises (EURICSE) ( email )

Via S. Giovanni 36
38122 Trento (TN)
Italy

Silvia Sacchetti (Contact Author)

University of Trento ( email )

Via Giuseppe Verdi 26
Trento, Trento 38152
Italy

European Research Institute on Cooperative & Social Enterprises (EURICSE)

Via S. Giovanni 36
38122 Trento (TN)
Italy

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