A New Blueprint for Regulating Social Enterprises

Cambridge Handbook of Social Enterprise Law, (Benjamin Means & Joseph Yockey eds., Cambridge University Press, 2018

38 Pages Posted: 21 Nov 2017 Last revised: 7 Aug 2018

Sarah Dadush

Rutgers, The State University of New Jersey - Rutgers Law School

Date Written: August 15, 2017

Abstract

Social enterprises solve social and environmental problems in rich and poor countries alike. Some advance a social mission and work to expand access to critical goods and services for the poor and under-served, such as healthcare (e.g., affordable ambulance services and cataract surgeries), housing, financial services, and quality employment. Others commit to an environmental mission and develop green products such as eco-friendly household cleaning products and textiles, solar powered cooking stoves, and sustainably sourced food products and minerals.

Social enterprises receive funding from impact investors who expect their investments to generate double or triple bottom line returns: Financial, social, and environmental. Like the social enterprises it finances, impact investing — also referred to as social finance — is hybrid in that it is driven by both commercial and non-commercial imperatives: To generate financial returns alongside a positive social or environmental impact. Impact investors — individuals or institutions like funds, investment banks, foundations, etc. — supply “patient” capital to finance the provision of goods, services, and technological innovation that make the world a better, safer place.

This chapter is concerned with identifying norms, rules, and mechanisms for protecting the promise of social enterprises — and, by extension, social finance. The aim is to maximize the potential for social enterprise to have positive impact while minimizing the risk of “hybridity diversions,” which are produced when commercial and non-commercial imperatives come into tension. The argument is that, to protect the transformative promise of social enterprises, hybridity must be regulated, both formally and informally, through a mix of hard and soft norms. To do this effectively, we cannot simply blueprint the regulatory frameworks designed for conventional corporations and conventional finance — frameworks designed to protect financial expectations, not those of stakeholders, and not impact. Instead, a new blueprint must be developed.

Keywords: social enterprises, blueprint

Suggested Citation

Dadush, Sarah, A New Blueprint for Regulating Social Enterprises (August 15, 2017). Cambridge Handbook of Social Enterprise Law, (Benjamin Means & Joseph Yockey eds., Cambridge University Press, 2018. Available at SSRN: https://ssrn.com/abstract=3073095

Sarah Dadush (Contact Author)

Rutgers, The State University of New Jersey - Rutgers Law School ( email )

NJ
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
22
Abstract Views
126
PlumX