The Organization of Social Enterprises: Transacting Versus Giving
49 Pages Posted: 27 Jul 2018
Date Written: July 21, 2018
Traditional models of organizations focus on the distinction between for-profits and non-profits. This article presents a model where entrepreneurs receive subsidy-donations and have a choice not only between the for-profit and non-profit forms, but also between (1) giving to the beneficiaries, and (2) forming social enterprises that transact with them. Entrepreneurs form social enterprises to measure beneficiaries’ abilities and tailor disbursals to their needs when variance in abilities is high. When variance is very high, social entrepreneurs choose to form for-profits rather than nonprofits. This analysis has implications for the theory of the firm and subsidy policies to promote development.
Keywords: social enterprise, corporate social responsibility, theory of the firm, non-profits, development, subsidies
JEL Classification: L3, K1, H2
Suggested Citation: Suggested Citation