Nowadays, with the continuous rapid economic development, the profit distribution in social enterprises has become more and more prominent. Distributing profit wisely has become an important starting point for a social enterprise’s management and operation. The executors of social enterprises hope to get a more perfect method to distribute profit so that they can make more reasonable operation plans. Practically, a reasonable distribution of profits is the guarantee for the sustainable development of social enterprises. Because of the career of my mom(i.e. she is a business executor), I find it very interesting to learn some financial distribution patterns in enterprise. That is my motivation for doing this research. 1.0 Introduction Profits and surplus are the two core driving forces for the development of social enterprises. People always discuss these two different concepts. As the enterprises continue to grow, social enterprises start to pay more attention to the distribution of profits.
When Charles Leadbeater (1997) proposed the concept of “social entrepreneur” in 1997, social enterprise was only in its infancy. 14 years have passed since people began to pay attention to social enterprises. Today, social enterprises are widely organized. Social enterprises are businesses with social objectives, and the profits they make usually are used for their social objectives. Social enterprises have to self-finance, and the money they raise is used to pay for employee wages and carry on operational activities. Thus, the profit distribution is very important to the development of a social enterprise. Laville and Nyssens’s view is that the distribution of the profits should be fitted to the social enterprise or local community. (Laville& Marthe, 2001,p.312-332) They believe that the profits must be managed independently and cannot be owned by the government or individuals. The distribution of profits must be reasonable either for the development of social enterprises itself or in the return given to community. For social enterprises, as one form of various enterprises, the pursuit of profit is not contrary to its social purpose. For social enterprises, surplus is always used for reinvestment to expand local community commerce or promote the development of local community. As long as social enterprises have sufficient profits, they can better survive and develop fast; which will promote the commercial development of local community. After comparing these two viewpoints, I prefer the latter. According to the analysis based on today’s society, we cannot restrict social enterprises from pursuing profits and limit them to do business of non-profit nature only. The excessive emphasis on non-profit will affect the establishment and development of social enterprises. In general, a social enterprise must solve the problem of profit distribution so that it can be in a healthy and rapid development. We will discuss these issues further in this paper by analyzing with concrete examples. These examples will talk about the government policy, the development of market economy, and the impact of profit distribution in social enterprises on social economy, the impact of social enterprise on environment, how social enterprises assume their social responsibility, how social enterprises can better develop sustainably and so on. 2.0 Objective of the study The purpose of establishing enterprises is to make profits. The main differences between business enterprises and social economic organizations are the purpose of business activities and profit distribution. Unlike traditional non-profit organizations, social enterprises are directly engaged in production or sales, paying wages and etc. (Kong, 2008) In my opinion, a social enterprise is a special complex combined with business enterprises and non-profit organizations; hence, social enterprises pay attention to the distribution of profits. Marx offered two different ways of thinking about the relationship between surplus value and profit: 1. Profit is realized surplus value. (Marx, 1976,p. 232-54) 2. Profit is the mask behind which the bourgeoisie conceals the exploitation involved in the extraction of surplus value. (Marx, 1976,p. 232-56) In summary, according to Marx’s definition, we can conclude: all profits are derived from surplus value, but not all surplus value are profits.
Therefore, social enterprises pay more attention to profit, and consequently the profit distribution is more important in social enterprises. My objective of studying profit distribution in social enterprises is to demonstrate that social enterprises can take their social responsibilities better while continuing the pursuit of profit. For instance, as the pattern of profit distribution in one social enterprise has shown, the proportion of profit that is used for internal operation is greater than the proportion that is used for external donation or return to the community/society. Only by having this proportion ratio can a social enterprise ensures that it has sufficient funds to expand production and carry on daily operation. While the social enterprise keeps expanding, its profit will increase; therefore, the funds that are used for community investment will increase as well according to the proportion ratio. 3.0 literature review
In order to analyze my research accurately, I have searched many related articles and read them. They have helped me understand the specialized vocabularies and terms more accurately and also have provided theory basis for my research.
The first article that I read first was “The Rise of the Social Entrepreneur”, written by Leadbeater. This article firstly proposed the concept of social enterprises in 1997. It clearly explained the reasons for the establishment of social enterprises and purposes for establishment. It first defined social enterprises. After reading it, I started to have original understanding of social enterprises: the initial purpose of establishing social enterprises was to better contribute to the community; and the first social enterprises were non-profit organizations.
After I had basic understanding of social enterprises, I continued and read “Efficiency in Fundraising and Distributions to Cause-related Social Profit Enterprises” (Philip &Patrick L, 2011). This article vividly described the profit sources of social enterprises and orgazation’s specific operational flow. Then I had a preliminary understanding of the profit distribution in social enterprises.
Next, I read “The Social Enterprise towards a Theoretical Socio-Economic Approach” (2001), written by Laville and Nyssens. In the article, the authors discussed the social enterprises’ objectives and profit. The authors pointed out that social enterprises need to be managed independently, and the internal and external profit should have a reasonable ratio between them in order to achieve sustainable development.
In Heckl’s article, “Practices and Policies in the Social Enterprise Sector” (2006), the author argued that the majority of profit in social enterprises should be returned to the community/society. The article briefly analyzed the proportion ratio of internal and external profit distribution. In addition, in a second article, “The Diverse World of Social Enterprise” (John&Bob, 2006, p361-375), the author discussed some core problems in social enterprises. The article pointed out the difference between current social enterprises and original ones; current social enterprises have started to seek profit in order to promote the organization’s development.
Next, in Harding Rebecca’s article, “Social Enterprise: The New Economic Engine?”(Business Strategy Review, 2004), the author discussed the needs of social enterprises for social values and economic creation and the functions that social enterprises play in these two sectors. The article also pointed out that social enterprises having mixed profit sources often create more employment opportunities and develop faster than those having only single profit source.
Thereafter, in the article “A Framework for the Governance of Social Enterprise” (International Journal of Social Economics, 2006), the author Low Chris described two different modes of governance within social enterprises. He discussed the two different management models within for-profit enterprises and non-profit enterprises separately. I referred to this article to study the internal profit distribution ratio in social enterprises.
The article, “Should I stay or should I go now? Investigating the Intention to quit of the Permanent Staff in Social Enterprises” (European Management Journal, 2010), was written by Marc and Maryline. It argued that the mobility of social enterprises employees was great due to the fact that they had low turnover. This article helps me to analyze the internal profit distribution in social enterprises.
Finally, in ManMohan S and Christopher S’s article, “Social Enterprises as Supply-chain Enables for the Poor”(Soci0-Economic Planning Science, 2011), the authors demonstrated how social enterprises can improve the living standard of the poor. Part of the external profit distribution of social enterprises is assigned to the poor or ordinary people as financial credits, which eventually helps improve the poor’s quality of life. 4.0 conceptual frameworks
In the study of profit allocation in social enterprises, we need to understand the relationship and interaction between the pattern of profit distribution and individuals, enterprises, community and society. While analyzing the profit distribution of enterprises, we must analyze both its internal and external profit distribution. All these analysis aims to maintain the sustainable development of social enterprises, to bring more benefits to the community, and to guide social enterprises to better bear the social responsibilities. Here is a simple concept sketch: ￼ 5.0 Research Question There are two types of social enterprises in community commerce: for-profit social enterprises and non-profit social enterprises, respectively. For-profit social enterprises actively create social value and accumulate a large number of personal wealth at the same time. They strive to make profits. Though they do not directly contribute to the community, they do play a good role in promoting the development of community economy. At the other hand, non-profit social enterprises participate in business activities mostly for social welfare that directly benefits the local community. The profits made by non-profit social enterprises will be returned to the community and local government and be used to support the local economic development. Therefore, a reasonable distribution of profits can lead to better development of social enterprises and promote the development of community commerce. “People in business today agree with that social and environmental sustainability will be the defining business drivers for multinational corporations in the first part of the 21st century.”(Laszlo, 2008,p.11-20) Now corporate social responsibility (CSR) in social enterprises has a new definition; it is no long only engaged in the traditional philanthropy.
Social enterprises’ principal social responsibility is to create profit and promote economic growth. The healthiest developing model for a social enterprise is to fulfill its social goals and responsibilities while it is pursuing profits. The profit allocation in social enterprises should be used mainly for excess production, promoting community commerce and improving the local economic environment.
Therefore, the MRE study is designed to illustrate the following objectives: 1. the rationality of social enterprises pursuing profit; 2. the direction of profit distribution in social enterprises; 3. the relationship between profit distribution and social responsibilities of social enterprises; 4. how to balance the internal and external profit distribution in social enterprises; 5. the reasonable ratio of profit distribution.
6.0 research approach and methodology
I will apply both quantitative and qualitative approaches to analyze my research. This hybrid approach is more conducive to information collection; which is advantageous to the completion of my research.
By using the quantitative method, I can refer directly to specific existing network data and start analyzing; hence, I can learn the pattern of profit distribution in widely ranged social enterprises. However, the data collected by this method is only sample data, which cannot be used for detailed analysis of profit distribution. Therefore, I also need to adapt qualitative approach to analyze the detailed information and specific data. The quantitative approach is very different than the qualitative approach. By using the qualitative method, I can interpret my research analysis more straightly. I can create interviews by practicing this method and hence I can collect data from the employees of social enterprises, which helps me to learn the internal profit distribution of the social enterprises. Since my MRE research needs me to provide many specific examples to demonstrate, the qualitative and quantitative approaches surely contribute to collect and analyze these specific examples. 6.1 Research Design： I will complete my MRE research by taking six steps in sequence: 1. Identify and define my MRE topic. 2. Select the articles and determine data collection 3. Apply both the qualitative and quantitative methods to collect data. 4. Interview with social enterprises and collect data carefully on-site 5. Assess and analyze data 6. Prepare a data report 6.2 Research participants
I prepare to use questionnaire to survey 100 employees working in social enterprises. The major participants are going to be general staff and managers. I will classify those under two categories and also classify their views respectively. Then I will summarize and analyze their opinions separately; then I will create a concrete column chart to analyze 6.3 research tools
First, I will choose 5 social enterprises as representatives to complete the survey. For enterprises which are close, I will personally go and assign 70 questionnaires. Then I will pick up the people of whom I want to have a further investigation and have a face-to-face discussion with them. During the discussion, I will talk about the direction and proportion ratio of the profit distribution in the social enterprises with the selected employees and managers. By doing so, I can learn their distinct views and focuses. For these enterprises that I cannot go personally, I will send emails to them so as to complete the rest 30questionnaires. Then I single out the people who have interest in my research and continue my investigation with them. 6.4 ethics
I will be responsible for the information that respondents provide and reserve this information only with their permission. Also, I promise that the data will only be used for agreed research. For these managers who are willing to provide detailed internal profit distribution information, I will sign a confidentiality agreement with them. I guarantee that their internal information will not be displayed because I only conduct this research for my MRE study. All I need is to analyze and summarize the proportion ratio of profit distribution in the social enterprises. 6.5 data analysis
I will record the conversation that I have with face-to-face respondents and then make specific analysis on them. The face-to-face conversation will provide me more detailed information that I need. I will organize the face-to-face respondents together with the social enterprise staff who discuss with me effectively via email into a group and divide them into two categories: general staff and managers. There will be 11 questions in the questionnaire, of which three are open questions. After receiving the questionnaires, I will summarize the information collected in forms and column charts.
After analysis, I will combine all the useful and relevant information; which will be later used for supporting evidence of my report. 6.6 Limitations of the Study
1. My research design is too comprehensive and therefore I might lose some cognitive or problems. 2. Not everyone will cooperate with my investigation, and I need to filter out error messages from the information collected. It may take a long time. 3. It takes a long time communicate in order to get accurate internal information of social enterprises. 4. This research design needs monetary support. 7.0 Conclusion Social enterprises are in transition; their influence is widely recognized and expanded. For social enterprises continue to grow and make more contribution to the society, they need to address a series of problems such as the lack of strategic plan, inefficient financial plan, in sufficient capital investment, training issue and so on. The root of these problems is the unreasonable profit distribution. Hence, it is necessary for social enterprises to face their problem with profit distribution. Social enterprises do not have a fixed pattern of profit distribution; they need to make the reasonable profit distribution according to the existing situation of their development. The profit allocation in social enterprises needs to take account of the external and internal profit distribution as well as sustainable development and etc. Such reasonable profit distribution needs to meet the interests of social enterprises and local community.
The ultimate goal of this study is to find a reasonable profit distribution model for social enterprises and to prove that social enterprises bring economic benefits to community while in the pursuit of profit. A reasonable proportion ratio of internal and external profit distribution contributes to social enterprises’ reproduction and expansion of production; which indirectly contribute to accomplish social responsibilities of social enterprises. 8.0 References Leadbeater, C (1997) The Rise of the Social Entrepreneur, Demos 1997, From: Http://www.demos.co.uk/publications//socialentrepreneur Eva Heckl. (2006). Practices and Policies in the Social Enterprise Sector Laville, j. -L., & Marthe, Nyssens (2001). The Social Enterprise towards a Theoretical Socio-Economic Approach. The Emergence of Social Enterprise, Routledge, PP. 312-332. Kong. (2008). International journal of management reviews; Sep2008, Vol. 10 Issue 3, p281-299, 19p Marx’s falling rate of profit: a dialectical view’ from the Canadian Journal of Economics, IX (2), May 1976, pp. 232-54 Marx’s falling rate of profit: a dialectical view’ from the Canadian Journal of Economics, IX (2), May 1976, pp. 232-56 Laszlo, C. (2008). Sustainable Value: How the World’s leading Companies Are Doing Well by Doing Good, Stanford Business Books, p.11-20 Low, Chris, (2006). International Journal of Social Economics; 2006, Vol. 33 Issue 5/6, p376-385, 10p, 1 Chart Ohana, Marc & Meyer, Maryline, (2010). European Management Journal; Dec2010, Vol. 28 Issue 6, p441-454, 14p Sodhi, ManMohan S & Tang, Christopher S, (2011). Socio-Economic Planning Sciences; Dec2011, Vol. 45 Issue 4, p146-153, 8p Doug Lionais. (2002). The Mondragon Cooperative Corporation as Community Business. C Christensen, (2003). The Innovator’s Solution: Creating and Sustaining Successful Growth, Harvard Business SchoolPress.
Sociology 382 Professor: Dawn Currie
Assignment 4: Research Proposal
Research on the Profit Distribution in Social Enterprises Locating in Vancouver Area
TA: Heather Holroyd
Name: Wanlu Hu
Date: December 13th, 2013
Department of Sociology
6303 N.W. Marine Drive
Vancouver, B.C. Canada V6T 1Z1
Letter of CONSENT
Research on Profit Distribution in Social Enterprises Locating in Vancouver Area
Undergraduate Student: WanLu Hu, in the Department of Math Contact: firstname.lastname@example.org, (778) 996-3306
Purpose: The purpose of this research study is to learn about the profit distribution of social enterprises, and how the profit allocation helps or protects the enterprising from growing strong. This study will demonstrate what roles the social enterprises play in the society and will recommend some changes that social enterprises could adopt for sustainable development.
This study is being conducted in Downtown Vancouver Granville Street . I (Wanlu Hu) will be interviewing about 10 individuals who are working in a company and have some understanding about the profit distribution of their companies. Study Procedures: You will be asked to give approximately 20 to 30 minutes of your time to participate in this interview. With your permission, the interview will be audio-recorded so that I can represent what you have told me as accuriately as possible. I may also jot down words throughout the interview to remember to ask you about specific points. I am happy to answer any questions you have about the procedures at any time. There are no known risks associated with you in participating in this study and the information you share will help me to make recommendations based on people’s actual experiences with immigration and settlement programs.
Confidentiality: Your identity will be kept strictly confidential and will not be shared with anyone. All interview audio-recordings and documents will be assigned and identified by a code number, and all documents, including the transcript of the interview, will be kept on my password-protected computer. I am the only person who will have access to the identities of study participants. You will not be identified by name in any reports of the completed study and I will change all revealing details in order to protect your identity.
Withdrawal of consent: You may choose to withdraw your consent at any time during the interview, and for up to a month after the interview has been completed. If you decide that you do not want to participate in this study I will delete the audio-recording and any information you have already given.
Payment: You will not receive any money for participating in this interview.
Study results: The findings of this study will be kept within the Department of Sociology and may be published in Sociology 382 course material. If you would like to receive a copy of the findings, please indicate your email address below and I will send you the findings when the research is complete (approximately two weeks later). There is a chance that the information you share in this interview might be included in future research projects.
Contact for information about the study: If you have any questions or would like further information about this study, you may contact me via email at email@example.com or by phone at 778-996-3306.
Contact for concerns about the rights of research subjects: If you have any concerns or questions about your rights as a research subject or your experience while participating in this study, you may contact the Research Subject Information Line in the UBC Office of Research Services at (604) 822-8598 or via email at RSIL@ors.ubc.ca.
Consent: Your participation in this study is entirely voluntary and you may refuse to participate or withdraw from the study at any time without giving a reason and without any impact on your life.
Your signature indicates that you consent to participate in this study. Your signature below also indicates that you have received a copy of this consent form for your own records.