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MODELLING SOCIAL ENTERPRISES
Author(s) -
SZYMAŃSKA Aleksandra,
JEGERS Marc
Publication year - 2016
Publication title -
annals of public and cooperative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.526
H-Index - 37
eISSN - 1467-8292
pISSN - 1370-4788
DOI - 10.1111/apce.12127
Subject(s) - social enterprise , profit (economics) , business , profit maximization , maximization , social economy , principal (computer security) , for profit , realization (probability) , order (exchange) , industrial organization , marketing , microeconomics , economics , finance , public relations , market economy , computer science , political science , statistics , mathematics , operating system
The majority of research concentrates exclusively on the objectives of governments, profit entities or non‐profit organizations, while a significant number of organizations are hybrids. One form of these hybrids is the social enterprise. This paper theoretically describes social enterprises taking into consideration their main aims. Based on the ‘earned income’ school of thought, the principal‐agent theory and considering the nature of social enterprises’ activities we propose the objective functions of their owners (principals) and managers (agents). The maximization problem of the social enterprise is defined as the weighted average of the utilities of two groups of stakeholders who have an influence on the degree of the realization of the social mission and business orientations. We point out the direction which social enterprises should follow in order to obtain the highest value of their objective functions. The desired state for social enterprises should be one in which they reinvest all surpluses in the process of their mission realization and their profit is slightly higher than the required level by the principal's contract.