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Social Enterprise and Future Prosperity and Growth in India

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In a recent interview with Chennai Online, I highlighted some of the similarities and differences between social enterprise activities in India and Australia. This comment and some of my other recent work with colleagues in India has focused on the nature of technology innovation and sustainable development.

“social enterprise is increasingly being promoted as the solution to government and market failure to provide for the socially excluded.”

In the current search for mechanisms to promote prosperity and growth in India, social enterprise is increasingly being promoted as the solution to government and market failure to provide for the socially excluded. In a relatively recent book – India: An Uncertain Glory, Dreze & Sen (2013) point to the need for more inclusive social policies and practices to combat the persistent divide between a minority rising middle class and a majority of excluded. They focus particularly on government and to some extent market failures and do not mention social enterprise. A good example of an effective social enterprise with a focus on real needs, and innovative financial support for energy supply to rural poor is SELCO – a firm that has focused on lighting, solar energy and latterly other energy supply modalities. Another popular avenue for social enterprise with a livelihood focus has been artisan based producer groups connected to lucrative markets, e.g. FabIndia, Industree Crafts/Mother Earth, Rope International and other examples of this model are also widely known. These ‘livelihood’ social enterprises embed cooperative logics, independence, financial training and other elements in an effort to promote local economies.

The term social enterprise as noted, captures a dual focus on social value and market-oriented enterprise activity and covers a continuum of organisational types stretching from NGOs promoting income generating activities, e.g. micro-enterprise, through to socially responsible CSR activities of specific firms. Claims to social impact of this hybrid continuum as a result vary and measuring this impact in a transparent way is increasingly high on the agenda of those involved in the sector. Other factors that play a key role in the nature and success of such organisations is the formal and informal institutional context of policy, cultural norms and legal forms. Given the range of factors and other uncertainties, critics have begun questioning the claims to social value and impact of the relevant organisations.

“there has been a strong tendency to promote social business models of social enterprise where affordable product and service innovations are developed and then ‘scaled up’ across the country.”

In India specifically there has been a strong tendency to promote social business models of social enterprise where affordable product and service innovations are developed and then ‘scaled up’ across the country. Building on the general enthusiasm for enterprise and business discourses in India, this model is often promoted as the only financially viable and sustainable model for social enterprise. In a recent Landscape Report on Social Enterprise in India by the Asian Development Bank this is the assumed mainstream interpretation of social enterprise while so-called livelihood oriented organisations, actively encouraging employment and skill development among communities, is a minority phenomenon.

Thus many questions remain. The principle of cooperative ownership and surplus distribution and governance is excluded from this mainstream discourse of social enterprise. As a recent Guardian article notes other myths regarding the inefficiencies of cooperatives versus business-as-usual models are unjustified and misleading. Another key aspect is transparency with regard to surplus distribution – who benefits from social enterprise? A third key question concerns the explicit or implicit model of development being promoted. Is social enterprise a mechanism for mainstream growth and development or a potential real alternative to current business models in a context where social innovation is required. Many questions remain and the answers will require more detailed understanding of the policy, institutional and sociocultural context of the many Indias that exist in the continent.

 

Written by Dr Gavin Melles, Swinburne University of Technology