27 November 2014

An Executive Summary from the Director on

ACSEP's Research Agenda on Social Enterprise and Social Entrepreneurship in Singapore, 2013 -2015

ACSEP has a multi-year research agenda on social enterprise and social entrepreneurship. With a mission to advance understanding and thought leadership, ACSEP engages stakeholder continuously in its research projects, with one research project building on the findings and outcomes of the previous one. We aspire to share ACSEP's learning journey with stakeholders to corroborate Singapore's learning journey in the social space. Each building block in this learning journey is documented in ACSEP Working Paper Series on Social Entrepreneurship in Asia and disseminated through ACSEP Public Seminar Series on Social Entrepreneurship.

As there is little research done to date, we started with an exploratory study in Working Paper No. 1: Landscape of Social Enterprises in Singapore. Here, we find that the concept of social enterprise in Singapore possibly predates 1925 even though "social enterprise" as a label is a recent phenomenon. At the Public Seminar on 3 June 2014, we compared the social enterprise models in Europe, U.S., U.K. and Singapore, given their associated socio-economic, political and regulatory frameworks. The important takeaways from this preliminary comparative analysis are:

  1. The definitions and models of social enterprise vary across Europe, U.S., U.K. and Singapore and there is no consensus.
  2. These definitions and models of social enterprise are determined internally within the country or region given its socio-economic, political and regulatory framework and unmet social needs.
  3. Within a country like Singapore, the definitions and models of social enterprise also change over time and are driven by the changing unmet social needs of the day.
  4. Therefore, each country has to determine for itself what characteristics would discriminate what is and what is not a social enterprise. This is so that various actors can locate themselves along the continuum of performance goals that facilitates investment flows, and policy makers and government agencies can provide targeted support to various parts of the social eco-system along that spectrum.
  5. Social enterprises can be parsimoniously modelled as two types. A type 1 social enterprise suffers a trade-off in financial returns as it grows its social impact. A type 2 social enterprise engenders more financial returns as it grows its social impact.
  6. This typology has implications for
  • a social investing equilibrium where venture philanthropists and impact investors, who have differing risk tolerances and return preferences, are likely to find their investee firms in Type 1 and Type 2 social enterprises respectively;
  • identifying the common and unique training needs of the social entrepreneur and the team in type 1 and type 2 social enterprises;
  • capacity-building policies in facilitating investor-investee investment flows and segmenting curricula development and training to prepare social enterprises to be investment ready for venture philanthropists or impact investors.

On the same day, we launched the Social Enterprise Conversation to give voice to online stakeholders. This conversation was brought to a more intense level in a Community Consultative Circle (CCC) on 16 July 2014. The CCC comprised 24 key stakeholders representing social entrepreneurs, grant-makers, intermediaries, investors, corporates, policy makers and journalists in Singapore. The CCC, working through a series of convergent learning loops, engaged in a two-part discourse. Firstly, it gave sense together on what discriminates a social enterprise from a charity or, a social enterprise from a for-profit with a corporate social responsibility (CSR) programme. Secondly, it made sense on what will be the top unmet social needs in Singapore in thirty years' time, and what form the associated solutions may possibly take. Working Paper No. 3: Finding a Common Language for Social Enterprises in Singapore documents the CCC's findings. We note the key takeaways from this grounded research on sense-making and sense-giving on social enterprises:

  1. To better understand what is or what is not a social enterprise, we need to move away from being locked in to a definition, label, legal registration or business form (whose static nature cannot address the dynamism of changing unmet social needs or organisational ecology) to identify its intrinsic meaning and characteristics.
  2. These intrinsic characteristics of a social enterprise give a common language to the community. This common language becomes the essential foundation upon which venture philanthropic and impact investing spaces are built and it gives legitimacy to the sector.
  3. To the Singaporean stakeholders, the top five discriminating characteristics of a social enterprise are:
    • A contextually relevant social mission at (re)birth with a business model;
    • Based on business processes and thinking;
    • Continuous balancing of dynamic tensions across business and social objectives;
    • A social mission which flows through the products, services and operations, and where all social impact achieved is consistent with the mission;
    • An intention and roadmap to sustainable financial performance (may have multiple revenue streams). 
  4. The stability of social enterprise as the sustainable solution to unmet social needs evolves over time. In making sense of the future unmet social needs of Singapore and their associated solutions, there is hardly any mention of social enterprise per se as the expected solution. Instead, the systemic nature of these future unmet social needs in most instances calls for private-public-people partnership with the government acting merely as a facilitator in the collaborative process.

Next Steps

In 2015, ACSEP will focus on two research threads:

  1. To build on the current year research outcomes on the question of what is a social enterprise to develop a rich database on social analytics. The five intrinsic characteristics of a social enterprise from the above grounded research will need to be validated statistically before these can be used to discriminate a social enterprise from a charity, and similarly, a for-profit with a strong CSR programme from a social enterprise. Of significance to the venture philanthropic and impact investing community, ACSEP plan to evaluate predictors for social enterprise performance, both at the entrepreneur and firm levels. Such analytics would facilitate the deal sourcing, deal filtering, performance measurement and evaluation processes in social investing and would aptly re-allocate scarce resources to where the greatest social and environmental impact may be generated.
  2. To initiate a follow-on conversation on the question of how to manage the legitimacy of a social enterprise in Singapore: Should Singapore opt for registration, certification, validation, or regulation? On 22 May 2015, ACSEP will be hosting an International Symposium on Social Enterprises when international scholars will discuss and evaluate, among other issues, the various systems being adopted in the U.S., U.K., Europe, China and other parts of Asia.

Finally, slow is fast.

On behalf of ACSEP, I wish you, one and all, a most blessed Christmas and a happy New Year 2015!

LAM Swee Sum

Director, ACSEP

Associate Professor of Finance

NUS Business School