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Does ownership matter in social business?

I'm a social entrepreneur based in Leeds in the UK. I work with other social entrepreneurs on things like market research, marketing and so... Read More Here...

I find myself becoming increasingly impatient for change.  I'm 35 now and have been actively involved in this social business game for 10 years or so. In those 10 years, in broad terms, the world's become a worse place to live.  So if we're going to make the world a better place, social entrepreneurs had better get a move on.

I sometimes wonder whether ownership structures get in the way of creating social change. Social ownership is generally seen as one of the three pillars of a true social enterprise - alongside a clear social mission and an enterprising approach.  But is ownership as important as some people make it out to be?

The Rochdale Pioneers suddenly spring to mind.  Ownership mattered then because people were being sold adulterated flour by unscrupulous private merchants.  So by taking control of flour production and distribution, the early co-operators could ensure that business was done for the benefit of the many, not the few. 

Divine Chocolate comes to mind next.  Ownership clearly matters there.  Through social ownership, Ghanaian farmers are given a stake in the part of the cocoa business where real money is made - selling chocolate bars. 

But does ownership matter everywhere?  Surely it's the social change that you create that matters most.  I'm not convinced that, for the bulk of social businesses, ownership makes any real difference at all.

I see many social enterprises going through the motions when it comes to social ownership.  They'll proudly proclaim their social enterprise status, as if being a Company Limited by Guarantee, or a CIC, automatically means that everything they touch turns to social gold.  It doesn't.  A structure is no more than a legal vehicle.  If you drive that vehicle in a certain way, it may help you to get where you want to be - a better world - more quickly.  But there's no guarantee that it will. 


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article image Rob Greenland Says

Just to add - there's plenty more discussion on this topic over on my blog:

http://thesocialbusiness.typepad.com/the_social_business/2008/09/does-ownership.html#comments

Thanks

Rob

Debate Comment
article image Rob Greenland Says

Thanks for your comments. Pete - I don't think we'd disagree - I think that ownership structures can make a difference - I'd just argue that often they don't. I love to see businesses where ownership gives people power and rewards them for risk/work. I just don't see enough of them - but I see plenty that go through the motions telling me how wonderful they are because they're a company limited by guarantee or whatever.

Rory - I'd be interested to hear more about the Spanish and French and Italians - do you have any more info?

Thanks
Rob
Debate Comment
article image Rory Ridley-Duff Says

Rob,

I think that ownership matters - it is the principle way to reconcile the competiting demands on members (compensating them for their time, emotional commitment and financial needs) and organisation resources (in terms of the way it distributes the benefits that it creates).

Some structures do work better than others. In the UK, there is an obsession with asset-locks that freeze out incentives for individual commitment. We still have a lot to learn from the Italians, French and Spanish in this regard.

All the best
Rory Ridley-Duff
Senior Lecturer
Sheffield Hallam University

www.roryridleyduff.com
Debate Comment
article image Pete Burden Says

I'd go the other way Rob. I think ownership matters immensely.

It depends, I think what you think "ownership" means.

In a traditional business and I guess in a social business too it can mean control. Typically the owners or members have votes and can therefore change the direction of the business.

Ownership can also equate to motivation. The owners are highly motivated to make the business successful - to meet it's goals whatever they are.

I think there's also a third way to look at ownership. It relates to motivation but isn't quite as rational. It's perhaps closer to taking responsibility. For example, if I own a activity or result - I have committed to doing it. The tangible rewards may not be huge or very motivating. I could just renege or my commitment from that point of view. But if I have this sense of ownership I won't - and having people committed is of course hugely valuable to any enterprise.
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