A Cautionary Note on Stakeholder Theory and Social Enterprise

Abstract

Much ink has been spilt over the last decade in discussion of the theories and practices of social enterprise — see especially Peattie and Morley2 for a comprehensive review of the field, including of other reviews.

This brief paper is about a specific aspect of these theories and practices: the effort to establish social enterprises as distinctive from others in having at least a double bottom-line (or in some cases a triple bottom-line, or even some greater multiple of bottom-lines).

The effort to establish this distinction does not fit comfortably with Freeman’s ideas about stakeholders, as exemplified in his suggestion that ‘all of those groups and individuals that can affect, or are affected by, the accomplishment of the business enterprise’ should be taken into account by its managers.3

The main feature of the multiple bottom-line is, on the contrary, that only some interests, not all, should be taken into account in decision making.

I do not claim that the multiple bottom-line is the sole distinctive characteristic of organisations defined (by themselves or other) as social enterprises, but it is the only characteristic that concerns me in relation to stakeholder theory in this paper. I also do not claim that stakeholder theory consists only of a view about who should be taken into account by managers, but this is the only element of stakeholder theory that concerns me, in this paper, in relation to social enterprises; and all other aspects of social enterprise theory and practice, and all other aspects of stakeholder theory, will have to wait until another day.