Low, Christopher and Chinnock, Chris (2008) Governance failure in social enterprise. Education, Knowledge and Economy, 2 (3). pp. 203-212. ISSN 1749-6896

This article aims to evaluate the effectiveness of the participative, democratic model of governance commonly found within social enterprises. This model has its origins in the broader not-for-profit sector where it is widely adopted. A core assumption of this governance form is that it ensures that the organisation will take a range of views into account through involving stakeholders at the highest level of decision making. This assumption is examined through an analysis of a social enterprise that went into administration following a breakdown in its governance. The data include internal documents and observations from a key participant. The findings suggest that the democratic model can be subverted by powerful actors who wish to retain their positions regardless of the impact on the organisation. A contrast is drawn between this case and governance problems in the private sector which have resulted in business failure. Although it can be argued that there is a divergence in the motivation of actors within each sector, the threat is found to be the same with regard to organisation survival. This article concludes by offering thoughts on establishing a potential solution to prevent such abuses in other social enterprises.

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