Not just for profit: an empirical study of social enterprises in South Yorkshire

This thesis seeks to investigate the development of social enterprises in the UK. Specifically, it analyses the determinants, nature and forms of legal structures of such organisations in South Yorkshire and how these impact on their operations. In order to do so, the thesis develops a hybrid conceptual framework of analysis which is broadly informed by political economy approaches but also draws on the behavioural theory of the firm and its contractual elements. The research design of the thesis is based on a mixed method approach involving the complementary use of quantitative and qualitative data collection methods. Data from a postal survey of 102 self-defined social enterprises and semi-structured interviews of 18 support organisations in South Yorkshire is complemented by detailed analysis of four selected cases and some key informant interviews. The study findings are based on the critical analysis of two key legal structures, Company Limited by Guarantee (CLG) and Company Limited by Shares (CLS) that underpin the activities of social enterprises in South Yorkshire. While there has been an upsurge of academic interest in social enterprise over the past decade, little is known and understood about the determinants and types of social enterprises’ legal structures and how these influence their operations. The thesis makes significant empirical and theoretical contributions to existing knowledge on this subject and provides new insight into understanding the determinants and formulation of legal structures of social enterprise. The investigation identifies a complex taxonomy of six exogenous and endogenous factors which influence the type and nature of a social enterprise’s legal structure and its ability to achieve financial sustainability. The thesis reveals that those social enterprises with charitable, less flexible legal structures such as CLG struggle to operate as viable businesses in competitive environments compared to those with CLS legal structures. The study recommends that social enterprises adopt legal structures that allow them to maximise the extraction and delivery of value to the communities they serve.