Social businesses are being prevented from delivering lasting benefits to their regions because of complex policies, unclear guidance, financial constraints and poor use of resources, according to new research from our Business School.
Social businesses are organisations that aim to address social or environmental challenges through commercial activities. They reinvest profits to support their mission.
Led by Dr Chrysostomos Apostolidis and colleagues from institutions across the UK and Greece, the study warns that current policy approaches can undermine local impact.
The researchers have also developed a new framework to help social businesses create and retain sustainable regional value.
The study found that social businesses are often established with strong local ambitions.
However, the way they are required to operate can reduce the positive impact they hope to achieve.
Policy barriers reduce local impact
A key challenge is the lack of visible support, guidance and expertise at local authority level.
This can make it difficult for social businesses to operate effectively and respond to changing social and economic pressures.
This is despite funding being available through national governments and international organisations.
The researchers found that social businesses face challenges in balancing their social mission with the need to remain financially sustainable.
In some cases, the support mechanisms designed to help organisations can unintentionally reduce their impact.
Partnerships with larger organisations can provide valuable opportunities.
However, differing priorities and definitions of success can weaken a social business's original mission.
As a result, the benefits created may not always be retained within the communities they are intended to serve.
The study also highlights how complex funding requirements can divert time and resources away from social missions, making it harder for organisations to focus on delivering value for local communities.
Common challenges across regions
The team drew on evidence from Greece, Bangladesh and previous UK research. They found that social businesses face similar challenges across different regions and economic contexts.
The researchers identified several common barriers, including:
- Limited understanding of social businesses and their value among policymakers, reducing opportunities for support and investment.
- Poor resource sharing and knowledge exchange between social businesses, local authorities, organisations and communities.
- Complex policies, bureaucracy and stigma that create operational and financial challenges.
- Limited financial capacity to invest in innovation and organisational development.
- Pressure to adapt social missions in order to secure funding from a wider range of stakeholders.
A framework for sustainable value
To address these challenges, the researchers developed the Sustainable Value Capture: CARE (Collaboration, Agility, Regulations and Entrepreneurship) Framework.
It identifies the conditions needed for social businesses to create and retain sustainable regional value.
The model highlights collaboration, effective regulation, entrepreneurial leadership and knowledge-sharing as key drivers of success.
It also encourages social businesses to build relationships with appropriate partners such as incubators, NGOs and other locally based organisations.
The researchers argue that improving outcomes for social businesses is not simply a matter of providing more funding.
They say policymakers also need to recognise where existing structures and policies may be creating unintended barriers to success.
The study suggests that financial incentives could help ensure partnerships and projects remain focused on their intended outcomes.
It also highlights the importance of regulation in protecting the goals of social businesses and supporting long-term regional development.
Education is identified as another important factor.
The framework highlights the role universities can play in helping entrepreneurs develop leadership skills.
These skills can support the growth of successful social businesses and maximise their regional impact.
