The Emergence of Social Enterprise in China: Models and Strategies

Abstract

During the historical development of traditional charities towards nonprofit sector, three important entities have performed important functions, status groups, professionals and the state (Dimaggio & Anheier, 1990). Driven by these three entities, the nonprofit sector transformed from charitable organizations to voluntary organizations and then to third party government. Currently, the market becomes the most crucial entities underlying the development of nonprofit sector, and the social enterprise emerged as a new organizational form of the entities consisting of nonprofit sector (Tian, 2016). Alter (2004) proposed 11 types of models of social enterprises, which was applied by scholars to examine the development of social enterprise in different cultural contexts like US, Taiwan and Hong Kong (Cooney, 2011; Cheng & Wang, 2010; Chan, 2006). This paper examines the transformation of nonprofit organizations towards social enterprise organizations, and the factors underlying the transformation. Different models will be identified through the application of Alter’s typology to the Chinese context with a particular focus on the relationship of the SE organizations to the government. Alter’s typology mainly focuses on different input-output flows between the social enterprise and umbrella organization, market, target population and business sector with regard to finance, service and products. This article argues that the state plays an important role during the nonprofit sector changing towards social enterprise, particularly in a strong-government context like China. This article will enrich Alter’s model by considering the factor of state as a critical player in models of social enterprise in China. Supported by National Philosophy and Social Science funds, this study applies a comparative case study approach to three cities of Yangtze River Delta of China. The selected cities (Huangzhou, Nanjing, Shanghai) reflect different government-market-civil society configurations offering natural variation in local approach.. Data from primary data collection (expert interviews with organizational leaders) and document analysis of organizational operational material and local NGO policy are used to examine the transformation of non-profit organizations to social enterprise organizations and the relationship between the SE organization and government. We argue that local NGOs are embedded in the local context, and that emerging social enterprise models reflect variation in government openness to the civil society. Government openness is characterized by two dimensions, (1) government regulations on NGOs including registration, supervision and other regulations such as fund raising or management practices, and (2) government funding system and practices and related between government and NGOs. Additional factors reflecting the openness of local government is related to the way the government seek its legitimacy which is influenced by the central- local government relation and local social, economic and cultural context. References: Alter, K. 2004. Social Enterprise Typology. Paper commissioned by the Inter-American Development in 2003 titled: “Social Enterprise: A Typology of the Field Contextualised in Latin America” Cooney, K. 2011. An Exploratory Study of Social Purpose Business Models in the United States. Nonprofit and Voluntary Sector Quarterly. Vol.40. 185-196. Cooney, K. 2006. The Institutional and Technical Structuring of Nonprofit Ventures: Case Study of a U.S. Hybrid Organization Caught Between Two Fields. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 17(2), 137-155. Tian, Rong. (2009). Development and Transformation: A Case Study on Social Welfare Nongovernmental Organizations in Hong Kong. Unpublished PhD Thesis. University of Hong Kong. OECD .2003. The Non-profit Sector in a Changing Economy. Paris: OECD.