How are social enterprises different from free market enterprises?
Profits
http://www.google.com/#q=social+enterprises
Social enterprises can earn a profit and free markets do not?
Please read some of the sites in the link above. Both earn profits -- but the difference is how much profit and how the profits are used.
Social enterprises and free market enterprises differ in their primary objectives and approaches to business.
1. Primary Objective:
- Social enterprises prioritize social or environmental impact alongside financial sustainability. They aim to address specific social problems or meet unmet needs in society while generating profits for reinvestment.
- Free market enterprises primarily focus on maximizing profits as their main objective. Their main purpose is to create value for shareholders and generate financial returns.
2. Approach to Business:
- Social enterprises adopt innovative and sustainable business models to address social or environmental issues. They often operate in sectors where government or market failures exist, such as renewable energy, healthcare, education, and poverty alleviation.
- Free market enterprises operate within existing market structures, aiming to maximize profits through efficient production, cost management, and market competition, without a specific focus on social or environmental goals.
3. Governance and Ownership:
- Social enterprises may have a diverse ownership structure, including individuals, communities, non-profit organizations, or even for-profit entities. They often have a mission lock-in mechanism to ensure that their social or environmental objectives are protected over time.
- Free market enterprises are typically privately owned by individuals or corporations, and their governance focuses on maximizing shareholder value.
4. Profit Distribution:
- Social enterprises reinvest a significant portion of their profits to further their social or environmental objectives. They prioritize using resources and profits to create positive societal impact.
- Free market enterprises distribute profits primarily to shareholders, with the aim of maximizing shareholder returns.
It's worth noting that social enterprises can also engage in commercial activities and generate revenues like free market enterprises. The key distinction lies in their integrated focus on social and environmental impact alongside financial sustainability.