Sustainability of Micro and Small Scale Social Enterprises in the Philipines (topic Proposal with Rrl)

Sustainability of micro^[1] and small^[2] scale social enterprises in the Philippines:

A synthesis of lessons from several cases

A proposal submitted by:

Jaime Luis G. Sy

In partial fulfilment of the course

DS 120: Research Methods

Submitted to:

Leslie A. Lopez

Development Studies Program, School of Social Sciences

Ateneo de Manila University

Loyola Heights, Quezon City

23, March 2015

I. INTRODUCTION

“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little^[3].” In an era where society is centered on consumerism and structured by capitalism, global poverty and inequality have proliferated. The Organization for Economic Cooperation and Development (OECD) conducted a study back in 2014 called How is Life? Global Well-being since 1820, which essentially aimed to determine how the different aspects of “life” (e.g. education, healthcare, etc.) have progressed between 1820 (approximated start of the “Industrial Revolution”) and the present date. One major finding is that income inequality has regressed back to the levels of 1820, a period infamous for such conditions. Figure 1 below reflects this, showing that the cumulative Gini index^[4] score of the different world regions has truly returned to the average of the Industrial Revolution’s onset.

[pic 1][pic 2][pic 3]

Such inequity does not exclude the Philippines. As seen from Figure 2, the Gini Index scores of the Philippines and income share held by the wealthiest 10% of Filipinos have remained relatively stagnant in alarming levels throughout the years.

[pic 4]        

However, what makes these figures even more alarming is the fact that the Philippine economy has been growing, often being dubbed as the “Next Tiger Economy of Asia.” Evident from Figure 3, the country has grown each year from 2003 to 2013. This means that as the country has grown in terms of GDP, the levels of inequality have remained virtually unchanged over the same span of time.

[pic 5]

Based on the data above, it is clear that there is a pressing need for inclusive growth not only in the Philippines, but the rest of the world as well. In relation to social enterprises, dominant literature suggests that such institutions are a means of achieving inclusive growth, and there is empirical evidence that supports this. According to a joint study by Institute for Social Entrepreneurship in Asia (ISEA) and Oxfam (2014) entitled Poverty and Women Economic Leadership: Roles, Potentials and Challenges of Social Enterprises in Asia, which studied social enterprises across the Philippines, Indonesia and Bangladesh, social enterprises in the Philippines have covered at least 2.5 million people living below the poverty line.

In that regard, this study aims to determine what techniques or practices \ may be applied to ‘micro’ and ‘small’ scale social enterprises in the Philippines to achieve sustainability. The reason behind this is that firms of this scale constitute 99.14% (as of 2012) of business enterprises operating in the Philippines, according to the Department Of Trade and Industry. Setting this limitation will make the data gathered more relevant to the Philippine context. As such, the research question is as follows: “What are the methods or techniques that can be practiced to sustain ‘micro’ and ‘small’ scale social enterprises in the Philippines?”

The research question entails concepts such as social enterprise, inclusive growth, scale, sustainability, and diminishing marginal returns. There is vast literature on these concepts and to have a better understanding on such concepts, a review of related literature is needed to analyze any similar, complementary, or contradictory views on the said subjects.

II. REVIEW OF RELATED LITERATURE

What is a social enterprise?

        Defining the term ‘social enterprise’ is a difficult task. There appears to be an agreement among scholars and experts that this poses a challenge for research efforts regarding the concept. As a result, majority of the related literature begin by reviewing definitions by other authors throughout history. This is exemplified by Bacq and Janssen (2011) in the journal The Multiple Faces of Social Entrepreneurship: A Review of Definitional Issues Based on Geographic and Thematic Criteria attempted to answer the question “what is social entrepreneurship.” They mention authors such as Borschee (1995), who defines the term as the action of “non-profit executives who pay increased attention to market forces without losing sight of their underlying mission, to somehow balance moral imperatives and profit motives – and that balancing act is the heart and soul movement.” Also, according to Dees (1998), it “combines the passion of social mission with an image of business-like discipline, innovation, and determination.” The authors then gave a more recent example by Nicholls (2008), defining social entrepreneurship as a “set of innovative and effective activities that focus strategically on resolving market failures and creating new opportunities to add social value systematically by using a range of resources and organizational formats to maximize social impact and bring about change.”

        In relation, Blount and Nunley (2014) in the journal “What is a ‘Social’ Business and Why Does it Matter?” argue that the difficulty in defining social enterprises are rooted from the use of the terms “social.”  Though a basic definition would be entrepreneurship with social mission or objective, further definitions of the term widely vary among authors (as seen from definitions above). Also, this makes differentiating social enterprises difficult from strictly for-profit ventures, since these are inherently social as well. The authors then cite Santos (2012) and his work A Positive Theory of Social Entrepreneurship. Santos defines social enterprises as an entrepreneurial venture with the fundamental strategy of prioritizing value creation (“aggregate utility of society’s members increases after accounting for the opportunity costs of all the resources used in the activity”) over value capture (essentially means making a profit).