A Social Enterprise Business Model and a Case Study of Pacific Community Ventures (PCV)

Introduction

Social enterprises aim to achieve sustainability through stable revenue and profit generation while pursuing their own social mission (Peredo & McLean, 2006). Different types of social enterprises have emerged, ranging from non-for-profit to for-profit organizations (Global Entrepreneurship Monitor, 2009). For some types of social enterprises, social missions are directly embedded into goods and services. For other types of social enterprises, the profits generated from their non-social mission businesses are used to support their social missions. While it is a rapidly growing sector in the economy, their growth in large part depends on government policies, private and corporate donations, and government contracts. Furthermore, many social enterprises fail in the long run due to poor management, lack of innovation, or shortage of resources (Casselman, 2007).

Haugh (2005) indicates that the social enterprise is under-studied and the value of social enterprises to society is difficult to quantify where management practices, performance metrics, and business models are not well established. While a number of business models have been proposed and case studies have been conducted in corporate settings, no study has yet investigated the applicability of business models for social enterprises. To establish a well-defined social enterprise business model, the business model needs to take into consideration both the unique characteristics of social enterprise and the theoretical foundations of business models in the strategy area.

This study attempts to fill the gap between the current research and the pressing need for a solid business model by social entrepreneurs. We lay theoretical foundations for the social enterprise business model by reviewing literature on the business model and social enterprise. The purposes of our study are two-fold:

• 1.

  To develop a social enterprise business model and the components essential for successful value creation and management of social enterprises, and

• 2.

  To conduct a case study of Pacific Community Ventures (PCV) using the proposed business model and present management guidelines for the social enterprise business model.

The rest of the paper proceeds as follows. The second section develops theoretical foundations of the social enterprise business model. The third section presents a social enterprise business model reflecting the unique characteristics of social enterprise. The fourth section illustrates the proposed social enterprise business model with a case study of Pacific Community Ventures (PCV). The fifth section discusses management guidelines of the social enterprise business model. The sixth section concludes.