From stakeholders to institutions: the changing face of social enterprise governance theory

This paper aims to set out the current theoretical landscape of social enterprise governance. It considers the two theories of governance currently advocated in the social enterprise literature – stakeholder and stewardship theories. Furthermore, it asserts the utility of neoinstitutional theory in analysis of social enterprise governance.

The methodology employed was critical review and application of the prevailing governance theory in a social enterprise context.

The prevailing institutional theory offers a great deal in explaining the governance dynamic in these organisations. The influence that values, symbols and cultural norms have upon organisation structure are not fully encompassed in social enterprise governance theory. Rather, it has been adapted and diluted to fit different explanations of governance, such as stakeholder and stewardship theory.

Institutional theory offers an alternative lens with which to analyse social enterprise governance. This paper advocates institutional analysis of governance as an alternative method of mapping social enterprise governance, testing existing concepts such as isomorphism within the third sector, and new conceptual research.

The paper consolidates the governance theory currently attributed to social enterprise governance, and puts forward an alternative theory that considers the influence of institutional pressures upon governance arrangements. It adds to the governance literature by suggesting a deeper analysis of institutional factors upon governance structure. It also adds to the growing literature that focuses on the governance of social enterprise as a distinct form of organisation in the third sector.