Social Enterprises’ InstitutionalRationale and Its Inspirations for theModern Market Economy

Jin Bei*

the Chinese Academy of Social Sciences (CASS), Beijing, China

Zhengzhou University Business School, Zhenghzou, China

Abstract: This study analyzes the ways in which social enterprises contribute to society’sgoals. In the new era of human development, many social problems cannot be resolvedwithout the participation of social enterprises (SEs). The study on these enterprises is ofgreat significance for theoretical research and practical observation. In a modern marketeconomy, SEs have pro-social market vitality and compatibility with the market economy;their action gives a glimpse into the truth of human development. As can be seen from thesocio-economic reality, numerous entrepreneurs nurture a desire to run SEs at a certainstage of their career development. The tendency of some entrepreneurs to run SEs is ofgreat significance for this study. Social enterprises are hybrid enterprises as opposed tofor-profit enterprises and SEs must address complex problems through organizational andinstitutional innovations. State owned enterprises (SOEs) and SEs share many topics ofresearch and have much to learn from each other, and a key question for SOE reform iswhat makes SOEs efficient quasi-social enterprises. Both SOEs and SEs assume a socialmandate, and their fulfillment of social responsibilities is underpinned by their economicefficiency (market competitiveness). The theoretical rationale and institutional mechanismof SEs – not least their innovation practice and formation of rules – stem from therelationship and coordination between economic and social exchanges under market-basedconditions. Social enterprises focus on altruistic social exchange but need to be supportedby a certain economic exchange to finance their operations. The biggest social problemfor China is its failure to balance economic and social exchanges, as well as the method ofreward. Research on SEs should promote the understanding of these questions and the questfor their solutions. Social enterprises may inspire more enterprises to pursue pro-socialinnovation and development.

Keywords: Social enterprises, altruistic behaviors, economic exchange, social exchange,

JEL Classification Code: L20

DOI: 10.19602/j.chinaeconomist.2023.01.01