Strategic factors of social enterprise development under the public sector optimization

Strategic and Enterprise Planning

The paper studies the possibilities of social entrepreneurship as a new form how to organize business with the elements of non-profit activity. It shows that when the public expenditures are decreasing and the processes of commercializing the social sector in the economy are growing, there is the growth of social enterprises as possible substitutes of the State. The cases showing the most effective examples of such substitution are studied. The basic strategic fundamentals of social enterprises, which are the pledge of their successful activity under the competition set by the private companies, are also defined. The study shows that while implementing social outsourcing policy that imply a gradual transfer of the social area’s institutions into the private sector, some cases of irresponsible behaviour of the private business towards the managed units are found. These cases include the abrupt decreasing of wage rates of the employed staff and economy related to the quality of service. Taking into account the intensification of commercialization processes in all social areas, it is proved that such social policy is dangerous to this sector in context where the base institutions, capable to take such responsibility to manage these units, are not available. The examples of social entrepreneurship that imply not only the establishment of a new type of enterprises, but also mark the formation of a new management paradigm, including a more active participation of entrepreneurs to solve social problems than the participation of common firms under the auspices of social responsibility, show that these formations are able to act as such institutions. However, one should approve a complex of measures ensuring their stable development for their successful functioning.