Table Of ContentThe Economics of Social
Responsibility
This book offers a rethinking of the burgeoning research on not- for-profit organ-
izations and socially responsible economics. Adopting a comparative approach,
the chapters explore and reinterpret the impact of social enterprises on the provi-
sion of general-i nterest services, work integration, microfinance, and fair trade,
and show how these enterprises form the hub of an emerging economy of social
responsibility. The book provides a new interpretation of social enterprises as
entrepreneurial organizations that pursue social objectives and are successful due
to the non- self-seeking motives of their members.
As the current financial crisis highlights, social enterprises often have the capac-
ity to tackle social and economic problems more effectively and efficiently than
public agencies and for-p rofit enterprises. The contributors argue that social enter-
prises are able to create value in socially responsible and environmentally sustain-
able ways due to their competitive advantages in providing goods and services that
meet the needs of their clients and the communities in which they operate. By
focusing on the main features, incentive structures, and governance models of these
enterprises, the book moves beyond the traditional conception of non- profits and
paves the way for the development of a more comprehensive theory of the firm.
A key finding of the book is that social enterprises constitute a viable form of
entrepreneurship that complements the activities of public authorities and for-
profit firms. Against this background, productive initiatives with explicit social
goals should not be considered ‘against the market’, but rather seen as successful
mechanisms for reconciling equity and efficiency on the one hand with the crea-
tion of economic and social value on the other.
This book will be of interest to postgraduate students, professionals working
in the not- for-profit sector, and scholars interested in socially responsible eco-
nomics. It is particularly suitable for seminars and workshops focusing on the
management of not- for-profit organizations, sustainable development, and
globalization.
Leonardo Becchetti is Professor of Economics at the University of Roma ‘Tor
Vergata’, Italy. Carlo Borzaga is Professor of Economics at the University of
Trento, Italy, and President of the European Research Institute on Cooperative
and Social Enterprises (Euricse).
Routledge advances in social economics
Edited by John B. Davis
Marquette University
This series presents new advances and developments in social economics think-
ing on a variety of subjects that concern the link between social values and eco-
nomics. Need, justice and equity, gender, cooperation, work poverty, the
environment, class, institutions, public policy, and methodology are some of the
most important themes. Among the orientations of the authors are social econo-
mist, institutionalist, humanist, solidarist, cooperatist, radical and Marxist, fem-
inist, post- Keynesian, behaviouralist, and environmentalist. The series offers
new contributions from today’s foremost thinkers on the social character of the
economy.
Published in conjunction with the Association of Social Economics.
Previous books published in the series include:
1 Social Economics
Premises, findings and policies
Edited by Edward J. O’Boyle
2 The Environmental Consequences of Growth
Steady- state economics as an alternative to ecological decline
Douglas Booth
3 The Human Firm
A socio- economic analysis of its behaviour and potential in a new
economic age
John Tomer
4 Economics for the Common Good
Two centuries of economic thought in the humanist tradition
Mark A. Lutz
5 Working Time
International trends, theory and policy perspectives
Edited by Lonnie Golden and Deborah M. Figart
6 The Social Economics of Health Care
John Davis
7 Reclaiming Evolution
A Marxist institutionalist dialogue on social change
William M. Dugger and Howard J. Sherman
8 The Theory of the Individual in Economics
Identity and value
John Davis
9 Boundaries of Clan and Color
Transnational comparisons of inter-g roup disparity
Edited by William Darity Jnr and Ashwini Deshpande
10 Living Wage Movements
Global perspectives
Edited by Deborah M. Figart
11 Ethics and the Market
Insights from social economics
Edited by Betsy Jane Clary, Wilfred Dolfsma, and Deborah M. Figart
12 Political Economy of Consumer Behaviour
Contesting consumption
Bruce Pietrykowski
13 Socio- Economic Mobility and Low- Status Minorities
Slow roads to progress
Jacob Meerman
14 Global Social Economy
Development, work and policy
Edited by John B. Davis
15 The Economics of Social Responsibility
The world of social enterprises
Edited by Leonardo Becchetti and Carlo Borzaga
The Economics of Social
Responsibility
The world of social enterprises
Edited by Leonardo Becchetti and
Carlo Borzaga
First published 2010
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
270 Madison Avenue, New York, NY 10016
Routledge is an imprint of the Taylor & Francis Group, an informa business
This edition published in the Taylor & Francis e-Library, 2010.
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collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.
© 2010 selection and editorial matter; Leonardo Becchetti and Carlo
Borzaga, individual chapters; the contributors
All rights reserved. No part of this book may be reprinted or reproduced or
utilized in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in
any information storage or retrieval system, without permission in writing
from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
The economics of social responsibility: the world of social enterprises/
edited by Leonardo Becchetti and Carlo Borzaga.
p. cm.
Includes bibliographical references and index.
Nonprofit organizations. 2. Entrepreneurship. 3. Social responsibility of
business. I. Becchetti, Leonardo. II. Borzaga, Carlo.
HD62.6.E37 2010
338.7–dc22
2009047910
ISBN 0-203-85102-1 Master e-book ISBN
ISBN13: 978-0-415-46576-2 (hbk)
ISBN13: 978-0-203-85102-9 (ebk)
Contents
List of illustrations ix
Notes on contributors xi
List of abbreviations and acronyms xii
Introduction 1
LEONARDO BECChETTI AND CARLO BORzAGA
1 The economics of social enterprises: an interpretive
framework 15
CARLO BORzAGA AND ERMANNO TORTIA
2 The competitive advantages of social enterprises 34
SARA DEPEDRI
3 The impact of social enterprises on output, employment,
and welfare 55
ERMANNO TORTIA
4 From economic growth to sustainable development 72
LEONARDO BECChETTI AND GIUSEPPE MASTROMATTEO
5 The provision of welfare and general-i nterest services 88
LUCA FAzzI
6 Social enterprises and the integration of disadvantaged
workers 105
GIULIA GALERA
7 The fair- trade debate and its underpinnings 123
LEONARDO BECChETTI
viii Contents
8 An empirical test of fair trade 145
LEONARDO BECChETTI AND MARCO COSTANTINO
9 Microfinance: a frontier social enterprise 165
LEONARDO BECChETTI
10 Only the fittest survive? A test of the sustainability of
corporate social responsibility 194
LEONARDO BECChETTI AND ROCCO CICIRETTI
References 227
Index 251
Illustrations
Figures
1.1 Organizational objectives and the satisfaction of needs 26
3.1 The impact of social enterprises on output, employment, and
welfare 59
7.1 Average annual fair-t rade and market prices for cocoa beans 125
7.2 Average annual fair-t rade and market prices for coffee 126
7.3a The three-p illar economic system 128
7.3b Virtuous circle for the globalized economy 129
7.4 hotelling game of ethical imitation and the asymmetric costs
of ethical distance 135
7.5 North consumer’s welfare improvement under the fair trader’s
entry and the profit-m aximizing producer’s price reaction 140
8.1 Model of ‘awareness intensive’ demand for fair-t rade goods 155
9.1 Relative dominance of group sizes (in terms of lower face
values of debt and higher borrowers’ welfare) under different
group solvency hypotheses 182
9.2 The non- cooperative microfinance game 187
9.3 Effort regions in the non-c ooperative microfinance game 187
9.4 Excessive and insufficient investment areas 188
Tables
6.1 Main characteristics of work integration social enterprises in
Italy, Portugal, Finland, and Poland 118–19
7.1 Price breakdown of fair-t rade coffee 124
8.1 Impact of affiliation to Meru Herbs on the standardized index
of price conditions (SIPC) 150
8.2 Daily expenditure (in €) by Italian consumers on fair-t rade
products 156
8.3 Declared willingness of Italian consumers to ‘pay in excess’
for the social characteristics of fair-t rade products (€ per month
for overall food expenditure) 157
