Social Enterprise in Mexico, a New Business Classification

Germán Osorio-Novela, Alejandro Mungaray-Lagarda and Natanael Ramírez-Angulo
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Germán Osorio-Novela: Faculty of Economics and International Relation, Autonomous University of Baja California, Tijuana 22390, Mexico
Alejandro Mungaray-Lagarda: Department of Economics, University of Sonora, Hermosillo 83000, Mexico
Natanael Ramírez-Angulo: Faculty of Economics and International Relation, Autonomous University of Baja California, Tijuana 22390, Mexico

Sustainability, 2021, vol. 13, issue 16, 1-11

Abstract: Social Enterprise (SE) is an increasingly important sector for generating employment and distributing wealth in market structures. The social business type two (SB2)—a very specific type of SE—is a category that has challenged orthodox theoretical elements in its main assumptions and behavior in the markets. SB2 is mainly classified within the category of microenterprises because they have a very small number of employees. A new official business classification is important to differentiate enterprises not only by size, but also by type of behavior. There is a new indicator that compares the profit levels of microenterprises with the poverty line as a representative tool to classify Mexican microenterprises into profit seekers and SB2. When these outcomes are contrasted with a discrete choice model under the logistic functional form, the probabilities that this indicator classifies a microenterprise with entrepreneurship by necessity, installed capacity maximization and no profit seeking as SB2 is 80% for microenterprises up to ten workers, and goes up to 92% for microenterprises with one person. With such a new classification, better policies could be promoted to support SB2, and help address both the lack of opportunities from the market economy and poverty menace.

Keywords: social business; business classification; microenterprises; profit maximization; maximization of installed capacity (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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