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Profit with purpose? a theory of social enterprise with experimental evidence

Timothy Besley () and Maitreesh Ghatak ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: When social benefits cannot be measured, a hybrid organization which selects managers based on motivation can be used to balance profi…ts with a social purpose. This paper develops a model of social enterprise based on selection of citizen-managers with this goal in mind. It develops the implications of matching between founders and managers based on their preferences for the mission. The main trade-offs suggested by the theory are tested experimentally and these are used to calibrate a matching outcome. This makes precise the parameter range in which social enterprises based on selection will be observed in a market setting; we show that they achieve gains in proficiency of around 10% over non-pro…fit enterprise.

Keywords: social enterprise; motivated agents; non-profits (search for similar items in EconPapers)
JEL-codes: J1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-exp and nep-soc
Date: 2013-11-06
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http://eprints.lse.ac.uk/58181/ Open access version. (application/pdf)

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Working Paper: Profit with Purpose? A Theory of Social Enterprise with Experimental Evidence (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:58181

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