Establishment 1994 1987 2000 1995
2. Year of
Initiation of SE 1996 1997 2000 1996
3. No. of SE Units 8 5 10 23 Source: Compiled by the author from materials provided by YCSW, SLSW, TVH, and CAUSW.
C. Structure of the Board of Directors
The board of directors for each of the four Taiwanese SE nonprofit organizations is the highest decision-making within their organizational structure. Three out of the four NPOs with a board of directors have fewer than 16 members. Of the remaining NPOs, two have 9 members (SLSW and TVH) and the other two have 15 members (YCSW and CAUSW). With respect to the background of the board of directors, three of the nonprofit organizations (YCSW, SLSW, CAUSW) have a board in which 67% of the board members are guardians for the mentally disabled, while the remaining 33 percent have been recruited from various professions. If we use CAUSW as an example, though there are no specific rules stipulated in the organizational articles, the Board of Directors of CAUSW holds the consensus that the guardians for the mentally disabled should comprise more than half of the Board of the Directors. TVH, whose board members have all been recruited from various professions, is the exceptional case. Consequently, the characteristics of the boards of directors of YCSW, SLSW, CAUSW can be described as
“single stakeholder” and “philanthropic governance” whiles TVH can be portrayed as
“multiple stakeholders” and “philanthropic governance”6 (See Table 5).
6 According to the EMES definition, the ideal-typical social enterprise is formed on a collective dynamics as well as on the participation of different stakeholders in the organization’s governance, which may include beneficiaries, volunteers, public authorities, donors’ et al. This is normally portrayed as “multiple-stakeholder ownership” (Bacchiegga & Borzaga, 2003).
Therefore if the board of directors of a social enterprise is comprised of a narrow group of people, e.g., volunteers or donors, it is considered a “single-stakeholder ownership”. As for the definition of “philanthropic governance”, Alexander and Weiner (1998: 225) indicate that, compared to “corporate governance”, the model of “philanthropic governance” underscores the following: Larger number of board members, separation of management and governance, no limit to consecutive terms, no compensation for board service, and emphasis on assets and mission preservation.
Table 5: Structure of the Board of Directors-- 4 Cases, Taiwan Source: Compiled by the author from materials provided by YCSW, SLSW, TVH, and CAUSW.
D. Changes in the Governance Structure and Function
Among the four SE NPOs in Taiwan, three (YCSW, TVH and CAUSW) have already set up designated units to carry out specified duties in cooperation with other departments. The “Enterprise Department” in YCSW, the “Social Enterprise Department”
and the “Sheltered Workshop Department” in CAUSW, and the “Welfare Enterprise Department” in CAUSW were all established. Only one nonprofit organization (SLSW) has yet to set up a designated unit. In addition, only one (YCSW) of the four nonprofit organizations had set up an “Enterprise Advisory Committee” under its board of directors to help the administrative department to oversee overall planning and management. As a consequence, from the viewpoints of the four SE CEOs, their boards of directors play a weak role in running the social enterprise units. For example, in TVH, the Board of Directors does not play a dominant role in the decision-making process; most of the units are operated independently by local administrative departments.
Whether or not adjustments have been made to the governance structure of the SE nonprofit organizations to accommodate the operation of a social enterprise is one of the issues covered in this study. In identifying changes in board members, it was found that in
Taiwan, the four SE NPOs pointed out that for the most part they had made no changes in the board of directors that arose from the establishment of the social enterprises. The four SE NPOs either indicated that the CEO played the dominant role in managing social enterprise units, or that the main role played by the CEO was to support certain key board members.
The majority of the SE NPOs (YCSW, SLSW, CAUSW) stated that the main concern of their boards of directors when dealing with affairs regarding a social enterprise was to place the fulfillment of social goals as their first priority and that of economic goals as secondary. This was also true for TVH, where the intent was to achieve its social goals, but to these were added financial sustainability for the satisfaction of the organization (See Table 6). Concerning the importance of achieving social goals, two cases deserve further elaboration.
Case 1: The Board of Directors of SLSW desires that its SE units be capable of generating some profits, or at least of making ends meet. Even if an SE unit (such as the Laundromat) suffered some losses for several years, the Board of Directors is determined that the SE unit should continue carrying out its services and reiterates that reaching the social goal takes precedence over meeting the economic goal.
Case 2: Though the Board of Directors of YCSW is still somewhat concerned about the profits and losses of the SE units in YCSW, the decision-making model still focuses on whether these SE units can assist the disadvantaged groups that YCSW supports in gaining employment and making a living. For instance, although the car-washing services have suffered losses in several years, the Board of Directors has reached a consensus that this SE unit should continue carrying on its business. The top priority of YCSW is caring for and helping disadvantaged groups to obtain jobs; in other words, the fulfillment of social goals takes precedence over meeting economic goals.
E. Professionalization in Human Resource Development
When conducting the interview with the four SE NPOs in Taiwan, we were mainly interested in answers to the following two questions: 1. Does the current CEO have any background in business administration or any relevant expertise in products and services?
2. Do the current heads of SE units have experience in business management or sales and distribution of products and services? To the first question, we found that two of the nonprofit organizations (YCSW, SLSW) reported that “the CEO does not have any background in business administration or any relevant expertise in products and services.” One (TVH) highlighted that, “although the CEO does not have any background
in business administration, he does have relevant expertise in products and services.” The fourth organization (CAUSW) indicated confidently that, “the CEO has both a background in business administration and relevant expertise in products and services.”
To the second question, we discovered that three out of the four NPOs (YCSW, TVH, and CAUSW) stressed that either all or most of their heads of SE units had experience in business management or sales and distribution of products and services. For example, because TVH’s top priority in development is to provide employment services for the physically disabled, the heads of the SE units are required to have professional experience in business management or sales and the distribution of products and services when recruited. Only one (SLSW) responded negatively, stating that these 5 heads had less experience in business management or sales and distribution of products and services, but more in social welfare professions. It seems that the evidence found in this study is capable of proving that the level of the CEO/Deputy CEO’s profession and the experience of the SE unit head in business management or sales and distribution of products and services are positively related with the development of the SE nonprofit organizations (See Table 7).
As mentioned above, we also conducted a case study of SE governance in Hong Kong during the same period we carried out the study of Taiwanese SE cases. An interesting comparison is described briefly as follows. First, the governance structure of social enterprises in Hong Kong is more diversified than in Taiwan. Second, the governance of the SE organizations in Hong Kong tends to shift from being a non-profit to a profit-orientation (e.g., setting up a company), indicating the strong influence of market forces. Third, most traditional NPOs operating SEs do not have personnel with business backgrounds while there is a growing trend of businessmen joining SE initiatives. Fourth, similar to those in Taiwan, CEOs in Hong Kong have a strong impact on decision making concerning the operation and management of SE (Kuan et al., 2011:
161-168). Obviously, the outcome of the case study of SE governance in Hong Kong provides additional empirical evidence to support Low’s argument(2006), emphasizing that social enterprise governance may tend to develop a hybrid of for-profit stewardship and non-profit democratic models. Moreover, NPO social enterprise boards are also likely to be pushed to recruit members on the basis of business expertise rather than a representative status.
Table 6: Changes in the governance structure and function-- 4 Cases, Taiwan
Source: Interviews with YCSW (2011/03/25), SLSW (2011/03/25), TVH (2011/03/25), and CAUSW (2011/03/26).