Can Social Outsourcing Enhance the Development Strategy of Social Enterprises?

Nowadays social enterprises have been increasingly seen as a substitute for the state in those fields of national economies where its role is diminishing. In this context the emergence of such phenomenon as social outsourcing, which implies the transfer of certain business processes from the central and local authorities to social enterprises, becomes a critically important tool designed to enhance the ability of these entities to deliver public services. This process can be viewed as double-sided as it means both the legalization of transfer of social functions to the private sector and the provision of aid and experience of the public services to social enterprises. It is assumed that this transfer is realized due to the comparative advantages of social enterprises which seem to operate more efficiently than those in public sector, as they have a unique ability to combine business principles with those employed in charities and NGOs. Indeed that is not the case as evidenced by the numerous examples presented in the paper. For instance, in the UK most enterprises that deliver social services operate in private sector, which is a matter of trouble as they seek to profit-making which is a point confronted with their main mission - to reinvest their income to further social projects. Moreover, the share of such entities in the private sector in some European countries was increased for the recent decade. According to the recent data, of the homes in England registered with Ofsted in September 2011, 76% were in the private or voluntary sector. The most prominent inequalities arise when analyzing the situation with children's care services. Profit-making and cost-cutting in children's services are exacerbating regional inequalities as the firms who provide children's residential care do so where it is cheapest for them, so children are placed away from their home boroughs where property prices are lowest, and they become more vulnerable to abuse. Nevertheless the very practice of social outsourcing has been spreading steadily for the recent years and has become a sort of strategy for social enterprises in their striving to survive and strengthen their sustainability. The main task of the paper is to find out, whether such strategy can facilitate the innovation process of social enterprises.