A Social Leadership Model For Social Enterprise Business Essay

Published: 2021-06-23 09:10:05
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Faculty of Technology Management and Technopreneurship
University of Technical Malaysia Melaka (UTeM)
Izaidin Abdul Majid
Faculty of Technology Management and Technopreneurship
University of Technical Malaysia Melaka (UTeM)
Abstract— Leadership commonly stated as factor affected towards business performance. This paper outlines a conceptual framework of leadership style and the relationship with social enterprise performance. In Malaysia, there is lack of systematic studies on social entrepreneurial leadership with a focus on social enterprise especially cooperative. To address this gap, therefore the model conceptualizes one of leadership style by exploring SERVANT LEADERSHIP PRACTISE and its impact on COOPERATIVE PERFORMANCE as Social Enterprise mediating by Social Entrepreneurs’ Role.
Keywords: Social Entrepreneurial Leadership, Servant Leadership, Social Enterprise, Cooperative Organization
Leadership commonly stated as key driving force for improving a firm’s performance (Zhu et al., 2005; Rowe et al., 2005). This paper outlines a conceptual framework of Social Entrepreneurial Leadership impact on Social Enterprise performance. It is widely recognized that the contribution of social entrepreneurs make to a nation’s social, economic, cultural and environmental wealth. Whereby, leader is the key component in social enterprise that drives organization to success. Social enterprise involves activities relating to philanthropy and social responsibility. It is a combination of business acumen, innovation and determination. Their area of work is not limited to not-for-profit ventures; they also involve themselves in for-profit ventures or at time a combination of both, (Vasudha, 2008). One conceptual model developed to define the impact of servant leadership on cooperative performance mediated by social entrepreneurs’ role. It is proposed based on review of existing literature. Cooperative has been choosing as social enterprise and servant leadership as social entrepreneurial leader. Cooperative is unique business structure and significant entity to economic contributor to the country. Leaders in cooperative (Board of Cooperative Members) is a key person who lead the cooperative.
From literature and reviewing, servant leadership have similar concept with cooperative elements. The model of servant leadership first proposed and explored by Greenleaf, (1970). Servant leaders are servants first, who place the needs of others above their own self interest and seek to produce more. It focused to give more effort in their servicing, encourage others, building community and share decision making (Greenleaf Centre for Servant-Leadership, 2013). Selected literature definition and meaning of servant leadership to match with cooperative board of members stated in table 1.
TABLE 1: Similarity elements of servant leadership and cooperative board of member’s criteria
Spears (2010) addressed ten servant leadership characteristics of servant leadership (p.27-29): Listening, empathy, healing, awareness, persuasion, conceptualization, foresight, stewardship, commitment to the growth of people and building community
The Circle of Responsibilities for Co-ops Board (2003), Standards of conduct applicable to cooperative directors include:
Duty of Obedience. Directors must ensure that they or the cooperative do not engage in illegal or improper actions.
Duty of Care. Directors are expected to act in good faith at all times, exercise prudence, and apply their best judgements for the benefit of the cooperative.
The servant-leader has a natural inclination to serve the needs of others in a meaningful way Sartain (2003)
Duty of Loyalty. Directors have a position of highest trust and must avoid conflict of interest, self dealing, act in any other than the best interest of the cooperative or divulging confidential information.
Reed L., L. et al. (2011) suggest servant leadership criteria:
Interpersonal Support
Building Community
Moral Integrity
P. Davis’ in Isaac Bleger (2004) mentioned major ideas on the subject of how co-operatives are being organized and managed are:
• Co-operatives are instituted as a response to the economic, social and cultural needs of its members. These have freely created an enterprise on the basis of common property governing it in a democratic fashion.
• This enterprise exists to solve the problems raised by the members’ environment, in ways they cannot manage individually alone.
• Members own the co-operative and the members of the Board they elect are their trustees.
• As members of the co-operative or as a part of its Board of Directors, they act as mere laymen in the office of management. As such they need the knowledge and experience of persons professionally trained in these kinds of tasks, in order to receive from them a guide on the best ways to provide for their own interest.
Based on general description of servant leadership and cooperative similarities, both interact with complex servant-society systems or relationship. According to (Bond & B-, 2009) cooperative boards of members responsibility is to monitor cooperative managers’ actions towards members’ interest. The responsibility of board of members is to exercise leadership, entrepreneurship, integrity and sound judgment in directing the affairs of the cooperative. Cooperative management seems similar to the servant leadership aim (serve and help others). Therefore, cooperative leader is encourage to practice servant leadership style together with cooperative principles, to ensure that their manager follows the processes and motivate the members and employees to achieve the cooperative objectives.
International Co-operative Alliance (ICA) in (Cooperative Development Institute, 2011) defines:
Cooperative as an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through jointly-owned and democratically-controlled enterprise. Social entrepreneurial organizations may exist in any legal form – societies, associations, clubs teams, cooperatives or agencies (Prabhu, 1999). As social enterprise, the membership is voluntary and open to all members or share/stakeholders who are the statutory but not exclusive beneficiaries of goods and services produced. The main objective is not much to achieve the highest return on capital investment as to satisfy a common pre-existing requirement or need, in order to give members or share/stakeholders a greater advantage or saving than would otherwise have been possible separately (Samuli Skurnik, 2002; Austin Stevenson and Wei-Skillern, 2006; Antonio Thomas, 2004). Cooperative is business entity owned by members that governed by values and principles. They are part of social economy (Ciriec, 2000) and mechanism for country economic growth and social development. A cooperative is entirely different from all other organization in terms of its structure which more flatten (Borgen, 2001) and unique business principles. The cooperative are formed primarily to render service to its members and may also provide some service to the society.
TABLE 2 : Related literature summaries on social enterprise and cooperative
(DTI 2001), Is an independent organization with social and economic objectives that aims to fulfil a social purpose as well as achieving financial sustainability through trading.
(International Co-operative Alliance in Cooperative Development Institute, 2011):
Is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through jointly-owned and democratically-controlled enterprise. Based on values of self-help, self responsibility, democracy, equality, equity and solidarity. Their members believe in the ethical values of honesty, openness, social responsibility and caring for others. Based on seven (7) principles:
Voluntary and open membership
Democratic member control
Member economic participation
Autonomy and interdependence
Educational, training and information
Co-operation among cooperatives
Concern for community
(Cochran, 2007), Is the process of applying the principles of business and entrepreneurship to social problem.
(Morfopoulos et al., 2006) Social Entreprise should fulfill four conditions; Realism, Affordability, Profitability and Societal impact.
(Antonio Thomas, 2004), Co-operatives have mutualized institutional purpose for their members or share/stakeholders who are the statutory but not exclusive beneficiaries of goods and services produced. The main aim of co-operatives is not much to achieve the highest return on capital investment as to satisfy a common pre-existing requirement or need, in order to give members or share/stakeholders a greater advantage or saving than would otherwise have been possible separately.
(Wallace, 1999), Prevented from distributing their profits to those who exercise control over them. Any surplus generated must be retained in the organization and/or community, either as direct services or as grant to the service-targeted population.
(Kamsi, R., 2008), The cooperative are formed and owned by a group of individuals for the purpose of improving their standard of living and enjoying the services provided
(Sarah H. Alvord et al., 2002), Initiative to generate and develop the assets of the poor group they served. This way they could transform the small investments into sustainable activities for the benefits of the needy.
(Otito O & Ogionwo W, 1994), Cooperative societies are group made of individuals whose inter-related task and specialities enable the total aggregate to achieve set goals, perform complimentary, reciprocal functions
From the social entrepreneurs’ literature, several researchers suggested study should broader on servant leadership impact. Scholars such as (Russel & Stone, 2002; Sharon L. Drury, 2004) suggest researchers should not only examine the genuine servant leadership characteristics, but should expand in analyzing servant leadership impact on organizations, higher learning, different types of industries and commercial establishment and non government to test the reliability of the servant leadership and organizational commitment. In addition, other researcher (David et. al, 2010) conclude to increase understanding of servant leadership practise and how well they guide and support positive environment in organization and increase company performance, continuous study must be conducted and test to other for-profit and not-for-profit organization, while more research is needed to generalize servant leadership beyond its limitation stated by (Dan R. Ebener et.al, 2010), and (Francine, 2010) added and suggest to interview top management for determination the principles of servant leadership implemented in the organization are apparent.
With strong suggestions by scholars of servant leadership studies, it is significant to propose servant leadership model in cooperative management. In other words, servant leadership should be tested to cooperative enterprise as different business entity. But how to measure the impact? Servant leadership has the potential to improve financial performance (Melrose, 1998; Ruschman, 2002) as cited in (Errol E. Joseph et al. 2004). Cooperative is organization owned by members and operated for the benefits of their members. Ed Mayo (2010) concludes in measuring cooperative performance, the most important is to understanding member value and business performance. It is because the strength of the cooperative is held to be democratic accountability through the internal ownership of members. The indicators are two kinds – financial and non financial indicators. Since cooperative is member-owned entity, therefore it is important to count or measure the members’ value (financial). Furthermore, servant leadership is focus to follower development. In case of cooperative, members as the follower will gain the benefits from cooperative engagement. This will reflex to their economic development, increase socio-economic level and motivate their life. The board of members’ responsibility is to assess the performance of cooperative in terms of profitability and return to the members. The ratios of members’ values suggested are profitability ratio, earnings per share, rate of interest on share capital, members’ equity to total assets, rate of patronage, rate of solvency and rate of liquidity. The ratio value will determine the members’ earn from involvement in cooperative.
Social entrepreneurial leaders take multiple roles in their organization – creator and transformer. They do strategic planning, hire people and provide them mentorship. The leader may face conflict between organizational and personal role and external influence. Dees (1998), a leading scholar in the field, provides a role of social entrepreneurship as an agent of change by profiling five activities such as i)setting a mission to achieve and sustain social value, ii)identify and severe new opportunities to serve that mission, iii)continuously involve in innovation process, adaptation and learning, iv) no obstacle in actions, and v) showing high accountability to constituencies served and outcomes created. The entrepreneurs’ role and the statement taken as the mediator in this model since the elements of servant leadership and cooperative aims are serving others and concern for people. They must ‘act as an agent’ to transform the cooperative operation to sustain for the benefits of members and stakeholders.
This framework developed from literature review and analysis. The model constructed after reviewing and analysed few researcher’s idea, which illustrated in figure 1.
FIGURE 1 : Servant Leadership Model for Cooperative Performance
Through extensive literature review on servant leadership and cooperative, authors proposes servant leadership style as leadership model to enhance social enterprise (cooperative) performance especially in measuring the members’ benefits. Cooperative is unique business entity owned by members whereby servant leadership serve the members in the organization.

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