When social benefits cannot be measured, an organization that selects managers based on pro-social motivation can be used to balance profits with a social purpose. This paper develops a model of social enterprise based on selection of citizen-managers to run firms with flexible missions. We analyze organizational choice between social enterprise, for-profits, and nonprofits. The paper also develops the implications of matching between founders and managers based on their preferences for the mission.
Besley, Timothy, and Maitreesh Ghatak.
"Profit with Purpose? A Theory of Social Enterprise."
American Economic Journal: Economic Policy,
Firm Behavior: Theory
Business Objectives of the Firm
Nonprofit Institutions; NGOs; Social Entrepreneurship