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Social Enterprises In Singapore: The Perception Gap

In September last year, I was pestering people to complete a survey so as to determine perceptions towards social enterprises in Singapore. Besides the obvious limitations of a small sample size and reaching out only to retail consumers, there were some interesting findings in the form of a presentation, which you can peruse by clicking on the image below:

Social Enterprises The Perception Gap

Here is the introduction to the research study:

In the 2010 “Public Perception Survey on Social Enterprise”, commissioned by the Social Enterprise Association (SE Association) in Singapore – an umbrella organisation “tasked with the role of promoting social entrepreneurship and social enterprise … to bring about positive social impact and an inclusive community among Singaporeans” (Social Enterprise Association, 2014a) – the 2,000 interviewees were asked if they would be willing to pay the same or higher price for products or services which were sold by social enterprises (Social Enterprise Association, 2011, 33). Over 70 per cent indicated that they were willing to. For instance, 50 per cent would pay the same price for a $10 teddy bear from a social enterprise as a gift, and 26 per cent would pay more than the actual price.

At first glance the findings are encouraging. These respondents might reckon that social enterprises contribute back to the society and are engaged in meaningful social causes (Social Enterprise Association, 2011, 28), and hence are willing to pay competitive prices – or even a premium – for products or services from these companies. Yet this optimism should be tempered with some scepticism. Especially in the context of face-to-face interviews, respondents might be less likely to divulge their actual willingness to pay. Furthermore, the SE Association conceded that respondents in its study were also briefed on the social objectives of social enterprises in Singapore (Social Enterprise Association, 2011, 34). The fact that the notebook, teddy bear, and home moving service were priced at $5, $10, and $500 respectively could also have primed the respondents to overstate their willingness to pay.

Past studies have been done to ascertain consumer behaviour towards companies with ethical production strategies. Trudel and Cotte (2009), after experiments on coffee and cotton products, concluded that “[t]he negative effects of unethical behaviour have a substantially greater impact on consumer willingness to pay than the positive effects of ethical behaviour” (Trudel and Cotte, 2009, 67). Conversely, when studying fair-trade coffee, De Pelsmacker et al. (2005) found that “consumers’ behaviour in the marketplace [was] apparently not consistent with their reported attitude toward products with an ethical dimension” (De Pelsmacker et al., 2005, 381). Nevertheless, such results will not necessarily follow for social enterprises, which are premised upon more varied, unique selling propositions – that is, not just ethics per se. Studies like these have also rarely been done in the Singaporean context.

Surveys and polls by the SE Association and the mainstream media in Singapore have been premised upon whether consumer perspectives fit conventional characteristics of social enterprises. These approaches are unfortunately problematic, because even though academics and practitioners have varying conceptualisations of social enterprises, with their distinct “emphases and discrete outcomes” (Kerlin, 2006, 248), these surveys still expect respondents to adhere a predetermined conception of the social enterprise. With the present discourse in Singapore – and efforts by the Asia Centre for Social Entrepreneurship and Philanthropy (ACSEP) to “draw the line between a regular business and a social enterprise” (Goy, 2014) – a different approach would be helpful. Beyond the present reliance on prescriptive methodologies, this paper argues that the aggregation of descriptive opinions could give rise to a more general and broad-based determination of the social enterprise in Singapore.

These are the three research questions for this research paper:

1. How do retail consumers in Singapore understand the social enterprise?
2. What is the premium – in dollar terms – that retail consumers in Singapore are willing to pay for goods and services from social enterprises?
3.What are the levels of interest and involvement in social enterprises in Singapore?

This research paper henceforth posits that there is a perception gap concerning the roles and responsibilities of social enterprises, which consequently explains the low premiums consumers in Singapore are willing to pay for goods and services from these companies. The government, together with organisations such as the SE Association, might be anxious to raise awareness, but they should be more cognisant of varied understandings of social enterprises, and instead formalise a set of general characteristics for greater legitimacy.

Here is the conclusion:

In response to the research questions articulated at the beginning of this paper, first, retail consumers in Singapore have a fairly good understanding of social enterprises, even though some variations in their comprehension persist. Expectations and standards of the organisations are varied. Second, these retail consumers will not pay a premium for goods and services from social enterprises. Even when differences in the willingness to pay – in other words, the premiums – are observed, they are statistically insignificant. Finally, while the respondents appreciated the work and value of social enterprises in Singapore, they were unlikely to be personally involved in these organisations. Based on these findings, three thematic policy recommendations were crafted: to engage more Singaporeans across all sectors in conversations, to see social enterprises in the context of the non-profit sector in Singapore, as well as to strengthen the business fundamentals of these organisations.

This research paper is a small contribution to an emerging field of study in Singapore. Some non-profit and voluntary welfare organisations are looking to business models of social enterprises in a bid to become financially sustainable, others – often motivated by personal experiences or an innate desire to do good – view social entrepreneurship as a means to marry social objectives and business principles, and amidst this flurry of activity the government is concerned that some might abuse the “social enterprise” label for more pragmatic purposes. The finding that Singaporean retail consumers are not willing to pay a premium for goods and services from social enterprises might not necessarily be negative, since the likelihood of misuse is less likely if it is impressed upon organisations that the financial benefits are not obvious. In this vein, since discussions on social entrepreneurship have been limited to academics or practitioners, it would be more constructive to involve more in exchanges, and to strengthen the financial bottom-line of existing social enterprises.

This paper would not have been possible without the guidance of Associate Professor Lim Ghee Soon of the National University of Singapore. I would also like to thank all the respondents who took time to complete and share the questionnaire.

About guanyinmiao

A man of knowledge lives by acting, not by thinking about acting. Carlos Castaneda.

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