Social enterprise makes perfectly good business sense in tourism. As a business model, it has enormous potential to deepen meaningful connections between purpose-led businesses and their customers.
At a systems level, collectives of social enterprise can help to deepen connections between hosts and guests, and for travellers to see and understand the world, and the places they visit, in a different and deeper way.
At an individual level, social enterprise can also trigger development of the self, and help to evolve our level of social and environmental consciousness.
In this post, we explain social enterprise, why it makes perfect good business sense for tourism, and its potential to help us transition towards regenerative economies.
Source: Dining on surplus food. The story of food and food waste delivered during the TEFI conference in 2017 transformed visitors understanding of food and participants' roles and responsibilities as global citizens.
In a post-pandemic world, businesses that deliver positive social and environmental impact will become more important as consumers become increasingly conscious of their impact. The power of social enterprise in tourism has been discussed previously by Anna Pollock, Roberto Daniele and Pauline Sheldon, yet the uptake of social enterprise in tourism has been slow, and it is often misunderstood.
What is social enterprise?
A social enterprise is a organisation that has at the very core of its business model the delivery of a social and/or environmental mission.
Social enterprises have a purpose beyond profit. Social enterprises are for-profit businesses, where the profit generated is invested back into achieving its social and environmental mission. Social enterprises stand in contrast to growth-focused, profit-driven business models where any profit is distributed to external shareholders. The mission of the social enterprise is central to the reason why the business exists (i.e. its purpose), and is reflected in its business structure and operations.
Social enterprise is not CSR. Social enterprise is often confused with CSR (corporate social responsibility) initiatives. CSR is a voluntary add-on feature to a business model. Businesses might contribute to CSR initiatives when profit margins permit, but the rest of the time they continue with business-as-usual which may involve generating negative social and environmental impacts. A mining company or an airline might have a CSR program, for example, but that doesn't make it sustainable or reduce its impact.
Social enterprises are not charities or NFPs. Social enterprise is also often confused with charities and not-for-profit (NFP) models. NFPs and charities usually rely on external sources of funding such as philanthropy, donations, or government grants. Alternatively, social enterprises generate most (if not all) of their revenue from operating in the market place. The difference is that instead of profits being distributed to global shareholders, profits are redirected back into delivering the social and/or environmental mission of the business.
Social enterprises are generative not extractive. Social enterprises contribute to goals such as improving community well-being, generating employment, supporting marginalised people, contributing to quality of life, restoring connection to culture, resilience, environmental restoration and regeneration. These missions are often place-based, which is why the tourism sector could work more closely and collaboratively with social entrepreneurs to deepen the experience of place.
Source: Catalyst 2030 Catalysing Change week May 2022 - Regenerative tourism and social enterprise.
Social entrepreneurship catalyses positive change
As a business model, social enterprise has taken off across the world. While it is difficult to estimate the growth given the very different contexts and policy supports that exist, there is evidence to show it is a global phenomenon. The expansion has now led to the emergence of global support networks including Ashoka, Catalyst 2030, Skoll and others.
These global networks "catalyse transformational social change by investing in, connecting, and championing social entrepreneurs and other social innovators who together advance bold and equitable solutions to the world’s most pressing problems." (Skoll 2022).
The power of this approach is that collaboration across a social enterprise system can unleash synergies of positive impact. In this case, the benefits of catalysing a social enterprise system are far greater than the sum of the impact an individual business may generate.
Why is social enterprise booming?
Social entrepreneurship is growing more rapidly than other forms of business, which in turn aligns with a number of clear shifts:
Businesses with purpose do better. The desire to find purpose is a clear trend for over a decade. Businesses that establish a clear purpose beyond profit, and can demonstrate that they deliver on that promise are performing more strongly that businesses that focus on profit alone. They have higher rates of consumer satisfaction and repeat customers.
Workers are searching for purpose. It started before the pandemic but the trend will only increase in the post-pandemic period. Workers are increasingly looking for meaning and a deeper sense of purpose. Research shows that businesses that are based on and deliver on a social and/or environmental mission can retain their workers, have a higher level of employee engagement in management, and are more likely to feel ownership and bring innovation into their roles in the organisation.
Communities support businesses aligned with local values. It's a global phenomenon that communities are pushing back and wanting a say in the decisions that affect them. They are asking why they have to accept a growth and development agenda, especially when it is clear that the value generated by these developments does not appear to contribute to community well-being and environmental resilience. Communities will support businesses that invest back into local well-being. We saw during Covid-19 that these businesses with a strong local social and/or environmental mission were strongly supported by their local communities.
People are aligning their values and purpose. The research is clear, having a sense of purpose not only provides individuals with meaning, it is also strongly correlated with a deeper sense of belonging, a sense of identity, and happiness. Purchase decisions, lifestyle decisions, travel decisions, ethical and life decisions are also made easier when one has a sense of purpose - or their own a guiding star.
An increasing army of lifestyle, micro, and small business owners and entrepreneurs are adopting social enterprise as their business model as more and more people seek to align deeper meaning and the purpose they seek in life and work. Even before Covid-19, the boundaries between work, leisure and life were becoming blurred, and the pandemic only hastened the drive to find alignment between our values, our purpose, how we connect, and act in the world. As a result, when a business displays a strong social or environmental mission, and can demonstrate that they deliver on it, they are more likely to perform better, enjoy stronger customer loyalty, and be accepted and supported by the local community.
Why social enterprise makes perfectly good business sense for tourism?
Social enterprise has enormous potential to deliver transformational visitor experiences. Transformation occurs when visitors connect with their inner selves, with others such as fellow travellers and the community, and with nature. A true transformational connection occurs when a visitor can see the world in a different way, build empathy and a connection with others, and transform their thinking and understanding. It's a portal into a new higher understanding, where these new insights cannot be unseen. Such experiences can transform visitors understanding of the place they visit, and the people and the culture of the hosts. Adopting an audacious mission to evolve visitors' thinking, social enterprise can also help to transform our understanding of nature, and help us understand the human impacts on vulnerable ecosystems.
Source: Community Benefit Tourism Vietnam. TEFI and Tourism CoLab social enterprise walking workshop 2020.
For example, a neighbourhood tour carefully curated and guided by marginalised people (e.g. ex-homeless, ex-street walkers, ex-criminals, refugees, and others) has incredible power to interpret the neighbourhood in unimagined ways. As the guide delivers their story, breakthrough understandings transform the relationship between host and visitor. The visitor walks away with a deeper understanding of social realities of others less privileged, and a heightened sense of their own privilege. The social enterprise delivering the experience delivered training and employment. And, in our own work, we found that the guides delivering their stories, not only developed skills (e.g. care of self and others, public speaking, workplace administration, and storytelling) but they also benefited from feelings of being empowered and increased confidence.
Street Voices, Copenhagen, Denmark (Dredge & Meehan 2017)
Social enterprise can transform consciousness
Tourism social enterprise has the potential to evolve consciousness. It is the evolution of our consciousness that is the most pressing challenge we face in confronting social, ecological and economic disruption ahead. Kegan's (1982) work on transforming mindsets suggests that raising our consciousness, in moving from the competitive mindset (me) to collaborative mindset (we) is essential so that we can start to address these complex challenges ahead. So what is the link with tourism?
Visitors often find themselves in a relaxed state, happy, and emotionally connected. Research into neuroscience suggests this is precisely the state we need for our minds to be open to new ways of understanding, to learn from new experiences, to step outside our comfort zones, and to see differently. In this relaxed and happy state the neuro-chemical cocktail flowing though our brains puts us in a state where deep transformation is possible.
Social enterprises offering genuine experiences that can transform visitors' hearts and minds and shift their core assumptions. The visitor becomes connected to the place or the people in deep and authentic ways that cannot be undone. Think of a visitor experience you have had that has transformed you, and helped you connect at a deeper level with your friends and family or perhaps it was a connection with nature. You will never be the same again.
"The experience made my skin tingle. I was speechless. I couldn't walk away when the tour was over. We all just stood there in silence, bonded to each other by what had just occurred. I will never think of homelessness in the same way ever again".
"I came face to face with my own biases... (This experience) triggered a huge sense of guilt about my assumptions. Wow. I had never ever even considered that prostitution wasn't a choice... This has changed completely what I thought."
Source: Participant feedback from street voices tour
Visitors who see or experience something that shifts understandings of themselves, of others, or nature cannot be undone. This is why understanding the power of social enterprise to deliver transformative experience is an enabling pathway to positive impact and regenerative tourism. Put simply, social enterprises can connect, transform, and take us to a place of deeper and more authentic understandings of the places we visit.
Social enterprise delivering on the shift
Photo: Community gardens provide a visitor experience, insights, learning experiences and a deeper connection into place.
It just makes plain good sense that visitors want to connect in authentic and genuine ways with the people and the places that they visit. Whether conscious transformation takes place depends on a range of factors many of which are outside control since transformation is an emergent experience dependent upon both personal characteristics and contextual parameters. But one thing is for sure, if the visitor sees, experiences and/or learns something about themselves, about others, or the environment that transforms the way they see and act the world, it cannot be undone.
While the drive for authentic connections with destinations was happening before the pandemic, it appears that the shift is accelerating. Intentional travel is on the rise. Their spend is often stickier and spreads further into local communities. They are prepared to go out of the way to find memory-making experiences that move and inspire them. They seek authenticity, new learning experiences and show a deeper appreciation for the places, and communities they visit. These travellers are intentional, they care about the impact they generate, and they often seek out deeper stories and connections with the places they visit. Research corroborates this argument:
DMOs as social enterprises
Some organisations understand the change ahead and are catalysing the change by being what they wish to see. Victoria Island tourism organisation (recently renamed 4VI) made an 'industry leading' move in April 2022 announcing its intention to become a social enterprise.
“Tourism Vancouver Island was a 60-year-old organization and we need to change with the times. We are making an industry-leading transition that will allow us to be Vancouver Island’s respected tourism advisors known for investing profits into powering the stewardship of our destination and our home.”
This shift places the delivery of social, economic and environmental good at the core of the organisation's business model. It also flips on its head the old assumption that tourism is to benefit 'the industry'. Instead, the root motivation to support the visitor economy is to deliver social, environmental and economic good for local communities on which tourism relies.
Four reasons you can't ignore social entrepreneurship in tourism
There are four key reasons you can't ignore the benefits of tourism social entrepreneurship as a place based strategy, especially given the changes unfolding and the need for more resilient local economies ahead:
Place-based social enterprises catalyse positive change for communities. Building the capacity of traditional players to transform and innovate in their business models to deliver a purpose beyond profit is the shift that is coming, ready or not.
Social enterprise flips tourism to be generative not extractive. It transforms extractive economic activity to a generative activity that invests back into places.
Social enterprise responds to the search for meaning. Social entrepreneurship is a tool or model that can respond to the search for meaning, the demand for positive impact, and conscious ethical consumer choices.
Social entrepreneurship delivers transformational visitor experiences. Delivering transformational visitor experiences provide genuine, authentic connection between places, the people who live there, and visitors.
Daniele, R. & Sheldon, P. 2017. Tourism and Social Enterprise: Philosophy and practice. Springer.
DREDGE, D. 2017. Institutional and Policy Support for Tourism Social Entrepreneurship, In Tourism and Social Enterprise: Philosophy and practice. Springer.
Dredge, D. and Meehan, E. 2019. Street Voices, Copenhagen, Denmark. Published in Jamal, T. (2019) Justice and Ethics in Tourism, Earthscan, Abingdon & New York.
Pollock, A. 2016. Social Entrepreneurship and Tourism: The conscious travel approach. TIPSE/TEFI. Tourism Education Futures Initiative.
Note: The Tourism CoLab, a social enterprise itself, is a capacity building organisation that catalyses positive change. We work with tourism organisations, businesses and communities to collaboratively design new regenerative pathways for hosts, guests, and special places.