The concept of „social rationality‟ and its

implications for social entrepreneurial

thinking

Plenary Lecture, 2010 Research Colloquium on Social

Entrepreneurship, Skoll Centre for Social Entrepreneurship, Oxford
University, 22nd-25th June

Dr Rory Ridley-Duff
Sheffield Business School (at Sheffield Hallam University)

Supporting Paper: http://shura.shu.ac.uk/2680/

r.ridley-duff@shu.ac.uk
Introduction
• Conceptual Origins
– Ethnography, Grounded Theory and „sensitising concepts‟
– Methodological issues (authenticity, plausibility)

• First Applications
– Relationships as ends, not means
– Social rationality as governance theory
– Social rationality and social capital

• Evolving the concept

– Social rationality as a theory of attraction
– Social rationality as theory of performance
– Social rationality in a „social purpose‟ enterprise
– Social rationality in a „socialising‟ enterprise
Conceptual Origins
• Individualist (Rationalism)
– Focus on personal development (Smith, 1937)
– Individual as autonomous and rational
– Focus on „rights‟ and liberalism (Rawls, 1999)

• Communitarian (Collectivism)
– Common interests, shared goals (Tam, 1999)
– Individual as socially embedded and controlled
– Focus on responsibility for others (Starrat, 2001)
Conceptual Origins
• Unitarist (Consensus)
– Establish and follow „best practice‟
– Scientific universal truths (Lutz, 2000)
– Unitary authority (conflict seen as “irrational”)

• Pluralist (Diversity)
– Duplication / competition
– Emergent truths and (competing) practices (Morgan, 1986)
– Devolved authority (conflict seen as “inevitable”)
Philosophies of Governance
Society served by…
Individualism
Communitarianism
Ridley-Duff, R. J. (2007) Communitarian Perspectives on Social Enterprise, Corporate Governance:
Unitary
1. Governance by a
sovereign, rules created to
impose social order,
allocation of property,
adjudicate conflicts between
subjects.
(Hobbes, Skoble)
2. Governance by an elite,
rules embody shared values,
collective property, elite
adjudicates conflicts
according to collective
interests.
(Weber, Keynes)
An International Review, 15(2): 382-392.
Pluralism
3. Accommodation of
individual conflict, legal and
democratic rights, and
market economics.
(Rawls, Friedman)
4. Accommodation of
individual and collective
conflict, participatory
decision-making, direct
democracy.
(Habermas, Nové)
Philosophies of Governance
Society served by… Unitary Pluralist

Agency Theory Democratic Theory

"Command "Critical Debate"
and Control"
Individualised Berle and Means, 1932
Schumpeter, 1942

Rights Jensen and Meckling, 1976

Pateman, 1970
Rothschild and Allen-Whitt, 1986

Paradox Perspective
Cornforth, 2004
Stewardship Theory Stakeholder Theory
Collectivised Hegemony Theory "Multi-Paradigm“
Rights "Partnership" “Closed Loop”

Donaldson, 1990 Morgan, 1986

Barney, 1990 Turnbull, 1995
Adopting a Communitarian Perspective
• Shifting the lens
– from „liberal individualism‟ (Rawls, 1999)
• Identity as a natural or genetic inheritance
• Personality as a product of traits and social history
• Individual as an economic, social and moral agent

– towards „liberal communitarianism‟ (Tam, 1999)

• Identity as a variable social construct
• Personality as a product of community relationships
• Individual as a contributor to collective action / labour process
Ethnography and Grounded Theory

• Critical Ethnography
– Descriptive, sensitising (Hammersley, Van Maanen)
– Critical, emancipatory (Agar, Thomas, Dey)
– Goal: alternative „plausible‟ reality / „authentic‟ theory

• Grounded Theory
– Inductive and grounded in data (Glaser and Strauss)
– Existing theory to sensitise reader/researcher (Locke)
– Goal: development of a „sensitising core concept‟
Was the methodology robust?

• 18 months data collection

– 3 companies, over 100 individual „cases‟ organised into 30
„authentic narratives‟.
– 7 months in the field (20 hours a week)
– 5 months transcribing / analysing journal and e-mail trails.

• Close coding / thematic development

Was the methodology robust?
Was the methodology robust?
Assistance Physical Meeting, Organising, Making, Avoiding
Intellectual Organising, Theorising, Interviewing, Teaching, Evaluating, Noticing, Checking

Material Money Feeding, Giving, Cooking, Making

Awards
Food / Drink
Attention Access (Preventing) Ignoring, Withholding, Frightening, Forgetting, Withdrawing, Fearing,
Barring, Resisting
Non Verbal Body Language (Touching*, Looking, Smiling*, Waving, Turning*, Flirting*,
Approaching, Copying*, Kissing*, Crying, Laughing)

Behaviours (Meeting, Reading, Offering, Trading, Attracting*, Employing,

Inviting, Arranging, Sending, Acknowledging, Awarding, Attending, Playing*,
Questioning, Encouraging, Giving, Listening, Helping, Impressing, Supporting)

Verbal Phoning, Storytelling, Complimenting*, Writing, Apologising, Talking, Asking,

Describing, Bantering*, Informing, Texting*, Arguing

Sharing Confessions, Contacts, Plans, Reflections, Suggestions, Resources, Time,

Space, Interests
Information Acquiring Enquiring, Exchanging, Telling, Finding, Discovering
Using Understanding, Speculating, Organising
Emotion Intending, Caring, Fearing, Wanting, Feeling, Aspiring, Coveting*,
Appreciating, Liking*, Enjoying

Based on: Ridley-Duff, R. J. (2005) Communitarian Perspectives on Corporate Governance, PhD Thesis, Sheffield:
Sheffield Hallam University, Tables, 4.2, 4.3 and 4.5 , http://www.scribd.com/doc/3271344/
Relationships as ends, not means
• Relationship dynamics
– People adopt (un)intentional strategies….
• To give/get attention (social domain)
• To give/get assistance (economic domain)

• Identity formation…
– … social aspirations / dependencies (reproductive role)
– … economic aspirations / dependencies (wealth creating role)
 Relationships as ends, not means

Economic Social
Rationality Rationality

I
Intellectual Material N Information Emotion
T
Assistance I Attention
M
A
C
Physical Access
Y
Social rationality as governance theory
Attention (Social Domain)
Access Information Emotion
Desire for intimacy Incentive to (dis)agree

Decision Making Processes

Level of dependency Incentive to (dis)agree

Physical Intellectual Material

Assistance (Economic Domain)
 Social rationality in governance theory
Sustainability
Understanding of how to Understanding of how to
satisfy (gendered) economic satisfy (gendered) social
goals goals

Economic Social
Potential Rationality Rationality Potential
Efficiencies Effectiveness

Profitability Operational Social Cohesion

Competence

Ability to satisfy
economic and social
goals
Theoretical Problem Areas
• Contradictions
– Men and women found at both top and bottom of social hierarchies
– …and class does not explain the data…

• Wealth Generating Context

– Linked to child-raising expectations/responsibilities
– One parent oriented towards tasks (wealth creation)
– Other prioritises relationships (social cohesion)
– …OR a delicately negotiated / fiercely contested balance…

• Organisation Structures…
– Reflect relationship aspirations / commitments
– Reflect the relationships people are prepared to defend
– Facilitates (hidden) development of emotional commitments

• Requires updated theory?

Social Capital Literature
• Early Developments
– Coleman (1988) – Community relationships in lifelong learning
– Putnam (1993, 1995) – Civic engagement
– Private/Public domains of social capital

• Application to Social Enterprise

– Cross-group relationships (Evers, 2001; Pearce, 2003)
– A resource and end in itself (Laville and Nyssens, 2001)
– The Community Company Model (Beeby and Norris, 2000)
– Emphasises public, not private domain…
 Social Enterprise Definition
• “Instead of viewing „social enterprise‟ as a subset of the social
economy, it can be viewed as a range of business practices that
proactively build economic and social capital across the affected
stakeholder groups. As such, it regains an ideological character
(and basis) that moves the definition away from „profit‟ based
definitions towards an understanding of social enterprise as the
development of alternative business structures (and practices) that
support socially rational objectives…”

Ridley-Duff, R. J. (2008) “Social Enterprise as a Socially Rational Business”, International Journal of

Entrepreneurial Behaviour and Research, 14(5): 292-312.
Extending the Concept
• Economic & Social Rationality
– Economic Rationality
(Not) Trading physical, intellectual and material assistance…
…with the goal of completing (or disrupting) a task.

– Social Rationality
(Not) Trading access to people, information and emotions…
…with the goal of strengthening (or disrupting) a relationship.

• Socio-Economics
– Etzioni (1988) – Normative/Affective Paradigm
– Hearn and Parkin (1987) – Sexuality at Work
– Lutz (2000) – Socio-economic theory and communitarianism
Social rationality as a theory of attraction

“The premise of Attraction Theory is that selecting sexual

partners and raising children involves navigating two conflicting
perspectives that shape our epistemological and ontological
assumptions about the purpose and nature of work. One is
grounded in the concept of social rationality, the other in
economic rationality.”

Ridley-Duff (2008) Gender, Courtship and Pay Equality: Developing Attraction Theory to
Understand Work-Life Balance and Entrepreneurial Activity, paper to
31st ISBE Conference, Belfast, November 5 – 7th, p. 8
Socially rational view of economic life
Social Life Economic Life

Delegate Caring (if desired) Celebrity Elite No Need to Do Paid Work

Primary Carer Female Part-Time Paid Work
(Necessity)

Secondary Carer Full-Time Paid Work

(Necessity)

Male Male
Human Reproduction

No Dependents Full/Part-Time Paid Work

(Choice)

Female

No Family Life Dispossesed No paid work / illegal trading

Economically rational view of social life
Economic Life Social Life

Delegate Work (if desired) Business Class No Need to Do Caring

Managerial Class Male Secondary Caring Role

(Necessity)

Professional Class Primary/Secondary Caring

(Choice)
Administrative Class Primary Caring Role
(Necessity)
Female Female
Wealth Creation

Labouring Class Primary/Secondary Caring

(Choice)

Male
Underclass (No paid work / illegal trading) Dispossesed No Caring Role
Impacts on entrepreneurship?

• "Interestingly, women are almost as likely as men to be social

entrepreneurs, and in some regions are more likely to be social
entrepreneurs than men. This is in stark contrast to mainstream
entrepreneurial activity where men are twice as likely to be
setting up a business than a woman."

• Source: GEM 2004 Study (Harding and Cowling, 2004:11)

Impacts on entrepreneurship?

60%

50%

40% Consumer Oriented

Business Services
30%
Transforming
20% Extraction

10%

0%
All

All
Women

Women
Men

Men
Early Stage Established

•
GEM 2007 Report on Women and Entrepreneurship (data for women's enterprises)
GEM 2006 Global Monitor (data for all enterprises)
Some Interpretations
• Women are roughly twice as likely to establish consumer
(customer-facing, service-based) businesses

• Women slightly more likely to establish business-to-business

(service-related) businesses

• Men are roughly twice as likely to create businesses capable of

„transforming‟ raw materials (i.e. manufacturing)

• Men are roughly twice as likely to create businesses involved in

„extracting‟ raw materials.

Ridley-Duff (2008) Gender, Courtship and Pay Equality: Developing Attraction Theory to
Understand Work-Life Balance and Entrepreneurial Activity, paper to
31st ISBE Conference, Belfast, November 5 – 7th
Some Implications
• "By defining social power in a way that bridges the spectrum of
work-life issues, it is possible to interpret the academic literature
in new ways…By recognising that women dominate some forms
of power, we can understand that some jobs empower women
(through the promotion of interpersonal contact and emotional
well-being) and that they will not trade these for different jobs
that do nothing to increase their attractiveness. Men, on the
other hand, will trade these forms of power because higher pay
increases their attractiveness.“

Ridley-Duff (2008) Gender, Courtship and Pay Equality: Developing Attraction Theory to
Understand Work-Life Balance and Entrepreneurial Activity, paper to
31st ISBE Conference, Belfast, November 5 – 7th, p. 12
 Social rationality as performance
• "Delegates and interviewees consistently raised the need to define
performance, both in individual and organisational terms. The
study finds that delegates have widely varied conceptions of
performance, ranging from 'meeting organisational targets', to
'meeting self-defined goals', to 'qualitative changes in reasoning
and conduct', to 'maintaining the motivation to work effectively', to
'positive attitudes towards learning'. Attitudes can be divided into
those with a focus on economic performance (tasks) and social
performance (resolving relationship issues).“

Ridley-Duff, R. J. (2009) Coaching for Performance: Evaluation Report for Nottinghamshire NHS
County, Sheffield Business School, Centre for Individual and Organisational Development, p. 2.
Social rationality as performance

“It’s not about efficiency, not about tasks, it is about being effective…and
personal happiness and goals and things. If people aren’t happy, they don’t
perform. It could be their dog is ill, or something to do with the
organisation. It feels that if they have somewhere to go to talk about what
is troubling them, to move on from that, to move on more quickly, they’ll
start performing again. Happiness is the key to it all for me. Sounds a bit
on the hippy side, but there you are.”

Health Sector Manager, February 2009

Ridley-Duff, R. J. (2009) Coaching for Performance: Evaluation Report for Nottinghamshire NHS
County, Sheffield Business School, Centre for Individual and Organisational Development.
Social rationality as relationship performance
Social Performance (social rationality) - “developing a community of interest”
Skills in getting and giving attention in order to form, develop, maintain and end
relationships.

Access Performance as the ability to create, use or shape tasks in such

a way that they contribute to the formation and development of
satisfying relationships.

Information Performance as the ability to obtain, organise, analyse and use

information to support the development of human relationships
for their own sake (rather than in pursuit of a task).

Emotion Performance as the ability to interpret social network dynamics

and clarify emotional commitments in order to help people
process emotions and make decisions about their relationships.
Economic rationality as task performance
Economic Performance (supported by economic rationality) - “getting the job done”
Skills in getting and giving assistance in order to complete tasks

Physical Performance as the capacity to motivate oneself to arrange and

attend meetings with others, and adopt or model behaviours that
support the effective and efficient completion of tasks.

Intellectual Performance as the capacity to develop and disseminate expertise,

and apply it in ways that bring about the effective and/or efficient
performance of tasks.

Material Performance as the capacity to manage money and time effectively

in the acquisition, delivery and completion of tasks / contracts.

Ridley-Duff, R. J. and Bull, M. (2011) Understanding Social Enterprise,

London: Sage Publications, Chapter 12, (in press)
Some theoretical propositions
• Social rationality can help to sensitise us to
the theoretical construction of social
enterprise itself:
– Social Purpose Enterprises: enterprises that deploy social
rationality instrumentally in pursuit of a task or mission

(e.g. intermediate labour markets / employability projects).

– Socialisation of Enterprise: enterprises that have

internalised their commitment to social rationality and
express it through changed institutional arrangements for
governance, ownership and management

(e.g. the „solidarity‟ economy / cooperativism)

Some theoretical propositions
• Social rationality in social purpose enterprises
– Where social enterprise is seen as „business with a social
purpose‟, social rationality is deployed instrumentally.

– Relationships are used to pursue a (social) mission, and are

justified in terms of their contribution to („rationalist‟)
economic performance.

• Social rationality in socialised enterprises

– Where social enterprise is seen as „socialising‟ the
entrepreneurial or business process, socially rationality is an
embedded concept (e.g. as „mutuality‟ and „reciprocity‟).

– Economic rationality (a task or mission) is deployed

instrumentally, and is assessed in terms of its contribution to
social performance.
Summary - Social Rationality
• As a descriptive theory of governance
– Explains under-theorised aspects of firm development
– Helps to theorise the diverse contexts for entrepreneurship

• As a way of theorising social performance

– The capacity to use tasks to develop relationships…
– The thinking that underpins the development of social
networks and social capital…

• As a theoretical dimension of social enterprise

– Social rationality as a „tool‟ to be deployed instrumentally in
pursuit of one or more social purposes.
– Social rationality as a concept that helps to theorise the
socialisation of entrepreneurship.
References
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• Ridley-Duff, R. J. (2008) “Social Enterprise as a Socially Rational Business”, International Journal of Entrepreneurial
Behaviour and Research, 14(5): 292-312.
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Balance and Entrepreneurial Activity, paper to
31st ISBE Conference, Belfast, November 5 – 7th
• Ridley-Duff, R. J. (2009) Coaching for Performance: Evaluation Report for Nottinghamshire NHS County, Sheffield
Business School, Centre for Individual and Organisational Development.
• Ridley-Duff, R. J. and Bull, M. (2011) Understanding Social Enterprise, London: Sage Publications, Chapter 12, (in
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