Social Enterprise in Mexico, a New Business Classification

• Published in: Sustainability 2021-08, Vol.13 (16), p.9264
• Main Authors: Osorio-Novela, German, Mungaray-Lagarda, Alejandro, Ramírez-Angulo, Natanael
• Format: Article
• Language: English
• Subjects: Classification; Economic aspects; Economic development; Economic growth; Employment; Entrepreneurs; Entrepreneurship; Identification and classification; Income distribution; Market economies; Poverty; Small and medium sized companies; Small business; Social enterprises; Social factors; Sustainability
• ISSN: 2071-1050; 2071-1050
• DOI: 10.3390/su13169264

Social Enterprise (SE) is an increasingly important sector for generating employment and distributing wealth in market structures. The social business type two (SB2)—a very specific type of SE—is a category that has challenged orthodox theoretical elements in its main assumptions and behavior in the markets. SB2 is mainly classified within the category of microenterprises because they have a very small number of employees. A new official business classification is important to differentiate enterprises not only by size, but also by type of behavior. There is a new indicator that compares the profit levels of microenterprises with the poverty line as a representative tool to classify Mexican microenterprises into profit seekers and SB2. When these outcomes are contrasted with a discrete choice model under the logistic functional form, the probabilities that this indicator classifies a microenterprise with entrepreneurship by necessity, installed capacity maximization and no profit seeking as SB2 is 80% for microenterprises up to ten workers, and goes up to 92% for microenterprises with one person. With such a new classification, better policies could be promoted to support SB2, and help address both the lack of opportunities from the market economy and poverty menace.