Social enterprises are firms that actively create jobs for people with disabilities and reduce social and labour inequalities, thereby participating in the social economy. Due to their importance to society and the work they do towards diversity integration and social sustainability, they have recently attracted much attention in academic literature. For this reason, the main objective of this study was to analyse the survival of social enterprises, identifying key variables that condition their continuity in the market or their failure. The initial sample consisted of 999 social enterprises for the year 2022. The Altman Z-score and artificial intelligence (AI) algorithms were used to obtain the basic survival patterns. The main findings were that, on average, social enterprises are highly experienced companies and only one-third of them are at risk of bankruptcy. This means that most of these enterprises can continue their social function. Moreover, the results of return on assets (ROA), equity and debt turnover can predict being at risk of bankruptcy of social enterprises. This study contributes to the scarce academic literature on social enterprises and promotes the existence of such enterprises for social and economic sustainability.
Policy Implications
- As social firms are relevant for promoting work for people with disabilities, policymakers and governments should support its viability.
- The creation of social enterprises should be promoted, as well as management support, to prevent their failure. The closure of these enterprises for whatever reason negatively affects the social economy of the country, the fulfilment of the Sustainable Development Goals (SDGs) and the socio-labour integrity of people in need.
- Social enterprises must be oriented to continue their business and create jobs for people in need, while at the same time avoiding the risk of bankruptcy. Variables such as debt, profitability (ROA) and equity are the main patterns for the survival of these companies.
- The variable of public subsidies plays an important role for social enterprises in reducing the risk of bankruptcy. Subsidies can help to reduce the financial risk in difficult times. This issue is important because social enterprises are first and foremost oriented towards social work and then towards profitability.
Photo by Marcus Aurelius