Page 326 - Social Enterprise A New Business Paradigm for Thailand

11.2 Current Limitations of Social Enterprises

At the 2024 annual assembly of community enterprises, which was attended by 80 members,
four key limitations of social enterprises were identified. These align closely with findings from

interviews conducted with social enterprises participating in this study: (1) Social enterprises
remain largely unknown to government agencies, including local administrative organizations
(LAOs), as well as to the private sector and the general public. This lack of recognition is
particularly problematic when these enterprises seek legal entitlements such as preferential
treatment in public procurement. As a result, many state agencies hesitate to grant them the
legal benefits available under existing laws. (2) Entrepreneurs and workers often lack business
acumen and have limited access to funding sources. These enterprises need substantial support
to build their capacity and organizational strength. (3) The information on legal benefits and the

registration process for social enterprise status is often difficult to understand and offers
insufficient incentives to encourage formal registration. (4) Many social enterprises are
unprepared to respond to external disruptions and long-term challenges, such as climate
change and environmental shifts, due to limited knowledge and readiness.

As noted in Chapter 8, small social enterprises that lack backing from the government or large
private companies typically fail to generate profits within their first five years. Interviewees
described their operations as precarious, with frequent setbacks. Consequently, they tend to
place greater expectations on government procurement support than on tax incentives, as most

are too new and not yet profitable enough to benefit from tax deductions. In this context,
having “wind beneath their wings,” that is, strong external support, becomes critical for
progress.

Chapter 9 further highlights the role of corporate social responsibility (CSR). Under current laws,
companies are permitted to allocate up to 2% of their profits to social initiatives or to enhance
the sustainability of their operations. A portion of this may also be used for charitable giving. If
all listed companies on the stock exchange were to fully utilize this allowance, the total amount
directed to social initiatives could reach approximately 20 billion baht in 2023. However,

interviews with social entrepreneurs indicate that most companies’ actual CSR spending falls
far short of this ceiling.

In summary, the success of social enterprises depends heavily on visionary, resilient, and
committed leadership. Financial data show that most social enterprises remain financially
unsustainable for at least their first five years, and it typically takes around seven years before
they begin to turn a profit. In short, social enterprises are “hard to start, easy to fail, slow to
grow, and in need of wind beneath their wings.” This is largely due to the fragile markets in
which they operate, a topic that will be explored further in the next section.

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