Modelling Social Enterprises

The majority of researchers concentrate exclusively on the objectives of governments, profit organisations, or non-profit organisations, while a significant number of organisations are hybrids. One form of these hybrids is the social enterprise.
This paper formally describes social enterprises taking into consideration their main aims. Based on the ``earned income'' school of thought, the principal-agent theory, and considering the nature of social enterprises' activities we propose the objective functions of their donors/owners (a principal) and managers (an agent). The maximisation problem of the social enterprise is defined as a weighted average of the utilities of two groups of stakeholders who have an influence on the degree of the realisation of the mission and business orientations. We point out the direction which social enterprises should follow to obtain the highest value of their objective functions. The desired state for social enterprises should be the one in which they reinvest all surpluses in the process of their mission realisation and their profit is slightly higher than the required level.