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7.1. Competition in the sector PDF Print E-mail
Written by Leo Bartlett   
Friday, 07 December 2007
Competition has always been the pillar of economic capitalism. Competition can (but not always) stimulate innovation and encourage increased efficiency. Competition is regarded by many people as the foundation of capitalism. Competition occurs when two or more parties act independently to secure someone else’s business on the best terms possible. So how does this apply to the Social Economy in our study?
•    The source of competition among Social Economy organisations was seen to be rooted in vying for (too little) funding and funding opportunities among too many social sector organisations and programs.
•    There was very little mention of collaboration and cooperation among too few members of the Social Economy as a strategy to resolve this perceived issue of overpopulation of programs and organisations. Indeed the data from the study, indicated that there was little cooperation and collaboration occurring in the sector.
•    When a question about ”Collaboration and Cooperation” was raised, the term competition was repeatedly used to “explain away” the absence of collaboration and cooperation.
•    In the views of respondents, the issues of Funding and Resources, Competition, and Collaboration and Cooperation” were all associated within a specific “free market” orientation framework of thinking about competition.
•    Too much competition was inferred as a justification for reducing the number of programs and organisations in the sector (this usually meant reduction in the number of smaller organisations).

Little wonder that (difficult to comprehend) comments such as the following were made:
The whole purpose of the Social Economy is to attract funds for support of social issues. Thus, strategies to increase funds and to identify resources of funds determine the success of the Social Economy .
Many [NFPs] need to be educated on where/how they can get funding e.g. memberships, sponsorships, government grants. Having said this, many lack the skills, $‘s and resources to accomplish this. Many NFPs fold due to the pressure of no funds or resources and shear frustration .

The overriding concern for financial sustainability appears to set the conditions for fierce competition within the sector with the consequences of:
•    lack of unity;
•    low advocacy;
•    few lasting alliances (among similar industries especially)

In terms of the outcomes of economic competition, participants often claimed that competition:
•    ”stifled innovation”;
•    “wasted precious resources” (for example, through expending these resources in following ”the grant trail”, and an excessive number of applications to funders);
•    “contributed to a lack rather than gain in efficiency, effectiveness and impact”; and hence also
•    “led to lack of transparency in the sector”.  

We interpret these claims of participants to reflect precisely what we have observed previously; namely, that the majority of participants in the study made claims (similar to the above) that were contested and contradicted by the views of a smaller more competent group of participants. Hence in Chapter 3, we observed that the views of the more knowledgeable and sophisticated participants contradicted the general population. Again in Chapter 5, we recorded a long list of claims about funding issues. Where the majority posited these as cause, the more competent executives viewed them as symptoms.

We made the tentative interpretation that the larger population was composed of those who may not have had the benefit of advanced management development.

However, when we explore the issue of competition we need to ensure that we are talking about the same issue.  Competition in some areas or forms might actually create social value whereas competition in other areas might reduce it.

To assist this discussion we deconstruct competition into sub-topics for convenience.  The subtopics are:
•    “levels” or “form” of competition
•    corollary, being proprietary intellectual property
•    heterogeneity & sub-sector conditions that might argue for more or less competition
•    reconciliation of the scarcity of resources and competition
 
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