Social enterprises are a unique form of organisation, located where the public, private and voluntary sectors intersect, typically founded by dynamic individuals who deal with social injustice by finding resources in the community. As these organisations develop, isomorphic pressures from stakeholders such as funders and regulatory bodies lead to a formalisation of previously informal relations with vulnerable beneficiaries. This could cause harm or distress to the beneficiaries, which can then impact on front-line workers who are providing day-to-day services to them.

In healthcare organisations, it has been shown that workers can form psychological defences to deal with the stress of working with people in pain or distress, which can account for otherwise inexplicable behaviour in teams and organisations. Since social enterprises also deal with people who are vulnerable and needy, they too could evolve similar defences, complicated by the involvement of these individuals in the roles of both client and as stakeholder that can influence the organisation's governance.

This exploratory paper first considers social enterprise as a unique form of organisation, then how stakeholder involvement in governance contributes to legitimacy. After outlining how individual and group psychological defences can affect healthcare organisations, the paper then considers the implications for social enterprise governance, concluding with recommendations for further research.