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The Role of European Social Enterprises in Economies and

Public Policy

Prof. Marthe NyssensCIRTES, Catholic University of Louvain

Prof. Jacques DEFOURNY Center for Social Economy

University of Liège Belgium

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1. The socio-economic context of the debate

2. The EMES conception of SE

3. Social enterprises in the whole social economy

4. Social Enterprises between ideal-type and institutionalisation

5. Conclusion

OVERVIEW

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The pioneering initiatives• Late 1970’ – beginning 1980’• Context

– Increasing structural unemployment– Unmet emerging social needs– Limits of public financing

• Limits of traditional social and employment policies to tackle social exclusion : – Long term unemployed or low qualified people– Social problems – Refugees, immigrants– “De – institutionalisation” of mental ill people (Italy,

Sweden…)– …

1. The socio-economic context of the debate

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• Innovative entrepreneurial behaviours driven by a primary social purpose mainly took place within the third sector (WISE, Personal services…)

• Changes in public funding of the third sector played an important role: forms - rather than the volume - of public funding transformed: – quasi-market– second labor market programs

• Key social actors shaping the debate– Federative bodies advocate for a better recognition of

their specificities (for instance, the Italian Consorzi)

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PUBLIC POLICIES PROMOTING SOCIAL ENTERPRISES IN EUROPE

• Public policies focusing explicitly on the promotion of SE (UK since 2002, EQUAL programme,…)

• Setting up of public or public-private funds providing seed capital, loans and other financial supports (France, Belgium,…)

• Promoting access of SE to public procurement (e.g. local public goods)

• New legal frameworks designed for SE

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• New legal frameworks related to the "cooperative model":

• Italy (1991): "social cooperative« (pioneering role)• Portugal (1998): "social solidarity cooperative"• Spain (1999): "social initiative cooperative "• Greece (1999) " social co-operative with limited liability "• France (2001): "cooperative society of collective interest " • Poland (2006): " act on social cooperative "

• New legal frameworks based on a more "open model":

• Belgium (1995): "social purpose company"  • UK (2004): "community interest company" • Finland (2004): " act on social enterprise " • Italy (2006): "social enterprise "

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Characteristics of these laws reflecting• Economic democracy (14/16 laws)

• limits in voting power • limits return on capital shares

• cap on distribution of profit • asset locks

• Multiple stakeholders ownership

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2. The “EMES” approach

An « ideal-type » social enterprise defined by

• An economic project– A continuous production with some paid work– An economic risk

• Primacy of social aim – Limited profit distribution

• A participatory governance– A high degree of autonomy– Stakeholders’ involvement – A decision-making power not based on capital

ownership

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THE EMES DEFINITION AS AN « IDEAL-TYPE »

• These criteria are not conditions to be strictly met to deserve the label of social enterprise

• They rather define an « ideal-type » (abstract construction) within the « third sector » like a star within the « galaxy » of social enterprises

A methodological tool rather than a normative framework

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The concept of social enterpriseis double-sided:

Social enterprises can be

NEW ENTITIES

OR

ALREADY EXISTING ORGANISATIONS

reshaped by new dynamics

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Co-operatives Non-profit Organisations

3. Social enterprises in the whole social economy

A. THE SOCIAL ENTERPRISE AS A BRIDGE BETWEEN THE ASSOCIATIVE (NPOs) AND THE CO-OPERATIVE WORLDS

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Co-operatives Non-profit Organisations

UserCo-ops

WorkerCo-ops Social

Co-ops

A. THE SOCIAL ENTERPRISE AS A BRIDGE BETWEEN THE ASSOCIATIVE (NPOs) AND THE CO-OPERATIVE WORLDS

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Co-operatives Non-profit Organisations

Production-oriented NPOs

AdvocacyNPOs

NPOstransformed

into social firms

A. THE SOCIAL ENTERPRISE AS A BRIDGE BETWEEN THE ASSOCIATIVE (NPOs) AND THE CO-OPERATIVE WORLDS

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Co-operatives Non-profit Organisations

SOCIALENTERPRISES

A. THE SOCIAL ENTERPRISE AS A BRIDGE BETWEEN THE ASSOCIATIVE (NPOs) AND THE CO-OPERATIVE WORLDS

. ..

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Social economy(third sector)

Redistribution

State(public agencies)

Not-for profit For-profit

Market

Privatecompanies

Reciprocity

Community(households, families)

Public

Private

Informal Formal

B. LOCATING SE IN THE WHOLE ECONOMY

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4. Social Enterprises

Between ideal-type and institutionalisation

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Empirical field:Work Integration Social Enterprise

(WISE)The major objective of WISE is to help poorly qualified

unemployed people, who are at risk of permanent exclusion from the labour market. WISEs integrate

them back into work and society in general, through productive activity.

PERSE project : 15 WISEs by country (162 WISEs across Europe)

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STOfin = sosiaalinen työosuuskunta = labour cooperativesVOfin = vajaakuntoisten osuuskunta = co-operative social firms for disabled peopleTKfin = työkeskus = work centresMSJOYfin = muut sosiaalialan järjestöjen omistamat yritykset = other enterprises owned by associations for the disabled

Pekka PättiniemiWISEs in Finland

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Social Enterprise:

between ideal-type …

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SOCIALENTERPRISE

Economic Goals

Social Goals

Socio-political Goals

a) Multiple Goals Social Enterprise

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In the board :

• not only in the hands of shareholders to avoid profit maximizing behavior (social benefit mission)

• Different types of stakeholders for different goals

b) Multiple Stakeholders Social Enterprise

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Market

Donations, volunteers

Public financing

c) Multiple Resources Social Enterprise

SOCIALENTERPRISE

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(Social Enterprise:

between ideal-type …

…and institutionalisation

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• In the 1980’ :WISEs implementing Active Labor Policies (ALP)

before their institutional existence• From the 1990’:

With the process of institutionalisation, most of the WISEs are supported by (specific) public schemes.

=> These Active Labor Policies frame their action …

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- New public schemes targeting work integration social enterprises :

• Entreprise d’insertion, association intermédiaire, FR• Entreprises de formation par le travail, entreprises d’insertion,… Belgium• Social economy program, Ireland• Beschäftigungsgesellschaften, Germany• Integration enterprise program, Portugal• Integration enterprise program, Spain • Social Enterprise, Finland

=> This has even led to the concept of social enterprise, in some countries, being systematically associated with such employment creation initiatives

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CAVAf

SOCIALIZATION THROUGHPRODUCTIVY

ACTIVITY

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TRANSITIONAL EMPLOYMENT SUPPORTED BY SHORT-TERM SUBSIDIES

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PERMANENT

SELF-FINANCED

JOBS(*)

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JOBS SUPPORTED BY LONG-TERM SUBSIDIES

Tkfin

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ONCEs

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SKsw

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Types of work integration in WISEs

Source : ELEXIES/PERSE

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Main characteristic of target groups

Persons with mental or physical disabilities

« Abled » unemployed workers

WCOuk

WCOuk

ETAb

Women at risk

Minorities Low-qualified

young people

«Social handicap»

(alcohol, drug)

«Hard-to-place»

(long-term)

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SOCIALENTERPRISE

Economic Goals

Social Goals

Socio-political Goals

a) Multiple Goals Social Enterprise

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• Economics goals: support work and social integration– adapted to the capacities of disadvantaged groups

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Social services 29 19%Recycling 28 18%

Services for enterprises 19 12%Personal services 14 9%

Gardening, urban regenerat. 12 8%Processing industry 10 6%

Building industry 9 6%Restaurants and hotels 8 5%

Traffic, telecommunication 7 5%Culture and leisure 7 5%

Education 5 3%Commerce 3 2%

Placement services 3 2%Agriculture 1 1%

Total 155 100%

Type of production of European WISEsNb WISE

Source : PERSESource : PERSE

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WITH THE PROCESS OF INSTITUTIONALISATION– no public financing for collective type of production…– pressures from new entrants : for profit firms

• Economics goals: support work and social integration– adapted to the capacities of disadvantaged groups– developing market niches : a successful strategy– collective dimension of the production : social services,

environmental field

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• Social goals :– For all: work integration at the core of the mission– For some of them: collective dimension of the

production– Empowerment of excluded workers through

democratic management structure

WITH THE PROCESS OF INSTITUTIONALISATION– Instrument to the integration in the first labour market based on a transitional model of WISE

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CAVAf

SOCIALIZATION THROUGHPRODUCTIVY

ACTIVITY

EIf

AIf

ETTIf

GEIQf

EFTb

LVdk

BWg

KBg

BLUIg

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TRANSITIONAL EMPLOYMENT SUPPORTED BY SHORT-TERM SUBSIDIES

GFsw

CBuk

WCOuk

SGg

EIp

EIb

IBb

EINf

PERMANENT

SELF-FINANCED

JOBS(*)

SWirl

ETAb

BWb

SWb

SHsw

EPp

SEirl

JOBS SUPPORTED BY LONG-TERM SUBSIDIES

Tkfin

MSJOYfin

BVdk

Types of work integration in WISEs

Source : ELEXIES/PERSE

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• Social goals :– For all: work integration at the core of the mission– For some of them: collective dimension of the

production– Empowerment of excluded workers through

democratic management structure

WITH THE PROCESS OF INSTITUTIONALISATION– Instrument to the integration in the first labour market based on a transitional model of WISE

=> Weaker participation of workers

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• Economic goals : – as a support of work and social integration

• Social goals :– for some : collective dimension of the production : social

services, environmental field …– for all: work integration at the core of the mission

• Socio - political goals – multiple interactions between WISEs and public bodies

In tension

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Multiple goals WISEs facing institutionalization

WISEs’ mission =

multiple goals ?

or a tool of active labor policy

=> Contested nature of WISEs’ mission

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Type of ownership Nb WISE

%

Single-stakeholder

64 41 %

Multi-stakeholder

9359 %

TOTAL 157 100 %

Members of board of European WISEs

Source : PERSE

b) Multiple Stakeholders

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Influence of stakeholder categories in multi-stakeholder European WISE

Stakeholder category

Users Volunteer

Staff Partici-

pant

Busi-ness

Govern-ment

NPO Other Total

Average 5% 20% 21% 7% 10% 13% 14% 11% 100%

Source : PERSE

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Influence of stakeholder categories in multi-stakeholder European WISE

Stakeholder category

Users Volunteer

Staff Partici-

pant

Busi-ness

Govern-ment

NPO Other Total

Average 5% 20% 21% 7% 10% 13% 14% 11% 100%

Source : PERSE

=> Linked to the transitional mode of work integration

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c) Multiple resources

Source : PERSE

53% 39%

8%

Market Redistribution

Donations, volunteers

Total resources : monetary and non – monetary (volunteer, tax deductions, loans of equipment)

SOCIAL

ENTERPRISE

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The origin of resources

Public sector56%

Third Sector8%

Persons21%

Business sector15%

Source : PERSE

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Resources used

Non-marketresources

Marketresources

Donations/Volunteering

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Redistribution SE Market SE Reciproc. and predom. market SE

Reciproc. and redistribut. SE

ExamplesGerman munically-

owned SEWorkers' coops,

community busin.Finnish self-help co-

operativesVoluntary Organis.

Public funding 91% 4% 16% 62%

Non monetary resources

2% 11% 13%

Various Production Various Social Services Various

Mobilisat. of volunteer

Support from NPO

Rooted in local networksMobilisat. of volunteer

Workers in integration

Workers with a weak level of employability

Various, a higher proport. of more qualified workers

A higher proportion of workers with a stronger profile

Various

"Social entrepreneur"

Launched by public bodies or large NPO

Set up by individuals or groups of workers

Sales 9% 94% 24%74%

Source: PERSE

Type of WISEs according resource mix structure

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• Importance of market sales

• Importance of the public sector

• “Re-embedding” of market relationships

• Voluntary resources embedded in civic networks

• Diversity of resource mix according to the type of social mission

Multiple resources WISEs facing institutionalization

But public schemes put WISEs « into the market or

the non-market box »

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=> Managing hybridity constitutes a challenge:Bulwark against isomorphism or threat for their

identity ?

• Institutionalisation generates strained relationships between the different goals and put WISEs into « boxes »

• Hybridity appears to be a channel to sustain the innovative capacity of WISEs linking people from different backgrounds and resources from different nature