SETTEMBRE 2017
 
A map of social enterprises and their eco-systems in Europe

A map of social enterprises and their eco-systems in Europe

Abstract

A new study on social enterprise in Europe has been recently published: “A map of social enterprises and their eco-systems in Europe” (European Commission, 2014a). It is a useful update for policy makers and practitioners engaged in implementing important regulatory mechanisms and development programs for social enterprises: structural funds, financial programs, market regulation, training programs, etc. The study presents an interesting set of tools that may contribute to change the internal framework of this sector. We propose a critical review of the document, especially in relation to the structure and the role played by the ecosystems of resources and services supporting social enterprises.

Italian Version

 

“Variability” (of forms and models) and “lack” (of information and answers) are terms that appear frequently in the Executive Summary recapping the main results of the Map of Social Enterprise recently promoted by the European Commission (European Commission, 2014a). Add to this the fact that the final guidelines are reduced to a list of “barriers and boundaries” and the result is a challenging playing field for social enterprises in Europe. Such difficulties are not in line with the increasing relevant role assigned to social enterprises by the European policy framework. In the document, in fact, the impact of this entrepreneurial model is repeatedly emphasized as a means to face increasing economic, social and environmental challenges, whose resolution cannot be delayed any longer.

The gap between expectations and reality, therefore, is wide and new multilevel policies (European, national and local) are called to reduce, if not to neutralize, it. But how? The answer proposed by the document consists in a “policy framework” in which norms, support services and resources are structured as an eco-system placed on a “middle ground” between top-down interventions (promoted first of all by Public Administration, but also by other actors who, for one reason or another, wish to play a supportive role) and bottom-up infrastructures created by social enterprises themselves (for example, through representation and coordination networks, product/service brands, voluntary certificates, etc.)

mapping1Fig 1: Policy framework for social enterprise | Source: European Commission 2014, “A map of social enterprises and their eco-system in Europe”

An eco-system structured in this way should support the development of social enterprise as an autonomous entrepreneurial sector, thus going beyond a representation that, especially on a European level, is strengthened by the existence of isolated and “disrupting” initiatives that do not add up to an homogeneous picture. Although the term “eco-system” has been adopted by EU institutions as a metaphor of the vast and complex environment in which social enterprises originate and develop, an insightful debate on the consequences arising from the use of this term is still missing. Even in the European mapping study, in fact, the term “eco-system” is used reductively, as a more or less extended list of actors (and related functions) operating in a certain territorial, socio-economic and normative context. However, the most important part of an eco-system – the one which makes its use particularly effective even in the field of social entrepreneurship – does not refer to the first half of the word (“eco”), but rather to the second (“system”), i.e. the relational dimension among the actors, the scalability of initiatives evolving in time. In other words, what characterizes an eco-system is not only the group of “living beings” inhabiting it, but most importantly the way in which they interact among them and with the actors of other eco-systems, thus engendering processes that have an impact on the eco-system as a whole or on single parts of it. Having a clear understanding of the constitutive dimensions of the eco-system – actors, relations, range and time – may be functional to the creation of policies and actions based on pertinent and measurable feedback.

This is not an easy task and the main complexity is to be found both in the internal structure of the eco-system, and in the contexts in which the eco-system realizes itself. Therefore it is crucial to grasp those features of variability featuring social entrepreneurship and treat them not as problems but rather as elements enriching the knowledge and policy framework.

Looking at the different components of the eco-system, some criticalities emerge on the following aspects.

A) As far as the normative framework is concerned, we can notice the substantial failure of all those laws that, as in the case of Italy (law 118/05 and subsequent decrees), tried to put different models of social enterprise in the same juridical framework and used a general nomenclature, thus overcoming an approach based instead on an ad hoc juridical form (in the case of Italy, law 381/91 on social cooperation law). Nowadays the “magnetic field” generated by laws on “second generation” social enterprises revealed itself to be less powerful than many entities that, as the Executive Summary points out, remain “under the radar” and which are located, on the one hand, among nonprofit productive organizations and, on the other hand, among for-profit enterprises incorporating the production of social value in a more consistent way that traditional CSR policies. As a result, the majority of social entrepreneurship continues to act by means of unspecified juridical forms, and it is not a case that in the Executive Summary the expression “de facto social enterprises” appears a number of times. From this point of view, it is fundamental to establish a relationship with pre-existent and institutionalized forms of social entrepreneurship in various Member States. In fact, if it is true that social enterprises are deeply rooted in the social economy, it is likewise true that in certain contexts this link is weaker, not only because of normative issues, but also because of historical and cultural factors (as it is the case in many Eastern European countries, for example) which may cause problems among the different components of the local eco-system.

B) The normative recognition inevitably recalls the definition and, therefore, the Executive Summary suggests a development, though not really relevant, in the definition of social enterprise thanks to the combination of three elements from which some “core criteria” originate (Box 1). If there is an almost unanimous agreement on the social (pursuit of an explicit objective of a general interest) and entrepreneurial (continuity of productive processes) dimensions, there are different opinions on the third criterion which also shows a wider leeway on a normative level. It is the governance dimension, which includes all those criteria concerning the stakeholders’ involvement in decision processes, but also additional aspects such as profit distribution and patrimonial asset lock. All those elements, though with different degrees of intensity, are under the law-makers’ attention (even the Italian one) with the aim to improve the appeal of normative rulings.

mapping2Box 1: List of basic criteria reflecting the minimum requirements that an organization should meet in order to be classified as a social enterprise according to EU definition | Source: European Commission 2014, “A map of social enterprises and their eco-system in Europe”

C) As for resources, the Report focuses perhaps excessively on a dedicated financial system which is no longer grounded only on actors and tools directly or indirectly generated by social enterprises themselves or by similar organizations. Here the emphasis is centered on the role of mainstream financial actors who identify a new investment asset class – if not in this model of enterprise, at least in some of its important sectors. The contribution of social (or ‘solidarity’) finance would have probably required a deeper focus, especially from an evaluation standpoint, considering the recent development of this way of providing resources to social enterprises across the world but most of all its real transformative potential. The eco-system outlined in the Executive Summary is characterized by the existence of an actual “market of social impact investments” which is still to be constructed (according to the results of the mapping exercise), but which probably can mobilize resources and implement pilot projects like those on “social impact bonds” in the United Kingdom. Besides, finance causes a dragging effect even on other components of the eco-system, particularly as far as measurements of social impact and consulting and support services to development are concerned. Without these additional components, in fact, financial resources would lose their power, because they could not identify and measure social effects influencing the economic dimension. In addition, without an adequate system of services supporting social business models, a mismatch would appear between, on the one hand, a growing, diversified and competent supply of financial resources and, on the other hand, a demand on the part of entrepreneurs which would not be able to (or interested in) intercept these resources.

D) Another complex element characterizing the implementation and the consolidation of social entrepreneurship eco-systems concerns the growth (or “scalability”) models, particularly of the most significant innovation elements (of both product and process). The system proposes mechanisms that are not new to mature social entrepreneurship, such as supporting networks and tools like certifications and brands. Even in this case, it will be interesting to verify the effect exerted by financial resources that are going to be allocated on the basis of the replicability and transferability potential of the investments that they contribute to subsidize.

The resistance of social enterprise eco-systems is connected not only to their structure, but also to the basis on which they are grounded, coinciding to the main socio-economic factors (drivers) fostering the creation and the development of these enterprises. In the Executive Summary, the traditional areas of sources of social entrepreneurship are updated and re-launched, and a new emerging context is delineated. The well-known mechanism of self-organization among citizens is enriched by “social startups” launched by individual entrepreneurs, as well as by “grassroots initiatives” developed by associated citizens who take charge of answering to the needs of society, and whose collective nature derives from substantially mutualistic processes. Another fostering factor concerns the entrepreneurial transformative processes of nonprofit actors, not only thanks to the progressive transformation mechanism in social entrepreneurship, but also through the construction of social enterprises as the “operating arm” of an association, a foundation etc. aiming at managing the market-oriented activities. The last, but not less relevant, driver of development concerns the restructuring of the public sector and of the productive models of goods and services incorporating an explicit social function. From this point of view, the Report not only does emphasize the traditional tools of externalization and partnership, but it also identifies the spin-out mechanisms in order to transform entire parts of Public Administration into social enterprises, as it is the case of English “public services mutual”.

From the analysis, a globally articulated framework emerges, but the mapping does not provide adequate information on the maturity of the generative factors described. This is not an insignificant limitation, taking into account the need to calibrate the action of supportive eco-systems.

In addition to the most stable factors, the Report indicates as an emerging driver those capital enterprises that restructure traditional business models by introducing in the production chain elements of a social and environmental value, which are then shared non only with shareholders but also with a wider group of stakeholders. Even in this case, the Report only hints at the phenomenon, which probably deserved more recognition in order to precisely describe the policies targeted to social enterprise as an institutional form structurally oriented to the production of social benefits or addressed to other models of “social entrepreneurship” redefining the strategies of social responsibility through a partial transformation of organizational and governance assets.

The only macro-trend that has been observed in the ongoing transformations consists in the progressive transfer of social enterprises out of the traditional niches of activity (care services) and market (public trading arenas), pushing them into a sort of “grey area”, which has not yet been thoroughly mapped in the study. In other words, it does not help to identify the business fields and economic contexts where social enterprises are developing beyond the model of inclusion through employment (which can be considered “the universal element” of all social enterprises) and care or educational services. There are some hints at new typologies of services of a common interest different from welfare (transports, renewable energies, etc.), but there is still lack of a precise feedback on the positioning of social enterprises within “strong” economic sectors (agriculture, manufacture, advanced services), which are also undergoing a series of transformative processes where sociality and sharing attributes are recovered in various ways. To sum up, the European mapping does not allow to determine whether social enterprises can represent an effective element of “biodiversity” within the economic model, in a period in which the social objectives acquire an ever growing importance, even outside of sectors where meritocracy is more evident, like the care services.

The need to support with adequate knowledge a new cycle of policies fostering European social enterprise is solved by suggesting new research activities. The solution can also be retrieved in the various “country reports” (globally 28 countries) (European Commission, 2014b), from which the European Executive Summary stems and which, by focusing on the phenomenon on a local level, can even “escalate” the knowledge on the following topics: 

  • Local policies, redefining the relationships between Public Administration and social enterprises as authentic partnerships;
  • The impact of finance, thanks to pioneering experiences whose mid-term results can be measured in order to design new financial products and their management;
  • Impact measures and other methods to define common standards;
  • Business models adopted by groups of social enterprises (for example, for the transformation of real estates into “community assets”);
  • The evolution of support structures into districts and production chains which, thanks to the launch of dedicated marketplaces, unify supply and demand, and propose a model of “circular scalability” of innovation according to a multi-local rather than a globalizing vision.

Observing them from a lower angle, the results of the Executive Summary of the European mapping on social enterprises may appear less negative and, most importantly, able to foster the policy making strategy that was initiated with the Communication on “Social Business Initiative” (European Commission, 2011).


Bibliografia

Barco Serrano S. (2015) “Economía Social y Solidaria: una propuesta para un ecosistema más complejo”, Revista IECA: Economía Social y Solidaria, pp. 172-178.

European Commission (2011), Social Business Initiative. Creating a favourable climate for social enterprises, key stakeholders in the social economy and innovation, SEC (2011) 1278 final, Bruxelles.

European Commission (2014a), A map of social enterprises and their eco-systems in Europe, executive summary, DG Employment, Social Affairs and Inclusion.

European Commission (2014b), A map of social enterprises and their eco-systems in Europe, country reports, DG Employment, Social Affairs and Inclusion.

SEN (2014), Policy meets practice. Enabling the growth of social enterprises, Results of the Social Enprepreneurship Network.

Zandonai F. (2013), “Una nuova stagione di politiche europee per l’impresa sociale: implementazione e ricadute dell’Iniziativa per l’imprenditoria sociale”, Impresa Sociale, 2013-0, pp. 52-55.

 

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