Podcast with Johanna Mair: Chronicling Social Entrepreneurship’s Evolution

Johanna Mair (SEFORÏS) is the academic editor of Stanford Social Innovation Review; professor of organization, strategy and leadership at the Hertie School of Governance in Berlin; and the Hewlett Foundation scholar at the Stanford Center on Philanthropy and Civil Society. Her research focuses on how entrepreneurs create value through novel organizational and institutional arrangements. She is a vice-chair of the Global Agenda Council on Social Innovation at the World Economic Forum and has written three books on social entrepreneurship and multiple award-winning articles on international development, scaling social impact and corporate strategy.

Listen to the podcast here

SEFORÏS paper puts forward a positive view of how Welfare States and Solidarity enable Social Entrepreneurship and wins Best Paper award at leading Entrepreneurship conference

SEFORÏS paper puts forward a positive view of how Welfare States and Solidarity enable Social Entrepreneurship and  wins Best Paper award at the leading Entrepreneurship conference (BCERC).

The paper is entitled “The welfare state and social entrepreneurship: insights from a multi-level study of European Regions”. Authors are Aston University academics Emma Folmer, Anna Rebmann and Ute Stephan.

Emma, Anna and Ute investigate the relationship between solidarity attitudes and social entrepreneurship. National welfare states are an expression of solidarity. They aim to redistribute income and life chances. In turn, how extensive and ‘compassionate’ national welfare systems are depends in part on citizen’s attitudes toward solidarity including redistribution. Indeed in many countries the welfare state has increasingly come under pressure and has been downsized or ‘rolled back’ considerably (even before the 2008 financial crisis). Governments especially in developed economies increasingly see social businesses as complementing or even replacing welfare state interventions. They thus seem to expect that social enterprises will ‘fill the gap’ left by government welfare programmes.

However, we do not know much about how social entrepreneurship is related to support for and the configuration of the welfare state. Does solidarity, the foundation of the welfare state, also drive social entrepreneurship? If people support the welfare state, and thus the idea of redistribution, does that make them more likely to engage in social entrepreneurship? And if the welfare state works well, are people still inclined to start social businesses? Is it the case that large welfare states lead to complacency – if welfare states ‘take care’ of social needs then social enterprises are not needed –; or may there be spillover effects such that more expansive welfare state signal to their citizens that ‘it is good to care’ and stimulate social entrepreneurship?

The team analysed data from the European Social Survey and the Flash Euro Barometer on entrepreneurship to answer these questions. They focussed on a subset of social entrepreneurs, those that form as businesses but with a clear goal to create social or environmental benefits. As there is evidence for growing regional socioeconomic inequalities within Europe, the research took a regional perspective (while controlling for country differences).

Emma, Anna and Ute find that there are more social entrepreneurs in regions where people have more positive attitudes toward welfare state redistribution. They also observe more social entrepreneurs in regions where the welfare state is performing well. Thus, individuals are more likely to become social entrepreneurs in areas where social problems are seen as collective problems, as something that all members of society bear some responsibility for. This is in contrast with views that argue for trade-offs and suggest that welfare states may crowd out individual’s social initiative. Rather, the positive relationship between welfare state performance and the regional share of social entrepreneurship that the current study finds, means that a ‘rolling back of the state’ by itself will not result in alternative social service provision by social enterprises. A well-functioning welfare state allows social entrepreneurs to thrive. 

Social enterprises in Germany and the refugee crisis: What role do they take?

By Miriam Wolf and Alexandra Ioan

More than a year ago - in the midst of what is often called the refugee crisis and in the midst of our survey data collection - we realized that organizations in the social sector were rethinking their activities as a reaction to the refugee crisis. We reflected about the role of German social enterprises might take in this situation in a country where the state has a particularly strong and pronounced role in social service provision. 

Meanwhile, looking at the survey results from the SEFORÏS project, German social enterprises emerged as particularly strong collaborators and innovators.  

This motivated us to take a step back and look more closely at what this means in the context of the refugee crisis. We followed up with almost a quarter (24) of the 107 German organizations who participated in our survey and asked them about the role they took in relation to this new challenge. 

While half of these organizations indicated that they had already worked with refugees before the refugee crisis, most of them have intensified or scaled their services as a consequence of the crisis. 9 out of 24 organizations indicated that they added refugees as beneficiaries to their target groups, 6 of them long-term, 3 temporarily. Only two organizations indicated they do not work with refugees and do not plan to do so in the future. 

Adapting established structures to changing needs

We found that 21 out of the 24 social enterprises that responded to our short survey have developed new services (15), processes (8) or products (7) as a response to needs they saw emerging with the refugee crisis. 

So what kind of services, products and processes did they predominantly develop? We find two principal types of social enterprises in this case: the ‘capacity builders’ and the ‘access facilitators’.

The ’capacity builders’ channel resources into other organizations or actors working with refugees: they support schools, youth organizations or business organizations in working with refugees. This type of social enterprises engages in adapting existing structures to changing needs – for instance by supporting teachers in dealing with students who do not speak German and have a different cultural background. 

The ’access facilitators’ focuses on the refugees themselves. Here we found predominantly organizations who support refugees to enter the labor market or gain access to education, thus enabling the target group to make use of existing structures and opportunities. 

This suggests that, apart from the organizations that design their own internal programs for refugees, social enterprises also take a mediating role in the refugee crisis: one the one hand they support established structures in adapting to changing needs, while on the other they enable beneficiaries to make use of existing opportunities.

Socia enterprises - refugees

Strength through collaboration and diversity

A year ago we also asked if the refugee crisis might be an opportunity for diverse actors in the German welfare state to move closer together and address challenges collectively. Today we find that on average, the 24 social enterprises we followed-up with reported to collaborate with more than 4 different types of partners in their refugee-related activities. What is striking is the diversity of collaborations:  14 collaborate with welfare organizations, 13 with other social enterprises, 12 with charities and 11 with business organizations. This corroborates our more general SEFORÏS survey findings about the connecting role of social enterprises linking sectors and stakeholders in tackling social challenges.

Although our data on the role of social enterprises in the refugee crisis is not representative of a large population, it does gives some further food for thought of how social enterprises contribute to solving emerging social challenges. Firstly, by mediating between existing structures and changing social needs, they contribute to the adaptation of the social sector to emerging challenges. Secondly, by collaborating with actors from different sectors simultaneously they contribute to pooling capacities and resources to tackle the social challenges we face as a society. 

First SEFORÏS Cross-Country Results available!

Market-Oriented and Mission-Focused: Social Enterprises Around the Globe

Between April 2015 and December 2015, the SEFORÏS consortium surveyed over 1000 social enterprises in Hungary, Romania, Spain, Portugal, Germany, Sweden, the United Kingdom, Russia and China. This means that thanks to the diligent cooperation of social enterprises and funding from the European Union, we have been able to launch the world’s largest and most rigorous panel database on social enterprises. This report presents key findings for all the countries investigated. Where possible, we compare findings to the 2009 SELUSI survey, the predecessor of the SEFORIS project. 

A detailed blog post, written by SEFORÏS researchers Marieke Huysentruyt, Johanna Mair and Ute Stephan is available on Stanford Social Innovation Review's website.

The 1st IESE-LUISS Conference on Responsibility, Sustainability and Social Entrepreneurship

 Hybrid Organisations: walking at the edge between economic performance and social & environmental impact

Hybrid Organisations: walking at the edge between economic performance and social & environmental impact

The 1st IESE-LUISS Conference on Responsibility, Sustainability and Social Entrepreneurship
18-19 April 2017, Rome Italy
http://www.iese.edu/luiss-conference 

This conference, possibly the first of a series, is aimed at gathering scholars from different literature streams interested in highlighting the mechanisms through which hybridity is created and sustained. To give more substance to the debate we asked key scholars in the field –among them Johanna MairAnne Claire PacheGuido PalazzoTommaso Ramus and Ute Stephan, who already accepted our invitation- to join us and present their work. To give more visibility to the research discussed at the conference, we proposed to the Journal of Business Ethics, one of the leading journals in the field, to create a Thematic Symposium on these themes linked to the conference.

This call for papers aims at generating a conference exploring how organisational hybridity is created and sustained, with particular reference to social enterprises. 

Call for papers! 
Submission deadline [EXTENDED]: 20/01/2017

 

CONFERENCE HIGHLIGHTS

EXCEPTIONAL SPEAKERS: Johanna Mair (SEFORÏS) , Anne Claire Pache, Guido Palazzo, Tommaso Ramus and Ute Stephan (SEFORÏS).

SPECIAL ISSUE: The Journal of Business Ethics will create a Thematic Symposium linked to the conference.

EXTENSIVE DISCUSSION OF YOUR WORK: Each paper will be allocated a large slot for presentation and Q&A. In each parallel session a discussant -asked to read the papers in advance- will give feedback. 

DEVELOPING SCHOLARSHIP: The conference hosts a Ph.D. and Early Career Symposium.

SEFORÏS at the 8th International Social Innovation Research Conference (ISIRC) in Glasgow

Between September 5th and 7th 2016, Prof. Ute Stephan from Aston University (UK), Dr. Miriam Wolf and Alexandra Ioan from the Hertie School of Governance (Germany) attended the 8th International Social Innovation Research Conference in Glasgow and presented some first insights generated through the SEFORÏS project.

Prof. Ute Stephan gave a keynote speech (download here) on the role of social entrepreneurship in achieving social change. Going beyond discussing the internal challenges that social enterprises face, the talk focused more on the way in which these organizations have societal impact through their wide range of activities. Drawing on the existing knowledge from several research disciplines, Prof. Stephan focused on a framework for change that can be useful both for practitioners and researchers when discussing social impact.

SEFORÏS was represented also by Dr. Miriam Wolf and Alexandra Ioan who presented first research insights in the “Governance and stakeholders” conference stream. Dr. Wolf’s presentation concentrated around the topic of governance and the key role it plays for social enterprises both internally and externally, as they adapt to different contexts. Ms. Ioan’s presentation revolved around particular cases of social enterprises in Germany and the particularities of their development in this specific welfare system.

The ISIRC 2016 conference was a great occasion to open up some of the current debates around social innovation, social enterprises and their role in society. Some of these topics and many more will also be discussed at the SEFORÏS conference on December 9th, 2016 at Aston University, in Birmingham, UK. 

Do women earn less, even as social entrepreneurs?

According to a recent study, of which we published a summary in our news section in September 2015, female CEOs earn 29% less than their male counterparts.

Gender differences in pay are ever-present at all organisational levels. As CEOs of their own organisations, entrepreneurs largely determine their own pay. In addition, social entrepreneurship may be a particularly gender-blind occupational choice; evidence indicates that women are more likely to start a social enterprise.

Do women at the top of social enterprises see a gender pay gap? 

Saul Estrin (London School of Economics & Political Science (LSE); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)), Ute Stephan (Aston University - Aston Business School) and  Suncica Vujic (VU University Amsterdam - Faculty of Economics and Business Administration) share the outcomes of their research in the interview below.

SEFORÏS research discussed at the Stanford PACS Junior Scholars Forum hosted by the Hertie School of Governance

The Stanford Center for Philanthropy and Civil Society held its 3rd annual Junior Scholars Forum at the Hertie School of Governance in Berlin between June 15th – 17th, 2016. SEFORÏS research was well represented. Alexandra Ioan presented her research on patterns of interaction between social enterprises, resource providers and established social welfare organizations in Germany. Miriam Wolf acted as a discussant of a paper unpacking the role of transparency in philanthropic organizations.

As Johanna Mair, convener of the forum jointly with Walter W. Powell, Rob Reich and Paul Brest and member of the SEFORÏS academic board explains, the Junior Scholars Forum is the most powerful tool to disseminate, test and refine emerging insights from our research on social enterprises in 7 European countries, China and Russia. The issues of governance, financing, impact, innovation and institutional context that are core to the research undertakings in SEFORÏS were highlighted throughout the discussions.

The Stanford PACS Junior Scholars Forum brings together young researchers working on civil society, philanthropy, social entrepreneurship with the aim of creating an intellectual community around these issues. The intense exchange between junior and senior scholars during the Forum contributes to the development of high-quality research in this domain. By building an interdisciplinary research community, Stanford PACS is supporting the next generation of dedicated scholars in this field.

This year`s Forum hosted 11 junior scholars from 10 different nationalities working in 8 different countries. They conduct work on topics such as transparency, the sharing economy, collaborations between civil society organizations and private companies, social impact measurement and social entrepreneurship.  

KU Leuven just finished collecting data for the Community Innovation Survey 2015

KU Leuven recently finished collecting the data of the biennial Flemish Community Innovation Survey which is part of the pan-European Community Innovation Survey (CIS).

KU Leuven is responsible for collecting the data of the biennial Flemish Community Innovation Survey which is part of the pan-European Community Innovation Survey (CIS). This year, ECOOM joined forces with members of the SEFORÏS project to develop a module on social innovation for the CIS2014. This social innovation module asks respondents whether any of the product, process, organizational or marketing innovations developed in the period 2012-2014 had a social impact. The initial version of the module was developed based on a review of the existing academic literature on social innovation. In the fall of 2014, the module went through extensive cognitive testing with both small and large, and service as well as manufacturing firms. These iterations resulted in a final version of the module, which consists of three main questions. After two reminders and extensive telephone follow-up, we are happy to inform you that we just finalized the data collection process. In the coming weeks, the data cleaning process will start in order to have the data available for analysis early 2016.

Women CEO’s in social enterprises earn 29% less than their male counterparts

... But women are happier with their jobs. Ute Stephan, Sunčica Vujić and Saul Estrin unpick the paradox.

Gender differences in pay are ubiquitous at all organisational levels including at the top. Entrepreneurship is hailed as one way for women to circumvent organizational norms and discrimination, because as CEOs of their own organizations, entrepreneurs largely determine their own pay. Moreover, social entrepreneurship may be a particularly gender-blind occupational choice; evidence indicates that women are more likely to start a social enterprise This opens the question of whether at the top of social enterprises we may see little or no gender pay gap.

Yet, income might not be the only outcome of an entrepreneurial career. Entrepreneurship and especially social entrepreneurship might permit people to realize non-monetary rewards such as their desire for job flexibility. In particular, social entrepreneurs may reap benefits in terms of higher satisfaction from helping others through their enterprises. Thus, we also investigate whether there is a gender gap in job satisfaction.

Social entrepreneurship is a rising phenomenon that is only poorly understood to date, in part because it is difficult to research, being difficult to define, and challenging to identify in official registers. A social entrepreneur addresses social needs such as poverty, discrimination, exclusion, and environmental degradation through market-based activities. Thus, social entrepreneurs have much in common with traditional (commercial) entrepreneurs, for example, the central role of individual risk bearing and organisational formation, but they are also distinguished by their objectives – social wealth rather than private profit.

Gender Pay Gap

Our research looks at the gender pay gap among social entrepreneurs, using a unique dataset, Social Enterprise as Lead Users of Service Innovation (SELUSI). We employ a respondent driven sampling method to capture a representative sample of UK social entrepreneurs. This method addresses a key problem – that there is as yet no information on the underlying population of social entrepreneurs. We use the SELUSI dataset to identify whether gender pay and satisfaction gaps exist in social enterprises, as well as their scale and determinants.

We find that even as social entrepreneurs, women earn 29% less annual salary (27% hourly wages) than their male colleagues. This is a greater unadjusted gap than the UK average of 20% based on hourly wages. Controlling for demographic, human capital, job, social business, personal preference and values characteristics, we estimate an adjusted pay gap of about 23% for the annual salary of social entrepreneurs (20% for hourly wages).

Satisfaction

At the same time, we show that female social entrepreneurs are more satisfied with their jobs than their male counterparts. This finding holds, even when we take into account the lower salary or revenues (as a proxy for the size of the organisation) generated through a social enterprise. Our findings therefore are consistent with the "paradox of the contented female (social) business owner," whereby the female social entrepreneur's job satisfaction is independent of the (lower) salary or revenues generated through the social business.

There are several reasons for policymakers to consider supporting social entrepreneurship. These include the promise of social enterprise as a vehicle to address some of the pressing social issues for which governments no longer have the resources to address, and the documented positive spillover effects of social on commercial entrepreneurship. Thus, social entrepreneurship appears to be a route into commercial entrepreneurship attracting those who are typically less likely to engage in commercial entrepreneurship but who, through the social enterprise experience, build skills and confidence that they subsequently leverage in creating profitable new ventures. Finally, there appears to be a relatively more equal balance in the participation of men and women in social enterprise.

Undervalued?

However, the results of this study contribute to a more rounded perspective, highlighting that although social entrepreneurship may be a highly satisfying occupation, it also perpetuates gender pay inequalities. What is not clear is whether this should be of concern to policy makers, if the pay gap is not driven by discrimination but rather by choices of the social entrepreneurs themselves. However, this has the worrying implication that, women are undervaluing their contributions. Since society in general will likely always be concerned by income inequalities, whether explicable by social and economic factors or not, policy makers might wish to engage business support and communication campaigns to mitigate the pay gap while stressing personal fulfilment.

Ute Stephan is Professor at Aston Business School and the Director of the Aston Centre for Research into International Entrepreneurship and Business (ACRIEB).

Sunčica Vujić is Associate Professor at the University of Antwerp (Belgium) and a Honorary Senior Lecturer at the University of Bath (UK)

Saul Estrin is Professor of Management and Strategy and a member of the Centre for Economic Performance at the London School of Economics and Political Science

This article was originally published in the LSE Business Review. You can find the source article here.

Presentation: Organizational and institutional innovation on and around societal challenges

Professor Johanna Mair gave the presentation Organizational and institutional innovation on and around societal challenges at the Sustainable Innovation and Entrepreneurship Academy in Milano on the 3rd of September 2015. The Sustainable Innovation Academy is a three days gathering that addresses PhDs and young scholars interested in Sustainable Innovation and Entrepreneurship. It adopts an interdisciplinary approach in order to create a multidisciplinary community of experienced and young scholars for exchanging ideas and building research collaborations. The experts invited as speakers and other senior researchers support the PhD students and the young scholars in developing their research. They will assist in defining relevant research topics and explain the complex and relevant links with other research streams close to their research topics. The Academy is organized by EU-InnovatE, a EU-funded interdisciplinary research project which addresses the obstacles and prospects for sustainable lifestyles and green economy in Europe.

Taking the impact of social enterprises to scale

Social enterprise is a rising phenomenon right across Europe. Social enterprises are hybrid organizations that combine aspects of charity and business at their core. Their purpose is to achieve a social mission through the use of market mechanisms. Several trends help account for their recent growth in numbers: One is the hybridization trend in both civil society and the business sector. We see traditional NGOs increasingly search for and experiment with new entrepreneurial approaches to innovate and self-finance their activities -in part fueled by competitive pressures, loud calls for more transparency and accountability, and budgetary cuts. We also see traditional businesses becoming more integrated, as they act more sustainably. Another trend at play is the intensifying citizens' distrust, disconnect and disillusionment with the status quo, as we grapple with widespread double-digit unemployment rates, particularly amongst the young and elderly; growing inequalities and yet crumbling systems of solidarity and redistribution systems. People yearn, increasingly so, for a deep change, as widespread experimentation with new forms of 'civic capitalism' testify. Finally, the social enterprise model, interestingly enough, seems to resonate well with both the political left and right. This gives the phenomenon potentially an ever stronger, broader support basis.

Admittedly, social enterprise today is still very much a niche or marginal phenomenon in statistical terms. [1] To illustrate, worldwide, on average 2.8% of people aged 18-64 are involved in social entrepreneurial activity as a nascent entrepreneur (thinking to start-up a social enterprise) or manager-owner of a new business (running a social venture that is less than 3.5 years old)[2]. The need for further growth of social enterprise in numbers is thus far from trivial. Indeed, given the sheer scale, depth and scope of society's major challenges, and given the enormous social innovation deficits that we have accumulated over time in many important policy areas, more exploration is clearly called for.

The remainder of this article, however, limits its focus to the challenge of how to increase the real impacts that social enterprises make. How can we accelerate the scaling of impactful social enterprise experiences? In short, how can we help grow social enterprise in true impact? I would like to highlight 3 powerful, practical strategies that, I believe, can really help us jumpstart the 'impact growth' of social enterprises.

Strategy 1: To shift from isolated to collective impact

To successfully move the needle in important societal domains such as poverty, (global) health, education, and social inclusion, be it at a local, regional, national or international level, I believe we need to shift from an isolated impact to collective impact perspective [3]. Large-scale social change arguably requires broad cross-sector coordination and learning, and yet the social sector tends to remain fragmented, focusing on the isolated intervention of individual organizations. Real progress, by contrast, depends on important actors from different sectors – corporations, civil society associations, government agencies, and hybrid organizations like social enterprises - working together towards a common agenda for solving a specific social problem.

Taking a collective impact perspective encourages us to think beyond the (elusive) 'golden nugget' – the single social enterprise with the most promising solution – and rather think in terms of 'golden platforms' - configurations or combinations of differentiated organizations and actions to solve a specific societal problem. The essential glue notably that holds all such platform participants together is a strong, shared vision for change, including a common understanding of the problem and joint approach to solving it through agreed upon actions. Furthermore, 'golden platforms' also require solid backbone organizations (with adequate problem-specific expertise and top-quality management skill) that can manage the entire collective impact platform, coordinating the different participating organizations. The backbone organization plays a hugely important role in enabling continuous learning, consistent and open communication across all platform participants. This implies, of course, that all platform participants must be committed to relentlessly monitor and critically discuss the progress they each make towards a same goal.

GAVI, the Vaccine Alliance, is a powerful illustration of a collective impact initiative at global level. GAVI is essentially an international back-bone organization, that was created back in 2000 to bring together the best of what key UN agencies, governments, the vaccine industry, private sector and civil society had to offer in order to improve childhood immunization coverage in poor countries and to accelerate access to new vaccines. Towards the end of the 20 th century, a new approach to a global problem was clearly needed. Global immunization efforts were beginning to plateau. Despite the promising progress of the previous two decades, by the Expanded Program on Immunization (EPI), there were still 30 million children living in poor countries who were not fully immunized. Coverage was stagnating and in some places even declining. And even though new life-saving vaccines were becoming available, beyond the original six EPI vaccines, virtually none were reaching children in developing countries, those who needed them most, because they were too expensive.

For many specific societal problems that are being tackled at a local, regional or national level, a systemic approach to social impact is required, one that focuses on the relationships between different organizations, including social enterprises, and the progress toward shared objectives. In some instances, a social enterprise may be ideally suited to step up as a backbone organization, playing a key brokerage role; in other instances, they may be great 'independent', in-between organizations, with sufficient clout to inspire and mobilize the various other platform members. Governments, notably, also have a real interest to effectively support those platforms whose goals coincide with their own policy-making priorities. Support could take the form, amongst others, of co-financing of the backbone organization's operations, or of contributing as a platform participant.

Strategy 2: To help social enterprises tackle 'behavioral bottlenecks'

I also believe that there is a huge, underexploited potential for social enterprises to realize a bigger impact through leveraging relevant insights from behavioral economics. Behavioral economics combines perspectives of economics, psychology and sociology, and has made in recent years huge advances in our understanding of why we do what we do, what drives our choices. We now understand people better than ever. Some of these new insights are counter-intuitive. Most are overlooked in policy and program design of social enterprises. All are powerful.

A behavioral perspective emphasizes the big influence that context exerts on individual decision-making relative to the presumed influence of beliefs, preferences, and personality traits - something we persistently and immensely underestimate. When overloaded by choice options, we prefer the status quo. We have a tendency to delay savings, to postpone going to the gym today, etc. Widespread practical experimentation putting the insights from behavioral economics to practice demonstrates that very often seemingly minor visual cues, changes in the way a message or campaign is framed, process simplifications, or subtle reminders can have surprisingly large, positive effects on a program's take-up and compliance rates.

The numerous social enterprises that strive to lift the poor out of poverty, or avoid that people fall into poverty, in particular, stand to reap significant gains from leveraging a more profound, nuanced understanding of how poor and socially excluded people decide and behave. Conditions of poverty and social exclusion essentially create their own psychology. Living in poverty and experiencing chronic scarcity—continually not having enough money, food, time, or other necessities—imposes a tax on a person's mental bandwidth. It interferes with a person's ability to make decisions, plan for the future, and exercise self-control. In one study, scientists estimated poverty's effect on cognitive ability is the equivalent of losing 13 IQ points. Being poor means coping not just with a shortfall of money, but also with a concurrent shortfall of cognitive resources.[4] This simple, but powerful insight challenges social enterprises to examine more closely the drivers of this bandwidth tax and figure out ways to diminish those. In short, by aiming to remove 'behavioral bottlenecks', social enterprises can, I believe, truly scale the real impact they make.

In short, one underappreciated, yet compelling avenue to help scale the real impact that social enterprises make is to help social enterprises introduce small amendments to their program designs, marketing campaigns, or market propositions, that can have a big behavioral effect. In practice, this implicates the creation of a new market, where behavioral experts match with specific social enterprises. Given the public benefits involved, government may wish to promote the creation of this new market, by sponsoring the first role-model experimentations, [5] and thus raising awareness, which in turn will attract more actors and subsequent imitation.

Strategy 3: Help social enterprises break free from the home bias tendency

As a third strategy, I would like to argue that special efforts are needed to help more social enterprises scale cross-regionally and trans-nationally. In our own work supporting and monitoring the scaling trajectories of over 300 'social innovations' (not social enterprises, though over 80% of the social innovations in our study hail from social enterprises) over the past 2 years, social entrepreneurs tend to exhibit a home bias tendency. [6] They hugely underestimate the contribution that they could make elsewhere.

International networks of incubators like the BENISI and TRANSITION [7] networks, are particularly well-positioned to challenge this home bias tendency found across many 'scalers', and broaden the lens of opportunity for scaling beyond local markets. This is important if we (Austria) wish(es) to expedite the spread and reach of its social entrepreneurial initiatives across the whole of Europe. Without deliberate efforts to promote ambitious, international growth, we run a real risk that the already unequal distribution of social innovations and ecosystem support today will become even more pronounced in the future.

These international networks of incubators and the specific expertise they connect, however, require substantial upfront investments before first real benefits from joint actions and exchange of learnings can effectively materialize. Put differently, these are massive machines to build and get going. This can only be justified from a cost-benefit perspective if a sufficiently long-term focus is upheld. Relatedly, one of the real challenges for many growth aspiring social enterprises is being able to free up sufficient 'bandwidth' to successfully exploit and leverage the many opportunities – contacts and expertise – that these international networks can generate. Government-led financing schemes that are results-oriented would be warranted and much welcomed, as they, by design, not only encourage ambitious impact but also help bridge the financing gap to be able follow through on these good intentions.

To conclude, today's bulk of social entrepreneurial initiatives arguably remains too small-scale and fragmented. It is high noon for us to jumpstart a new wave of growth of social enterprise: a growth in impact. I hope the three strategies put forward here, can help inspire and unlock initiatives that effectively take impact to scale!

Professor Marieke Huysentruyt
SITE at Stockholm School of Economics and HEC Paris
Oksigen Lab

This article appeared originally in German in the White Paper on Social Entrepreneurship of the Wirtschaftsagentur Wien, Kreativzentrum departure. Find it here on ISSUU.


[1] For recent scientific findings on social enterprises based on, amongst others, the world's largest panel database on social enterprises, please refer to the SEFORÏS Project: http://www.seforis.eu/. For a recent mapping study on social enterprises across all EU member states commissioned by the European Commission (2014): seehttp://ec.europa.eu/social/main.jsp?langId=nl&catId=89&newsId=2149.

[2] This figure comes from the Global Entrepreneurship Monitor (2009). In 2015, GEM will once again collect high-level data on the prevalence of social entrepreneurial activity, so a more updated figure is on its way.

[3] For a pioneering article on this topic, see 'Collective Impact' written by John Kania and Mark Kramer, published in the Stanford Social Innovation Review in Winter 2011.

[4] For a terrific book publication on the topic of poverty and how it influences everyday decision-making, see "Scarcity: on why having too little means so much" (2013) authored by Sendhil Mullainathan and Eldar Shafir.

[5] Interestingly, the size of the government support could be made dependent on results. What is required then, is that the partnering actors (social enterprise, behavioral expert, government) agree ex ante on the desired impact and the size of financial rewards in the event of success and failure.

[6] This insight draws from the BENISI Project, funded by the European Commission. See http://benisi.eu/

[7] For more information about Transition, please refer to their website: http://transitionproject.eu/about-transition/proje...

Studying social enterprises and ecotourism organisations in Mexico

Between January 22 and January 29 of 2015, prof. Tomislav Rimac from the Universitat Autònoma de Barcelona visited Oaxaca region of Mexico. His visit was a part of an ongoing collaboration with a Mexican research team lead by prof. Maria Jose Fernandez Aldecua. Prof. Rimac and his Mexican colleagues explored a possibility of adopting the SEFORÏS research methodology for studying of social enterprises and ecotourism organisations in Mexico while accounting for idiosyncrasies of the Mexican indigenous and mestizo communities.

 Lagarto Real

Lagarto Real

During his stay prof. Rimac delivered a presentation to the faculty and the students entitled "Social Entrepreneurship in European Union: Learning from SELUSI and SEFORÏS projects. Why and how Mexico should participate?" In addition, prof. Rimac visited a number of local indigenous and mestizo communities such as Barra de la Cruz, Barra de Navidad, La Escobilla, La Ventanilla and Mazunte where he interviewed members of the local communities and studied their social and community enterprises such as Cosméticos Naturales de Mazunte, Lagarto Real, PRODECO, and Red de los Humedales.

In 1990, due to international pressure to put a stop to the killing of sea turtles, government of Mexico passed a law banning the hunting of turtles. Despite having been recognised worldwide as an ecological victory, this act caused devastating effects among indigenous and mestizo communities in the coastal region of Oaxaca whose livelihoods depended on turtle hunting. Almost overnight local population lost their main source of income and faced bleak employment prospects.

However, through various community initiatives and participation of Ecosolar, an NGO from Mexico City, a new development plan emerged that involved environmental education, reforestation, and ecotourism. Within few years, local communities assumed their new role of the custodians of their natural resources and got organized in community enterprises, cooperatives, and social enterprises.

Some of organizations focused on ecotourism activities providing the tours of the estuaries, and participating in crocodile and turtle re-population. Others focused on provision of microfinancing to local communities and farmers (e.g., PRODECO) and production and marketing of cosmetic products (e.g., Cosméticos Naturales de Mazunte founded in 1993 with the help of Ecolosar and Anita Roddick, the founder of Body Shop).

Despite numerous problems such as climate changes and destructive hurricanes, social disintegration of local communities, and changing economic reality of Mexico, most of the organisations still exist, admitably with a varying degree of success. Irrespective of their varying degree of success, what they have in common is that they have influenced and changed many lives.

More info:

Is it possible for Social Enterprises to thrive post the UK elections?

With the dust of the UK national election beginning to settle, now is a good time to look ahead and explore the possible consequences of the new conservative government for the UK social enterprise sector.

With the dust of the UK national election beginning to settle, now is a good time to look ahead and explore the possible consequences of the new conservative government for the UK social enterprise sector. To appreciate these consequences, let us revisit 2010, when the rhetoric of 'The Big Society' played an important role in the electoral campaign of the Conservative Party. 'Big Society' was put forward largely as an alternative to government provided social services ('big government') and can be broken down into three courses of action: (1) an emphasis on volunteering, (2) the devolution of government power to local authorities and communities realized through the Localism Act (2012), and finally, (3) extensive support for voluntary organisations, charities and social enterprises. The third course of action led to the creation of the Big Society Bank (Big Society Capital) as well as the 'opening up' of public service delivery for social enterprises (via the Social Value Act (2012)[i]).

The second and the third course of action under The Big Society agenda were of particular interest for the social enterprise sector, but they proved difficult to realise simultaneously. The increased responsibilities for public service delivery devolved to local authorities coincided with significant spending cuts in autumn 2010 – aimed at reducing the public expenditure deficit by 2014. This meant cuts of government grants to local authorities by 23% to 46%[ii], leaving local authorities with increased responsibilities for public service delivery but fewer funds to live up to these responsibilities. The Localism Act was intended to encourage local authorities to be creative and innovative in delivering public services - with social enterprises in mind as potential commissioning partners1. However budget pressures meant that local authorities ended up commissioning to large private companies instead of 'experimenting' with alternative ways of service delivery. Any additional funds earmarked to support the social enterprise sector quickly fell victim to the spending cuts. As for Big Society Capital, a recent report[iii] suggests that despite its potential, it has not been functioning much differently than a regular bank, and that it still needs to prove its added value for the social enterprise sector.

The miraculous disappearance of social enterprise from the 'Big Society'? 

The Big Society occupied much less space in the 2015 conservative election campaign manifesto. Although the manifesto contained pledges to encourage volunteering, a continuing commitment to the implementation of Big Society Capital as well as to expanding the National Citizen Service – social enterprises were largely absent. The only mention of social enterprise was in relation to the Work Programme[iv], which it claimed had commissioned extensively to social enterprises and charities, increasing the profile of the sector. A closer look, however, reveals that the prime providers of the Work Programme have been large organisations, a significant share of which comes from the private sector and are owned by large international recruitment companies[v]. The current mode of public service delivery thus seems to be one of 'tried and trusted' partnerships with large corporations instead of experimentation and engagement with social enterprises. Further future spending cuts of £15bn to £20bn pledged by the new government[vi]are unlikely to encourage public service commissioners to diverge from this pathway.

With much of the Big Society rhetoric and additional support for the social enterprise sector gone from the political agenda, the overall outlook for the sector is rather bleak. 

Yet, there is potential for social enterprises to benefit from the commissioning of large government programmes if they are included in the supply chains of the prime providers –social enterprises can emphasize their competences in delivering social value. There are also opportunities for social enterprises to exploit their networks and bid for commissioning in consortia. In addition, local authorities can play an important role by commissioning smaller contracts to social enterprises, which typically operate in an embedded way in their local communities. However, with the projected spending cuts, local authorities are likely to need further incentives to include social enterprises in their procurement. An example is the Scottish Government's sustainable procurement duty implemented in its Procurement Act (2014). It obliges contracting authorities to consider how their procurement affects their local area economically, environmentally and socially. This duty explicitly promotes experimentation in public service delivery, includes third sector organizations and plays to the 'local strength' of social enterprises. A redesign of the Social Value act in line with the Scottish Procurement Act would arguably be an effective way of supporting social enterprises.

There are further reasons and ways of strengthening the social enterprise sector under the current government as part of the Big Society agenda – and importantly as part of regular enterprise, SME and innovation policy to spur economic growth.

This would allow the UK national economy to harness the strengths of the social enterprise sector - such as the high rates of radical innovation by social enterprises[vii] and the well-documented spillover effects of a thriving social enterprise sector on business start-ups[viii]. Last but not least, social enterprise has the potential to re-engage young people with economic issues. At Aston and internationally, we see rising student interest in social enterprise – often by students from majors and backgrounds who would typically outright dismiss entrepreneurship and business as career options for them. Our research finds that social enterprise is a way into business entrepreneurship especially for these groups.

Comments or thoughts? Get in touch with the authors e.folmer@aston.ac.uk and u.stephan@aston.ac.uk.


[i] The Public Services (Social Value) Act (2012) intended to stimulate the commissioning of public services to organisations that created social value –it did not define social value and was not compulsory.

[ii] Institute for fiscal studies briefing note BN166, http://www.ifs.org.uk/publications/7617

[iii] The Report of the Alternative Commission on Social Investment: http://socinvalternativecommission.org.uk/

[iv] The Work Programme is a UK-wide payment-for-results welfare-to-work programme launched in 2011.

[v] www.gov.uk: Work Programme: contract package area and prime providers

[vi] The Conservative Party manifesto 2015, https://www.conservatives.com/Manifesto

[vii] See e.g., http://www.seforis.eu/upload/conference/Stephan_social_innovation_-Unltd_Nott_15.04.2015f-1.pdf

[viii] Estrin, S., Mickiewicz, T., & Stephan, U. (2013). Entrepreneurship, Social Capital, and Institutions: Social and Commercial Entrepreneurship Across Nations. Entrepreneurship Theory and Practice, 37(3), 479–504

First impressions: How Social Entrepreneurship differs in 8 EU countries, China and Russia

Before diving into the extensive qualitative and quantitative research ahead – notably the 25 case studies and 1000 surveys- we tried to effectively take stock of the state of social entrepreneurship in the participating SEFORÏS countries

Our aim was to collect useful facts, figures and trends about social entrepreneurship in each of these countries and this in relation to our 5 core topics of study: context, organization, impact, financing and innovation. In addition, we sought to feel the temperature of the public debates, public opinion and alive myths. You can readily download the full reports online – structured either by country or by topic. Below, we highlight just a few of those insights: things that we felt were intriguing, warranting further scrutiny.

Belgium:

  • Contrary to what the popular discourse suggests, only a minority of social enterprises so far have adopted the 'social purpose' legal clause or cooperative legal form
  • Few Belgian social enterprises are active in the domain of education, health or social work in comparison with other European countries. Yet we face enormous problems of unequal outcomes by socio-economic status in these domains.
  • About half of all social enterprises engage in activities whereby they employ and/or train people from disadvantaged backgrounds.

Germany:

  • Social enterprises are mostly active in the domain of social service provision.
  • The debate about the future of the welfare state and the role of social enterprises is very much ongoing. A strong welfare state like that of Germany may well have slowed down the rise of social enterprises compared to other countries with a more liberal welfare system such as the UK.
  • There seem to be ever louder calls for more cooperation between social entrepreneurs, established welfare state organizations and policy makers.

China:

  • The concept of social enterprise began to surface in 2004. Most of social enterprises in China are in their early development stage and so far have demonstrated limited potential for job creation.
  • About half of all social enterprises today seem to make use of social impact measurement tools like SROI and CBA. This is a very high percentage compared to monitoring and measurement practices elsewhere.
  • Two-thirds of social enterprises seem to be located in Beijing or Shanghai. So there is a strong metropolitan area effect.

Romania:

  • Many social enterprises rely heavily on grants and are not financially sustainable.
  • The use of social impact measurement tools seems rather low.
  • Many social enterprises are finding it difficult to recruit talented people to work for their organization and the level of acceptance of the phenomenon 'social enterprises' in the market remains fairly low.

Russia:

  • Social entrepreneurship in Russia is in a transition period. The level of social entrepreneurial activity in Russia is among the lowest worldwide, only 1,2% of the adult population undertake it. But discussions on the definition and a growing awareness and public interest for social entrepreneurship are emerging.
  • Many social enterprises serve socially deprived people.
  • Women clearly seem to be more often running a social enterprise than men.

Spain:

  • Spain was the first European country to adopt the legal form 'social economy'.
  • Social enterprises tend to be mature: the majority is over 10 years old.
  • In order to lower the levels of unemployment and social exclusion, work-integration, training and education programs have been developed and reflect a huge current social challenge.

Sweden:

  • There is an increasing diversification in the social enterprise sector both in target groups (more on education, integration) and financing sources (crowdfunding, impact investment)
  • The mean age of the sector is over 15 years, but there is an increasing rejuvenation of the sector with many small social enterprises popping up.
  • There is an increasing awareness of the social enterprise sector, with a growing number of awards, articles in the media, grants, and political debates related to social entrepreneurs.

Portugal:

  • Awareness of the concept is clearly on the rise, emerging from practice as social initiatives take place.
  • Societal challenges related to aging population and unemployment (exacerbated by the financial crisis) are key areas for social innovation and entrepreneurship initiatives.
  • The phenomenon of social entrepreneurship seems very concentrated around Lisbon and Porto.

Hungary:

  • There exists very little data on social enterprises besides SELUSI data (This, by the way, holds true for many of the countries we study….).
  • Mainly non-profit organizations are active, which carry out business activities in a complementary manner.
  • Important EU grants have helped the growth and development of social cooperatives


UK:

  • The need to measure and demonstrate social impact is increasing. More initiatives are focusing on providing impact measurement support and standardizing the processes.
  • Lack of, or limited access to, financing and funding is the most common barrier to start up and to grow a social enterprise according to social entrepreneurs.
  • The government remains heavily involved in the field of social entrepreneurship. Examples of this are: improving the legal form for social enterprises, enabling a stronger social enterprise support ecosystem, creating demand for the services of social enterprises, etc.

New research outlines the ingredients for a successful ‘Big Society’

 Copenhagen, Denmark

Copenhagen, Denmark

Research disproves the theory that reducing government support will boost social enterprise. A recently published 'Institutions and Social Entrepreneurship' study by academics from Aston Business School, EDHEC Business School, and the University of Sheffield Management School identifies why some countries are better than others at fostering social enterprise.

The Global Entrepreneurship Monitor (GEM) ranks Denmark number one for social entrepreneurship activity[1]. The study sought to identify the secret of Denmark's success and what other countries, such as the UK, could learn from its example. The authors analysed 26 countries to identify the relative importance of a range of economic, institutional, cultural and social measures in encouraging greater levels of social entrepreneurship.

These included:

  • the level of active government support, i.e., the extent to which the government formally redistributes wealth through progressive tax structures and welfare spending[2]
  • the level of so-called 'post-materialist values' among individuals, i.e., the extent to which individuals feel willing and empowered to take action for the benefit of society[3]; and
  • socially supportive culture, i.e., the strength of informal networks in the wider community[4]

The results of the analysis demonstrate that it is a combination of these three factors, not any one factor alone, that best encourages social enterprise activity. However, active government support is crucial: Without this support it is unlikely that individuals and communities can mobilise to fill the gap.

Key findings:

Seven out of the top ten countries for social entrepreneurship also top the list for strong social entrepreneurship support, e.g., a local culture and government that endorse such activity, as illustrated by the table below.

Top 10 countries for social entrepreneurship activity (GEM)

  • 1. Denmark
  • 2. Argentina
  • 3. Finland
  • 4. UK
  • 5. Slovenia
  • 6. United States
  • 7. Israel
  • 8. France
  • 9. Greece
  • 10. China

Top 10 countries for social entrepreneurship support[5]

  1. Denmark
  2. Italy
  3. Netherlands
  4. Finland
  5. United States
  6. UK
  7. Switzerland
  8. France
  9. Slovenia
  10. Israel

Study highlights:

  • Denmark, France, Italy, the Netherlands and Israel rank highest for government support
  • Switzerland, Italy, the UK, US and Argentina rank highest for post-materialist values among individuals
  • Malaysia, Iran and Russia rank amongst the top five countries for having a socially supportive culture but have relatively low levels of government support. This can explain why these countries rank lower for social enterprise activity (25th, 19th, and 24th, respectively)

Compared to other nations, the UK relies more heavily on individuals to drive social entrepreneurship activity, based on a relatively high ranking for post-materialistic values amongst its citizens (3rd) and less favourable rankings for government support (10th), and socially supportive culture (17th).

Ute Stephan, Professor of Entrepreneurship at Aston Business School commented: “Broadly speaking there have been two schools of thought about the extent to which government encourages or stifles social entrepreneurship. Some feel that too much support removes the demand for social enterprise while others have taken the opposite view – that social entrepreneurship must have institutional support to survive.

“Things are never so black and white, but the importance of a supportive climate may explain some of the challenges facing the UK's Big Society initiative, despite the UK's strong post-materialist values. Cultivating such an eco-system is likely to be a longer term process. It is also a process that spending cuts and rising social inequalities in the UK likely undermine".

Lorraine Uhlaner, Professor of Entrepreneurship at EDHEC Business School concluded:“Our study highlights that the additional demand for social enterprise created when there are radical cuts in the state sector, such as those seen in many countries in response to the global economic crisis, do not translate into higher social entrepreneurship activity.

“Social entrepreneurs need to feel supported both by the government and the wider community to be able to realise their aims, which is why countries like Denmark perform so strongly. Private individuals and groups, if they collaborate and support each other, can make a difference but will only thrive with effective government support".


[1] Global Entrepreneurship Monitor (2009)

[2] Analysis of information on government activism (2008) based on a model developed and validated by Aidis et al.(2012)

[3] Based on World Values Survey (2010)

[4] Based on GLOBE cultural practices data (1995-1997)

[5] Includes all three measures plus GDP performance rankings