High-level internal workshop on building the ecosystem for social entrepreneurship in Europe
Cluster 1
Social Innovation, Social Business and Social Entrepreneurship
Brussels, 25-26 May 2011
The workshop is a first step in the consultation process towards the adoption of a Commission Communication on Social Entrepreneurship in autumn 2011.
Objectivesof the workshop:
- agree on a suitable framework for developing social entrepreneurship in the European Union and thus materialize the Commission commitment taken under the Single Market Act on 13 April 2011 (lever 8: social entrepreneurship)
-discuss elements and instruments of an effective ecosystem for social entrepreneurship in Europe
Within the context of the Workshop, Working Group on Cluster 1( Social Innovation & Social Business) will
Define and map social businesses and entrepreneurshipin a pluralistic market economy
Identify the main fields of activity of socialbusinesses
Explore how social innovation can be used by social entrepreneurs
Reflect on how to measure social impact of social business
Assess barriers to scaling up of socialbusiness models
Brainstorm on the future development of social entrepreneurship in Europe
Propose strategies and instruments topromote social entrepreneurship in Europe
Discussion will be based on contributions from the following experts:
Filippo Addarii, UK, Executive Director of Euclid network
Guillaume Taylor, CH, Quadia Impact Investment Genève
Alastair Ballantyne, UK, Portland Place Capital
Thorkil Sonne, DK, founder of Specialisterne
Saskia Bruysten, DE, CEO & Strategic Director Grameen Creative Lab
Gianluca Salvatori,IT, President of EURICSE
- What is a socialbusiness and social entrepreneurship?
Short summary of popular positions:
Social businessesare developing new ways of self-sustaining their economic activity through selling their products and services in the market; thus they are a business, independent of their legal form.
Social businesses are driven by a vision and mission to generate a societal value in the general interest, notably by contributing to smart, sustainable and inclusive growth: thus their purpose and outcomes aresocial.
Their governance and ownership structures reflect their mission, promoting empowerment and involvement in decision-making, and increasing participation in social and working life, of employees, partners and clients, thus their process of working is social.
They use the surplus generated from their activity to realise their social objective, by reinvestingandto serve the members' interest or a wider interest.
The approach of combining economic activity with the generation of social value is not new: In Europe, social entrepreneurs have started and developed businesses for the mutual benefit of their members and their community since 200 years; social entrepreneurship is part of the European Social Model.
Issues for discussion:
Are each of these four criteria necessary conditions to be met by a social business?
Can the terms "social business" and “social enterprise" be seen as synonyms?
How do they relate to the concept of "social economy"?
Is the concept of social entrepreneurship only related to social business?
In reality, do the social business model and Corporate Social Responsibility overlap in certain cases, or are these concepts mutually exclusive?
Does the social business model have to be viable and sustainable, and not depending on revenue from subsidies, members, charities, or investors?
Does the concept of social business imply that profits are retained in the company or community and not redistributed to shareholders, and is that requirement incompatible with certain types of legal structure?
Some are adding more conditional features to social business. What is the relevance of the following features?
Their core assets are forms of social capital (relationships, networks, cooperation, trust) which facilitate access to markets and financial capital; they are strongly linked to the civil society and communities and thus are social in nature.
Their ways of production and means of delivering services are not exclusive and proprietary. Sharing with others as a means to scaling–up is an essential feature of the business model, thus aiming at changing systems to better serve the needs of people and nature.
They are experimenting with alternative ways of responding to societal needs and meeting social values, they are thus highly innovative in terms of products and services, production processes and means of service delivery, value chains, standards and norms, interfaces and linkages between sectors etc.
- What are the main fields of activity of social businesses?
Short summary of popular positions:
Social businesses develop affordable and acceptable systems and produce services,products and processes to
improve social and health care,well-being,
facilitate social and work integration,
participate in, and benefit from education and lifelong learning,
nurture culture and arts,
enable participation in the digital society,
provide public services such as community transport, utilities,
reduce emissions and waste,
use natural resourcesefficiently,
organise and financecommunity development,and
promote fair trade.
Issues for discussion:
Which fields of activity should be added?
Are there priority fieldsfor social business (empirical, normative)?
Do the products, services or processes of social businesses have to be innovative?
- How can social innovation be used by social entrepreneurs
Short summary of popular positions:
The BEPA study summarised the concept of social innovation as follows:
"Social innovations are innovations that are social in both their ends and their means. Specifically, we define social innovations as new ideas (products, services and models) that simultaneously meet social needs (more effectively than alternatives) and create new social relationships or collaborations. They are innovations that are not only good for society but also enhance society’s capacity to act.
The process of social interactions between individuals undertaken to reach certain outcomes is participative, involves a number of actors and stakeholders who have a vested interest in solving a social problem, and empowers the beneficiaries. It is in itself an outcome as it produces social capital. "
Social innovations can arise from initiatives in the public or in the private sector, but they often are expressed in the civic society sector. They play a part in reshaping society as a more participative arena where people are empowered and learning is central.
Social entrepreneursmay often use various forms of social innovations when acting as change makers, thinking and operating "outside the box":
in organising different from mainstream business,new ways, of delivering services, re-engineering value chains, providing evidence for changing standards and norms for businesses, developing new or different interfaces and linkages between sectors, or between public bodies, private enterprises, and NGOs;
in mobilising, creating and investing social capital, because they are embedded in a wider community and integrated intonetworks of people sharing their objectives, enabling them to build actions on trust, and motivating them to share knowledge and resources.
Issues for discussion:
What are the conditions for social entrepreneurs in Member States and regions which have a low endowment of social capital, or little capacities and experience in promoting and organising social innovation, such as the new member states?
How can public support for social innovation (e.g. employment initiatives) be organised to also stimulate and promote social entrepreneurs?
- What is the role of social entrepreneurs?
Short summary of popular positions:
Social entrepreneurs are the main drivers of social businesses. They often work in teams, are embedded in a wider community, and passionate about the mission of the social business.
Different people may take up the different roles and contributions of a social entrepreneur:
Envisioning – clarifying a need, gap and opportunity
Engaging – engaging the opportunity and build essential networks with a mind to doing something about it.
Enabling – ensuring things happen by acquiring the necessary resources, such as people and money and, if necessary, premises.
Enacting – championing and leading the business to a meet is societal goals
Issues for discussion:
How tomobilise potential social entrepreneurs for starting a business venture?
How to support the different roles and functions of a social entrepreneur?
How to reward the social benefits generated by social entrepreneurs?
- How to measure social impact?
Short summary of popular positions:
Not only social businesses, but also companies with a dedicated corporate social responsibility collect and disclose information on the extra- financial value (i.e., environmental and social value not currently reflected in conventional financial accounts) generated, in order to demonstrate impact to customers, stakeholders, sponsors and the general public, identify ways to improve performance and increase social benefits, attract value-oriented customers and investors, and increase transparency on the market.
A large number of tools exist (for instance social accounting, social audits, bilanci sociali, bilans sociaux, socio-economic reporting, SROI) which are being used by an increasing number of social enterprises. While they may be adopted initially to provide accountability to benefit of external stakeholders such as finance providers, they also serve to guide business strategy and investments.
Issues for discussion:
Which methods for measuring social and environmental impact work well and are also suitable for smaller businesses?
How to use reporting for benchmarking, or networking?
Should reporting be voluntary or mandatory?
How to ensure compliance of the measuring work with standards? What could be the role of independent audits?
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- What are the main barriers to scaling up of social business models, and how can these be overcome?
Short summary of popular positions:
Barriers frequently addressed are:
Insufficient capacity and experience, lack of proven scaling models that might act as exemplars, inadequate infrastructures and incentives a to scale up the business/to spread a business model;
Educational systems and social environments do not create the mindsets needed for the creation, sustainability and scaling of social businesses which need a critical mass of "sophisticated customers";
Weak social recognition of social entrepreneurs and the value of their business activities hamper the diffusion of social business models.
Lack of high quality intermediaries and networking platforms to transform fragmented, single issue business ventures into networked approaches working across regional and national borders.
Access to finance in comparison to mainstream businesses - throughout the life cycle of a business. Disadvantages seem to exist in relation to the availability of market information and market transparency (investors looking for suitable investment opportunities in social businesses; and businesses looking for investors/ business angels), financial infrastructures such as stock exchanges, and capacities to assess risks for providers of capital to businesses engaged in innovative ventures.
Issues for discussion:
What changes can be made to develop education and training systems that are more conducive to stimulating and enablingsocial entrepreneurship?
What is the experience with social franchising and other methods for scaling up?
Is social franchising an approach that can be generalised?
How can the financial system provide expansion capital, in particular risk-taking growth capital?
What role can public procurement play in creating new markets which facilitate scaling of innovative social businesses?
How can transnational scaling be facilitated?
- The future development of social business in Europe
A recent study on the perspectives of social businessin Germany (twenty years from now), based on the Dephi method, estimated a high ratings (probabilityofoccurrence) for the following forecasts:
Social and environmental values determine consumer behavior.
Social business is a sustainable business model.
Social Business concentrates in particular on a number of sectors (such as social services, health care).
Social business will be anchored in corporate law, and special standards (regarding governance codes, audits, measuring of social impact) are established.
Social Business is an established business model that complements the traditional economic system.
Social Business is a stable model, driven by social entrepreneurs giving priority to achieving social benefits over profits.
Social Business is an integral part of education and training
Issues for discussion:
Would these estimates also apply for the development t of social business in the EU?
What patterns of development can one expect with respect to groups of member states (such as new member states) ?
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