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An Introduction to Social Economy /Entrepreneurship


    

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What is the Social Economy
There is no simple, straightforward way of defining Social Economy. 
 In general, Social Economy, which is often called the ‘Third Sector’or the ‘Non-Profit Sector’,  can be defined as: 

Figure 1. The Social Economy
Source: Defourny, J. (2004), "Social Enterprise in an Enlarged Europe: Concept and Realities", Second Conference on Social Economy in the Central and Eastern European Countries "Social Entrepreneurship &# Economic Efficiency", Krakow (Poland), 27-28 October 2004.

Defining the Social Economy
Whilst, there are several ways of defining Social Economy (see the definitions which follow), there is a broad agreement that the Social Economy Sector can be understood by combining:
 the institutional characteristics of the organisations which make up the sector (i.e. cooperative-style enterprises, mutual-type organisations, associations and foundations, while in recent years the social enterprise-type of organisations have emerged), with an affirmation of the basic values and principles which underpin the sector. Democratic decision-making and the priority of people over capital in the distribution of surpluses, prevail among these principles and values. 
Most used definition of the Social Economy 
The set of private, formally-organized enterprises, with autonomy of decision and freedom of membership, created to meet their members’ needs through the market by producing goods and providing services, insurance and finance, where decision-making and any distribution of profits or surpluses among the members are not directly linked to the capital or fees contributed by each member, each of whom has one vote. 
The Social Economy also includes private, formally- organized organisations with autonomy of decision and freedom of membership that produce non-market services for households and whose surpluses, if any, cannot be appropriated by the economic agents that create, control or finance them. 

CIRIEC (Monzon and Chavez). (2007) The Social Economy in the European Union. The European Economic and Social Committee (EESC). Report No CESE/COMM/05/2005. Ciriec International 

Other definitions of the Social Economy 
 Social economy organisations are small or medium-sized value-based organisations founded on commitment (arising from devotion, compassion, enthusiasm, solidarity, etc) and working for a common or public benefit.
Rob Paton, “The Social Economy: Value-based organisations in the wider society”, 1992
 Social economy organisations and enterprises are independent of the State, producing marketable and non-marketable goods and services with a social aim. They exercice the democratic participation of their user and worker members. Their main objectives are those of general interest and solidarity and they do not distribute profits among their shareholders. 
The REVES (European Network of Cities and Regions) Charter, which includes the key principles that are to be respected by their members (see REVES website)

The distinctive features of Social Economy Organisations
They are private , in other words, they are not part of or controlled by the public sector
They are formally-organised, that is to say that they usually have a legal identity
They have autonomy of decision, meaning that they have full capacity to choose and dismiss their governing bodies and to control and organise all their activities
They have freedom of membership, in other words, it is not obligatory to join them
Any distribution of profits or surpluses among the user members, should it arise, is not proportional to the capital or to the fees contributed by the members but to their activities or transactions with the organisation.
 
They pursue an economic activity in its own right, to meet the needs of persons, households or families, For this reason , SE organisations are said to be organisations of people , not of capital.
They work with capital and other non-monetary resources, but not for capital.
They are democratic organisations. Except for some voluntary organisations that provide non-market services to households, SE primary level or first-tier organisations apply the principle of  “one person, one vote” in their decision making processes, irrespective of the capital or fees contributed by the members. Organisations at other levels are also organised democratically. The members have majority or exclusive control of the decision-making power in the organisation.
 CIRIEC (Monzon and Chavez). (2007) The Social Economy in the European Union. The European Economic and Social Committee (EESC). Report No CESE/COMM/05/2005. Ciriec International


The main organisational/ legal forms making up the Social Economy Sector
Social Economy includes a wide range of socio-economic activities carried out by entities of collective character, based on self-organisation and voluntary participation of citizens and which are underpinned by a spirit of solidarity and cooperation. 
The main organisational/legal forms include:
social enterprises, 
social cooperatives, 
cooperatives, 
non-profit organisations (associations and foundations). 
Note: The organisational/ legal forms vary considerable from country to country depending on their historical experiences, traditions and legal systems. Social cooperatives resemble to a great extent to social enterprises

Advantages and Innovative Elements of Social Economy Organisations
The significance of Social Economy organisations relates to their specific advantages in producing positive externalities and other invisible resources (trust, human capital, network relations, etc) that foster the creation of “social capital” which is considered of great value.

Other advantages and innovative elements of Social Economy Organisations are the following:
participatory structure and democratic management: consumers and/or workers often directly participate in the decision-making process; also, they ensure not only trust relations but also strong stakeholder commitment to the organisation’s mission
multi-stakeholder nature: it guarantees either direct participation in management by several groups of stakeholders (e.g. consumers and workers together, but also representatives of the local community), or other organisational devices designed to take account of the stakeholders’ interests
presence of voluntary workers: providing free work resources, also exercising control over the matching between the activity carried out and the mission of the organisation
close links with the local community: responding to local needs, but also exploiting resources (human, technical, organisational, financial)
high propensity to collaborate with other Social Economy organisations: creating networks, second-level and, third-level, organisations
high propensity towards innovation and experimentation: in terms of both services provided and of the ways in which they are provided; donations and voluntary work reduce the costs and the risks of innovations. 

Main fields of economic activities – new sources of employment
The European experience shows that the Social Economy is already playing an important role in:
promoting the employment of working age population by creating new jobs, especially for vulnerable social groups, and 
supporting local development by meeting the increased demand for social goods and services at local level. 

The main fields of economic activities of the Social Economy organisations can be grouped into the following 3 categories:
Services to improve the quality of life – social services at local level, such as: housing improvements, redevelopment of public urban areas, local public transport, home help services, child care, assistance for young people in difficulty and other disadvantaged groups: integration, etc. 
Environmental services, such as: management of waste and water, protection and maintenance of natural areas, regulation and monitoring of pollution, etc.
Cultural and leisure (mass media and sport) services, such as: cultural heritage, local cultural development, tourism, etc.

The emergence of the Social Enterprise type organisation: What is a ‘Social Enterprise’
The concept of Social Enterprise is not identical with the concept of Social Economy. It has been gradually developed to reflect a new kind of organisation which has been emerged under the boundaries of the Social Economy Sector. The social enterprise refers to entities created from scratch and constitutes a new form of entrepreneurship, which has some elements from past experiences of social economy initiatives. 
The central idea which underpins the setting up of a Social Enterprise is to develop and promote new initiatives, of a collective character, based on solidarity, combining the use of business methods tailored to peculiarities of specific vulnerable groups, with the promotion and achievement of social purposes.

The new organisational/legal form of a ‘Social Enterprise’
The Social Enterprise:
can be described as a private business with a social purpose, reflecting a new - social- orientation of entrepreneurship activities; 
constitutes a new and innovative form of organisation, which reconciles the economic dimension (business efficiency) and the social dimension (solidarity);
is characterized by a broader participation of heterogeneous partners, such as employees, volunteers, service users, public or private support organisations and others, in contrast to the classic social economy organisations that were particularly homogeneous groups. 
Note: Social cooperatives resemble to a great extent to social enterprises

EMES1 definition of a Social Enterprise
According to the commonly accepted definition of the European Network EMES, the ideal type of a social enterprise should comply -cumulatively- with the following 9 criteria:
Economic criteria
a continuous activity producing goods and/or selling services
a high degree of autonomy
a significant level of economic risk
a minimum amount of paid work
Social criteria 
an initiative deriving from a group of citizens
a decision making-power not based on capital ownership
a participatory nature, which involves the persons affected by the activity
limited profit distribution
an explicit aim to benefit the community
1European Research Network on the emergence of Social Enterprises in Europe

Main Tasks/Goals of a Social Enterprise
Production and supply of goods and services, which provide benefits for the community as well as for the direct users; 
Work integration of the disadvantaged, through their employment in a wide range of economic activities 
Addressing issues of social concern such as: (long-term) unemployment, deteriorating environment, social exclusion and deprivation of various population groups, and performing any other activity designed to combat major problems of the local community.

Note: Some Social Enterprises combine all the above tasks.

The innovative elements of Social Enterprises/Social Co-operatives 
The introduction of new products or a new quality of products (e.g. new types of services, better ways of service provision etc)
The application of new methods of organisation and/or production (the involvement of different even diverse partners or categories of partners: salaried employees, voluntary workers, users, aid organisations and local authorities are often partners in the same project)
The existence of new production factors (e.g. the use of voluntary workers in the production process) 
The establishment of new market relations (e.g. ending of certain public monopolies, development of quasi-markets for certain services, etc)
The establishment of new forms of enterprises (new legal frameworks combining social purposes and entrepreneurship behaviour)

The key distinguishing features of a Social Enterprise from a non-profit organisation 
The key elements of differentiation of a Social Enterprise are those relating to its entrepreneurial nature and its productive role. These elements are:
The business perspective, i.e. they operate on business criteria,
High autonomy, in contrast to the dependence on the state observed in other non-profit organisations,
The application of economic criteria in their functioning (balanced budget) and
A combination of resources (income) from the market and outside of the market (subsidies)

The Social Enterprise is also characterised by: 
a greater participation and a greater involvement of the different stakeholders,
democratic forms of control and management (a less degree of paternalism),
a closer partnership with public authorities and a greater integration in their policies. 

Figure 2. Social Enterprises, at the crossroads of the co-operative and the non-profit organisations
The distinguishing features of a Social Enterprise from a conventional (for-profit) small and medium enterprise  
The Social Enterprises:
are non-profit oriented 
normally have a mixture of economic and social objectives (e.g. to create jobs especially for those suffering from a certain disadvantage as well as to produce socially useful products or services)
are controlled by the beneficiaries, the employees and the local community at large, who derive the maximum benefit from their operation
frequently arise from within a local community as a form of economic self-help rather than depending on external initiatives be that of the public or other private sector initiatives
involve wider partnerships, i.e. between different local interests: public, private and community

Key bodies active at European level for the support and promotion of the Social Economy organisations
Social Economy Europe (www.socialeconomy.eu.org)
EMES - European Research Network (www.emes.net) 
Social Firms Europe (www.cefec.de)
European Confederation of Workers' Co-operatives, Social Co-operatives and Social and Participative Enterprises (www.cecop.coop)
European Network of Cities and Regions for the Social Economy (www.revesnetwork.net) 
European Social Cooperative (www.escoop.eu) 
European Regions of the International Cooperative Alliance (www.coopseurope.coop)




 Introduction to Social Economy /Entrepreneurship

Introduction to Social Economy /Entrepreneurship

  Defining the Social Economy Clic to read

  Most used definition of the Social Economy Clic to read

  Other definitions of the Social Economy Clic to read

  The distinctive features of Social Economy Organisations Clic to read

  The main organisational/ legal forms making up the Social Economy Sector Clic to read

  Advantages and Innovative Elements of Social Economy Organisations Clic to read

  Main fields of economic activities – new sources of employment Clic to read

  The emergence of the Social Enterprise type organisation: What is a Social Enterprise Clic to read

  The new organisational/legal form of a Social Enterprise Clic to read

  EMES1 definition of a Social Enterprise Clic to read

  Main Tasks/Goals of a Social Enterprise Clic to read

  The innovative elements of Social Enterprises/Social Co-operatives Clic to read

  What is the Social Economy Clic to read

  The key distinguishing features of a Social Enterprise from a non-profit organisation Clic to read

  Social Enterprises, at the crossroads of the co-operative and the non-profit organisations Clic to read

What is the Social Economy
There is no simple, straightforward way of defining Social Economy. 
 In general, Social Economy, which is often called the ‘Third Sector’or the ‘Non-Profit Sector’,  can be defined as: 

Figure 1. The Social Economy
Source: Defourny, J. (2004), "Social Enterprise in an Enlarged Europe: Concept and Realities", Second Conference on Social Economy in the Central and Eastern European Countries "Social Entrepreneurship &# Economic Efficiency", Krakow (Poland), 27-28 October 2004.


Defining the Social Economy
Whilst, there are several ways of defining Social Economy (see the definitions which follow), there is a broad agreement that the Social Economy Sector can be understood by combining:
 the institutional characteristics of the organisations which make up the sector (i.e. cooperative-style enterprises, mutual-type organisations, associations and foundations, while in recent years the social enterprise-type of organisations have emerged), with an affirmation of the basic values and principles which underpin the sector. Democratic decision-making and the priority of people over capital in the distribution of surpluses, prevail among these principles and values. 
Most used definition of the Social Economy 
The set of private, formally-organized enterprises, with autonomy of decision and freedom of membership, created to meet their members’ needs through the market by producing goods and providing services, insurance and finance, where decision-making and any distribution of profits or surpluses among the members are not directly linked to the capital or fees contributed by each member, each of whom has one vote. 
The Social Economy also includes private, formally- organized organisations with autonomy of decision and freedom of membership that produce non-market services for households and whose surpluses, if any, cannot be appropriated by the economic agents that create, control or finance them. 

CIRIEC (Monzon and Chavez). (2007) The Social Economy in the European Union. The European Economic and Social Committee (EESC). Report No CESE/COMM/05/2005. Ciriec International 

Other definitions of the Social Economy 
 Social economy organisations are small or medium-sized value-based organisations founded on commitment (arising from devotion, compassion, enthusiasm, solidarity, etc) and working for a common or public benefit.
Rob Paton, “The Social Economy: Value-based organisations in the wider society”, 1992
 Social economy organisations and enterprises are independent of the State, producing marketable and non-marketable goods and services with a social aim. They exercice the democratic participation of their user and worker members. Their main objectives are those of general interest and solidarity and they do not distribute profits among their shareholders. 
The REVES (European Network of Cities and Regions) Charter, which includes the key principles that are to be respected by their members (see REVES website)

The distinctive features of Social Economy Organisations
They are private , in other words, they are not part of or controlled by the public sector
They are formally-organised, that is to say that they usually have a legal identity
They have autonomy of decision, meaning that they have full capacity to choose and dismiss their governing bodies and to control and organise all their activities
They have freedom of membership, in other words, it is not obligatory to join them
Any distribution of profits or surpluses among the user members, should it arise, is not proportional to the capital or to the fees contributed by the members but to their activities or transactions with the organisation.
 
They pursue an economic activity in its own right, to meet the needs of persons, households or families, For this reason , SE organisations are said to be organisations of people , not of capital.They work with capital and other non-monetary resources, but not for capital.
They are democratic organisations. Except for some voluntary organisations that provide non-market services to households, SE primary level or first-tier organisations apply the principle of  “one person, one vote” in their decision making processes, irrespective of the capital or fees contributed by the members. Organisations at other levels are also organised democratically. The members have majority or exclusive control of the decision-making power in the organisation.
 CIRIEC (Monzon and Chavez). (2007) The Social Economy in the European Union. The European Economic and Social Committee (EESC). Report No CESE/COMM/05/2005. Ciriec International


The main organisational/ legal forms making up the Social Economy Sector
Social Economy includes a wide range of socio-economic activities carried out by entities of collective character, based on self-organisation and voluntary participation of citizens and which are underpinned by a spirit of solidarity and cooperation. 
The main organisational/legal forms include:
social enterprises, 
social cooperatives, 
cooperatives, 
non-profit organisations (associations and foundations). 
Note: The organisational/ legal forms vary considerable from country to country depending on their historical experiences, traditions and legal systems. Social cooperatives resemble to a great extent to social enterprises

Advantages and Innovative Elements of Social Economy Organisations
The significance of Social Economy organisations relates to their specific advantages in producing positive externalities and other invisible resources (trust, human capital, network relations, etc) that foster the creation of “social capital” which is considered of great value.

Other advantages and innovative elements of Social Economy Organisations are the following:
participatory structure and democratic management: consumers and/or workers often directly participate in the decision-making process; also, they ensure not only trust relations but also strong stakeholder commitment to the organisation’s mission
multi-stakeholder nature: it guarantees either direct participation in management by several groups of stakeholders (e.g. consumers and workers together, but also representatives of the local community), or other organisational devices designed to take account of the stakeholders’ interests
presence of voluntary workers: providing free work resources, also exercising control over the matching between the activity carried out and the mission of the organisation
close links with the local community: responding to local needs, but also exploiting resources (human, technical, organisational, financial)
high propensity to collaborate with other Social Economy organisations: creating networks, second-level and, third-level, organisations
high propensity towards innovation and experimentation: in terms of both services provided and of the ways in which they are provided; donations and voluntary work reduce the costs and the risks of innovations. 

Main fields of economic activities – new sources of employment
The European experience shows that the Social Economy is already playing an important role in:
promoting the employment of working age population by creating new jobs, especially for vulnerable social groups, and 
supporting local development by meeting the increased demand for social goods and services at local level. 

The main fields of economic activities of the Social Economy organisations can be grouped into the following 3 categories:
Services to improve the quality of life – social services at local level, such as: housing improvements, redevelopment of public urban areas, local public transport, home help services, child care, assistance for young people in difficulty and other disadvantaged groups: integration, etc. 
Environmental services, such as: management of waste and water, protection and maintenance of natural areas, regulation and monitoring of pollution, etc.
Cultural and leisure (mass media and sport) services, such as: cultural heritage, local cultural development, tourism, etc.

The emergence of the Social Enterprise type organisation: What is a ‘Social Enterprise’
The concept of Social Enterprise is not identical with the concept of Social Economy. It has been gradually developed to reflect a new kind of organisation which has been emerged under the boundaries of the Social Economy Sector. The social enterprise refers to entities created from scratch and constitutes a new form of entrepreneurship, which has some elements from past experiences of social economy initiatives. 
The central idea which underpins the setting up of a Social Enterprise is to develop and promote new initiatives, of a collective character, based on solidarity, combining the use of business methods tailored to peculiarities of specific vulnerable groups, with the promotion and achievement of social purposes.

The new organisational/legal form of a ‘Social Enterprise’
The Social Enterprise:
can be described as a private business with a social purpose, reflecting a new - social- orientation of entrepreneurship activities; 
constitutes a new and innovative form of organisation, which reconciles the economic dimension (business efficiency) and the social dimension (solidarity);
is characterized by a broader participation of heterogeneous partners, such as employees, volunteers, service users, public or private support organisations and others, in contrast to the classic social economy organisations that were particularly homogeneous groups. 
Note: Social cooperatives resemble to a great extent to social enterprises


EMES1 definition of a Social Enterprise
According to the commonly accepted definition of the European Network EMES, the ideal type of a social enterprise should comply -cumulatively- with the following 9 criteria:
Economic criteria
a continuous activity producing goods and/or selling services
a high degree of autonomy
a significant level of economic risk
a minimum amount of paid work
Social criteria 
an initiative deriving from a group of citizens
a decision making-power not based on capital ownership
a participatory nature, which involves the persons affected by the activity
limited profit distribution
an explicit aim to benefit the community
1European Research Network on the emergence of Social Enterprises in Europe

Main Tasks/Goals of a Social Enterprise
Production and supply of goods and services, which provide benefits for the community as well as for the direct users; 
Work integration of the disadvantaged, through their employment in a wide range of economic activities 
Addressing issues of social concern such as: (long-term) unemployment, deteriorating environment, social exclusion and deprivation of various population groups, and performing any other activity designed to combat major problems of the local community.

Note: Some Social Enterprises combine all the above tasks.

The innovative elements of Social Enterprises/Social Co-operatives 
The introduction of new products or a new quality of products (e.g. new types of services, better ways of service provision etc)
The application of new methods of organisation and/or production (the involvement of different even diverse partners or categories of partners: salaried employees, voluntary workers, users, aid organisations and local authorities are often partners in the same project)
The existence of new production factors (e.g. the use of voluntary workers in the production process) 
The establishment of new market relations (e.g. ending of certain public monopolies, development of quasi-markets for certain services, etc)
The establishment of new forms of enterprises (new legal frameworks combining social purposes and entrepreneurship behaviour)

The key distinguishing features of a Social Enterprise from a non-profit organisation 
The key elements of differentiation of a Social Enterprise are those relating to its entrepreneurial nature and its productive role. These elements are:
The business perspective, i.e. they operate on business criteria,
High autonomy, in contrast to the dependence on the state observed in other non-profit organisations,
The application of economic criteria in their functioning (balanced budget) and
A combination of resources (income) from the market and outside of the market (subsidies)

The Social Enterprise is also characterised by: 
a greater participation and a greater involvement of the different stakeholders,
democratic forms of control and management (a less degree of paternalism),
a closer partnership with public authorities and a greater integration in their policies. 

Figure 2. Social Enterprises, at the crossroads of the co-operative and the non-profit organisations
The distinguishing features of a Social Enterprise from a conventional (for-profit) small and medium enterprise  
The Social Enterprises:
are non-profit oriented 
normally have a mixture of economic and social objectives (e.g. to create jobs especially for those suffering from a certain disadvantage as well as to produce socially useful products or services)
are controlled by the beneficiaries, the employees and the local community at large, who derive the maximum benefit from their operation
frequently arise from within a local community as a form of economic self-help rather than depending on external initiatives be that of the public or other private sector initiatives
involve wider partnerships, i.e. between different local interests: public, private and community

Key bodies active at European level for the support and promotion of the Social Economy organisations
Social Economy Europe (www.socialeconomy.eu.org)
EMES - European Research Network (www.emes.net) 
Social Firms Europe (www.cefec.de)
European Confederation of Workers' Co-operatives, Social Co-operatives and Social and Participative Enterprises (www.cecop.coop)
European Network of Cities and Regions for the Social Economy (www.revesnetwork.net) 
European Social Cooperative (www.escoop.eu) 
European Regions of the International Cooperative Alliance (www.coopseurope.coop)









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SE_COU - English

Social Entrepreneurship


Training Fiche: 4

Online Course: 5

EKKE

basic concepts, definitions and main characteristics



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