Social Enterprise: A Global Comparison

3: East-Central Europe

ewa leś & marija kolin East-Central Europe 3the concept of social enterprise Social enterprise in East-Central Europe has emerged from the concepts of the third sector, nonprofit organizations, and the social economy, including both institutionalized entities such as associations, foundations, and cooperatives and noninstitutionalized entities such as self-help groups and other initiatives without legal identity (see figure 3.1). Social enterprises consist of new, emerging organizations that have developed between the market and the state to pursue social goals by economic activities. A range of social and economic criteria of social enterprises, known collectively as the emes criteria (Borzaga & Defourny, 2001), have been identified by researchers of the eu-15. In recent years these criteria have been adopted and modified to fit within an East-Central European context. This approach defines a social enterprise as an organization that fulfills certain minimum economic and social criteria. These basic economic criteria include both the production of goods or the provision of services on a continuous basis and a trend toward paid work, involvement of economic risk, and autonomy. This means that associations, foundations , and other organizational forms of social enterprise have neither an advocacy function nor the redistribution of financial flows as a major goal. Instead, social enterprises are predominantly involved in producing goods or providing services on a longer-term basis. Moreover, although the provision of paying jobs is not a requirement, social enterprises in East-Central Europe usually aim to hire a paid sta√. A number of criteria are essential to defining social enterprise within East-Central Europe. Social enterprises generally serve a specific group of people by meeting special needs or providing a service or set of services to the community. Social enterprises in the region also rely on new models of decision-making power that are not based on capital ownership or maximizing profits. These new decision-making models distinguish East- 36 social enterprise Central Europe’s social enterprises from regular third sector organizations and usually include democratic management styles, customer representation and participation, and an orientation toward stakeholders. The last of these promotes decision-making input and a high degree of participation by stakeholders. Another feature distinguishing social enterprises from ordinary voluntary organizations is that social enterprises include not only organizations characterized by total nondistribution constraints , but also organizations that share some percentage of their profits. Most studies argue that there is not yet a common definition of social enterprise in East-Central Europe. For example, in Poland the concept of social enterprise has received initial recognition among government o≈cials , professionals, academics, and the third sector due to eu programs on social inclusion and economic reintegration, such as equal and Human Capital. The model for social enterprise consists of both mutual-interest and general-interest organizations. The main legal forms of the third sector in Poland that closely correspond to the concept of social enterprise include foundations, associations, and other voluntary organizations, cooperatives , shelter enterprises, and social cooperatives. Additionally, several entities have no legal form but are close to the emes ideal type and act as substructures for associations, foundations, and other voluntary organizations—for example, vocational enterprises for the handicapped (zaz),∞ social integration centers (cis),≤ social integration clubs (kis),≥ and vocational therapy workshops (wtz).∂ A closer look at Serbian social enterprise development shows that the following forms of organizations correspond to the concept of social enterprise: associations of citizens, cooperatives, social cooperatives, vocational enterprises for persons with disabilities, spin-o√ enterprises in the form of limited and joint-stock companies, incubators, and agencies for small and medium-sized enterprises (Babovic et al., 2008). In reality, the forms of organizations listed in figure 3.1 do not entirely correspond to the ideal type of social enterprise model and vary significantly in their degree of similarity with the emes model. For example, social cooperatives in Poland and Serbia are very close to the model, whereas others do not meet some of the criteria due to such reasons as the dearth of paid work in associations and foundations and the low degree of empowerment and democratic procedures and management in cooperatives and religious-based organizations. The majority of social enterprises in East-Central Europe consist of service-oriented initiatives, work-integration organizations, and other leś and kolin, East-Central Europe 37 figure 3.1. Main Organizational Forms of Social Enterprises in East-Central...