Social Enterprise: A Global Comparison

2: Western Europe

marthe nyssens Western Europe 2definition In Western Europe, according to Defourny and Nyssens (2006, p. 4), the concept of social enterprise ‘‘made its first appearance in the early 1990s, at the very heart of the third sector, following an impetus that was first Italian, linked closely with the cooperative movement.’’ Indeed , according to European tradition (Evers & Laville, 2004), the third sector brings together cooperatives, associations, mutual societies, and, increasingly, foundations, or, in other words, all not-for-profit organizations (organizations not owned by shareholders) that are labeled the ‘‘social economy’’ in some European countries.∞ Specifically, in 1991, the Italian parliament adopted a law creating a specific legal form for ‘‘social cooperatives,’’ stimulating their extraordinary growth. These cooperatives arose primarily in response to needs that had been inadequately met or not met at all by public services or private enterprises (Borzaga & Santuari, 2001). More than ten years later, the government in the United Kingdom defined social enterprises as ‘‘businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners’’ (dti, 2004), and a new legal form, the ‘‘community interest company,’’ was approved by the British parliament in 2004. European researchers noticed the existence of similar initiatives in several other European countries. These initiatives were given a variety of labels and legal forms. In 1996, researchers from a number of these countries decided to form a network to study the emergence of social enterprises in Europe. This group became known as the emes Research Network. Covering all fifteen countries that at the time comprised the European Union, this network of researchers carried out its initial work nyssens, Western Europe 13 over a four-year period and gradually developed a common approach to the study of social enterprise in Europe (Borzaga & Defourny, 2001b). In the European public debate, the concept of social enterprise has di√erent meanings and is still unclear. One school of thought stresses the social entrepreneurship dynamic developed by firms seeking to enhance the social impact of their productive activities. In this school the literature often highlights innovative approaches to tackling social needs developed by individuals who are fostering businesses (Grenier, 2003), mostly in the nonprofit sector but also in the for-profit sector (Nicholls, 2005). In the latter case, social entrepreneurship has to do, at least partially, with the ‘‘corporate social responsibility’’ debate. Another stream of thought uses the concept of social enterprise only for organizations belonging to the third sector and therefore builds on the specificities of the sector . In such social enterprises, generally of the cooperative or associative type, the social impact on the community is not merely a consequence or a side e√ect of economic activity; it is the motivation itself (Defourny & Nyssens, 2006). The emes approach (Borzaga & Defourny, 2001a; Nyssens, 2006) falls within this latter framework. emes defines social enterprise as not-forpro fit organizations providing goods and services, directly related to their explicit goal of benefiting the community. They generally rely on collective dynamics involving various stakeholders in their governing bodies, and they place a high value on independence and economic risk-taking related to ongoing socioeconomic activity (Defourny & Nyssens, 2008). This research e√ort is, among other things, establishing an ‘‘ideal type’’ of social enterprise with the understanding that even social enterprises that do not precisely adhere to the ‘‘ideal type’’ are nonetheless included in the sphere of social enterprise. This perspective on social enterprise di√ers on at least three points from the U.S. rationale for social enterprise (Defourny & Nyssens, 2006). First, the emes framework places the emphasis on the multidimensional character of the governance of social enterprises. This point of view is far richer than the sole nondistribution constraint or the limitation on profit distribution, which constitutes the central feature around which most of the nonprofit literature has been built. In comparing it with social enterprise in the United States, Young and Salamon state, ‘‘In Europe, the notion of social enterprise focuses more heavily on the way an organisation is 14 social enterprise figure 2.1. The EMES Ideal Type of Social Enterprise The emes definition distinguishes between criteria that are more economic and criteria that are predominantly social. The economic dimension a) A continuous activity, producing and selling goods and...