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Social Economy and Social Entrepreneurship: The Concept, Entities, Policy

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Social entrepreneurship is a fast-growing area of scientifi c research, closely linked to economic activities. Th e development of the concept of social entrepreneurship is particularly noticeable in the European Union and other developed and developing countries. Th e aim of the chapter is to present and discuss the basic theoretical foundations of the social entrepreneurship and its interrelated terms such as the social economy, the social enterprise and social entrepreneur in European context. In this chapter based on a review of Polish and foreign literature, a critical analysis of the theoretical approach to the concept of social entrepreneurship, including the classifi cation of social economy organisations was made. Th eoretical considerations were complemented by the analysis of regulations in the fi eld of EU policy towards social economy and social entrepreneurship. Diff erent approaches to the concept of the social economy and social entrepreneurship are noted in the economic and social literature. Social economy entities support the implementation of social objectives. Th e new approach to social entrepreneurship broadens the range of the actors and strengthens the links between them. EU policy towards the social economy is crucial to create an institutional framework for its functioning. New EU programmes and instruments support the development of social entrepreneurship and levelling social disparities.
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Social Economy and Social Entrepreneurship: The Concept, Entities, Policy
SOCIAL ECONOMY AND SOCIAL ENTREPRENEURSHIP:
THE CONCEPT, ENTITIES, POLICY
Marek Maciejewski, Bożena Pera, Krzysztof Wach
Cracow University of Economics, Faculty of Economics and
International Relations, Cracow, Poland
Abstract
Social entrepreneurship is a fast-growing area of scienti c research, closely linked to
economic activities.  e development of the concept of social entrepreneurship is particu-
larly noticeable in the European Union and other developed and developing countries.  e
aim of the chapter is to present and discuss the basic theoretical foundations of the social
entrepreneurship and its interrelated terms such as the social economy, the social enter-
prise and social entrepreneur in European context. In this chapter based on a review of
Polish and foreign literature, a critical analysis of the theoretical approach to the concept
of social entrepreneurship, including the classi cation of social economy organisations
was made.  eoretical considerations were complemented by the analysis of regulations
in the  eld of EU policy towards social economy and social entrepreneurship. Di erent
approaches to the concept of the social economy and social entrepreneurship are noted in
the economic and social literature. Social economy entities support the implementation
of social objectives.  e new approach to social entrepreneurship broadens the range of
the actors and strengthens the links between them. EU policy towards the social economy
is crucial to create an institutional framework for its functioning. New EU programmes
and instruments support the development of social entrepreneurship and levelling social
disparities.
Keywords: social economy, social entrepreneurship, social economy organisations,
EU social policy, EU institutions supported social economy
1. INTRODUCTION
Currently social entrepreneurship is a very trendy term and concept, especially a er
the global  nancial crises and the debt crisis in the European Union as well as in other
developed and developing countries. European economy has always been more social
(excluding the UK as the most liberal economy in Europe), especially if we compare it
with the American economy and their realities.
e aim of the chapter is to present and discuss the basic theoretical foundations
of the social entrepreneurship and its interrelated terms such as the social economy, the
Source:
Maciejewski, M., Pera, B., & Wach, K. (2018). Social Economy and Social Entrepreneurship:
The Concept, Entities, Policy (Chapter 1). In: B. Knežević (Ed.), Social Supermarkets as
Entrepreneruial Ventures in Socially Responsible Economy. Zagreb: University of Zagreb, pp.
1-21 (ISBN 978-953-346-058-1)
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Marek Maciejewski, Boz
ena Pera, Krzysztof Wach
social enterprise and social entrepreneur in European context.  e article is based on
literature review and its critics, as well as the evaluation of the source documents of the
EU policy in favour of social entrepreneurship.
e chapter is designed as follows. At  rst the basic de nitions are discusses in or-
der to make us familiar with the basic assumptions of the concept of the social entrepre-
neurship. Secondly, the social economy organisations (SEOs) are mentioned, classi ed
and discussed.  is is thanks to them that the objectives of the social economy are met.
Finally, the EU policy stimulating the social economy and social entrepreneurship is
discussed in the chronological order.
2. DEFINING AND DELIMITATING SOCIAL ECONOMY AND
SOCIAL ENTREPRENEURSHIP
It is obvious that at  rst the explanations of basic terms used in the desk research is
needed, which is typical for all studies in order to use not only the proper terminology,
but to conclude with the adequate  ndings and conclusions. Even a very brief search
query reveals a very worrying fact that in many cases social economy and social entre-
preneurship are not enough de ned and delimitated. What is an axiom, for sure social
economy and social entrepreneurship, cannot be the interchangeable or trade-o terms,
although they have some interrelated issues.
Although the social economy (économie sociale) as a term itself comes from French
from 1830s (Defourney & Develtere, 1999), but only recent decades put new life into this
term. Oatley (1999) noticed that social economy can be understood very widely, and in
a narrow way.  e narrow de nition of the social economy focuses on social enterprises
as its predominant entities.  e broader de nition of the social economy considers all
forms of ‘not-for-pro t’ or ‘third-sector’1 activity as part of the social economy. Teague
(2007) adds that widely understood de nition the social economy includes various ini-
tiatives trying to advance the principles of mutualism, voluntarism and philanthropy
that makes up the modern economy. And this seems to the most commonly accepted
broader de nition of the social economy. What is more, the social economy seems to
answer and solve the current social problems occurring in the modern economy (Ar-
row, 1999).
When we discuss the social economy, you must also mention the social market
economy, which is economic system applied in some European countries like Germa-
ny (Soziale Marktwirtscha ) or Poland (społeczna gospodarka rynkowa is mentioned
in the Constitution of Poland). e social market economy is based on ordoliberalism
being a German variation of social liberalism postulating that the state should interfere
the market economy in order to provide social protections for the most weakest hu-
man units. Wygnański (2007, p. 5-6) states that the social economy can be positioned
in two ways. Firstly, as an alternative to both pure market mechanisms and excessive
1 e rst sector is the state and its authorities.  e second sector consists of private enterprises.  e
third sector consists of non-governmental organizations (NGOs).
3
Social Economy and Social Entrepreneurship: The Concept, Entities, Policy
state intervention in the economy (solidarity economy). Secondly, as a speci c way of
participation in the market. Most authors stress that “the social economy is developed
by enterprises that, rather than aiming for pro ts at any cost, are primarily interested in
ful lling a social mission while remaining economically viable” (Chantier de l’écono-
mie sociale, 2014, p. 2). Some researchers use also a term the social and solidarity-based
economy, which comes from French and Spanish (Defourny & Develtere, 1999), but is
also popular in Central and Eastern Europe.
Fowler (2000, p. 649) de nes social entrepreneurship as “the creation of viable (so-
cio-) economic structures, relations, institutions, organisations and practices that yield
and sustain social bene ts”. De es et a l. (2 002) add t hat it is “a bout  nding new and better
ways to create social value”. Social entrepreneurship uses the same mechanism typical
for entrepreneurship itself, but in social context. Let’s give some example. While en-
trepreneurship is value creation, social entrepreneurship is about social value creation.
While entrepreneurship aims at a  nancial return, social entrepreneurship is also about
a social return on investment. What is very important social entrepreneurship applies
the same entrepreneurial tools and entrepreneurial mechanism that are well known and
connected to the theory and practice of (private) entrepreneurship.  ere are three basic
attributes of all types of entrepreneurial behaviours, which are called entrepreneurial
orientation and they are risk-taking, proactiveness and innovativeness (Covin & Slevin,
1989). Weerawardena and Mort (2006) successfully try to put all these three dimensions
in the social context while building a multidimensional model of social entrepreneur-
ship (Figure 1).  is relationship can be stated in the following way (Weerawardena &
Mort, 2006, p. 32):
SVC = ƒ (I, P;RM) subject to S; SM; E (1)
where
SVC: social value creation;
I: innovativeness;
P: proactiveness;
RM: risk management;
S: sustainability;
SM: social mission;
E: environment.
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Marek Maciejewski, Boz
ena Pera, Krzysztof Wach
Figure 1. Bounded multidimensional model of social entrepreneurship
Source: (Weerawardena & Mort, 2006, p. 32).
Social entrepreneurship appears when there is a market failure or a government
failure, so when the market economy fails and ordinary actors (people) try to ful l the
social mission in order to stimulate the solidarity economy or to provide the social econ-
omy. Monllor (2010) proposes the traditional approach in entrepreneurship and the so-
cial opportunity starts with its recognition, then evaluation and exploitation.  e third
stage enable the social entrepreneurship. Of course it is done thanks to the awareness
and the alertness of an entrepreneur (a social entrepreneur), so typical for all entrepre-
neurial process in the economy. Usually social entrepreneurship is developed in net-
works, even by including the sharing economy mechanisms (Figure 2).
Figure 2. Social entrepreneurship concept
Source: (Monllor, 2010, p. 116)
Brouard and Larivet (2010) try to put the three main concepts of the social economy
in order to describe the relations between the social entrepreneur, the social enterprise
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Social Economy and Social Entrepreneurship: The Concept, Entities, Policy
and the social entrepreneurship (Figure 3). While social entrepreneurship is the process
in the social economy, the social enterprise is organizational forms following principles
of cooperatives and social priorities. Social entrepreneurs are usually individuals who
alter social issues and see social opportunities so that to create the social value.
Figure 3. Theoretical relationships between basic concepts of SEs
Source: (Monllor, 2010, p. 51)
When we discuss social entrepreneurship, it is also important to distinguish this
term from inclusive entrepreneurship as it also deals with the social context and some
drawbacks of the market economy. Inclusive entrepreneurship is basically a new con-
cept in the theory of entrepreneurship (Wach, 2015). As a concept of including social
groups excluded from the labour market, and more broadly from the market economy
(capitalism), which enables people from these groups to use their skills and competences
to implement their projects, not necessarily business ones, but of course mainly business
ventures.  is concept can be de ned as the opposite of social exclusion, which should
be eliminated.  e concept of inclusive entrepreneurship refers in its semiotics to the
sociological concept of inclusive groups, or inclusiveness, but also to the economic con-
cept of social inclusion, which is an economic response to social exclusion. Inclusive
entrepreneurship means providing di erent social groups with equal opportunities in
pursuing their aspirations and dreams, economic and business ventures, in other words,
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Marek Maciejewski, Boz
ena Pera, Krzysztof Wach
equalizing opportunities against entrepreneurial opportunities, so that these opportu-
nities are for everyone, as is the case in the United States, where careers from a bootblack
to a millionaire’s is possible, unlike under European conditions. Inclusive entrepreneur-
ship is above all an emphasis on the barriers that potential entrepreneurs and nascent
entrepreneurs may encounter, coming from those social groups that are underrepre-
sented in the statistics in the  eld of private entrepreneurship.
At present, within inclusive entrepreneurship, scienti c discourses are being con-
ducted and empirical research is undertaken, in such areas – combining entrepreneur-
ship with particular social groups – as follows:
1) senior entrepreneurship, who are less active in social perception but also have
greater di culties in the labour market than younger people (Kautonen, 2013),
2) women entrepreneurship, which, unlike men, are usually less focused on com-
petition (including business), and more focus on the family (Jennings & Brush,
2013),
3) youth entrepreneurship, who in many economies are the largest group le with-
out work (Geldhof et al. 2014)
4) immigrant entrepreneurship, as immigrants usually have problems with assimi-
lation to the conditions of the local labour market (Glinka & Brzozowska, 2015),
5) entrepreneurship of ethnic groups and national minorities, which are more di -
cult to undertake entrepreneurial activities (Chaganti & Greene, 2002),
6) entrepreneurship of the unemployed, because self-employment - as an elementa-
ry manifestation of entrepreneurship - is the basic method of actively counteract-
ing negative e ects on the labor market ( urik et al., 2008).
Of course, this kind of enumerative list is not complete, these are only the most
important areas in which research within entrepreneurship is currently conducted, or
more precisely within inclusive entrepreneurship.
3.ENTITIES OF THE SOCIAL ECONOMY
e de nitions of social economy and social entrepreneurship presented in the
previous section indicate evolving approaches to very important phenomenon of social
inequality, which all aim at taking actions to reduce it.  is section focuses on the or-
ganisational and institutional level of this issues and presents di erent types of econom-
ic and social actors active in all sectors, but operating as entities and organisations of
the social economy.  e de nition of these actors is compound and multi-dimensional.
It combines economic, social and management elements.  e concept of social econo-
my organizations (SEOs) is based on traditional economic theories, which indicate that
public goods and services are insu ciently provided by the state to citizens. Moreover,
they are justi ed by theory of property rights (Diaz-Foncea & Marcuello, 2012) and
Bryce paradigm emphasising their signi cant in uence in the management of the dis-
tribution of certain public goods and services (Bryce 2006).
7
Social Economy and Social Entrepreneurship: The Concept, Entities, Policy
e social economy organisations are characterised by the common objective of
serving people than making own pro ts and distinguished by their objectives, speci c
form of entrepreneurship and designed to meet their own and common needs (Roelants
& Bajo, 2002). In addition, these entities are governed by the “one member one vote”
principle. Voluntary participation, open membership in them, democratic control by
members, the defence and implementation of principles of solidarity and responsibility,
management autonomy and independence from state authority are typical features of
these organisations (Social Economy Europe, 2013).  e innovation and  exibility, un-
derstood as a response to emerging economic and social problems are also signi cant
for that group of entities (Brzuska, Kukulak-Dolata, Nyk, 2017).
e SEOs in the area of mutual relations perform a competitive function, compet-
ing with each other for the support of the society, local communities, public adminis-
tration, institutional donors and private individuals.  ey carry out activities aimed at
obtaining nancial resources for their operations.  ey support each other in exerting
pressure on local administration, leading to the implementation of solutions facilitating
their functioning, as well as lobby for speci c projects in the interest of marginalized
social groups. By replicating best practices of other non-pro t organisations, they have
an incentive e ect. By in uencing the public sector, social economy entities signal ir-
regularities in the functioning of state institutions and undertake actions for legislative
changes.  ey take measures to stabilise the local and regional environment, including,
among others, eliminating con icts and non-civil activities.  ey strive to solve social
problems, meet the needs of marginalized social groups, take initiatives leading to polit-
ical, economic and social reforms. Social economy entities also cooperate with commer-
cial organisations, creating and popularizing new values, implemented as an element of
business culture and used by the latter as activities of responsible business supporting
to build their positive image in the market (Trzaska 2018).
Social economy organisations evolved. In traditional approach to the social econ-
omy, from the normative and institutional point of view, cooperative and associative
organisations can be distinguished.  e two main types of entities took di erent legal
forms and they are regulated in various way, usually by national laws (Borzaga & Santu-
ri, 2003). A more precise legal framework, but still at a general level, makes it possible to
list such basic forms of social economy organisations as (i) associations, (ii) foundations
and trusts, (iii) co-operatives and (iv) mutual aid societies.  ey are also classi ed as
non-pro t organisations.
Associations are organisations that can come under di erent names, such as: vol-
untary organisations, non-governmental organisations, charitable institutions, etc., de-
pending on the country.  ey are the result of a free decision of a group of people who
decide to collaborate in  nding a solution to a social problem. Associations may carry
out activities of mutual or general interest. In the  rst category solidarity among the
members is necessary, while bene ciaries are di erent from promoters in the second
one. Another distinguished group of organisations are foundations and trusts, which
are set up by individuals or group of people.  ey pursue their goals as established
by the founders, ether for group of people or for the community as whole (Borzaga &
Torit i a, 20 07).
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Marek Maciejewski, Boz
ena Pera, Krzysztof Wach
Foundations need  nancial support from of public bodies and private companies
to achieve their goals (operating foundations).  ey can also grant support for activities
of other organizations (grant-making foundations. (Borzaga & Toritia, 2007).
e third type of traditional social economy entities are social cooperatives.  ey
share the speci c principles or operational features as: membership open to all, dem-
ocratic management, members-based decision, mutual assistance and distribution of
surpluses, depending on activities performed by each person (Bembenek, Piecuch, Su-
dol-Pusz, 2016).
Mutual aid societies are the last main class of co-operative organizations.  ese
entities are usually owned by their customers and they are established for achieving
their goals.  eir core activities are mainly insurance and  nancial services.  ey can
operate within local communities or have a wider range of activities and area. To a large
extent, their activities may be limited by the existing legal regulations in this respect
(Defourny, 2001; Borzaga &Toritia, 2007).
New social economy not only extends the scope of its entities to include organisa-
tions from the public and private sectors, but also changes the addressees of these activ-
ities, directing activities to bene ciaries and social groups that are not direct members
of the economy.  e aim of their activities is to provide bene ts to local communities,
especially from marginalised groups and groups threatened by social exclusion.  e ac-
tors of the new social economy o en carry out activities for the professional integration
of socially excluded people.  ey also created networks of social economy organizations.
Many of their successes have been given the unique status of hybrid entities, which have
complementary but o en contradictory social and economic issues. Hybridity of this
type of organisation lies in attempts to combine commercial and public or commercial
and non-governmental orders, or use all three systems at once (Frątczak &Wygnański
2008). e social enterprises can have non-pro t and for pro t legal forms.  ey include
not only di erent forms of entrepreneurship and not-for-pro t commercial companies,
but also social partnerships based on existing businesses in the sector and more or less
formal agreements between di erent local institutions.
e new approach to the social economy also takes into account strengthening
links between entities creating local structures, in uencing the reform of the public
services sector, o ering alternative forms of credit (Borzaga & Toritia, 2007). It goes
beyond the traditional areas of functioning and activity of social economy entities.  e
concept of social enterprise and other types of entities resulting from social entrepre-
neurship were introduced, in addition to the existing forms of organisations. e cre-
ation of new entities in the social economy is a reaction of market failure and of the state
and its institutions activities in satisfying collective needs (Borzaga & Galera, 2012).
9
Social Economy and Social Entrepreneurship: The Concept, Entities, Policy
Figure 4. Locating social economy organisations in the economy
Source: (Defourny & Nyssens, 2012, p.11)
SEOs take a special place in the economy, viewed from the perspective of various
forms of exchange and fundamental principles (concerning fundamental rights of mar-
ket, redistribution of goods and services, economic activity based on voluntary basis)
(Defourny & Nyssens 2012).  e entities involved in in third sector ful ll the gap in the
economy, because traditional enterprises do not conduct their activity in this area due
to the lack of su cient pro tability, and typical social entities are not able to operate
e ectively (Figure 4.).
In the new social economy, there are  ve basic types of such organisations: (i) co-
operatives, (ii) mutual societies, (iii) associations, (iv) foundations and (v) social enter-
prises, four of which were included in the presentation of traditional forms of social
economy initiatives. A social enterprise is a new entity, which has been introduced in
the social economy. It is an organisation whose activities are geared towards social ob-
jectives and whose pro ts are reinvested in the community or for the performance of its
tasks (Huybrechts 2012). Social enterprises governed by group of people who voluntarily
created them in order to implement autonomous projects, o en with  nancial support
from public authorities or other organisations.  eir activity is to implement autono-
mous projects, o en with  nancial support from public authorities.  ey are required


&
  
!
"  

&

$%



10
Marek Maciejewski, Boz
ena Pera, Krzysztof Wach
to have a minimum number of employees remunerated. Moreover, activities of social
enterprises involve an economic risk. Unlike foundations, which belong to traditional
entities in this sector, social enterprises usually do not have advocacy activities or
redistribution of  nancial  ows.  ey are directly involved in the regular activity of
producing goods or providing the services to the people (Defourny & Nyssens, 2012;
Extezarreta & Bakaikoa, 2012, Sepulveda, 2015). Table 1. distinguishes the criteria for
identifying social enterprises and indicates the di erences with other types of organ-
isations.
Table 1. Characteristics of social enterprises in comparison
with selected organisations operating on the market
Criteria Social
enterprise
Traditional
Social Economy
Organisation
Social
responsible
enterprise
Profi t-making
company
Creation of
social value
Internal high high high high/low
External high high low -
Profi t
distribution
Undistributed/limited yes yes - -
To shareholders - - yes Yes
Governance Stakeholders high high low -
Shareholders/top managers - - high High
Finance
sources
Private (sales) high high high High
Mix (private and subsidies) high high low Low
Mainly government subsidies - high - -
Supplied
goods and
services
Private high high high High
Public high high low Low
Promoters Individual - - high High
Community high high - -
Link to the
community
Directly high high - -
Indirectly - - high Low
Source: (Diaz-Foncea & Marcuello, 2012, p.68)
e management model of social enterprises shows a much stronger adjustment
to the demand of society and a more responsible distribution of pro ts, guaranteed
by various stakeholders of the company.  e criteria they set are very di erent from
maximising pro ts, which are o en governed by shareholders and board members in
pro t-making companies (Table 1). Public authorities and institutions, civil society
and businesses are the main categories of stakeholders in the social economy  e rst
group of stakeholders ensures general guidance and guarantees the respect of funda-
mental principle in social economy. At the local level managing social initiatives belong
to the local authorities and citizens. Public authorities o er  scal facilities for social
enterprises. Civil society is another group of social economy stakeholders.  ey are ac-
tively involved in promoting social initiatives and link the relations of existing SEOs
11
Social Economy and Social Entrepreneurship: The Concept, Entities, Policy
to socially excluded and marginalised groups of people in the economic environment.
e businesses (economic environment) represent the third category of social economy
stakeholders and support establishment and activities of social enterprises (Matei & Do-
robantu, 2015). A comparison of social enterprises and socially responsible companies
also shows that there are signi cant di erences in the approach to the supply of public
goods and services, as well as in the origin of the sources to  nance their activities (Ta-
ble 1.). Diaz-Foncea and Marcuello (2012) underline that democratic governance model
introduces a mechanism which ensure balance in decision-making and in the division
of power. Moreover, sale of goods and services guarantees  nancial stability for social
enterprises and helps to identify the real needs of people. Financial self-su ciency of
social enterprises ensures them  nancial autonomy through their activities.  is is an
important feature distinguished traditional social economy organisations and entities
operating according to the new approach (Madill, 2010).
A social entrepreneur is another form connected with a social enterprise. However,
the approach to this form of enterprise varies between the Anglo-Saxon and European
systems, the latter containing more common features with the social enterprise (Di-
az-Foncea and Marcuello, 2012). Social entrepreneurs represent a hybrid model.  ey
can be entrepreneurs and persons strongly involved in the implementation of social
objectives (Laville, Levesque & Mendell, 2007). Social entrepreneurs see something in
society, that is not working. An envision a systematic change will allow them to shi
society to a new and better way (Drayton, 2002). Social entrepreneurs construct, eval-
uate and pursuit opportunities for transformative social changes (Roberts and Woods,
2005). Social entrepreneurs are creating innovative ways of tackling some of our in-
tractable social problems.  ey are nding new ways for discarded resources and peo-
ple and using them to satisfy unmet and o en unrecognised needs (Light 2009). Social
entrepreneurs focus on social concerns and seek pro t to drive their business forward
and make important changes in the marketplace (Grieco, 2015). Volkmann, Tokarski &
Ernst (2012) propose a similar approach to de ning a social entrepreneur, emphasizing
that he is an actor who applies business principles in order to solve social problems.
ese entrepreneurs conduct their business activity, such as non-pro t or pro t-ori-
ented organisations.  eir main objective is social change relating to well-being. Social
entrepreneurs and social enterprises as well, are characterised by innovation, which is
quite o en emphasised in the literature (Austin, Stevenson & Wei-Skillen, 2006; Grieco,
2015; Sinclair, Mazzei, Baglioni & Roy, 2018).
e form of SEOs depends on the legal system, the objects of the business (produc-
tive activities or services) and the customs adopted.  e associative forms are equally
widespread throughout di erent countries. However, the functioning and presence of
some categories of SEOs is more typical of certain areas than of others. Foundations,
charities and trusts have stronger traditions in countries with an Anglo-Saxon back-
ground i.e. the USA, the UK and Australia.  e co-operative organizations and mutual
society are more frequently established in continental European countries. New forms
of social economy organisations, including social enterprises and social entrepreneurs,
have been developing on European continent.  ey o en adapt the existing legal forms
of entities that allow them to operate in a given country and transfer  nancial and man-
12
Marek Maciejewski, Boz
ena Pera, Krzysztof Wach
agement burdens from public to private entities that are more likely to provide sustain-
able solutions to societal problems.
4. POLICY OF THE EU TOWARDS SOCIAL ECONOMY AND SOCIAL
ENTREPRENEURSHIP
To shape the European Union’s policy towards the social economy, it is crucial to
create an institutional framework for its functioning. At  rst it is crucial that the public
authorities should recognize di erent identity of social enterprises and their abilities
and the right to take actions in any area of social and economic activities (EESC, 2012).
e process of institutional recognition of the social economy and the creation the
corresponding European policy began in the 1980s.  e most signi cant was the 1989
Commission communication to the EU Council entitled „Businesses in the Economie
Sociale sector: Europe’s frontier-free market”.  e Commission has proposed the es-
tablishment a European legal basis for cooperatives, associations and mutual societies
through their o cial statutes preparation. (COM, 1989).  e Social Economy Unit in
European Commission Directorate General XXIII, dealing with sectors dominated by
small and medium-sized enterprises (SMEs), was also established. Its tasks included
strengthening cooperatives, associations and mutual societies, developing legislation
for them and ensuring the coherence of European policies a ecting their development
(EESC, 2012). In 2000, the Unit’s tasks were divided into the Directorate General for En-
terprise and Industry (currently DG Internal Market, Industry, Entrepreneurship and
SMEs) and the Directorate General for Social A airs (currently DG Employment, Social
A airs and Inclusion).
e support for the development of the social economy in the European Union
is also dealt with by the European Economic and Social Committee (EESC) and the
European Parliament, which in 1990 created an informal European Parliament Social
Economy Intergroup.  e intergroup is a place to exchange knowledge and stimulate
discussion for the development of speci c solutions.  e intergroup’s activities led to the
adoption of the  rst resolution devoted to the social economy in 2009.  e Parliament
emphasized, that the social economy plays a leading role in the European economy, as
it combines pro tability and solidarity, enables the creation of high-quality jobs, and
strengthens social, economic and regional cohesion.  e resolution describes the char-
acteristics of the social economy, which is not determined by the size or sectors of ac-
tivity, but also by: respect for common values, participation of social partners, priority
of individuals and social goals from pro t, allocation of the majority of surpluses to
achieve the goals of sustainable development and services in the interests of members in
line with the general interest (EP, 2009).
Another EU body set up to promote the development of the social economy was
the Consultative Committee of Cooperatives, Mutuals, Associations and Foundations
(CMAF). It was created in 1998 to give opinions on various issues regarding the promo-
tion of the social economy at EU level.  e Committee was dissolved in 2000 as a result
of the restructuring of the European Commission. In its place, the European Standing
13
Social Economy and Social Entrepreneurship: The Concept, Entities, Policy
Conference on Cooperatives, Mutual Societies, Associations and Foundations (CEP-
CMAF) was created as a European platform for the cooperation with European institu-
tions. In 2008, CEP-CMAF adopted the name Social Economy Europe.
e EU budget policy in relation to the social economy was not successful. Attempts
to support social enterprises, already made in the 1990s, with the help of special EU
programmes ended in failure.  is was related to the competition rules in force in the
EU policy, according to which joint actions are perceived as practices that restrict com-
petition and should be prohibited.  e support for the social economy in the EU bud-
get policy was implemented as a part of the employment policy and cohesion policy,
in particular through funds  nancing the development of the SME sector, such as the
Community initiatives ADAPT and EQUAL, undertaken for social inclusion.
New development opportunities for social enterprises were created together with
the announcement by the European Commission in March 2010 of the Europe 2020
strategy. As the basic priorities, it indicated, among others, inclusive growth - support-
ing a high-employment economy that ensures social cohesion.  is was re ected in the
de nition of speci c objectives, such as an increase in the employment rate to 75% and a
decrease in the number of people living in poverty by 20 million (COM, 2010).
Real support for social enterprises became the subject of the work of the European
Commission only in 2011.  is was related to the scale of the economic crisis and the
wave of social and institutional demands, such as the open letter of the European aca-
demic community „From words to action. Supporting cooperative and social enterprises
to achieve a more inclusive, sustainable and prosperous Europe”.
In April 2011 the Commission issued a Communication to the Council, the Euro-
pean Parliament, the European Economic and Social Committee and the Committee
of the Regions entitled “Single Market Act. Twelve levers to boost growth and strengthen
con dence”. e eighth of these levers is social entrepreneurship indicated in connec-
tion with the social economy. Its aim is to stimulate the development of enterprises that
intend to pursue the goals of not only achieving  nancial pro ts, but also acting in the
public interest, social development, high ethical or environmental issues (COM, 2011a).
In the same year in October the Commission issued the new Communication en-
titledSocial Business Initiative. Creating a favourable climate for social enterprises, key
stakeholders in the social economy and innovation”. Social Business Initiative (SBI) con-
tains a plan to support social enterprises (COM, 2011b). Since 2012, the European Com-
mission has been promoting a series of policies on social enterprise under the Social
Business Initiative, focused on creating the right eco-systems of support to drive the
growth of social entrepreneurship (ESELA, 2015). Supportive bodies were created to
support the work of the Commission in the implementation of the SBI. In 2012, a group
of experts called European Commission Expert Group on Social Entrepreneurship
(GECES) was established, which involves representatives of all EU member states and
about 40 independent experts.  e group’s task is to issue recommendations on what
needs to be done to create a truly supportive ecosystem for a social enterprise (COM,
2016). In 2013, the European Commission asked lawyers to undertake a study to deter-
mine the shape and nature of social enterprises in European countries.  e result was
14
Marek Maciejewski, Boz
ena Pera, Krzysztof Wach
the idea of creating an association of European business law yers. In 2015, it was decided
to create the European Social Enterprise Law Association (ESELA).
In the Communication of the European Commission “Towards a job-rich recovery
of April 2012, complementing the employment priorities under the Europe 2020 Strat-
egy, it was pointed out that supporting social enterprises positively a ects the demand
for labour. It has been pointed out that social economy entities and social enterprises are
important drivers for job creation and inclusive social innovation. It was emphasized
that these entities require special support, including through public procurement and
access to  nancing (COM, 2012a).
In the next communication of October 2012, the “Single Market Act II. Together
for new growth”, the European Commission identi ed four pillars of new economic
growth, including strengthening social entrepreneurship.  e Commission recognized
that in the area of social entrepreneurship, the most urgent issue is the development of
tools to demonstrate the viability of social enterprises to consumers, bankers, investors
and public authorities (COM, 2012b).
In January 2013, the European Commission presented a new Communication en-
titledEntrepreneurship 2020 Action Plan. Reigniting the entrepreneurial spirit in Eu-
rope”. e Commission has found that social enterprises create sustainable jobs and
show greater crisis resilience than the economy in general. Social entrepreneurs are in-
novators, they are a driver of social inclusion and contribute to achieving the goals of the
Europe 2020 Strategy (COM, 2012c).
In the Communication of February 2013, “Towards Social Investment for Growth
and Cohesion – including implementing the European Social Fund 2014-2020” of 20 Feb-
ruary 2013, the Commission concluded that the funds allocated for social policy do not
come only from the public sector. A signi cant part of them comes from individuals
and families. Socially non-pro t organizations also provide broad social services (COM,
2013a).
Attention was paid to the need to improve access to private  nancing, the need to
launch European funds and improve the legal environment by creating European legal
forms adapted to the needs of European social entrepreneurship.
It was found that the main barriers to the development of social entrepreneurship
are the di culties related to obtaining  nancing. Social enterprises were perceived as
more risky and less pro table.  erefore, they had to count on  nancing only from pub-
lic funds or subsidies of natural persons (Krawiec, 2016).  e solution to this problem
was to be the creation within the European Union the legal basis for the operation of
investment funds for social entrepreneurship within the European Union.  e adop-
tion of Regulation of the European Parliament and of the Council on European Social
Entrepreneurship Funds (EuSEF) in 2013 was intended to increase the interest of private
investors in social enterprises (EP and Council, 2013a).  e social impact of the bene -
ciaries of the funds is emphasized, not their form or management – the requirement is
that at least 70% of the capital received from investors should be used to support social
enterprises.
15
Social Economy and Social Entrepreneurship: The Concept, Entities, Policy
e European Union Programme for Employment and Social Innovation (EaSI)
was also established in December 2013 by the Regulation of the European Parliament
and the Council (EP and Council, 2013b). It is a pan-European  nancial instrument
managed directly by the European Commission and aimed at supporting employment,
social policy and employee mobility across the EU. One of the goals of EaSI is to increase
the availability of microcredit for vulnerable social groups and micro-enterprises, and
to improve access to  nance for social enterprises. As a part of activities related to social
enterprises, such entities will be facilitated by access to nancing through public and
private entities that provide loans to social enterprises and provide them with other
nancial instruments. In the years 2014-2020, a total of 92 million euro will be allocated
to support for social entrepreneurs.  e limit is 500,000 euro per an enterprise, provid-
ed that the annual turnover of a given entity does not exceed 30 million EUR (COM,
2013b).
e European Investment Fund (EIF) is linked to the EaSI.  e EIF manages two  -
nancial instruments under EaSI: the EaSI Guarantee Instrument and the EaSI Capacity
Building Investment Window.  ey help  nancial institutions to increase their ability
to lend to micro enterprises and social enterprises (EESC, 2017).
e regulations on the scope of directions of spending funds from the European
Social Fund (ESF) and the European Regional Development Fund (ERDF) for the  rst
time indicated the social economy and social enterprises. Under the ESF and ERDF (EP
and Council, 2013c, 2013d), the investment priority for the social economy and social
enterprises was included in the thematic objective of Promoting social inclusion and
combating poverty.
In addition, other  nancial instruments are available for the social economy and
social entrepreneurship, which are not only targeted at this area.  ey include Innov-
Fin (research and innovation investments for enterprises under Horizon 2020), COSME
(Competitiveness of Enterprises and Small and Medium-sized Enterprises) and the Eu-
ropean Fund for Strategic Investments (EFSI).
It is estimated that the ESF and European directives and legislation have the greatest
impact on the development of the social economy in Europe.  e new tools established
recently, such as EFSI, EaSI, COSME, have shown little impact, especially in the EU
member states located in the Mediterranean region and in the East of Europe (EESC,
2017).
5. CONCLUSIONS
e concept of the social economy and social entrepreneurship is an important area
of research today, especially a er the recent global  nancial and debt crisis in the Eu-
ropean Union. Di erent approaches to these concepts are noted in the economic and
social literature, although of the social economy, as a term itself, appeared as early as
in 19th century. Modern research allows the concept to be developed by indicating its
features and dimensions, but it also takes into account the phenomena, relationships
and networks that occur within the categories that make it up. In recent decades, more
16
Marek Maciejewski, Boz
ena Pera, Krzysztof Wach
and more attention has also been paid to the concept of social entrepreneurship, es-
pecially when the market economy seems to fail and the ordinary actors want to ful l
their social mission. Inclusive entrepreneurship is, alongside social entrepreneurship, a
new concept that takes account of the social context and some of the weaknesses of the
market economy.
Social economy entities support the implementation of social objectives on the level
of public administration, local communities and citizens, including groups threatened
with social exclusion or marginalisation.  ey also promote new values (the social ones)
and support changes in the business culture of pro t organisations.  e new approach to
the social economy goes beyond the traditional areas of activities of di erent categories
of organisations. It broadens t he range of actors involved in creating the social economy
and strengthens the links between them. Social entrepreneurship also distinguishes a
social enterprise as a new form of organisation, in addition to traditional entities.
e European Union’s policy towards the social economy is crucial to create an
institutional framework for its functioning.  e public authority should recognise dif-
ferent identity of social enterprise, their abilities and the right to take actions in any area
of social and economic activities. Since the 1980s, many regulations have been created
and implemented to support the development of social economy policy and social en-
trepreneurship in the European Union. EU institutions undertook activities not only to
improve the legal environment, but also to establish new programmes and instruments,
adapted to the changing environmental conditions, facilitating the access of potential
bene ciaries to  nancial resources supporting the development of social entrepreneur-
ship and levelling social disparities.
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ACKNOWLEDGEMENT
is work has been supported by Croatian Science Foundation under the project
UIP-2014-09-4057 entitled “Potentials and obstacles of Social Supermarkets Develop-
ment in Central and Eastern Europe” (SSMCEE Project). For more details, please visit
the project website at http://www.efzg.unizg.hr/ssmcee .
e authors declare that their share in the contribution of this study is equal and it
amounts to 33.3% for each of the co-authors.
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