Social Economy: Actors, Trends, and Challenges
Three Actor Model
Three independent elements interact:
- Business: Taxes decrease.
- State: Wages decrease.
- Society: Labor decreases (doubly so due to technology).
There’s a conventional equilibrium among these actors, but something remains unresolved. Society demands more services and has increasing needs, while the state has fewer resources to meet these needs (this is a core problem in our economy). The part of society called non-profit organizations depends on profit, directly or indirectly, because they receive funding from businesses.
Accelerated Elements
- Technology: Plays a role in promoting turnover between capital and labor, reducing the relevance of the human factor.
- Socialization of Processes: Socialization is crucial in personality formation.
- What if digital innovation is not assumed by social enterprises, but is promoted by them?
This change is called Platform Cooperativism.
Goal of Social Entrepreneurship
The goal of social entrepreneurship is maximizing social impact.
Defining Social Entrepreneurship
Social entrepreneurship is a broad tendency to take charge of social needs through social enterprise.
European 2020 Strategy
The European 2020 strategy set targets for member countries, including:
- Employment targets
- GDP (Gross Domestic Product: a monetary measure of the market value of all final goods and services produced in a period) investment in research and development
- Reduced greenhouse emissions (energy efficiency)
- Decreased rate of early school leavers
- Lower risk of poverty and social exclusion
Social Economy Trends
Main trends:
- Adoption of socially responsible behavior by individuals.
- Direct and bottom-up provision of general-interest services by groups of citizens.
- Increased attention to the social impact of economic and financial activities across sectors (including growing attention paid to social innovation).
Common Goods and Shared Value
- Responsible Management of Collective Assets (Common Goods): The right of ownership must be balanced with the duty of custody for the benefit of current and future generations.
- Recognition of the Importance of Social Capital and Reputation: Important within business processes.
- Focus on Shared Value: Policies and operating practices that enhance a company’s competitiveness while simultaneously advancing economic and social conditions in the communities in which it operates.
Social Economy Actors
- Traditional Actors:
- Cooperatives
- Mutuals
- Associations
- Foundations
- New Actors:
- Social Enterprise: Created specifically to pursue social goals. It’s a business model.
EC Definition of Social Enterprise
An operator in the social economy whose main objective is to have a social impact rather than make a profit for its owners or shareholders. It operates by providing goods and services for the market in an entrepreneurial and innovative fashion and uses its profits primarily to achieve social objectives. It is managed in an open and responsible manner, involving employees, consumers, and stakeholders affected by its commercial activities.
Social Enterprises are market-oriented: They earn a substantial proportion of their income through trading rather than being dependent on grants or donations.
Social Enterprise Key Challenges
- Lack of visibility
- Lack of specialized education
- Improving networks and infrastructure for business development services
- Limited access to traditional finance
- Lack of uniformity between regulations across member countries
- PA-SE relationships
- Platforms from start-up to scale-up
- Access to public markets