Evolution of the Social Entrepreneurship in Europe from 2000 to 2020

4621 words (18 pages) Essay in Business

23/09/19 Business Reference this

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                                           Research Proposal

 

Abstract

In the last two decades, social entrepreneurship is attracting a large amount of attention from different fields such as management and business but also from sociology and economy.

This research inspects the evolution of social entrepreneurship in the European context, examining its impact on different societies during the last decades. I aim to identify the contributions that social entrepreneurship has had on the business performance in the states of the EU members. The study offers a theoretical perspective on the business model and it analyses the different importance that it has on the social economy of the eastern and western countries.

This research has an important contribution being able to compare how the economic system of a country may influenced the way this new type of making business it was accepted by the leaders and the governments of the EU member States.

In the first place, social entrepreneurship will be described then, I will define the differences between business and social entrepreneurship analyzing available data, and at the end we will have a look at the challenges that are encountered by this “different” type of business model.

Introduction

In order for us to identify the nascent point of the “social entrepreneurship”, we have to deeply understand the Evolution of European society in the context of global economy.

Social entrepreneurship is the new business model that has created lots of debates between the researchers which were trying to find the correct definition of this concept in the context of the current global economy.

Above all, it is important to highlight the fact that there are a significant amount of research and a large variety of definitions of the concept, therefore it is desirable to specify that the results and conclusion will be outlined upon careful review of the literature which folds the best the European context. 

Because for many researchers the definition of social entrepreneurship is yet unclear, I will start the research by analyzing the different definitions that are presented in the existing case studies and literature, with the purpose of identifying the one which suits more the concept.

With this research I am aiming to define a few concepts such as “social entrepreneurship”, “social enterprise”, “social market economy”,” social economy”, seeking to draw the definition that can summarize the objectives and the framework of the business model.

Research topic

The topic of my thesis is: “The evolution of the social entrepreneurship in Europe from 2000 to 2020”.

At the beginning of the paper we will look at how European Union started to change the way of performing business, then we will be able to underline the evolution that took place on this field of study.

A comparative research must be conducted to understand the reason behind the different evolution that social entrepreneurship has had within countries. For instance, although in many countries the Social entrepreneurship has already found its place, being able to create social value, in some other country such as Romania, the concept is still new (Borza, Mitra, Bordean, & Nistor, 2009)

Research question

With this research I am going to highlight the importance and the contribution of the social entrepreneurship in Europe looking at its evolution throughout the years, therefore this study aims to respond to the following main question:

  • What was the starting point that has made people to start focusing on social entrepreneurship and why leaders are interested in this new type of business?

followed by the secondary questions:

  • What is the contribution that social entrepreneurship brings to the society?

And as a third question, we will look to the following:

  • Is social entrepreneurship the new way of doing business that can solve social problems and revolutionize the capitalism?

 

Objectives

My research will be a positivist research; therefore, it is going to be based on data collection followed by an objective interpretation.

 The objectives of this study are:

  • Understanding historic underpinnings of social entrepreneurship
  • Understanding the differences between social entrepreneurship and commercial entrepreneurship
  • Understanding its evolution during the last decades
  • Understanding its contribution to the society
  • Compare the evolution of the social entrepreneurship in the different states members of the European Union

Literature review

According to the European Research Institute on Cooperative and Social Enterprises it is important to understand the context in which social economy and social entrepreneurship are situated.

In Europe a new vision of shared future for the entire continent appeared after the devasting destructions that took place during the World War II. After the watershed in the Words history, a unique social and economic model appeared in Europe. More and more countries chose the path of integration with the purpose of preventing conflicts, changing the way the countries have decided to interact with each other. (Enterprises, 2013)

In a nutshell, after the World War II until 1970, the Keynesian model has been implemented and the governments of most western countries were guided after it, therefore at that time a solid welfare system was in place and social services, such health and education were provided by the state. After 1974, however because of an increase inflation, the economic system shifted to a free market neo-liberalism. This model, on the other hand was characterized “minimal involvement of the state in the economic sector” and because of that and more other reasons, the government wasn’t providing the welfare to all people anymore, that caused a growing gap between rich and poor people. Because of the negative consequences of the model “the third way” compromise incurred. At that time, governments took back the responsibility for social services such as health and education and started to promote a “free market for business and was supported the “free trade as the goal of both national and global economies”. (Cheney, 2005)

According to some academics, the treaties that gave birth to the European Union such as: the scope of the Rome Treaty of 1957, were not only concentrated to create an economic cooperation between the states, but also an important part of it was the purpose to achieve “a cohesive social and economic growth that could reduce disparities among European countries” (Enterprises, 2013).

As already stated above, post-war reconstruction has created the desire to develop and implement a model based on solidarity and integration, there are three different layers of conviction to establish the development in the society:

  1. Collective action is more effective than just an individual action
  2. All parts of society can have their contribution
  3. The economic growth will affect the wellbeing of everyone (Enterprises, 2013)

Years later, with the foundation of the European Union in 1993, the countries members have decided to share the same economic and social models using the same shared values for its growth.

The great powers of the continent decided to let down their boundaries to create an economic and social model that can be shared by the States that were part of the Union. The objectives of the European Union were the social cohesion as well as the economic solidarity and integration. (Enterprises, 2013).

Roger L. Martin & Sally Osberg remarked that while talking about entrepreneurship we have to start with the French economist Jean-Baptiste, who at the beginning of the 19th century, described the entrepreneur as the one who “shifts economic resources out of an area of lower and into an area of higher productivity and greater yield”.

A century later, the Austrian economist Joseph Schumpeter contributes with a significant idea built upon the concept of “value creation”. He sees the entrepreneurs as “the force required to drive economic progress, absent which economies would become static, structurally immobilized, and subject to decay.” According to Schumpeter the entrepreneurial spirit is to identify commercial opportunities in order for them to create “a venture to implement it”.

(Osberg, 2007).

In 1934 Schumpeter and decades later Adam Smith as well, sustain that “the personal profit motive is a central engine that powers private enterprise and social wealth”, they consider entrepreneurship being productive because “in the process of pursuit selfish ends, entrepreneurs also enhance social wealth by creating new markets, new industries, new technology, new institutional forms, new jobs, and net increases in real productivity”. (Marti, 2005)

Gregory Dees sustain that Schumpeter’s entrepreneurs may be the “change agents in the economy by serving new markets or creating new ways of doing things”, but the entrepreneurs described by him have only the goal of starting new and profitable ventures, therefore their purpose is not to start a new business. (Dees, 2001)

To differentiate “social entrepreneurship” from the “commercial entrepreneurship”, Austin (2006) affirm that the first one is driven by “an unmet need, demand, or market failure, which is to say by the opportunity for social change” with the commercial entrepreneurship is “attracted by large or growing market sizes that can provide for profitable opportunities”. (Borzaga G. G., 2009)

Roger L. Martin & Sally Osberg on the other hand argue that, the difference between these two concepts is not the idea that social entrepreneurs are driven by altruism while entrepreneurs by money. They acknowledge that both type of entrepreneurs are motivated by “the opportunity they identify, pursuing that vision relentlessly, and deriving considerable psychic reward from the process of realizing their ideas” (Osberg, 2007)

In order to understand the history of social entrepreneurship, academics and researcher like Jacques Defourny note that the concept “social enterprise” has its roots during the 1970s 1980s in the United States and Europe appearing as a movement in the third sector- the nonprofit sector. In the U.S. because of the economic downturn in the late 1970s, nonprofit organizations were beginning to set up and operate in order to create jobs for the disadvantage people, at the same period of time, in Europe, in the nonprofit sector new “entrepreneurial dynamics” started to take place, but the term of “social enterprise” appear only in the early 1990s in Italy, when the paper named “Impresa Sociale” was launched and it was promoting the concept of “social enterprises”    (Kerlin, 2009). The starting point has its roots in the late 1980s, when in Italy “new cooperative-like initiatives” have been created to respond unmet needs regarding to the work integration or personal services, but the legislation at that time restricted the power of association in the economic field, therefore the Italian Parliament created a new legal form-named “social cooperative” to allow the cooperatives to perform their mission. (DEFOURNY, 2012)

The initiative of the Italian government has inspired plenty of other countries both across Europe and beyond. During the following years, various other countries have decided to introduce “new legal forms reflecting the entrepreneurial approach adopted by this increasing number of “not-for-profit” organizations.” While in France, Portugal, Spain and Greece, these new legal forms were of the cooperative type. Some other countries such as Belgium, the UK and Italy chose more open models of social enterprise”(DEFOURNY, 2012)

According to the Department of Trade and Industry, in 2004 the UK Parliament passed a law to create “community interest company” and two years later the British government defined the social enterprise  as being “a business 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 maximise profit for shareholders and owners” (DEFOURNY, 2012)

The European Commission has also defined the term “social enterprise” as following:

“an operator in the social economy whose main objective is to have a social impact rather than make a profit for their 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 and, in particular, involves employees, consumers and stakeholders affected by its commercial activities”(Enterprises, 2013)

Although, social entrepreneurship was considered to be a new type of business, researchers sustain that social entrepreneurs always existed, but at that time they were called visionaries, humanitarians, philanthropists, reformers, saints, or simply great leaders. For instance, we can start with St. Francis, that should be not only known about the moral teachings, but also for creating the fastest growing religion of its days, or even Florence Nightingale who is known as the minister of wounded soldier, but not because “she built the first professional school for nurses and revolutionized hospital construction” Academics with their research want to bring into our attention the fact that even though many institutions or movements are taking for granted, the source of them was exactly the social mentality that much of our social entrepreneurs of today have. (DAVIS, 2010).

Carlo Borgaza and J. Defourny notice a clear connection between the development of social enterprises and the decline in the rates of economic growth that brought the European welfare system in crises. Another reason for the growth of the social entrepreneurship “derives from the failures of traditional labor policies and from the difficulties in shifting from regulatory, and mainly passive, policies to active ones.” The difficulties were related to the people whom were unable to enter or re-enter the labour market. (Borzaga C. &., 2001)

According to Nicholas (2006) the interest in social entrepreneurship, in the last decades, has increased due to two reasons, first because of the “persisting problems that call for innovative approaches” -the demand side and second because of the developments that took place in the recent years that can help the problems to be resolved- the supply side. (Brigitte Hoogendoorn, 2010)

The World Bank (2007) notice on the demand side, an increased awareness regarding the inequality in wealth distribution and regarding the environmental issues, but at the same time the governmental funding in face of free market ideology have decreased. (Brigitte Hoogendoorn, 2010)

On the supply side, on the other hand, there is a hope thanks to the increased chances of alternative approaches to deal with societal, economical, and environmental problems. As Zahra, Rawhouser, Bhawe, Neubaum, & Hayton, (2008) have noticed a big development in the private sector which leads to an “increased corporate social responsibility and more proactive responses to complex social problems”. As a second factor, Reis & Clohesy, (2001) see that young generation are earning a vast sum of money compering to the previous generations and many of them are involved in philanthropic causes. Moreover, a new group of philanthropists is emerging from different backgrounds, the most noticeable example is the founder of Microsoft, Bill Gates.  Before he turned forty he created the Gates Foundation, from that moment on, he started devoting his life and capital in order to improve the quality of health and to reduce poverty. Zahra (2008) sustain that another chance in dealing with societal problems is doing social good and making a profit as well, these are the characteristics of the Corporate Social responsibility movement. (Brigitte Hoogendoorn, 2010).

According to Benjamin Huybrechts and Alex Nicholls, the drivers of the growth of social entrepreneurship are firstly the increase of the global crises that claim innovation for social-environmental issues. They affirm that, nowadays, the major challenges are: climate change and environmental degradation; inequality and poverty; lack of access to basic healthcare, clean water and energy; mass migration; international terrorism.” Another change in socio-economic, political and cultural context, that has increased the growth of social enterprises, is the development of social media that created “global connectedness- that has improved the ability of citizens to identify and respond to social and environmental needs”. A third driver, the decreased involvement of the government in welfare services has conducted social entrepreneurs to innovate and finally, as also the World Bank affirmed, is the mismatch between supply and demand of resources to sustain social organization. (Nicholls)

According to the academics Carlo Borzaga and Jacques Defourny “the first theoretical and empirical milestones of social enterprise analysis” has been undertaken by the EMES European Research Network. The approach, based on a theoretical and empirical project, aim to identify the requirements for an organization to qualify as a social enterprise. 

From an economic and entrepreneurial dimension, the social enterprises should have:

  • “A continuous activity producing goods and/or selling services”
  • “A significant level of economic risk”
  • “A minimum amount of paid work”

 From a social dimension, the social enterprises should meet the following conditions:

  • “An explicit aim to benefit the community”
  • “An initiative launched by a group of citizens or civil society organisations”
  • “A limited profit distribution”

The last criteria, it is regarding to the participatory governance of social enterprises:

  • “A high degree of autonomy”
  • “A decision-making power not based on capital ownership”
  • “A participatory nature, which involves various parties affected by the activity” (DEFOURNY, 2012)

 

According to some academics, the concept of social entrepreneurship is view more as a hybrid form of business, associate the private sector with the non-profit and public sector. Porter (2003), on the other hand, describe the business model as a “strategic philanthropy”.

Trying to understand the social entrepreneurship’s characteristics, Juliet Roper and George Cheney realize that there are multiple ways of characterizing “social entrepreneurial ventures”. Because social entrepreneurship is not only about “doing business”, but is also about partnership across sectors, the academics identify how social entrepreneurship influence every sector:

  • Social entrepreneurship in the private sector.

Campbell, 1998 state that “Socially oriented purpose business ventures can draw upon a wealth of experience in terms of market analysis and the conduct of feasibility studies”. The advantage of the social entrepreneurs working in the private sector is that they are more oriented in: planning, profit and innovation.

  • Social entrepreneurship in the non-for-profit sector

In this sector, social entrepreneurship is challenged by a high competition for funding resources from private foundations and government agencies.

  • Public-sector social entrepreneurship

“So-called third way economic and social policy is especially amenable to the symbols and methods of entrepreneurship, as an essential part of this ideology is that there is no inherent alienation between public and private interests.”(Cheney, 2005)

 

Methodology

In order to have an accurate view of the subject studied, the methodology that is going to be used in the dissertation is literature-based.  Using existing research, I will be able to compare different views of different academics, to create an overview and a frame of the business model. Qualitative data will be used for conducting the research, analyzing various case studies, I will have a large spectrum of different view on the subject that will help me to infer the data.

The scholarly field of social entrepreneurship is still at early stages, the materials found are mainly phenomenon-driven and most publication present the conceptual setup of the process. The large number of studies are composed of conceptual articles more than empirical research.

The qualitative data will be using to have a holistic perspective on the hole phenomenon and a concrete analysis of the evolution of the business will be attaint.

Quantitative methods will be used in order to create an overview on the evolution of the social entrepreneurship during the years, from 2010 to 2020. This data will be found in previous research, publications and reports.

The Global Enterprise Monitor updated in 2018 will be consulted in order to create an overview regarding the Social Entrepreneurial activity in the recent years.

Research methods

Combining qualitative and quantitative data we will have an accurate overview of the evolution and on the impact that this model has on the development of the countries and their economy.

With a chronological view on the concept, we will be able to identify the reasons why this concept draws so much attention lately.

I am aware of the fact that in order to measure the social impact is a big challenge, the issue is not necessarily the measurement, but the identification of the performance of social entrepreneurship in particular. According to Emerson: “for many of those active in the social sector, it has been taken as a virtual given that most elements of social value stand beyond measurement and quantification” (Marti., 2004)

 

Ethical Consideration

 

The most part of my analysis is literature-based; therefore I will not be dealing with sensitive data.

 

 

 

Data analysis

 

Because the concept of Social entrepreneurship is a quite new subject to debates, an increased number of research has started from the beginning of 1990, therefore the materials used to conduct my analysis is up to date and very recent.

At the same time, due to the fact that the subject is still under research the literature available can be considered limited.

Project Timetable:

 

Task name

Duration

Start

Finish

Dissertation

197

15/12/18

30/06/19

Collecting data

137

15/12/18

01/05/19

Collecting secondary data from qualitatively researches

137

15/12/18

01/05/19

Collecting secondary data from qualitatively researches

                      28

01/01/18

01/02/19

Dissertation introduction

15

01/01/19

15/01/19

Background of the study

5

01/01/19

06/01/19

Why is social entrepreneurship important for society

2

6/01/19

8/01/19

Understanding the objectives

2

10/01/19

12/01/19

Introduction of the research

3

12/01/19

15/01/19

Literature review

30

1/02/19

02/03/19

History of Social Entrepreneurship

5

1/03/19

5/03/19

What was the starting point that has made businesses to start focusing on social entrepreneurship

15

15/03/19

30/03/19

The way Social entrepreneurship influenced the social economy

10

30/03/19

10/04/19

Methodology

23

10/04/19

01/05/19

Context of the study

5

01/05/19

05/05/19

Research approach

10

05/05/19

15/05/19

Research design

15

15/05/19

30/05/19

Method of analysis

10

30/05/19

09/06/19

Conclusion

12

09/06/19

21/06/19

Compare the results from the first and final year of the research

4

21/06/19

25/06/19

Compare the situation of the social entrepreneurship in different countries of EU.

3

25/06/19

28/06/19

Some perspectives for it in the future

2

28/06/19

30/06/19

 

 

Grantt Chart

Bibliography

  • Borza, A., Mitra, C., Bordean, O., & Nistor, R. (2009). Fair Trade in Romania. Review of Economic Studies and Research.
  • Borzaga, C. &. (2001). The Emergence of Social Enterprise. London.
  • Borzaga, G. G. (2009). Social enterprise. An international overview of its conceptual evolution and legal implementation. Social Enterprise Journal.
  • Brigitte Hoogendoorn, E. P. (2010). What Do We Know About Social Entrepreneurship:An Analysis of Empirical Research.
  • Cheney, J. R. (2005). The meanings of social entrepreneurship today. Corporate Governance International Journal of Business in Society.
  • DAVIS, D. B. (2010). SOCIAL ENTREPRENEURSHIP WHAT EVERYONE NEEDS TO KNOW.
  • Dees, J. G. (2001). The Meaning of “Social Entrepreneurship”. Duke Innovation & Entrepreneurship.
  • DEFOURNY, J. (2012). THE EMES APPROACH OF SOCIAL ENTERPRISE IN A COMPARATIVE PERSPECTIVE . EMES European Research Network.
  • Enterprises, E. R. (2013). Social economy and social entrepreneurship.
  • Kerlin, J. A. (2009). Social Enterprise: A Global Comparison.
  • Marti, J. M. (2005). Social entrepreneurship research.
  • Marti., J. M. (2004). Social entrepreneurship research: a source of explanation, prediction and delight.
  • Nicholls, B. H. (n.d.). Social entrepreneurship: definitions, drivers and challenges.
  • Osberg, R. L. (2007). Social Entrepreneurship: The Case for Definition. Standford Social Innovation Review.

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