ESDN Office at the Institute for Managing Sustainability Vienna University of Economics and Business Welthandelsplatz 1, Building D1, A-1020 Vienna, Austria E:
also focusing on the role of social entrepreneurship in the context of the social innovation discourse.
1. 1 Core elements and common features 6 1. 2 Social innovation and social entrepreneurship 8 2 EU initiatives and activities on social innovation
2014). 1. 1 Context and definitions Social innovations are new solutions (products, services, models, markets, processes etc.)
Social innovation relates to new responses to pressing social demands by means that affect the process of social interactions,
3) social entrepreneurship; 4) the development of new products, services and programmes; and, 5) a model of governance, empowerment and capacity building. 1 Our perspective on social innovation is guided in many ways by the work done by the FP7 project TEPSIE (http://www. tepsie. eu),
which explored the‘Theoretical, Empirical and Policy Foundations for Social Innovation in Europe'and ended officially in January 2015.
and individuals are seen not only as passive recipients of services anymore2; 5) Mutualism: Notion that individual and collective well-being is obtainable only by mutual dependence;
i) New products Assistive technologies developed for people with disabilities ii) New services Mobile banking iii) New processes Peer-to-peer collaboration
or regulatory frameworks or platforms for care vi) New organisational forms Community interest companies vii) New business models Social franchising,
2012) Social innovation does not refer to any particular sector of the economy, but to innovation in the creation of social outputs, regardless of where they emanate.
2012, p. 26). 1. 2 Social innovation and social entrepreneurship We devote now a brief section of our report to the topic of‘social entrepreneurship'.
1) What is the role of‘social entrepreneurship'in such a debate?(2) Is this the only way for social innovation to get results?
Our main interest is to show here that social entrepreneurship should not be confused with social innovation,
And enterprises are important because they deliver innovation. But ultimately, innovation is what creates social value.
Innovation can emerge in places and from people outside of the scope of social entrepreneurship and social enterprise.
by expressing willingness to contribute to the creation of a favourable environment for the development of social business in Europe,
and of the social economy at large3. Social entrepreneurship seems to be one of the most considered avenues
and potentially most effective ways for social innovation to offer solutions to the most pressing social problems.
therefore, EU policy, social enterprises contribute to social cohesion, employment and the reduction of inequalities,
In its view, social enterprises seek to serve the community's interest (social, societal, environmental objectives) rather than profit maximisation.
2008) noted, the underlying objective of social entrepreneurs and social enterprises is to create social value that is seen as the creation of benefits
Seemingly, the EU Commission sees social enterprises as often having an innovative nature, through the goods or services they offer,
and through the organisation or production methods they resort to, often employing society's most fragile members (socially excluded persons).
or create new opportunities through a process of exploration, innovation, experimentation, and resource mobilization. This is, therefore, an active, messy, highly decentralized learning process,
and assess opportunities (Dees, 1998). In terms of creating social value, therefore, wealth is just a means to an end for social entrepreneurs.
2009), social entrepreneurship encompasses the activities and processes undertaken to discover, define, and exploit opportunities
in order to enhance social wealth by creating new ventures or managing existing organizations in an innovative manner (p. 522).
Another useful conceptualization is offered by Peredo and Mclean (2006, p. 64) that, after an examination of'social entrepreneurship'in its common use, suggest the following comprehensive definition:
Social entrepreneurship is exercised where some person (or group)( 1) aims at creating social value, either exclusively or at least in some prominent way;(
2) shows a capacity to recognize and take advantage of opportunities to create that value(‘envision');
'3) employs innovation, ranging from outright invention to adapting someone else's novelty, in creating and
and,(5) is unusually resourceful in being undaunted relatively by scarce assets in pursuing their social venture.
that defines it as an instrument for developing new ideas, services and models to better address social issues5.
-What does strategic social investment look like and how can social policy support it? -How to support people in lifelong learning to ensure adequate livelihoods in a changing world?
and,(3) supporting social innovation projects through the Social Innovation Competition. 4 See also: http://ec. europa. eu/growth industry/innovation/policy/social/index en. htm 5 See also:
and the public and third sectors. o It will promote social innovation through the European Social Fund (ESF) building on the significant investments in social innovation which the ESF has made over the last ten years, all along the innovation cycle.
As an immediate step, it will pilot a European Public sector Innovation Scoreboard as a basis for further work to benchmark public sector innovation.
i) Networking,(ii) Competition,(iii) EU funding,(iv) Finance,(v) Framework conditions,(vi) Results,(vii) Incubation and scaling up.
Competition Every year since 2012, the European Social Innovation Competition is organized to support new solutions and raise awareness of social innovation.
The Competition invites Europeans to develop new solutions to reduce unemployment and minimize its effects on the economy and society.
The first two editions focused on the best social innovation solutions to help people move towards work or into new types of work.
Naples 2. 0-International Social Innovation Competition, and Social Innovation Tournament. EU funding Direct funding to support social innovation is offered by the EU programme for Employment
which is open to social enterprises. Additionally, EU funding can be found under the EU Structural and Investment funds.
and the role of the third sector in socioeconomic development and social entrepreneurship. Horizon 2020's broad approach to innovation further strengthens social
and public sector innovation and provides many opportunities for take-up across all areas. For the first multiannual work programme of Horizon 2020,
and services, enhancing transparency and decision-making processes of public administrations, the launch of a Social innovation community in 2015, support to the public sector observatory of the OECD, a new competition for the prize of the European capital of Innovation,
as well as continuation of support to the Social innovation competition for the next years Finance Information about available financial support for social innovation is made public by the European commission that prepared a well-structured report to describe the main typologies of support.
The report Financing social impact. Funding social innovation in Europe among others recommends a coordinated
iii) funding for pilots and prototypes, as well as for evaluations;(iv) finance for embedding successful models;
Framework conditions The European commission aims to improve the conditions for social innovation and social enterprises in Europe, for instance through the EU single market, the Social Business Initiative and its 11 key actions.
The Social Business Initiative (SBI) was launched by the European commission in 2011 with the aim of fostering a fertile environment for the development of social business in Europe.
-Bigger role for social innovation in the European Social Fund-European Social Innovation Competition; -Support to networks of incubators for social innovation. 27-Support a research programme on public sector and social innovation;
-Pilot a European Public sector Innovation Scoreboard-Social and public sector innovation included in Horizon 2020 topics;
Two EU-wide networks of incubators are particularly notable. Firstly,‘TRANSITION-Transnational Network for Social Innovation Incubation'is a project that supports the scaling-up of social innovations across Europe by developing a network of incubators bridging established partners within the fields of social innovation (SI
) and innovation-based incubation (IBI. Secondly,‘BENISI-Building a European Network of Incubators for Social Innovation'seeks to build a Europe-wide network of networks of incubators for social innovation,
with the aim to identify at least 300 social innovations that are identified with high potential for scaling successfully,
and ensure the delivery of necessary support services to those social innovations. 2. 2 Research projects in Europe Several EU-funded research projects are focusing on social innovation.
5) EFESEIIS Enabling the flourishing and evolution of social entrepreneurship for innovative and inclusive societies;(
6) SEFORIS Social Enterprise as Force for more Inclusive and Innovative Societies; Social Innovation in Europe ESDN Quarterly Report No. 36 15 (7) Third Sector Impact The Contribution of the Third Sector to Europe's Socioeconomic Development;(
integrating critical analysis of current and previous work with future-oriented methodologies, new actionable knowledge and continual stakeholder participation.
EFESEIIS (Enabling the flourishing and evolution of social entrepreneurship for innovative and inclusive societies. The project provides advice to stakeholders on how to foster Social Entrepreneurship and Social Innovation;
drafts an Evolutionary Theory of Social Entrepreneurship to explain the different evolutionary paths of Social Entrepreneurship in Europe
and how Social Entrepreneurship and institutions co-evolved over time; identifies the features of an enabling ecosystem for Social Entrepreneurship;
and identifies the New Generation of Social Entrepreneurs, its features, needs and constraints as well as their contribution to Social Innovation.
Social Innovation in Europe ESDN Quarterly Report No. 36 16 SEFORIS (Social Enterprise as Force for more Inclusive and Innovative Societies.
The project seeks to understand the potential of social enterprise in the EU and beyond to improve the social inclusiveness of society through greater stakeholder engagement,
promotion of civic capitalism and changes to social service provision through a. investigation of key processes within social enterprises for delivering inclusion
and innovation, including organisation and governance, financing, innovation and behavioural change and b. investigation of formal and informal institutional context, including political, cultural and economic environments and institutions directly and indirectly supporting social enterprises.
Third Sector Impact (The Contribution of the Third Sector to Europe's Socioeconomic Development. The project will create knowledge that will further advance the contributions that the third sector
and volunteering can make to the socioeconomic development of Europe. These unique‘renewable resources'for social and economic problem-solving and civic engagement in Europe are needed more than ever at this time of social and economic distress
2) persistent multi-stakeholder constellations;(3) the mobilisation of multiple resources. Against the update of structural data, the project will test these hypotheses on the qualitative impacts of the Third Sector in terms of capital building (e g. social networks,
1) SCU (2014) Science for Environment Policy In depth Report: Social Innovation and the Environment. Science Communication Unit, University of the West of England, Bristol.
Report produced for the European commission DG Environment, February 2014. Available at: http://ec. europa. eu/science-environment-policy;
2) the Transition Network's website: www. transitionnetwork. org 10 The idea of‘Peek oil'is one of the main motives of the transition towns movement. 11 Permaculture can be defined as‘consciously designed landscapes which mimic the patterns
and relationships found in nature, while yielding an abundance of food, fibre and energy for provision of local needs.'
'Starting from a permaculture vision of permanent or sustainable agriculture, the concept of permaculture evolved in time
the Transition Network was set up to respond to the demand for information, guidance, training and materials from communities engaged in the transition process.
The individual Transition Initiatives and the projects they create can become social enterprises or other forms of organisation.
well-being and social entrepreneurship are definitively central to it while economic constraints and different patterns of development are suggested.
2) European commission (2013) Social economy and social entrepreneurship-Social Europe guide-Volume 4. Luxembourg: Publications Office of the European union.
which provides an environment for third sector entities to cooperate, learn from each other and build new shared enterprises.
The Social Innovation Park presents itself as‘a place where businesses, entrepreneurs and nonprofit entities form a community with a common purpose:
and transforming them into business opportunities, where the actors can be part of the solution. SI Park works mainly in the development of large scale social enterprises, generating high local impact
and with large potential to be replicated. The Park hosts a range of facilities, which provide incubator services, training for social economy,
and access to international networks to nurture and spread the new social enterprises. Three main facilities are well representative of the SI Park's innovative structure:(
1) the Social Innovation Laboratory (G-Lab;(2) the Social Innovation Academy; and,(3) the Social Enterprise Generator.
1) Social Innovation Laboratory (G-Lab) SI Park hosts a Laboratory for identifying emerging social tendencies (G-Lab) applying participatory democracy methodologies.
Social Innovation in Europe ESDN Quarterly Report No. 36 22 (2) Social Innovation Academy SI Park provides on-site and on-line training to bring fresh ideas to services
organizations and enterprises. The Social Innovation Academy offers regularly-scheduled programs: Intensive Training for Third Sector Leaders, project-based education,
3) Social Enterprise Generator Collaborating entities within the SI Park are offered the opportunity to incubate new social enterprises
In terms of financing of new social innovation ventures, the SI Park will contribute to expanding funding opportunities through establishing a‘Social Business Stock market'
a place where individuals, companies and the public sector can invest both in developing of new opportunities
Social innovations are defined as new solutions (products, services, models, markets, processes etc. that simultaneously meet a social need (more effectively than existing solutions) and lead to new or improved capabilities and relationships and better use of assets and resources.
Social innovation does not refer to any particular sector of the economy, but to innovation in the creation of social outputs, regardless of where they emanate.
and, the informal sector. 2 Social innovation and social entrepreneurship are not the same thing Social entrepreneurship seems to be one of the most considered avenues and, potentially,
Social enterprises seek to serve the community's interest rather than profit maximization; the underlying objective is,
European commission, DG Research Dees, J. G. 1998) The Meaning of Social Entrepreneurship. Available at: http://csi. gsb. stanford. edu/sites/csi. gsb. stanford. edu/files/Themeaningofsocialentrepreneurship. pdf Dees, J. G. 2006) Taking Social Entrepreneurship Seriously.
Society 44 (3): 24-31. EC (2014) State of the Innovation Union Taking Stock 2010-2014.
Commission Staff Working Document Accompanying the European commission Communication‘Research and innovation as sources of renewed growth COM (2014) 339'.
http://ec. europa. eu/research/innovation-union/pdf/state-of-the-union/2013/state of the innovation union report 2013. pdf#view=fit&pagemode=none EC (2013) Social economy and social entrepreneurship.
Peredo, A m and M. Mclean (2006) Social entrepreneurship: A critical review of the concept. Journal of World Business 41,56 65.
SCU (2014) Science for Environment Policy In depth Report: Social Innovation and the Environment. Science Communication Unit, University of the West of England, Bristol.
Report produced for the European commission DG Environment, February 2014. Available at: http://ec. europa. eu/science-environment-policy Taub, R. P. 1998) Making the adaptation across cultures and societies:
a report on an attempt to clone the Grameen Bank in Southern Arkansas. Journal of Developmental Entrepreneurship 3 (1), 53 69.
TEPSIE (2014) Building the Social Innovation Ecosystem. A deliverable of the project: The theoretical, empirical and policy foundations for building social innovation in Europe (TEPSIE), European commission 7th Framework Programme, Brussels:
European commission, DG Research. Thomas, J. J. 1995) Replicating the Grameen Bank the Latin american experience. Small Enterprise Development 6 (2), 16 26.
Wall street journal (1998) Microcredit arrives in Africa, but can it match Asian success? September 29, Section A p. 1. Zahra, S a e. Gedajlovic, D. O. Neubaum and J. M. Shulman (2009) A typology of social entrepreneurs:
Motives, search processes and ethical challenges. Journal of Business Venturing 24: 519 532. Social Innovation in Europe ESDN Quarterly Report No. 36 26 European Sustainable Development Network (ESDN) www. sd-network. eu
such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences,
and Ari LATVALA from the European commission, DG Enterprise and Industry. A special thank goes to Giuseppe Munda (Universitat Autònoma de Barcelona and European commission,
http://composite-indicators. jrc. ec. europa. eu/The research was funded partly by the European commission, Research Directorate, under the project KEI (Knowledge Economy Indicators), Contract FP6 No. 502529.
and Communication Technologies IMF International monetary fund INSEE National Institute for Statistics and Economic Studies (France) JRC Joint Research Centre KMO Kaiser-Meyer-Olkin LIN
Innovation Index TAI Technology Achievement Index UCM Unobserved Components Model UN United nations UNDP United nations Development Program VIF Variance-inflation factor
which compare country performance are recognised increasingly as a useful tool in policy analysis and public communication.
, environment, economy, society or technological development. It often seems easier for the general public to interpret composite indicators than to identify common trends across many separate indicators,
Facilitate communication with general public (i e. citizens, media, etc. and promote accountability. Help to construct/underpin narratives for lay and literate audiences.
On the other hand, the temptation of stakeholders and practitioners to summarise complex and sometime elusive processes (e g. sustainability, single market policy, etc.
into a single figure to benchmark country performance for policy consumption seems likewise irresistible. Saisana et al.
Extreme values should be examined as they can become unintended benchmarks. Multivariate analysis. An exploratory analysis should investigate the overall structure of the indicators
this version of the Handbook does not cover the composite leading indicators normally used to identify cyclical movements of economic activity.
Composite indicator developers have to face a justifiable degree of scepticism from statisticians, economists and other groups of users.
and combination of variables into a meaningful composite indicator under a fitness-for-purpose principle (involvement of experts and stakeholders is envisaged at this step).
and stakeholders is envisaged at this step). To check the quality of the available indicators. To discuss the strengths and weaknesses of each selected indicator.
To discuss the presence of outliers in the dataset as they may become unintended benchmarks.
and services produced in a given country, where the weights are estimated based on economic theory and reflect the relative price of goods and services.
The theoretical and statistical frameworks to measure GDP have been developed over the last 50 years and a revision of the 1993 System of National Accounts is currently being undertaken by the major international organisations.
However, not all multidimensional concepts have such solid theoretical and empirical underpinnings. Composite indicators in newly emerging policy areas, e g. competitiveness, sustainable development, e-business readiness, etc.
For example, the Growth Competitiveness Index (GCI) developed by the World Economic Forum is founded on the idea that the process of economic growth can be analysed within three important broad categories:
the macroeconomic environment, the quality of public institutions, and technology. The GCI has, therefore, a clear link between the framework (whatever this is) and the structure of the composite indicator.
or may be subject to controversy among stakeholders. Ultimately, the users of composite indicators should assess their quality and relevance.
as well as the next, should involve experts and stakeholders as much as possible, in order to take into account multiple viewpoints and to increase the robustness of the conceptual framework and set of indicators.
and the number of new products and services (outputs) in order to measure the scope of innovative activity in a given country.
Given a scarcity of internationally comparable quantitative (hard) data, composite indicators often include qualitative (soft) data from surveys or policy reviews.
Some analysts characterise this environment as indicator rich but information poor. The underlying nature of the data needs to be analysed carefully before the construction of a composite indicator.
The reference could also be an external benchmark country. For example, the United states and Japan are used often as benchmarks for the composite indicators built in the framework of the EU Lisbon agenda.
Alternatively, the reference country could be the average country of the group and would be assigned a value of 1,
and to better forecast cycles in economic activities (Nilsson, 2000). See, for example, the OECD composite leading indicators,
I Percentage of enterprises that have a website display a correlation of 0. 88 in 2003:
and adoption of communication technologies and therefore bear equal weight in the construction of the composite?
Alternatively, participatory methods that incorporate various stakeholders experts, citizens and politicians can be used to assign weights.
i) leaders and laggards,(ii) spider diagrams and (iii) traffic light presentations. 36 HANDBOOK ON CONSTRUCTING COMPOSITE INDICATORS:
Another way of illustrating country performance is to use spider diagrams or radar charts (Figure 3). Here Finland is compared to the three best countries on each indicator and to one other country, here the United states. Finally,
An indicator measuring the environment for business start-ups, for example, could be linked to entry rates of new firms,
where good performance on the composite indicator of business environment would be expected to yield higher entry rates.
the DQAF assesses how the quality of statistics is affected by the legal and institutional environment and the available resources,
Clarity refers to the statistics'information environment: appropriate metadata provided with the statistics (textual information, explanations, documentation, etc;
and the availability of metadata and user support services. It also includes the affordability of the data to users in relation to its value to them
and whether the user has a reasonable opportunity to know that the data are available
GDP, saving rate and inflation rate within the objective growth maximisation. Variable: is constructed a measure stemming from a process that represents, at a given point in space and time, a shared perception of a real-world state of affairs consistent with a given individual indicator.
For example, in comparing two countries within the economic dimension, one objective could be maximisation of economic growth;
some degree of economy can be achieved by applying Principal Components Analysis (PCA) if the variation in the Qoriginal x variables can be accounted for by a small number of Z variables.
b) Variance-inflation factor (VIF) is simply the reciprocal of tolerance. A VIF value greater than 4. 0 is an arbitrary
or an external benchmark. 5. 5. Indicators above or below the mean This transformation considers the indicators which are above and below an arbitrarily defined threshold, p, around the mean:
2004), where all the indicators are expressed in terms of percentages of enterprises possessing a given 88 HANDBOOK ON CONSTRUCTING COMPOSITE INDICATORS:
It requires any of actual time series, benchmarks or projections, thus poor data availability may hamper its use.
analysis (DEA) Data Envelopment Analysis (DEA) employs linear programming tools to estimate an efficiency frontier that would be used as a benchmark to measure the relative performance of countries. 26 This requires construction of a benchmark (the frontier) and the measurement
The following assumptions are made for the benchmark:(i) positive weights the higher the value of a given individual indicator, the better for the corresponding country;(
The distance of each country with respect to the benchmark is determined by the location of the country and its position relative to the frontier.
The line connecting countries a b and c constitutes the performance frontier and the benchmark for country d
while the benchmark corresponds to the ideal point with a similar mix of indicators (d'in the example).
The benchmark could also be determined by a hypothetical decision-maker (Korhonen et al. 2001), who would locate the target in the efficiency frontier with the most preferred combination of individual indicators.
the composite indicator is defined as the ratio of a country's actual performance to its benchmark performance:
suggested obtaining the benchmark as the solution of a maximisation problem, although external benchmarks are also possible:()
===Q q 1 qk q I, k {1,,...M} I*I*(w) argmax I w k (20) I*is the score of the hypothetical country that maximises the overall performance (defined as the weighted average),
ii) the benchmark would in general be country-dependent, so there would be no unique benchmark (unless,
as before, one particular country were best in all individual indicators), (iii) individual indicators must be comparable,
..M (21) subject to non-negativity constraints on weights. 28 The resulting composite index will range between zero (worst possible performance) and 1 (the benchmark).
and communication technologies HANDBOOK ON CONSTRUCTING COMPOSITE INDICATORS: METHODOLOGY AND USER GUIDE ISBN 978-92-64-04345-9-OECD 2008 95 plus an error term, accounting, for example, for the error in the sampling of firms.
The benchmark is based not upon theoretical bounds, but on a linear combination of observed best performances.
(which will remain stacked to 1). This can be solved by imposing an external benchmark. Unobserved Components Models--e g.
Allows all stakeholders to express their preference and creates a consensus for policy action. Implies the measurement of concern (see previous discussion on the Budget Allocation.
Information and Communication Technologies Index (Fagerberg, 2001. The method is based on ordinal information (the Borda rule.
M. 29) The second method is based on the number of indicators that are above and below a given benchmark.
Average value per case is indicated in the box. 7. 3. 2. Analysis 2 In this analysis it is assumed that the TAI stakeholders have agreed on a linear aggregation system.
In fact, it might be argued that the choice of the aggregation system is to some extent dictated by the use of the index and by the expectation of its stakeholders.
For instance, if stakeholders believe that the system should be non-compensatory, NCMC would be adopted. Eventually
Economists are accused often, justly, of thinking that what cannot be counted does not count. In this case the construction of CIS, economists are trying to count what-many would say-cannot be counted.
The alternatives, however, are worse. Either we ignore this fact or we make subjective guesses.
(and reach compromise on weighting) on an index to be used to benchmark best practice, but such acceptance cannot be taken for granted.
If a composite indicator were to exacerbate disagreement among stakeholders, who would otherwise have been willing to accept a scoreboard,
This is perhaps the opinion of Mario Monti, the former EU Commissioner for Competition, who, in describing the internal market scoreboard
Cherchye L. 2001), Using data envelopment analysis to assess macroeconomic policy performance, Applied Economics, 33: 407-416 Cherchye L. and Kuosmanen T. 2002), Benchmarking sustainable development:
Dietz F. J. and van der Straaten J. 1992), Rethinking environmental economics: missing links between economic theory and environmental policy, Journal of Economic Issues, Vol. XXVI, 1: 27-51.
Dunteman G. H. 1989), Principal components analysis, Thousand Oaks, CA: Sage Publications, Quantitative Applications in the Social sciences Series, No. 69.
a social choice approach, Journal of Environmental Economics and Management, Vol. 47: 270-283. Efron, B. 1987), Better bootstrap confidence intervals (with discussion.
The challenge from innovation-based growth in the Globalising Learning Economy, Oxford Press. Feldt L. S.,Woodruffe D. J,
an examination of composite performance indicators, Centre for Health Economics, Technical Paper Series 29. Jencks S f.,Huff E d. and Cuerdon T. 2003), Change in the quality of care delivered to Medicare beneficiaries, 1998-1999 to 2000-2001, Journal of the American Medical Association
Munda G. 1995), Multicriteria evaluation in a fuzzy environment, Physica-Verlag, Contributions to Economics Series, Heidelberg.
a multi-criterion framework, Environment, Development and Sustainability, Vol. 7 (1): 117-134. Munda G. and Nardo M. 2005), Constructing Consistent Composite Indicators:
a defensible setting, Forthcoming in Applied Economics. Munda G. 2007), Social multi-criteria evaluation, Springer-verlag, Heidelberg, New york, Economics Series.
Nardo M.,Tarantola S.,Saltelli A.,Andropoulos C.,Buescher R.,Karageorgos G.,Latvala A. and Noel F. 2004), The e-business readiness composite indicator for 2003:
Saltelli A. 2002), Making best use of model valuations to compute sensitivity indices, Computer Physics Communications, 145: 280-297.
Economists have long been hostile to subjective data. Caution is prudent, but hostility is warranted not.
Overtext Web Module V3.0 Alpha
Copyright Semantic-Knowledge, 1994-2011