Enterprises on Economic growth Development Author: Oncioiu Ionica, Titu Maiorescu University Bucharest, ionicaoncoiu@yahoo. ro, Romania Small firms are big business in the aid of economic development.
positive and negative, of the changed economic environment in Romania, for the development of small medium enterprises'.
'Results revealed that Romanian Small medium enterprises (SMES), as in all transition economy, play an important role in the economic growth development and are recognized increasingly as having a permanent role as a seedbed for future growth.
enterprise The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 410 Special Issue December 2013 Introduction Given the importance of SMES in their world
There can be made two main arguments that justify the specific attention to this subpopulation of private enterprises.
or estimates of the market new business The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 411 Special Issue December 2013 concept.
The new business concept is conceived from the current state of products and processes in the enterprise
the capacity of the enterprise to muster resources and to act in a sufficiently dynamic way.
because they provide an opportunity to succeed relatively much The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 412 Special Issue December 2013 higher.
small enterprises have share research costs much higher turnover than in large enterprises. Moreover, large enterprises in research-development focuses on another very important indicator for them:
the share of production of new products in turnover. Lately, attention is given, absolutely natural, SME branches of the peak of high-tech."
Is it possible to measure The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 413 Special Issue December 2013 the innovation in a transition economy,
with which to explain the The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 414 Special Issue December 2013 reasons of the emergence of companies in specialized exchange economy
Damanpour and Wischnevsky 2006, The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 415 Special Issue December 2013 Lankhuizen and Woolthuis 2003
Today, the view which is taken as a current guideline is that the most important way of supporting Romanian small and medium enterprises is to encourage the business environment and the general development of the economy.
and observe three The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 416 Special Issue December 2013 maxims of scientific method:
%15,56%15,56%The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 417 Special Issue December 2013 4 Pattern notpattern not Pattern
Small and medium enterprises represent an equilibrium factor at micro and macroeconomic level. In permanent economic changing environment, SMES are flexible
The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 418 Special Issue December 2013 Thus,
despite the economic reform, small and medium enterprises in Romania are confronted still with a series of obstacles which, in the view of the economic and political instability, lead to uncertainty and to inhibition of the entrepreneurial spirit.
as we will have winners of The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 419 Special Issue December 2013 the crisis,
but also bring The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 420 Special Issue December 2013 more economic growth, employment,
The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 421 Special Issue December 2013 11 Soete, Luc a o.,Eindrapport van
20 Business models for Small and Medium-Sized Enterprises, in Constructing the European Information Socia1yfair, 1998,
23 OECD, Small and Medium-sized Enterprises: Local Strength, Global Reach, OECD Observer, iunie 2011;
The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 422 Special Issue December 2013 26 www. cnipmmr. ro;
Data from 430 small and medium-sized enterprises were analyzed through hierarchical regression analysis, and innovation was found to be a significant factor in both family and non-family samples.
Similarly, family firms have dominated small and medium-sized enterprise (SME) creation in many countries (Astrachan and Shanker 2003;
and this contextual connection can be relevant to family-owned enterprises (Nordqvist 2012). Knowledge-based resources have been noted as important for a firm's innovative capacity which aids in the discovery and exploitation of opportunities (Kaya and Patton 2011.
) Innovation speed in small and medium-sized enterprises. Creativity and Innovation Management, 15 (3), 279 295.
high growth strategies of women-owned enterprises. Journal of Business Venturing, 16,453 470. Hambrick, DC,
In response to calls in the Open Innovation (OI) literature, this paper aims to create a better understanding of the role of OI practices in the innovation efforts of Small-and Medium-sized Enterprises (SMES
Role of the Owner/Manager. 2 1 Introduction The purpose of this explorative paper is to generate insights into the effective use of Open Innovation (OI) practices in Small-and Medium-sized Enterprises
Exploring Open Innovation in Small and Medium-Sized Enterprises. In H. W. Chesbrough, W. Vanhaverbeke,
SME Performance Review-Small and medium sized enterprises-Enterprise and Industry Online. Brussels. Available: http://ec. europa. eu/enterprise/policies/sme/facts-figuresanalysis/performance-review/index en. htm. Communities, S. O. o. t. E. 2005.
Oslo manual: Guidelines for collecting and interpreting innovation data, Publications de l'OCDE. Fletcher, D.,Helienek, E. & Zafirova, Z. 2009.
A comparison of small and medium-size enterprise development in Central and Eastern europe. Comparative Economic Studies, 43,35-68.
Open innovation practices in SMES and large enterprises. Small Business Economics, 41,537-562. Uzkurt, C.,Kumar, R.,Kimzan, H. S. & Sert, H. 2012.
and science must meet regional policy and enterprises. Universities are increasingly called upon to adjust their work, both in terms of research activities and human capital development,
including the research community and enterprises. It must be stressed that Structural Funds are intended not to cover the general operational costs of universities the main source of financing for universities will continue to come from national or regional budgets, competitive funding and increasingly from the private sector.
enterprise and business development: promoting enterprise development and growth; human capital development: contribution to human capital and skills development;
and enhancing social equality: improving social equality through regeneration and cultural development. 6 Main themes emerging from the workshop debate 16 REPORT ON JOINT EUA-REGIO/JRC SMART SPECIALISATION PLATFORM
but on a more strategic level through market-driven education, commercially relevant research and connectedness with enterprises and local authorities, all of which raise the profile of the university,
coordination research locations & EU Cohesion Policy Anders Olsson Sweden Värmland Enterprise and Innovation Manager Rui Monteiro Portugal Norte Head of Unit, Science
THE ROLE OF UNIVERSITIES IN SMART SPECIALISATION STRATEGIES Enhancing R&d cooperation between R&d institutions and enterprises (programmes supporting materials, environmental, ICT, healthcare, biotechnologies, energy.
to enterprises especially SMES, for example, intensive computing facilities, experimental platforms (e g. agro-materials platform, chemical and physical analysis services.
Funding for innovation activities has been directed through a separate agency (Enterprise Ireland) as an open competitive process on a rolling basis. There is thus a considerable synergy between structural funding and national programmes,
enterprises and regional authorities. 2) Centre VUKONZE Project: Development of a research centre for the efficient integration of renewable energy sources The Technical University of Ko ice conducts this integrated project with a mission that focuses on the establishment of an open research and development network.
and human rights or to invest in micro-enterprises in Mumbai or Mexico city. Government data is increasingly being made public
and Peter Droell and Henriette Van Eij, DG Enterprise, European commission for their insight and advice.
'xiii It also points to the importance of new social business models such as social enterprises, cooperatives or socially driven businesses.
The term social innovation is used often synonymously with social enterprise and social entrepreneurship. They are overlapping but distinct.
Social enterprises are businesses with primarily social objectives whose surpluses are reinvested principally for that purpose in the business or community.
There is currently no universally accepted definition of social enterprise. This is because social enterprises can take numerous forms
are engaged in multiple spheres of activity and because legal structures vary from country to country.
or social enterprise although it will often include one or both of these. Social innovation describes the processes of invention, diffusion and adoption of new services or organisational models,
Unlike the terms social entrepreneurship and social enterprise, social innovation transcends sectors, levels of analysis,
and enterprises they create. But it will certainly require understanding and fostering the conditions that produce solutions to social problems. xxiv Even though,
-the third sector (for example, Emmaus in Europe or Dialogue Social Enterprise which tackles issues of disability and marginalisation in Germany;
social enterprise or charity that will carry the innovation forward. In the public sector this means identifying budgets, teams and other resources such as legislation.
Local government in the UK has used commissioning to experiment with alternative service models provided by social enterprises and grant based organisations
which makes it difficult for social enterprises and third sector organisations to recruit, retain and develop staff,
and New Business development in Spain is creating a business park for social enterprises and cooperatives.
%Ireland (10.6%)or France (8. 7%).One of the most rapid growth areas within the social economy over the last decade has been in the growth of social enterprises.
Information about the scale and scope of the social enterprise sector across Europe remains limited.
There are difficulties in measuring how many social enterprises operate within member states. In part this is because most countries do not collect information on the number of social enterprises instead they collect data on the number of organisations with particular legal forms that is, the number of social cooperatives, associations, social purpose
companies and so on. For example, there were 7, 363 social cooperatives in Italy in 2005. lviii As a result,
only a small proportion of social enterprise activity is collected in official statistics. A few countries have started to collect information about the number of social enterprises.
In Finland, for example, there were 170 registered social enterprises in 2008. lix However because social enterprises in Finland are work integration organisations(‘social firms')-that is, organisations
which focus on integrating highly excluded groups into the labour market, it is highly likely that these figures significantly underestimate the true scale of social enterprise activity in the country.
With the EU, the field of social enterprise may be developed best in the UK. Figures from 2008/9 estimate that there are 62,000 social enterprises in the UK,
with small and medium social enterprises contributing £24 billion Gross Value Added to the UK economy. lx In
what follows, we've pulled together a range of examples of social innovation from across Europe's 27 member states.
As this section will demonstrate there is no shortage of ideas or even innovations. We've organised the material into sectors the public sector, the private sector,
the grant economy and the household-because there are clear and distinct trends in each sector. 36 Public sector As we mention earlier,
One of the most significant developments has been in the growth of social enterprises. These are businesses
but are focussed on their social goals. lxvii Definitions of social enterprise vary, but the main features are,
The term social enterprise covers a wide range of organisations from cooperatives to public service providers
Social enterprises also work across a range of social and environmental fields-in Poland and Finland, for example,
social enterprises are mainly nonprofit work insertion organisations; in France and Sweden, childcare services make up the bulk of social enterprise activity;
in the UK, social enterprises cover education, health and care but increasingly also areas such as housing, culture and sports and;
in Italy, cooperatives make up a significant proportion of social enterprise activity. 43 In the main, however, social enterprise activity falls into two categories.
The first is social service provision childcare, eldercare, care for the disabled and so on. The second is‘work integration
'or‘work insertion'integrating the long term unemployed or disadvantaged and marginalised groups into the labour market. lxviii A study of the WISE sector in Europe carried out by research network EMES,
and as such, the figures for total employment are in all likelihood significantly higher. lxix The WISE organisations in Germany are a good example. lxx Social enterprises can also be identified by the types of relationships they have with their beneficiaries, the way in
'Borzaga and Defourny, for example, argue that‘the key feature of social enterprises seems to be their ability to strengthen the fiduciary relationship within and around the organisation,
'lxxi As a result of these relationships, social enterprises are embedded often within their local communities. Consequently, they are attuned more and responsive to the needs of beneficiaries.
Social enterprises tend to be relatively small although some have established themselves in the mainstream. Access to finance has been identified as a significant barrier to the growth of the sector however,
which cater specifically for the needs of social businesses and social enterprises (banks for charities such as Banca Prossima in Italy or ethical banks such as Triodos Bank in The netherlands).
1. Businesses developing social innovations 2. Collaborations across sectors 3. The growth of social enterprise 4. The growth of microfinance 44 5. The growth of social finance
The growth of social enterprise Work Insertion-Diakoniewerk Arbeit & Kultur, Germany Diakoniewerk Arbeit & Kultur ggmbh (or the‘deacon's activities for work and culture')in Mülheim is a fairly typical example
of a German Work Insertion Social Enterprise (WISE. It was set up in 1985 to run a small number of employment measures funded by the regional labour office
but has expanded since into a social enterprise which provides wrap around services for social welfare in the community.
The Koispe is a relatively unique organisational form in that it is both an independent trading enterprise and an official mental health unit,
So far, it has established 25 income-generating enterprises (a further 35 are in the process of being created), as well as restoring two redundant large state farms
and the various activities undertaken by Barka over the last 20 years have had a major influence in facilitating the emergence of civil society and social enterprise in post communist Poland.
support the development of civil society and social enterprise in Poland; address the problems of social 51 exclusion with the creation of eight Centres for Social Integration and;
These include social enterprises and social entrepreneurs, trading charities and socially driven commercial organisations. Examples from Europe include Bonventure in Germany,
It earns part of its income from the wide variety of enterprises it has set up which provide those being rehabilitated with on-the-job skills training.
which can be used across social enterprises and is a transferable credit. The second element is based a time credit which aims to make voluntary work visible and accountable.
Overall strategic frameworks for social innovation, social enterprise or entrepreneurship. These remain rare but are beginning to spread, for example Denmark's recent strategy for social enterprise.
Legal frameworks, such as new legal forms. Finance of external projects, programmes and institutions. Dedicated funds exist for early stage ideas, investment, R&d,
education and health by linking small scale actors such as associations, social enterprises and foundations to big institutions, laws and regulations.
Social Enterprise Investment Fund UK The Social Enterprise Investment Fund is run by The Social Investment Business on behalf of the Department of health in the UK.
Developed in the wake of the 2006 White paper, Our Health, Our Care, Our Say, which identified the potential role of social enterprises in developing health
and social care to better meet the needs of communities, the fund was established in 2007 to prompt innovation in health and social care.
Funding applicants include multi-agency partnerships (primarily voluntary and community, existing social enterprises and health professionals.
while twenty £200, 000 grants are available for existing social enterprises wishing to expand. The first funding round is in January 2010.
and right to request for organisations proposing alternative provision of NHS services into a social enterprise.
and the public sector. The workshops aim to develop an understanding of the role social enterprise can play in the delivery of primary and community care. 72 Finance Tools for Social Innovation There are also a series of financing devices
private enterprises and the research community under one roof to promote user-centred innovation. Mindlab's involvement of citizens and businesses in public-sector innovation processes has two purposes:
and are providing new models for taking ideas from inception to impact by helping to create sustainable social enterprises.
Incubators provide a range of supports for social enterprises and social entrepreneurs. Some of these needs are the same as those of mainstream businesses including space
Other needs are specific to social enterprise and arise from their social mission or particular decision-making and ownership structures including legal issues associated with specific forms of incorporation.
and develop new joint enterprises in a highly innovative environment. The Social Innovation Park will host more than 50 international companies and associations.
It will also host the first‘Social Enterprise Generator, 'enabling those in receipt of employment
and social security benefits to work for the park's enterprises without losing their benefits and;
Southern Europe's first‘Social Innovation Laboratory',providing the opportunity for those based in the park to work together to generate new social enterprises that will be incubated in the park, with access to training, mentoring and evaluation in the process.
organisations and enterprises will also be available, in the form of a‘Social Innovation Academy'.
and Gigahertz Centrum a centre developing energy-efficient electronics and mobile communications. cvi Recently, VINNOVA, together with five other leading European innovation agencies-Enterprise Ireland (IE), FFG (AT), Senternovem
The SEIR helps social enterprises currently working outside the NHS to develop services that NHS commissioners want to contract to help deliver better health outcomes.
and secure investment from funds such as the Social Enterprise Investment Fund (SEIF) and the Regional Innovation Funds (RIF) managed by the Strategic Health Authorities (SHAS).
skills and values of NHS staff and local enterprises are harnessed and channelled towards delivering sustainable solutions to address health and social care needs.
As well as creating new services, a SEIR with roots in the local social enterprise culture, works to change the culture of an organisation
Examples of successful projects include setting up new social enterprises and lowering hand straps in the Metros for shorter passengers.
These new legal forms have helped to build awareness of the social enterprise sector and distinguish social enterprises from charities, associations and other third sector organisations.
Legal forms Many European countries have had long innovative legal forms for social enterprise. They include Italy's social cooperatives Type A and B
which has been superseded by a 2005 law on social enterprise, and France's Société coopérative d'intérêt collective (cooperative society of collective interest), a new type of multi-stakeholder cooperative structure introduced in France in 1982,
introduced as a new legal form in 2002. In the UK, the Community Interest Company (CIC) was created as a new legal form in 2004 to reduce the tensions between finance and mission for businesses with a social purpose.
This new legal form has played a critical role in opening up new kinds of finance for social enterprises.
The field is developing fast in the UK where there are an estimated 62,000 social enterprises with small and medium social enterprises contributing £24 billion GVA (Gross Value Added) to the UK economy. cxvi
which makes it difficult for social enterprises and third sector organisations to recruit, retain and develop staff,
community and voluntary organisations, associations, foundations as well as a significant bulk of the social enterprise sector.
and growth of social enterprises and ventures. The Business Panel on Future Innovation Policy notes that the current finance system is not fit for the new types of innovation required to address grand societal challenges.
which are intended to grow the field of social enterprise. In February 2008, for example, the Office of the Third Sector committed £10 million for the creation of the Risk capital Fund for Social Enterprise.
It is the first fund of its kind and is intended to help social enterprises and early stage social start-ups to access funding to grow
and develop their businesses. While financing is clearly an issue there is a need to think more broadly about the kinds of support needed by individuals and organisations in the field of social innovation through the various stages of the innovation lifecycle.
which makes it difficult for social enterprises and third sector organisations to recruit, retain and develop staff,
such as Finland's methods for assessing social enterprises. clviiithe burgeoning field of environmental economics has spawned methods for measuring everything from wetlands to emissions,
France's‘bilan sociétal'is a set of 100 indicators showing how enterprises affect society.
-European Social Fund-European Investment Bank along the lines of joint EIB and European commission initiatives such as JESSICA, JASMINE, JASPER and JEREMIE-EIF to promote social enterprise alongside enterprise.
Enterprise Ireland (IE), FFG (AT), Senternovem (NL), Tekes (FI), Technology Strategy Board (UK) and VINNOVA (SE) acknowledged that the Grand Challenges of Europe are an important driver for new innovation
ftp://ftp. cordis. europa. eu/pub/technology-platforms/docs/i652-etp09-flyers en. pdf Accessed on 3 december 2009. xi European commission, DG Enterprise & Industry
http://ec. europa. eu/enterprise/policies/innovation/policy/lead-market-initiative/Accessed 11 december 2009. xvi Ibid. xvii Communication from the Commission to the European parliament, the Council, the European Economic and Social
http://www. istat. it/dati/catalogo/20080807 03/inf 08 04le cooperative sociali italia05. pdf lix P. Pattiniemi,(2009) Social Enterprise Legislation in Finland.
http://www. rci. org. pl/download/080728/17. pdf lx George Leahy and Frank Villeneuve-Smith (2009) State of Social Enterprise Survey 2009, London:
Social Enterprise Coalition. Available at: http://www. socialenterprise. org. uk/data files/stateofsocialenterprise2009. pdf lxi Robin Murray (2009) Danger and Opportunity:
http://s3. amazonaws. com/connected republic/attachments/15/Cologne the participatory budget. pdf lxvii For more information on social enterprises and social entrepreneurship see, Alex Nicholls (ed.)(2006) Social Entrepreneurship:
Jacques Defourny and Marthe Nyssens (2008)‘ Social Enterprise in Europe: Recent Trends and Developments',Social Enterprise Journal, Vol. 4, Issue 3 and Jacques Defourny and Marthe Nyssens (2008)‘ Conceptions of social enterprise in Europe and the United states:
convergences and divergences',paper presented at the 8th ISTR International 122 Conference and 2d EMES-ISTR European Conference, Barcelona, July 9-12;
2001)‘ The Emergence of Social Enterprise',London and New york, Routledge. lxviii J. Defourny,‘From third sector to social enterprise'in C. Borzaga & J. Defourny (eds.
2001) The Emergence of Social Enterprise, London and New york, Routledge. lxix Spear, R. & Bidet, E. 2003)‘ The Role of Social Enterprise in European Labour markets',Working papers Series
I. Bode, A Evers and A. Schulz,(2002)‘ Work Integration Social Enterprises in Germany',Working papers Series, no. 02/04 Liège, EMES European Research Network. lxxi A. Bacchiega & C. Borzaga
,‘Social enterprises as incentive structures: an economic analysis'in C. Borzaga & J. Defourny (eds.
2001) The Emergence of Social Enterprise, London and New york: Routledge. lxxii Muhammad Yunus (2008) Creating a World Without Poverty:
Vigorous independent enterprises meeting social needs or the emergence of‘entrepreneurial not-for profits with limited social liability'?
addressing the critical gaps in risk-taking capital for social enterprise, Skoll Centre for Social Entrepreneurship Working Paper, Said Business school, University of Oxford, Oxford: UK lxxxviii
Enterprise Survey 2009, London: Social Enterprise Coalition. Available at: http://www. socialenterprise. org. uk/data files/stateofsocialenterprise2009. pdf cxvii Cabinet Office (2006), Partnership In public Services:
An action plan for third sector involvement Available at: http://www. cabinetoffice. gov. uk/media/cabinetoffice/third sector/assets/psd action plan. pdf Accessed 3 december 2009. cxviii Department of health (2009) Personal health budgets:
Addressing the critical gaps in risk-taking capital for social enterprise. Skoll Centre for Social Entrepreneurship Working Paper, Said Business school, University of Oxford.
Addressing the critical gaps in risk-taking capital for social enterprise, Skoll Centre for Social Entrepreneurship Working Paper, Said Business school, University of Oxford, Oxford: UK cxxvi
European commission, DG Enterprise & Industry, Special Business Panel (2009) Reinvent Europe through innovation: From a knowledge society to an innovation society.
/equal/index en. cfm cxli European commission, DG Enterprise & Industry, Special Business Panel (2009) Reinvent Europe through innovation:
See European commission, DG Enterprise & Industry, Special Business Panel (2009) Reinvent Europe through innovation: From a knowledge society to an innovation society.
"INNO-Partnering Forum's view on the future European Innovation Plan, 8th december 2009. clxxiii European commission, DG Enterprise & Industry, Special Business Panel (2009) Reinvent Europe
and tools for innovation being used across the world and across different sectors the public and private sectors, civil society and the household in the overlapping fields of the social economy, social entrepreneurship and social enterprise.
We show that many innovations take shape within organisations public agencies, social enterprises, mutuals, co-ops, charities, companies as well as loose associations.
perhaps linking some commissioners in the public sector, providers in social enterprises, advocates in social movements,
and identifying income streams to ensure the long term financial sustainability of the firm, social enterprise or charity,
Examples of successful projects include setting up social enterprises, and lowering hand straps in the Metros for shorter passengers. 57) Video booths to capture the views and ideas of the public.
Famous US examples include Brookings and the American Enterprise Institute. The most visible tend to focus on policy innovation.
like the Singapore Prime minister's Enterprise Fund, or the UK's Invest to Save Budget.
'or more like corporate venturing units whose primary target is the number of spin-off enterprises created. 98) Paying for time.
For social enterprises, the business model represents a strategy for sustainability. It needs to be simple, persuasive and striking,
as well as leisure trusts and social enterprises running public leisure facilities. There are now 109 such leisure mutuals 4 66 THE OPEN BOOK OF SOCIAL INNOVATION with a combined annual turnover of £640 million.
This is a new legal status for social enterprises, and is similar to charitable status. CIC status enables social ventures to access equity investment
while maintaining the social goals of the enterprise as paramount. They do this by having a lock on assets and a cap on dividends,
which partially insulates the enterprise from the private market's imperative for profit maximisation and capital growth.
when the enterprise goes through difficult times. 119) Boards are one of the key design features of any organisation.
For social ventures it is key that the sources of finance should share the venture's social goals as the primary driver of the enterprise.
enterprises can raise social equity, limit the quantity of common shares, and seek subordinated loans from sources ready to share early risk without demanding a counterbalancing share in the project's equity. 145) Grant funding is provided sometimes to grow social ventures.
Loan provision for social projects is now a reasonably mature industry in many countries with typical unit scales from £25k-£500k. 4 SUSTAINING 79 147) Equity is likely to be invested into both creating and growing enterprises,
and supporting spin outs from the public sector. It can be used for various kinds of social enterprises as well as for-profits.
when the enterprise has proved itself, and risks are reduced. They sometimes have an advantage over venture capital funding in that they can tap investors who want to make social impact their primary incentive rather than financial returns.
Local government in the UK has used commissioning to experiment with alternative service models provided by social enterprises and grant based organisations,
Small social enterprises and other NGOS generally find organisational growth difficult: it requires changes to leadership, culture,
while retaining the advantages of small and medium social enterprises, such as flexibility, drive, and dynamism. 203) The consortium model.
as 5 104 THE OPEN BOOK OF SOCIAL INNOVATION part of EQUAL, Finland developed an‘SYTA method'for assessing social enterprise activities.
France's Bilan Sociétal (literally social balance sheet) is a set of 100 indicators (ranging up to 400) showing how enterprises affect society.
giving students the experience of working in small social enterprises. These could play a critical role in training up a future cadre of social innovators. 249) Mutual help and mentoring by users.
or more social enterprises to improve local health outcomes within the first 12 months of the project.
and the Ministry of Employment, to bring together government, private enterprises, and the research community under one roof to promote user-centred innovation.
Another example is the Centre for Social Innovation (CSI) a social enterprise with a mission to catalyse social innovation in its home base of Toronto,
'They are creating a business park for social enterprises and cooperatives. The park will include start-ups, regional and governmental organisations,
and welfare by linking small-scale social enterprises and projects to big institutions, laws, and regulations (for example, shifting a city's transport system over to plug-in hybrids).
It has a wide-ranging portfolio, covering regulation, enterprise and business support, higher education, innovation, and science.
In the 1980's it was instrumental in the establishment of the Finnish Ministry for the Environment whilst at the same time making important progress in the opening of international markets to Finnish enterprises. 288) Specialist innovation agencies such as the NHS
or Singapore's Enterprise Challenge. Some funds are increasingly branching into service CONNECTING PEOPLE, IDEAS AND RESOURCES 133 innovation,
and grow a social enterprise; provide a space to test out new ideas rapidly in practice, with quick assessments;
and accelerate the creation and growth of successful Canadian enterprises. It was created in 2000 on the site of the old Toronto General Hospital.
it includes social enterprises engaging in the market, as well as some of the activities of private companies that have primarily social goals. 2
and social enterprises attract all sorts of voluntary support. But for both private and social enterprises the primary discipline is the market.
Similarly, some charities and other grantbased organisations run their own shops and other market enterprises
and many contract services to the state. Yet organisations like Oxfam and Age Concern are shaped still primarily by the grant economy in how they raise their money,
which refers to the social economy as the third sector namely NGOS and social enterprises.
as in the recent case of Grameen-Danone and their collaboration in a social enterprise producing yoghurt for low income households in Bangladesh. 5. Maxmin, J. and Zuboff, S. 2004)‘ The Support Economy:
such as the UK's‘Invest to Save'budget for crosscutting innovations, The Enterprise Challenge in Singapore,
The Greater london Enterprise Board financed its operational expenditures for many years through the sale of industrial property it had bought during the recession of the early 1980s.1 158 THE OPEN BOOK OF SOCIAL INNOVATION 361) Social investment funds
which would act as a wholesaler for a range of financing needs (see method 475). 362) Social enterprise investment funds,
such as the Social Enterprise Investment Fund launched by the UK's Department of health with around £100 million,
and Enterprise Boards. 376) Public Finance Initiatives, also referred to as‘public-private partnerships, 'have been used mainly to finance physical structures and infrastructures,
and improving prospective post-tax rates of return. 377) Exemptions and assistance such as tax relief along the lines of the Enterprise Investment Scheme (EIS) for social enterprises,
or property tax holidays for early-stage social enterprise and charities. 378) Experimental zones are geographic areas
000 volunteers contribute to the UK NHS. 401) Secondments of public sector employees to community organisations and private enterprises,
and what mix of funding for individuals, teams The State The Market The Grant Economy The Household 2 SUPPORT IN THE GRANT ECONOMY 169 and enterprises works best,
some are social enterprises, and some are charities themselves. They provide legal and business advice, offer free mentoring services,
for growing brand equity (through association with well known charities or social enterprises; attracting talent (particularly younger people who want to believe that their employer has a social conscience;
The most significant development has been in the growth of social enterprises. These are businesses which earn a profit
but are focussed on their social goals. 1 The main challenge for social enterprises is to maintain their commercial position in the market
In some cases, clusters of social enterprises have developed a network for collaboration and joint services
Increasingly though, there are examples of social enterprises establishing themselves in the mainstream. Inspirational examples and more information on successful business models 3 SUPPORT IN THE MARKET ECONOMY 181 are critical for the growth and sustainability of the social enterprise sector.
There need to be diversified more capital markets, packages of support for social entrepreneurs, and more supportive regulatory and legislative frameworks.
and organisational form in the Sustaining section in Part 1). 442) Social enterprises operate in the market to achieve social goals.
There is currently no universally accepted definition of social enterprise. This is because social enterprises can take numerous forms,
are engaged in multiple spheres of activity, and because legal structures vary from country to country.
For example, in Italy, social enterprises are constrained by a non-distribution clause that is, all income has to be reinvested in the enterprise.
In the UK, the Community Interest Company (CIC) was created as a new legal form in 2004 to reduce the tensions between finance and mission.
Social enterprises can generate income in a myriad ways. Some may generate their income through direct provision of a service
Image courtesy of Michael Valli. 3 SUPPORT IN THE MARKET ECONOMY 183 which is sold a magazine by homeless people. 443) Social enterprise mutuals as providers of joint services for their members,
in addition to its users in east Africa. 451) Corporate not-for-profit management of social provision such as Academy Schools in the UK and Charter schools in the US. 452) Partnerships between social enterprises and corporations
with not-for-distributed profits such as BASF-GAIN initiative for Vitamin a in Africa, the Danone-Grameen yoghurt enterprise in Bangladesh and the BASF Grameen venture, also in Bangladesh,
Finance One of the big challenges for social enterprise is growth. Partly, this is because they face limited access to risk and growth capital,
but it is also a reflection of the fact that as social enterprises grow, they often face difficulties in balancing conflicting pressures.
triple bottom lines and‘blended value'2 but how to ensure that the interests of investors remains subordinate to the social mission remains a critical question for social enterprise.
which take into account the particular needs of social enterprises and businesses with social goals. A number of these, like public share issues, funding through cooperative subscription and crowdfunding are discussed in section 4 on Sustaining.
and fair trade. 458) Social enterprise funds including the new venture capital fund, set up by Triodos Bank,
which invests in high impact and commercially sustainable social enterprises. Their aim is to help grow a dozen
or so social enterprises in the UK. 459) Social venture funds that use equity-like investments for start-up and early-stage social ventures where loan financing is unsuitable.
or promising enterprises to a stage where traditional investors can make investments. This can include
and growth capital to established social enterprises with the ambition and potential, both to scale up their businesses and maximise their social impact.
which provides shared office space for more than 115 charities and social enterprises in sites in central London (see also method 487). 467) R&d mentored funding prior to start-up lending, such as MONDRAGON
which are now catering to the specific needs of social enterprises and businesses with social and environmental goals. 468) Ethical banks including Triodos Bank and the Cooperative bank in the UK, RSF Social Finance in the USA, GLS Bank in Germany, the Alternative Bank
furniture, engineering, food, etc) and they give their judgement on the quality of the proposal and the prospects of the enterprise.
the committee then promises to guarantee a bank loan to the enterprise, backed by a small capital reserve and the personal guarantees of each member of the consortium.
In many cases investors are looking for projects that combine social and financial returns. 473) Bank-based funding for social enterprises
an online market place for social enterprises and lenders that takes a small margin on the financial transaction.
and in providing publicity to social enterprises. Countries like Cyprus have used the model of a‘Good Food Guide'to upgrade the quality of the island's food
of financial resources for social enterprise. As yet, very few resources have been devoted to labour market development. However, developing skills within the field of social enterprise is critical to the growth
and development of the sector. 483) Specialist academies linked to social economy initiatives, such as: the University of Mondragón in Spain;
and social enterprise across the UK (see also method 466). 3 SUPPORT IN THE MARKET ECONOMY 193 Markets for social goods New markets for social goods (or‘bads'can also play a role in accelerating social
Currently a number of social enterprises trade shares through matched bargains between registered buyers and registered sellers on the basis of a price recommended by the Board of directors.
The Rockefeller Foundation has announced recently a study to investigate the viability of a social stock exchange for social enterprises in the UK. 492) Social indices such as the FTSE4GOOD Index Series,
and to track their performance over time. 3 194 THE OPEN BOOK OF SOCIAL INNOVATION End notes 1. For more information on social enterprises
Defourny, J. and Nyssens, M. 2008) Social Enterprise in Europe: Recent Trends and Developments.‘‘Social Enterprise Journal.'
'Vol. 4, Issue 3, 2008; and Defourny, J. and Nyssens, M. 2008)‘ Conceptions of social enterprise in Europe and the United states:
convergences and divergences.''Paper presented at the 8th ISTR International Conference and 2nd EMES-ISTR European Conference, Barcelona, July 9-12,2008;
Borzaga, C. and Defourny, J. Eds)( 2001)‘ The Emergence of Social Enterprise.''London and New york:
166 National Health Service Duty to Promote 162 National Health Service Social Enterprise Investment Fund 158 NHS Innovation Hubs 135 NHS Institute
159 Prime minister's The Enterprise Challenge (TEC) 150 Private Equity Foundation 175 Pro-Ams 139;
199 Social Enterprise 2; 60; 66; 78; 86; 98; 99; 103; 130-132; 142; 158;
and tools for innovation being used across the world and across the different sectors the public and private sectors, civil society and the household and in the overlapping fields of the social economy, social entrepreneurship and social enterprise.
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