Empirical research corroborates that social enterprises are widespread across Europe, in geographical contexts with dissimilar levels of economic development and welfare systems (Borzaga and Galera, 2014). As a structural trend that is triggered by the transformation of contemporary welfare and economic systems, social enterprise tends to develop spontaneously independently from the existence of exogenous enabling conditions, such as specific legislations designed for social enterprises. Despite cross-country variations, depending on a set of political, legal, economic and historical factors, the key driver explaining social enterprise creation is the necessity to meet new needs arising in society. Significant differences exist in terms of legal forms, governance model, and fields of activity of social enterprises. However -add to this- what differs dramatically across countries is the degree of visibility and replicability of social enterprise as a specific type of institution. While in some countries social enterprises, or specific typologies of social enterprise, have been legally recognized and supported through enabling policies, in others they are still rather invisible (ICF, 2015).
The starting assumption of this paper is that the degree of visibility depends on the specific pattern of institutionalization that has been followed by social enterprises. Conversely, their replicability depends on a complex set of factors, including the effectiveness of existing legislations.
In EU member countries where social enterprises are set up through the existing legal forms made available by the national legal system, de facto social enterprises operate through a variety of legal forms, including association/foundation, traditional cooperative, mutual help association. In most cases, although playing key roles in addressing a number of societal challenges, such entities are not acknowledged as social enterprises and few data are available concerning their seize, employment and income share.
Alongside the diffusion of facto social enterprises, since the 1990s a set of laws aimed at both defining the main features of social enterprises and regulating their development across Europe has been introduced in specific EU countries with a view to supporting the diffusion of social enterprises (Galera and Borzaga, 2009). Social enterprises have been acknowledged and regulated either as social inclusion tools or as a way whereby key general-interest issues can be tackled through the direct commitment of the citizens concerned (Nyssens, 2006)). Thanks to ad hoc legislations social enterprises have gained visibility and have become countable as a specific type of institution (ICF, 2015).
Nevertheless, not all legislations designed to regulate social enterprises have been successful. In some cases ad hoc legislations have been followed by a dramatic increase in number of new social enterprises (e.g. UK, IT), in other cases they have succeeded only partially (e.g. France). In other cases, they have overall failed (e.g. Slovenia). National legislatures have generally followed one of two paths in regulating this sector (Galera and Borzaga 2009): i) the adjustment and transformation of one or more existing legal forms and ii) the entitlement of any legal form to qualify as social enterprise. The new sets of laws have specified goals, activities, constraints, governance assets, and incentives that social enterprises have to comply with.
The paper will classify the main patterns of institutionalization of social enterprises across Europe. Next, a tentative assessment of social enterprise legislations is proposed with a view to analyzing a number of key issues (e.g. context; degree of ownership of the law by the social enterprise community; legal constraints introduced) that can have a role in determining the success versus failure of legislation in this area.
Galera Giulia and Borzaga Carlo, “New Trends in the Non-profit Sector in Europe: the Emergence of Social Enterprise”, in M. Andreaus, E. Costa and L. Parker (eds.) Accountability and Social Accounting for Social and Non-profit Organisations, Edward Elgar, 2014.
Galera Giulia and Borzaga Carlo, “Social Enterprise: An International overview of its conceptual evolution and legal implementation” in Davis J.B., Christoforou A. (Eds.) The Economics of Social Institutions, Elgar Research Collection, Elgar Publishing Ltd., 2013, pp: 911-929. Includes an article already published in Social Entreprise Journal 5(3) pp. 210-228 (2009).
Nyssens Marthe, “Social Enterprise: At the Crossroads of Market, Public Policies and Civil Society, Routledge, 2006.
ICF Consulting Services, “A Map of Social Enterprises and their Eco-systems in Europe”, European Commission, forthcoming 2015.
