Building the mindset for social entrepreneurship: From a global vision to a local understanding and action Assoc. Prof. Darina Zaimova Faculty of Economics, Trakia University, Stara Zagora Agenda Why social entrepreneurship matters? theoretical background, key concepts and emerging interpretations for social entrepreneurship, related scientific fields and multidisciplinarity Some background characteristics - descriptive characteristics for Bulgaria, rural areas and problems to be addressed, main periods of significant changes and necessity for a different approach towards the newly emerged problems and social needs What has been done so far? third sector development, organizations functioning within the concept of social enterprises, results and limitations Civil society, social entrepreneurship and corruption role of the civil organizations in fighting corruption practices, general achievements and basic considerations What is the next step? Why social entrepreneurship matters? The entrepreneurial dynamic of third sector organizations has received recently significant attention due to its significant development rate and success in dealing with specific social issues. These organizations have been recognized by the policy-makers as a driving force in supporting people in unequal position; in promoting enterprising solutions to social, cultural, health or environmental challenges; and in facilitating the provision of public services. Approached simultaneously as a simple term with a complex range of meanings (Trexler, 2008) and as an organization that marry philanthropy with business models, and non-profit with market-based tools (Alter, 2007), the social enterprise has inspired multiple definitions pertaining to different disciplines as accounting, economics, entrepreneurship and political science (Short et al., 2009). Still the theoretical underpinnings of social entrepreneurship have not yet been adequately explored (see for e.g. Austin et al., 2006; Mair and Marti, 2006; Weerawardena and Mort, 2005). The lack of understanding of the concept remains as one of the major barriers to advanced research on the subject. Of course while to some of the experts in the field this remains a problem, others see unique opportunities to challenge and rethink traditional concepts and assumptions starting from the three generally established criteria - predominance of a social mission, the importance of innovation, and the role of earned income. Defining what social entrepreneurship is both at global and regional context poses important challenges and the growing interest in social entrepreneurship by policy makers as well as social investors means that it cannot be left undefined. Policy makers and investors need clarity: unclear landscapes and boundaries can limit their support, which is critical to the smooth development of these fields. Whether it is better to concentrate on setting the boundaries or analyzing the landscape of social entrepreneurship, or to adopt a more inclusive or more exclusive definition of it, remains an important discussion in the field: both approaches have advantages and disadvantages. Given that social entrepreneurship is still an evolving field of practices, it might be best to avoid narrowly defining it, so as to avoid excluding initiatives that may be entitled to be considered social entrepreneurship even if they have not met all of the essential characteristics. On the other hand, overly diluting the concept can actually serve to create confusion rather than to eliminate it, with attendant problems for the support and development of the sector. A great variety of definitions of social entrepreneurship and social entrepreneurs has been provided since the early 1980s. Social entrepreneurship can be defined as entrepreneurship that aims to provide innovative solutions to unsolved social problems, which usually goes hand in hand with social changes. Nevertheless binding the concepts of innovation and enterprise with the definition of being social is perceived both as a
challenge and contradiction. Interpretations in this aspect proved to be fruitful and intriguing field of research interests and studies. The idea for social innovation no longer represents only theoretical formulation, but turns out to be a practical phenomenon, which gave impetus to unique bottom-up initiatives. Social entrepreneurship is about solving social problems rather than exploiting market opportunities. Social currency is the motivation of social entrepreneurs who all have one thing in common: the innovative use of resources to pursue opportunities to catalyze social change (Mair and Ganly, 2010). Social entrepreneurs are in pursuit of sustainable solutions to problems of neglected positive externalities (Santos, 2009, p. 1). The content and approaches of definitions vary, including multiple dimensions; and presenting a number of conflicting points within the notion of the social entrepreneurship itself: 1. Is social entrepreneurship an individual or a collective phenomenon? 2. Is social entrepreneurship shaped by social value rather than economic value? 3. Is social entrepreneurship located only in the non-profit sector, or can it also be found in the for-profit and public sectors? 4. Does social entrepreneurship aim to achieve incremental social impacts, or is it meant to produce radical social transformations only? 5. Is social entrepreneurship a local phenomenon or a global one? Some background characteristics - Bulgaria Even though social enterprises deal with important social and economic concerns, the concept of social enterprise itself has limited dissemination in Bulgaria. The lack of understanding of the potential of social enterprises generates several negative effects (social exclusion, lack of various personal services, underdevelopment of certain less advantaged areas); hence the importance of building awareness and empowering social enterprise through a more enabling legal framework that does not penalize social enterprises. By this it is implied not necessarily provision of particular legal form but operationalizing the concept of social enterprise by focusing on the underlying causes, rather than only dealing with the consequent negative results. The social enterprise as any other enterprise conducts an economic activity and relies on different resources human, tangible fixed assets, financial, intangible assets etc. For that reason it is necessary to distinguish which specific characteristics are intrinsic only to this type of entrepreneurial activity. Back from the very start, there are four periods that could be distinguished in the development of the third sector in Bulgaria, mainly defined by the changes in legal framework and the current political situation. The first one is related to the rapid growth of the third sector and occurred more than a year after the beginning of the political changes in Bulgaria. The 1991 Constitution of Bulgaria proclaimed the freedom of association as a fundamental civil right to be exercised by citizens by establishing associations to safeguard their interests. Civil associations may pursue different goals related to education, human rights, trade unions, and others, but are not allowed to pursue political goals or engage in political activities, as the latter are the domain of political parties. After the intensive establishment of nonprofit organizations in 1990 and 1992, in 1993 the growth rate fell back, mostly because of the detrimental impact of the generally unfavorable socio-economic environment. Surveys showed a persistent tendency to lean on the state as the main source for social services. In 1994 a questionnaire was performed by the Center for study of democracy to show that 30,7% believe that Bulgarian charities and foundations revive a noble Bulgarian tradition; 19,1% think they are useful for surviving in difficult times; 10,2% argued that these organizations give the people opportunity to protect their interests better and to take part in decision-making in important issues. 17% see in foundations a tool for fast enrichment; 12% as a device for dirt money laundering, 9,7% as superfluous and unnecessary; and 7,4% as channels of foreign interests. The second (1994-1998) and the third (1998-2005) periods have been influenced by the strong presence of international donors and their programmes to support third sector development. With respect to internal governance, the NGO law allows for two types of non-profits associations and foundations. As regards their beneficiaries, the law also distinguishes between organizations acting in the
private interest of their members or other persons and organizations whose functions and goals are for the public good. When the Non-Profit Legal Entities Act (NGO law) was enforced, it was not initially clear how the status of organizations acting in public interest would work; as a result, many organizations opted for registering as acting in private interest. Later on, however, most non-profit organizations, except for the community centers (chitalishte), started changing their registration to non-profit legal entities acting in public interest. The fourth period started in 2005, but the significant changes appeared after 2007 when the European membership of Bulgaria has become a fact. By this time the Bulgaria Country Partnership Strategy (CPS) identified three strategic priorities: productivity and employment; fiscal sustainability and EU funds absorption; and social inclusion. Structural reforms undertaken in the context of the EU Lisbon Agenda and Growth Strategy resulted in update of the National Program to address improvement of administrative capacity and business environment, as well as synergy with Health Sector Reform Project (2000-2008) and the Social Inclusion Project (2008-2010). The trend leveled off around 2006 and subsequently, according to the National Statistical Institute (NSI), the share of non-profit organizations acting in public interest has remained rather stable between 92 and 94 percent. Overall, in August 2010 there were 20% more NGOs of both types compared to 2008. The accession of Bulgaria to the EU led to reinforcement of the role of third sector organizations in the social and economic development of the country. The strategic vision and role of the third sector are outlined in all the basic national documents prepared to follow the EU guidelines, such as the National Development Plan 2007-2013, the National Strategic Reference Framework 2007-2013, the National Reform Programme 2006-2009 etc. Capacity building and enhancement of the effectiveness of the third sector are envisaged in many different spheres, including the social protection system, services for businesses, educational services, deinstitutionalization, healthcare, childcare etc. All the Operational Programmes foster interaction between the state and third sector organizations, and highlight their intervention capacity and public-private partnerships. Third sector organizations are identified as key beneficiaries of a number of EU-funded actions. In spite of all the steps taken so far, there remains the need for a comprehensive national policy to support social enterprises as tools for social inclusion and employment of disadvantaged people. Some of the areas where continuous support is required are: advocacy and lobbying to improve the environment; capacity for training and assistance; international exchange and networks; improved access to markets; consolidation of the third sector, access to financial resources for social enterprises and business support services adapted for these organizations. In the survey conveyed for the purposes of this report, 80% of Bulgarian social enterprises note the lack of governmental policy as a major obstacle to social entrepreneurship. In Bulgaria, the social economy, in the form of cooperatives, associations and foundations, includes over 600,000 members. The National Social Economy Concept is an expression of the political involvement for the creation of a favourable environment for the development of social economy models and practices. By applying the Concept it is intended: to raise awareness, relevant aspects of social culture and human values; to advance the Government s vision and priority goal to promote social economy; to express the concentrated will of a wider scope of stakeholders; to provide a platform for the development of related policies; to provide incentives for the development of new social inclusion approaches; to support inputs in view of the achievement of Europe 2020 goals. There are national traditions of social economy in Bulgaria although under different socio-economic context that might be a constructive prerequisite specifically while launching the present Concept. The First Action Plan for implementation of the Concept is under development and under discussion among stakeholders in the realm of social economy and social entrepreneurship. For this purpose a special working group with
representatives from central and local authorities, academia, social partners, social enterprises and actors in the social economy field was established. Social entrepreneurship and corruption Back in 2001, the European Commission proposed the White paper on European governance in which is put forward the idea for greater openness of policy-making process through getting more people and organizations involved in formulating, sharing and applying European policy. Furthermore it is stressed on the differences in development and enhancement of social relations in the countries of Eastern and Western Europe (p. 3): Whereas in Western Europe and the Unites States the main question was how ordinary people could rebuild a sense of solidarity and so strengthen the social ties which a community needs, the initial concern in Central and Eastern Europe was to dismantle the central government control inherited from the Communist system. One of the main problems, relates to the limitations that the government initiatives and action throughout the transition process. More over: (...) The countries of Central and Eastern Europe had not succeeded and in certain cases have still not completely succeeded, either in building confidence in the new institutions or in creating the necessary structures for the existence of a strong civil society. This situation is particularly relevant for the European union in the context of enlargement 1. The literature on corruption has drawn from many of the social sciences, generally trying to integrate or address the views and objectives of different academic fields. Researchers established corruption s deterrent effects on growth (Mauro, 1995) and foreign direct investment (Habib and Zurawicki, 2001; Wei 2000), attracting investment flows (Henisz, 2000). At the same time efforts were focused on identifying the roots of corruption (Husted (1999), Treisman (2000) and Robertson and Watson (2004)), and prediction measures such as the GDP per capita, measures of regulatory barriers and cultural characteristics, such as high power distance. More generally, scholars have found that the government regulation of entry into new markets, whether by foreign or domestic firms, is associated with higher levels of bribery and corrupt exchanges (Djankov et al. 2003). In Bulgaria rates of corruption remain high and are still above EU average. These rates are different, signifying for a decline of administrative corruption, while the increase in political corruption remains a serious challenge yet to be dealt with. To some extend this was predicted by the difficult processes of land reform, privatization and the management of state assets, which basically have become the key areas of political corruption risks. Coupled with serious social problems such as poverty and unemployment, this has resulted in identifying the corruption as the gravest problem in society. The corruption identified as a social problem emerged from different sources such as: The discrepancy between official and unofficial levels of payment in the country reflects The relatively high social security burden in Bulgaria, The lack of trust in the services such as social care, education and healthcare. The failure to report income received from outside of the country, etc. The Center for the study of Democracy has reported that 2 : Until 2001 corruption reached was at its highest levels, with a tendency towards a decline. In the period from 2001 to 2004 the number of corrupt interactions decreased and reached its lowest level (at index value 0.4). After 2005 corruption levels increased again and reached an index value of 0.8 in 2008, the highest for the whole period since Bulgaria s EU accession. 1 Opinion of the Economic and Social Committee on The role and contribution of civil society organizations in the building of Europe, (1999/C 329/10), point 4.2. - 4.4. 2 Corruption and anti-corruption in Bulgaria (2012 2013) Policy Brief No. 43, November 2013, Center for the study of Democracy
After 2009 the index of involvement in corruption transactions decreased again and was in the range of 0.4 0.5. In 2013, the level of administrative corruption in Bulgaria affecting the population and the business sector remained practically the same. Bulgaria is still among the EU Member States with highest corruption risk. In the period 2012 2013, 14 % of the adult population has been involved in corruption transactions at least once per year. Confidence in state institutions in general and in specialised anti-corruption bodies in particular remained very low. The acceptance of corruption among the population is at a stable low level. One of the key roles of the civil organizations was to place corruption high on the list of public concerns. NGOs have also been instrumental in prompting government action against corruption and exert a consistent pressure for key reforms. The public-private partnerships have become the most effective mechanism through which anti-corruption reforms were implemented: Ensuring the implementation of the anti-bribery instruments: a monitoring process based on selfand mutual evaluation Ensuring the implementation of the anti-bribery instruments: a monitoring process based on selfand mutual evaluation Making sure government comply with its commitments Encouraging private companies to adopt compliance measures The research leading to these results has received funding from the People Programme (Marie Curie Actions) of the European Union's Seventh Framework Programme FP7/2007-2013/ under REA Grant Agreement No. 611490 (PIAPP-GA-2013-611490)