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Social entrepreneurship in Central Eastern Europe – are we making the best of it?

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A guest-comment from Alexandra Ioan, PhD Candidate at the Hertie School of Governance/ Research Assistant in the SEFORÏS Research Project

Social enterprises in Central and Eastern Europe are part of an increasingly active civil society that slowly becomes aware of its potential and role in countries still undergoing development of their democratic systems. They are organizations looking to fulfill their social missions through commercial activities, such as selling products and services on the market or to governments. They are important partners in social service delivery but are we doing enough to tap into their innovation potential?

Research shows that most social enterprises in the region focus on delivering basic social services or on work integration for disadvantaged groups (see for instance the preliminary results of the EU-funded SEFORÏS research project: www.seforis.eu). An important contribution of social enterprises shouldn’t however be forgotten. That is their innovative capacity and their role in dealing with complex social issues in alternative ways.

Social enterprises are not a completely new phenomenon in Central and Eastern Europe. Classically categorized as social economy organizations, cooperatives, mutuals and credit unions have been operating all across the region for decades. In most cases they are essential structures that foster solidarity in their communities through their focus on work integration or financial support structures. However, a new wave of social enterprises has also started emerging. Newer support organizations (which are themselves social enterprises) such as NESst ( www.nesst.org) or the Impact Hub (www.impacthub.net) are investing in developing programs and organizations that respond through innovation to emerging and changing social needs in the region. Their portfolios include organizations working on environment and sustainability topics, on alternative educational models, on developing custom-tailored products for people with disabilities and many more. These social enterprises build their business model around alternative solutions to the social problems they address and in this way push the boundaries of what is thought possible and desirable in the social sector. Their activity is therefore also focused on innovating around social issues and not only on purely providing social services.

Authorities in Central and Eastern Europe are becoming aware of the contributions of social enterprises. For instance, Romania, Poland, Slovenia and the Czech Republic all passed specific legislation for social economy organizations. These legal frameworks do however focus primarily on cooperatives as organizing forms and governments generally understand social enterprises as solutions for reducing unemployment rates and especially as solutions for employing people with disabilities and other vulnerable groups. Although this work of social enterprises is essential and extremely valuable, there might also be other ways to take full advantage of the creative capacities of these organizations. An openness for alternative business models, as well as an openness towards more diverse target groups could prove essential in enabling them to deliver the best possible outcomes of their work. Moreover, intense collaboration between classical forms of the social economy and younger social businesses would only enrich the chances they create for their beneficiaries.

Just to give you a quick example: the EU-funded SEFORÏS research project has studied social enterprises in 7 EU countries (UK, Germany, Spain, Portugal, Sweden, Hungary and Romania), China and Russia. Romania was the country where the least amount of social entrepreneurs interviewed (23% of the sample) reported that they introduced new or significantly improved products, services or processes in 2014. Although 85% of the Hungarian social entrepreneurs reported this, there is still a lower focus on innovation from social enterprises compared to Sweden (99%), China (97%) or Germany (88%).

Central and Eastern Europe is still a region where basic social needs are unmet and where there is a lot of space for developing solutions and taking action. Ensuring the provision of basic social services is vital and social enterprises have naturally taken over this role in partnership with governments. However, the lives of their beneficiaries could be improved even more if they had the appropriate regulatory framework, access to resources and political and societal support to innovate. In this way, they would not only maybe find more efficient and effective solutions to the current issues in the region but also to emerging ones that have not yet reached the political agenda. Social enterprises, old and new, have the potential to do so.

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