Social en- tre-pre-neur-ship

Social entrepreneurship – what is it?

In recent years, the European Union has been paying a lot of attention to social economy and its development in order to solve youth unemployment, social exclusion and other problems. These are the key features of organisations that make up social economy:

a) They are not public, but private;

b) They act autonomous - ly;

c) Their primary goal is to meet social needs, rather than seek financial gain;

d) They can carry out financial transac - tions but financial gain is not their primary goal;

e) They are democratic organisations;

f) They use their funds solely to fulfill their social purpose.

The main values in social economy are mutual self-help initiatives and the social mission. Social economy is based on the triple bottom line structure, spanning across three – economic, social, and environmental – dimen - sions. Social entrepreneurship is part of social economy. The first country in the European Union to speak up about social entrepreneurship was Italy in 1990. Social entrepreneurship was created when trying to fill a niche which public ser - vices would not fill. Around the same time, social entre - preneurship began evolving in the United States. However, it should be noted that social entrepreneurship still does not have one particular definition, but there are two main directions: Anglo-American and European. The meaning of Anglo-American social entrepreneurship is ambiguous: from non-profit companies with a social mission, to those of which the central axis is social innovation.

Meanwhile, the following are the three aspects of the conti - nental European tradition: social, entrepreneurial and governance. The Social Business Initiative of the European Commission provides a more elaborate definition of the aforementioned tradition. First of all, the entrepreneurial aspect requires regular eco - nomic activity. This distinguishes social enterprises from conventional non-governmental organisations and other social economy entities with a social purpose but no regu - lar economic activity. The indicators of this aspect are: a) Market revenue share (the percentage of income from market sources, taxes, including annual membership fees; rental income; public procurement); b) Paid labor force (what part of the whole organisation’s employees are earners). Second, the social aspect is the primary, clear social purpose, which helps distinguish social entrepreneurship entities from the traditional profit-making business enti - ties. Social dimension indicators: a) The organisation activities, to ensure the social bene - fit, description; b) The target groups, organisation activity benefit recipi - ents, isolation. Third, the governance aspect is the establishment of mechanisms that ensure the achievement of social objec - tives and separates even more strictly social entrepreneur - ship from the traditional business entities and non-gov - ernmental organisations. In this case the fundamental indicators are as follows:

a) Limited profit distribution makes us question whether the profit may or may not be distributed. If it may, how do we set the limits for the distribution?

b) The asset lock mechanism ensures that the compa - ny’s profit will be used for the social purpose, even if the organisation suspends its activities;

c) Autonomy: the organisation is independent from the public sector organisations and the other profit and non-profit organisations (fully/partly independent)?

d) Inclusive management ensures balanced participa - tion and representation of all the interested parties (e.g.: paid employees, volunteers, clients, users, beneficiaries, investors), and the democratic principle (one member – one vote);

e) Transparency: does the social enterprise have a sys - tem for measuring and communicating social impact to the interested parties (Europe, 2007).

Accurate social entrepreneurship indicators are needed in order to avoid exploitation of the social entrepreneurship term in ways, such as benefiting from tax incentives, financing and the development of the company’s image. In 2015, the Lithuanian Ministry of Economy approved the concept of social enterprise, based on the one proposed by the EU. It is described as follows “social entrepreneurship is a business model, according to which, by exploiting the market mechanism, the pursuit of profit is associated with social goals and priorities; the model is based on the provisions of socially responsible business and public-private sector partnership, while invoking social innovation. The concept of social entrepre - neurship covers three main aspects: entrepreneurship (regular commercial activity), social (social objectives) and manage - ment (limited profit distribution)”.