Mapping Social Enterprises in Belgium

Research Project conducted for the King Baudouin Foundation

september 2013

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Executive Summary

Social entrepreneurs identify and respond to societal needs long before the bulk of the marketplace encounters them. They are on the cutting edge when it comes to dealing with certain societal needs, and continuously innovate to meet these needs. Social entrepreneurs are driven and motivated by strong visions about the desired future and about innovative pathways to reach those future outcomes. The social entrepreneurs’ particular experiences of translating their visions for society into concrete actions are a rich source of inspiration for mainstream businesses and also public authorities.

After Hungary, Romania, Spain, Sweden and the UK, the Belgian social entrepreneurship movement is being analysed (learn more about the overall research project on www.selusi.eu). With more than 700 social entrepreneurs interviewed so far in Europe, we aim to build the first systematic, detailed and population representative panel database on social enterprises in Europe. These data offer a unique look into the phenomenon of social enterprise across different country-contexts today and over time. This report presents the main findings resulting from 78 interviews with Belgian social enterprises anchored in the whole territory. It aims to promote a shared understanding of who social entrepreneurs are and their approach to achieving societal benefits. Finally it aims to whet your appetite to find out more, to subject unchallenged assumptions to more critical scrutiny and help create space for radical thinking about the future of social innovation and entrepreneurship in Belgium.

7 key findings

1. The stereotypical social enterprise is a myth2. Social enterprises are more market-oriented than you would assume 3. Social enterprises are neither something new nor small in scale 4. Social impact is a key innovation driver5. Social entrepreneurs put their values into practice6. Operations are mostly regional but ambitions for scaling-up are there7. Political recommendations are pragmatic but also visionary

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Thank you!

First of all, we are deeply grateful to the 78 social entrepreneurs who have dedicated around two hours of their very scarce time as directors to have these phone interviews with us and to answer the online survey. These interviews have been of great value in order to capture more than pure quantitative data and to understand what it practically means and entails to be a social entrepreneur in Belgium. More than that, interviewing all these change makers and social-minded entrepreneurs has been a great experience and a great pleasure for us!

We also thank the King Baudouin Foundation for its support in our research and for making it happen. We are especially grateful to Benoit Fontaine and Anne Van Meerbeeck for their fruitful advice and support.

Moreover, we are grateful to the academic consortium of the SELUSI project for sharing their experience, methodologies and material with us and to Nathalie Morray for her academic feedback on the report.

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Content

Executive Summary 3

Thank you! 4

Index 5

Introduction 6

Key facts and figures about social enterprises 9

Chapter 1 - What is social about social enterprises? 11

Chapter 2 - Business models to create social and financial value 14

Chapter 3 - Are social entrepreneurs atypical entrepreneurs? 18

Chapter 4 - Market positioning and resources 22

Chapter 5 - Are social enterprises innovative? 25

Chapter 6 - Assessing and monitoring social impact 28

Chapter 7 - Political recommendations to support social entrepreneurship in Belgium 30

Conclusions 32

Next steps 33

Selection of References 33

Additional Suggested Readings 34

Annex 1 – Methodology 36

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Introduction

This report gives you a new, contemporary and reliable snapshot of what social enterprises in Belgium do, how they are configured, how they innovate (or not), etc.

[1] Who did we interview?

We interviewed the directors of the social enterprises. We had in-depth conversations with them over the phone (very structured), and got everyone (or almost everyone) to also fill in a 20-minute online survey.

[2] What do we mean by social enterprise?

Social enterprises are organizations (1) whose drive or primary goal is social: it is to address a societal challenge or structurally mitigate a social problem, like tackling the multidimensional social problems of the most vulnerable groups in society. (2) Secondly, social enterprises do so in a business-savvy, market-orientated way, generating own revenues, selling services and/or products.

Social enterprises are situated within the hybrid spectrum of organization types, with the pure non-profits and pure for-profits at each extreme. They typically experiment with business models that allow for the realization of sustainable impacts in a relatively more autonomous, self-financing way, compared to pure non-profits, who in turn tend to more heavily rely on government subsidies or private donations only. At the same time, unlike traditional for-profit firms, social enterprises are crucially mission-driven (not purely profit-driven), leading them to principally re-invest any surpluses or profits made towards growing real social impact and (be more prepared to) forego certain surplus-enhancing activities in the interest of maximizing their social impact.

[3] What makes it so difficult to survey social enterprises?

Social enterprises are essentially a hidden population! Three reasons:

1. The population of Belgians running a social enterprise is small in size relative to the population at large. 2. There is no available sampling frame (e.g. telephone directory, administrative database) on which one can readily draw to identify a sample of social entrepreneurs. 3. Public acknowledgement of the social enterprise phenomenon is erratic and subjective. In other words, one cannot rely on people’s inclination to self-identify as a social entrepreneur.

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[4] How did we deal with this problem?

We adopted a sampling method specially designed to study hidden populations. The method is called respondent-driven sampling. It is a chain-referral sampling method. We began with a purposeful selection of a few social enterprises, so-called “seeds”. Each “seed” recruited up to 3 other social enterprises, who in turn referred to up to 3 social enterprises, and so on.

[5] Why can we claim that the sample is population representative?

There are various ways to verify this. The most intuitive one is to assess the length of the chains. They need to be sufficiently long. As a rule of thumb, they should be ideally more than 3 waves long on average. This was the case: they were on average 3,4 waves long.

[6] How did we decide who to interview and who not to?

We used four screening questions (or eligibility criteria):

1. We wanted to capture the perspective of the person running the organization – that is, the director (or CEO) of the organization.2. The organization must employ a minimum of 1FTE employee, apart from the owners (‘employment creation’)3. The organization must self-generate a minimum of 5% of their revenues (‘market-orientated’ – selling their products or services in the market)4. The organization must be driven first and foremost by a social mission (mission scored via elaborate scoring grid for various aspects and overall social/societal concern)

This approach conforms with the criteria discussed at EU level, and exactly the same way the term social enterprise was operationalized by the SELUSI research consortium.

[7] Unique in which sense?

It is unique in three ways. (1) It presents a uniquely rich perspective on social entrepreneurship in Belgium. (2) It provides a first, novel picture of social enterprises active in all three regions.1 (3) It provides a uniquely reliable perspective of the nature of social entrepreneurship in Belgium.

[8] Why this study now?

Belgium faces three important challenges:

1. Belgium is embroiled in enormous sovereign debt, and a major challenge will be for us to find ways to cope with this debt while maintaining societal cohesion.2. Double-digit unemployment rates are on the rise, and spectacularly so amongst our youth; they disturbingly underline e.g. the uneven distribution of rewards from the productivity and prosperity gains that globalization and technology revolution engender. The share of citizens who each month struggle to make ends meet (provoked by the recent turmoil of the financial crisis) is disturbingly high and growing, and yet principles of solidarity and redistribution are under siege. 3. And yet, Belgium must keep an eye on growth and innovation.

Time seems therefore particularly ripe for a new wave of innovation and growth: innovation and growth that can boldly connect economic and societal progress.

1 As the database is much richer than the scope of this first report, we plan to further explore it and develop additional analyses with the Innovation & Action Lab, but also welcome other interested parties to collaborate with.

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To help unleash this wave of growth and innovation, a solid understanding of the nature, complementary role, limits and potential of social entrepreneurship and social innovation seems critical.

[9] What to we hope to achieve?

We hope to contribute to the on-going debates about social entrepreneurship, by bringing to bear original, rich and reliable new evidence on social entrepreneurship today in Belgium. We also aim to bust more than one “myth” - popular ideas and their assumptions- about social entrepreneurship, and rather place our understanding of social entrepreneurship on a more solid knowledge base. We aim to whet your appetite to find out more, think critically and help create space for more radical thinking about the future of social innovation and entrepreneurship in Belgium.

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Key facts and figures about social enterprises

This is not a new phenomenon

In the online survey, we asked participants to tell us when the organization they manage was formally established. The average age of the social enterprises that responded to this question was 20.7 years. Still, half of the panel interviewed was 16 years old or younger.

This figure underlines that social entrepreneurship is not a new phenomenon in Belgium, with nearly three quarters of the organizations surveyed over 10 years old (72%). At the same time, there also seems to be a continual renewal within the population, with over one quarter of organizations under 10 years old (28%). In comparison, 40% of Hungarian and Romanian social enterprises are younger than 10 years and 35% of the Spanish organizations.

The legal form ‘non-profit’ is dominant

During the phone interview, we asked participants about the legal statute of their organization. Some organizations were actually composed of several legal entities but Figure 2 shows only the primary entity or the entity representing the different entities. We notice that almost three quarters of organizations interviewed have a non-profit legal statute (71%) but also that they often combined it with another statute, and this for different reasons like to better accomplish different social objectives or to create more flexibility in the revenue generation and access to financing means.

Our data also shows that the dedicated legal form ‘with a social purpose’ (met sociaal oogmerk/avec finalité sociale) has so far not widely spread across the sector of social enterprises, with 5% only of our sample having adopted this statute. This finding raises some doubts on the adequacy and added value of this legal form for social enterprises.

Social entrepreneurs create and sustain many jobs

During the phone interview, we asked the director to indicate the number of employees currently working in his/her organization.

Figure 3 reveals that the majority of social enterprises are in fact not micro-enterprises. We accounted in total for 8.673 employees and 114 employees on average per organization in our sample. The number of employees notably differed a lot across organizations. We observe a dominance of organizations ranging from 10 to 49

Figure 1: Organizational Age. N=72

Figure 2: Legal entities. N=78

Figure 3: Number of Employees. N=76

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employees (43%), meaning a dominance of small enterprises. But also, a significant share of the sample employed more than 50 people (18%), or even more than 250 people (18%), which correspond to, respectively, medium- and large-sized enterprises. As a comparison, more than half of Swedish and UK social enterprises interviewed in the past employ less than 10 employees.

A wide scope of activity

During the phone interviews, we asked the social entrepreneurs to describe what their organization does and what its key products and services are. Based on their input, we clustered these activities into different industry segments coming from the NACE classification. We were especially interested in understanding if there are any dominant industries where social enterprises operate in Belgium.

A first finding is that 93% of the social enterprises do have more than one activity and in average 3,3 per organization. Moreover, their activities span in very diverse industries, ranging from health and social work, over wholesale and retail trade to construction. It is quite striking to note that 51% of our sample is actually present in at least two industry segments.

Figure 4: Distribution of industry presence. N=78Others: Transports and storage (5%); Personal services activity (5%); Agriculture (4%); Telecommunication & Post(4%); Public administration, social security (4%); Energy supply (3%); Real estate(3%); Financial intermediation (1%)

About the dominant industries, ‘business activities’ is to be considered through the large spectrum of activities that are listed in this category: recruitment/outplacement services, building maintenance like professional cleaning and gardening, IT management and software testing, audit/consultancy, print and mail, communication, marketing and advertisement services.

Finally the proportion of social enterprises active in the area of community and social services, and education is quite low, much lower than it is in other European countries, like the UK, Spain, Hungary or Romania. In these areas, we might expect or hope to see more social entrepreneurial solutions in the future.

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Chapter 1 - What is social about social enterprises?

Mission and vision for creating social change

The common denominator to all social enterprises is their pursuit of a social goal. The social mission is the raison d’être of these organizations. We were interested to capture the goals that these organizations aim to achieve and we asked participants to tell us about their organizations’ mission and vision.

Figures 5, 6 and 7 present evidence on four categories of organizational goals: • socialgoals–capturingtowhatextentanorganizationfocusesonachievingsocietalchange.(Figure5)• economicgoals–capturingtowhatextenttheorganizationfocusesoneconomicsuccessandfinancial viability such as developing revenue-generating activities to cover its costs and generating surpluses. (Figure 5)• socialchangefocus–capturingtowhatextenttheorganizationaimstotransformandempower individuals, communities or society as such. (Figure 6)• geographicscope-capturingtowhatextenttheorganizationworkslocallyvs.internationally.(Figure7)

We found out that social enterprises in Belgium expressed very strong social goals (Figure 5). This practically means that social entrepreneurs mentioned a mission strongly to entirely centered around the alleviation of a social issue, like for instance great concern about the well-being of others, social justice and/or the environment. The respondent provided us with a specific and clear description of how their organization addresses the specific social issue.

Figure 5: organizational mission – weight on a scale from 1 to 5 of social focus and economic parameters in the organizational mission of social enterprises. N= 78(social focus), 77 (economic focus)

For example, a social mission dealing with work integration of disabled persons can be expressed and rated differently: (i) a social enterprise scoring 2 or 3 would have focused its mission on the ‘job creation’ part while (ii) a social enterprise scoring 5 would embrace a wider scope to make the social issue disappear through its action, like through action for augmenting well-being, skills and capacities of disabled persons to help them transition to the traditional job market and to better integrate in the society.

Moreover, the organizational goals also incorporated moderate to strong economic concerns as reflected in the Figure 5. Financial sustainability appears as a key element of the mission, often described as an ultimate condition to realize the social mission and sustain the impact over time. Furthermore, Figure 6 reveals a strong focus on achieving social change at the community level (40% of the respondents). This means that social enterprises’ ambition is situated at the level of target groups and local communities. From the Figure 6, we observe that few organizations have a very narrow focus in their mission and go beyond individual level. Even when organizations aim at providing services or solutions that serve very specific target groups (i.e. drug addicts, disabled people etc.), they aim at changing more than the individuals by tackling (part of) the root causes that stand behind the visible social issue.

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Figure 6 (left): Repartition of respondents on a scale from 1 (focus on individual change, 3 (focus on community change) to 5 (focus on systemic change) indicating the scope of social enterprises in social change. N=78Figure 7 (right): Geographic scope as on today and expectations in the future. N=77.This figure displays the average geographic focus on a scale from 1 (local level), 2 (regional) 3 (national), 4 ((European) to 5 (international level).

In another moment of the interview, we asked social entrepreneurs to share with us their vision for their organization. We deployed the same framework to capture the vision, namely social mission, economic parameters, social change focus and geographic scope.

Our first finding is that social entrepreneurs expressed high ambitions and priority in increasing the social impact and reach they have. Different approaches were mentioned from focusing on increasing the quality of their impact to increasing the number of people reached or diversifying the scope of their impact. Again this growth in social impact appears as non-dissociable from economic growth and development.

If the economic growth is often not seen as an objective per se, it is almost always described as a condition sine qua non for augmenting their impact. More than 40% of the social entrepreneurs put a moderate to high emphasis on economic success and financial viability. They did mention objectives in terms of profits, sales, facilities, market shares, or number of product or service offerings for sale.

A last remark about the mission and vision of social enterprises regards their geographic scope (Figure 7). We asked participants about their current location of activities and territory coverage and their eventual ambitions of development in the future. We note that more than 40% of the sample is anchored and operating at regional level, meaning within Flanders, Wallonia or Brussels. Only 15% is operating at the national level, meaning both in the three regions. However, we notice a strong interest and willingness from organizations operating regionally to find partners and distribute their service at a national level. They often mention the administrative complexity and lack of network to identify the right partners as current barriers they are trying to overcome.

Social challenges addressed

During the phone interviews, we asked the social entrepreneurs to describe what their organization does and its key products and services. Based on their input, we clustered these activities into different industry segments and social sectors. We previously evoked their industry presence and remarked a high diversity. Regarding social sectors, we were especially interested in understanding the actual social issues and challenges that shape the organizations’ social mission and drive entrepreneurs.

We used the International Non-Profit Classification (NPO) to cluster these social sector types. Below, Figure 8 displays the top four sectors in which Belgian social enterprises are active (again multiple ticks are possible here, meaning one organization’s activity portfolio fits in more than one social sector category) .

The four most common social sectors were thus 1) Employment and Training, 2) Environment, 3) Social Services and 4) Economic, Social and Community Development. Similar to the industry presence, 47% of the organizations hold a social mission that addresses more than one social sector.

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Figure 8: Top social sectors. N=76Other : Civic and advocacy organizations: 7,9%; Recreation: 5,3%; Housing: 5,3%; Health services: 3,9%; Culture and arts: 2,6%; Education: 2,6%; Law and legal services: 2,6%; and below 2%: sport, research, emergency and relie, animal protection, philanthropic intermediaries, etc.

We notice a particularly high share of social enterprises active in the areas of employment and training: 63% of social enterprises interviewed provide employment or training to specific target groups who face difficulties to access the regular job market because of physical, mental or social barriers (youth, migrants, ex-convicts etc.). Interestingly, a very high share of the social enterprises active in the domains of employment and training, simultaneously address another societal challenge. In other words, providing specific training programs or job opportunities for these target groups is not their sole focus and not always their primary one.

20% of all the organizations interviewed combine this focus on employment with a focus on tackling an environmental or ecological challenge. For instance, an organization promoting the use of bikes would hire people from a specific target group to fix the bikes when needed or an ecologic construction operator would train this target group to help them transition towards the regular job market. Also, plenty of activities dealing with sorting, recycling and reusing goods and material often couple their mission with a work integration objective.

12% of all organizations interviewed combined services in the area of employment and training with the delivery of social services: ‘Social services’ cover different services to help and guide deprived target groups to access and benefit rights they are entitled to or to provide with basic emergency services. For instance, a transportation service for the elderly and for disabled also allows employing specific target groups or an organization providing training opportunities for migrant women would offer social services to guide them in accessing specific social aid.

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Chapter 2 - Business models to create social and financial value

Operational model

We were also interested in better understanding how social enterprises configure their operations to create social value and economic value. Figure 10 depicts the relative weight of each model for Belgian social enterprises.

Figure 9: Most frequent operational models applied in social enterprises (source: SELUSI)

Figure 10: Operational model. N=78

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In Belgium, the dominant operational models we identified are:

But clearly, as the frequencies in Figure 10 show, many social enterprises combine or mix more than one operational model. Below, the four most frequent configurations are explained:

Fee-for-service + Subsidization model (6,5% of the organizations) This combination might indicate that the social mission is being financed via the distribution of other services on the market. This is the typical example of cross-financing a social purpose through a commercial activity or a different pricing policy among clients to deliver products or services at the lowest rate for the poorest.

Employment model + fee-for-service (6,5% of the organizations)A typical example would be a sheltered workplace that mixes activities (i) with high added-value and profitable (ii) less value-generating but allowing a wide scope of disabled persons to work (e.g. handling, packaging).

Employment model + fee-for-service –low income (6,5% of the organizations) This combination shows how some enterprises combine a double approach to create social impact: (i) by creating jobs for disadvantaged target groups (ii) by selling a specific service or product to deprived target groups.

Employment model + service-subsidization (5% of the organizations) This combination shows that certain organizations generate revenues through employment activities and training delivery that allows them to cross-finance other social purposes.

Sources of revenue and financing

We asked interviewees about their main source of revenues on a yearly basis. We notice that on average 56% of annual revenues were generated from selling products and services on the market (Figure 11), which underlines the strong entrepreneurial orientation of these ventures. In fact, 15% of the organizations were fully independent from any source of grant finance or donations, with 100% of their total yearly revenues generated via the sales of products and or services.

On average 40% of the total revenues came from grant funding, most of which are provided by the public sector. This can be explained by the fact that the mission of numerous social enterprises was to accomplish a public service, and thus received financial means to do so. Throughout the interviews, we noticed a common trend of proactive search for new revenue sources in order to reduce the share of subsidy and become more and more independent.

1 - Employment model

54% of the organizations have at least one service configured following the employment model.

This confirms that work integration remains a key model in the sector and that plenty of Belgian social enterprises generate their revenues by creating economic activities to employ or train specific target groups.

2 - Fee-for-service model

46% of the organizations have at least one service following the fee-for-service model. Typically in this model, the social enterprise commercializes its product or service and generates its revenue from the sales.

We identified two main reasons for using the fee-for-service model in creating social impact: 1) The product or service is in effect the medium to create social impact and realize their social mission. Think of ecological solutions or services for the poor for instance. 2) Another possibility is to couple a fee-for-service activity to generate revenues allowing them to finance a social mission. Think of social enterprises selling a good and reinvesting any surpluses in a social cause.

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Figure 11 (left): Sources of revenue on a yearly basis of activity (2011 or 2012). N=78 Other: cooperative membership fees (0.6%), own resources (0.88%) + other tailored casesFigure 12 (right): Organizations & generated revenue from sales. N=78

Figure 12 sheds further light onto the distribution of social enterprises according to the share of revenues they self-generated through market sales. We repartitioned our sample into the following four categories: (i) 5 to 25% of revenues self-generated through market sales; (ii) 25 to 50%; (iii) 50 to 75% and (iv) 75 to 100%. The figure underscores the significant differences across social enterprises in terms of the extent to which they rely on sales to self-generate their revenues. While over 30% rely nearly exclusively on self-generated revenues through sales, there is also about 20% of organizations for whom sales make-up only a minor share of revenues.

Overview of the economic value creation

Earlier in the report, we provided evidence illustrating the important employment creation role that social enterprises seem to play – indeed, 36% of our sample employs more than 50 employees.

Regarding the annual budget that social entrepreneurs manage (Figure 13), 71% of our sampling has an annual budget of more than 1 million euro (among which 14% above 10 million), which again is far from trivial economically speaking.

We were also interested to find out what the total revenues were that the organizations generated between 2011 and 2012 and what growth expectations social entrepreneurs hold for 2013 (Figure 14 and 15)

Figure 14 presents total revenues earned by Belgian social enterprises over the past year. Again, almost half of respondents reported revenues over 1 Million euro (in comparison, only 20% of UK social entrepreneurs did). The median annual revenues equalled 957.000 euro.

Another interesting finding is that over the last 12 months of operations, 74% of the social enterprises reported a profit or surplus (n=75).

Figure 15 summarizes the actual and expected growth in revenues (i.e. December 2011 to December 2012, or December 2012 to December 2013). It is remarkable that despite the financial and economic crisis, only 7% of social enterprises expect a reduction in revenues, while 12% foresee stable revenues (i.e. 0% growth). 38% anticipate moderate growth (up to 25%) and 13% strong growth (25% to more than 100%). On average, the growth expected for 2013 is around 12% which depicts a fairly high degree of confidence and optimism from Belgian social entrepreneurs. Still, expected growth appears lower than the actual revenue growth realized last year, which was on average 22%.

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Figure 13: Annual budget

Figure 14: Distribution of organizations following their total revenues 2011 or 2012

Figure 15: Distribution of organizations according to actual and expected revenue growth over a period of 1 year. N=70

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Chapter 3 - Are social entrepreneurs atypical entrepreneurs?

Overview of demographic data

First of all, our data reveals a large predominance of male social entrepreneurs (80% of the panel). We note that the share of female social entrepreneurs in Belgium seems to be much lower than its counterpart in the five other countries surveyed for SELUSI (43%). However, this figure remains superior to the ratio of women present in executive position in Belgium, which is 10%2 .

Figure 16: Gender distribution

Regarding age groups (Figure 17), the majority of the sample is between 40 and 54 years old. The average age is 46, which reveals a fairly young group of individuals at the helm of these organizations. Looking at educational level (Figure 18), our data shows that social entrepreneurs in Belgium are rather highly educated with more than 50% owning a Master or a MBA. Still, there are also 15% of the directors who do not hold a higher educational degree. Another interesting finding is that we observe a variety of educational backgrounds: ranging from of economics and business studies, to social studies and public administration to engineering (Figure 19).

Figure 17 (left): Age distributionFigure 18 (middle): Educational levelFigure 19 (right): Highest degree areas

At first sight, there is no major difference when profiling with demographic data social entrepreneurs and comparing them with mainstream entrepreneurs. A recent study from Social Enterprise UK3 has actually shown much different results: (i) UK social enterprises are much more likely to be led by women than mainstream businesses - 38% of respondents had a female chief executive, compared with 19% of SMEs, and 3% of FTSE

2 Source : Women on boards - Factsheet 2: Gender equality in the Member States ; http://ec.europa.eu/justice/gender-equality/files/womenonboards/factsheet-general-2_en.pdf 3 Source: People’s business, Social Enterprise UK, 2013

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100 companies ; (ii) almost a quarter (23%) of social enterprises are run by younger leaders aged 25-44, while one in ten (13%) are led by people over the age of 65. Social enterprises are twice as likely as mainstream SMEs to be led by someone with a black, Asian or minority ethnic background. A possible explanation could lie in the fact that entrepreneurship is better valued, supported and more advertised as meaningful career path than in Belgium – and social entrepreneurship in particular.

Pro-social values and intrinsic motivation drive social entrepreneurs

Values are general, important goals that people strive to achieve in life (Schwartz, 1992); values are guides to action. They are socialized early on in life, typically stable within individuals (from young adulthood onwards) though variation across individuals is common. Using a validated, standardized set of survey questions (i.e. Personalized Values Orientation Survey; Schwartz, 2003), we sought to collate new evidence on the value profile of Belgian social entrepreneurs, and contrast these with the value profiles of (i) the average Belgian individual, (ii) the social entrepreneurs surveyed in the five countries through SELUSI (iii) a sample of middle managers in a large Belgian traditional business. Our guiding question was whether the value orientation of Belgian social entrepreneurs diverges from average citizens or commercial entrepreneurs?

Figure 20 (left): Schematic representation of the value mapping used for SELUSI and based on SchwartzFigure 21 (right): Average value score for Belgian social entrepreneurs compared to a representative sample of Belgian individuals and mainstream managers

Intuitively, one might expect social entrepreneurs to hold strong pro-social and non-conformist values, given the strong pro-social orientation and oft novelty of their mission and activities. Preliminary research indeed seemed consistent with these intuitions. Using SELUSI Data on social enterprises in five EU countries, Huysentruyt, Stephan and Vujic (2011) found that the value profile of social entrepreneurs measurably shapes his or her management practices, which in turn importantly drive organizational performance. They found for instance that social entrepreneurs who positively value universalism and benevolence and negatively value power and conservation also adopt more participatory workplace practices.

We compiled the data received and clustered the results in the Figures 21 and 22. Compared to a representative sample of Belgian individuals, Belgian social entrepreneurs on average display:

• strong self-direction and stimulation values, reflecting a relatively big openness to change.• lower conservation and normative attitudes• strong universalism and benevolence – this is also confirmed by the motivation drivers below• average self-interest and relative consideration of power and personal achievement – also validated by the

low importance allocated to salary expectations

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Figure 22: Value mapping overview. N=76

Relatedly, we also investigated key motivational drivers of social entrepreneurs. Interestingly, intrinsic and reputational motivation appear to be the most important; whereas extrinsic or monetary motivation the least important. To illustrate, the entrepreneurs most strongly agreed with the statements that they enjoy their work (scored 4.5/5 on average) and find their work engaging (scored 4.35/5 on average) and want to help others (scored 4.1/5 in average). They also indicated a strong appreciation of the respect gained through the work they do (scored 4.1/5 on average). The lowest motivational factor was actually salary with a score of 2.6/5 on average.

Atypical in their management and governance practices

Remuneration and management practices

A first finding about the salary in the sector is that a fixed wage is the mainstream practice even for directors. Indeed, 88% of directors report receiving a fixed wage only. Over 40% of the directors we interviewed earned a net wage between 30.000 and 40.000 euro per year and 35 % a net wage under 40.000.

Another finding is that the internal salary spread (the difference between highest and lowest salary) is quite low: one to two in average. This is coherent with the value set of social entrepreneurs; it is aligned with the discourse and the management and governance practices they depict.

Another interesting fact about the managerial style of social entrepreneurs is the way they perceive the satisfaction from their employees.

Directors not only seem to be very satisfied with their job, they also judge the global satisfaction of their employees to be very high. Indeed, as Figure 24 depicts, the most frequently given rating for job satisfaction of the employees (on a scale from 1 to 7) was 6. It would of course be interesting to compare their view with the views of the employees themselves.

These perspectives on job satisfaction also resonate well with the apparent significant attention that directors place in operationalizing a participative management style. Indeed, 85% of the directors state that they involve their employees in setting goals, and in 6% of the organizations entirely co-define their organizational goals with their employees. Moreover, more than half of the respondents say that employees are provided with feedback at least on a quarterly basis, which indicates a strong consideration given to explaining targets and assessing the progress made by everyone towards achieving those targets.

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Figure 23 (left): Distribution of net wages among the directors interviewed (N=73)Figure 24 (right): Distribution of respondents to the questions: i) What is the average satisfaction of your employees on a scale from 1 (not satisfied at all) to 7 (very satisfied)?, ii) What is your average satisfaction on a scale from 1 to 7? N=67

Echoing their own work motivations, the directors also seem to strongly emphasize the intrinsic benefits, procedural utility and reputational gains when motivating their employees. To illustrate, 91% of the directors attribute a high importance to motivating their employees by engaging them through giving them a say in their work (capture by a statement, which received an average score of 4.1/5). This corroborates our earlier finding that 85% of the directors state that they involve their employees in setting goals. The other two important ways to motivate their staff were that they regularly recognize a job well done (scored in average 4.0) and that they motivate their employees by emphasizing the social impact the organizations has (scored in average 3.9).

Governance

Almost all organizations interviewed have a board with active members. The average board size is 7 members. For 15% of the organizations, the board is exclusively composed of people who also invested in the capital. Typically, board membership is a not remunerated function but a volunteering activity. The directors often explained that they actively seek to surround themselves with diverse people with diverse skills, but who share a similar interest in social value creation and are prepared to dedicate time to provide entrepreneurs with advice and guidance. In only a very few instances did the director also serve as president of the board, a practice which good governance rules discourages. A last interesting finding is that around 25% of the board members were female. This number remains very low but markedly higher than its counterpart in the mainstream business: on average in Belgium just under 15% of people occupying non-executive administrator functions are women4.

4 Source : Women on boards - Factsheet 2: Gender equality in the Member States ; http://ec.europa.eu/justice/gender-equality/files/womenonboards/factsheet-general-2_en.pdf

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Chapter 4 - Market positioning and resources

First to market?

We were also interested to better understand the competitive landscape at the time of founding. 37% of the organizations surveyed were the first to market in their region - providing a product and/or service that no one else was at the time. More than half of those first-to-market organizations were also first at national level and 15% at international level (to the best knowledge of the director).

Among the respondents who indicated that there were other organizations or “competitors” in their market at the time of creation (63% of the sample), almost 50% of those competing organizations were social or hybrid enterprises and almost 30% were pure for-profit companies. We also learned that 60% of identified competitors or similar organizations were located at regional level. These data invite further scrutiny. Does the level of competition reveal any useful indication of the size or nature of the social needs that these organizations?

Interestingly, when asked to contemplate the ‘playing field’ at the time of founding, many of the organizations who indicated that they were not the first still underlined that they were first in putting together a specific business activity AND the social mission. For instance, a social enterprise active in legal services might consider a lot of law firms and other public services as competition; however their model allowing them to service specific deprived target groups remains unique on the market and therefore was a radical innovation.

Figure 25 (left): First to market. N=76Figure 26 (right): Number of competitors

The competitive landscape as of today

The experiences today with respect to perceived competition seem wide-ranging. On the one hand, a majority of social enterprises identified at least 5 competitors. Among these perceived competitors, 50% is located at regional level confirming the relatively high pressure on social enterprises at regional level, and 41% are in fact other social enterprises. On the other hand, a significant share -nearly one third of the social enterprises interviewed- identified less than 5 competitors, and overall 9% of organizations interviewed no competitors at all.

Regarding organizations that were pioneers, namely first-to-market (37% of our sample), only 6 enterprises still remain without competitors today, meaning organizations providing similar services or products in their market. In other words, most of these enterprises were imitated – primarily by other non-profit or other social enterprises, but also by for-profit organizations (22% of current competitors). The latter is indicative of the potential significance of social enterprises in creating or opening up sustainable new markets.

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Looking at the future competition

60% of the directors do not expect new entrants entering their market. This seems high. During interviews, several directors of work integration companies especially stressed the scarcity and continuously reducing size of markets that allows activities compatible with the skills and capabilities of their target groups. The competition of countries with low income appears as a threat for their social mission within their current business model.

Figure 27: Expected future entrants

When new competitors are foreseen, 50% of those new entrants are expected to be pure-profit organizations – which again is in line with the notion that social enterprises are often trend-setters, at the leading edge, testing ideas which, when successful, become mainstreamed. Another 30% is composed of other social enterprises, indicating that for some activities, there is more optimism and more market than for some others.

In general, the perception of competition from social entrepreneurs happened to be very positive. Several entrepreneurs actually wish they would have more competitors to prove the need of their solution and create a sustainable market. The stimulation from competition was also mentioned but also the need to create new markets as drivers for innovation.

What are key resources social enterprises rely on?

We were also keen to deepen our understanding of the resources or assets social enterprise typically use to “do business” i.e. to generate economic and social value. So we asked on a scale from 1 to 7 how much their organization had relied on a specific resource over the past 12 months. A value of 1 indicates that the organization did not at all rely on the specific resource, whereas 7 means ‘to a great extent’.

Figure 28 clusters our findings by major resource category: (1) Collaboration Resources, (2) Advice and Knowledge Resources, (3) Resources related to Reputation and (4) Human Resources. The numbers highlighted in green indicate the average score for a specific resource; the shaded area captures the average reliance on the entire category.

These figures readily demonstrate that the interviewed Belgian social enterprises relied most heavily on their full-time employees (6.0), their organizational reputation (5.1), their informal social networks (4.8), partnerships with other organizations (4.8) and industry/social sector reputation (4.8). By contrast, they relied only weakly on advice and knowledge resources.

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Figure 28: Resources. N=67. The closer the line to the middle of the spider web, the less did social enterprises rely on that particular resource in doing business.

Network size

Looking at the size and depth of networks can be helpful to qualify the social capital that social entrepreneurs own and build over time. Sociology and economics sciences have long been investigating especially the role of networks in the way entrepreneurs run their organization, but also their positive influence on organizational performance and innovation capabilities. Ronald S. Burt 5 has done pioneering research in this area. He differentiates social and human capital and asserts that high social capital allows entrepreneurs to better grasp opportunities and also to better exploit their human resources.

Figure 29: Distribution of organization’s network size. N=68

Our evidence suggests that social entrepreneurs in Belgium are well-networked with fellow social entrepreneurs. 70% of the respondents declared for instance having had a contact with at least 20 social enterprises in the past years. 20% declare knowing the founders or directors from more than 50 social enterprises, often correlated to membership activities in a social economy federation. We also noticed some repetition throughout the chains. For instance, one organization was referred to us by five other organizations. Looking at deeper ties in this population, we observe that social entrepreneurs go further than knowing their peers; they also regularly discuss important and shared concerns. We noted on average fairly strong interconnections and exchanges between social entrepreneurs. For instance, the majority of respondents identified more than 6 social entrepreneurs with whom they interact on a regular basis.

5 Le capital social, les trous structuraux et l’entrepreneur, Ronald S. Burt, Revue Française de Sociologie, Vol. 36, No. 4, Analyses de réseaux et structures relationnelles#. (Oct. - Dec., 1995), pp. 599-628.

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Chapter 5 - Are social enterprises innovative?

Another special focus topic in the survey regarded innovation: enquiring about the beliefs and attitudes vis-à-vis innovation as well as about actual innovative practices. To this end, we integrated into our survey standardized, validated questions from the European Community Innovation Surveys (available through Eurostat). Virtually everyone indicated that they find innovation important; 92% of the Belgian social enterprises reported having introduced at least one new or significantly improved service, product and/or process to their organization within the past year.

Innovation drivers

We also enquired about what drives these social enterprises to innovate. The most common response was to increase the range and/or quality of the product and/or services that they deliver (62%), which is also the most common response found with mainstream entrepreneurs.

Interestingly, and unlike with mainstream businesses, the second most cited driver was to achieve social enterprise’s social goals (58%) (by increasing the quality of social impact, spreading social impact or reducing environmental impact). This is indeed in line with the strong social focus of their mission. The third most common driver was to increase the enterprise’s financial sustainability and expand its market (55%). Note that pressure from competitors and financing organizations was mentioned by 30% of the sample, which is a markedly high share in comparison to the social entrepreneurs surveyed in the other European countries by the SELUSI consortium.

Figure 30: Innovation drivers. N=77. The categories were obtained through prior exploratory research, and from the Community Innovation Surveys (available through Eurostat)

Typology of innovations

The majority of the innovations introduced in the past year were either service or process-related. To illustrate, we list some examples below, drawing form the discussions we had with the social entrepreneurs.

Product - “The company developed a technology that improves and brings environmental added value to regular water treatment systems.”

Service - “The organization has created adjacent services based on its core service, health-related, in order to provide tailored solutions for persons with specific diseases.” Or “The organization has developed a complementary activity to reach out a broader customer base and spread in society alternative consumption patterns.”

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Process - “To include more people of their target group, the organization redesigned the existing infrastructure and developed a new workflow. These changes create more opportunities and ensure more participation for the target group, as well as a growth in social impact for the organization.”

Another way to capture information about the nature of the innovations launched is to look at the timeframe in which they expect a return on their investment. Figure 36 shows the dispersion of answers given. The overwhelming majority of social enterprises expect a return within one year. 24% of the organizations expect the introduced innovation to pay off in the medium term, i.e. 2 to 5 years. None of the interviewees mentioned a timeframe beyond five years.

Figure 31 (left): Expected return last year innovation N=72 Figure 32 (right): Innovation partner. N=61

Innovation process

Resources / involvement

We asked social entrepreneurs what percentage of their employees are involved in the development of new products, services and/or processes. We find that on average approximately 45% of the employees were involved in the development of innovations. In fact, in 25% of the organizations, 100% of the employees have been involved. 26% of the surveyed companies also involve volunteers in their innovation process. Besides internal resources, respondents were asked about external resources they leverage for innovation. The data shows that 81% of the organizations worked together with other people or organizations to develop new or improved products, services or processes.

To get a sense of the main and typical innovation partner, we asked respondents to describe their relationship with the previous mentioned collaboration partners. Figure 32 shows the percentage of our sample per type of partner.

Among external partners, diverse organizational types were mentioned. It turns out that 22% are other social-driven organizations. We also notice that 17% of the organizations collaborate with individuals for their innovation, which can refer to experts, clients or customers (via surveys for instance).

These data suggest that Belgian social enterprises widely leverage both external and internal resources to define and develop their innovations. Over a quarter of the enterprises collaborate with other organizations in the same field or sector to develop new projects. An equally high share of enterprises sources in intelligence and guidance from consultants and commercial labs.

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Barriers to innovation

What are the reasons for not implementing good ideas? To find answers to this question, respondents were asked to report on any innovation barriers that they have encountered over the past 12 months, i.e. factors that led the organization not to develop new or improved products, services or processes. 67% of the respondents encountered barriers. These factors have been grouped into the following four large areas: (1) Cost-related innovation barriers, (2) Internal barriers, (3) Regulation-related barriers and (4) Market-related barriers.

Figure 33 shows that cost-related innovation barriers (much like with commercial enterprises) are the most frequently mentioned (67%). More than one third of the sample experienced problems with the availability or lack of finance and also because of costs being too high for financing their project.

Internal barriers turn out to be almost equally blocking or slowing down their ambitions (63%). For instance, the lack of time available or lack of qualifications within the team but also internal resistance to change scored very high.

On the other hand, market barriers (27%) (and this is different to commercial enterprises) and regulation-related barriers (23%) were least frequently cited.

These findings on innovation barriers are very similar to the results from the other European countries. In all of these countries, the two most frequently cited barriers to innovation were also cost-related and internal barriers.

Figure 33: Innovation barriers. N=52

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Chapter 6 - Assessing and monitoring social impact

Our study is also unique with respect to the rich data we have on the detailed practices that social enterprises have in place to capture and monitor their social impact.

Defining social impact

We let the directors themselves describe how they evaluate and monitor their societal impact. In this respect, our approach was bottom-up, and most suitable given the wide variety of enterprises interviewed and the current lack of consensus on which is the most appropriate framework to use.

Impact assessment

80% of the social enterprises interviewed reported that they have at least one indicator in place to track their social impact. In an open-ended question, we then asked respondents to provide us with more details about the indicators they use. To help code these data, we made use of a categorization that the SELUSI Consortium had previously developed, notably based on the classification of the full spectrum of qualitative data regarding social performance measurement collected from over 550 interviews, see below.

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The following figure displays the most recurring indicators mentioned in the interviews.

Figure 34: Overview of the relative weight of different social impact metrics. N=164 indicators in total, 63 respondents.

First conclusion, the highest share of indicators mentioned was employment-related. This is notably consistent with the earlier findings that many enterprises deploy the employment model (as operational model) and undertake activities linked to training and job creation for deprived and disabled individuals in Belgium. Respondents thereby often highlighted that the use of these employment-related metrics is a criterion in the reporting to subsidizing authorities.

Having said this, many of the employment-related indicators mentioned went beyond the measurement of the number of job created or hours of training provided. For instance, some directors sought to track employee satisfaction, evaluating responses to questions like ‘would you recommend a job in our organization to your family and friends?’

Interestingly, we observed some uncertainties amongst the respondents regarding the scope of social impact to be taken into account. While some showed a very advanced thinking on social impact measurement, in general, we note two trends:

• Lackofin-depthandtailoredindicatorstocapturetheentiresocialimpactoftheorganization• Dissociationofthesocialperformanceindicatorsandthesocialmission

To further illustrate, some organizations would provide us with HR indicators as social impact metrics while their social mission has to do with ecology and environment. This is revealed in the data as although 40% of social enterprises are active in environmental issues, only 8 indicators were mentioned on all interviews.

As in the other EU countries, none of the interviewees reported using the social return on investment (SROI) measurement framework, plausibly due to high complexity and costs involved in adopting this framework. Still, most of the interviewees expressed high interest in strengthening their approach to impact measurement. This is perhaps not surprising given their strong growth ambitions reported earlier with respect to their social impact.

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Chapter 7 - Political recommendations to support social entrepreneurship in Belgium

At the end of the interview, we invited the social entrepreneurs to propose recommendations for new policies or policy-making instruments that would help them in their organization. 92% of the social entrepreneurs came up with suggestions for the Belgian authorities that related to multiple policy areas. Two independent raters clustered all the answers into the following 9 categories. Figure 35 indicates for each category the proportion of social enterprises who mentioned such a policy suggestion.

A first interesting finding is that the policy recommendations span many diverse policy areas. While some recommendations address issues specific to social enterprises (legal statutes, public procurement preferences etc.), the main bulk of the recommendations concerns general public policy domains, ranging from welfare policies to economic regulations.

As a matter of fact, 35% of the respondents call for a reduction in administrative complexity and barriers to entrepreneurship, which is very much aligned with regular businesses’ requests. Of course, numerous respondents were also referring directly to the administrative burden implied by subsidy search, management and reporting obligations. Many social entrepreneurs insisted on the need to lower controls and reporting burdens (that come together with subsidy allocation) so that they can better focus and dedicate more of their resources to achieving their mission and creating impact.

Also, a lot of remarks dealt with a certain lack in coherence and repartition of subsidies. Several social entrepreneurs did call for more ambitious and impact-driven political decisions for allocating subsidy envelopes. Indeed, several remarks concerned the way subsidies are being diluted into a multitude of projects with the immediate and the damaging consequences of diluting social impact and increasing administrative burden for each beneficiary organization.

Another interesting finding based on the social entrepreneurs’ policy recommendations concerns the fact that social enterprises encounter similar barriers than other entrepreneurs towards supporting their growth through the employment of additional workforces. Even when growth and financial stability conditions were met, social enterprises were facing important issues to recruit because of the high taxes that are incumbent upon employers in Belgium. One respondent out of five reported wage taxes as a blocking factor for their development and ask Belgian governments to reconsider the tax system that restraints entrepreneurship.

Additionally, 7% of the social entrepreneurs claimed to face issues regarding access to capital and ask for innovative mechanisms to ease the access to capital but also to support early-stage and scaling-up social enterprises with high impact potential. Another 8% of the sample underlined the need for specific support in R&D, through more accessible funding schemes (problem of workload and visibility of existing calls).

In the same vein, 10% of the social entrepreneurs highlighted rooms for improvement in terms of regulating market conditions. In particular, social enterprises dealing with work integration of low-skilled or disabled target groups mentioned the unfair competition coming from low-income countries. The costs of their own workforces, they say, do not allow them to compete in terms of pricing on such tasks as handling, packaging etc. Therefore, social entrepreneurs ask authorities to consider setting up protection mechanisms to keep these activities on the Belgian soil and allow them to preserve a set of activities that create jobs for specific target groups.

In a more specific area, 17% of the respondents requested some legal changes or more favourable legal threshold for social enterprises. Several social entrepreneurs requested a better legal framework to allow cooperatives to start up and grow. In particular, the French SCOP statute was mentioned several times as a favourable legal framework to attract cooperative shareholders and facilitate the financial management.

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In general, there was a widely held concern about the lack of support to entrepreneurs and too many barriers to create economic and social value. Also, one quarter of the respondents would welcome public actions to promote and support social enterprises. One possible action that was widely pointed out (11%) is the better use and refining of existing social clauses in public procurement and tenders.

Figure 35: Overview of Policy Suggestions in Belgium. N=72

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Conclusions

The present study reveals an intriguingly high degree of diversity -in form, model, impact, size and growth- across the Belgian social enterprises surveyed. Social enterprises appear to experiment with new forms of so-called civic capitalism, a type of capitalism that is much better aligned with the needs of local communities and individual social change agents than alternative models. Various strands of evidence presented in the present study highlight this experimental character.

Interestingly, the evidence on Belgian social enterprises also further underscores the pertinent diversity of social entrepreneurship across countries. Indeed, context seems to matter. The evidence on Belgium presented here thus clearly strives to clarify and enrich our understanding of the nature of social entrepreneurship in Europe overall: revealing common trends, as well as stark differences.

For instance, with its relative high share of social enterprise activity centered in the fields of business activities, construction, and community and social services, the Belgian sample looks in fact fairly similar to the comparable samples in Spain, Sweden and the UK. On the other hand, social enterprises in Hungary and Romania are comparatively much more active in the health and social work and education.

Likewise, Belgian social enterprises most heavily rely on own-generated revenues, followed by grant finance. While this also holds true for social enterprises in Sweden, Spain and the UK, a very different picture emerges from SELUSI data in Hungary and Romania. In Hungary, fees and grant finance were found to be nearly of equal importance, whereas in Romania, the most significant share of revenues hailed from grant finance.

When we look at the drivers for innovation, the elements raised by Belgian and Swedish social entrepreneurs appear very similar. The most important drivers were to increase the range and/or the quality of products and increase the enterprise’s social and environmental effects. In Spain, Hungary and the UK, the rank order of these two drivers was reversed. In Romania, then again, increasing financial sustainability seems to be the most common and important driver.

Belgian, Swedish and UK social enterprises also look similar when it comes to constellation of resources they most heavily rely on. On average, the most important resources for all these countries were full-time employees (human resource), informal social networks (collaboration resources) and the organizational reputation (reputation related resources).

As a final illustration, we turn to the policy suggestions made by the social enterprises, which in general tend to be broad-ranging, but still in its mix very distinct by country. As with social enterprises in Romania, many Belgian enterprises suggested less bureaucracy in regulation. At the same time, they also suggested more attention should be given to employment rights, social rights and the welfare state, which is something social enterprises in Spain also emphasized.

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Next steps

We hope this report has provided you with at least a few new insights about the phenomenon of social entrepreneurship in Belgium, debunked or busted a few conventional wisdoms here and there, and whetted your appetite to learn more.

We believe that good, solid empirical evidence is a critical ingredient towards effective decision-making not just by policy-makers in the area of innovation and social entrepreneurship, but in fact by all relevant stakeholders.We hope to be able to repeat the survey in 3 years’ time. Doing so, would allow us to create a unique panel database on social enterprises in Belgium – so that in the future, we can try to better understand the changes of these enterprises over time.

Selection of References

Burt, R.S. (1995). “Le capital social, les trous structuraux et l'entrepreneur.” Revue Française de Sociologie, Vol. 36, No. 4, Analyses de réseaux et structures relationnelles. (Oct. - Dec., 1995), pp. 599-628.

D’Este, P., Iammarino, S., Savona, M. & von Tunzelmann, N. (2008). “What hampers innovation? Evidence from the UK CIS 4.” SPRU Working paper No. 168.

Dey, P. and Steyaert, C. (2012). “Social entrepreneurship: critique and the radical enactment of the social.” Social Enterprise Journal, 8 (2): 90 – 107.

Ebrahim, A. (March 13, 2013). Let's Be Realistic About Measuring Impact. Retrieved April 26, 2013, from http://blogs.hbr.org/hbsfaculty/2013/03/lets-be-realistic-about-measur.html

European Commission (s.d.). Women on boards - Factsheet 2: Gender equality in the Member States. Retrieved April 26 2013 from http://ec.europa.eu/justice/gender-equality/files/womenonboards/factsheet-general-2_en.pdf

European Commission (s.d.). Social Entrepreneurship. Retrieved April 26, 2013, from http://ec.europa.eu/internal_market/social_business/index_en.htm

European Commission (2011). European Policy Brief SELUSI project. March 2011. Retrieved April 26, 2013, from ftp://ftp.cordis.europa.eu/pub/fp7/ssh/docs/selusi-policy-brief_en.pdf

Eurostat (2010). Science, technology and innovation in Europe. Luxembourg: Publications Offices of the European Union. Retrieved April 26, 2013, from http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/introduction

Heckathorn, D. (1997). Respondent-Driven Sampling: A New Approach to the study of Hidden Populations. University of Connecticut.

Huysentruyt, M., Rimac, T., Stephan, U., von Essen, E. & Vujic, S. (2010). Social entrepreneurs as lead users for service innovation. Summary country reports on social enterprises in Hungary, Romania, Spain, Sweden and UK.

Huysentruyt, M., Stephan, U. & Vujic, S. (2011). Values, Management practices and organizational performance: evidence from social enterprises. Retrieved April 26, 2013, from http://www.selusi.eu/uploads/images/Abstract%20-%20Values.pdf

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Marée, M., Gijselinckx, C., Loose, M., Rijpens, J. & Franchois, E. (2008). Les associations en Belgique : Une analyse quantitative et qualitative du secteur. This research was published by the King Baudouin Foundation.

Moray,N. & Stevens, R. (2012). “The role of CEO values, organizational identity, slack resources and firm performance on the attention allocation of social and economic goals in for profit social enterprises.” Working paper.

Salganik, M. & Heckathorn, D. (2004). Sampling and Estimation in Hidden Populations Using Respondent-Driven Sampling.

Seelos, C. (2012) Theorizing and Strategizing with Models: Generative Models of Social Enterprises.” Forthcoming in: International Journal of Entrepreneurial Venturing.

Stevens, R. (2011). The social and economic proclivity of social enterprises: antecedents, measurement, and dynamics. Degree of Doctor in Applied Economics. Ghent University, Belgium.

Additional Suggested Readings

Borenstein, D. (2004). How to Change the World: Social Entrepreneurs and the Power of New Ideas, Creating Social and Economic Value, San Francisco: Jossey-Bass.

Christensen, C., Baumann, H., Ruggles, R., Sadtler, T. M. (2006). "Disruptive Innovation for Social hange," Harvard Business Review, December 84 (12).

Day, G., Schoemaker, P. (2005). “Scanning the Periphery,” Harvard Business Review, 83 (11): 135-148.

Dees, J.G. (1998). “The Meaning of Social Entrepreneurship,” Stanford University: Draft Report for the Kauffman Center for Entrepreneurial Leadership.

Defourny, J., Nyssens, M. (2010). "Conceptions of Social Enterprise and Social Entrepreneurship in Europe and the United States: Convergences and Divergences," Journal of Social Entrepreneurship, 1:32-53.

Elkington, J. & Hartigan, P. (2008). The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World. Harvard Business School Press

Hehenberger, L., Harling, A., & Scholten, P. (2012). A Practical Guide to Impact Measurement, EVPA.

Mair, J. & Marti, I. (2006). “Social entrepreneurship research: A source of Explanation, Prediction, and delight,” Journal of World Business, 41(1): 36-44.

Mair, J., & Marti, I. (2009). Entrepreneurship in and around institutional voids: A case study from Bangladesh. Journal of Business Venturing, 24(5), 419–435.

Mulgan, G. (2010). “Measuring Social Value,” Stanford Social Innovation Review, 8 (3): 38-43.

Nicholls, A. (ed). (2006), Social Entrepreneurship: New Models of Sustainable Change, Oxford: Oxford University Press.

Phills, J.A. (2005). Integrating Mission and Strategy for Nonprofit Organizations, Oxford: Oxford University Press.

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Porter, M. E. & Kramer, M. R. (2011). “The Big Idea: Creating Shared Value How to Reinvent Capitalism and Unleash a Wave of Innovation and Growth,” Harvard Business Review, January/February.

Rao, H. (2009). Market rebels: How activists make or break radical innovation, Princeton University Press.

Salamon, L. M., Sokolowski, S.W. & Anheier, H.K. (2000). Social Origins of Civil Society: An Overview.” Working Papers of the Johns Hopkins Comparative Nonprofit Sector Project, no. 38. Baltimore: The Johns Hopkins Center for Civil Society Studies.

Terjesen, S., Lepoutre, J., Justo, R. & Bosma, N. & Global Entrepreneurship Research Association (2012). Report on Social Entrepreneurship. http://www.gemconsortium.org/docs/download/251933(5/6): 399-410.

Von Hippel, E. (2005). Democratizing Innovation, Cambridge, MA: MIT Press.

Young, H. P. (2009). “Innovation Diffusion in Heterogeneous Populations: Contagion, Social Influence, and Social Learning," American Economic Review, 99: 1899-1924.

Yunus, M. (2009). Creating a World Without Poverty: Social Business and the Future of Capitalism. PublicAffairs.

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Annex 1 – Methodology

This research is anchored in a wider, pan-European initiative called SELUSI (Social Entrepreneurs as Lead Users for Social Innovation 6). This research project, funded by the European Commission under the Framework Program 7, covered five European countries (UK, Spain, Romania, Hungary and Sweden) over a period from 2008 to 2011. SELUSI partners are the following organizations: London School of Economics (UK), IESE Business School (Barcelona, Spain), University of Leuven (Belgium), SITE Stockholm School of Economics (Sweden), Harvard Business School (USA), i-propeller (Belgium), NESsT (international), and the Global Institute (international).

Key facts & figures about SELUSI

i-propeller and the King Baudouin Foundation have grasped the opportunity created by SELUSI to extend the panel with data collected in Belgium between November 2012 and March 2013.

With this research, we wish to contribute to a more nuanced, evidence-based understanding of the specificities of social enterprises in Belgium. The target audience for the research output is fourfold:

1. Social entrepreneurs themselves: increasing their knowledge about themselves, helping them benchmark themselves vis-à-vis their peers, perhaps even inspiring them by the variety of models and experiences captured, and helping them obtain a wider visibility and recognition for the work they are doing.

2. Academics: encouraging their use of reliable, new data to further our understanding of social entrepreneurship in Belgium, their critical scrutiny and their contribution to an original evidence base about social entrepreneurship more broadly.

3. Civil society and other enterprise interested in supporting the development of social innovation and social entrepreneurship in Belgium: increasing their knowledge of the phenomenon, better understanding the promise, potential, needs and limits of social entrepreneurship in Belgium, and this also contextualized from a European perspective.

4. Policy-makers: augmenting their understanding of the phenomenon, and encouraging more evidence-based policy-making in this realm.

Relative to past and on-going research efforts, which have traditionally been more strongly centered on non-profit organizations or overlapping groups of social enterprises, we hope this study will shed important new, complementary light specifically on social entrepreneurship in Belgium today.

6 www.selusi.eu

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For instance, the Centre for Social Economy in Liège has in the past extensively studied the non-profit sector in Belgium, as defined through its legal statutes (institutions without lucrative purposes)7 . The main source of their data was financial and employment statistics, augmented with qualitative insights from the point of view and experiences of umbrella organizations and federations around legal concerns and trends in policy-making for the sector, stakeholders’ involvement like volunteers, sources of founding etc.

Stevens and Moray8 collated original evidence on social enterprises in Flanders, compiling information about work integrations companies, enterprises focusing on people and planet objectives (published by Coopkracht and VOSEC), organizations having received venture capital between 2004 and 2007 by four social venture investors active in Flanders, and organizations with the dedicated legal statute “Vennootschappen met sociaal oogmerk”. The total population thus identified amounted to 285 distinct organizations, of which 51% responded to the survey sent out in 2008.

In sum, the key value-added of the present study is threefold:

1. Development a uniquely rich database on social entrepreneurship in Belgium, containing both in-depth qualitative and quantitative data regarding a large spectrum of topics (see next paragraph)

2. National coverage and representativeness in Belgium and EU comparability3. Focus on social enterprises as defined by two equally important factors: a clear social mission and an

entrepreneurial drive (going beyond social economy borders), on which to date, no reliable evidence exists.

Research approach

In this project, we interviewed and collected data on 78 Belgian social entrepreneurs, meaning directors (or “CEO’s”) of social enterprises based across Belgium’s three regions: Brussels, Flanders and Wallonia.

Over the phone and via an online survey, we gathered data on a diverse set of areas including:

• Organizational design: Organization’s vision, targets in the coming 12 months, operational model, finances, changes in revenue model in the past year, resource configuration, etc.

• Competition and Market Interaction: first mover advantage, nature of competition, etc.• Innovation: Drivers and barriers to innovation, examples of innovations, nature of collaboration, etc. • Organizational Performance: Measuring social and financial performance, governance, etc.• Personnel Practices: Wage structure, goal setting, employee satisfaction and motivation, etc.• Policy change: Recommendation, etc.• Background information about the directors: Motivation and values, socio-demographic profile, etc.

The survey models combined established measurements from psychology, economics, and management science. The questionnaire comprised a mix of open-ended, closed-ended and rating-questions. The data gathered were both qualitative and quantitative.

One question was double-scored for 50% of the interviews done for homogeneity reasons.

About the Respondent Driven Sampling methodology

New Approach

Anyone who is keen to create reliable, population-representative evidence on social enterprise in Belgium must find a clever way to overcome at least 3 major difficulties. Firstly, the population of Belgian social entrepreneurs

7 Les associations en Belgique – Une analyse quantitative et qualitative du secteur – 2008. 8 Stevens, R. (2011). The social and economic proclivity of social enterprises: antecedents, measurement, and dynamics. Degree of

Doctor in Applied Economics. Ghent University, Belgium.

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is small in size relative to the population at large. Secondly, there is no available sampling frame (e.g. telephone directory, administrative database) on which one can readily draw to identify a sample of social entrepreneurs. Thirdly, public acknowledgement of the social enterprise phenomenon is erratic and subjective. In other words, one cannot rely on people’s inclination to self-identify as a social entrepreneur.

Therefore, to capture population representative data on what is essentially a “hidden” population, we adapted the respondent driven sampling method9,10 . Respondent-driven sampling (henceforth, RDS) uses a chain-referral procedure that exploits respondents’ social networks.

We started from a list of ‘seeds’, and grew the database by surveying the enterprises that the interviewees referred us to. Theoretically, the choice of seeds should not affect the representativeness of the emerging sample provided the chains that follow-on from those seeds are sufficiently long.

To select our ‘seeds’, we systematically took on board the following series of considerations. Firstly, and most obviously, any seed social enterprise must comply with our basic eligibility or selection criteria (that is, criteria which needed to be met to make it into our sample):

• Minimum of 1FTE employee, apart from the owners (‘employment creation’)• Minimum of 5% self-generated revenues (‘market-orientated’)• Driven first and foremost by a social mission (mission scored via elaborate scoring grid for various aspects and

overall social/societal concern)

Secondly, when developing the list of 19 seeds, we sourced in names from very different origins or informational sources (for instance, drawing from networks such as Ashoka, POSECO, SAW-B, VOSEC etc.). Furthermore, we ensured that the seeds were neatly spread across the:

• Different geographic regions (three regions),• Language groups (mirroring the Belgium population at large). • Urban versus rural scope (dense/urban/semi-urban/rural)• Industry sector• Social trends (environment, elderly, poverty, etc.)• Female/male entrepreneurs • Age and size of the organization• Legal statute of the organization

9 Heckathorn, D. (1997). Respondent-Driven Sampling: A New Approach to the study of Hidden Populations. University of Connecticut. 10 Salganik, M. & Heckathorn, D. (2004). Sampling and Estimation in Hidden Populations Using Respondent-Driven Sampling

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Overview of the chains

The average length of the chains in our sample equals 3.4 which is a very good average to ensure the representativeness of the sample and elude eventual bias from the seed selection.

The smallest chain’s length was one, indicating that either the person did not give us recommendations or that we did not interview the persons recommended, given the targeted sample size. Our longest chain was seven.

Example of a chain:

N=78, among which 10 respondents did not provide with recommendations

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About i-propeller

i-propeller is a research and development and consultant group for social and open innovation based in Brussels, as a spin off from KU Leuven.

The mission

We push for Social Business Innovation – developing opportunities for our clients in the areas of six societal challenges. We drive for these services to be social, innovative and profit-oriented.

We are a team of 18 professionals from 6 countries with backgrounds in private sector, academia and entrepreneurship.

We have substantial experience working in strategy, finance and change management areas and over years have proven our skills in service innovation and business model development.

Services we offer

i-propeller is a social innovation consultancy, working with profit, public and non-profit organizations. We help organizations find innovative solutions and develop new services to address emerging demands generated by societal trends. We treat these societal trends as new, important growth markets for your organization. Our services include:

Social Innovation Opportunity IdentificationReveal through a special methodology which social trends are most likely to impact your business, and which new services should be designed to turn those trends into a business opportunity.New Service DesignDesign a new service or product-service combination that is profitable for you and society.Strategy SupportSupport your organization or number of organizations with the development of a strategy that would take into account the societal challenges and develop a long-lasting vision and adequate eco-system around it. Capacity BuildingStrengthen your internal capabilities to develop and implement social business innovations.Impact Measurement and Reporting Reveal and communicate the impact of your organization on society.

Eco-System to promote Social Entrepreneurship

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In order to further improve its social impact, i-propeller has co-created three organizations to ensure the complete eco-system for Social Business Innovation.

Innovation & Action Lab

Provides incubation and coaching services to social entrepreneurs. The objective of the Lab is to pick-up, lead and enable research on subjects related to social business innovation and translate it into practice. The Lab has developed strong links with the leading academic institutions and initiated a number of the pan – European research project to promote this agenda. http://www.ia-lab.eu/

SI² Fund

Provides capital to social enterprises in their early development stage. The SI² Fund has been working with the private investors helping them to engage with socially rich projects. http://www.si2fund.com/

Social Innovation Accelerator (SIA)

SIA is a partnership of a number of private sector organizations specifically created to support the incubation of social enterprises and to ensure the cost of coaching for the starting up organizations.

Research / Policy work / Development Aid and Cooperation The i-propeller team has been active not only in Belgium but has initiated a number of research activities in order to promote Social Entrepreneurship abroad in the Middle East, Africa and Asia. . Below we list few examples: China. Support with the establishment of the Social Innovation Park (23,000 M² of space). Palestine. Support to the feasibility study of the BTC programme to support SME start-up and their incubation. Development of the Project File for the EC under the BTC funding. Meeting with over 50 stakeholders in West Bank, Gaza and East Jerusalem. Congo (Kinshasa): Evaluation of the VLIR-UOS cooperation programme and its management capacities including the proposal of new initiatives. OECD: Preparation of Report on the prevalence of Female entrepreneurs among social entrepreneurs based on the cases in Russia, Chile and Hungary.

Incubation activities and Innovation & Action Lab

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Through its “Innovation and Action Lab”- i-propeller provides support to social enterprises and develops new academic-industry projects. The Innovation and Action Lab enhances cross-fertilisation between entrepreneurs, international academia and the clients of i-propeller. We are active over the entire eco-system of support to start-up creation and incubation of existing organizations. Over the last four years we have coached over 100 enterprises in Belgium.

The I&A Lab provides a support structure to propel the incubation process, taking entrepreneurs from business concept to investment-ready business plans through the i-Coach, Capacity Coaching and SI² Fund mechanisms and acceleration processes.

Capacity CoachingWe also provide a whole range of Capacity Coaching to existing businesses to help them develop appropriate business models, KPIs and evaluations of the market potential for their interventions.

Scaling -up

Through the SI² Fund (9.5M EUR) we at –propeller help organizations scale –up and grow. We have created our own SI² Fund to be able to invest between 100- 500K into promising businesses with a high social return and a fair financial return.

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About the authors

Marieke Huysentruyt

Marieke Huysentruyt is co-founder and partner, responsible for the R&D strategy and activities at i-propeller. Marieke is Assistant Professor at the Stockholm School of Economics (SITE) and Faculty Fellow at the London School of Economics (Managerial Economics and Strategy group at the Department of Management). She is an applied micro-economist who does research on poverty and household finance, development aid and NGOs, CEO values and management practices, and social enterprise and societal innovation, among other topics. Marieke has a Bio-Engineering Degree from the Catholic University of Leuven, an MSc. in Applied Economics and Management from Cornell University, and PhD in Economics from the London School of Economics. She has been invited to spend time at Harvard University and the Santa Fe Institute as a visiting scholar, and collaborated with numerous development NGOs e.g. in Kenya, Mali, the Netherlands and the UK. Marieke has been awarded various academic awards, including a Fulbright Scholarship, British Council Scholarship, and LSE-Columbia University Collaborative Research Grant.

Anna Kint

Anna Kint is project manager at i-propeller. Anna has experience in product-service systems, sustainable design and creative methodologies. She holds a Master Degree in Product Development from the University of Antwerp and is currently following the course Sustainable Production at the Open University of the Netherlands.

Sabrina Weymiens

Sabrina Weymiens is project manager at i-propeller. She studied in Lille (France) in the Institute for Political Studies where she specialized in Managing Social Innovation (master degree). Sabrina got different experiences in the area of ‘sustainable banking', first lobbying EU institutions for the European Association of Co-operative Banks and then working for the Triodos Bank in Brussels. She published her thesis on the topic of political activism in high privileged Parisian area by the French editor L'Harmattan (Les militants UMP du 16ème arrondissement de Paris).