PERSPECTIVES ON SOCIAL ENTREPRENEURSHIP IN ROMANIA

Abstract

At the European Union level, there is a great interest in social entrepreneurship and social economy, which are correlated with a more efficient market competition, with the encouraging of solidarity and cohesion, with a high degree of flexibility and innovation that allows a rapid adaptation to the changing social and economic context. The issue of social entrepreneurship became more and more important as the financial and economic crisis evolved and brought to surface the necessity to foster not only economic development but also social inclusion. In Romania, social entrepreneurship is in its emerging phase, the non-profit sector being the major actor in this area. Through an exploratory research based on secondary sources, we aimed to identify the perspectives and the main initiatives and practices in social entrepreneurship area in Romania. The analysis focuses on the non-profit and for-profit sector, the academic area and the institutional and legislative framework. [PUBLICATION ABSTRACT]

Headnote

Abstract: At the European Union level, there is a great interest in social entrepreneurship and social economy, which are correlated with a more efficient market competition, with the encouraging of solidarity and cohesion, with a high degree of flexibility and innovation that allows a rapid adaptation to the changing social and economic context. The issue of social entrepreneurship became more and more important as the financial and economic crisis evolved and brought to surface the necessity to foster not only economic development but also social inclusion. In Romania, social entrepreneurship is in its emerging phase, the non-profit sector being the major actor in this area. Through an exploratory research based on secondary sources, we aimed to identify the perspectives and the main initiatives and practices in social entrepreneurship area in Romania. The analysis focuses on the non-profit and for-profit sector, the academic area and the institutional and legislative framework.

Keywords: social entrepreneurship, social business, NGOs, Corporate Social Responsibility, Romania

Introduction

Social entrepreneurship is seen as a promising instrument for addressing social needs (Peredo, McLean, 2006: 57). Thus, it became a major topic in the academic and nonacademic area, being of high interest for both practitioners in non-profit and for-profit sector and (social) policy makers (Peredo, McLean, 2006: 56; Dacin, Dacin §i Matear, 2010: 37).

Social entrepreneurship became more and more important as the financial and economic crisis evolved and brought to surface the necessity to foster not only economic development but also social inclusion. The very concept of entrepreneurship, profit bound or social, would be primarily associated with the identification of various opportunities. But it is only the social entrepreneurship that focuses mainly on social issues in order to create what could be described as social value (such as income for the less advantaged social groups). Another important difference from the main track of profit bound entrepreneurship is the strong correlation with the peculiarities of the community environment, a context that often generates various social and institutional barriers on the road to accomplishing entrepreneurial tasks. If we add the organizational framework to these liabilities, the result is hybrid entities, targeting both profits and non-profit objectives. (Doyle, Ho, 2010: 636-637).

In Romania, social entrepreneurship is in an emerging phase, the non-profit sector being the major actor in this area. Although, as in many other countries, there is an increasing interest in social entrepreneurship, Romania did not construct the cultural and institutional mechanisms that are actually needed. Since 2011, the involvement of civil society in social entrepreneurship and social economy initiatives became more visible, as a result of few projects financed by European funds, i.e. the Social Economy Institute program, initiated by The Foundation for Civil Society Development as a part of a project financed by European Social Fund. The social entrepreneurship is sustained also by the for-profit sector, mainly by financing small scale projects or contests on social entrepreneurship/social innovation. At macro-institutional level, the main initiative comes from the Ministry of Labour, Family, Social Protection and Elderly, that elaborated a Social Economy Law project, which is still under debate.

I. Social Entrepreneurship - definitions, perspectives and international initiatives

The social entrepreneurship definition is controversial. One of the major questions is whether the social entrepreneurship is a phenomenon specific for the non-profit organizations or it could also be applied to businesses that have social objectives and activities (Peredo, McLean, 2006: 56)

Two main approaches can be distinguished: 1) social entrepreneurship as resource mobilization for social problem solving (statistically, the dominant tendency); 2) social entrepreneurship as a form of corporate social responsibility and responsibilization or as a result of corporate philanthropy and/or social innovation (Dacin, Dacin §i Matear, 2010: 38). Social entrepreneurship is also viewed as part of an ongoing reinvention process of the third sector and as an alternative problem-solving pathway (Dees, 2007: 27).

The social business definition is also controversial: "Social enterprise is a simple term with a complex range of meanings. Some experts say that a social enterprise is any venture that generates earned income for public benefit; others argue that the term denotes nonprofits that utilize efficient business metrics; still many see it as a movement not intrinsically business-like at all, but rather, entrepreneurial in the sense of pursuing innovative solutions to social problems" (Trexler, 2008:65) EMES European Research Network and United Nations Development Program define social enterprise as ''entrepreneurial activities focused on social aims", including cooperatives, associations, foundations, mutual benefit and voluntary organizations and charities (EMES ERN, UNDP, 2008:3). Thus, social enterprise has both economic and social objectives, within the third sector (all non-profit organizations created by civil society) (EMES ERN, UNDP, 2008:5).

As already mentioned, social entrepreneurship is also conceived as a form of corporate social responsibility (CSR) and responsibilization or as a result of corporate philanthropy. In this case, the social business/enterprise would be any enterprise that redistributes the corporate profits to social causes and has social objectives and activities. From this perspective, the social business/enterprise is a "CSR firm" (Baron, 2005:4), and social entrepreneurship is any business company or corporation (sometimes even the government) that has a social purpose (Popoviciu I. & Popoviciu S.A., 2011: 47). In a reversed logic, the non-profit organizations include economic purposes (i.e., practices of cost recovery) along with the social ones (Popoviciu I. & Popoviciu S.A., 2011: 47). The hybrid entities, targeting both profits and non-profit objectives seem to become a characteristic of the social entrepreneurship field.

However, there is more agreement on the benefits of social entrepreneurship. The social entrepreneurship creates social values, having as benefits: the increase of employment, through job creation and training opportunities for various disadvantaged groups; innovation and product/service offer that satisfy social needs which are not addressed by other actors of community/society, contribution to sustainable economic and social development; the promotion of social equity; offers effective solutions to social problems; contributes to human well-being and environmental sustainability etc. (Orhei, 2007: 2-3; Dees, 2007:25-26; Olsen & Galimidi, 2009: 44; Popoviciu I. & Popoviciu S.A., 2011: 47)

At the European Union level, there is a great interest in social entrepreneurship and social economy, which are correlated with a more efficient market competition, with the encouraging of solidarity and cohesion, with a high degree of flexibility and innovation that allows a rapid adaptation to the changing social and economic context (EC, Social Economy, 2013). Thus, in December 1989, the Commission adopted a Communication on "business in social economy sector", followed by financing, for several years, of various projects and activities. In 2000, the European Standing Conference of Co-operatives, Mutual societies, Associations and Foundations (CEP-CMAF) was created, which changed its name to Social Economy Europe in 2008. The European Parliament, the European Economic and Social Committee, and the Committee of Regions also encourage the social economy in order to exploit its potential for economic growth, employment and citizen participation (EC, Social Economy, 2013).

Since 2013, the European Parliament and the Council of the European Union adopted a Regulation on European Social Entrepreneurship Funds (No 346/2013), as a part of the Social Business Initiative established by the Commission in its Communication of 25 October 2011 entitled "Social Business Initiative - Creating a favourable climate for social enterprises, key stakeholders in the social economy and innovation" (EP, 2013:18).

The interest in social entrepreneurship has increased also as a result of including it as a discipline in various higher education study programs (i.e. "Social entrepreneurship and innovation", Malmö University, Sweden). A great number of well-known universities (Harvard, Stanford, Columbia, New York University, Oxford, Duke) have centers or initiatives in social entrepreneurship area (Dees, 2007: 24), i.e.: Harvard's Initiative on Social Enterprise, the University of Alberta 's Canadian Centre for Social Entrepreneurship, Oxford's Skoll Centre for Social Entrepreneurship, and Stanford's Center for Social Innovation (Braun, 2009: 75-76). Also, social entrepreneurship is promoted through academic journals creation (i.e. International Journal of Social Entrepreneurship and Innovation). We can also mention the initiative of World Economic Forum to create a top of the global competitiveness and, through Schwab Foundation, supports a social entrepreneurship program (Schwab Foundation for Social Entrepreneurship). All these institutional constructions have an interdisciplinary approach of the social entrepreneurship, which is absolutely necessary for understanding the complexity of the phenomenon (Braun, 2009: 76-79). Although in many countries there is a boom in social entrepreneurship, many societies did not construct the cultural and institutional mechanisms that are actually needed (Dees, 2007: 27).

II. Perspectives on social entrepreneurship in Romania

After 1990 and after Romania's integration in EU (2007), the commercial entrepreneurship constituted a major concern for the Romanian government and different bodies/institutions, in order to accelerate the development of the private initiative and to create a functioning economy. The commercial entrepreneurship is also a main topic in the Romanian specialized literature, while the social entrepreneurship is rather marginal, even if, in academic area, a number of authors started to analyze the phenomenon (i.e. Bibu & Orhei, 2008; Borza & Cri§an, 2012, Popoviciu & Popoviciu, 2011). The opening Report of the project "Social Economy Model in Romania" indicate, at academic level, insufficient information on social economy, but a growing interest in this area (Stänescu (coord.), 2012). Moreover, another report, in the same project, indicates the lack of any academic social entrepreneurship program; in 2013, only 5 master programs and 2 postgraduate courses on social economy were registered (Stänescu, (coord.), 2013: 15). The results of a focus-group on economics and political sciences students indicate: a low awareness of the social economy notion; an increased interest in a course on social economy; the social economy is seen as an alternative to the crisis of the current institutions and forms of economic organization (Stänescu, (coord.), 2012: 31).

Romania, as other economies of Central and Eastern Europe during transition, confronts with severe economic and social problems - i.e.: social exclusion of a variety of groups: disabled people, rural workers, people over 50 years, young people with low qualifications, working poor etc. (EMES ERN, UNDP, 2008:4). Social enterprise is conceived as one of the solutions in societies characterized by weak and young welfare systems (EMES ERN, UNDP, 2008:4). But there are considerable obstacles for the social enterprises in these systems, mainly the institutional framework and the legal environment (EMES ERN, UNDP, 2008:6). For example, one of the problems raised by the Social Economy Institute is the lack of a specific legal framework for social entrepreneurship in Romania (IES a). In fact, there is a lack of specific legislation in the social entrepreneurship and social economy areas, even if recent researches indicate a growing social economy industry in Romania over the last years, in spite of the current financial and economic crisis (IES, 2012). After Romania's integration in EU (2007), 3000 new social economy organizations started-up every year (IES, 2012). In 2010, the social economy in Romania included over 31 000 organizations and 100 000 employees (IES, 2012: 31; Stänescu, (coord.), 2012:31).

The main forms of the social economy in Romania are: associations, foundations, federations, agricultural and credit cooperatives, protected units (Work Integration Social Entreprises WISE, Associations of flat owners) (IES b), the non-profit NGO's definition matches better the definition of social enterprise (Bibu, Orhei, 2008). One explanation could be that this form of organization is already set up to advance social value (Popoviciu L, Popoviciu S.A., 2011: 47). A survey on the use of the term ''social entrepreneurship" in scholarly and non-scholarly publications indicate that 83% employ examples from non-profit organizations, concluding that the social entrepreneurship is a phenomenon associated with the non-profit sector (Taylor, Hobbs, Nilsson, O'Halloran, & Preisser cited in Peredo and McLean, 2006:61). Thus, Romania is part of this general trend in social entrepreneurship area.

Two of the more visible social entrepreneurship initiatives of the Romania non-profit sector are: the Social Economy Institute program, initiated by The Foundation for Civil Society Development as a part of a project financed by European Social Fund, and the "Social Economy Model in Romania" project, co-financed by European Social Fund (this project is a partnership between a NGO, two universities and the United Nations Development Program in Romania).

These projects are not only visible, but they also make a great contribution to the development of social entrepreneurship in Romania. One of the main contributions of those projects is a systematized research on the social economy in Romania. Also, the setup of structures for promoting social economy and social entrepreneurship: Social Economy Institute, social economy incubators, social economy courses and training programs, guides for social enterprises for disadvantaged groups.

The Foundation for Civil Society Development (FCSD) promotes, through Social Economy Institute, the social economy, i.e., in 2011 elaborated, in partnership with other NGO's an NGO's White Paper for social economy sustaining (IES c). It is also actively involved in monitoring other institutional initiatives in this area, the most important being The Law of the Social Entrepreneur and The Social Economy Law. The Law of Social Entrepreneur was proposed in 2010, by a deputy, in order to create a legislative framework for social entrepreneurship activities and to create a special sector of economy: the social economy that promotes the inclusion of disadvantaged and vulnerable groups (EES d). This law project was hardly criticized by FCSD (and other NGO's) for its negative effects on NGO's sector and social economy development as a result of the emphasis on the role of State and private enterprises as social entrepreneurs. The main critics of this law project are: 1) the false premise that in Romania there is no social economy sector; 2) the social entrepreneur is defined as the State and the multinational / national corporations; the NGOs are recognized as social entrepreneurs only as partners of the State or of companies - this approach contradicts the international and European theory and practices in the social economy field; 3) the social entrepreneurship is assimilated to CSR (corporate social responsibility) (IES, 2011).

The Social Economy Law is proposed by the Ministry of Labour, Family, Social Protection and Elderly. FCSD (and other NGOs that it represents) proposed some amendments to the law project and requested a public consultation of the Ministry of Labour, Family, Social Protection and Elderly with all the actors involved in social economy in order to elaborate a common document. The Social Economy Law is still under debate, scheduled for adoption in April 2014 (IES, 2014).

Another important promoter of the social entrepreneurship in Romania is NESsT Foundation. NESsT is an international non-profit organization that began its activities in Romania in 2007. NESsT is a contributor to the development of social enterprises in emerging market economies. The main instrument it employs is the organizing of social enterprise competitions. In addition, the foundation offers consulting, training and financial support for social enterprises (NESsT Romania, 2012: 4, 10). In partnership with PETROM, NESsT, launched in Romania the largest social enterprise competition, with funding of 350.000 EUR: "Fabrica în tara lui Andrei" ((NESsT Romania, 2012: 10; http://www.taraluiandrei.ro/fabricat-in-tla).

Other examples of NGOs involved in social entrepreneurship are: "The Association for Social Intervention and Communitarian Solidarity" (Bucharest), The "Close to You" Foundation (Iasi), the "Travelling Book" Foundation (Focsani) "Romanian Angel Appeal" Foundation (Bucharest), The "New Horizons" Foundation from Lupeni, Hunedoara (Botezatu, 2010), the Association for Community Relations (Asociatia pentru Relatii Comunitare) - develops social and community involvement programs for individuals and different organizations/companies (ARC). In 2006, a portal / (web page) for corporate social responsibility promotion (www.responsabilitatesociala.ro) was created. The portal became a promoter also for the social entrepreneurship practices (http://www.responsabilitatesociala.ro/taguri/antreprenoriat-social.html).

The social entrepreneurship is supported also by the for-profit sector, mainly through the financing of small scale projects or competitions on social entrepreneurship/social innovation. Some of these private enterprises financed (at least partially) such projects, as part of their CSR strategy. For example, Guinness financed a contest on social entrepreneurship projects (CSR, 2010). BRD Groupe Société Générale financially supported the Communitarian Foundation (Cluj) in the "Investments in a Sustainable Future and Equal Chances" project (împarte.ro, 2011). Junior Achievement, financed, in February 2014, a competition on social innovation projects for high school students (Junior Achievement Young Enterprise, 2014) The already mentioned social enterprise competition "Fabricat in tara lui Andrei" is an example for the contribution of actors from the for-profit area. Another example is the creation of a platform for those interested in social entrepreneurship - roPot Community, defined as an incubator and a community of people interested in social entrepreneurship (roPot 2012). The list of these initiatives could be extended, but our main aim is to grasp the phenomenon not to make an extensive review.

The analysis of the social entrepreneurship forms promoted in Romania by the civil society and those promoted by the private enterprises indicate different approaches Thus, a characteristic of the social entrepreneurship promoted by the civil society is the inclusion of the disadvantaged and vulnerable groups; the emphasis is on social needs and social problem solving. The private enterprises seem to emphasize more the business aspect of the social entrepreneurship and its contribution to social innovation. Also, the private sector assimilates, to a certain extent, social entrepreneurship to corporate social responsibility practices.

At macro-institutional level, there are some initiatives in order to support social economy and social entrepreneurship, as the already mentioned Social Economy Law project proposed by the Ministry of Labour, Family, Social Protection and Elderly. Another important initiative is the creation of the biggest social enterprise from Romania, in Câmpia Turzii (Combinatul Social Câmpia Turzii), as a result of a project submitted in December 2012 at the European Commission by the Cluj Territorial Employment Agency (AJOFM Cluj). The project received seven million Euro financing (Femoaga, 2014) and targeted the unemployed persons from the Integrated Iron and Steel Work Mechel Câmpia Turzii (Mediafax, 2013). The project aims to train ex-employees to qualify for the new 300 jobs in the social enterprise (Femoaga, 2014); the employees would become the owners of the social enterprise (Mediafax, 2013). The social enterprise is due to become functional this year, in the sports equipment production industry (Femoaga, 2014).

Conclusion

Although, as in many other countries, there is an increasing interest in social entrepreneurship, Romania did not construct the cultural and institutional mechanisms that are actually needed. At this moment, Romania does not have specific legislation for social economy and social entrepreneurship, only a general framework of regulation and public policy (IES).

At the academic level, there is an increasing interest for social entrepreneurship field, but compared to the commercial entrepreneurship, in the Romanian specialized literature, the social entrepreneurship is rather marginal.

The non-profit sector is the major actor in social entrepreneurship and social economy promotion and development in Romania. This is not a characteristic for Romania, but a worldwide general trend. The analysis of the social entrepreneurship forms promoted by the Romanian civil society and those promoted by the private enterprises indicate a different approach. Thus, a characteristic of the social entrepreneurship promoted by the civil society is the inclusion of the disadvantaged and vulnerable groups; the emphasis is on social needs and social problem solving. The private enterprises seem to emphasize more the business aspect of the social entrepreneurship and its contribution to social innovation. Also, the private sector assimilates, to some extent, the social entrepreneurship to corporate social responsibility practices.

The main conclusion is that in Romania, the social entrepreneurship is in an emerging phase, but of a high interest for the academic area and for practitioners in non-profit and forprofit sector and also for the (social) policy makers.

References

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