Innovation and Social Entrepreneurship: Principles, Ownership, and Impact

INNOVATION: INNOVATION: case of social social enterprises the the case of enterprises TAIEX Workshop on Social Entrepreneurship for the Promotion of Employment Simo Mannila, 12-13 April 2018, Kyiv

Some Some principles principles of of innovation innovation In economics, management science, and other fields of practice and analysis, innovation is generally considered to be the result of a process that brings together various novel ideas in a way that they affect society > there is implementation Innovation is always relative: it can be transfer of an already existing practice in time, or space; it can be redefinition of the target group or stakeholders; it can be a new combination of already existing practice Why we need the innovation for social entrepreneurship: human rights, social inclusion, economy Who has the ownership? Partnerships needed (NGOs, private sector), but ultimately the responsibility remains with the public sector. What about the clients? Users? Social order required, and it must be transferable to politics and policy-making Innovation or imitation? Imitation is quicker, if it is possible! International and internal experience gives perspectives and models (good and bad cases): study tours, fact-finding, internet search as innovation tools not to be neglected

Social Social enterprise enterprise - - EU definition EU definition A social enterprise is an operator in the social economy whose main objective is to have a social impact rather than make a profit for their owners or shareholders. (SM: not-for profit, not necessarily non-profit) It operates by providing goods and services for the market in an entrepreneurial and innovative fashion and uses its profits primarily to achieve social objectives. It is managed in an open and responsible manner and, in particular, involves employees, consumers and stakeholders affected by its commercial activities. The Commission uses the term 'social enterprise' to cover the following types of business: Those for whom the social or societal objective of the common good is the reason for the commercial activity, often in the form of a high level of social innovation. Those where profits are mainly reinvested with a view to achieving this social objective. Those where the method of organisation or ownership system reflects the enterprise's mission, using democratic or participatory principles or focusing on social justice. There is no single legal form for social enterprises. Many operate in the form of social cooperatives, some are registered as private companies limited by guarantee, some are mutual, and a lot of them are no-profit-distributing organisations like provident societies, associations, voluntary organisations, charities or foundations. SM: social enterprises are not-for-profit and they can be owned by local governments, associations or foundations

Social Social firms firms CEFEC definition CEFEC definition Social Firms are one type of social enterprise; their specific social purpose is to create sustainable paid employment for people who are either disabled or severely disadvantaged in the labour market. These are businesses that use their market- orientated production of goods or services to achieve their social mission and they exist all over Europe, albeit at different stages of development and with different levels of intervention/recognition/legal status. It is cheaper for any government to have people with severe disadvantages in work than out of work for the rest of their lives. The ethos of Social Firms is to CREATE the jobs that can be filled by people with severe disadvantages by employers that understand their support needs and who are committed to this objective. SM: focus on disability or severe disadvantages i.e. people who cannot be transferred into open competitive labour market? Clear focus on market-oriented production.

Key Key criterion criterion of of social social enterprises enterprises At least 30% of the enterprise staff must come from disadvantaged groups; equal staff conditions How to define disadvantage > together with e.g. employment and social services (mandatory?) Social enterprises often specialize on certain types of disadvantages, e.g. persons with mental ill-health (e.g. the UK example); visually impaired; deaf etc. However, in smaller communities the target group is usually more mixed (the only option available locally)

On On target target groups groups and and stakeholders stakeholders Potential target groups: persons with disabilities; persons with intellectual disabilities; persons with mental ill-health; alcohol & drug addicts; unqualified youth; long-term immigrants and some ethnic minorities Public bodies: several bodies often in charge for the services of the one potential target group > cross-administrative cooperation needed for success Other stakeholders, potential owners of the innovation to be included: professionals, staff, relatives, NGOs (?) who would be the agents of the innovation, and are there vested interests e.g. of staff? unemployed persons;

Some Some key key problems problems of of social social enterprises enterprises Key problem 1 the working conditions and pay of the disadvantaged workers vs. others > turnover i.e. how to keep qualified staff; permanent vs. transitory jobs > international cooperation and learning a solution? Key problem 2 - how to fund the wages and salaries i.e. what are the public support schemes to compensate lower productivity (availability; alternatives to social enterprises; competition) Key problem 3: - flexibility and reliability of the work organization (work time, replacement etc.), the constraints of the law and the markets? > All these issues require some innovative solutions, maybe trials and errors potential impact on business

Innovation Innovation base base for for social social enterprises enterprises Sheltered workshops or work centres to be reformed to be more social and businesslike? Day centres, work activities for special groups to be developed further towards work? New steps and pathways to be built into vocational rehabilitation schemes for persons with disabilities? Or are we speaking about something completely new in the country context? What is the benefit system like can the existing benefits be utilized? should they be adjusted or should there be new ones? how to overcome benefit traps?

Sheltered Sheltered workshops workshops ( (work for for innovation Sheltered work has a negative image, considered outdated and not enough social Feasibility study or market research, business plans needed: what can a social enterprise produce, can the products or services be sold, to whom? what about funding, how much and from where any changes needed? how to guarantee its financial and institutional sustainability, with or without changes? What are the working conditions? Surveys among the clients (and their relatives?); is there a possibility for development, acquiring new skills Work organisation and working time: how to organise part-time or periodic work keeping the businesslike character of work Decentralizing the workshops, staff rent? Linking them with various steps of rehabilitation Decency of work and pay work as a source of pride; various pay schemes and their legitimacy Links with the customers local government? NGOs? private business? Other stakeholders? work centres centres) ) innovation

Day Day centres centres, , work work activities activities and and rehabilitation rehabilitation Introducing work as useful activity (making food, teaching ICT skills etc.) and proceeding towards business planning Analyzing the premises and organisation > what would be the working conditions? how to integrate paid work into the daily operations and provide for equality Integrating day centres and work activities in the (vocational, social) rehabilitative processes > social enterprises, transitional and permanent jobs Social entrepreneurship would link day centres and work activities with the social environment > social inclusion (also a precondition for success) Macro level requirement: integrating disability (etc. social) policy with employment policy

Introducing Introducing social social enterprises enterprises in Finland in Finland One element for updating service repertoire for disadvantaged persons (other new elements to be introduced in the 1990s supported employment, clubhouses) Legal and institutional background: developed system of vocational rehabilitation, subsizided employment (vs. labour workshops, special work activity scheme for persons with intellectual disabilities Reform motivation: linking social purposes with EU employment targets First key target groups persons with mental ill-health and those with intellectual disabilities Largely ESF-financed cooperation nationally and internationally, starting in the 1990s; transnational programmes a key funding instrument, the UK and Italian experience Major projects, nationally coordinated, with tens of local players across the country (local govt s, NGOs, few businesses) > allowing for local differences, providing dissemination of good practice, capacity of international cooperation Study tours nationally and internationally, ICT important for networking market training), various sheltered

Supporting Supporting social social enterprises enterprises in Finland in Finland Literature: international review 1996; first doctoral dissertation 2006; a great deal of applied research (e.g. on alternative costs) International integration (CEFEC + bilateral links), new organizations, e.g. VATES Foundation (www.vates.fi), new emphasis of already existing organizations (Central Association of Mental Health) Reform of sheltered workshops into social enterprises; new enterprises launched by local key players in the field of disability mainly, linked with further development of rehabilitation National legislation defining social enterprises, first launched in 2003 responsible body the Ministry of Employment and the Economy The concept of intermediate (or transitory) labour market (project-funded) for dissemination of good practice, under the Ministry of Employment and the Economy (co- responsibility with the Ministry of Social Affairs and Health), 2008-2011 Reform boom passed, the concept did not spread well, now critical attitudes towards social enterprises vs. other forms of supporting social inclusion of disadvantaged groups or persons; new legislation expected, linked with a major regional reform in Finland

Some Some final final comments comments Introducing a successful innovation requires commitment and good management skills General management training on how to run innovations would be useful Finnish view: social enterprises can only be succesful if they are as much enterprises as they are social ( social firm approach) there are other means of helping disadvantaged people, too (if not, they must be developed) is this correct? Stakeholder relations of key importance for success, and general societal atmosphere bears a strong influence (also through local unemployment rate ) Innovation is usually a stepwise process and it always takes time: adjustments needed usually with the whole system (attitudes, skills, benefit schemes, obligations vs. duties, institutions) > patience and quick wins are both important Research and monitoring & evaluation necessary Legislation needed, but not enough: implementation can be started by projects, if the administrative culture allows for it: besides normative steering there is also financial steering and information steering

Thank Thank you you! (to ! (to be be continued continued ) )