Social Economy Organizations Questioned on Their Economic Model

The PACTE law (Plan of action for the growth and the transformation), recently adopted by French parliament, highlights on the “social interest” and “raison d’être” of enterprise, to mainly response to its negative and recurrent role as well as environmental and social impacts. A few years earlier, the law in 2014 on social economy had put forward two major principles to define social economy: “another goal rather than only sharing profits” and a “democratic governance”. The advantage granted to democratic governance to define social economy in justifying the questionings on their governance model under a difficult economic and social context.

Is the enterprise in the process of transforming to become social? Nothing is for sure. The ambiguity of the PACTE Law causes concerns. The solidarity generally remains as an untought of the organization theory. Finally, the surprise is a shortage of references on successful experiences as well as on the failures of social economy investing in these fields since the second half of the 19th century. Whether associations (with salaried workers or not), cooperative or mutual organizations… entirely concern about the modalities of their governance in a context characterized by both competition and the decline of public funding, while on the other hand, the State relies precisely on associations to develop support actions which should be undertaken by government. The issue concerns about using management tools and the definition of performance criteria is in the agenda.

By this way, it is legitimate to question an apparent contradiction between two movements: that of the enterprise which currently shows an increasing “social interest” and that of the association which must be more and more “entrepreneurial” and efficient.  The transformation of enterprises (with lucrative goal) and social economy organizations takes place in the global evolution of capitalism and of labour organization, characterized by the increase of social inequalities. The State leaves to the associations to manage disastrous resulting social effects. The State, indeed, governs the association organizations, such as the particular case with Dispositif Local d’Accompagnement (DLA), a public policy which offers management advice to employers’ associations to be professionalized.

If the social economy organizations has persisted or even developed and become more complex up to the present day, regardless of a persistent context of mistrust and sometimes strong hostilities, it is because it offers useful and even necessary answerers and meet an evident social need. That is so-called “social innovation” which the OECD defines as “the research of new responses to a social problem”, takes various forms to support professional integration for “persons in situation of fragility”, to reuse words of the law in 2014. We can give the example about the cooperatives of activity and employment which tend to facilitate professional integration of job seekers by combining entrepreneurship and salary of workers, thereby reducing the risk inherent in creating a business. Moreover, in the context of the Uber economy, sharing economy and development of digital platforms, synonymous with difficult working conditions, the formation of start-ups, sometime under a form of cooperative organization, to supply new services. These social enterprises prefer their social mission rather than profit goal, taking place on various activities, such as crowdfunding, training professional integration for job seekers, delivering cheap meals, recycling, sharing goods/services, and cultivating a vegetable garden.

The desired goal of doing something different drives the entrepreneurs of ESS to develop various innovations activities (organizational, goods and services, process). They also redefine their internal and external governance to not only offer new goods and services that meet requirements of consumers or users, but also to access new funding sources, such as crowdfunding. Thus what is the main objective pursued by the founder of a SCOP, whereas its managers are elected by the associated-workers according the following principle: “one person = one vote”? The modalities of governance and the relationships between workers and managers are specific, because strategic decisions are taken in a concerted manner. The profit goal becomes secondary, the willingness/desire to serve a social cause, to work for the common well-being, on the contrary, becomes an operation engine of social enterprise.

Under context of fierce global competition, the management of these enterprises, with a strong concern in developing good working conditions for workers, can be difficult to achieve. Thus, an enterprise can be social only if it contributes to the emancipation of their all stakeholders. Such is the initial challenge for enterprises of social economy.

By

Sophie Boutillier – Université du Littoral-Côte d’Opale

Jacques Defourny – Université de Liège

Henry Noguès – Université de Nantes

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Market & Organizations

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