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This op-ed piece is part of a series written by Fellows of the Salzburg Global Seminar program “Public Policy New Voices Europe”
This op-ed was written by Hannelore Pourier, Alexander Kuch, and Diana M. Pintér. This op-ed was updated on 20/2/2023 to include examples of social enterprises and references.
Over the past decades, the world around us has changed significantly following various political, technological, economic, socio-cultural, and environmental developments [1, 2, 3]. While some of these developments have benefitted our societies greatly, others did the contrary.
Profound social challenges affecting most countries include social exclusion, fragmentation and polarization, poverty, unemployment, gender inequalities, and growing wealth and health disparities [2, 4, 5]. These problems result in societies not being inclusive or cohesive. This situation is problematic and runs counter to the public policy ideal of creating inclusive societies [5, 6].
Following the 1995 United Nations World Summit for Social Development, an inclusive society was defined as “a society for all in which every individual, each with rights and responsibilities, has an active role to play.” Such a society “over-rides differences of race, gender, class, generation and geography, and ensures equal opportunities for all to achieve full potential in life, regardless of origin [7]."
The social challenges often termed “wicked problems” stress the shortcomings of the public, private, and civil sectors to deal with such challenges [8, 9]. As such, a profound disconnect appears to exist between prevailing approaches and structures to problem resolution and those necessary to face wicked problems [8, 10].
To address “wicked problems” effectively or, at the very least, manage them, we need more dynamic and innovative strategies [11]. It is against this backdrop that social innovation (SI) and social entrepreneurship (SE) have received increasing attention over the past years [8, 9].
There are numerous definitions of SI. Common themes and features that the definitions share include the explicit aim of addressing a social need, novelty, processes involving multiple stages and phases, cross-sectoral, grassroots, changed social relations and resilience.
According to the Young Foundation, “Social innovations are new solutions (products, services, models, markets, processes etc.) that simultaneously meet a social need (more effectively than existing solutions) and lead to new or improved capabilities and relationships and better use of assets and resources. In other words, social innovations are both good for society and enhance society’s capacity to act.”
Various actors can drive the SI processes, and these actors can also come from any sector [8, 12]. In this article, we focus on social entrepreneurs as drivers of SI processes. 
Just like SI, SE is defined in many ways. One way SE can be understood is as a process in which socially oriented individuals – social entrepreneurs – devise innovative solutions and use entrepreneurial and market-oriented approaches to start and develop socially oriented organizations – social enterprises – to leverage social change [9, 13, 14, 15, 16]. Here are two examples:
Chatterbox is a social enterprise that started as an online language school, helping marginalized professionals find their way back to the workforce. The initial idea was that refugees could become language coaches in their mother tongue. Silicon Valley investors then backed Chatterbox, which has since become an online language-learning platform.
This enterprise is inclusive in many ways. It offers affordable classes from anywhere in the world, creates jobs for people from disadvantaged backgrounds, and helps refugees to integrate and have meaningful work again.
Matyodesign is a sustainable business that creates handmade products while providing work to older women in Tard, a small northeast Hungarian village and UNESCO World Heritage Site.
This enterprise has existed for more than 10 years now. It employs 27 women, keeps the Matyo culture alive, educates people through guided tours, and creates jobs for women in their hometown.
It is important to add that, as you can see in the examples above, SE is fundamentally about creating social value instead of wealth. Profit is perceived as a means, not as its main end [9, 14].
The emergence and ability of SE to flourish is highly context specific. Some environments or ecosystems are more conducive and supportive of SE than others. The differences can be explained by differences in the configuration of formal and informal institutions (e.g., government institutions, norms, and values) [17, 18, 19, 20]
Social entrepreneurs frequently encounter problems related to a lack of financial resources, limited market access, restricted skill sets, and regulatory barriers [21, 22, 23].
Governments can play essential roles in helping social entrepreneurs overcome such barriers, given their formal power and ability to exert influence on formal and informal institutional arrangements [20, 24, 25, 26]. This, in turn, calls on public policymakers to design and create specific SE public policies [19, 20, 27].
Public policymakers can use various policy instruments to support SE and create supportive environments. Examples include tailor-made legal forms, social impact bonds, social procurement, public campaigns, and education (see below for a more elaborate list of policy instruments).
Aside from targeting social entrepreneurs and their respective social enterprises, policy instruments for supporting SE also target different stakeholders in the SE environment, such as government institutions, corporate companies, and the public.
Overall, policy instruments for SE are aimed at leveraging social entrepreneurial intentions and promoting the legitimacy, recognition, credibility, visibility, and sustainability of SE and social enterprises [28].
When designing the SE policy instrument mix, it is essential to ensure a context-specific approach. As has just been explained, the contexts within which SE is embedded and unfolds differ, with differences also evident in the extent to which these contexts promote or hinder SE. Due to these contextual differences, SE instrument mixes can be designed in different ways.
For that matter, a one-size-fits-all SE instrument mix does not exist. To ensure that the instrument mix is relevant to the time, place, and people, it is essential that public policymakers acquire a thorough understanding of their respective context, establish baseline SE ecosystem conditions, benchmark, and evaluate existing SE policy frameworks (if any) and collect any best policy practices.
In addition to taking a context-specific approach, it is important that the instrument mix selected is consistent as well as comprehensive. This implies that the policy instruments positively interact with one another and address all the different domains that comprise a supportive SE ecosystem. The latter is important since ecosystem domains are interconnected. The ecosystem domains typically include legislation and regulation, finance, markets, culture, human capital, support services and structures, and research and impact [28].
It is essential that SE policies are rooted in and supported by strong formal institutional frameworks. Such frameworks set out clear operational definitions, strategies, action plans, and programs and enjoy strong and sustainable support from institutional bodies (e.g., statutory bodies and public agencies) and political parties and networks. Strong formal institutional frameworks are furthermore coherent, transparent, and inclusive.
Horizontal and vertical policy coherence is essential because social enterprises frequently operate across policy domains and policy development is often decentralized to the lower levels of government. This, hence, demands effective communication channels among the different levels of government. Transparency about policy objectives and policy processes is essential for leveraging institutional legitimacy and reinforcing coherency.
Finally, inclusivity assures that SE policies consider and reflect the views and perspectives of SE ecosystem stakeholders. To this end, it is essential to develop, implement, monitor, and evaluate SE policies through stakeholder consultation and engagement processes [28].
Learn more by watching our pitch for the policy challenge: “Social Innovation”
The information and views set out in this article are those of the author and do not necessarily reflect the official opinion of the European Commission.
Sections/parts of the text above are excerpted from Hannelore’s bachelor’s and master’s thesis. See references below.