Author: Savannah D. Dodd
This document is the result of research by Savannah D. Dodd, a research associate at Queen’s University Belfast for WFTO-Asia. It aims to understand how countries apply Social Entrepreneur terms in the development of their societies, so that these can be related to Fair Trade terminology. This understanding provides a valuable tool in facilitating the communications around Fair Trade, Social Entrepreneurship and Social Enterprise.

 

Chapter 1: Social Economy in Republic of Korea (South)

 

1. Legal concept of Social Enterprise in Republic of Korea (South)

2014 Inaugural Meeting of the Global Social Economy Forum (GSEF 2014) was held in Seoul. A GSEF charter was unanimously adopted as a result of the forum. Korea has a Social Enterprise Promotion Act enacted by Act No. 8217, Jan. 3, 2007 and amended by Act No. 8361, Apr. 11, 2007.

Legal concept of a social enterprise (as per Article 2 of the Law on the Promotion of Social Enterprises):

“The term ‘Social enterprise’ used in this Act means an organization which is engaged in business activities of producing and selling goods and services while pursuing a social purpose of enhancing the quality of local residents’ life by means of providing social services and creating jobs for the disadvantaged, as an enterprise certified according to the requirements prescribed in Article 7;”

2. Five types of social enterprise in Korea [1]:

Job-creation Type: The main purpose of the enterprise is to offer jobs to vulnerable social groups

Social Service Provision Type: The main purpose of the enterprise is to provide vulnerable social groups with social services.

Mixed Type: Job-creation Type + Social Service Provision Type

Other Types: A social enterprise of which realization of social purposes is difficult to judge on the basis of the ratio of employment or provision of social service.

Local Community Contribution Type: An enterprise which contribute to the improvement in the quality of life of the local community. (newly defined in 2011)

3. Seoul Metropolitan Government on SE [2]:

 “Social economy refers to the economy system for various subjects such as social enterprise, co-op, self-supported enterprise, town enterprise, etc., created on the foundation of cooperation and reciprocity to realize social values including improving the quality of life, overcoming poverty and alienation, etc.

4. Seoul Metropolitan Government’s “Seoul-type social enterprise”:

 “Seoul-type social enterprise is a potential social enterprise that works with the goal of providing social service with high growth possibilities and profit making as well as realization of social goals but has yet to meet the certification conditions of the employment/labor department.”

Vision: Forming a sustainable social economy ecosystem

Goals: Ratio of social economy at 2% against GRDP and 8% against total employment

Area of Focus: Establishing a systematic intermediary support system, Customized general support for each development stage, Expanding the public realm consumer market, Establishing the foundation for local community-oriented cooperative ecosystem, Establishing public/governmental network for cooperation and communication

Grounds of Pursuit: Local community-based, citizen-led method

5. Korean Social Enterprise Promotion Agency’s (KoSEA) definition of SE:[3]

“A company or organization which performs business activities while putting priority on the pursuit of social purposes.”

Examples of social purpose:

  • Offer jobs or social services to vulnerable social groups. (vulnerable social groups: low-income brackets, the aged, the handicapped, victims of prostitution, long-term jobless, women with severed career, etc.)
  • Promote development of local community and public interest.
  • Promote democratic decision-making process (with the participation of stakeholders including the recipients of services, workers and local residents).
  • Reinvest profits for the realization of social purposes. (a corporation according to commercial law: more than â…” of profits)

Examples of business activities:

  • Various types of organization are recognized including no-profit incorporation and organization, cooperative and companies as stipulated by commercial law.
  • Employs paid workers.
  • Profits made by business activities should be more than 30% of the labor (personnel) cost.

6. Buzz words in social economy in Republic of Korea (South):

Organization, enterprise, company, business activities, producing and selling goods and services, social purpose, social services, local community, creating jobs, social values, high growth, profit making, citizen-led, community development. public interest, democratic, reinvest profits

 

Chapter 2: Social Economy in Sri Lanka

 

1. Concept of Social Enterprise in Sri Lanka[4]

Social Enterprise sector in Sri Lanka is in its early stages of development. We estimate there are at least 1,000 entities in Sri Lanka which can be recognised as social enterprises. Although a few companies identify themselves as social enterprises, many others do not even know they may be running a social enterprise. Most social enterprises are at start-up stage, while more and more charities are being transformed into social enterprises.

Social Enterprise Lanka: “Our purpose is to build a thriving social enterprise sector in Sri Lanka by 2025.”

“Sustainability of any organisation depends on its ability to generate social-environmental impact and profit.”

– Eranda Ginige (Founder of Social Enterprise Lanka)

2. Implications incorporated to SE in Sri Lanka[5]

Positive socio-environmental impact + profit

The aim is for 65% to be reinvested, but 51% meets the requirements.

3. Buzz words in social economy in Sri Lanka

Sustainability, profit, reinvest, self-sustaining, social or environmental problem

social or environmental impact,

 

Chapter 3: Social Economy in Thailand

 

1. Thai Social Enterprise Office (TESO) and Financial Support[6]

The Thai Social Enterprise Office (TSEO) is an intermediary organization that facilitates the movement and expansion of social enterprise in Thailand. It was established in 2010 under the Thai Health Promotion Foundation Act. TSEO is delivering the country’s Social Enterprise Master Plan and has launched a 1 billion Baht fund (£18 million) to raise money from the public to finance operations of social entrepreneurs.

2. Definition of Social Enterprise

According to Thai Social Enterprise Office (TSEO)[7]:

A social enterprise is a business or an organization set up to tackle social and environmental issues. The main income is from a trade or service (rather than donations) to establish a self-sufficient financial model.  Profits are reinvested in order to achieve social objectives.

3. Social Enterprise in Business Models

Appears in the middle of the spectrum of business models:

In his thesis titled “Legal Entity for Social Enterprise,” Park Kanjanapaibul outlines the SE definition offered by the Thai government:

A business which has a clear objective to develop a community by solving its social or environmental problems is called social enterprise. It must have central revenue for producing a service or product which is parallel to its social objective and must not concentrate solely on maximizing profit for its partners or stakeholders.

4. Social Enterprise in Legislation

Kanjanapaibul also outlines the SE definition offered in the legislation on the National Promotion of Social Enterprises[8]:

An act of a private sector, which is a person, a group of persons, or a community, operating or carrying out businesses with initially the express purpose of addressing problems and developing a community, society, or environment, and generating revenue by selling goods or providing services not with the primary object of maximizing profit for its shareholders or owners. It has the following specific attributes:

  • Undertaking a manufacture or other operations which do not adversely affect health, society and environment in the long-term
  • Applying a doctrine of self-sufficiency
  • Have the potential to have its own financial stability
  • Accumulating revenue principally from businesses or operations carried out to further a purpose of addressing problems and develop communities, societies or environments, or returning benefits to societies
  • Possessing the capacity to be in a variety of organizational forms
  • Exercising a good governance

5. Criteria of Social Enterprise

Kanjanapaibul further describes criteria of SE:

Economic Criteria:

  • A continuous activity producing goods and/or selling services
  • A high degree of autonomy
  • A significant level of economic risk
  • A minimum amount of paid work

Social Criteria:

  • An explicit aim to benefit the community
  • An initiative launched by a group of citizens
  • A decision-making power not based on capital ownership
  • A participatory nature, which involves the various parties affected by the activity
  • A limited profit distribution

Three further criteria by the EMES (the Social Enterprise Coalition):

  • Enterprise orientation
  • Social aims
  • Social ownership

6. Social Enterprise Master Plan: Three strategies

The Social Enterprise Master Plan, according to Kanjanapaibul, has three strategies:

  • Creation of perception and understanding of social enterprises in Thailand
  • Development of structure and capability of social enterprise
  • Development of path to capital and resources for social enterprises

7. Buzz words in social economy in Thailand:

Business or organization, private sector, social or environmental issues, goods or services, self-sufficient, social objectives, revenue producing, financial stability, focus on community, society, and/or environment, autonomy, participatory, ownership


Chapter 4: Social Enterprise in the Philippines

 

1. Fair Trade and Social Enterprise in Legislation

In House Bill no. 6085, both Fair Trade and Social Enterprise are defined in Chapter 2, Section 3:

Fair Trade

  • Fair trade shall refer to a trading partnership based on dialogue, transparency and respect and which seeks greater equity in international trade and the transformation and adaptation of trading structures and practices in favor of the poor and disadvantaged by offering better trading conditions to, and securing the rights of, marginalized producers and workers;
  • Fair trade organizations shall mean enterprises certified by internationally and nationally recognized Fair Trade networks;
  • Fair trade principles refer to the values adopted by fair trade organizations in their day-to-day operation. These include creating opportunities for economically disadvantaged producers; transparency and accountability; payment of a fair price; ensuring no child labor and forced labor; commitment to non-discrimination, gender equity and freedom of association; ensuring good working conditions; providing capacity building; and, respect for the environment;

Provided here only to show that the state definition of fair trade is parallel to the WFTO Fair Trade definition

Social Enterprise

  • Social Enterprise or SE refers to an organization, whether an association, single proprietorship, partnership, corporation, or a cooperative, whose primary stakeholders and/or beneficiaries are marginalized sectors of society, engaged in providing goods and services that are directly related to its mission of improving societal well-being. It is established to achieve multiple bottom lines such as financial, social and ecological. It generates profit or surplus with due regard to social and environmental costs, and makes a pro-active contribution to resolving social and environmental problems. A SE, for purposes of this Act, shall principally mean a SEPPS;
  • Social entrepreneur refers to an innovative individual or institution that promotes the creation and operationalization of enterprises or livelihood endeavors for those in need or which address social problems and improve societal well-being;
  • Social entrepreneurship entails innovations designed to explicitly improve societal well-being, housed within entrepreneurial organizations, which initiate, guide or contribute to change in society;

2. British Council Study on the Philippines uses four definitions:

  • The UK government defines social enterprise as: “a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.”
  • The British Council defines social enterprises as “businesses that exist to address social and environment needs, [and] focus on reinvesting earnings into the business and/or the community.”
  • ODI work on social enterprise has looked at social enterprises as hybrid business models, operating in sub-sector niches where state, private and charity sectors do not or cannot reach (Smith & Darko, 2014; Griffin-El & Darko, 2014; Vu et al, 2014).
  • The recently proposed social enterprise bill in the Philippines was drafted by a coalition of stakeholders, one of whom is the Institute of Social Enterpreneurship in Asia (ISEA), which – through the leadership of Dr Lisa Dacanay – has developed a definition of what it deems to
be the most important form of social enterprise for inclusive and sustainable development: a social enterprise with the poor as primary stakeholders (SEPPS). A SEPPS is a “social mission- driven wealth creating organisation that has a double or triple bottom line (social, financial, environmental), explicitly has as a principle objective poverty reduction/alleviation or improving the quality of life of specific segments of the poor, and has a distributive enterprise philosophy.”

3. Information from Rad Saringan in regards to Social Enterprise:

  • Civil society. I have attached a link which discusses it and how it is important as a stakeholder in the whole SE ecosystem.
  • Civil Society in Asian Development Bank[9]

“Civil society is an important stakeholder in the operations of the Asian Development Bank (ADB) and its borrowers and clients. It is distinct from the government and the private sector and consists of a diverse range of individuals, groups, and nonprofit organizations. They operate around shared interests, purposes, and values with a varying degree of formality and encompass a diverse range – from informal unorganized community groups to large international labor union organizations. Of particular relevance to ADB are nongovernment organizations, community-based organizations and people’s organizations, foundations, professional associations, research institutes and universities, labor unions, mass organizations, social movements, and coalitions and networks of civil society organizations (CSOs) and umbrella organizations.”

  • Micro, Small and Medium Enterprise – MSMEs[10]

Most social enterprise and foundations belong to this group. I have attached a link from the Senate of the Philippine to refer to this sector. In fact, the APEC was just held in the Philippines recently with MSME as a focal point of discussion. But I believe not much has been done yet to improve this sector in the Philippines because of so many factors. I own to small businesses and corruption and red tape still happens in the government during the registration process.

4. Buzz words in social economy in the Philippines:

Organization (an association, single proprietorship, partnership, corporation, or a cooperative),   marginalized sectors of society, providing goods and services, mission of improving societal well-being, profit or surplus, acknowledges social and environmental costs, addresses social or environmental needs, contribution to resolving social and environmental problems, innovations, entrepreneurship, change in society, reinvest earnings into the business or community, the poor as primary stakeholders, wealth creating (profit-making), poverty reduction or alleviation, improving the quality of life, distributive enterprise, civil society, Micro, Small, and Medium Enterprise (MSMEs)

Chapter 5: Social Enterprise in the Vietnam

 

1. Social Enterprise Law in Vietnam

 “Under article 10 of the Law on Enterprise, there are three main characteristics distinguishing a social enterprise from a company of other types. These are: (i) being established under the Law on Enterprise, (ii) its objective is to resolve social or environmental issues for the interests of the community, and (iii) at least 51 per cent of its profits must be re-invested to accomplish its social and environmental objectives as registered.”[11]

 2. Rights and Obligations of Social Enterprises

Article 10 on Criteria, rights and obligations of social enterprises (passed in November 2014), verbatim:[12]

Every social enterprise must satisfy the following criteria:

a) The enterprise is registered in accordance with this Law;

b) The enterprise’s objective is to resolve social, environmental problems, or to serve public interests;

c) At least 51% of annual profit is used for reinvestment in order to serve the social, environmental purposes as registered.

Apart from the rights and obligations of enterprises prescribed in this Law, social enterprises also have the following rights and obligations:

a) Maintain the objectives and conditions prescribed in Point b and Point c Clause 1 of this Article throughout the operation; any operating enterprise that wishes to convert into a social enterprise, and any social enterprise that wishes to stop operating as a social enterprise shall notify the competent authority to complete necessary procedures;

b) Owners and managers of social enterprises shall be enabled to obtain licenses and relevant certificates as prescribed by law.

c) Seek and receive sponsorships from other individuals, enterprises, non-governmental organizations, other Vietnamese and foreign organizations to cover administrative expense and operating costs of the enterprise;

d) Do not use the sponsorships for purposes other than covering administrative expense and operating costs or resolving social, environmental issues registered by the enterprise;

e) Submit annual reports on the enterprise’s operation to the competent authority when receiving incentives or support.

  • The State shall introduce policies to encourage, support, and boosts the development of social enterprises.
  • The Government shall elaborate this Article

3. Definition of Social Enterprise in Center for Social Initiatives Promotion (CSIP)

Centre for Social Initiatives Promotion (CSIP) uses the definition of SE from Virtue Venture: [13]

Social Enterprise is a “social–oriented venture (not-for-profit/for-profit or hybrid) created to solve a social problem or market failure through entrepreneurial private-sector approaches that increase effectiveness and sustainability while ultimately creating social benefit or change”. Virtue Venture, 2010

CSIP looks for three characteristics when selecting SEs to support:[14]

Social impact: what is the social issue they address and what is the level of impact they can contribute?

People: are they strong leaders, do they have entrepreneurial spirit and capacity to build the organization?

Business model: is it vibrant and visible? Is the business model workable and will it actually help the organization achieve its mission? How do they manage generating financial income and social value? There needs to be a balance.

CSIP also offers indicators to differentiate between a Social Entrepreneur and a charitable or social activist:

Innovation: SEs are usually those who bring new products, services, or approaches to address the root causes of a specific social or environmental problem rather than those who merely deliver services to a certain community that are already developed.

Results: SEs are usually never content with their initial small-scale models but are those who will insist on going to “the end of the road” to develop their model and serve the larger market.

Direct action: SEs are directly involved in solving a social problem. They rarely get cold feet, daring to take risks to achieve their goals.

4. Buzz words in social economy in Vietnam:

Resolve social or environmental issues for community, re-invest at least 51% of profits, seeks sponsorships, social-oriented, nonprofit, for profit, or hybrid, social benefit, change, or value, private-sector, business model, generate income, capacity, innovation, large market, direct action

Reference

 

[1] “What is Social Enterprise?” Korean Social Enterprise Promotion Agency, http://www.socialenterprise.or.kr/eng/info/What_is.do

[2] “Social Economy,” Seoul Metropolitan Government, http://english.seoul.go.kr/policy-information/economy/social-economy/1-social-economy/

[3] “What is Social Enterprise?” Korean Social Enterprise Promotion Agency, http://www.socialenterprise.or.kr/eng/info/What_is.do

[4] http://socialenterprise.lk/

[5] https://wearesocialstarters.wordpress.com/2016/01/14/how-do-you-define-social-enterprise-in-sri-lanka/

[6] TSEO Website: http://www.tseo.or.th

[7] Thai Social Enterprise Office (TSEO), Asia-Pacific Economic Cooperation,

http://www.we-apec.com/directory/thai-social-enterprise-office-tseo

[8] Park Kanjanapaibul, Thesis on legal frameworks for social enterprise from Thammasat University, 2011, Chapter 2, ‘Conceptual and Legal Frameworks of Social Enterprise,’ http://digi.library.tu.ac.th/thesis/la/1702/03chapter2.pdf

[9] Civil Society in ADB: www.adb.org/publications/civil-society-briefs-philippines

[10] MSME Sector at a glance: www.senate.gov.ph/publications/AG%202012-03%20-%20MSME.pdf

[11] “New laws promote social enterprises in Viet Nam,” Viet Nam News, 16 Dec 2015, http://vietnamnews.vn/economy/279915/new-laws-promote-social-enterprises-in-viet-nam.html

[12] “Vietnam Enterprise Law 2014,” Vietnam Law in English, http://vietnamlawenglish.blogspot.com/2015/05/vietnam-enterprise-law-2014.html

[13] “Frequently Asked Questions,” CSIP, http://csip.vn/en/faq

[14] “7 Questions on Growing Social Enterprises in Vietnam,” KIVA, 16 May 2013, http://fellowsblog.kiva.org/fellowsblog/2013/05/16/7-questions-on-growing-social-enterprises-in-vietnam

 

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