THE SOCIAL ECONOMY

The Social Economy in Scotland is growing and

developing. It is composed of a diverse range of

organisations that exist between the traditional private

sector on the one hand and the public sector on the

other.

Within the social economy there is an emerging ‘social

enterprise sector’ which is distinguished by a focus on

enterprise creation through the use of business

principles for a social purpose.

UNDERSTANDING SOCIAL ENTERPRISE

Social Enterprise – A Social Enterprise is a

competitive business that has many similar

characteristics to an SME. The main difference is a

Social Enterprise trades in the market in order to fulfil

social aims. They bring people and communities

together for economic development and social gain.

Social Enterprise London (SEL) have identified three

common characteristics of social enterprises:

■ Enterprise Oriented – Seeking to be viable

trading concerns.

■ Social Aims – Explicit social or ethical aims such as

job creation, training, providing local services,

environmental impact.

■ Social Ownership – Governance structures based

on participation by stakeholders (users, clients,

community groups) or by Trustees.

Examples of social enterprises are Credit Unions,

Co-operatives, Community Businesses, Intermediate

Labour Market Companies, Development Trusts,

Social Firms. (For more information see

www.sel.org.uk)

SOCIAL FIRMS SCOTLAND

Research carried out within the Social Firms Scotland

network identified a range of organisations that are

part of this emerging social enterprise sector.

Social Firm – A Social Firm is a business that provides

employment opportunities for people who are disabled

or disadvantaged in the labour market. The key

characteristics of a social firm are:

■ Income Generation – At least 50% of the income

generated will come through sales of goods or

services in the market.

■ Integration – A significant number of the

employees (at least 25%) will be people with a

disability who are integrated into the staff of the

business and employed on the same terms and

conditions as other non-disabled staff, having the

same rights and responsibilities.

Social firm development in Europe and the UK has

focused on people with a disability. This is due in part

to the high levels of employment exclusion

experienced by this group (particularly people with

mental health problems or learning difficulties). Social

Firms Scotland recognise that there is a growth of

interest in developing social firms to provide

SOCIAL FIRMS AND THE SOCIAL ECONOMY

“We….believe that there is an opportunity for Scotland to forge ahead in the creation of social firms. We believe

they offer a unique mix of social and economic benefits not just to the people who have additional support needs

but to the whole community. In every sense, a social firm offers a ‘real’ job. That is what so many….people want”

Implementing Inclusiveness: Realising Potential (The Beattie Committee Report)

employment opportunities for people who are

disadvantaged in the labour market through having

high support needs (for example, people with problem

drug use, people with a history of homelessness, etc).

Emerging Social Firm – An emerging social firm is a

business or project, which aspires to become a social

firm but have not reached targets in terms of

employment of disabled people or generating sufficient

sales income.

Social Co-operative – A Social Co-operative is a co-

operative created to provide employment opportunities

for people who are disabled and disadvantaged in the

labour market. A social co-operative will have the

same characteristics as a social firm but within a co-

operative structure.

User-led Business – There are no user-led businesses

within Social Firms Scotland network but a level of

interest exists among members for establishment of

user-led businesses. This type of business is more

common in the USA and Canada. A user-led business

will have the same income generation targets as a

social firm but will aspire to have service users in the

management positions of the business and in control

of the Board of Directors. Some user-led businesses

may be co-operative in structure.

Intermediaries – A number of members of Social

Firms Scotland are Intermediate Labour Market

Organisations. These organisations have a focus on

employment creation and providing a ‘stepping stone’

to the open labour market. There is a growing trend

towards adoption of business principles within

intermediaries and a move towards becoming social

enterprises.

Enterprise Projects – These are characterised by a

‘project focus’ rather than a business/market focus.

Enterprise projects aim to provide training or

development opportunities to participants. They are

heavily reliant on revenue grants but are seeking to

become more sustainable through income generation

and trading activity. They are differentiated from social

firms by not aiming to employ disabled people or to

ever operate as a business generating a large

percentage of their income through sales. Enterprise

Projects are similar in many respects to the trading

arms of charities.

DEVELOPING SOCIAL ENTERPRISE

Experience of, and research into, the social economy

within Scotland would recognise that the above

distinctions are often hard to make. Many of the

organisations involved in the social enterprise sector

are evolving as a response to a changing and

developing market. There are also ‘hybrid’

organisations that combine some of the characteristics

detailed above.

The sector is driven by a social mission and has the

opportunity to make a real impact on the social justice

agenda. The development of the social enterprise

sector requires social investment as well as the

development of specialist support services that can

link social justice with economic success.

For more information see:

www.socialfirms.co.uk

www.socialfirms.org.uk

www.sel.org.uk

www.ceis.org.uk

web: www.socialfirms.org.uk