A new vision of a social enterprise: Standards and scaling social employee ownership in EU

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The EU understands social economy as a model of economic development that seeks social and territorial cohesion, sustainability, social justice and the equitable distribution of wealth.

This is quite a broad understanding of what social economy accounts for; however, the focus remains on the business practices building social capacities and fulfilling under-met needs. Experts have argued that this marginalizes the reach of social economy.

Social entrepreneurship has come under criticism for failing to disrupt the dominant power structures in the contemporary economies, which are to a large degree entrenched in the established patterns of business ownership. To disrupt the causes of wealth disparities, workplace alienation, community harm, declining political democracy, and environmental degradation, social economy must focus on changing ownership and governance rights in our economies.


In a recent Harvard Business Review article Roger L. Martin discussed the “long term enterprise, where chief executives would be incentivized by value enhancement, not stock price movements”. Long-term enterprises are firms where their legal structure ensures that the value produced is widely and equitably distributed, that the governance is democratic, and the negative externalities are diminished.


The vision put forth by R. L. Martin is inherent in the employee-owned enterprise. Indeed, a democratic version of the ownership structure is part of the social enterprise as defined by the European Commission. A democratic firm requires that the claim over profits and governance rights are not tied to a capital instrument (e.g., a share) but are tied to an active role in the business.v A worker cooperative is a democratic firm because membership, which brings the rights over profits and decision-making, is allowed only to the workers of the cooperative and only to the workers. There is a problem with such a rigorous definition – it is proving to be very difficult to scale democratic firms without allowing a gradual transition. True, there is the Mondragon Corporation, which has been one of the best examples around for the past decades. And there are other European worker cooperatives, mainly concentrated in regions with high support to democratic forms of firms.

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Več branja

09. 01. 2025
20. 12. 2024

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