explaining the success of the work integration social enterprise;
TRANSCRIPT
Explaining the Success of the Work Integration Social Enterprise;
A study on the key business model elements within the context of the Netherlands
Date: 30-06-2014 Name: L.T. van den Broeke Student number: 2541621 Contact: [email protected] Address: Admiraal de Ruyterweg 402 2 1055ND Amsterdam University: VU University Amsterdam Study: Master Business Administration Specialisation: Entrepreneurship Supervisor: Dr.ir. Elco van Burg
Master thesis
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Foreword
This thesis that you are about to read is the final work on my study Entrepreneurship at the
VU University. It was in 2010 – during my first voluntary work period in an orphanage in
India – that I started brainstorming on ideas on how to solve societal problems. Soon I
decided that starting my own business could be one solution. By employing people with no
chance on getting a job I could offer them new opportunities and empowerment. A few
months later I wrote down the steps that I would make in order to become this type of
entrepreneur. My first step was my study International Business at the University of
Maastricht. During my exchange in Norway I found out that there was an actual name for the
type of business that I had in mind: ‘Social Entrepreneurship’. Soon I started to deepen my
knowledge about social entrepreneurship and it seemed no less than logical to continue my
academic career at the VU studying a Master’s track in Entrepreneurship. The next step of my
plan involved practical experience. It was for this reason that I approached Social Enterprise
NL at the beginning of the academic year. They could not only provide me with much needed
guidance for my thesis but also gave me an insight in the world of social entrepreneurship, a
chance for which I am very thankful.
I would like to express my great gratitude to the various people that directed me through the
period of conducting this research. First and foremost I would like to thank dr.ir. Elco van
Burg for his guidance and wisdom throughout the whole process. Also I would like to thank
the team of Social Enterprise NL for the collaboration with this project. In particular I would
like to thank Mark Hillen. Mark supported me throughout the whole process and without his
expertise it would never have resulted in this thesis. I would also like to thank the ten
entrepreneurs that participated in the study and the experts that took part in the discussion
group that shared their highly valuable insights. I am also grateful towards my family and
boyfriend for supporting me through the good but also exhaustive times. A final word of
gratitude goes towards my grandfather, whose knowledge and understanding helped me gain
the necessary persistence to finish the thesis to its final state.
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Abstract
Over the past years, the research on social entrepreneurship has become an increasingly
important research topic. Yet till now it is still underdeveloped. Research on the business
model of the social enterprise is still scarce. This thesis aims to explore the business model of
one of the specific types of social enterprise: the work integration social enterprise (WISE).
The research question that this study answers is: ‘What does the business model of the Work
Integration Social Enterprise look like within the context of the Netherlands?’ A qualitative
approach is used to investigate the research question. Ten case studies were conducted and
the results of this study have been discussed in an expert session conducted by the author. The
results gave insights along the lines of the four main elements of the business model by
Shafer et al. (2005): creating value, capturing value, strategic choices and the revenue model.
This knowledge contributed to the delineation of several contributors to the success of the
WISE within the Netherlands.
Key words: Social Entrepreneurship, Work Integration Social Enterprise, Business Model
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Table of Contents
Foreword ............................................................................................................................... 2
Abstract .................................................................................................................................. 3
1. Introduction ..................................................................................................................... 5 1.1 Academic Relevance ............................................................................................................ 6 1.2 Social Relevance .................................................................................................................... 7 1.3 Thesis Structure .................................................................................................................... 7
2. Literature Review .......................................................................................................... 8 2.1 Social Entrepreneurship .................................................................................................... 8
2.1.1 History and background of social entrepreneurship ..................................................................... 8 2.1.2 Definition social entrepreneurship ........................................................................................................ 9 2.1.3 Comparison social and commercial entrepreneurship .............................................................. 10 2.1.4 Organisational types .................................................................................................................................. 11
2.2 The Work Integration Social Enterprise ....................................................................13 2.2.1 The employee ................................................................................................................................................ 13 2.2.2 Stakeholders .................................................................................................................................................. 15 2.2.3 Revenue model ............................................................................................................................................. 15
2.3 Business models..................................................................................................................17 2.3.1 Importance of business models ............................................................................................................ 17 2.3.2 Traditional business models .................................................................................................................. 18 2.3.3 Change towards new social business models ................................................................................. 20
2.4 Concluding section .............................................................................................................22
3. Methodology ................................................................................................................. 23 3.1 Research philosophy and design ..................................................................................24 3.2 Case studies ..........................................................................................................................24 3.3. Data collection ....................................................................................................................25 3.4 Semi-structured interviews and archival data ........................................................26 3.5 Experts and expert panel .................................................................................................27 3.6 Analysis and coding ...........................................................................................................27 3.7 Validity and methodological limitations....................................................................28
4. Findings .......................................................................................................................... 28 4.1 Creating Value......................................................................................................................29 4.2 Strategic Choices .................................................................................................................35 4.3 Value network .....................................................................................................................37 4.4 Capturing Value ...................................................................................................................40 4.5 Concluding section .............................................................................................................43
5. Discussion ...................................................................................................................... 44 5.1 The business model of the WISE ...................................................................................44 5.2 Academic implications .....................................................................................................49 5.3 Practical implications .......................................................................................................49 5.4 Limitations ............................................................................................................................50 5.5 Future research ...................................................................................................................51
6. Conclusion ..................................................................................................................... 52
Bibliograhpy ...................................................................................................................... 53
Appendices ......................................................................................................................... 56 Appendix A: Questionnaire ....................................................................................................56 Appendix B: Overview participants’ interviews .............................................................58 Appendix C: Experts and entrepreneurs during the workshop ................................58 Appendix D: Overview codes .................................................................................................59 Appendix E: Additional literature review .........................................................................60
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1. Introduction
When the Dutch king Willem-Alexander pitched the term ‘participatiesamenleving’ in his
annual speech in 2013, he indicated an important change with respect to the encouragement
of the employment of people with labour-inhibiting disabilities. A ‘participatiesamenleving’ –
or society of participation – is meant to encourage a culture in which everyone contributes to
society to the best of their capabilities (Willems, 2013). One of the key aspects of this vision
is to reintegrate disabled people into the labour market in order to economise on social
benefits and improve the overall quality of life of these people. By mandating a minimum
quota of incapacitated employees for corporations, the government hoped to improve the
integration of this vulnerable group of people (Rijksoverheid, 2014). The labour-integration
problem that accompanied this group of people is not something from recent years. However,
the fact that the term ‘participatiesamenleving’ was pitched indicates that there is a crucial
need for integration that was not met thus far by previous policies. Also one can see that
opportunities have always been offered by the corporate world, yet these initiatives have thus
far proved to be insufficient to help the entire target population and thus governmental action
is deemed necessary (Rijksoverheid, 2014). This indirectly indicates that the breed of
employer who does offer chances to this target population must be of a particular nature. It is
a breed of employer who plausibly acts on a different motivation than the ‘traditional’
capitalistic entrepreneur. The business form that is related to the integration of incapacitated
employees is called the ‘work integration social enterprise’ (WISE). The mission of this
enterprise is to provide employment for people with a distance to the labour market. It is
arguable that once the number of WISE is significantly increased the need for government
intervention by means of – for example – quota is reduced.
In the EU, the WISE is defined as an organisation where at least 30% of the staff has labour-
inhibiting limitations (Dereadt, Gijselinckx & Opstal, 2009). Several countries surrounding
the Netherlands recognize, and encourage, this business form (O’Hara and O’Shaughnessy,
2004; Loss, 2003). The Dutch government does not yet recognize the WISE as a full-grown
independent business form, and herewith foregoes the full potential that resides in it. Much of
this might be blamed on the incomplete understanding of the nature and characteristics of the
WISE within the Netherlands.
So far there is hardly any research on the WISE in the Netherlands, and in particular there is
no research on the business model of the WISE. The aim of this thesis therefore is to delineate
the concept of the WISE within the Dutch entrepreneurial landscape.
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The research question will be:
What does the business model of the Work Integration Social Enterprise look like within the
context of the Netherlands?
This research will focus on different elements of the business model of the WISE. In
particular this research will look at the elements that differentiate the WISE from a normal
business. The ones that are investigated in this study are the following:
The employees
The impact of the employees on the end product or service
The relation with the stakeholders
The revenue model
The elements will contribute to the understanding of the business model and show the nature
and the characteristics of the WISE. More importantly, the research will in the end gather a
sample of best practices which – taken together – allows to model the ‘ideal’ business model
for this particular form of organisation.
1.1 Academic Relevance The field of social entrepreneurship is currently growing quickly. This results in an increasing
amount of academic articles written about this topic. Nonetheless the field is still not
completely developed, and numerous research gaps are still existent. There still is a lot of
dispute about the definition of social entrepreneurship and significant efforts need to be made
in order to mature the research field (Martin & Osberg, 2007).
This study will further explore one aspect of social entrepreneurship: the business model of
the WISE. This paper will be of academic relevance given the absence of existent research on
the business model of this particular business form. This research will contribute to the
understanding of the business model of the WISE. This thesis will combine literature from the
WISE and business models in order to get a theoretical framework. The main scope of this
thesis will lie in expanding the theoretical development of this field.
Whereas the WISE in other European countries is documented quite extensively it is still a
relatively unexplored area within the context of the Netherlands. Most research is focused on
the integration of disadvantaged low-skilled workers, whereas this research also includes the
integration of disadvantaged high-skilled workers. Furthermore this study will contribute on
the literature about the WISE by focusing on the entrepreneurial aspects of the WISE. So far
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most research focused mainly on the WISE from a macroeconomic perspective. Furthermore
this study will contribute to the field of business models. So far there has been a main focus
on business models with an emphasis on value capturing. There is hardly any research on
social business models (Santos, 2012). The delineation of the social business model found in
this study meets this shortcoming.
1.2 Social Relevance
There is no clear general understanding of the nature and characteristics of the WISE within
the Netherlands. Through case studies this thesis will contribute on what nascent WISE’s or
longer established WISE’s can learn from each other’s best practices. This approach is well
suited for this particular field of business given the fact that social entrepreneurs are more
willing to share their insights compared to ‘traditional’ entrepreneurs. Although there still is a
sense of competition, the overall goal is to create a large social impact. Social entrepreneurs
will be more willing to collaborate if this would increase the chances of a larger social impact
(Social Enterprise NL, 2014). The sharing of best practices causes social entrepreneurs to
become aware about their business models and enables them to improve deviating aspects of
their organisation. In the end, this research will contribute to the success factors of the WISE
in the Netherlands.
There are several countries in which the WISE is considered as a business form with great
societal and economical value (Spear and Bidet; 2005; Vidal, 2005; Nyssens, 2006). By
adapting the working environment to employees’ needs, one does not only contribute to the
quality of life but also to the overall labour productivity. The jobs that these companies create
thus bring improvements to the participants’ overall productivity. This translates itself into
lower government provided benefits, more income tax, and thus higher revenues for the
government. By conducting research on the WISE, this study explores the societal and
economical value that this organisation creates in the Netherlands. Furthermore this study will
give insight on the kind of support this enterprise needs and hence might help the sector of the
WISE to growth.
1.3 Thesis Structure
This thesis will be structured as follows: chapter two provides the theoretical framework
regarding social entrepreneurship, the WISE in particular, and the overall business model. A
chapter covering the methodological choices made in order to target the research question
follows upon this framework. Chapter four is dedicated to the presentation of the findings of
the case studies, which are consecutively discussed based on previously written literature in
chapter five. A section on the social and academic relevance complements this chapter
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together with a paragraph on the limitations of the study and suggestions for future research.
This thesis will end with a conclusion.
2. Literature Review
This chapter of the thesis describes what becomes the theoretical foundation of this study. To
answer the research question it is first important to define social entrepreneurship. A deeper
insight into the social enterprise is given by zooming in on one specific type of social
entrepreneurship: the WISE. This theoretical basis will end with a review on business models.
2.1 Social Entrepreneurship
This section of the paper will show why it is important to have a sharp definition of what
social entrepreneurship is. Amongst the discussed topics are the history of social
entrepreneurship, its definition, its distinguishing factor relative to commercial
entrepreneurship, and its different organisational types. The reason for the inclusion of these
subtopics is the fact that they are important contributors to the establishment of the term that
we now know as social entrepreneurship. Without a firm understanding of these themes it will
become difficult to get a decent understanding of what is truly meant by social
entrepreneurship. After the establishment of these topics one can identify the various forms of
social enterprises that come forth from these themes; these are the ones mentioned in
subparagraph 2.1.4.
2.1.1 History and background of social entrepreneurship
Social entrepreneurship is a phenomenon with a rich history dating back to a long time ago.
There have always been ventures that have been nursing the sick or feeding the poor (Kickul
& Lyons, 2012). However old it may be, it is since relatively short that scholars started
mentioning it by the term we now know it by: social entrepreneurship (Dees, 1998). The
attention for the concept of social entrepreneurship is currently growing rapidly. It is no more
than logical to assume that this increased scholarly attention is related to the practical
endeavours in the social field. Another effect of the increased scholar devotion is that the
body of terminology related to social enterprises becomes increasingly varied, making it hard
to state a definitive definition (Martin & Osberg, 2007). This versatility in terminology would
be beneficial in case all resulting efforts would get sufficient funding. This however is a
somewhat flawed assumption since resources are scarce and not every social effort gets what
it needs in order to succeed. If every non-entrepreneurial effort – however social it may be –
is mentioned under the name ‘social entrepreneurship’, than chances are that the term
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becomes vulnerable to erosion. It is important to keep the definition true to its roots in order
to ensure that social entrepreneurship lives up to its promises (Martin & Osberg, 2007). The
next section will strive to give the definition of social entrepreneurship as accurate as
possible.
2.1.2 Definition social entrepreneurship
Although authors do not agree on what social entrepreneurship exactly is this section will
strive to give the most complete image of what social entrepreneurship is. One of the oldest
definitions is the one from Dees (1998).
Dees (1998) describes social entrepreneurship on the basis of six elements. The first element
is ‘being a change agent in the social sector’ (Dees, 1998, p.4). Schumpeter (1934) describes
an entrepreneur as a reformer. A social entrepreneur is a reformer with the goal to make a
social change. A social entrepreneur strives to make systematic changes to the habitual ways
in which things are done in the social context. Instead of solving the symptoms, the goal is to
remediate the underlying causes of the problems (Dees, 1998). The second element is
‘adopting a mission to create and sustain social value’ (Dees, 1998, p.4). The social mission is
more important than making profit. Profit making must be seen as the means to reach the end
(Dees, 1998). The third element is ‘recognizing and persistently pursuing new opportunities’
(Dees, 1998, p.4). Social entrepreneurs think in solutions, rather than problems. They try to
recognize opportunities. The entrepreneur should be persistent in his or her idea and as long
as there is faith continue in the pursuit of the goal. Ideas sometimes evolve along the way as
better alternatives reveal themselves to the entrepreneur. Sometimes an idea will change as
the entrepreneur finds along the way what the best solution is (Dees, 1998). The fourth
element is ‘engaging in a process of continuous innovation, adaptation, and learning’ (Dees,
1989, p. 4). Innovativeness holds a very important position amongst these three sub-elements.
Schumpeter (1934) describes that innovation can embody the invention of something truly
new but also as a novel combination of pre-existing things. Not only is innovation crucial in
the structure of the organisation, it also holds a key position in the financing of operations.
Social entrepreneurs are often forced to look into innovative methods to get adequate funding
for their projects. Innovation should not be a one-time event but rather a continuous strive for
novel opportunities (Dees, 1998). The fifth element is ‘acting boldly without being limited by
resources currently in hand’ (Dees, 1998, p. 4). Social entrepreneurs are skilled at doing
‘more with less’ and excel at attracting resources, even if they occasionally do not possess the
normally important collateral. Although the previous characteristic suggests an abundance of
resources the opposite is usually true, hence social enterprises are very risk conscious about
the risks they are taking, carefully managing all the shortcomings in their projects (Dees,
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1998). The sixth element described by Dees is ‘exhibiting a heightened sense of
accountability to the constituencies served and for the outcomes created’ (Dees, 1998, p.5).
Social entrepreneurs often make a need assessment that ensures that they are creating social
value. It is important to ensure that you as an entrepreneur assess the needs of the people that
you are serving. Communication between stakeholders can therefore be an important part of
being a social entrepreneur. Last but not least the entrepreneur should make sure that the idea
is attractive for the investor, something that can be challenging given the fact that social goals
often do not prioritise financial returns (Dees, 1998).
Dees laid the foundation on the definition of social entrepreneurship. There is still no
consensus on whether social enterprises are solely there to provide in a social need and are
hence not-for-profit or whether they can have a profit driven structure with social needs as a
prominent factor. Like Kickul & Lyons (2012), this study presumes that an organisation, as
long as it remains true to its social mission, can take any business form it deems optimal; be it
for profit, not-for-profit, or hybrid (Kickul & Lyons, 2012).
This study will go with the theory on social entrepreneurship posed by Santos. Santos (2012)
argued that previous scholars have taken such a broad stance that it has almost become
impossible to decide on the boundaries of the field of social entrepreneurship. It is for this
reason that Santos (2012) established a well-defined theory that focuses on a specific field.
Social entrepreneurs are addressing neglected social problems leaving the environment with
positive returns, sometimes referred to as positive externalities. Whereas the traditional role
of the government is to target these social problems they tend to be short on resources to
target all of them. This is where the social entrepreneur enters the stage and fills in the blanks
left by the governments. Often the entrepreneur will put significant effort in influencing the
government in order to create an as beneficial entrepreneurial environment as possible by
altering legislation or providing monetary support. Furthermore Santos described that firms in
general need to make a trade-off between value creation and value capturing. Social
enterprises generally prefer value creation to value capturing. Social entrepreneurs are
primarily motivated by the value creation for the society. This theory also has its implications
for defining a social business model. Value creation is measured on a societal level whilst
value capturing is measured on an organisational level (Santos, 2012).
2.1.3 Comparison social and commercial entrepreneurship
To some extent social- and commercial-entrepreneurship are similar. Amongst the common
grounds are the recognition of opportunities, the need for innovation, the desire for control
and the necessity of network building capabilities (Dees, 1998). One important distinction
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regarding the value proposition can be made between social entrepreneurship and normal
businesses. A regular – commercial – entrepreneur hopes to create value for its customers and
create a financial profit, resulting in a personal financial gain for the entrepreneur and the
venture’s investors. In contrast, the social entrepreneur does not strive for a financial gain for
himself or his investors. The social mission is most important. However, this does not impede
a business from making a profit (Martin & Osberg, 2007).
When categorising both social and commercial entrepreneurship one will witness that both
types are not purely distinct, but rather there is a continuum ranging from predominantly
social to mostly commercial. However, even at the far end of the scale one shall see that there
remains some social value in purely commercial entrepreneurship and vice versa. Though
social entrepreneurship is primarily characterized by its social value there is a wide range of
activities that fall under this category (Austin, Stevenson & Wei-Skillern, 2006). Figure 1
shows the spectrum of social and financial returns. As one can see a social enterprise can
have a non-profit structure as well as a for-profit structure or a combination of both. The next
section will elaborate on this in depth.
Figure 1: Spectrum of social and financial returns. From: “Stanford Social Innovation Review”. By
Emerson, J. (2008).
2.1.4 Organisational types
A social enterprise can be scaled on a spectrum from a pure non-profit organisational
structure to a pure for-profit structure, with hybrids in the middle. This section will describe
the different organisational types: pure non-profits, pure profits and hybrids. This section will
end with an overview of the different types of social enterprises that exist.
Pure non-profits
Although it is named a non-profit organisation this does not mean that the organisation cannot
make any profit. It can make a profit, however this profit should be reinvested in the
organisation to contribute to its mission. The main advantage of a non-profit structure is that
there are numerous options for generating revenue. An organisation can make revenue by
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selling services or products, but is also allowed to have a philanthropic income. Philanthropic
funding can be both traditional and non-traditional. Examples of traditional funding are
individual donations and government grants. The disadvantage of the traditional funding is
that the grants are often short-term, whereas the social problems are long-term. Constantly
acquiring new types of funding is highly inefficient and consumes valuable time. Another
disadvantage is that those firms of whom philanthropic grants represent the main part of their
‘income’ become highly dependent on these funds. In case the funding stops their continuity
is threatened abruptly, making their revenue model particular unsustainable (Kickul & Lyons,
2012). Private market investments – through for example crowd funding – or long-term loans
by foundations are examples of non-traditional funding (Austin, Leonard, Stevenson, Wei-
Skillern, 2007).
Pure for-profits
Central to those social enterprises that follow a for-profit strategy is the principle of ‘doing
well whilst doing good’. Apart from the social mission they are very similar to regular
commercial ventures. Where non-profit social enterprises usually find less difficulty in
finding funding, for-profit ventures sometimes struggle simply because they miss out on most
of the philanthropic grants. Philanthropists are mostly interested in the social progress instead
of the possible financial gains. Meanwhile however, for-profit organisations – especially
privately owned ones – face a lot less scrutiny than their non-profit counterparts. They can
more easily protect their intellectual properties and – in case of a privately owned
organisation – do not necessarily need to disclose their books (Kickul & Lyons, 2012). Non-
profit firms on the other hand do often need to justify their operations towards their generous
supporters. Concluding, one can state that for-profit ventures have greater control over their
venture and the corresponding revenue streams. Herewith comes the advantage of having the
ability to keep a portion of the generated profits for themselves whilst at the same time being
able to solve a social problem (Kickul & Lyons, 2012). The disadvantage for a social
enterprise with a for-profit structure can be that is difficult to explain their social objective
when they are making a profit (Smit, De Graaf, Verweij & Brouwer, 2011).
Hybrids
Hybrids combine elements from the non-profit, for-profit and/or governmental organisations.
The social entrepreneurs that create such a structure are searching for more financial and legal
flexibility. An example of a hybrid organisation is a for-profit social venture that needs
additional funds on top of the cash flows generated by its day-to-day business. In that case it
can also create a non-profit subsidiary that can accept donations and grants that the for-profit
could not attract (Kickul & Lyons, 2012).
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Division of social enterprises
There are many different types of social enterprises, and different authors made different
subdivisions. This study applied the subdivision made by the European Commission. The
main types of social enterprises can be divided into: personal services, local development of
disadvantaged areas and work integration (European Commission, 2014). Personal services
can for example include services for elderly people and childcare. Local developments of
disadvantaged areas are for example social enterprises that are operating in areas where it is
difficult to operate like remote rural areas where community services are necessary. Work
integration includes the training and integration of disadvantaged, unemployed people
(European Commission, 2014). The next section will explain the WISE in depth.
2.2 The Work Integration Social Enterprise
The WISE is an organisation that helps people with a disadvantage (be it physical or mental)
to reintegrate into a job position. Typical for this type of organisation is its multitude of goals:
social, economic and socio-political ones (Nyssens, 2008). Whereas in some other European
countries the WISE is acknowledged and supported by the government, this sector is still
relatively small in the Netherlands (For an extensive review on the characteristics of the
WISE in other European countries see appendix E). This section will elaborate on the main
topics of this study. The majority of the literature originates from studies conducted by the
EMES network. This network conducted two studies: PERSE and ELEXIES1. Both projects
conducted research on the WISE throughout Europe. The Netherlands did not participate.
2.2.1 The employee
The WISE can employ different kinds of target groups. The two main categories are
handicapped people and able-bodied jobseekers with serious integration problems (Davister,
Defourny & Gregoire, 2004). The WISEs that work with handicapped people adapt the
working environment to these people when necessary. The group of able-bodied jobseekers
with serious integration problems consists out of people with for example social problems
caused by alcoholism or schizophrenia. Others might belong to this group because they have
lacked adequate education due to early school dropout (Davister et al., 2004). Although the
former group is dominant there also is a group of highly educated members of the target
1
PERSE = "The Socio-Economic Performance of Social Enterprises in the Field of
Integration by Work". Researchers from eleven European countries participated in this project
that is coordinated by Marthe Nyssens.
ELEXIES = "L'entreprise sociale: lutte contre l'exclusion par l insertion conomi ue et
sociale". Researchers from twelve countries participated in this project that is coordinated by
Eric Bidet and Roger Spear
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group. Although this subgroup usually has less trouble in finding a suitable workspace there
are still situations in which finding suitable employment becomes a serious challenge (e.g. a
person struggling with severe autism). An organisation can decide to work with only one
target group of people or with a mix of various target groups. Some scholars argue that
focussing on one target group is the main factor for success (e.g. the VSBfonds & Start
Foundation, 2013). The reasoning behind this is that one can build knowledge about this
target group and focus on the remaining talent that resides within this group of people.
Smit, Van Genabeek and Klerkx (2008) found that entrepreneurs within the Netherlands
usually do not consciously mix people from the target group with regular employees. Dutch
WISEs look more like sheltered workshops, but with the major difference that those
organisations are usually run privately without governmental support. According to Smit et al.
(2008) mixing both groups of employees could have a positive effect on the reintegration of
disadvantaged people. In other countries this already resulted in positive outcomes. Mixing
both groups can increase the chance that an organisation becomes a financially healthy
company. Furthermore it can increase the chance that the disadvantaged groups integrate into
a ‘regular’ working environment (Smit et al., 2008).
The EMES network divides the different forms of WISEs into four main modes of
integration. The four modes are: transitional occupation, creation of permanent self-financed
jobs, professional integration with permanent subsidies and socialisation through a productive
activity (Davister et al., 2004). Transitional occupation occurs when the focus is on training
disadvantaged people in a temporary job with the aim to help them getting a regular job.
WISEs that create permanent self-financed jobs have the aim to create jobs that, in the
medium term, create self-sufficient jobs that provide disadvantaged people an income
independent from government support. People who have no chance of making it on the labour
market are met by stable places that are permanently subsidised by the government. These
places include locations that are ‘sheltered’ from the competitive environment in which they
are located. Among the target group are people who suffer from physical disabilities as well
as severe ‘social handicaps’. Socialisation through productive activities is not aimed at
reintegration in the labour market, but rather aims at the (re)socialisation of the target group
by means of social contact, acceptance of rules, and structured lifestyles. These activities are
semi-formal given they are not bound by legal or labour contracts (Davister et al., 2004).
There are two types of training recognized in the literature: ‘on-the-job training’ and
‘structured’ professional training. On-the-job-training is a short training aiming at assisting an
employee in getting to understand the basics of his task and to develop the skills necessary to
perform this particular job. The aim of structured professional training is to improve the
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competencies of the employee, herewith easing the employability on the labour market
(Davister et al., 2004).
2.2.2 Stakeholders
The presence of a variety of stakeholders forms the foundation of a multidimensional network
in which the sharing of social capital holds a central position (Nyssens, 2008). Previous
research has shown that this multitude of stakeholders is crucial for WISEs to achieve their
often complex social objectives. Related to this is the reliance on a diversity of resources that
originate from these stakeholders. Having a network composed of stakeholders from different
origins (e.g. private sector, public sector) or types of allocations (e.g. subsidies coming from
public domains, gifts, or volunteers) appears to be a crucial element for WISEs to succeed in
their objectives. Managing these different stakeholders and the resulting ambidextrous way of
operating is one of the characteristics that set the social entrepreneur apart from its purely
commercial counterparts (Nyssens, 2008). Alongside the necessary cooperation, transparency
also holds a crucial position. The organisation should be transparent in its actions as well as
open about the profit and loss statement. This can help an organisation to gain confidence
from the stakeholders; such as collaborators and financiers (Díaz-Foncea & Marcuello, 2012).
This section underlines the importance of the relationship with the various stakeholders.
Within the Netherlands social entrepreneurs often describe the relationship with the
government and other institutions as a laborious relationship (Smit, De Graaf, Verweij &
Brouwer, 2011).
2.2.3 Revenue Model
In contrast to normal businesses the WISE does not necessarily earn its financial ‘income’
only through its commercial activities, but rather through a more complex mix of diverse
financial ‘income-streams’ (Gardin, 2006). Both market and non-market resources are used to
achieve economic sustainability. It can be seen as a mix between the market, public
redistribution and reciprocity. Public redistribution consists of both direct and indirect
subsidies. Reciprocity represents the resources that WISEs get from for example volunteers.
The mix of market and non-market resources obviously depends on the nature of the handicap
of the employees at stake. Enterprises that integrate highly disadvantaged workers will most
likely need more non-market resources (Defourny & Nyssens, 2010). Managing the diverse
sources of funding can be challenging. It is more complex given that each source of funding
has different requirements and time horizons (Spear and Bidet, 2005).
16
Some WISEs are thus partly dependent on the government and the implementation through
institutions. The laws and regulations with respect to reintegration and social security are
changing regularly. This represents a challenge for the entrepreneur because regulation has
implications for the revenue model as well. The entrepreneur is sometimes partly dependent
on revenues from for example the reintegration trajectories or wage subsidies. The
government in the Netherlands is therefore sometimes seen as an unreliable partner (Smit et
al., 2011). Subsidization cuts can lead to problems for many social enterprises. It is a key
support for their activities that might lead to the diminishment of existence (Hara &
Shaughnessy, 2004). It challenges the organisation even more to balance commercial and
social organisations (Cooney, 2011). WISEs have the possibility to overcome this threat by
diversifying their activities in order to acquire additional revenue streams that should be able
to offset the decline of subsidies (Hara & Shaughnessy, 2004). There are two possible
options: 1) diversifying the products and services within one single business venture and 2)
establishing a multitude of ventures (Cooney, 2011). Social enterprises can for example
diversify the products and services in both retail as well as wholesale markets (Cooney,
2011). An example is a baker that next to the bakery also runs a restaurant and café. The
advantage of this is that when one of the elements within the organisations is not successful,
its losses are offset by the remaining profitable elements without losing sight of the social
needs. Establishing multiple ventures is the other option (Cooney, 2011). This is not always
an option given that it depends on the firm’s size and nature. When an organisation
establishes multiple ventures the management attention and coordination costs are usually
increasing. However, these costs can largely be offset following the same logic as the
previous example of diversification. Having multiple ventures increases the chances to hedge
costs and earnings to sustain cost parity and protect the highly esteemed social values
(Cooney, 2011).
Additional costs
WISEs do in general have more and higher costs to let the target group work according to
their abilities. According to earlier research the substantial additional costs that the
entrepreneur has do mainly derive from the personnel costs, the housing costs, and the
depreciation costs. Table 1 gives an overview of these additional costs.
17
Additional costs
Personnel costs 1) Costs due to lower productivity of employees
2) Costs for additional guidance
3) Other staff related costs
Housing costs 1) Extra space in order to have for example supporting conversations with
the target group
2) Building modifications
3) Additional square feet per employee available
Investment costs 1) Depreciation costs
2) Additional expenditure on adaptations of equipment
Table 1: Overview of additional costs. From: “Sociale ondernemingen en werknemers met een
arbeidsbeperking”. By Smit, A., De Graaf, B., Verweij, E., & Brouwer, P. (2011). TNO-Report.
These costs are generally not fully covered by the Dutch government. In some cases
organisations like the Dutch UWV intervene to cover for the additional expenses. This
however costs a lot of lobbying work and is generally not easily achieved (Smit et al., 2011).
2.3 Business models
This section of the paper will underline the importance of understanding the business model.
Next to that it will define the traditional business model and the elements that it is composed
of. The section will end with describing the ‘new’ social business model and its
corresponding characteristics.
2.3.1 Importance of business models
Over the last couple of years the interest in business models is increasing. Thanks to the
internet boom the term business model has become some sort of a buzz, making its
appearance in an increasing amount of literature (Magretta, 2002). Consequently, people use
the concept of business models in different ways and have a different understanding of what it
exactly is. There is no consensus on which elements the model is composed of (Shafer, Smith
& Linder, 2005). The concept is investigated from different academic disciplines (Pateli &
Giaglis, 2003). Some academic researchers attempted to combine literature on business
models and categorized the elements of business models that there are observed most often
(For e.g. Osterwalder, Pigneur & Tucci., 2005 and Shafer et al., 2005). These endeavours are
not only a sign of the popularity and relevance of the subject manner, they also bring
progression towards a situation in which there is widespread consensus.
The indistinctness about the business models has lead to misuse of the model. This is
unfortunate, given that a well-configured business model is essential for every organisation,
be it a nascent or established one. In order to use it in the correct way managers need to have
18
a clear understanding of its implications (Magretta, 2002). Osterwalder et al. (2005) have
numerous reasons for getting insight in the business model of an organisation. One can
compare one’s own business model – or parts of it – with other competitors once one has a
clear understanding of it. An organisation can learn from other business models. An
organisation can learn from comparing other organisations in the same industry, but also from
comparisons across industries. A different industry can give new insights and eventually lead
to business innovation. Apart from the competitive reasons there is also important internal use
for the consciousness of one’s business model (Osterwalder et al., 2005). One important
argument is for example the fact that a business model is hard to manage in case one is not
fully conscious of it. Increased consciousness not only helps in managing but also proves
beneficial for making important adaptations to it. The insights from the business model can
for example be useful for the implementation of the business model. An organisation is easier
to manage once the underlying logic behind it is clear. These changes might be essential in
case quick alterations are necessary due to revolutions in the competitive landscape
(Osterwalder et al., 2005).
2.3.2 Traditional business models
Definition
As earlier described, the business model can help an organisation to become successful when
implemented correctly. This section will in more detail describe what the business model is
and of what elements it is composed of. The most important aspect of a business model is
how the organisation creates value and captures financial return from that value (Shafer,
Smith & Linder, 2005). A business model is composed of various sub elements that taken
together resemble a closely aligned system (Magretta, 2002). The following definition
describes the business model:
“A business model is a conceptual tool containing a set of objects, concepts and their
relationships with the objective to express the business logic of a specific firm. Therefore we
must consider which concepts and relationships allow a simplified description and
representation of what value is provided to customers, how this is done and with which
financial consequences”(Osterwalder et al., 2005: p.3).
19
Elements
Most researchers agree on the fact that, taken together, all elements create and deliver value
to the customer (e.g. Johnson et al., 2008). This however is broadly defined. Shafer et al.
(2005) compared different articles and found in total 42 different business model elements.
These elements are categorized into four separate groups. The groups that were found are:
‘strategic choices’, ‘value network’, ‘capture value’, and ‘create value’ (Shafer et al., 2005:
see Figure 2).
Figure 2: Elements of the business model. From: “The power of business models”. By Shafer, S.
Smith, H., Linder, J. (2005). Business Horizons 48 (3).
Every business needs to create and capture value. According to Shafer et al. (2005) creating
value is powered through firm specific resources and processes. The key resources for
example consist of people, technology and the facilities (Johnson et al., 2008). Amongst the
key processes are planning, budgeting, sales, service, training and development. Furthermore
they also include the company’s rules, metrics and norms (Johnson et al., 2008). Equally
important as the creation of value, is the capturing of value. The process of creating value is
captured by a firm’s revenue model. Value creation and value capturing occurs not in a
vacuum, but in a value network. Besides the creation and capturing of value an organisation is
involved in many strategic choices. This includes for example the differentiation and
branding of the product or service. From an academic perspective, Shafer et al. (2005) gave a
good overview of the elements that the business model is composed of. A more hands-on,
practical tool that managers can use is the business model canvas that was first introduced by
Osterwalder. The business model canvas is a graphical tool describing nine elements, each
representing essential business elements. The model is widely used throughout the world
(Greenwald, 2012).
20
2.3.3 Change towards new social business models
The body of existing literature on business models of social enterprises is limited. Only a few
scholars have attempted to contribute to this research subject by for example defining the
elements of the social business model (e.g. Yunus et al., 2010). This section of the theoretical
framework attempts to summarize the research with regard to this subject so far. Jonker, Tap
& Van Straaten (2012) described the important elements that differentiate a sustainable
business model from a traditional business model. Although these scholars described a new
business model that should hold for any type of organisation, it gives a good picture of what a
business model of a social enterprise could look like.
Creating social value and the importance of partners
The ‘new’ business model differentiates itself from the ‘traditional’ business model by
creating social impact (Jonker et al., 2012). Whilst traditional models’ main focus is to create
value in the form of money, the ‘new’ business models’ goals are multidimensional.
Jonker et al. (2012) describes that it is not just the internal organisation that matters, but also
the external value network of business partners and contributors. An organisation should
focus on all-inclusive models where they also incorporate processes and elements coming
from the external environment. The firm should not only focus itself on internal affairs but
rather opens itself up for a more collaborative stance (Chesbrough, 2003). It is important to
make connections between different parties, such as the government, large commercial
organisations and neighbourhood initiatives (Jonker et al., 2012). What makes this
collaboration so important is the sharing of crucial information and knowledge across the
entire network. Consequently it is transparency that holds a crucial position amongst the core
values found in this ‘new’ business model (Jonker et al., 2012). The process of collaboration
is very complex and can only be learnt through experience. Whereas top-down
communication lines were previously seen as the easiest and effective methods, they no
longer suffice in a model in which partnerships play a central role. The clear disadvantage of
top-down communication is the lack of receptiveness towards valuable suggestions. It is these
suggestions that make it so crucial to put the partnerships in a key position. In order to make
these partnerships beneficial an organisation must first ensure that it is internally ready to
cooperate. Internal departments must open up and be willing to cooperate with external
parties. It is remarkable how those new business models differentiate themselves from
traditional business models with respect to the way stakeholders are treated (Miles, Miles,
Snow, 2006). Within the new business models stakeholders are often treated equally, and the
organisations are dependent on each other (Jonker et al., 2012; Miles et al., 2006). A ‘sense of
21
companionship’ between the different parties is therefore of significant importance (Jonker,
2012)
Related to this is the argument by Jonker et al. (2012) in which he states that social businesses
should value the access to important assets as more valuable than the actual possession of
them. A prerequisite of this principle is that the relationships one builds are of long lasting
nature. If this prerequisite cannot be met it is hard to rely on the mere access to these assets.
The preceding arguments stand in stark contrast to what traditional scholars stated. These
scholars, when referring to the traditional business models, emphasize the importance of the
internal organisation when composing a ‘traditional’ business model and herewith largely
forego the opportunities that are hidden in collaboration.
Furthermore Jonker et al. (2012) indicate that financial sustainability is part of the ‘new’
business models. Continuity is a very important part of the business model (Jonker et al.,
2012). Whereas profit driven firms tend to stress short-term profitability, social firms seem to
be focussed on the realization of long-term sustainability.
Social profit equation
Yunus, Moingeon, Lehmann-Ortega (2010) characterize a traditional business model on the
basis of three elements: the economic profit equation, the value proposition and the value
constellation. According to Yunus et al. (2010) a business model of social enterprise is
different from a traditional business model with respect to three particular points (See figure
3). First – as Jonker et al. (2012) also mention – rather than focusing only on the customer in
the value proposition, it is important to include all the stakeholders in the value proposition.
Second, the social profit equation makes also part of the business model. Thirdly, they state
that the economic profit equation only needs to recover the cost and the capital. According to
them financial profit maximisation is not the main target.
22
Figure 3: The four components of a social business model. From: “Building Social Business
Models: Lessons from the Grameen Experience”. By Yunus, Moingeon, Lehmann-Ortega
(2010). Longe Range Planning, 43.
A firm’s business model is often dependent on the social mission (Woolley, Bruno &
Carlsson, 2013). Woolley et al. (2013) examined a database of 124 social ventures. They
found that for example a firm concentrating on fighting against poverty has a different
business model than a firm of which mission it is to strive for women’s e uality (Woolley et
al., 2013).
2.4 Concluding section
This concluding section is based upon the combined literature from the field of social
entrepreneurship, the WISE and business models that define the elements of the social
business model used by this study. The main findings of the theoretical framework are
summarised in table 2.
Traditional Business Model Social Business model
Value creation mainly for customer Value creation for customers and society
Capturing value is the predominant focus Capturing value of importance, but rather a
means to an end.
Value network (Top-down) All-inclusive network
Table 2: Comparison of traditional and social business models. Based on the literature review in
chapter 2.
This study will focus on the four traditional elements of a business model as mentioned
earlier by Shafer et al. (2005). These elements are creating value, capturing value, strategic
choices and the value network. This study assumes that the social business model elements do
not significantly differ from a traditional business model, it is rather the practical application
of the elements that differ. When comparing Shafer et al.’s traditional business model with a
business model of a social enterprise, the main difference lies in the creation of value. When
going back to Santos’ (2012) theory of social entrepreneurship he describes value creation for
23
the society as the prime motivation for a social entrepreneur. Correspondingly this should be
one of the essential elements of a social entrepreneurship’s business model. The blade cuts on
two sides when focussing on the WISE business model. The WISE creates societal value by
providing employment possibilities for disadvantaged people whilst at the same time creating
customer value.
There are reasons to believe that the revenue model of a social business significantly differs
from a regular business. Being a financially healthy company is necessary to become
sustainable, yet it is not the sole purpose of the firm. As also mentioned before, a WISE can
get its financial income not only from the market but also from – for example – subsidies and
donations (Gardin, 2006). Also it is not just important to focus on the value network as
described by Shafer et al. (2005), but also in particular on the all-inclusive model in which the
partners play an important role and are equally treated (Jonker et al., 2012). Figure 4 shows
the model that this study will go with.
Figure 4: Components of a social business model. Based on Shafer et al. (2005), Santos (2012) &
Jonker et al. (2012).
3. Methodology
The aim of this research was to find exploratory insights on the business model of the WISE.
The first section of this chapter will describe the research philosophy and design. The second
section describes the case studies, followed by the data collection. Afterwards the semi-
structured interviews and archival data are discussed. The fourth section explains the role of
the experts and discussion group. Subsequently the data analysis will be discussed and this
section will end with the validity and methodological limitations of this research approach.
24
3.1 Research philosophy and design
The epistemological stance that is taken during this research is ‘transactional and subjectivist’
of nature (Guba & Lincoln, 1994). Given that this field of knowledge is presently
underdeveloped, the general aim of this research is to delineate the business model of the
‘WISE’. The insights in this business model will become richer in detail along the way (Guba
& Lincoln, 1994). Each WISE may be based on different perceptions and therefore it is
important to gather multiple perspectives from various social entrepreneurs.
Given the nascent state of the literature, a qualitative research approach fits best (Edmonson
& McManus, 2007). The research focuses on orientation and is explorative of nature as it is
discovering this novel topic. Eventually, the outcome of this research will be the basis for
new theoretical development. Interviews with experts and case studies are chosen as the
method to facilitate the study.
3.2 Case studies
Case studies are the best suitable approach given the qualitative methodological fit. First, case
studies are particularly helpful when answering ‘what’, ‘how’ or ‘why’ uestions (Baxter &
Jack, 2008). This study answers the uestion: ‘what does the business model of the WISE
look like?’ Second, case studies are suitable for exploratory research. Ten organisations have
been selected for theoretical purposes. The number of organisations is limited to ten due to
the limited time span of this study. It is therefore of utmost importance that a meaningful
selection is made (Eisenhardt, 1989). As mentioned by Pettigrew (1988) in Eisenhardt (1989):
“it makes sense to choose cases such as extreme situations and polar types in which the
process of interest is transparently observable” (p. 537)
The cases are chosen on two criteria: 1) the difficulty of the work and 2) the size of the
company. The difficulty of the work is categorised as low-skilled work or high-skilled work.
The reason for choosing the difficulty of work as distinctive factor is that there are reasons to
assume that participants with a low education need a different kind of accompaniment in their
tasks; something that might ask for a specific business model. It is reasonable to assume that
an organisation working with high-skilled employees aims at a different market segment and
correspondingly has different models for its costs and revenue’s; all variables that have a
significant influence of an organisation’s business model. The second distinctive factor is
company size. This study applies a distinction between ‘small’ and ‘large’ firms with a
boundary set at 25 employees that work for at least 32 hours weekly. The reason for choosing
the firm size as a distinctive factor is that there is reason to assume that the business models
of small and large organisations are significantly different from each other. The more diverse
25
product offerings that are usually accompanying large organisations have their effect on the
overall complexity of these larger firms, making their business models distinctively different
from smaller firms. Figure 5 visualizes the four resulting quadrants that will represent the
cases in this study. However, although each case is classified in one of the quadrants the
subdivision is still open for interpretation. For example, some firms work with a large
majority of low-skilled, disadvantaged workers and a smaller group of employees that is high-
skilled and disadvantaged. In this case this firm would be classified under the quadrants with
low-skilled employees. The next section further elaborates on the participants of the study.
Figure 5: Framework displaying the quadrants.
3.3. Data collection
The organisations are selected from the network of the foundation ‘Social Enterprise NL’.
This is a national platform in the Netherlands that represents, connects, and supports social
enterprises. Their network proved itself helpful in finding representative interviewees. In
March 2014 the network consisted of 170 social enterprises spread over 17 sectors. The
advantage of making use of their network is that most social entrepreneurs that are in this
network are eager to participate and contribute to the field of social entrepreneurship in itself.
Some of them hope to improve the impact that they have and are therefore willing to
collaborate and share their best practices. However, a disadvantage of selecting the sample
from the ‘Social Enterprise NL’ network is that they might be susceptible to groupthink.
So far there are only a few organisations in the Netherlands that focus on the employment of
high-skilled people that are vulnerable to the labour market. Therefore it was difficult finding
more than one organisation for both quadrants belonging to the group with high-skilled
employees. Searches outside the network of Social Enterprise NL did not result in any
additional participants. It is for this reason that the quadrant of WISE’s working with high-
skilled employees is limited in size. Despite its limited size there is still sufficient reason to
26
study this group given the indications that its result might be deviant from the rest of the
quadrants, making the group academically and socially relevant. Table 2 summarizes the core
characteristics of the sample population. See for more information about the participants’
appendix B.
Organisation Difficulty of work Number of employees (+/-) Product / Service
AutiTalent High-skilled - 30 collective agreements Digitalization and
administration
Swink High-skilled - 10 collective agreements Web services
Biga groep Low-skilled - 50 collective agreements
- 450 SW-indication
- 100 seconded (WSW)
- 100 trajectories
Several services:
Including
packaging and
cleaning services
Emma Safetyshoes Low-skilled - 100 SW-indication
- 20 collective agreements
Safety shoes
Balanz Facilitair Low-skilled - 600 SW-indication
- 250 collective
agreements
Facility Services
Kringloopwinkel
Opnieuw & Co
Low-skilled - 50 collective agreements
- 30 via WSW
- 60 seconded (WSW)
- 100 trajectories
- 50 volunteers
- 50 other
Thrift shop
Van Hulley Low-skilled - 13 trajectories
- 1 collective agreement
Underwear
De Prael Low-skilled - 28 collective agreements
- 104 volunteers
(Day care activities)
Brewer/
Gastronomy/retail
Driekant Low-skilled - 18 collective agreements
- 25 trajectories
Bakery with
lunchroom
Buurtwinkel
Bredeweg
Low-skilled - 10 collective agreements
- 35 trajectories
Supermarket with
lunchroom
Table 2: Core characteristics of sample population
3.4 Semi-structured interviews and archival data
Semi-structured interviews stand at the basis of this study. According to the semi-structured
approach the interviews were structured around a predetermined set of questions (see
appendix A) but allowed for possible elaboration – from both interviewee and interviewer –
where necessary. The interviews lasted anywhere between 80 minutes and two hours. The
interviews were conducted in Dutch. The interview questions were subdivided into the four
main topics of this study: the employees, the product of service, the stakeholders and the
revenue model.
27
The interviews are supplemented with archival data such as newspapers, internet websites,
financial plans and business plans. The advantage of using multiple data sources is that a
certain topic can be explored from multiple perspectives (Baxter & Jack, 2008).
3.5 Experts and expert panel
Various specialists were consulted for getting deeper insights in the business models of the
WISE. Aukje Smit is one of the experts, and discussed the interview questions. She has been
a researcher for TNO in the Netherlands since 1995, and she is currently specialising in the
inclusive labour market. She wrote several publications for the TNO about the WISE.
Furthermore she actively cooperates with the Start Foundation for whom she developed an
instrument to determine the extent to which a company contributes to the employment of
people with fragile position on the labour market.
The results of this study were discussed during a four-hour during discussion group. Eight
experts and four entrepreneurs of the participating organisations of this study were available
to give their advice and opinions (See appendix C for a complete list of the participants).
Together more insights were gained in the key topics of this study.
3.6 Analysis and coding
The ten interviews were transcribed and subsequently analysed. After the first two interviews
were conducted the transcripts were analysed to check whether the respondents interpreted
the questions correctly. After each interview the most important findings were summarised to
get familiarised with the data at an early stage.
Based on these findings and after the re-reading of the interview transcripts the most
important and reoccurring topics were coded. Literature related to the topics has been used to
categorise the codes, which consequently led to a higher level of abstraction. This resulted in
a total of 31 codes that were divided in the four main pillars of this study: the employee, the
product/service, the stakeholders and the revenue model (See appendix D for codebook). The
codes combined with the quotes were systemically organized in a word file. The codes have
afterwards been systematically organised amongst the four quadrants that are visualised in
figure 4 (Small organisation and low-skilled work; small organisation and high-skilled work;
large organisation and low-skilled work; large organisation and high-skilled work). The
results have been analysed to find similarities and contradictions between each quadrant. The
coding is done by the author herself, which could have resulted in biased findings (Guba &
Lincoln, 1985).
28
3.7 Validity and methodological limitations
Internal validity can be improved by having a preliminary analysis of the first interviews to
see if they contain answers to the research (Guba & Lincoln, 1985). In order to ensure that the
respondents agree with the initial concepts it is important to guarantee the interpretive validity
(Guba & Lincoln, 1985). The results have been reflected to the different interviewees. The
findings can be confirmed and explored from multiple perspectives by triangulating the
different data sources (Baxter & Jack, 2008).
The generalizability of the findings might be limited due to the relatively small sample size.
Although the small sample size potentially impedes large-scale generalization, it does suffice
in making a first exploration of a novel research area. In case this research finds sufficient
indications that WISE’s indeed have divergent business models, there is justification for
follow-up research including a more elaborate sample. Another sample related issue is the
fact that this particular sample limits itself to the Netherlands. Consequential the
generalizability across countries is limited. However limited the sample may be, there is
chosen for a wide variety of size, sector, age, and employees. This wide variety helps the
reader in deciding whether the results are transferable to other contexts (Guba & Lincoln,
1985). This creates a sense of variation to the theoretical body (Eisenhardt, 1989).
4. Findings
The following section will present the qualitative findings that came forth from the analysis of
the case studies. The findings have been structured into four paragraphs; each paragraph
represents an element of the previously visualized business model (fig. 5). Each paragraph
gives a representation of the topics that have proven to be important during the analysis of the
interviews and the archival data of the participating organisations. Also special attention has
been given to the existing differences between large and small firms all across the various
subjects. Furthermore the differences between the firms that focus on low-skilled work and
the firms that focus on high-skilled work will also be presented whenever applicable. The
structure of this chapter is visualised in table 3.
29
Table 3: Structure of the results section
4.1 Creating Value
This section will describe the elements that are most important for creating value for both the
organisation and the society. Based on the experiences that were gained during this study it
seems that the most important resources of the WISE are the employees and the
corresponding adjusted firm processes. This section will – among other topics – present the
selection of employees, the target group, the percentage of disadvantaged employees in the
organisation, the risk of working with this target group, motivation, turnover and reintegration
trajectories.
Selection of employees
In contrast to regular organisations where employees usually apply for a job position, the
employees with a distance to the labour market usually find a job through different
institutions such as municipalities and social services. The institutions act as intermediaries
that provide the WISE with the people for which they are aiming. Particularly large
organisations with low-skilled workers are in principle willing to accept every individual
provided that there is capacity and that the individual has the ability to add productive
capacity. Occasionally these organisations search for a specific person for a job such as
drivers or administrative workers. Companies such as Balanz Facilitair, Emma Safetyshoes
and Opnieuw & Co cannot work with people with a severe disadvantage. Whereas the former
examples look for productive output, companies such as the Biga groep also offer sheltered
workplaces with the sole purpose of providing people with day care. There is an upper
boundary on the level of incapacitation of the people who can be included in programs other
than the ones offered by sheltered workplaces. Most employees get first a temporary position
in which all possible combinations are tried to make sure the person can find a place in the
organisation. Although the procedures are aiming to provide everyone with a suitable position
this is not always possible.
Two of the smaller organisations with low-skilled workers basically accepted every employee
as long as there was capacity in e.g. re-integration trajectories, a permanent job or day care
4.1 • Creating Value
4.2 • Strategic Choices
4.3
• Value Network
4.4 • Capturing Value
30
activities. Two of the other small organisations mainly accepted people with a realistic chance
to re-integrate in another job after their designated programs have finished.
Other firms such as Swink and AutiTalent work with a different group of people that
distinguish themselves by their relatively high intelligence compared to the group of low-
skilled workers described earlier. Often these people have a severe lack of social skills that
precludes them from society and often has proved to be a high burden on acquiring much
needed diplomas. Whereas this lack of social skills excluded these people from getting
regular jobs they are still able to work at firms such as Swink and AutiTalent; firms that focus
on real skills and capabilities rather than on diplomas or certificates. The work that Swink and
AutiTalent perform is more specialised and precise. In these organisations work comes first;
they do not like to be referred to as charitable institutions. One other distinctive factor is the
fact that these organisations do not always approach their corresponding target groups
through intermediaries but rather hire them directly through internal recruitment processes.
The next section will discuss in depth why some organisations decide to work with one target
group, whilst others decide to target an entire range of people to work with.
Target group
Previous literature (e.g. report VSBfonds & Start Foundation) stated that the success of the
social entrepreneur partly depends on the target group of people that they work with.
According to them, focussing on one target group can be one of the main factors for success.
Whereas ‘AutiTalent’ is working with people within the spectrum of autism and ‘De Prael’
with people with a psychiatric background, the other organisations from the sample work with
mixed target groups. There are various arguments in favour and against working with one
target group mentioned during the interviews. One of the advantages of focussing on one
single kind of handicap is the fact that you can optimally use the special talent of this target
group. In some cases this talent proves to be of exceptional level, despite the severity of the
handicap. One of the examples for this situation is the group of people that have autism (or
more specifically the syndrome of Asperger). Although they suffer from a severe lack of
social skills they have the ability to perform certain tasks with an extreme level of accuracy.
In these cases the handicap proves to be a relative blessing rather than a curse. This is the
kind of handicap that is utilized by firms such as AutiTalent. Eric Tonn from the ‘Buurtmarkt
Breedeweg’ in Groesbeek describes the main disadvantage of focusing on one target group as
follows:
“Although firms focussing on one particular handicap have the ability to become
economically successful they have the tendency to bundle personnel with all the same talents
but also deficiencies. It is these deficiencies that require large groups of very expensive
31
supervisors. Moreover, organisations like these eventually resort to the confine these
handicapped people to stick together, hereby leaving a lot of potential for improvement
unused” (Tonn, 2014)
From this statement one can learn that having a specific target group is not always beneficial.
In most cases the contrary is true and one can witness complimentary effects in groups of
employees that suffer from different handicaps. One of the exemplary firms for this finding is
‘Emma Safetyshoes’ where various groups of people are combined. There are people working
with mental disabilities (who are sometimes demotivated to work), but also people having
physical handicaps (who are often highly motivated to work). Resulting is a situation where
the highly motivated employees compliment the others with the result of a harmoniously
functioning labour pool. By having a mix of people with a mental handicap such as severe
depression and people with a physical handicap such as a hernia, one can achieve synergies
that would otherwise not be possible.
Percentage of people with a distance to the labour market
When considering the optimal mix of employees, scholars (e.g. Smit et al., 2008)
recommended a mix of people with and without a distance to the labour market in which there
is not a large majority of disadvantaged employees. In the Netherlands one often finds that the
majority of employees in the WISE is disadvantaged (Smit et al., 2008); this also holds true
for the sample at stake. The sample population’s ration has grown into its current position
mostly out of financial considerations. Some people in the sample argue that in case money
would not be an issue, it would be better to have a higher proportion of supervisors in order to
assist the personal development of the disadvantaged people. However, this ideal is often
struck by financial burdens, which are too high to take for regular WISEs. Apart from the
financial limitations firms run into other limitations, as explained in the following quote from
Balanz Facilitair:
“We took the following position as a starting point for our venture: you start out with 100%
disadvantaged people and you just keep adding regular people to create a workable working
environment for those who are disadvantaged. We have seen that this process should stop at
around 70/30 [disadvantaged/regular]. If you exceed this ratio by adding even more regular
employees you eventually have to change your business model in order to remain competitive.
This will become troublesome because your internal processes will be insufficiently suitable
to have even a small number of disadvantaged employees. You basically have to become an
ordinary facility service provider, making it impossible to run your firm with the social
missions it once had” (Cortenraad, 2014)
32
Another reason for WISEs to have a predominantly disadvantaged labour force is the fact that
regular workers are often more expensive to employ than people with a distance to the
market. Exemplary for this is the Biga group. They formerly were a sheltered workplace that
was unable to write black ink. Later on this sheltered workplace became an independent
corporate entity and increased the disadvantaged/regular-ratio from ‘7-to-1’ to ’12-to-1’.
Apart from positive economic effects it also had its impact on the sense of empowerment of
the disadvantaged employee. This – according to customer satisfaction surveys – led in return
to a higher motivation of the workforce. Despite the positive effects of increasing the
disadvantaged/normal-ratio it should not be forgotten that regular foremen are still much
needed in order to safeguard the guidance of those who are disadvantaged and the continuity
of the overall work quality (Biga Social Report, 2012). Next to this, normally capable
foremen have an efficiency increasing effect on the overall workforce. A remark to this
finding is that the organisations that argue in favour of a high percentage of disadvantaged
workers perform low-skilled labour. Exemplary would be the labour performed behind a
typical assembly line. Firms who expect more complex labour from their employees also need
a higher number of supervisors to safeguard the overall quality.
Not everyone is as determined that a WISE needs a predominantly disadvantaged labour pool.
Smit warns for the side effect of getting a non-commercial working culture (Smit, 2014). This
‘social working culture’ contrasts a commercial one where people perform to their highest
possibilities at maximum efficiency. In a social working culture there is a common notion that
everything can be taken ‘easy’, jeopardizing the initial goal of creating value. Additionally
organisations that do more complex work do automatically need more supervision.
The risk of working with disadvantaged workers
One of the most commonly thought of risks for working with this particular group of people
is the risk of having excessive absenteeism. Although logical this does not necessarily have to
be true, as is explained by Henk Smit:
“It is a well grounded prejudice that ones who are working with this group of employees will
be faced with high absenteeism. This is only true if you place these employees on unwished
positions. These people stay home because they do not feel at ease with their job. This is not
on account of the employees but rather on the employers who are not adjusting the work to
their ‘special’ employees’ needs.” (Smit, 2014)
Adjusting the work to the employee is thus one method of decreasing the level of
absenteeism. Moreover, it is beneficial to do everything in ones power to decrease the overall
level of stress. Emma Safety Shoes did just this by replacing the regular assembly line with a
33
system with small carts. These carts can hold 10 finished products before they move to the
next station. Not only has this implementation led to a decreased stress level and
correspondingly a lower level of absenteeism, it also directly led to a 20% jump in output.
Another – and even simpler solution for stress reduction – is Swink’s and AutiTalent’s
allowance for flexible working hours. Herewith they give freedom to their employees making
them more empowered and less stressed out. Although these examples both show promising
results they are no bulletproof solution for every target group. Whether or not stress reduction
and workplace adjustment are successful still largely depends on the specific type of target
group one is working with.
Whereas flexibility is a highly desirable characteristic of a WISE-entrepreneur it is also a
difficult element for some of the disadvantaged employees at stake. Employees suffering
from mental disabilities, such as autism, are known for being relatively inflexible, making it
difficult to have adaptable expectations from them. A last addition to the pool of risks is the
high unpredictability of government legislation. Governments struggle in making stable
policies, something that is related to the relative novelty of the field.
Training and motivating the employee
Alongside ‘regular’ on-the-job training – which is also commonly found in normal enterprises
– WISEs sometimes allow their employees to follow additional training aimed at learning a
particular craft or skill. This is in order to allow for their flow into a regular job independent
of an organisation such as a WISE. Additionally one regularly finds coaching for social
competencies such as work ethics, structure, and planning. What sets the WISE apart from
regular enterprises is that they often pay special attention to one’s personal private life. The
underlying philosophy is that once a person is not feeling well at home, he will not feel well
at work. An example for this is the training in public transportation provided by Buurtmarkt
Breedeweg. They provide this training with the underlying thought that it does not only
empower their employees to travel to work, they also empower them to open up an entire new
social world; a world in which they can travel to any place they desire. As a concluding
statement it is fair to say that WISEs try to go the extra mile in order to ensure the overall
well-being of their employees.
As mentioned previously empowerment can be a serious motivator. Often disadvantaged
employees are already intrinsically motivated due to the fact that they have a job; something
that is not natural to this group of people. Yet, it is shown that the sharing of corporate results
can be an additional motivating force. This vulnerable group of people experiences this as a
34
sign of belonging. Along with this comes the notion that it is important to hear this group of
employees out and actually follow up on their feedback.
Turnover of employees
Despite the relatively young age of some of the study participants it is fair to conclude that
the overall employee turnover in the sector of the WISE is low. All participating
organisations indicated that the turnover is very low (apart from the employees that
participated in reintegration trajectories with the aim to find a job somewhere else). Although
it is difficult for the participating start-ups to draw conclusions, they also indicated that the
great majority of employees active at the start are still working in the organisation. This can
be explained by the fact that having a job for people with disabilities is not obvious. They
appreciate the fact that they have a job and hence are often very loyal to the employer. During
the interviews it became apparent that most of the employees do not have much of a private
social life next to their professional career. Indicative for this is also the fact that some
employees find it hard to take a holiday break and rather prefer to keep on working. Peter
Hobbelen (Emma Safetyshoes) describes the positive impact resulting from this as follows:
“When employees chose to stick around for a long period of time it creates a sense of
community and team spirit. People really get to know each other and this creates a sense of
belonging. This contributes to the perception that they [the employees] create a special
product or service together. That is what we strive for, long-term sustainable
employment.”(Hobbelen, 2014)
Reintegration trajectories
Short-term reintegration trajectories (+/- six months) have found to have little to no positive
effect on the chances of actually reintegrating people into new careers in a regular
organisation. Employers find various reasons for this finding: first, the majority of short-term
trajectories is simply too short to sustainably develop the skill-sets of the participants.
Second, the labor market is still a very competitive place in which it – due to the current
economic crisis – is increasingly difficult to get a job. Despite the fact that these trajectories
do not seem to meet their goals there are some positive side-effects described by the
employers that are worth mentioning. Although the distance to the labor market is not getting
any smaller it can also be said that it at least is not getting any larger either. Additionally, be it
minimally, the participants often do benefit from small incremental personal developments
that might prove beneficial in the future.
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4.2 Strategic Choices
As described before in the conceptual framework there are various elements that belong to the
strategic choices that a firm can make. This section will describe the positioning and value
proposition, the marketing and the client contact together with the image of the firm. Table 4
displays from each organisation whether the main focus is business-to-business (B2B),
business-to-consumer (B2C) or business-to-government (B2G). The focus of the organisation
can influence the strategic orientation.
Table 4: Overview participants B2B/B2C/B2G
Positioning and Value Proposition
When considering the level of pricing it is often assumed that social firms – given the
subsidies provided by national governments – act on the lower end of the price spectra.
Despite the logic underlying this assumption, private social enterprises do not receive the
large amounts of subsidies that some people expect. What all of the firms in the sample had in
common is that they heavily prioritized on the product/service. No social enterprise could
succeed when it is compromising on product/service quality. Consequentially, one can see
that firms on the one hand have a cost benefit when considering subsidies received whilst on
the other hand they face a disadvantage when considering the additional ‘effort’ needed to
guarantee top of the line quality. In the end one can see that the social enterprises of this
sample act on a price level that is more or less following suit with ‘regular’ high-end
enterprises. One of the possible reasons for this positioning is the fact that social enterprises
often utilize additional personnel in order to perform the same task (e.g. two people with a
labour productivity of 50% instead of one). Customers often enjoy a better overall experience
because of this additional effort. In the case of Balanz Facilitair this results in above par
performance that in the end partly offsets the pricing disadvantage. Other organisations
indicate that they can offer the customers continuity, as the turnover is low resulting in
employees getting accustomed to the specific desires of the customer. Whereas some of the
organisations would go for machinery, others that are making products often see working
with people as an advantage. By preferring manual labour to automated labour a firm can be
AutiTalent B2B/B2G
Swink B2B
Biga groep B2B/B2G
Emma Safetyshoes B2B
Balanz Facilitair B2B/B2G
Krinloopwinkel Opnieuw &
Co
B2C
De Prael B2C
Driekant B2C
Buurtmarkt Breedeweg B2C
Van Hulley B2C
36
adaptive to specific customer needs. Some organisations find that the social value they create
is also part of the value proposition for the consumer.
Marketing
When taking an overall perspective one witnesses that the social goal is often used for
marketing purposes. The majority of the companies agree on the fact, as mentioned in the
section above, that the quality of the product or service comes first before one can use the
social goal for marketing purposes. Henk Smit (Driekant) illustrates this as following:
“First of all the product should be of high quality. I would not want to be in business with a
client solely because he sympathizes with my employees. That is not a sustainable
relationship. In the long run this relationship will not survive” (Smit, 2014)
For this reason it is of utmost importance that the overall product quality is beyond doubt in
order to satisfy a long-lasting customer relationship. Only after this quality benchmark is
reached one can use the social target for marketing purposes. Over the last few years one can
see that social value enjoys a much higher esteem. Some of the larger firms from the research
pool are performing on the area of facility services. Customers in this branch are often openly
looking for affiliation with the label ‘MVO’ (Maatschappelijk Verantwoord Ondernemen;
Corporate Social Responsibility). By engaging with the WISE’s in the sample, large
corporations operating in the facility service industry open the door towards ‘MVO’, herewith
proving the fact that social responsibility is a valuable marketing asset. In particular the
facility services (such as the ‘Biga groep’ and ‘Balanz Facilitair’) benefit from this kind of
marketing. Opnieuw & Co, a store concept selling usable second hand items, does not see
notable sales increases through the marketing of their social purposes. What is noticeable is
that the general sense of goodwill is already high resulting in a large group of people who are
willing to donate their goods to the store. The smaller organisations in the sample are all
focused on B2B. In general, one sees that the companies that actively use the social purpose
in their marketing efforts often see increases in their overall revenue. Van Hulley describes
their advantage as following:
“The fact that we work with this group of women is an essential part of the decision to order
our product. Clients not only find the product very appealing, but also the fact that they play
a supporting role in helping these women towards a paid job.” (Creutzberg, 2014)
A small group of the sample does not yet benefit from the social purpose in the marketing or
does not use the social purpose in the marketing. It is interesting to see that Swink – in its
nascent state – actively used the social purpose in their marketing. The result was that people
37
expected a low quality of the services given that they worked with this group of handicapped
people. Paul Malschaert therefore decided to change their marketing strategy and not use the
social purpose at all. Soon they noticed that the sales increased. It is only since a short time
that Paul Malschaert notices that the ‘MVO’ gets important and therefore slowly brings the
social purpose back in the marketing. One remarkable exception of an organisation that
consciously does not use the social purpose in the marketing at all is ‘De Prael’. The
reasoning behind this is that they don’t want their employees to be seen as victims. They find
– like the other organisations – the quality of the product and service most important. They do
not wish to use their unique group of employees as a unique selling point.
Client contact and image of the firm
According to the participants the employee plays an important role in the client contact and
hence influences the image of the firm. The employees can both have a positive as well as a
negative influence on the relation with the client. Positively often in a surprising matter since
some clients do not expect that this kind of employee is able to work. Also, what one often
sees and experiences on the spot is that they take extensive time for the client. A negative
effect might arise in cases in which people are unaware of the limitations of the employees
and hence have disproportionate expectations. As mentioned before in section 5.1 some of the
employees lack flexibility that can in some occasions result in a troublesome relationship.
Due to this shortcoming some of the organisations - in particular the ones focussing on C2C -
estimate to lose some of their clients
Most of the organisations try to solve this problem by using foremen that try to guarantee the
quality of the service. These foremen see when something goes wrong and try to intervene
and show the employee how the task should be done. It also happens that these foremen talk
with the customer when they see that something goes wrong and explain the situation. This
often results in understanding on the side of the customer. One can also see that once
someone is convinced about the product or service that they remain loyal to the company.
4.3 Value Network
The WISE has various stakeholders that play an important role and make their existence
possible. So far the employees have been discussed in section 5.1, the clients in 5.2 and the
remainder of the important stakeholders will be discussed in this section. When asking the
participants whom they recognized as the most important stakeholders they often named the
government, but also the ‘UWV’, ‘sheltered workplaces’, financiers, shareholders, social
services and other agencies. The majority of their partners resided in the social domain. What
one can see is that the WISE and its partners have mutual interests in each other. Therefore it
38
is important that this relationship is optimal. This section will first describe the relationship
with the government. Second this section will describe the relationship with the remainder of
the stakeholders. This section will conclude with a notion on the sharing of knowledge.
Government
The government and in particular the municipalities can play an important role for the WISE
in various fields. First of all the municipality could for example offer the WISE financial or
advisory support. Second of all, in some cases the government is the recipient of some of the
services. The experiences with the government are varying. Whereas some organisations are
satisfied with the relationship with the government, others describe this relationship less
positively. Some organisations find that there is no relationship with the government, even
though they wished there was. All organisations perceived the relationship with the
municipalities as very labour-intensive. Also the majority perceived the relationship as
conservative. The Prael describes it as follows:
“The relationship with the municipalities is okay, yet of very conservative nature. (…) There
are a lot of slow ‘one size fits all’ solutions. While this group has an urgent need for
customization and creativity. There is an absolute necessity to make these two colliding
worlds fit together” (Kooy, 2014)
When comparing the small and large organisations in the sample the relationship with the
government varies. Smaller organisations often do not find the time/money to get the
maximum support from the government, as the relationship is very labour-intensive. Besides
support, they sometimes face difficulties with selling their services to the government. The
following statement illustrates this:
“The municipality of Amsterdam awarded various assignments to parties other than Swink.
This is partly due to my own reserved stance regarding marketing and sales. Yet, I also know
that at various moments I just did not meet their standards. I was too small, or was not able
to make positive returns and as a result they would not award me with their contracts.
Currently however, they state that they really prioritise on social firms so I am waiting for
them to ‘walk the talk’” (Malschaert, 2014)
This statement illustrates the ‘disadvantage’ of being a small organisation when considering
government relationships. The larger organisations possess a clear advantage as the
government is usually looking for a larger party to buy services. Additionally, these larger
39
firms have the resources (both time and money) to invest in the labour-intensive nature of the
much-needed strong government tie.
Some organisations (e.g. Opnieuw & Co) that operate in different municipalities do also
recognize differences between municipalities. In general they find that the smaller the
municipality the easier the cooperation. Marcel van Goch from ‘Opnieuw & Co’ describes
this as following:
“In small municipalities officers have the possibility to – as a figure of speech – sit together
with their collaborators and discuss manners over a cup of coffee. This makes them very
adaptive and versatile, creating a sense of approachability and receptivity. The larger the
municipality is, the harder it gets to truly listen to each other’s needs.”(Van Goch, 2014)
Other stakeholders
Apart from the aforementioned municipality as stakeholders, other important stakeholders are
the financiers and shareholders. These include banks, but also foundations. Foundations
support organisations financially at the start or during projects in which the organisation
hopes to growth. Some of the organisations have shareholders. In this sample the shareholders
sometimes represent the care facilities that provide for the target group. For many employers
the ‘UWV’ is an important organisation that comes with its own set of shortcomings. Many
describe the ‘UWV’ as a bureaucratic organisation, that responds slow to their wishes.
Another shortcoming resides in the fact that entrepreneurs often have multiple contact persons
within the UWV, each taking care of various people. This makes contact very strenuous and
unnecessarily increases bureaucracy. One of the entrepreneurs described the need for a quick
response from the ‘UWV’ in the case in which they find a new job for someone. The
following quote illustrates what often happens:
“They literally tell or email me [UWV]: “we have six weeks to approve the trial placement
because that is the law” (Anonymous, 2014).
Sharing of knowledge In general one can see that organisations are very open towards sharing their knowledge with
other social enterprises. Creating employment opportunities for the disadvantaged is what
motivated most of the entrepreneurs. With this common motivation in mind they are willing
to collaborate and share their knowledge with other organisations that have the same purpose.
Exemplary for this commonality was the fact that the Biga group welcomed approximately 35
organisations lecturing them on their unique way of getting low absenteeism numbers.
40
Driekant started the ‘Hogere Ambachtsschool’; a school with the purpose of transferring
knowledge about social entrepreneurship. The sharing of knowledge is not limited to merely
social enterprises themselves, but also regards other social institutions. The majority of the
entrepreneurs indicate that the sharing of knowledge between these organisations is prone to
improvement.
4.4 Capturing Value
Although creating organisational and societal value is the prime motivation for the WISE,
capturing value should also be considered as an important part of the business model. It is
important that the organisation is a financially healthy company in order to safeguard
continuity. While a regular organisation obtains income only through the market, the WISE
sometimes uses a mix of resources. This mix of resources is sometimes necessary to
compensate the additional costs that entrepreneur has due to the target group. It is for this
reason that this section will describe the additional costs that the WISE has together with the
grants/compensation that they receive for these costs. Furthermore this section will review
whether entrepreneurs find sufficient revenue streams to cover their costs. After this there will
be a section describing how the entrepreneur tries to compensate this cost disadvantage in
case there is one. This section will conclude with a review on what happens to the eventual
profit.
Additional costs
All the organisations in the sample recognised the personnel costs as the largest contributing
cost factor for their organisation. The participants were asked if they could recognise any
additional costs due to the fact that they worked with a group of disadvantaged workers. The
most frequently mentioned additional costs were the costs for the lower productivity of the
employees and the cost for additional supervision. The organizations that focus on high
skilled work did not mention the lower productivity as a major cost factor. Most of their
employees are able to get a ‘normal’ labour productivity. The remainder of the sample
mentioned these costs as the only substantial extra costs and said that the other additional
costs could be neglected or were even non-existent. Other extra substantial costs – although
only named by a few organisations – are the higher costs due to quicker deprecation of
equipment, expensive housing due to required additional surface and the additional education
to develop the employees.
Compensation and subsidization of the additional costs
The participants were asked what kind of subsidies they received and if these subsidies
compensated the additional costs that they face because of their particular business model.
41
Table 5 summarizes the additional costs that the participants recognised and if they are
compensated for these extra costs. The main subsidies that most organisations receive are the
compensated wages due to uncompetitive productivity. The organisations that worked with
reintegration trajectories were paid per trajectory. Extra supervision and additional
training/education is in most cases not or only partially compensated. The deprecation costs
of equipment and the additional housing costs are not compensated.
Extra costs Compensated by grants or trajectory funds?
Lower productivity Compensated in almost all the cases
Extra supervision Most cases not compensated or partly
compensated
Other personnel related costs Most cases not compensated
Additional training/ education Most cases not compensated
Earlier deprecation of equipment No compensation
Extra housing costs (more people per m2, or
people need more m2)
No compensation
Building modifications Sometimes compensated
Additional expenditure on adaptations of
equipment
Usually compensated
Table 5: Overview additional costs and compensation
Remarkably all large organisations in the sample indicated that the compensation outweighed
the additional costs. Some of the smaller organisations feel that the compensation does not
always outweigh the additional costs. Also organisations such as AutiTalent and Swink – who
employ people that do high-skilled work – say that the compensation do not outweigh the
additional costs.
Additional income
In all the organisations the market income is the largest part of the revenues (varying from
50% to almost 100%). Apart from the grants and trajectory funds that compensate the
additional costs, the WISE can also have other types of income. The major part of the
participants indicated that at least at one time they received donations from a foundation. The
largest part of the respondents did not have any income in the form of goods or services. Van
Hulley and Opnieuw & Co indicated that they work with volunteers. Opnieuw & Co gets old
products that they recycle. Furthermore Buurtwinkel Bredemarkt makes use of a cheap
building that was offered to them and a van that was sponsored by the entrepreneurs in the
neighbourhood. Some organisations (e.g. De Prael) have separate day care departments that
get compensated on a per person basis.
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Compensating the cost disadvantage
Keeping the supervision costs as low as possible can partly compensate for the additional
costs that the entrepreneur faces. Furthermore it is of utmost importance to critically review
the working processes to ensure that everyone performs to his or her highest efficiency.
Swink and AutiTalent are working with job carving to make their workers most efficient.
Some of the firms see that these methods of saving cannot offset parts of the disadvantages
and are correspondingly suiting for a smaller profit.
Diversifying the business model
Various entrepreneurs in the sample showed that the diversity in the organisation is crucial.
Some of them do not look at each individual business unit, but rather at the entire
organisation. This is often seen as the success of the organisation. This is illustrated by the
following quote:
“If one is strictly focusing on all separate entities in an organisation one can only conclude
that lots of them need to be divested. Only through the diversity of operations we can run a
cost-efficient enterprise that safeguards value to all stakeholders (Smit, 2014).
Another example is Buurtmarkt Breedeweg, a supermarket combined with a lunchroom. The
manager Eric Tonn is not looking at the revenues of the separate units of the organisation.
Rather it is the diversity that makes the success that people come to this supermarket and feel
attracted. At the Biga group you see that they accept every target group, even with a severe
disadvantage. Their sheltered workplace generates large losses, but by combining it with
lucrative sidelines the organisation is successful in the end.
Profit
The organisations in the sample were – with the exception of some of the start-ups – all
profitable enterprises. The profits are mainly reinvested into the organisations in order to
propel growth and create more employment options for the disadvantaged people. Sometimes
parts of the profits go to the shareholders. But what you often see is that the shareholders
reside in the healthcare sector and find it important that there are employment opportunities
for their clients. It is for this reason that they often decide to have all the profits reinvested in
the organisation. Some organisations save the profits as buffers for economically desperate
times during which government grants are far from certain.
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4.5 Concluding section
This section will summarise the results of this study. It is remarkable that the majority of the
entrepreneurs perceive the business model as an advantage, provided that the additional costs
of working with the target group are correctly compensated. It is often the mix of the
elements that makes the success. The model displayed in figure 6 summarizes the most
important relationships found during this study.
Figure 6: Overview of results
Empowerment and the sharing of results can both increase the motivation of the employees
and hence increase the labour productivity and the revenue generating potential. The degree
of work adaptation and in some case the adaptation of the workplace can increase the labour
productivity and hence the revenue generating potential. Some target groups have extra
difficulties with stress and pressure. In these cases the adaptation of the work can reduce the
level of stress and pressure and herewith lead to a decrease in the level of absenteeism. This
in the end should contribute to higher revenues.
This study showed that in most cases the marketing of the social purpose has a positive
influence on the sales volume. However, in some cases it worked contradictory. An
organisation should decide for itself whether it wants to use the social purpose in the
marketing or not. Nevertheless, for every organisation it is important to openly communicate
about its limitations. This will increase customer loyalty and hence the revenue generating
potential.
44
This study also showed that the value network plays an important role. The relations in the
social domain are in many cases described as laborious. Despite the fact that all firms stated
the laborious relationship with their stakeholders it has been observed that larger firms seem
to have somewhat of an advantage. This leads to the conclusion that firm size is a positive
contributor to the ease of partnership creation, which in turn is a positive contributor to the
revenue generation potential.
5. Discussion
This chapter provides important discussion on the newfound insights from the previous result
section. The theoretical framework of chapter two is combined with the findings in chapter
four. The findings are analysed according to deductive manner, meaning that existing
literature is compared to the findings to make sense of them. This chapter will first discuss the
elements of the business model, then the practical and academic implications and ends with
the limitations of this study together with the directions for future research.
5.1 The business model of the WISE
The Employee
This study showed that, like any other organisation, the employer of the WISE should treat its
employees equally. Employers attached great value to the fact that both people with a
distance to the labour market and their ‘normal’ counterparts are treated equally. Adapting the
work to the employee and when necessary adapting the workplace is found to be one of the
main contributors to the success of the WISE. The highest productivity can be achieved by
adapting the work to the employee. Next to the efficiency gains that the firm will enjoy,
adapting the work can also contribute to the overall well-being of the employees. The
adaptation of the work leads sometimes to a reduced level of stress and pressure and hence
the overall well-being of the employee will increase. This does not only have a positive effect
on the employee, it also decreases the level of absenteeism in the firm, which in turn is good
for overall firm potential. The WISE is characterised by its multitude of goals: economic,
social en socio-political goals (Nyssens, 2008). The social goals are well reflected in the
additional attention some employers spend on their employees. Numerous articles (e.g
Davister et al., 2004) have paid attention to regular on the job training and special social
competences training that the WISE offers, but there is little to no knowledge available on
additional trainings aimed at the improvement of an employee’s home situation. This study
showed that some WISEs offer these additional trainings reflecting the social and economic
45
goals of the firm. Social in the sense that it improves the overall well-being of the employee,
economical as the overall well-being of an employee in turn increases productivity.
While the development of the employees is seen as something very important, financially it is
not possible to give an employee the optimal individual support. It was previously shown by
scholars that the optimal configuration between workers with a disadvantage and without one
would be best if these groups were mixed. Articles have shown that the employee mix should
not be too skewed towards the employees with a disadvantage (e.g. Smit et al., 2008). One of
the main reasons for this is the suboptimal reintegration result. However, this study showed,
depending on the difficulty of the work, that a large majority of disadvantaged people is in
some occasions the best – at least financially seen – option. As a positive return one can see
that the overall capacity for incapacitated employees increases. The positive financial side-
effect comes forth from the fact that firms receive subsidies for disadvantaged employees,
making their overall labour costs very competitive. This study also showed that the more
complex the work becomes, the more regular employees are necessary in order to sustain the
desired level of quality.
In contradiction to previous literature (e.g. Report VSBfonds & Start Foundation), this study
showed that in most occasions a mix of various target groups is regarded as optimal. Each
target group has its strong sides as well as their shortcomings. By combining different target
groups the groups can complement each other and herewith offset each other’s disabilities
and create a sense of synergy. Nevertheless there are also imaginable situations in which one
can focus on one sole target group. This would for example hold true for the target group of
people with autism. This has to do with the fact that this group of people asks for a very
specific treatment. This treatment works best if there is no intervention of other people asking
for concessions in treatment.
Product/Service
When going back to the theory about social entrepreneurship, an entrepreneur sets the social
mission at the first place (Dees, 1998). However, this does not mean that the overall quality of
the product or service should be sacrificed for this condition. This study found that is rather
the opposite. High priority should be given to the quality of the product and service, only then
it is possible to have a sustainable relationship with the client. Social entrepreneurs do not see
themselves as a charity but rather as a genuine commercial business. A firm should only use
the social goal for marketing purposes if, and only if, the high quality of the end-product or
service can be guaranteed. This study found that in most cases the organisations that apply
their social mission for marketing purposes derive some of their success from it. Firms
46
focusing on B2B sometimes find that their customers are looking for affiliation for the
‘MVO’ label and hence pick for these organisations. Firms that focus on B2C generate
goodwill amongst their prospective customers by broadcasting their social missions;
something that eventually leads to higher sales figures.
Although an organisation should decide for itself whether or not they want to use the social
purpose in their marketing, open communication on the limitations of the employees remains
important. While in some organisations marketing already made it clear for the customer that
there are people working with limitations, in other organisations this is not as clear. The
WISE should therefore have an open stance towards their customer, with foreman trying their
best to ‘guide’ the expectations of the customer.
Value Network
Jonker et al. (2012) describe the new social business model as a model in which an
organisation is operating in a network of various stakeholders in which they all play an
important role and where organisations are mutually dependent. In order to get the most out
of these relationships it is important that stakeholders treat each other equally (Jonker et al.,
2012). Alongside the traditional stakeholders such as suppliers and customers the WISE also
possesses an array of stakeholders in the social domain. The study findings do underwrite the
importance of this last group of stakeholders and the relationships that they bring forth.
Literature describes the ‘ideal’ entrepreneurial setting as a setting in which partners treat each
other as equivalents. This ‘ideal’ situation is to some extend reflected by this study. All firms
seemed to strive for this ‘ideal’, yet some firms find great difficulties in receiving the mutual
partnership, making the abovementioned ‘ideal’ situation still a utopia. Like earlier described
by Smit et al. (2011), the relationship with the government is often described as an important
relation, be it of arduous nature. The relationship with the municipality can take mainly two
forms: 1) the municipality as a sales partner and 2) as a supporter or sponsor (e.g. financially).
Typically one finds the first kind of relationship in larger social enterprises. The majority of
the smaller organisations in the sample focused on B2C and not on B2G. The small
organisation that wished for a relation with the government did not get this sales position as
the government described them as too ‘small’. This holds potential for future improvement:
smaller organisations might look for mutual collaboration to enhance their own position as
small social enterprises.
Apart from the size argument there is another possible explanation for the fact that
governments rather work with larger enterprises. Large enterprises often perform simpler
47
tasks that hold very limited risk. One could think of municipality service or cleaning services;
straightforward tasks that can be performed by almost anyone. Meanwhile, smaller
organisations have difficulties competing with their large counterparts because they are less
efficient. Instead these smaller organisations often focus on niche tasks that are often of more
complex nature. This complexity of nature could be the reason that withholds governing
bodies of subcontracting these tasks to social enterprises. Instead they rather go for regular
enterprises specialised in the same kind complex labour (at the expense of the social firms).
The non-financial supportive function of the government is often a lot less spontaneous.
Although every WISE – be it small or large – indicates that this relationship is arduous and
labour-intensive, smaller firms seem to have more difficulties. The main reason for this is the
fact that small enterprises simply do not have the resources to maintain a healthy relationship
with the government.
Social enterprises are known for their open stance towards the sharing of knowledge (Díaz-
Foncea & Marcuello, 2012). This study confirmed this and showed that firms are in particular
willing to share their knowledge with other social enterprises with the hope to receive
something back in return. Their open stance towards the sharing of knowledge can be
explained through their motivation: the creation of employment opportunities for people with
limitations. Social enterprises within the Netherlands also wish to share their knowledge with
other important institutions such as the UWV, thereby creating a win-win situation for both
parties. Unfortunately this is often not the case and can hence be improved. Based on the
findings it would be beneficial when the institutions’ approach becomes more entrepreneurial.
As indicated before, one of the possible improvements could be the appointment of dedicated
personnel for specific firms. Moreover, till now WISEs experience difficulties when needing
a quick response for approval of a trial placement from institutions in case a vacancy comes
free. A quick response from the institutions is necessary given the short time span in which
these vacancies tend to be available.
The Revenue Model
As shown by the existing body of knowledge the WISE acquires a mix of market and non-
market resources. This is confirmed by this study. Furthermore it found that within the sample
the majority of the income is generated through the market. However, it also found that in
most cases governmental financial support is still deemed necessary to compensate for the
additional costs that the entrepreneur faces. While in other countries barter or voluntary
services (e.g. volunteers) are more common, this is not commonly seen in the Netherlands
48
(See for more information also appendix E). Only in a few cases the WISEs found additional
income through for example the use of volunteers.
Like earlier literature, this study found that the most important cost factor that a WISE faces
is represented by the additional expenditure derived from the employment of disadvantaged
people. This cost factor is composed out of a relatively low productivity and the necessity to
have additional supervision. All sample members focusing on low-skilled work confirmed
these two cost components, stressing the importance of this factor. The organisations focusing
on high-skilled work see the additional supervision as the main cost factor. Other important
cost factors stressed by some of the sample members are the costs for the education of the
employees, their development, housing costs and administration costs. Whereas most
entrepreneurs did not name administration costs, it is still plausible that these might be
substantial. Despite the fact that these costs find little to no origin in existing literature, they
are still worth investigation. One should question whether some of these additionalities
simply are non-existent or whether some of the entrepreneurs do not seem to recognize them.
This study showed that the large organisations perceive that they receive enough government
compensation whereas some of the smaller organisations sometimes struggle with the amount
of the subsidies they receive. A possible explanation could be the scale advantage of larger
organisations and the corresponding ability to organize their workforce in such way that they
are more efficient. Furthermore both sample organisations with high-educated employees do
indicate that the financial compensation does not outweigh the additional costs.
In order to offset the additional costs that are not financially compensated by the government
there are several options that a firm can put into effect. One of these options is the
diversification in the organisation (O’hara & Shaughnessy, 2004). Cooney (2011) described
two options: 1) diversifying the products and services within one single business venture and,
2) diversification through the dispersion of multiple ventures. This study also showed several
cases in which the entrepreneur described the diversity of the organisation as the key to
success, focusing on the total organisation, instead of looking at one single element. The
socially significant, loss-making elements can be compensated with lucrative side-elements.
Furthermore this study found that organisations with low-skilled workers try to compensate
their cost disadvantage by keeping the supervision costs as low as possible. Gaining
efficiency in the organisation can do this. In the organisations with high-skilled workers one
can find job carving as a tool to keep the costs as low as possible.
49
In some situations one can see that both the governmental support and the above-mentioned
measures still do not outweigh the additional costs and hence result in lower profits or even
losses. In case of positive returns these organisations typically reinvest in their organisation in
order to sustain their existence or growth in order to safeguard the creation of employment
opportunities.
Remarkably financial sustainability is indicated as an important part of the ‘new’ business
model (Jonker et al. 2012). Continuity is a very critical part of the business model (Jonker et
al., 2012). Whereas profit driven firms tend to stress short-term profitability, social firms
seem to be focussed on the realisation of long-term sustainability. This reveals itself in robust
financial planning and a certain degree of risk-averseness. This has at least partially to do
with the unpredictable ‘revenue’ streams of social businesses. A proportion of the firms in
this field is greatly depending on government subsidies and therefore has difficulties in
predicting next year’s financials. Conse uentially these firms resort into conservative
spending patterns in order to ensure their long-term continuity. This results in an interesting
paradox in which one can see that social firms can only predict short-term financials and are
yet focussing on long-term sustainability.
5.2 Academic implications
So far the literature on the business model of social enterprises has been scarce (Santos,
2012). There is hardly any research on the business model of the WISE, let alone research in
the Netherlands. This study is the first attempt to close the identified research gap of the
WISE business model. By relating the findings from the case studies to the literature from
different disciplines this study tried to gain more insights in what the business model of the
WISE looks like within the context of the Netherlands. This research contributed to the
current body of literature by getting insights in the four main elements of the business model:
creating value, capturing value, strategic choices and the value network.
5.3 Practical implications
Several practical implications reside within this study. Various groups of people can benefit
from this study, such as (nascent) social entrepreneurs and policy makers. Compared to other
European countries the Dutch WISE is not supported to the same extent (See also the
extensive literature review on this topic in appendix E). This might clarify the relatively small
sector of the WISE in the Netherlands. This study is one of the first in the Netherlands that
focused on the business model of the WISE and emphasizes the importance of this particular
kind of business and the governmental support that this type of enterprise needs. This study
underlined the importance of the close collaboration of social enterprises, municipalities and
50
other institutions. In many situations the relationship with the municipalities or other
institutions is suboptimal and should hence be enhanced. In the future small organisations
need to improve their mutual coherence in order to boost their position as small firm. This
should lead to a more prominent position on the radar of both municipalities as well as other
assisting institutions, which in turn should have a beneficial effect on the commercial
performance of these firms. Also it could benefit to the sense of sustainability of the sector.
With a strong representation of even the smallest firms the sector as a whole will be perceived
as ‘here to stay’, something that should have its upshots on the stability of policymaking.
Since this has been pointed out as one of the areas of improvement this change should lead to
a more suitable environment for the entire sector. Lastly stable policymaking is also a sign of
recognition and acknowledgement, two factors that should be seen as tokens of appreciation.
Apart from the abovementioned implications this study provides insight on the various
success factors of the WISE. This thesis helps (nascent) social entrepreneurs to become aware
of their business model. Furthermore it might help to improve the aspects deviating from the
best practices as presented in this thesis.
5.4 Limitations
This paragraph will give a concise overview of the various limitations that need to be taken
into consideration when interpreting the results. Some of the limitations are inherent to the
chosen methodology, whilst others are caused by the limited amount of literature available
and are hence inevitable.
The choice for a qualitative research approach is deduced from the fact that the existing body
of literature is still in a nascent state and hence does not provide sufficient basis for
quantitative research. The overall generalizability is consequentially jeopardised since the
relatively short time span of this study did not allow for elaborate sampling. This was not the
foremost concern given the explorative nature of the study; the purpose was not necessarily to
achieve optimal generalizability but rather to make an initial exploration and provide a deeper
inside into the business model of the WISE.
Next, all the participants from the research sample were selected from the network of Social
Enterprise NL. A disadvantage of selecting all the participants from this network is that they
might be susceptible to groupthink. On the other hand there are reasons to assume that the
organisations that join this network are in general more willing to share their knowledge. The
fact that they join this network already indicates that they want to share knowledge in order to
strengthen the social enterprise sector.
51
Another limiting factor arises from the quadrants of the analysis framework (size and level of
education) that are not equally represented. The number of WISEs that perform high-skilled
labour with disadvantaged people within the Netherlands is very limited. There has been a
search outside of the scope of the network of Social Enterprise NL to find additional members
of this group but none of these endeavours were fruitful. It is for this reason that only one
small and one large organisation with disadvantaged high-skilled workers participated. The
two other quadrants with low-skilled workers were both represented by four organisations.
Although the quadrants give insights in the differences between the various firms they do not
represent sufficient members to guarantee sufficient generalizability.
Additionally, due to the limited time frame of both this study and the participating
entrepreneurs (the interviews lasted approximately anywhere between 80 to 120 minutes) it
was not possible to go in depth into each element of the business model.
A last limitation is the availability of archival data. While some of the organisations were
willing to share ample documents providing key figures of their operations, others could not
or would not share these documents with the same ease. Again others were still in their start-
up phase and hence could not provide any underwriting documents simply because they did
not exist yet. This again contributes to the limited generalizability of the study.
5.5 Future research
This research took the first step in exploring the business model of the WISE. To overcome
the limited generalizability that is inherent to this study future research should investigate
each element of the business model in depth. In a later stadium quantitative research can
improve the generalizability of the findings. The model based on the findings presented in
section 4.5 should also be tested on a larger scale. Whereas this study has worked with a
framework prioritising on size and difficulty of work, other variables may also be able to
bring forward additional insights. Due to the limited time frame of this study only the
entrepreneurs of the participating organisations have been interviewed. Future research could
also investigate the experience of the employees in the organisation. The majority of the
participating organizations were able to generate sufficient income to at least achieve break
even. It is arguable that firms who are not in an as privileged situation face different or more
pronounced difficulties. Where best practices are worth copying it is just as important to
know how to avoid pitfalls. It is for this reason that it would be interesting to see how the less
successful firms cope in today’s business environment.
52
6. Conclusion
This concluding chapter answers the research question: What does the business model of the
Work Integration Social Enterprise look like within the context of the Netherlands? This
question was examined by investigating the four main elements of the business model:
creating value, capturing value, the value network and the strategic choices. The main success
factors of this particular type of business have been explored through the usage of case
studies.
This study showed how the WISE could create value (societal as well as customer) with one
of its most important ‘resources’: the employee and the corresponding processes. Among
various contributors of success this study showed that a mix of target groups is in most cases
of essential importance due the synergies that the firm derives from it. In case target groups
prove to have an exceptional talent in a specific field, organisations better focus on this sole
target group. This study also showed that the ratio between regular employees and people
with a disadvantage depends on the difficulty of the work. Organisations performing low-
skilled labour are usually better of with an employee mix skewed towards the disadvantaged
group of workers, given the low need for supervision. In case firms perform work of more
complex nature they tend to need more supervision, demanding a more balanced mix of
employees.
Also, this study described how strategic choices could influence the WISE. It showed that the
quality of the product/service of the WISE is essential to create a sustainable relationship with
the customer. The organisation should communicate openly about the limitations of the
employees and can in some situations benefit from marketing its social purpose. This study
showed that the value network of the WISE is of great importance. While the ‘ideal’ model is
one in which partners treat each other equally and are dependent on each other, this study
witnessed that this is not always the case in the Netherlands. Dutch entrepreneurs do not
always receive the amount of support on which they should be able to rely based on their own
efforts. This should therefore become one of the areas of future improvement. The revenue
model of the organisation is greatly influenced by the decisions that that are made by the
organisation with respect to the employees, the product/service and the value network.
Regarding the costs that are faced by the Dutch WISEs one witnesses that the major
contributor is the reduced productivity combined with much needed supervision; factors that
are not always sufficiently offset by the provided subsidies. Especially small firms or firms
that perform complex labour face significant challenges regarding these cost factors and
should hence try their best to optimise their operations.
53
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Appendices
Appendix A: Questionnaire (in Dutch)
Inleiding
Doel van het onderzoek uitleggen.
Opzet interview (Open vragen, beoogde tijdsduur)
Is het in orde als ik het interview opneem?
Zijn er nog verdere vragen van uw kant?
Openingsvragen
Kunt u kort de ontstaansgeschiedenis van het bedrijf schetsen?
Waarom bent u dit bedrijf begonnen? (Motivatie)
Verwacht u dat het bedrijf verder gaat groeien?
Middenstuk
Werknemers
Hoeveel werknemers zijn er in dienst?
o Hoeveel daarvan hebben een afstand tot de arbeidsmarkt?
Arbeidsmatigs dagbesteding
Reguliere arbeidsovereenkomst (loondienst)
In dienst via regeling begeleid werken
Detachering via WSW of anders
Stage, werkervaringsplaats of re-
integratietraject
Proefplaatsing
Wat voor beperking hebben deze werknemers? (Open vraag)
Lichamelijke handicap
Ernstig sociale problemen (Bijvoorbeeld alcoholisten, drugsverslaafden, ex-gedetineerden en
mensen met ernstige familie problemen).
Achtergestelde minderheden
Moeilijk te plaatsen in een baan (Bv. door leeftijd of kwalificaties)
Jong en laagopgeleid ( Bijvoorbeeld school drop-outs)
o Wat voor werk verrichten deze mensen?
Hoe worden werknemers geselecteerd?
Wat is de ratio ‘gewone werknemer/werknemer met beperking’?
o Hoe ervaart u de verhouding?
o Waarom is er voor deze verhouding gekozen?
Is de werkomgeving aangepast aan de werknemers? (Is de functie van de werknemer
ook aangepast?)
o Zo ja: hoe is deze aangepast?
Hoe worden werknemers binnen het bedrijf gemotiveerd?
Worden er trainingen gegeven?
o Wat is het doel van deze trainingen?
Wat is het risico van deze arbeidsgroep?
o Hoe gaat het bedrijf om met dit risico?
Wordt de arbeidsproductiviteit gemeten?
57
o Hoe ga je hier mee om als bedrijf?
Indien er re-integratie trajecten zijn, zijn deze succesvol?
Wat is de tijd dat een werknemer gemiddeld in het bedrijf werkt?
Product/marketing
Welk soort klanten is uw doelgroep?
Wat voor waarde creëren jullie voor de klant?
o Hoe onderscheiden jullie je van andere bedrijven?
Wat voor invloed hebben de werknemers op het product of service? (Kwaliteit,
imago, klantrelatie)
Hoe positioneert het bedrijf zich ten opzichte van de concurrentie? (Prijs &
Klantrelatie)
Wat is uw marketing strategie? Gebruikt u de uw maatschappelijke doelstelling in de
marketing, en zo ja hoe en in welke mate? Heeft het effect op de loyaliteit van de
klanten?
Stakeholders
Wat zijn de belangrijkste stakeholders?
Hoe gaat het bedrijf met deze stakeholders om? Wat voor relatie is er?
Ervaart u steun van de stakeholder?
Staan jullie open om kennis te delen? In welke mate ?
Indien overheid (gemeente/ provincie) een belangrijke stakeholder is, wat is de rol
van de overheid voor het bedrijf? Hoe zou u de relatie kenschetsen ?
Verdienmodel
Inkomsten
Waar komen de inkomsten vandaan? (verkoop producten/ service, bedrijfsbrede
subsidies, subsidies per individuele werknemer, giften, etc.)
Hoe hebben de inkomsten zich over de tijd ontwikkeld?
Wat betekent jullie model voor inkomsten wat betreft loonkostensubsidie, hoeveel is
dat in procenten van de omzet over 2013?
Krijgen jullie andere aan mensen gekoppelde subsidies zoals dagbesteding,
trajectgelden, etc. ? Hoeveel is dat in procenten van de omzet over 2013?
Krijgen jullie andere specifieke subsidies vanwege jullie model? Welke en hoeveel
in procenten van de omzet?
Zijn er ook inkomsten in de vorm van goederen of services?
Is er winst? Wat gebeurt er met de eventuele winst?
Uitgaven
Wat zijn de belangrijkste kosten voor het bedrijf?
Hebben jullie meerkosten vanwege jullie model ? Wat zijn daarvan de grootste drie
posten?
Weet u in welke mate de ontvangen subsidies opwegen tegen deze meerkosten ?
58
Algemeen
Wat betekent jullie business model voor de commerciële omzet, is het model een
voor- of een nadeel, en hoe groot is dat voor- of nadeel?
Op welke manier compenseren jullie je eventuele kostennadeel ?
Eind
Is het mogelijk om het jaarverslag te krijgen en uw business plan?
Bedank voor medewerking aan interview
Uitleg vervolg van dit onderzoek. Resultaten worden teruggekoppeld. In een
gezamenlijke werksessie zullen de resultaten besproken worden.
Heeft u verder nog vragen?
Appendix B: Overview participants’ interviews
Organisation Name Function
Biga groep Gerhard ten Hove Director
Opnieuw & Co Marcel van Goch Director
Balanz Facilitair (Part of
Vebego)
Niel Cortenraad Managing Director Public
Sector Vebego
Ben Theeuwen Director Balanz Facilitair
Emma Safetyshoes Peter Hobbelen Director
De Prael Arno Kooy Founder & Director
Van Hulley Jolijn Creutzberg Founder & Director
Driekant Henk Smit Founder
Buurtmarkt Breedeweg
(Part of Pluryn)
Eric Tonn Manager social enterprises
Pluryn
AutiTalent Paul Vermeer Founder & Director
Swink Paul Malschaert Founder & Director
Appendix C: Experts and entrepreneurs during the workshop
Participants Function
Marian Lambert Marketing expert (Former purchasing
director HEMA)
Tineke Kemp Venture Philanthropy Manager Anton
Jurgens Fonds
Aukje Smit Researcher inclusive labour market
Martine Breedveld Strategy UWV
Elco van Burg Associate Professor of Entrepreneurship and
Organisation
Mark Hillen Social Enteprise NL
Stefan Panhuijsen Social Enterprise NL
Marijt Regts Social Enterprise NL
Jolijn Creutzberg Entrepreneur, Van Hulley
Henk Smit Entrepreneur, Driekant
Paul Malschaert Entrepreneur, Swink
Paul Vermeer Entrepreneur, AutiTalent
59
Appendix D: Overview codes
General Employee Product/Service Stakeholders Revenue
Model
Type of
organisation
Number of
employees
Target group Important
stakeholders
Mix of
resources
Motivation
employee
Type of disadvantage Value
proposition
Sharing of
knowledge
Most important
costs
Type of work Customer
contact
Relationship
municipality
Additional
costs
Tasks/responsibilities Influence
employee on
service (Quality
& Image)
Relationship
remainder of
stakeholders
Business
model
advantage/
disadvantage
Selection of
employees
Marketing
strategy
Compensation
of
disadvantage
Ratio regular
employees/
disadvantaged
employees
Positioning
(Price &
Quality)
Profit
Motivation
Training
Risks
Labour productivity
Turnover
Reintegration
trajectories
1
The Work Integration Social Enterprise; an extensive literature review on
its characteristics and differences within various European countries
VU University
Amsterdam, 20-06-2014
Van den Broeke, L.T. (2541621)
Master Business Administration:
Entrepreneurship
Capita Selecta Assignment
Supervisor: Dr.ir. Elco van Burg
2
Preface
The literature review that you are about to read is best regarded as an extensive
appendix to the final thesis titled: 'Explaining the success of the Work Integration
Social Enterprise; a study after the key business model elements within the context of
the Netherlands'. This review will describe the general characteristics of the WISE.
Also, and more interestingly, it will explore the various governmental supportive
actions throughout Europe (and their corresponding impact) and see whether the
Netherlands can learn from these actions.
This review complements on the relevance of my main research. In order to make an
investigation on the specifics of the WISE within the Dutch landscape, it first needs to
be assumable that the Dutch case is unique in its kind. By investigating surrounding
countries I can discover whether international differences do exist. International
differences will make it assumable that the Dutch landscape also has its distinct
characteristics, making it important to dedicate a study on its specifics. Once the
distinctiveness of the Dutch situation is established it is worth diving deeper into the
specifics of the Dutch landscape to explore the WISE in detail and find out all about
its specifics.
3
Table of Contents Preface .................................................................................................................................................. 2 1. Introduction .................................................................................................................................. 4 2. Methodology ................................................................................................................................. 5 3. Research on the WISE................................................................................................................ 6 3.1 Italy ................................................................................................................................................ 8
3.1.1 Background information ............................................................................................... 8 3.1.2 Characteristics and legal framework ........................................................................ 9 3.1.3 Governmental support plans ........................................................................................ 10 3.1.4 Practical Implications .................................................................................................. 10
3.2 Germany .................................................................................................................................... 11 3.2.1 Background information ............................................................................................ 11 3.2.2 Characteristics and legal framework ..................................................................... 11 3.2.3 Governmental support plans .................................................................................... 12 3.2.4 Practical Implications .................................................................................................. 12
3.3 United Kingdom ..................................................................................................................... 12 3.3.1 Background information ............................................................................................ 12 3.3.2 Characteristics and legal framework ..................................................................... 13 3.3.3 Governmental support plans .................................................................................... 13 3.3.4 Practical Implications .................................................................................................. 14
4. Conclusion and recommendations .................................................................................... 15 Bibliography.................................................................................................................................... 18 Appendix .......................................................................................................................................... 21
4
1. Introduction
Unemployment amongst Europeans is, compared to the United States and Japan,
relatively high. Contributing factors to this high unemployment are for example the
extensive social security (Spear & Bidet, 2003). A major proportion of the
disadvantaged people in the US are involuntarily forced to make ends meet, whereas
their European counterparts have a relatively safe social security net that catches their
fall once they become disadvantaged themselves. What the continents have in
common is the fact that people who are unemployed due to labour inhibiting
disabilities are a difficult target group. These people not only demand significant
funds but they can also face great personal struggles. As they are often able to work
but are too costly to be employed, they often end up as a difficult group. The WISE is
intended to help this vulnerable group of people get reintegrated in the labour market.
Modes as productive activities or qualification trainings are installed to make the
reintegration possible. WISEs are operating in many areas, such as simple manual
labour and in the maintenance of public areas (Davister, Defourny & Gregoire, 2004).
The WISE is an organization characterized by its multitude of goals; it has social,
economic and socio-political goals (Nyssens, 2008). The social goals are the
employment opportunities that the WISE offers to people with a vulnerable position
in the labour market. The economic goals are related to the organizations’
entrepreneurial culture that allows them to be self-sustainable. Socio-political goals
are the goals that indicate the desire for social change through the influence on public
policies in the field of work integration (Nyssens, 2008).
Based on the existing body of literature this appendix will provide further insights on
the WISE. This review will answer the question: What can the Netherlands learn
from other European countries in order to stimulate the growth of the private sector
WISEs? The first paragraph covers a methodological section on how the literature was
gathered and how it was analysed correspondingly. After this is delineated there is a
section on the contents of the used literature in which the specifics of the WISE in
Germany, the United Kingdom, and Italy are discussed. This review will end with a
conclusion and recommendations.
5
2. Methodology
The main topics of this literature review are 1) the WISE in Europe (in particular
Italy, Germany and the UK) and 2) the characteristics of the WISE. The latter topic
can be found in chapter 2.2 of the thesis. Google Scholar is used in order to
systematically find and review relevant articles. When using the search term ‘work
integration social enterprise’ this resulted in 231 results in April 2014. When using
the search term ‘work integration social enterprises’ this resulted in a total of 657
results in April 2014. 29 articles were selected based on the title, abstract and
academic credibility. Afterwards these 29 articles were summarized and in total 13
articles proved to be relevant.
The snowball method is used in order to obtain additional relevant literature (Jalali &
Wohlin, 2012). This resulted in an additional number of 17 articles (See the appendix
for an overview of the articles found through Google Scholar and the snowball
method). Most English research dates back to the period of 2000 – 2004, which was
the point in time in which the WISE became the research subject of various institutes
and scholarly bodies. Given that both circumstances and knowledge are factors that
are affected by rapid transition it is possible that the resulting literature is no longer
completely up to date, implying that this is one limitation with which the research has
to work. This limitation is partly overcome by having email contact by foundations
that are currently investigating into the field of the WISE. Their knowledge regarding
the specific topic and the corresponding target markets makes it possible to partly
neglect the impediments of working with Google Scholar search results.
6
3. Research on the WISE
This section describes the arising of the WISE and the research done on it so far. It
was during the year 1991 that the Italian parliament adopted a law that paved the road
for the growth of ‘social co-operatives’. These co-operatives responded to the needs
that were not adequately met by public services (Borzaga and Santuari, 2001). From
this moment onwards, European researchers started to notice other similar
organizations as well, though they were labelled differently and exhibited themselves
in different entities. Researchers decided to dedicate more research on this type of
organization and developed a network called the EMES European Research network.
The fifteen European countries that at that time formed the European Union were
represented by different researchers (Borzaga & Defourny, 2001A). One of the
projects that the EMES network organized was the PERSE project. This project in
particular focused on the WISE and was supported by the European Union (Nyssens,
2006). A comparative analysis of the WISE was performed amongst 11 European
Countries. Remarkably, Denmark and the Netherlands, both countries known for their
robust social security net, did not participate with the study. In the end a total sample
of 160 varying WISE’s was investigated (European Commission, 2014). Next to the
PERSE project, the ELEXIES project was organized. The goal of this project was to
get an overview of the different types of the WISEs in the European countries. Again
the Netherlands did not participate (EMES Network, 2014).
Although European WISEs are similar in many aspects, there are also differences
amongst them and their corresponding countries. For example the number of WISEs
in a country, the activities in which they engage, and the form of the organisations are
all varying. In some countries the WISEs match the definition of a social enterprise
according to the EMES network (See table 1), whilst in others they do not meet all the
criteria (Borzaga & Defourny, 2001B). It is unclear why there is such a large
discrepancy in the number of WISEs amongst the different countries. This might for
example have to deal with the coherence of national policy and in particular if there is
specific legislation in the country (Spear & Bidet, 2003).
7
Economic aspect Social aspect
- Continued economic activity in goods and
services
- An explicit objective of benefits to the
community
- High degree of autonomy - An initiative created by a group of ordinary
people
- Significant level of risk - Power is not based on capital ownership
- Market-oriented enterprises - Nature of participation by those groups of
people affected by the activity
- A minimum number of workers - Limited distribution of profits
Table 1: The definition of a social enterprise according to the EMES network. From “The Emergence of Social Enterprise”. By Defourny, J. (2001), in Borzaga, C. and Defourny, J. (eds) The Emergence of Social Enterprise, London and New York: Routledge, 1–28.
The WISE in the Netherlands
As mentioned above the EMES network did not investigate the WISE in the
Netherlands and hence the literature on this topic is limited. Within the Netherlands
there are also WISEs, however they are not recognizable under the same denominator
or name as they are in some other countries (Smit, Van Genabeek & Klerkx, 2008).
Additionally – although there are no exact numbers available – the sector is relatively
small. The WISE gets compensated for the lower productivity of the employees and
some other additional costs. Other than that the governmental support is limited
(Smit, De Graaf, Verweij & Brouwer, 2011).
Comparison countries The following sections will in depth explain the legal forms from three countries
chosen on their relevance and the available literature. The chosen countries are Italy,
the United Kingdom and Germany. The different forms of WISEs are related to the
context of the country. Differences in context, labour market and economic situation
are often large and hence it is difficult to make a unilateral comparison. Although
these measures and experiences cannot simply be applied to other countries such as
the Netherlands, it is still interesting to see how other countries are coping with the
phenomenon of the WISE. The following sections will give a concise delineation on
the differences with respect to WISE-related legislation. Also it will give a closer look
at the various governmental support plans (such as grants and subsidies) that are
existent in the countries at stake. Once these two topics are concisely described it is
important to investigate the practical implications of these issues. For reasons of
8
compliance with the research sample this chapter limits itself to investigating private
sector initiatives.
3.1 Italy
3.1.1 Background information
It was in the late ‘70s and ‘80s that the failure of the welfare model in Italy became
clear. There was a stringent need for more social services. Various events resulted in
the unemployment of disadvantaged people (Borzaga & Santuari, 2000). One of the
failures was the shortcoming of Law 462/68, which was the quota system that
obligated firms to hire disadvantaged people. The quota was set too high and private
firms could therefore simply not comply with the newly set regulation (Loss, 2003).
The lack of public service offerings was first noticed by small groups of individuals
who recognised the existent gap between demand and supply of social services
(Borzaga & Santuari, 2000). These groups tried to bridge the gap by organizing new
organizational forms. It started with organizations that mainly helped the ‘new poor’;;
these were for example the elderly and drug addicts. Soon a large number of these
voluntarily organizations saw the light of day. These organizations were mainly
independent and did generally receive no support from the government (exceptions
were unique cases in which small governmental funds were granted). There was
however one large legal constraint that these organizations faced, they were not
allowed to start activities related to production or economical activities. Particularly
the organizations that helped the unemployed were constrained by this. It was for this
reason that these organizations started with the idea of using the legal form of a co-
operative for their organizations (Borzaga & Santuari, 2000). This had several
advantages, such as the allowance of participating in economical activities, and the
fact that they as an organization were not liable to tax on undistributed profits. It was
in 1991, that Law 381/91 – intended to recognize these social co-operatives – was
implemented. This new law removed some of the restriction of the traditional co-
operative (Borzaga & Santuari, 2000).
9
3.1.2 Characteristics and legal framework
According to Kerlin (2006) Italy was the first country in Europa that established such
legislation. Law 381/91 distinguishes two different types of social co-operatives: 1)
‘A’ co-operatives with the aim of delivering social, health and educational services
and 2) ‘B’ co-operatives with the objective of integrating disadvantaged people into
the labour market (Borzaga & Loss, 2002). These co-operatives are member-owned
and thus not privately owned (Costa, Andreaus, Carini & Capita, 2012). Requirements
are existent for either type. The members that can be involved are: volunteers,
workers and for example funders of the co-operatives, which are often the
municipalities (Borzaga & Santuari, 2000). In order to ensure that volunteers are seen
as a supplement rather than a substitution for normally remunerated employees the
percentage of non-paid voluntary workers may not exceed 50. In general, you see that
this number of volunteers is much lower than the 50%. ‘B’ co-operatives’ main goal
is to integrate disadvantaged people in a wider community. 30 % of the workers must
be disadvantaged in some way according to this legal form (Gosling, 2002). Those
groups benefiting from ‘B’ co-operatives include: “people with physical, mental and
sensory disabilities, former patients of psychiatric hospitals, people undergoing
psychiatric treatments, drug addicts, alcoholics, young people under 18 but of
working age with family difficulties and prisoners admitted to sentences which are
alternatives to imprisonment” (Law 381/91, article four as in Gosling, 2002). In
practice ‘B’ co-operatives also include other target groups of disadvantaged people
than the ones strictly prescribed by the law. For example they provide integration for
people who’ve been unemployed for a long time or elderly who otherwise have great
difficulties in finding a job position. It is interesting to see that in most cases half of
the income of ‘B’ co-operatives comes from contracts with the private sector and a
somewhat smaller proportion from the public sector (Gosling, 2002). The private
sector is officially obligated to hire disadvantaged people when employing more than
15 staff members. The private sector can make contracts with the ‘B’ co-operatives
and in this way obey to their obligations. This is probably one of the main reasons that
the private sector awards these contracts to the co-operatives (Gosling, 2002). In
2006 a new law is implemented, not only social co-operatives could set up this type of
social firm, but also for example non-profit organizations (Schwarz, 2011).
10
3.1.3 Governmental support plans
The ‘B’ social co-operative is in various ways supported by the government. This
section will describe the most important measures and policies that the government
has installed to pave the road for social co-operatives. First of all the social co-
operative is exempted from social security contributions. The co-operative benefits
from this measure if a minimum of 30% of its total number of employees belong to
the group of ‘recognised’ disadvantaged employees (Recognised under the
specification mentioned in subchapter 3.1.2.) (Loss, 2003). Second, social co-
operatives are advantaged through allowing them to establish contracts with public
domains without the issuance of a public invitation to tender. The only bylaw to this
exemption is that the total worth of the contract may not exceed the limits for public
offers set by the European Commission (Loss, 2003). Third, a ‘B’ social co-operative
can sometimes also get public contributions that cannot be seen as remunerations for
performed labour. Rather they are subsidies to cover for the additional cost of labour
of this particular labour group (whereas a normal employee would have an output of
100%, a disabled worker can only perform up to 70%, the resulting gap is filled with
the abovementioned subsidy). Whereas this form of contribution is a major source of
income within the Netherlands, it is of only marginal nature in Italy (Loss, 2003).
Lastly, social co-operatives have a major advantage by having a special value added
tax tariff of only 4% (Loss, 2003).
3.1.4 Practical Implications
The enforcement of this legal form has lead to several changes in the social co-
operatives sector. While first there were in 1993 only 287 social co-operatives of type
B, in 2000 there were already 1915 social co-operatives of type B. In 1993 in total
1675 disadvantaged people were employed by these co-operatives, this largely
increased to 13.569 in 2000 (Loss, 2003). Unfortunately, there is limited data
available for the number of social co-operatives after. Costa et al. (2012) however
found that this number of ‘B’ social co-operatives is largely increased to +- 6000.
11
3.2 Germany
3.2.1 Background information
While the unemployment in Germany has always been a large problem, it did not
further increase during the last few years. This stands in stark contrast to other
European Countries. However, the group of people with a distance to the labor market
remains large. In Germany there are various well-documented types of WISEs. These
are for example the municipality owned social enterprises, social enterprises
organized by small and local initiatives, and social enterprises organized by welfare
organizations (Schulz, 2003). These three mentioned business forms are for the
largest part dependent on government subsidies and furthermore are not allowed to
compete with other organizations (Schulz, 2003). Another type of WISE that is not
mentioned by Schulz are the so called ‘Integrationsfirmen’. Integrationsfirmen do get
their income for the largest part from the market. It is hence that this type of WISE
does fit to the research sample and will be discussed here.
3.2.2 Characteristics and legal framework Since 2001 Law SGB IX 132 gives a clear definition of the so-called
Integrationsfirmen. These firms are legally and economically independent companies
that employ people with disabilities. The Integrationsfirmen are firms in which at
least 25% of the people and a maximum of 50% of the people have disabilities
(Schwarz, 2011). The reasoning behind the minimum of 25% and maximum of 50%
is that the market position is not weakened, as the government argues that people with
a disadvantage integrate the best in an as regular employment status as possible (Smit
et al., 2008). Most Integrationsfirmen are able to generate 70 % of their income from
the revenues of the market within their first 2 or 3 years of operation. The majority of
the Integrationsfirmen operate in the service industry, but also a somewhat smaller
part in other traditional – labour intensive – industries (Smit et al., 2008). The legal
form of the Integrationsfirmen is called ‘Gemeinnützigkeit’. Only firms that benefit
the society can have this legal title. The profit should be reinvested to the organisation
and not the shareholder. The advantage of this legal form is that there is a sales tax of
a mere 7 %. However, on the downside these firms often face a difficult access to
capital (Smit et al., 2008).
12
3.2.3 Governmental support plans
The government gives support to the Integrationsfirmen in various forms. The firms
get support in the form of subsidies to compensate for issues such as the lower
productivity of the employees or other additional vulnerabilities that make a
‘Integrationsfirm’ less likely to be successfully competitive (Smit et al., 2008). For
regular firms there is a quota to integrate disadvantaged people in their firms. While
the public domain does obey to these regulations, many private firms do not obey to
this quota and hence get a penalty. This penalty is called the ‘Ausgleichsabgabe’
(Smit et al., 2008). The money that is generated through the Ausgleichsgabe is used to
financially support the Integrationsfirmen (Smit et al., 2008). This support includes
for example the funding for business consulting and the abovementioned allowance
on labour costs (Schwarz, 2011).
3.2.4 Practical Implications
There are expectations that law S§ 132 SGB IX significantly influenced the number
of Integrationsfirmen in Germany (Smit et al., 2008). The last number available was
700 (BAG-IF, 2014).
3.3 United Kingdom
3.3.1 Background information
Social enterprises have been around in the UK for a long time. It is estimated that the
number of social enterprises in the UK is now approximately 68.000 (Social
Enterprise Works, 2003). However, the UK government applies a different definition
to the firm we know as social enterprise. In the perspective of the UK government, a
firm can already be named a social enterprise if – next to the obvious social purposes
– a mere 25% of its revenues originate from the market (Social Enterprise Works,
2003). This low lower boundary is the most significant indication for the large
number of social enterprises. While the number of social enterprises in the UK is
enormous in comparison to other countries, the number of WISEs is remarkably low
within the UK (Social firms UK, 2003). Scholars differentiated six types of WISEs in
the UK: worker co-operatives, community businesses, social firms, intermediate
13
labour market organisations, quasi-state social enterprises and voluntary organisations
with employment initiatives. From these six types the social firms and worker co-
operatives are the forms that are most independent and privately organized (Spear,
2002). Although the number of social firms is still relatively low, the sub branch
shows signs of steady growth (Spear, 2002). The next section will describe the social
firm in detail.
3.3.2 Characteristics and legal framework
As written in the abovementioned paragraph the social firm is one of the existing sub-
types of WISE that exist in the UK (Smit et al., 2008). The social firm focuses on
people with a learning disability, mental health problems, prison record, experience of
drug or alcohol abuse and/or homelessness (Cunliffe, 2014). Most social firms are
independent organizations that are privately owned (Smit et al., 2008). It is nationally
defined that social firms are organizations where at least 25% of the total employees
belong to the target group. At least 50% of the revenues come from the sales of
products and services (Aiken, 2007). Furthermore there is economic empowerment
through the offering of employment contracts in which is stated that each employee
should get a wage correspondent to the market or at least equalling the legally defined
minimum (Aiken, 2007). Any profits are reinvested in the social firm (Cunliffe,
2014).
3.3.3 Governmental support plans
The government strongly believes in the importance of the social enterprise in the
UK. Therefore there is a national government policy for all types of social enterprises.
In 2006 the office of the third sector released an action plan to support social
enterprises. The main goal of this action plan is to create the right conditions for
social enterprises and subsequently increase the number of social enterprises. There is
no specific legislation for social firms, even though the social firms do sometimes
also have needs for specific measures (Smit et al., 2008). Although there are no
specific measures, there are still different options that social firms can use. For
example there are options for advice and support. Furthermore a social firm can
decide to use the legal form that is called the Community Interest Company (CIC).
This is a legal form for organizations that use their profits and capital for the common
14
good. The advantage of this legal form is the set up of the business and the flexibility
that comes with this form. It is remarkable that social firms do usually got not
compensated for the reduced labor productivity (Smit et al., 2008).
3.3.4 Practical Implications
The social firm sector is changing quickly. The latest number of social firms dates
back to 2010. According to Social firms UK there were in 2010 in total 99 firms and
82 emerging social firms. Emerging social firms are firms that do not yet belong to
the social firms defined by the UK, but are planning to become a social enterprise
(Cunliffe, 2014). Furthermore there are also employability social firms. These are
firms that focus more on providing work experience and developing employability
skills. This can help the person to find employment elsewhere. Although Social Firms
UK has not carried out research about this number, they estimate that there are many
more of this type than employment social firms (Cunliffe, 2014).
15
4. Conclusion and recommendations
Based on the review on the WISE on Italy, the UK and Germany the following table
summarizes the most important findings from the three countries.
Legislation/ Requirements Governmental
Support
Number of
organizations
Italy (‘B’ social
co-operatives)
- Law 381/91
- Minimum of 30 % of the
employees should be
disadvantaged people
- A maximum of 50 % is
allowed to work as
volunteer in the
organisation
- Exempted from
social security
contributions
- Precedence over
tenders
- Subsidies (such as
wage
compensation)
- Tax tariff of only
4%
- 6000 ‘B’ social
co-operatives
(2012)
Germany
(Integrations-
firmen)
- Law SGB IX 132/ 135
- Gemeinnützigkeit
- Minimum of 25 % and a
maximum of 50 % should
be disadvantaged people
- Ausgleichsabgabe
(financial support
to support
competitive
position)
- Sales tax 7%
- 700
Integrationsfirmen
(2014)
UK (Social
firms)
- Community Interest
Company
- Minimum of 25 % of the
employees should be
disadvantaged
- Minimum of 50 % of the
revenues should come
from the market
- Advice and
(financial) support
- 99 social firms
(2010)
- 82 emerging
social firms
(2010)
Table 2: Overview ‘B’ social co-operatives, Integrationsfirmen and social firms. Based on the literature review in section 3.1, 3.2 and 3.3.
Although this study has occasionally faced the difficulty of having to work with out-
dated literature, it has tried to delineate the situation per country regarding the WISE
as accurate as possible. Whilst taking into consideration that most of the findings are
16
very context-specific – and hence need to be taken care of with caution – there is the
possibility to draw several valuable lessons from the resulting overview. This section
will describe some of the discoveries that could be beneficial to the overall situation
of the WISE in the Netherlands.
One of the first points of improvement lies in control of the central and local
governments. Currently governments already prioritize on the private sector when
announcing a request for proposal. Within these cases, in which the government
assigns large or small assignments to local instances, resides a lot of potential for the
WISE. Till now, governing bodies predominantly focus on the cost side of tender
offers. The party with the tender accompanied with the lowest cost may perform the
task. Moving away from a system focussing on solely cost price towards a system that
also evaluates societal costs is a shift that could bring great potential for the WISE.
Whereas the WISE often cannot compete on direct costs it proves to be a powerful
player when one is also considering the societal gains that flow from an assignment.
The higher direct costs that are often accompanied by the assignment of a WISE are
greatly offset by the indirect social gains. If governments chose to have an all-
including cost measure they will in the end resort in the assignment of more WISEs to
tasks that are now performed by firms that do not provide the same societal gains. By
employing this – similar to the Italian – way of thinking WISEs will find themselves
in a far better position than they currently are.
The second recommendation elaborates upon the Dutch ‘participatiewet’;; a law
instigating a strict quota on the minimum number of disadvantaged people employed
by a firm. The corporate world is strongly opposing this quota claiming it impossible
to create long-term employment opportunities for these disadvantaged people. The
problems resides in the fact that corporations do not (yet) have the capacity to create
long lasting positions specially dedicated to the employment of this vulnerable group.
It should therefore be made possible to also include disadvantaged workers contracted
through subcontractors – for temporary assignment only – into the required quota. By
doing so it would be easier for corporations to abide the ‘participatiewet’. Also
WISEs that now find difficulties in subcontracting their personnel are given a
substantial helping hand that should help them – and their work pool – in getting a
better competitive position. In the end this should result in more customers for the
17
WISE, herewith creating the opportunity to help disadvantaged people that otherwise
would be left in the cold as corporations are unwilling to create the necessary
permanent working places. Like described before in Italy a large number of the ‘B’
social co-operatives get their clients through this quota (Gosling, 2002).
The last recommendation targets the lacking of a clear definition of the WISE within
the Dutch landscape. What one can see is that in the other discussed countries the
WISE much clearer is defined. Currently social firms face significant uncertainty
when determining what business forms exactly fall under the term WISE.
Correspondingly there is uncertainty concerning the available governmental support,
making it less attractive to make the step to get fully involved. By introducing a clear
legal definition of the WISE entrepreneurs will no longer be facing this uncertainty
and have a clear overview of what kind of assistance they are entitled to.
The abovementioned recommendations should make it possible to give the WISE a
permanent strong position within the Dutch landscape without incurring substantial
costs for the current domain of businesses. The costs that are inevitable are largely
offset by the resulting societal gains. These gains in return represent savings on
‘costs’ that would otherwise arise from helping this target group through the
traditional governmental channels.
18
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Defourny, J. (2001) ‘From Third Sector to Social Enterprise’, in Borzaga, C. and Defourny, J. (eds) The Emergence of Social Enterprise, London and New York: Routledge, 1–28.
Defourny, J. & Nyssens, M. (2010). Social enterprise in Europe: At the crossroads of market, public policies and third sector. Policy and Society, 29(3), 231–242.
Díaz-Foncea, M. & Marcuello, C. (2012). Social enterprises and social markets: models and new trends. Service Business, 6(1), 61–83.
European Commission (2014). PERSE - The Socio-Economic Performance of Social Enterprises in the Field of Integration by Work. Retrieved from: http://ec.europa.eu/research/social-sciences/projects/152_en.html
19
EMES Network (2014). Retrieved from: http://www.emes.net/what-we- do/publications/working-papers/?no_cache=1
Gardin, L. (2006). ‘A Variety of resource mixes inside social enterprises’. In M. Nyssens (Ed.), Social enterprise—at the crossroads of market, public policies and civil society. London/New York: Routledge, 111-136.
Gosling, P. (2002). Social co-operatives in Italy: lessons for UK. Retrieved from: http://socialeconomyaz.org/wp-content/uploads/2011/06/ SocialCooperativesInItaly.pdf
Gruber, C. (2003). National profiles of work integration social enterprises: Austria. EMES Working Paper.
Hara, P. O. & Shaughnessy, M. O. (2004). Work Integration Social Enterprises in Ireland. EMES Working Paper.
Jalali, S. & Wohlin., C. (2012). Systematic Literature Studies: Database Searches vs. Backward Snowballing. Proceedings of the ACM-IEEE international symposium on Empirical software engineering and measurement.
Kerlin, J. (2006). Social Enterprise in the United States and Europe: Understanding and Learning from the Differences. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 17(3), 246–262.
Loss, M. (2003). National profiles of work integration social enterprises: Italy. EMES Working Paper.
Nyssens, M. (2006). Social Enterprise : At the Crossroads of Market, Public Policies and Civil Society . London/New York: Routledge.
Nyssens M., (2008). ‘The Third Sector and the social inclusion agenda: the role of social enterprises in the field of work integration’, in: The Third Sector in Europe: Trends and Prospects, Edited by Stephen P Osborne, Routledge, London, 87 – 101.
Schulz, A. (2003). National profiles of work integration social enterprises: Germany. EMES Working Paper.
Schwarz, G. (2011, May). Social Firms in Europe. Retrieved from: http://www.dinf.ne.jp/doc/english/resource/employment/Social_Firms_in_Eur ope.html
Spear, R. & Bidet, E. (2003). The role of social enterprise in European labour markets. EMES Working Paper.
Spear, R. & Bidet, E. (2005). Social enterprise for work integration in 12 european countries: a descriptive analysis. Annals of Public and Cooperative Economics, 76, 195–231.
20
Smit, A., De Graaf, B., Verweij, E. & Brouwer, P. (2011). Sociale ondernemingen en werknemers met een arbeidsbeperking. TNO-Report.
Smit, A., Van Genabeek, J. & Klerkx, M. (2008). Europese ervaringen met sociale economie Werk voor gehandicapten en langdurig werklozen. TNO-Report.
Sociaal Ondernemen: Passie en Poen (2013). VSB Fonds & Start Foundation
Social enterprise Works (2013). A Report for the West of England Local Enterprise Partnership. Retrieved from: http://www.socialenterpriseworks.org/wp- content/uploads/2013/05/WoE-SE-mapping-report.pdf
Email contact about Social firms in the UK with: Di Cunliffe, Policy and Services Officer, Social firms UK
21
Appendix
Overview sources found through Google Scholar search and snowball method
Sources used for this review are blue
Sources used for the literature review on the WISE in the thesis are black
Sources used for this review and the literature review of the thesis are orange
Articles systematically found through
Google Scholar search
Articles found through snowball method
Borzaga, C., & Defourny,J. (2001B). Conclusions: Social enterprise in Europe, a diversity of initiatives and prospects, 350–370.
Aiken, M. (2007). What is the role of social enterprise in finding, creating and maintaining employment for disadvantaged groups? Retrieved from: http://webarchive.nationalarchives.gov.uk/+/http:/www.cabinetoffice.gov.uk/ media/cabinetoffice/third_sector/assets/social_enterprise_employment.pdf
Borzaga, C. & Santuari, A. (2000). Social enterprises in Italy. The experience of social co-operatives.
A Report for the West of England Local Enterprise Partnership. Retrieved from Social Enterprise Works website: http://www.socialenterpriseworks.org/wp-content/uploads/2013/05/WoE-SE-mapping-report.pdf
Borzaga, C. and Santuari, A. (2001) ‘Italy: from Traditional Co-operatives to Innovative Social Enterprises’, in Borzaga, C. and Defourny, J. (eds) The Emergence of Social Enterprise, London and New York: Routledge, 166–81.
Bundesarbeitsgemeinschaft Integrationsfirmen (BAG IF). (2014). Retrieved from: http://www.bag-if.de
Cooney, K. (2011). An Exploratory Study of Social Purpose Business Models in the United States. Nonprofit and Voluntary Sector Quarterly, 40(1), 185–196.
Borzaga, C. & Defourny, J. (eds) (2001A) The Emergence of Social Enterprise, London and New York: Routledge.
Defourny, J., & Nyssens, M. (2010). Social enterprise in Europe: At the crossroads of market, public policies and third sector. Policy and Society, 29(3), 231–242.
Carini C., Costa E., Carpita M., Andreaus M., (2012), The Italian Social Cooperatives in 2008: A Portrait Using Descriptive and Principal Component Analysis
Díaz-Foncea, M., & Marcuello, C. (2012). Social enterprises and social markets: models and new trends. Service Business, 6(1), 61–83.
Davister, C., Defourny, J. & Grégoire, O. (2004), WISE Integration Social Enterprises in the European Union: an Overview of Existing Models, EMES Working Paper WP no. 04/04, 29p
Gruber, C. (2003). National profiles of work integration social enterprises: Austria.
Defourny, J. (2001) ‘From Third Sector to Social Enterprise’, in Borzaga, C. and Defourny, J. (eds) The Emergence of Social Enterprise, London and New York: Routledge, 1–28.
Hara, P. O., & Shaughnessy, M. O. (2004). Work Integration Social Enterprises in Ireland.
European Commission (2014). PERSE - The Socio-Economic Performance of Social Enterprises in the Field of Integration by Work. Retrieved from: http://ec.europa.eu/research/social-sciences/projects/152_en.html
Kerlin, J. (2006). Social Enterprise in the United States and Europe: Understanding and Learning from the Differences. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 17(3), 246–262.
EMES network (2014). Retrieved from: http://www.emes.net/what-we-do/publications/working-papers/?no_cache=1
Nyssens, M. (2006). Social Enterprise : At the Crossroads of Market, Public Policies and Civil
Gardin, L. (2006). ‘A Variety of resource mixes inside social enterprises’. In M. Nyssens (Ed.), Social enterprise—at the
22
Society . London/New York:Routledge.
crossroads of market, public policies and civil society (pp. 111–136). London/New York: Routledge.
Schulz, A. (2003). National profiles of work integration social enterprises: Germany.
Gosling, P. (2002). Social co-operatives in Italy: lessons for UK. Retrieved from: http://socialeconomyaz.org/wp-content/uploads/2011/06/ SocialCooperativesInItaly.pdf
Spear, R., & Bidet, E. (2003). The role of social enterprise in European labour markets.
Loss, M. (2003). National profiles of work integration social enterprises: Italy
Spear, R. & Bidet, E. (2005). Social enterprise for work integration in 12 European countries: a descriptive analysis. Annals of Public and Cooperative Economics, 76: 195–231.
Nyssens M., (2008). The Third Sector and the social inclusion agenda: the role of social enterprises in the field of work integration, in: The Third Sector in Europe: Trends and Prospects, Edited by Stephen P Osborne, Routledge, London, 87 – 101.
Schwarz, G. (2011, May). Social Firms in Europe. Retrieved from: http://www.dinf.ne.jp/doc/english/resource/em ployment/Social_Firms_in_Europe.html
Smit, A., De Graaf, B., Verweij, E., & Brouwer, P. (2011). Sociale ondernemingen en werknemers met een arbeidsbeperking. TNO-Report.
Smit, A., Van Genabeek, J., & Klerkx, M. (2008). Europese
ervaringen met sociale economie Werk voor gehandicapten en langdurig werklozen. TNO-Report.
Sociaal Ondernemen: Passie en Poen (2013). VSB Fonds &
Start Foundation