Research on the social economy traditionally focuses on non-profit enterprises and other associative forms, all characterized by the non-distribution constraint. However, in many countries, the social economy includes companies as well, operating under legal frameworks that allow for a (limited) distribution of profits As specific legal frameworks usually exist for companies in the social economy, we may query whether their institutional design contains sufficient conditions to act as a quality standard. In other words: do these specific legal frameworks guarantee that enterprises using those frameworks can be considered as genuine social economy enterprises?

In this paper, we provide an economic analysis of the design and incidence of social economy companies in Belgium. For Belgium, this encompasses (accredited) co-operatives and social purpose companies (Mertens, 2005). After a brief introduction to the social economy landscape in Belgium, we assess the design of legal frameworks for social economy companies through an economic lens (e.g. Baron, 2007, Besley & Ghatak, 2007, Tirole, 2001) and evaluate whether these can act as a quality standard to ensure a genuine social economy status. Next, we provide an empirical evaluation of the incidence of both entrepreneurial forms, followed by an economic analysis that links its incidence with its institutional design. Specifically, we evaluate whether these legal frameworks attract the kind of social economy enterprises it should attract (by design) and assess what factors may refrain social economy enterprises to opt for a legal status when its seems ‘optimal’ for them to do so. Empirical evidence includes official statistics and data from a survey and focus group research. We conclude with policy recommendations.

References:

Baron, D. (2007) Corporate Social Responsibility and Social Enterpreneurship, Journal of Economics & Management Strategy 16 (3): 683-717

Besley, T. & Ghatak, M. (2007) Retailing public goods: The economics of corporate social responsibility, Journal of Public Economics 91: 1645-1663

Mertens, S. (2005) Une explication théorique à l’existence des cooperatives agrees et des sociétés à finalité sociale, Revue Non Marchand. Management, droit et finance. 2005/2: 13-27.

Tirole, J. (2001) Corporate Governance, Econometrica 69 (1): 1-35.