SURVEY ON SOCIAL ENTREPRENEURS

Transcription

1 SURVEY ON SOCIAL ENTREPRENEURS RESULTS FROM POLAND Agata Zablocka, Ryszard Praszkier, Ewa Jozwik, and Marta Kacprzyk

2 INDEX Abstract PAGE 3 Introduction PAGE 3 1. Methodological framework PAGE 5 2. The role of skills, personal experience, gender and age in developing SE PAGE 5 3. Trends in SE organisational forms PAGE Access to finance PAGE Innovation PAGE The institutional environment PAGE Cooperation and social capital PAGE Challenges and constraints PAGE Market versus social values tensions PAGE 44 Conclusion PAGE 47 EFESEIIS PAGE 2

3 Abstract We are presenting a report from the Polish part of the EFESEIIS research carried on The questionnaire covered a diverse variety of parameters such as the trends in SE organisational forms, access to resources, innovation, the institutional environment, cooperation and Social Capital (Social Capital is reported separately as an aggregation from all the participating countries), challenges and obstacles, the tension between the market economy and the social values. The results provide a comprehensive overview of the Polish social economy, as shown in the final conclusions section. Introduction This section presents an introductory analysis of the interviewees personal characteristics. Out of 1658 completed questionnaires we have valid data from 837 enterprises. There were 87 Polish respondents, representing 10.4% of the total European 1 sample. The report graphs do not show the percentage of questions which were not displayed. Figure 1. Gender distribution 1 Human resources (e.g., difficulties in recruiting employees and volunteers, drafting a business plan and challenges EFESEIIS PAGE 3

4 61% of Polish respondents are male and 39% female, 95% are Polish nationals and the average age is (SD=11,16) years old. The youngest interviewee is 26 years old and the oldest 66 years old. Figure 2 presents interviewees age distribution. Figure 2. Interviewees age distribution Figure 3. Respondents educational attainment Of the respondents, 2% have a secondary education diploma, 22% went to college, 13% got a bachelor degree, 58% attended some master programmes and 5% have a doctorate. 2% took part to some vocational training. The respondents are better educated than the general population. EFESEIIS PAGE 4

5 1. Methodological framework We conducted research using the WP3 Questionnaire. The questionnaire consists of 62 statements. It was created to provide a better understanding of Social Entrepreneurship thorough analysis of data gathered in 11 European countries (Albania, Austria, Denmark, England, France, Germany, Italy,, Scotland, Serbia, The Netherlands). The questionnaire consists of 9 sections and this report describes the Polish part of the results. The questionnaire was preceded by instructions and information about the project. The survey was voluntary. The questionnaire was translated from English into the languages of the participating countries and verified through back-translation. The final national versions were placed on the web-platform in native languages, e.g. the English version. The survey was administered between March 2015 and September Each grant partner sent out invitations to participate in the study, using databases of social enterprises available in their country. Mailing was repeated several times. If necessary, participants were invited to participate in the survey by telephone. We did not consider the missing responses. Each graph has been presented counting the total respondents the missing (NS). 2. The role of skills, personal experience, gender and age in developing SE 2.1 Founders and employees 85% of the interviewees are founders of the SE (15% are non-founders) (fig. 4). The largest part is Polish, 58.5% are male and 41.5% female. The percentage of non-founder women is 20% and 80% are men (fig. 5). Figure 4. Are you the founder of the enterprise? EFESEIIS PAGE 5

6 Figure 5. Comparison between founders/ no founders. Gender distribution Figure 6. Comparison between founders/ no founders. Age distribution In the founder group 7% are older than 60, 29% between 51-60, 22% between Founders within the age group represent 37% of the respondents, while those younger than 30 are 4% of the group. The interviewees who are not founders of the SE are, on average, younger than the founders. There is no-one over 60 years old or between 51-60; 13% in the group are with 50% between The share under 30 is higher than the respective percentage in the founders group, about 38% (fig. 6). EFESEIIS PAGE 6

7 Figure 7. Comparison between founders/ no founders. Educational attainment 2% of the founders have secondary education, 22% went to college, 13% have a bachelor s degree, 53% gained a master s degree, while just 2% got a doctorate. About 94% of the founders followed some vocational training useful for their current position. 10% of the nonfounders went to college, 10% have a bachelor s degree and 80% gained a master s Degree. No one has a doctorate. Around 6% of the non-founders followed some vocational training useful for their current position (figs. 7 and 8). Figure 8. Comparison between founders/ no founders. Vocational courses EFESEIIS PAGE 7

8 2.2 Entrepreneurs experiences Founders of SEs that had already established a social enterprise before their current one make up 32% of their group. Finally, the percentage of founders who had already managed a social enterprise throughout their career is 17% of their group (fig. 9) Figure 9. Interviewees having past experience in founding / managing SEs Overall, 35% of the founders had experience in founding a social enterprise before their current employment. The group is made up equally of 50% male and 50% female. When considering experience in managing a social enterprise, 19% of those interviewed had managed a social enterprise before the one they are currently working in. 39% are male and women count for 62%. (Figs. 10 and 11). Figure 10. Interviewees having past experience in founding / managing SEs. Gender distribution EFESEIIS PAGE 8

9 Figure 11. Interviewees having past experience in founding / managing SEs. Past experience in founding / managing SEs Figure 12. Interviewees having past experience in founding / managing SEs. Age distribution Only 6% of participants with founding experiences are over 60, 25% between and 25% between 41-50; 38% between and 6% younger than 30 years old. 10% got a High School diploma while 15% earned a bachelor s degree and 65% a master s degree. Just 5% got the doctorate. As far as educational attainment is concerned, the trend is similar to the one observed for respondents with previous experience in founding an SE - the largest number have a university degree (15% bachelor, 54% master), 23% have a High School diploma and all finished secondary school. Only 8% are over 60 years old, 23% are between 51-60, 31% are between and 39% between (figs. 12 and 13) EFESEIIS PAGE 9

10 Figure 13. Interviewees having past experience in founding / managing SEs. Educational attainment 2.3 Entrepreneurs motivations Figure 14 shows the interviewees motivations to work in a social enterprise. 23% of them undertook their job to address a social challenge, 2% the environmental challenges or to create an opportunity for self-employment (24% of the respondents). 7% started the business to innovate particular practices, 24% to address a social problem they personally experienced and just 1% were driven by the desire to deal with the inadequacy of existing social services. Differences in gender are shown by Figure 15.31% of men undertook a career in a Social Enterprise to cope with a social challenge, 31% in order to address a social problem they personally experienced or to create an opportunity of self-employment (26%). For women the former reason is 24%, 32 and the latter is 20% (fig. 15). Figure 14. Entrepreneurs motivation EFESEIIS PAGE 10

11 Figure 15. Entrepreneurs motivation. Gender distribution Differences by age are shown in Figure 16. The percentage of individuals who undertook a social business career to address a social challenge is higher for ages (42%) and (40%). 32% of respondents aged and 60% of those below 30 created a personal employment opportunity through social business. 68% of those aged over 60 were driven by the desire to address a social problem they personally experienced or to address social challenges. Addressing environmental challenges seems to play a comparable role for all age classes. Figure 16. Entrepreneurs motivation. Age distribution The graph in Figure 17 plots changes in motivation relative to educational attainment. For all levels of education (except PhD) the largest percentage of respondents started to work in a social enterprise to address a social problem or as an opportunity for self-employment. 100% of interviewees with secondary education were motivated by addressing a social problem they personally experienced. 100% of people with doctorate wanted to innovate particular practices. Graduate students and people with a High School diploma, with a bachelor s degree and with a master s degree mainly wanted to address a social issue they had first-hand experience of as well as creating a personal employment opportunity. EFESEIIS PAGE 11

12 Figure 17. Entrepreneurs motivation. Educational attainment EFESEIIS PAGE 12

13 3. Trends in SE organisational forms Regarding the year of establishment, 4% of the enterprises were founded before 2000, while 96% were established in the 21st century. The social enterprises founded after 2005 have been considered in the EFESEIIS project as New Generation of Social Enterprises. These enterprises represent 93% of the overall Polish sample (fig.18). The size of the business could be inferred by the number of full-time and part-time employees: 48% of firms are micro companies, 48% are small businesses and 5% are medium (fig.20). In parallel with employment data, 2014 turnover (fig.19) may be an additional telling indicator. Figure 18. Social enterprises per year of establishment Figure 19. Social enterprises per 2014 s turnover EFESEIIS PAGE 13

14 87% of the sample has a turnover for 2014 lower than Euro 200,000. Only 2% of the businesses have an estimated turnover between Euro 1-2M while 22% of respondents stated a sales volume lower than Euro 6,250. Figure 20. Social enterprises size* Micro company: Staff headcount<10; Small company: Staff headcount<50; Medium company: Staff headcount<250; Large company: Staff headcount>250. Data in Figure 21 show that most SEs deal with education (25%), accommodation and food services (23%), human health and social work activities (16%), arts, entertainment and recreation (17%) and other service activities (25%). The subgroup Other accounts for approximately 26% of the total and contains gardening activities, waste disposal, conservation of green spaces and cleaning firms, non formal education activities, recycling activities, fair trade, residential care facilities and residential centres, social inclusion and job placement services and business services. Figure 21. Social enterprises activity sector* *Respondents may choose more than one option (total does not add up to 100%) EFESEIIS PAGE 14

15 Focusing on the main funding sources of the enterprises (fig.22), 33% of the respondents are fully economically independent while 66% are not independent and receive grants, donations, bequests or benefactions (46% describes themselves as partly independent and 20% as not independent). Figure 22. SEs economic independence EFESEIIS PAGE 15

16 4. Access to finance The sources of funding available to the respondents are shown in Figure 23 Figure 23. Available sources of funding* Grants from projects were obtainable by 94% of respondents, 76% can borrow from banks, 62% can raise money contributions through donations and fundraising and 45% through crowdfunding while 41% have access to a microcredit (fig. 23). Taking into consideration the respondent s age (fig. 24): Available funding channels for people younger than 30 are mainly grants from projects, bank loans, personal savings, crowdfunding and regulated markets. People aged obtain funding mainly from regulated markets, crowdfunding, social investment and personal savings. For the and age groups bank loans, donations/ fundraising and project grants are the primary sources of financing. Bank loans are obtainable predominantly by older age groups (about 77% for ages 31-40, and 51-60). Microcredit is a potential source of financing for about 80% of the middle three classes, while it is less important for the age group and for people over 60. Finally, social investments are a more accessible financing channel for older persons. * Questions concerning the sources of funding allowed more than one option (total does not add up to 100%) EFESEIIS PAGE 16

17 Figure 24. Available sources of funding. Age distribution Figure 25 plots potential sources of funding and company size. Micro companies, which constitute the biggest group of SEs in, tend to benefit mainly from regulated markets, grants projects, fundraising and social investment as potential financing sources. Small companies are more inclined to use microcredit, crowdfunding and private investments, while medium companies rely on social investment and project grants. All financing instruments are in majority used by micro companies (55%-72%) and by small companies (28%-42%). There is no record for large companies in our country. Figure 25. Available sources of funding per SEs size EFESEIIS PAGE 17

18 The graph below (fig. 26) shows financing sources used at the start-up phase and currently used by organisations. Approximately 75% of the respondents claim that project grants are the most popular financing source at the startup phase. Personal savings and donations also play an important role at the beginning of an organisation s development. Project grants are also a primary source of financing in the latter phases. However, there is a noticeable increase in the importance of bank loans and other sources as the organisations develop. Figure 26. SEs funding The graph below (fig. 27) depicts the financing source actually employed per respondent s age. The age group funds its activities only through grants from projects, personal savings and microcredits. Other than microcredit, the aforementioned tools remain the main financing channel used by the over 60 age group, but in addition older respondents use bank loans. Crowdfunding is the most important source of financing for the group and is not employed by other groups. Social investment and private investment are shared equally only by groups and Microcredit is used in a large part (50%) by the group aged Donation/fundraising is important for the group (60%). Bank loans are used equally by all age groups excluding the youngest class. Grants from projects and personal savings are the only financing sources used by all age groups, while no respondents employ regulated market instruments. EFESEIIS PAGE 18

19 Figure 27. Funding currently used. Age distribution With regard to the business size, medium companies support their activities through grants from projects, personal savings, donations/fundraising and private investment. Micro companies present a more diversified funding portfolio, including all funding methods apart from regulated market and less popular microcredit. Conversely, microcredit is the main financing resource for small companies. Results are shown in Figure 28. Figure 28. Funding currently used per SEs size The following histograms (fig. 29) show the type of funds used by SEs that are totally, partially or not economically independent. Microcredit is employed only by totally economically independent SEs while social investment is employed only by partially economically independent SEs. Crowdfunding is used only by independent and partially independent SEs. Bank loans, project grants, donations/fundraising and private investments are used by all three categories but mainly by partially economically independent SEs. EFESEIIS PAGE 19

20 Figure 29. Funding currently used by SEs economic independence Figure 30 plots the main financing sources used in the start-up phase of the Social Enterprise. Figure 30. Funding used at the start up phase. Initial diffuculties EFESEIIS PAGE 20

21 Starting with the survey questions, it is possible to specify six categories of difficulties which could have hindered SEs development during their start up phase: - Human resources subgroup includes difficulties in recruiting employees and volunteers, in drafting a business plan and employees low motivation, skills and experience - Financial resources subgroup refers to low pay of employees, margins from business activities, difficulties in getting funds from private sources, accessing capital market and getting equity investment - Juridical and fiscal context subgroup gathers together the lack of government funding, red tape, lack of clear legal status, lack of favourable tax treatment and difficulties in participating in public tenders - Network subgroup is made up of lack of support organisations, difficulties in building strategic partnerships, limited public awareness of the organisation, lack of trust in the organisation and difficulties in communicating social values to stakeholders - Market subgroup concerns difficulties in finding and affording a physical space to work, in selling products in the non-private market, competition with other third sector organisations, competition with for-profit businesses and the small size of the market. - None of these Looking at the graphs, the main obstacles faced by SEs during their start up phase refers to the juridical and fiscal context. The second problem faced is the cost of human resources. Juridical issues hindered activities of businesses supported by microcredit, bank loans and personal savings in more than 60% of cases. Similarly, more than 60% of companies using private investments and microcredit for their activities reported being hampered by market problems. Problems within the human resource field were a major source of complication for over 50% of those enterprises funded by social investments, private investments, crowdfunding and grant projects. The quality and lack of network resources were sources of complication for more than 50% of businesses financed by bank loans as well as 40% of companies financed by social investment. Financial issues hindered the activities of businesses supported by private investment in more than 75% of cases. Problems within finance were an important problem in all categories of company but to a lesser extent - below 40%. EFESEIIS PAGE 21

22 5. Innovation Section F of the questionnaire explores the degree of innovation within the objectives and life-cycle of the enterprises. Figure 31 illustrates the importance of innovation in terms of products, process, finance or marketing in the start up phase. 51% of respondents stated that innovation has been very important during the initial phase of their activities, while 20% said that it has been extremely important. Just 9% reported a slightly significant role of innovation. Figure 31. Importance of innovation With regard to economic independence, the graph below (fig. 32) shows a similar trend for each level of economic independence. Innovation is very important for most social enterprises, particularly for non-economically independent businesses. The highest percentage of individuals who state innovation is extremely important was found in the group of non-economically independent companies at their startup phase and reached 41%. The neutral role of innovation and its relative importance was reported by about 32% of totally economically independent companies at their startup phase. EFESEIIS PAGE 22

23 Figure 32. Importance of innovation per economic indipendence status Following the usual analysis framework, the graph below (fig. 33) illustrates the degree of importance of innovation in relation to the size of the company. As business size changes, the trend of the importance of innovation in the current phase of the business life cycle and the one observed in the initial phase are a lot alike. Medium companies had a great interest in innovating during their initial phase (50% of medium companies stated innovation was extremely important and 50% that it was very important). Innovation played a minor role for micro and small companies. Indeed, 25% of small firms deem that innovation was neutral. The importance of innovation increases as business size increases, although the percentage of respondents believing innovation is very or extremely important is higher than 50% regardless of the size of the company. Figure 33. Importance of innovation per SEs size EFESEIIS PAGE 23

24 With reference to the entrepreneurs age (fig. 34), people aged saw innovation as less important than other age groups. They considered innovation to be more important in the current phase of the organisation development compared to its startup phase. The difference between the level of innovation importance according to the developmental phase of the company was not observed in other groups. Of all age groups, those aged considered innovation to be the most important. In this group the percentage of opinions of very important and extremely important amounted to 75%-90%. Similar results were obtained in the group (75%-80%). Figure 34. Importance of innovation. Age distribution Figure 35 presents the importance of innovation to increase SEs competitiveness. Innovation is perceived as very important and extremely important in the field of marketing (45%) and product/service (46%). To lesser extent innovation was perceived to be important in case of organisation processes. Figure 35. Importance of innovation to increase Se s competitiveness (per area of innovation) EFESEIIS PAGE 24

25 As Figure 36 depicts, innovation to achieve a greater social impact is seen as extremely important in the field of marketing (17%) and as very important in all four sectors, particularly in the field of product/service (30%). The importance of innovation is perceived as not at all important or slightly important by less than 7% respondents in four categories. Figure 36. Importance of innovation to achieve a greater social impact (per area of innovation) Figure 37 presents the importance of innovation to achieve a greater environmental impact. It is perceived as extremely important, particularly in the field of marketing (13%) and as very important in all four categories - product/service, process, finance and marketing (20-26%). Only innovation in the field of processes is seen as slightly important (8%) and neutral (16%). Figure 37. Importance of innovation to achieve a greater enviromental impact (per area of innovation) EFESEIIS PAGE 25

26 Focusing on the actual process of innovation, 68% of interviewees replied that they did innovate in terms of products, process, finance, or marketing in the last 3 years; 28% of the total respondents did not innovate (fig. 38). The highest rating of organisations which apply innovations was found in the group of partially economically independent companies, the lowest was observed in the group of totally economically independent (fig. 39). Figure 38. Did you innovate in the last three years? Figure 39. Current innovative practices per indipendet status Interviewees who did innovate are mostly in age groups and The percentage of respondents that did not innovate is higher for individuals older than 60 (fig. 40). EFESEIIS PAGE 26

27 Figure 40. Current innovative practices per age distribution It was observed that the larger the company the greater the process of innovation. Still, more than 60% of enterprises within each business category do innovate (fig. 41). Figure 41. Current innovative practices per SEs size Distribution of innovation per enterprise turnover is shown by Figure 42. The largest number of enterprises which did innovate in terms of product, process, finance and marketing over last 3 years had a turnover between Euro 200, ,000 and Euro 350, ,000 in Companies which did not innovate mostly had a turnover between Euro 12,501-25,000 in EFESEIIS PAGE 27

28 Figure 42. Current innovative practices per 2014 s tournover 5.1 Motivation to innovate The respondents innovated to respond to changes in the external environment. The trend per age class is rather heterogeneous. It is worth noting that the most innovative in adapting to a change in the external environment are entrepreneurs aged (here over 40% declared that they employed innovation) followed by age group (over 30%). Figure 43. Did you innovate due to a change in the external enviroment? EFESEIIS PAGE 28

29 Figure 44. Change in the external enviroment per SEs economic independence With regard to economic independence status, it is clear that 36% of those who innovated to adapt to external changes are totally economically independent 42% are partially independent (the group which seems to be most innovative of all categories) and 37% are not independent. Those who did not innovate comprised: 51% totally independent, 29% partially independent, 45% not independent. Figure 45. Change in the external enviroment per SEs size The size of a business is likely to affect the motivation behind an enterprise s reasons to innovate. Graphs illustrate that the most keen to innovate to adjust to changes in the external environment are medium sized companies. In contrast, no large firms innovated in response to a change in the environment. Micro companies declared to innovate in 41% of cases and small companies in 25%. EFESEIIS PAGE 29

30 Figure 46. Motivation to innovate within specific business area (Micro SEs)* To show how important innovations introduced by the SEs were to increase the enterprise s competitiveness, achieve greater social impact and achieve greater environmental impact it is useful to gather together related business activities and create four areas of possible innovation: (1) product and service, (2) process, (3) finance and (4) marketing. In the case of small SEs the graph below shows that 100% of respondents believe it is very or extremely important to innovate in the product/service area, almost 85% in the marketing area, 81% in finance and 61% in the process area with the aim of increasing the enterprise s competitive power. According to our respondents, innovation in marketing and product/service played the most important role in achieving greater social impact (almost 90% for both). The percentage is slightly lower for finance and process (70% and 55% respectively). Lastly, innovating in marketing product/service and finance proved to be very or extremely important to achieve greater environmental impact for our interviewees. The share is lower (slightly over 40%) for those who innovated in process area. *Each of the 12 columns represents the percentage of respondents that have expressed their preference to innovate within the specific business area (product/service, process, finance and marketing) to achieve one of the three goals (increasing competitiveness, achieving greater social impact and achieving greater environmental impact). The motivation to innovate is calculated as the sum of respondents that selected the options very important and extremely important. EFESEIIS PAGE 30

31 Figure 47. Motivation to innovate within specific business area (Small SEs)* Looking at the charts in Figures it is possible to see how purposes and areas of innovation changed as business size changes. Figure 48. Motivation to innovate within specific business area (Medium SEs)* *Each of the 12 columns represents the percentage of respondents that have expressed their preference to innovate within the specific business area (product/service, process, finance and marketing) to achieve one of the three goals (increasing competitiveness, achieving greater social impact and achieving greater environmental impact). The motivation to innovate is calculated as the sum of respondents that selected the options very important and extremely important. EFESEIIS PAGE 31

32 Innovation played a similar role in micro companies. Around 90% of micro firms deem innovation in product/service and marketing area to be very or extremely important to increase the firm s competitive power. The percentage is slightly lower for innovation in process (50% of micro companies). Innovating in finance positively affected competitiveness for about 69% of micro company category. In the case of medium enterprises, 100% deem innovation in all four areas (product/service, process, finance and marketing) to be very or extremely important to increase the firm s competitive power as well as to achieve greater social impact. The same is true for the product/service category in achieving greater environmental impact (also 100%). Medium companies give lower importance to innovation in process, finance and marketing as far as environmental impact is concerned. EFESEIIS PAGE 32

33 6. Institutional environment This section analyses the degree to which specific groups of stakeholders influence the decision-making process of the organisation and the type of engagement practices employed by the social enterprises interviewed. With regard to the first issue, the most influential factors in the decision-making process are the owners/ Board of Directors, followed by customers and users, employees and investors. Third sector organisations, suppliers and community are deemed to be slightly influential for our respondents. Figure 49. Stakeholders degree of influence* Differences regarding the company s economic independence status are shown by Figures 51 and 52. Figure 50. Stakeholders degree of influence per economic independence status (not at all influential)* * The graph shows the respondents that selected the not at all influential option. EFESEIIS PAGE 33

34 Figure 51. Stakeholders degree of influence per economic independence status (influential)* Starting from not independent companies, through totally and partially independent, it is possible to see that owners and the Board of Directors are the most influential stakeholders within the enterprise s decision-making process. This is also true for customers and users, employees and stakeholders, while third sector and community are less influential. State and public administration are somewhat influential (especially in the not independent category). In most cases, businesses which rely on external money such as grants, donations and bequests show the highest degree of influence by the owners and Board of Directors, while all other categories play a significantly less important role, except for customers and state, which play a modest role in the decision-making process. It is worth noting that the employees are less important in the case of not independent category compared to the partially and totally independent category. Figure 52. Stakeholders degree of influence (Micro SEs)* * The graph shows the respondents that selected the not at all influential option. EFESEIIS PAGE 34

35 Figure 53. Stakeholders degree of influence (Small SEs) Figure 54. Stakeholders degree of influence (Medium SEs) The three Figures above (figs ) illustrate the stakeholders degree of influence, taking into consideration the size of the enterprise. Owners and the Board of Directors are deemed to be extremely influential by almost 70% of micro companies, almost 80% of small companies and about 50% of medium enterprises. Shareholders and investors are not influential at all for about 50% of micro and medium businesses and 25% in the case of small enterprises. Employees play a modest role (somewhat influential) regardless of the size of the company. Suppliers are more influential in medium sized companies than in micro and small ones. The influence of state and public administration appears to decrease the larger the enterprise. Third sector organisations are slightly influential in the case of medium companies, somewhat, slightly and not at all influential for most of the respondents for micro and small companies and the community is deemed to be more influential the smaller the company. EFESEIIS PAGE 35

36 Figure 55. Stakeholders engagement practices* As far as the engagement practices are concerned, the main mechanisms employed to ensure the stakeholder s involvement in the business s activities are reported in Figure 57. Organisation of public meetings is the most common practice of stakeholder engagement (more than 70%), followed by the membership of Executive Board (about 55%), the use of social media (almost 50%) and the collection of feedback, surveys and evaluation of users satisfaction reporting system. Almost 20% of businesses rely on advisory groups. The following graph describes how stakeholder engagement practices change as the size of the company increases. Figure 56. Stakeholders engagement practices per business size* Micro companies mainly rely on public meetings, membership of Executive Board, stakeholders involvement for the reporting of activities and collection of feedback or evaluation of user satisfaction methods to engage stakeholders in their activities and decision making. Small companies follow the same pattern, although they use more advisory groups. Medium companies limit themselves to public meetings and collection of feedback or evaluation of user satisfaction. * Respondents may choose more than one option (total does not add up to 100%) EFESEIIS PAGE 36

37 7. Cooperation and Social Capital Section H studies entrepreneurs social capital. Around 30% of the interviewees completely agree and more than 50% quite strongly agree that in their team people generally trust each other and cooperate effectively. Many respondents stated that they generally trust people in their team (over 30% agreed completely, 51% agreed quite strongly). The percentage of respondents who replied that they generally co-operate with their team members is even higher (40% completely agree, 51% quite strongly agree). On the other hand, only 5% of respondents believe (completely agree) that their enterprise has a large network of business relations. Figure 57. Social capital - % of agreement with specific set statements EFESEIIS PAGE 37

38 8. Challenges and constraints The charts in this section will help us to understand the main challenges and constraints SEs cope with at each stage of their organisation is development (start up, current and future stage). Respondents were asked to select the three main challenges they faced/will face during every phase. Bureaucracy is one of the main constraints to the undertaking and initial activities of 21% of the SEs. Other challenges that hindered the enterprises development and could affect their future are employees low pay (16%), employees low experience and skills (14%), difficulties in participating in public tenders (11%) and getting funds (from private (10%) and public (12%) bodies) and the limit of public awareness of the organisation (6%). In the future, entrepreneurs expect to have to face decreasing profit margins from their business activity (17%), red tape (13%) and competition with other third sector organisations (13%). Constraints with obtaining financing will remain one of the main concerns (about 10% on average, regardless of the source of funding). With reference to organisations current development stage, 28% of respondents believe bureaucracy is one of their first three challenges, followed by employees low pay and a decreasing margin from business activity. The lack of government funding and the lack of a favourable tax treatment represent the other two significant limits to the SEs development. The chart below (fig. 60) sums up the incidence of each constraint over the organisation s life cycle. It is possible to see different evolutionary trends according to each specific element. The size of the market, physical space availability and affordability, the access to private and public financing and difficulties in participating in public tender seem to be quite stable over the SEs development. Competition rises as well as difficulties related to the employees low motivation, volunteer and employee recruitment, increase of the business margin, access to equity investment, building partnership and benefit from the support of other organisations. As the organisation grows, difficulties in communication with stakeholders and in selling products also increase. On the other hand, capital market accessibility improves, together with employees skills, public awareness of the organisation and trust in its activities. Tax burden is expected to play a smaller role in the future stages of SEs development. Taking into consideration the same categories of difficulties specified in section 4: Human resources (which includes difficulties in recruiting employees and volunteers, in drafting a business plan and employees low motivation, skills and experience); Financial resources (which refers to low pay of employees, margins from business activities, difficulties in getting funds from private sources, accessing capital market and getting equity investment); Juridical and fiscal context (which gathers together the lack of government funding, red tape, lack of clear legal status, lack of favourable tax treatment and difficulties in participating in public tenders); Network resources (which is made up of lack of support organisations, difficulties in building strategic partnerships, limited public awareness of the organisation, lack of trust in the organisation and difficulties in communicating social values to stakeholders); EFESEIIS PAGE 38

39 Market resources (which concerns difficulties in finding and affording a physical space to work, in selling the product in non-private markets, competition with other third sector organisations, competition with for profit businesses, small dimension of the market); None of these Figure 58. Constraints incidence over SEs life cycle* Figures 61 and 62 illustrate the challenges and constraints for the enterprises in the current phase of their life cycle as the business size and the economic independence status change. Figure 59. Challenges and constraints in the current phase of SEs per business size* * Respondents may choose more than one option (total does not add up to 100%) EFESEIIS PAGE 39

40 Figure 60. Challenges and constraints in the current phase of SEs per economic independence status* Figure 63 sums up current difficulties when the enterprise s turnover changes. Figure 61. Challenges and constraints in the current phase of SEs per 2014 s turnover* Most enterprises with a turnover higher than Euro 500,000 are firstly constrained by financial problems (respectively 69% of companies with a turnover between Euro 500,001-1M, 20% of companies with a turnover between Euro 1M and 2M, 67% of enterprises between Euro 2M-4M and 46% between Euro 4M-8M). On the other hand, enterprises with a lower turnover are mainly hindered by juridical and fiscal issues. Complications concerning the size of the market and competitiveness are faced by more than 30% of enterprises within the following turnover groups: Euro 0-6,250; Euro 25,001-50,000; Euro 500,001-1M and Euro 2M-4M. * Respondents may choose more than one option (total does not add up to 100%) EFESEIIS PAGE 40

41 50% of firms with a turnover about Euro 300,000 Euro in 2014 complain of network limits, the highest percentage within the whole sample. Finally, human resource difficulties are mainly tackled by businesses with a turnover of Euro 100, ,000 (about 40% of this group of firms). Figures 64 and 65 describe challenges and constraints expected in the future by companies, according to their size and degree of economic independence. Figure 62. Expected challenges and constraints per business s size* In the future, companies expect to face very similar problems to the ones they are currently tackling. Micro companies foresee an improvement in the juridical and fiscal context and financial conditions and equally an increase of complications within the human resources. Growing difficulties in this field are also expected by small and large companies. The weight of financial issues will decrease slightly for all kinds of companies, together with network constraints for small and medium companies. Except for medium businesses, all other companies predict a worsening within the market field. With regard to the economic independence status, recruiting employees and volunteers seems to become slightly more difficult for totally independent and partially independent companies. Financial constraints are expected to lessen by all types of companies, particularly by not independent businesses. Similarly, companies are optimistic with regard to the juridical and fiscal context. The percentage of those believing it will be a problem goes down by more than 10 percentage points for totally and not independent firms, but by just 3 points for partially economically independent firms, who foresee an improvement in their network higher than that expected by all other types of companies. Finally, market resources are predicted to be an issue by a larger number of totally and partially independent enterprises than currently reported. * Respondents may choose more than one option (total does not add up to 100%) EFESEIIS PAGE 41

42 Figure 63. Expected challenges and constraints per economic independence status* In the initial phase, juridical and fiscal issues were more influential for smaller companies. Around 45% of small and micro companies say they had to face these types of complications while starting their activities. Financial constraints were crucial for large companies (with over 65% of respondents reporting them) and relatively important for about 50% of small companies. Difficulties in the financial field seem to increase as companies develop, probably because of last year negative economic trend. Complications concerning human resources were an issue for 33% of large businesses, but less so for other companies. Still, they mattered largely in this phase of the business life cycle for all kinds of enterprise. Large companies faced greater network problems more often than smaller firms. To conclude, difficulties in the market field had to be tackled by about 33% of large companies, 15% of medium and small companies and 12% of micro companies. Finally, Figures 66 and 67 show the initial obstacles to business development in relation to the size of the enterprise and its economic independence status. Figure 64. Expected challenges and constraints per economic independence status* * Respondents may choose more than one option (total does not add up to 100%) EFESEIIS PAGE 42

43 Most of enterprises say that their main difficulties concern financial resources and the juridical and fiscal context. Around 70% of large companies and 50% of medium firms have limited access to funding and investment and difficulties in ensuring a reasonable profit margin. Juridical and fiscal obstacles are more crucial for smaller businesses. Around 50% of micro and small enterprises claim to be hindered by the lack of clear regulation and a proper taxation system and by bureaucratic complications while working with the public sector. Market resources firstly prevent the development of medium and small companies while network resources matter for about 30% of large and small companies. Figure 65. Initial challenges and constraints per economic independence status* As Figure 61 illustrated earlier, financial issues and juridical and fiscal deficiencies are the main obstacles to the growth of totally economically independent, partially economically independent and not independent companies as well. Financial constraints slow down the development of around 40% of totally economically independent and partially economically independent businesses, mostly because they do not benefit from grants or other donations but they rely on private savings or investments for their sustainability. More than 50% of not independent enterprises are hindered by juridical and fiscal inadequacies, a higher percentage than the one seen for totally independent and partially independent companies. In contrast, just 11% of economically dependent firms reported network limits, probably thanks to their donors support. Market difficulties are mainly a problem for totally independent companies, while human resources could be a limit for more than 20% of partially independent and not economically independent respondents. * Respondents may choose more than one option (total does not add up to 100%) EFESEIIS PAGE 43

44 9. Market versus social value tensions To study whether there is any kind of relationship between the way an SE finances and manages its market activities and its social values and commitment, it could be useful to sum up the features of the three business categories - totally economically independent enterprises, partially economically independent and not independent companies - in terms of year of foundation, business size, turnover and stakeholder engagement practices. The Polish sample of SEs includes 58 totally economically independent enterprises, 29 partially independent and 35 dependent on grants, donations, bequests or benefaction. Totally and partially economically independent firms include the highest percentage of companies founded in the current century (52% of their respective groups), while companies established in the 1990s are mainly partially economic independent enterprises. The share of not independent businesses started in the 1980s is 20%, higher value than that seen for the other two groups. Finally all 1970 s companies are partially independent companies. Figure 66. % of totally independent SEs per year of foundation Figure 67. % of partially independent SEs per year of foundation EFESEIIS PAGE 44

45 Figure 68. % of not independent SEs per year of foundation Figure 69. Business size per economic independence status Micro companies represent the highest number of enterprises for each level of economic independence, followed by small companies, medium and large companies. The share of medium companies and large companies is slightly higher among partially economically independent enterprises and not independent enterprises. EFESEIIS PAGE 45

46 Figure 70. SEs tournover in 2014 per economic independence status 2014s turnover trend for each of the three kinds of business is describes in Figure 68. More than half of the enterprises in all categories had a turnover higher than Euro 350,000 in The group of partially economically independent firms has the highest share of companies with a turnover between Euro 4-8M, while the not independent firms have the lowest. The highest percentage of firms with a turnover below Euro 100,000 is among partially independent businesses. Finally, enterprises stakeholder engagement practices are presented by the graph in Figure 71. Shares in each category are generally similar - the most common practices are public meetings, collection of users satisfaction and the social media. Partially economically independent companies mainly arrange public meetings and use social media, while not independent businesses tend to prefer the collection of feedback through surveys to social media. Stakeholders are mainly involved in reporting activities within not independent enterprises, who are also the first to organise advisory groups. Dedicated telephone lines are mainly used by partially economically independent companies. Finally, totally independent firms mainly collect feedback, use social media and hold public meetings. Furthermore, this group of companies shows the lowest percentage of respondents choosing membership of Executive Board as main practice of stakeholder engagement. Figure 71. Stekeholders engagement practices per economic independence status EFESEIIS PAGE 46

47 Conclusions In the study, men were overrepresented in comparison to gender distribution in the general population. The average age of participants was similar to the general population. The respondents had higher education than average within the general population. Most of the interviewees were founders of the SE. Both the founders as well the non-founder group followed some vocational training useful for their current position. Founders of SEs mostly have no experience in establishing a social enterprise before their current one, both male and female. As far as educational attainment and age distribution is concerned, the trend is similar to the one seen for respondents with previous experience in founding an SE. The entrepreneurs had diverse motivations for working in a social enterprise. Most undertook their job to address a social challenge, to create an opportunity for self-employment and in order to address a social problem they personally experienced. Motivation to work in social enterprise was similar for men and women. For all levels of education (except PhD), the largest percentage of respondents started to work in a social enterprise to address a social problem or as an opportunity for self-employment. All interviewees with secondary education were motivated by addressing a social problem they had personally experienced and all of the people with a doctorate needed to innovate particular practices. Graduate students and people with High School diploma mainly wanted to address a social issue they had experienced first-hand as well as creating a personal employment opportunity. Most of the enterprises were established in the 21st century. The social enterprises founded after 2005 have been considered in the EFESEIIS project as a New Generation of Social Enterprises. These enterprises represent a significant part of the overall Polish sample. Size of the business could be inferred by the number of full-time and part-time employees. Most of the firms are micro and small companies. In there was a noticeable increase in the number of social enterprises after The ma jority represent a turnover lower than Euro 200,000. Similarly, the size of the organisations is limited and they are mainly micro and small companies. Almost half of Polish social enterprises run their activity in the areas of education, accommodation and food services. The majority of organisations benefit from additional funding and donations. Only one third is financially independent. The most popular sources of funding among Polish social entrepreneurs are grants from projects and personal savings. Some sources of funding are more frequently used in selected age groups, for example crowdfunding is very popular in the age group Others, such as bank loans, grants from projects and personal savings are equally important regardless the age of the respondents. Interestingly, the economically independent social enterprises for the main part rely on microcredits. The innovation of the organisations seems to increase with the increase in their size. This trend also seems to be true for the companies income the greater the income the greater the likelihood of product, process, finance or marketing innovative practices. EFESEIIS PAGE 47