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Chapter 3
Social Enterprises Abroad:

Development and Legal Frameworks

Over the past two decades, social businesses, or social enterprises, have continued to grow
steadily across various regions. The global financial crisis of 2007–2008, combined with increasing
awareness of economic, social, and environmental challenges, particularly following the United
Nations’ adoption of the Sustainable Development Goals (SDGs) in 2015, has prompted various
sectors to recognize the need for a paradigm shift in business practices. Today, there is a stronger

emphasis on addressing social problems rather than pursuing profit maximization alone.

According to this study, the development of social enterprises abroad can be classified into three
broad types:

1. The first type is found in Anglo-Saxon countries, notably the United States and the United
Kingdom. In these countries, social enterprises are viewed as hybrid entities that straddle the
line between non-profit and for-profit organizations. They are designed to generate income
and provide financial support for social initiatives through market mechanisms (income
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generation approach) , while also implementing innovations that address social needs (social
innovation approach). Concrete examples of this model include Community Interest
Companies (CICs) in the UK, and Benefit Corporations, B Corporations (B Corps), and Low-
profit Limited Liability Companies (L3Cs) in the United States.
2. The second type is observed in various European countries, where the focus is on enterprises
that aim to reduce social disparities or provide opportunities for marginalized groups to
participate in society (social inclusion). These enterprises often rely on public funding and
emphasize strong governance structures, such as decision-making processes that are
independent of capital ownership, stakeholder participation, and limits on profit distribution.

As such, they are recognized as part of the social economy and the solidarity economy. Many
of these organizations are non-profit entities that produce goods and services for the direct
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benefit of their communities . Early examples of this model in Europe include social
cooperatives, which originated in Italy and later spread to other countries across the
continent.

6 Milan Diaz-Foncea and Carmen Marcuello, Social Enterprises: Conceptual Debates and Approaches, The
International Handbook of Social Enterprise Law, Springer Nature Switzerland, 2023, p. 136.
7 Ibid, p. 137.
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