Page 90 - Social Enterprise A New Business Paradigm for Thailand

2) Social Business Initiative (SBI)

In 2011, the European Commission (EC) formally adopted the Social Business Initiative (SBI),
marking the beginning of an official policy framework to promote social enterprises. In its
documentation, the EC uses the terms “social business” and “social enterprise” interchangeably,
treating them as equivalent. It defines social enterprises as follows:

“A social enterprise is an operator in the social economy whose main objective is to have a social
impact rather than make a profit for their owners or shareholders. It operates by providing goods
and services for the market in an entrepreneurial and innovative way and uses its profits primarily

to achieve social objectives. It is managed in an open and responsible manner and, in particular,
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involves employees, consumers, and stakeholders affected by its commercial activities.”
Although the SBI acknowledges that social enterprises may take various legal forms, such as
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cooperatives, foundations, associations, and mutual societies (organizations owned and
operated by their members for mutual benefit), its definition emphasizes democratic governance
and stakeholder participation. These requirements make “social cooperatives” particularly well-
suited to qualify as social enterprises under the initiative’s guidelines. Nevertheless, there is a
growing trend among EU member states to enact legislation recognizing a wider range of

organizational forms as social enterprises. Such laws typically specify conditions that
organizations must meet to be legally recognized, including restrictions on profit distribution. For
example, Italy’s 2017 legislation permits social enterprises, whether cooperatives or companies,
to distribute profits to owners or shareholders, but limits such distributions to no more than 50%
of annual profits.

The SBI outlines the types of businesses that qualify as social enterprises as follows :
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2.1) Businesses that provide social services and/or goods and services to vulnerable groups. These
include access to housing, healthcare, support for the elderly or persons with disabilities, social

20 Communication from the Commission to the European Parliament, the Council, the European Economic and
Social Committee and the Committee of the Regions, Social Business Initiative, Creating a favourable climate for
social enterprises, key stakeholders in the social economy and innovation, Sec (2011) 1278 final.
21 Mutual societies or mutual organizations are business entities that provide public services, with ownership and
management shared by members for their collective benefit. Each member has one vote in accordance with
democratic principles. These organizations encompass cooperatives, associations, and companies that meet the
criteria of mutual societies. If an organization conforms to the seven cooperative principles, it may also be regarded
as a cooperative. The seven cooperative principles are: (1) voluntary and open membership, (2) democratic
member control, (3) member economic participation, (4) autonomy and independence, (5) education, training, and
information, (6) cooperation among cooperatives—at the local, national, regional, and international levels, and (7)
concern for community.
Source: UW Center for Cooperatives, https://uwcc.wisc.edu/about-co-ops/cooperative-principles/
22 Ibid, Page 3
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