The Power of the Social Economy: A Guide to its Principles, Importance, and Impact


1) What is the Social Economy?

The social economy comprises diverse enterprises and organizations, including cooperatives, mutuals, associations, foundations, and social enterprises. These entities share common values:

  • Primacy of people and social objectives over capital
  • Democratic governance
  • Solidarity
  • Reinvestment of most profits for sustainable development

The social economy plays a significant role in the European social market economy, with 2.8 million enterprises and organizations ranging from SMEs to large EU groups.

2) What Makes an Organization Part of the Social Economy?

Organizations become part of the social economy by adhering to shared values and principles, such as prioritizing people over profits, practicing democratic governance, and reinvesting most of their profits. They contribute to:

  • Quality jobs for all
  • Social innovation
  • Deepening democracies
  • Quality services
  • Championing equality
  • Fighting climate change

3) Why is the Social Economy Important?

The social economy is crucial for addressing societal challenges like poverty, inequality, and environmental degradation. It empowers communities through:

  • Meaningful employment
  • Skills development
  • Fostering local ownership

Social economy initiatives prioritize marginalized groups, promote social justice and inclusion, foster innovation, and build social capital for community resilience. They prioritize long-term sustainability over short-term profit, emphasizing environmental stewardship.

4) How Does the Social Economy Promote Equality?

The social economy promotes equality through various means:

Quality Jobs for All

It creates quality jobs through collective entrepreneurship and work-social integration for disadvantaged individuals. Its local focus contributes to local economic development and territorial cohesion.

Deepening Democracies

Social economy enterprises and organizations strengthen democratic values through participatory governance practices, independent management, democratic decision-making, and prioritizing people and labor over capital in income distribution.

Social Innovation

The social economy constantly innovates for the common good. It develops creative solutions to social problems, with examples like ethical finance and the fair-trade movement. These organizations collaborate with public authorities, stakeholders, and users to find collective solutions.

5) What is Corporate Culture?

Corporate culture encompasses an organization’s vision, mission, and values.

  • Mission: Describes the organization’s current purpose, what it does, who it serves, and its contribution to society.
  • Vision: Outlines the organization’s aspirations for the future.
  • Values Statement: Defines actions reflecting the fundamental values held by most individuals within the organization. Individual values, experiences, and upbringing contribute to the overall corporate culture.

Example: Freshly Cosmetics

  • Mission: To offer natural and sustainable cosmetic products that promote beauty and wellness, taking care of people’s health and the environment.
  • Vision: To be the world’s leading brand in natural and sustainable cosmetics, offering innovative products that transform the industry towards more responsible and healthy practices.
  • Values: Sustainability, transparency, innovation, commitment to health and wellness, social and environmental responsibility.

6) What are the Differences Between Sustainable Development and Sustainability?

Sustainable development focuses on meeting present needs without compromising the ability of future generations to meet their own needs. It balances economic, social, and environmental aspects.

Sustainability refers to maintaining a balance in natural and social systems over time without depleting resources or harming the environment, ensuring long-term viability.

7) Explain the Concept of Sustainability and its Different Types

Sustainability aims to maintain ecological, social, and economic systems in a balanced and healthy state over time. It involves balancing present and future needs and using natural resources and ecosystems responsibly.

Weak Sustainability

Argues that man-made capital can replace natural resources, allowing economic growth despite resource depletion. It prioritizes economic growth over environmental protection, assuming technology can always find substitutes.

Strong Sustainability

Considers natural resources irreplaceable and essential for human well-being. It recognizes the economy as a subset of the environment, emphasizing environmental protection for long-term economic growth and human development. It seeks to balance economic, social, and environmental goals for the well-being of present and future generations.

8) Explain Two SDGs and Propose Two Social Business Ideas for Each

The Sustainable Development Goals (SDGs) provide a blueprint for a better and more sustainable future, addressing global challenges related to poverty, inequality, climate change, environmental degradation, peace, and justice.

SDG 4: Quality Education

  • Social Business Idea 1: Free online courses for underserved communities.
  • Social Business Idea 2: Vocational training centers in rural areas.

SDG 7: Affordable and Clean Energy

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Social Business Idea 1: Solar energy devices for off-grid communities. Social Business Idea 2: Energy efficient appliances for urban areas.
What is the base of the pyramid? Explain how social business can meet the needs of the base of the pyramid. Use examples.
The ‘base of the pyramid’ refers to the low-income population, which is the segment of society with the least economic resources. Social enterprises can meet their needs by offering affordable and innovative products or services. For example, microfinance for small entrepreneurs or low- cost health clinics in rural areas.

10- Explain the differences between social business and traditional business.
Traditional business:
− Main objective: To generate profits for the owners/shareholders.
− Focus: Focused on financial profitability and maximising return on investment.
− Profit distribution: Owners/shareholders may receive dividends.
− Social impact: Not the primary objective; may engage in philanthropic or corporate social
responsibility activities, but not the focus. Social business:
− Primary objective: To achieve one or more social objectives.
− Focus: Driven by a social cause; seeks to generate a positive impact on society or the
− Profit sharing: Investors can recoup their investment, but do not receive additional
dividends beyond that.
− Profitability: Financial profitability may be important to ensure sustainability, but it is not
the only objective; social impact carries significant weight in business decisions.

11- Explain what social impact measurement is and why it is important.
Measuring social impact is essential for social and solidarity economy organisations. They need this information to allocate resources effectively, improve their activities, inform growth strategies, and obtain financial and political support. Increasingly, social entrepreneurs and charities are tracking progress towards their impact objectives. This is important because:
− Accountability: it allows organisations to demonstrate their accountability to funders, beneficiaries, and the public. It promotes transparency and trust.
− Decision-making and resource allocation: It provides data for informed decision-making and identifies areas in which to allocate resources for maximum impact.
− Learning and continuous improvement: Impact evaluation enables organisations to learn from experiences and improve practices, driving innovation and more positive outcomes.
− Demonstrating value and commitment: Communicating achievements to stakeholders strengthens relationships and builds support. It helps maintain commitment to the cause.
12- Explain what ex ante is, ex post and in itinere evaluation.
• Ex-ante: Evaluation carried out before the project is implemented to estimate its potential impact. It helps to make informed decisions about the design and feasibility of the project.
• Ex-post: Evaluation conducted after implementation to compare actual results with initial
objectives. It allows learning from experience and adjusting strategies for future actions.
• In itinere: Continuous monitoring during implementation to ensure progress towards planned objectives and identify challenges or areas for improvement in real time. Helps to
take the necessary corrective measures.