Financial Viability of Social Enterprises

Abstract

Our study presents a model of factors influencing the financial viability of Hungarian social enterprises, and tests the model on a sample of 220 Hungarian firms involved in social entrepreneurship. In the model we suggest that the most important factors for financial viability are the Regulatory environment (the transparency of regulations); the Entrepreneurial attributes of the entrepreneur (business orientation, business skills and experience, business planning tendencies); the Financial support provided by the environment (the ratio of grants, donations and subsidies within the total revenues of the firm); and the Strategy followed by the firms (the presence of such generic strategies as cost leadership or differentiation). We find that only two of the model's four factors are significantly associated with Financial viability: Entrepreneurial attributes and Financial support. The results suggest that the best way of strengthening the viability of social enterprises is through entrepreneurship training (to enhance the business skills and experience of the entrepreneurs, and to propagate business planning), and to provide grants and subsidies to these firms. As no significant association was found between Financial viability and Strategy, we can conclude that the role of market competition is probably relatively week among Hungarian social enterprises.

Marketing Communications of Latvian Social Enterprises from a Consumer Perspective

“…As Bartha and Bereczk (2019) note, social enterprises in the Central Eastern European region are characterized by weak financial viability which coincides with observations of Ūlande, Līcīte (2018) regarding the situation in Latvia where social enterprises must rely on donations or grants to make ends meet and often operate in "survival mode" (Ūlande, Līcīte, 2018). Bartha and Bereczk (2019), based on their research of social enterprises in Hungary, argue that in order to enhance the ability of social enterprises to earn their own income, public policy should focus on developing the business-mindset of social entrepreneurs' as well as provide continued access to grants and other forms of financial support, as these factors are found to have the most significant impact on financial viability of social enterprises in Hungary (Bartha, Bereczk, 2019). The development of social economy across European Union member states is not uniform, however, much effort and financial support is invested towards improvement.…”

“…Often characterized by a non-profit background, their marketing skills are below par compared to their commercially-oriented counterparts which, among others, is a significant challenge social enterprises are faced with. While the amount of research with regards marketing aspects of social enterprises is steadily increasing, this specific topic is still relatively under-researched, especially in Latvia, where, to Authors' current knowledge, there are only few research studies published (Kerlin, 2010;Young, Lecy, 2014;Bartha, Bereczk, 2019;Blagoycheva, 2019, Dobele, 2013. Thus the purpose of this study is twofold -to contribute to the further understanding of social enterprises' marketing by providing a consumers' perspective on the content that social enterprises generate in order for them to be able to better understand their strengths and weaknesses and to establish a reference point with regards the current situation in social enterprise marketing which will allow to compare and measure improvement in the future and, if needed, provide fact-based evidence to assist social enterprises in their call for support from public authorities.…”

“…al. 2019), to promote sustainable development (Bartha, Bereczk, 2019;Blagoycheva, 2019, Dobele, 2013, and drive innovations (Monroe-White, Zook 2018; Tkazc, 2016). Having originated as a public response to the failures of government and public organizations to provide the required level of social services (Satar, et.…”

Why We Should Not Wait for Existing Latvian Crowdfunding Platforms’ Authorisation under the EU Regulation on Crowdfunding Service Providers for Business

“…The exceptional capacity of social entrepreneurship to provide sustainable results in the social and economic domain continues to attract the interest of both the public sector as well as the academic community of which the latter have also expressed a certain level of scepticism (Morris, et al, 2020;Dacin, et al, 2011) towards the field. Nevertheless, social enterprises, often referred to as "change agents", "mission leaders" and "opinion leaders" (Abu-Saifan, 2012, p.25), have been praised for being able to rectify the failures of capitalism (Baglioni, 2017), drive innovations (Monroe-White, Zook, 2018), promote sustainable development (Bartha, Bereczk, 2019), and tackle various social and economic problems (Bandyopadhyay, Ray, (b) 2019) all of which have contributed to the massive spread of the social entrepreneurship movement across the world, earning high appreciation and support for the field also within the European Union (Social, n.d.). The world-known professor and author of competitiveness theories Michael Porter (Driver, Porter, 2012) perceives social entrepreneurship and its values as the new norm that will increasingly take over the world, transforming capitalism which has lost its legitimacy.…”

International Scientific Conference “New Challenges in Economic and Business Development – 2022: Responsible Growth” : Proceedings

“…Social enterprises have been recognized as an effective solution for achieving sustainable development (Bartha, Bereczk, 2019;Blagoycheva, 2019;Littlewood, Holt, 2018), balancing out the failures of capitalism (Baglioni, 2017;Mansfield, Gregory, 2019;Brdulak et al 2019), solving various social and economic problems (Bandyopadhyay, Ray, 2019;Berbegal-Mirabend et al 2019) and driving innovations (Monroe-White, Zook 2018). Prodanov (2018) has specifically accentuated the role of social entrepreneurship in reducing social inequality and social stratification, provided authorities integrate social entrepreneurship in their agendas, "…social entrepreneurship must be embraced by the state and political parties that are able to put it in the center of their socio-economic policies" (Prodanov, 2018, p.136).…”