The Joys and Burdens of Multiple Legal Frameworks for Social Entrepreneurship - Lessons from the Belgian Case

Abstract

In the last two decades, several innovative legal frameworks for social entrepreneurship were developed across Europe. The differential success of these innovations raise certain questions. Is the intrinsic design of these legal frameworks optimal for social enterprises? Secondly, is the attractive capacity of these legal frameworks high enough to attract both new as existing social enterprises? And lastly, have these new legal frameworks reached full maturity? If this is not the case, these changes may well impede rather than encourage the development of social enterprises. In this paper, we look at the Belgian situation where an innovative framework was introduced and where multiple legal frameworks for social entrepreneurship coexist. By means of a multidisciplinary approach involving law and economics, we investigate the joys and burdens of having numerous legal frameworks for social enterprises. We provide an introduction to the Belgian legal environment for social entrepreneurship, and argue that the current institutional design is suboptimal. Finally, we conclude with lessons that can be learned from the Belgian case relevant for other countries and contexts.

An Empirical Investigation of Supportive Legal Frameworks for Social Enterprises in Belgium: A Cross-Sectoral Comparison of Case Studies Concerning Social Enterprises in the Social Housing, Finance and Energy Sector

“…A cooperative can become "a cooperative with a social purpose" by reforming its AoA to include all the cumulative requirements that have been introduced in Article 661 of the Belgian Companies Code (1999). Spear (2004, p.105), and subsequently Coates and Van Opstal (2009), stress that the majority of VSOs in Belgium have the legal form of a cooperative. However, the introduction of the VSO legal requirements into the cooperatives' AoA will not suffice.…”

“…The VSO legal label was introduced to increase the marketability and recognition of existing social enterprises such as cooperatives and mutual societies. Furthermore, it provided an alternative entrepreneurial type to commercial enterprises with for-profit objectives that wish to shift to social purpose seeking activities (Coates and Van Opstal 2009;Cafaggi and Iamiceli 2009). However, in Belgium, the VSO legislation has not been widely used (EC 2014a, p. i).…”

Work integration ambitions of startups in the circular economy

“…To gain an accreditation, WISEs also have to take the legal form of a non‐profit association or a cooperative accredited as a social enterprise. All WISEs in Flanders opted to become a non‐profit association, ensuring both a non‐distribution constraint and an asset lock to signal and safeguard its social objectives (Coates & Van Opstal, 2009). While in theory conditions to become accredited as a WISE have been set out by the Flemish Government, in practice there is no room for new entrants to become accredited.…”

Market-Specific Barriers and Enablers for Organizational Investments in Solar PV—Lessons from Flanders

“…This fee is capped at the social tariff, as guaranteed by a Flemish decree. Moreover, Aster has an incentive to remain true to its social mission, as it faces a legal cap on the distribution of its profits (Aster is a co-operative that combines an official accreditation of the National Council for Co-operatives and federal recognition as a social enterprise, which generates a legal cap on the distribution of its profits to its members and ensures that profits are sufficiently reinvested in the social objective of the co-operative [48,49]). Focus group participants, however, point out that not every social dwelling has its own roof.…”