The economic environment has a significant impact on the rate of entrepreneurial activity. Favorable economic environment also enables inflow of foreign investments which capital should further positively affect domestic investments and domestic economic flows.
Subdimension: Socioeconomic
Socio-economic indicators show the picture of the quality of life in the country. Countries with high rates of poverty, unemployment and inequality have a greater need for inclusion of social elements in businesses, but also inclusion of social businesses themselves in reducing the negative effects on the quality of life of citizens.
Socio-economic indicators are also important for measuring the economic and social impact of social enterprises.
Economic indicators provide insight into countries business environment as a pre-condition for development of social businesses.
Socioeconomic Indicators
Poverty is a condition in which basic human needs are greater than the ability to meet them. Social entrepreneurship has a huge role in creating economic opportunities for the poor and consequently, mitigating the poverty rate.
At risk of poverty or social exclusion, abbreviated as AROPE, corresponds to the sum of persons who are either at risk of poverty, or severely materially and socially deprived or living in a household with a very low work intensity
Inequality shows the gap in income distribution in an economy. Low mobility of low-income people and high inequality are predictors of social entrepreneurship. Income inequality shows how it is distributed to the population, or what the gap is between rich and poor.
The share of youth not in education, employment or training (also known as “the NEET rate”) conveys the number of young persons not in education, employment or training as a percentage of the total youth population.
Unemployment is a structural problem facing economies today. Unemployment is the percentage of the active population that seeks but cannot find work.
Youth unemployment rate is the percentage of the unemployed in the age group 15 to 24 years old compared to the total labour force (both employed and unemployed) in that age group.
Subdimension: Microeconomic
Microeconomic indicators are part of the economic dimension and are important in order to analyze the effects in terms of behavior of each individual social enterprise, but also the sector of social enterprises in general.
Microeconomic indicators have also become relevant for measuring the effectiveness and efficiency of measures to mitigate the effects of the Corona crisis.
Microeconomic Indicators
Taxation is part of the microeconomic indicators that directly affect the business models of social enterprises.
This indicator placed in the context of social entrepreneurship can be used as a performance indicator to measure the efficiency and effectiveness of the policy for development of social entrepreneurship in the economy.
The death of enterprises is an integral part of the phenomenon of entrepreneurship. Monitoring the rate of exit of firms from the market, over time and across countries, helps the understanding of the process of “creative destruction” and the impact of economic cycles on entrepreneurship
This indicator can be used to assess the viability of companies’ business models and its resilience.
This indicator is important because the needs for financial resources of social enterprises also depend on the projected investments.
This indicator directly affects the business climate in an economy and on innovation and competitiveness.
Subdimension: Access to Market
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 fashion and uses its profits primarily to achieve social objectives. Access to markets is essential for social enterprises to develop, consolidate and become more self-sustaining. A number of barriers can hinder the capacity of social enterprises to access the market such as managerial capacity within social enterprises, benefit from measures applicable to SMEs and a level playing field for SMEs and social economy organizations, and public procurement policy and procedures.
Access to Market Indicators
One of the ways in which public policy can support the development of social entrepreneurship is through access to public markets. In order to have greater access to public markets, first of all, it is necessary to allocate larger funds for projects in the field of sustainable development, and consequently public procurement where social enterprises will be able to compete.
Social enterprises have difficulties accessing the public sector markets (i.e. social service provision) due to lack of contacts, capital and non-transparent public procurement contracting procedures.
In order for social enterprises to be able to apply for tenders, it is necessary to strengthen their capacities, but also to have institutional and technical support while responding to calls for tender.
Social enterprises are increasingly expanding their portfolio with products, resources or investments in order to reduce the risk and improve the sustainability of the enterprise. This indicator shows whether the SEs are utilizing the opportunities on the private market.
Which measures would improve the access to private markets and help social enterprises to exploit the opportunities? Whether policies are facilitating private investments, equity, lending?
Subdimension: Human Resources
Effective strategic human resource management leads to reducing employee turnover and improving overall market performance. There is a positive impact of human resource management practices on the performance of organizations. Good performance management in organizations requires a good human resource management system. Basically, human resource management as a system is related to the performance management in the organization, which are practically indicators that should measure the progress of the company and are important for the planning process, as well as the overall management. Human resource management should lead to a higher level of employee motivation, and at the macro level to higher employment. It is also very important to take into account the economic effectiveness of human resource management whose indicator can be the level of entrepreneurship within the company.
Human Resources Indicators
Sustainability of human resource management is important for building sustainable organizations. Such policies and practices of sustainable human resource management are important for all companies that aspire to become social enterprises, starting from supporting and implementing social responsibility practices, to creating their final social business model.
Subdimension: Financial and Technological Resources
This sub-dimension is important for the development of social enterprises, considering capital as one of the factors of production. A sound economic model, benefitting from a mixed stream of financial revenue, coupled with vision and dynamism, has shown itself to be a key ingredient of a striking development.
Technological resources are crucial for the technological development of enterprises. Technology resources, especially the digitalization of enterprises and e-commerce, contribute to greater productivity and greater competitiveness.
Financial and Technological Resources Indicators
Many elements have an impact on the financial sustainability of social enterprises. Some of them are social enterprises’ entrepreneurial characteristics (employee training, business planning, etc.) and financial support in the form of grants and subsidies.
The technological development of social enterprises is important for raising their productivity.