Social entrepreneurship is one of the relatively new concepts in the economy and rests on opposite goals from the hitherto dominant market economy. Different models of legal regulation of social entrepreneurship are known in Europe and the world. For example, Italy, Finland and Slovenia regulate it by a separate law, while in a large number of countries it is only a part of the existing legal regulations. Social entrepreneurship in the Republic of Croatia is not regulated by a separate law but is integrated into positive legislation.
The working group of the Strategy for the Development of Social Entrepreneurship in the Republic of Croatia for the period 2015-2020 determined 9 criteria for recognizing social entrepreneurs:
- A social entrepreneur achieves a balance of social, environmental and economic business goals.
- A social entrepreneur performs the activity of production and trade of goods, provision of services or performs an artistic activity which generates income on the market, and which has a favourable impact on the environment, contributes to the development of the local community and society as a whole.
- A social entrepreneur creates new value and ensures financial sustainability in a way that in three years of business he plans to realize at least 25% of the annual income or realizes it by performing his entrepreneurial activity.
- The social entrepreneur invests at least 75% of the annual profit, ie the surplus income generated by performing his activity, in the realization and development of business goals, ie activities.
- A social entrepreneur is characterized by voluntary and open membership and autonomy of business, ie activities.
- The Republic of Croatia, a unit of local and regional self-government or a body of public authority cannot be the sole founder of a social entrepreneur.
- A social entrepreneur is characterized by a democratic way of decision-making (involvement of stakeholders in transparent and responsible management), ie decision-making is not exclusively related to own shares or membership roles but includes key stakeholders: workers, members, users or consumers and collaborating organizations.
- The social entrepreneur monitors and evaluates his social, economic and environmental effects and impact, and uses the results of the evaluation in planning his further business and takes care of their improvement.
- In case of cessation of activity, the social enterprise has a defined obligation to transfer its remaining assets9, after covering liabilities to creditors and covering losses from the previous period, to the ownership of another social enterprise with the same or similar business objectives, or the local unit. regional self-government that will use it for the development of social entrepreneurship
Key principles of social entrepreneurship:
- Corporate Social Responsibility: Corporate social responsibility is a key part of the idea of social entrepreneurship. Nevertheless, what is usually understood by this term today in the context of a modern market economy is a significantly narrower concept than what is meant by social responsibility in social enterprises. Thus, CSR is usually a set of positive measures or policies that a company consciously adopts and implements in the public interest of the community in which it operates. It must be said that social responsibility for social enterprises is the goal, and for private for-profit companies only a means to increase the value of their products and services in the market. Although both types of enterprises are guided by the triple balance model, the profits of socially-owned enterprises serve to achieve social and environmental goals; and in for-profit companies, social and environmental goals serve to increase profits. We could say that the production process in social enterprises takes on a much deeper socio-economic meaning in which profit is only a means to achieve social and environmental goals.
- Economic democracy: Economic democracy is a very important and integral part of the idea of social entrepreneurship to the extent that many of the leading theorists of social entrepreneurship take economic democracy as one of the key features of social enterprises: or members of the local community, guided by both social and commercial goals, and managed jointly on democratic principles. It is about the right of employees of a company to manage it and to participate in the profit they generate through their work in that company. This right also extends to customers or users of the services of an enterprise that applies the principles of economic democracy, and in some cases to members of the local community who may be the founder of a social enterprise - in which case development programs of that same community.
- Participatory democracy: Participatory democracy is a direct form of decision-making in which citizens directly participate in decision-making, as opposed to, or better said as a quality complement to, a representative form of democracy in which citizens decide through their elected political representatives. That is why this form of democratic practice is also called direct or immediate democracy. The natural course of social development should be indicated by the development of participatory democracy both in the social and in the economic field. In this sense, social entrepreneurship and social enterprises seem very interesting because they turn the classic approach to market business into the principle of "capital in the service of labour" and contribute to the economic and social empowerment of members of local communities. Social enterprises seem to be necessary forms of self-organization in the economic field, as represented at the social level by civil society organizations and independent civic initiatives. Therefore, the importance of social enterprises and social entrepreneurship for the general development of civil society and democratic social relations becomes clear.
- Sustainable development: The role of social entrepreneurship in light of the truly sustainable development of local communities, as well as the sustainability of the global community and the ecosystem of planet Earth, is very significant. Sustainable development is a term that denotes a modern development concept based on the harmonious harmonization of three important development principles: technological progress, environmental protection and citizen participation in decision-making. What is important to note about the relationship between sustainable development and social entrepreneurship is that the development of new forms of democratic decision-making in the economic (and social) area, decentralized and fairer distribution of profits, economic and social empowerment of local communities, more responsible use of natural resources. technology and renewable energy, social entrepreneurship directly contributes to sustainable development.