Study Finds that German Social Enterprises Lead in Collaboration and Innovation

The first results from the international comparative SEFORÏS study.

by Alexandra Ioan, Miriam Wolf and Johanna Mair, December 5, 2016

Social entrepreneurship is a worldwide phenomenon that manifests itself differently depending on the national context and institutional settings in which social enterprises operate. The social issues they address, their organizational strategies, their business models and hiring practices are only some of the aspects influenced by their context. Therefore, there is no one-size-fits-all ecosystem that nurtures social entrepreneurship on the one hand and on the other hand, there is a need for custom tailored policies in different regions of the world that can appropriately respond to the needs of social enterprises.

Understanding both the similarities and differences of social enterprises around the world is one of the main goals of the SEFORÏS project. By researching social enterprises in 7 European countries (Germany, Hungary, Portugal, Romania, Spain, Sweden, the UK), China and Russia, the SEFORÏS team builds upon qualitative and quantitative data to contribute to a more impactful engagement of social enterprises in different contexts. This then helps to inform policy-makers at national and European level on the specific characteristics of these organizations with the ultimate goal of supporting them in generating social change.

The in-depth study – carried out by the SEFORÏS research consortium throughout 2015 with the financial support of the European Commission – draws on an average of two hours of interview time with 1.030 social enterprise directors. The survey used a respondent-driven sampling method that allowed an in-depth analysis of the diversity and breadth of social enterprises.

The 107 social enterprises surveyed in Germany employed 7.500 people, generated over two billion Euros and facilitated the access to some 900 people to the labor market through internships and training in 2014.

The respondent-driven sampling method resulted in a very diverse database of social enterprises. Most of the organizations are registered associations (45%), gGmbH (17%) and GmbH (15%). German social enterprises in the sample focus primarily on community development and employment and training (25%), education and research (22%), and health care (15%). German social enterprises are the most evenly distributed age-wise compared to the other countries: 29% have been in business five years or less, 42% between 5-20 years and 36% of them were founded over 20 years ago. 50% of the social enterprises in the sample have less than 10 full-time employees and 55% of the sample does not work with volunteers at all.

The diversity of the social enterprises is evident also when looking at the revenue structures of the organizations surveyed. The main sources of funding for German social enterprises were fees and sales on the market or to governments (43%), grants (29%) and donations (10,5%). Revenues from investment were mentioned only by 6,5% of organizations. Their total revenues range widely, with 41% of them reporting revenues of over 1 million EUR in 2014, while 27% reported revenues of less than 80.000 EUR.

German social enterprises stood out in regard to the collaboration and innovation indicators in the study.

For 36% of German social enterprises surveyed, the primary beneficiary group are other social organisations. Comparatively, only 25% of social enterprises in the UK and 23,5% of the Russian sample focus on benefiting other organisations.

The main categories of primary beneficiaries in all surveyed countries included citizens, followed by children and youth. While these categories were important in the German case too (26% and 32% respectively), they are secondary to working with other social organisations.

Besides collaborating with non-profit organisations (42%), and other social enterprises (35%), almost half of the German social enterprises surveyed collaborate with corporations (40%). They also collaborate with government. However, Germany was the only country in which the collaboration with the national government (21% of social enterprises) was more important than collaboration with local and regional government. The collaborative attitude towards other social organisations is a defining feature of German social enterprises: they scored the lowest (alongside Spanish ones) on competitive aggressiveness. 

Following the example of German companies, German social enterprises in the SEFORÏS sample stand out as highly innovative compared to social enterprises from the other countries. According to the 2014 Innovation Union Scoreboard, the yearly innovation performance report of the European Commission, German companies rank 3rd among the most innovative in the EU after companies in Sweden and Denmark. Similarly, 88% of the German social enterprises in the SEFORÏS survey reported to have created a new product, service or process in 2014. Only social enterprises in Sweden (99%) and China (97%) scored higher, which illustrates the focus German social enterprises have on innovation activities.

" German social enterprises stand out as highly innovative compared to social enterprises from the other countries."

Overall, the SEFORÏS survey paints a heterogeneous picture of the German social entrepreneurship sector which matches the same diverse organizational landscape from other countries. Policies and support systems taking into account this diversity can help further nurture social enterprises in addressing the complex challenges in today’s world. More first insights into the survey results can be found in the country reports and first cross-country analysis.

For more information on SEFORÏS please visit: www.seforis.eu

About the authors: Johanna Mair is Professor of Organization, Strategy and Leadership at the Hertie School of Governance and Principal Investigator in the SEFORÏS project. Miriam Wolf is a Post-Doctoral Researcher in the SEFORÏS project at the Hertie School of Governance. Alexandra Ioan is a Research Associate in the SEFORÏS project and PhD Candidate at the Hertie School of Governance.