Factors influencing social entrepreneurship intentions in Romania

Abstract

The current study aims to make known the factors influencing the decision to conduct business with social impact, given that the concept of social entrepreneurship is quite a new one in Romania. The investigative method used was quantitative research, by applying questionnaires to 300 students at both bachelor and master level at the Faculty of Economics and Business Administration, University of Craiova. The results indicate two categories of factors that influence the intention of social entrepreneurship in the investigated area, namely: those with negative influence (lack of necessary funds, fear of failure, lack of experience and involvement in social projects and activities) and those with positive influence (knowledge of the concept of social entrepreneurship and social problems in the studied region that can be solved through entrepreneurial initiatives).

Keywords:

• Social enterprise
• entrepreneurship
• professional insertion

SUBJECT CLASSIFICATION CODES:

• O1
• M13

1. Introduction

1.1. General concept of social entrepreneurship

Drucker (1985) defined entrepreneurship as the act of innovation involving endowing existing resources with new wealth-producing capacity. The field of social entrepreneurship is in the developmental stage as a field of inquiry and presents a high degree of novelty and topicality at the level of academic research, as it redefines and enriches the current economic theory (Swanson & Di Zhang, 2010).

The economic theory regarding business is based on the premise that in their business activities, companies pursue their own interests, which consist mainly of maximizing profits (Brueckner, 2013; Colander, 2017; Sullivan Mort et al., 2003). On the other hand, for most of the entrepreneurs, the social mission and the creation of social value is a secondary consequence of their activity.

It is, therefore, the time for economic theory to be adjusted according to the multidimensional reality of the current society, in which two types of enterprises coexist: the traditional, profit-oriented, one and social enterprises which in the last decade have been well-defined and properly regulated in 16 Member States. Social enterprises have become an important actor in the European economy taking into account that a significant number of workers (13.6 million) are involved in this type of business in EU (European Commission, 2020).

The Social Business Initiative (SBI) definition incorporates the three key dimensions of a social enterprise: an entrepreneurial dimension, a social dimension and a governance dimension (European Commission, 2015).

Social economy is based on a voluntary private initiative, has a high degree of autonomy and responsibility and involves assuming an economic risk and a limited distribution of profits (Stănescu et al., 2012).

In fact, social enterprises are a new type of initiative, their role being to solve a social problem through business-specific methods: producing and selling products and services. Social entrepreneurship leads to the establishment of new types of social or non-profit organizations in various fields of activity: economic, educational, research, etc. (Parker, 1998). In a social business, the investor aims to help other people, without reserving gains for himself, but is also an authentic business, generating enough profit to cover the costs and creating resources to sustain and develop it further.

Many times, the concept of social entrepreneurship is mistakenly associated with the idea of a non-profit organization, while others understand through the concept of social entrepreneurship all organizations that assume the fulfillment of a social mission. A foundation or a non-profit organization, as charity organizations seeking to raise and distribute funds to create social benefits, are not sustainable solutions since they use a large amount of their resources to raise money while confronting financial issues. The solution could be the establishment of social businesses, which pay more attention to the personal dignity and autonomy of their beneficiaries. It is obvious that social businesses are no substitute for charitable programs, which are effective only in punctual situations (cases of a natural disaster).

Social enterprises do not allow their investors and owners to benefit from dividends or other forms of financial gain, but the invested amounts are recovered within a predetermined period of time (Cace et al., 2010).

According to Yunus (2010) there are are seven principles of social entrepreneurship leading to the idea that the social mission is at the center of the social entrepreneurship activities they carry out, and the actions taken have the role of maximizing social output. Social entrepreneurs identify social issues in areas such as poverty, health, education, environment, migration, and try to solve them by using innovative approaches. Many times, social entrepreneurs intervene in areas where state and public services fail to solve existing problems (Santos, 2012). According to Lyne (2014), social entrepreneurs try to correct the failure of the markets by challenging the classical way in which problems could be solved by applying social innovations and by involving private actors who become service providers in these sensitive areas.

A defining feature of social enterprises is the involvement of the target group in solving the problems they are facing, thus trying to find a long-term solution by developing sustainable programs and projects that will address the cause and not just the social issue in question (Agoston, 2014). Thus, social entrepreneurs help community members how to solve their problems with the means at their disposal and stimulate them to turn their vulnerabilities into added-value qualities for themselves and for society (Gidron, 2014). The essence of social entrepreneurship, as stated by Granados et al. (2011), is the individual initiative of an entrepreneur and should not be confused with corporate social responsibility, which is part of business management, and, although they have common elements, the significant difference is the level at which the decision is made.

Social enterprises are hybrid organizations (Thompson et al., 2000) that combine specific elements of non-profit organizations with specific elements of pro-profit enterprises by combining various management methods and techniques and adapting the existing theoretical approach of classical entrepreneurship to social entrepreneurship, by developing effective strategies that maximize the social impact, as the main shortcomings of social enterprises refer to the lack of professionalization of functions, processes and procedures. According to Gardin (2006), the hybrid character of social enterprise also refers to the resources it uses: part of the funds come from its own activity, but also from subsidies and state-sponsored funds or sponsorships.

1.2. Present situation and prospects for the development of social entrepreneurship in Romania

In Romania, social entrepreneurship is at the beginning, and those who want to develop or already have a social enterprise often face barriers such as the ambiguity of the legislative system or lack of financial resources. However, Romania along with other countries such as: Austria, Bulgaria, Croatia, Germany, Poland, Slovenia and Spain has been introduced an accreditation scheme for work integration of social enterprises (European Commission, 2020).

A study made by Ashoka România (2018) on Social Entrepreneurship in Romania reveals the following aspects: social entrepreneurship is an area with significant potential, not yet exploited, and the difficult context in the country is not encouraging for Romanian social entrepreneurs, motivating them to be creative and energetic, to seek innovative solutions and new resources and to overcome barriers arising in the way of their initiatives.

The study also showed that there are 932 social innovators in various fields.

The capital city Bucharest is perceived as the most developed area but also with the greatest development potential for the future, followed by large urban centres such as Cluj, Timisoara, Brasov and Iasi. Rural areas, however, are less developed, and various problems are just magnified by the lack of social infrastructure and jobs, but they have a far greater potential for social business development. According to National Institute for Statistics (NIS) there were recorded more than 42,000 social enterprises with roughly 100,000 employees in 2015. The data presented by European Commission (2019) revealed an uneven distribution of social enterprises at the national level concentrating approx. 75% in urban areas and 55% in the three most developed regions Bucuresti-Ilfov, Sud- Muntenia and Nord-Vest.

In Sud-Vest Oltenia region are the fewest social enterprises, given that Sud-Vest Oltenia region, especially Mehedinti County, has one of the highest unemployment rates in the country, namely 11% in 2015, 9.6% in 2016, 9.4% in 2017 and 8.9% in 2018, respectively 8992 persons (Ashoka România, 2018).

At the country level, four major categories of people can be identified that could be targeted by social entrepreneurship initiatives: Roma people, people with guaranteed minimum income, people with disabilities and young people over 18 who leave the child protection system.

The Roma population is one of the most exposed categories to economic difficulties, given the manifestation in the general public consciousness of prejudices that generate discrimination and marginalization (Zamfir & Zamfir, 1993).

According to the statistics presented in the U.E. on Roma Inclusion (European Parliament, 2011), Roma is the largest and poorest minority in Europe, but with the fastest-growing rate. Numerous Roma communities exist in all 27 Member States, accounting for between 10-13 million people (about 2-2.5% of the EU population). In Romania, the Roma population is the second minority as a share, accounting for 619,007 people at the 2011 census. Due to the heterogeneity of the Roma community, numerous obstacles were encountered in the development of programs for this category of people, who are lacking the resources needed for decent living conditions and access to education and are confronted with marginalization on the labour market while having limited access to social and health services, that will enable them to participate in social life (Duminica & Preda, 2003).

Analysis conducted in Romanian social enterprises on their willingness to employ people from vulnerable groups shows a strong reluctance towards Roma (Stănescu, 2013). The inclusion of Roma in the labour market continues to have a low probability of success (Stănescu, 2011). Botonogu and Tomescu (2013) considers that promoting the social economy is a viable solution for employment and is supported by specific solidarity of the Roma community, the existence of traditional trades that can be revived and Pavel (2011) states about entrepreneurial initiatives in the social field that they can be an effective tool in the fight to reduce social exclusion.

Therefore, there is a need to take immediate measures to accelerate the social inclusion of the Roma ethnic group.

Regarding young people over the age of 18 leaving the institutionalized child protection system, national data are insufficient and decentralized in terms of development regions, localities, gender and age, so that no comprehensive analysis can be made showing the evolution of the various variables specific for this group such as the number of beneficiaries of the child protection system who show different disabilities of various degrees and types, the employment rate on the labour market in the first year after the cessation of the social protection measures or their state of health.

In order to ensure the integration of the young people raised in an institutionalized environment, it is necessary to analyze the feasibility elements necessary to identify the necessary activities, starting with their needs and preoccupations. The effect on these young people would be to stimulate their participation in the labour market by increasing self-esteem and motivation for work, allowing them to feel equal with other young people while learning to lead an independent life (Spear, 2008).

In terms of people with disabilities, their participation in the labour market is influenced by the level of education, work experience and vocational training, as well as variables such as age, home environment or mobility to and from the workplace (Applica & CESEP & Alphametrics, 2007).

On December 31, 2018, in Romania, the total number of persons with disabilities communicated by the National Authority for Disabled Persons was 823956, out of which only 28,863 are employed (Ministerul Muncii si Justitiei Sociale, 2018).

According to some reports from the Romanian Academic Society (2009) and the Ministry of Labor, Family and Social Protection (2010), the reasons that cause difficulties for the insertion of disabled people are difficult to access education and training, especially in rural areas, limited access to public services, the prejudices of employers associating various disabilities with lower labour productivity and the need to supervise the work of these people.

The professional insertion of this category of people can be sustained and increased by the creation of social enterprises that have an integrated approach to the medical, professional and social pathway, through the simultaneous deployment of a complex of activities aimed at aspects such as assessment and preliminary counselling, professional counselling and guidance, recovery and skills training, vocational training in various occupations, occupational therapy, post-employment support, recreational and social activities (Avram et al., 2019; Safta et al., 2011).

At the country level, the minimum guaranteed income is considered to be the main social assistance tool to reduce poverty and social marginalization being a form of support for vulnerable groups that don't have the necessary mechanisms to get out of poverty (Radu, 2009). In April 2018, 219 252 families benefited from guaranteed minimum income in Romania (Ministerul Muncii si Justitiei Sociale, 2019).

According to a report of the European Parliament's Committee on Employment and Social Affairs (2012), poverty alleviation is a priority of EU policy and one of the objectives of the Europe 2020 strategy: "the number of Europeans with a living standard below the national poverty line should be reduced by 25%, which means removing over 20 million people from poverty".

Social economy entities can successfully fulfil the roles that have so far been achieved by private and public actors in addressing the problems faced by disadvantaged communities by providing basic social services, educational services, sanitation, and offering employment opportunities or on the Inclusion of Vulnerable Persons (United Nations Development Programme, 2019).

2. Methods

2.1. Quantitative research model for the analysis of factors influencing social entrepreneurship intentions in the S-V Oltenia Region

A quantitative research using the questionnaire survey was conducted October 2018-February 2019 through hardcopy anonymous questionnaires distributed to the senior students of the Faculty of Economic and Business Administration, University of Craiova willing to participate in this survey. The questionnaire consisted of a series of 17 questions divided into four sections (detailed below). A total of 348 questionnaires were distributed during classes and the number of valid questionnaires collected was 300 (86.2%).

The first part of the questionnaire contains identification questions about the respondent (age, gender, home environment, education level, occupation).

The second part of the questionnaire assesses entrepreneurial intentions:

1. I plan to open my own business in the next three years.

2. Fear of failure prevents me develop my own business.

3. The need for a stable and steady income is more important to me than the potential to gain more from my own business.

4. I have enough business knowledge to start my own business.

5. I know different ways that a business could be funded.

The third part contains evaluation questions of social entrepreneurial intentions:

• I know the concept of social entrepreneurship.

• I identified in my region various social problems that could be solved by entrepreneurial initiatives.

• I would like to work in a social enterprise.

• I am involved in various projects and social activities.

• If I had the necessary funds, I would initiate a social business.

• I prefer to be involved in activities that do not bring me very large financial income but allow me to help those around me.

• In my own business, I have integrated a social responsibility component.

The fourth part contains questions evaluating the respondents' perception of the effectiveness of the Romanian state, NGOs and civil society in solving social problems:

1. Private social entrepreneurship initiatives can solve the social problems in the region more effectively than the state.

2. I consider that NGOs and other civic initiatives play an increasingly important role in solving social problems in recent years.

3. Social entrepreneurship can only be applied successfully in rich countries

4. Companies should be compelled to invest in social projects.

5. Romania does not have the necessary culture to promote social entrepreneurship.

Questions on respondent identification are closed, with multiple responses, and those measuring entrepreneurial intentions use the Likert scale in three steps (1 - disagreement, 2 - neutral, and 3 - agreement). The questions were formulated so that they cannot be interpreted differently and do not suggest a specific directive of the answer.

3. Results and discussions

The results obtained from the survey have been analysed with the LimeSurvey tool.

Centralization of the results obtained after completing the questionnaires is presented in Table 1:

Table 1. Centralization of results.

Question	Disagreement %	Neutral %	Agreement %
1. I plan to open my own business in the next three years	20,54	24,32	55,14
2. Fear of failure prevents me develop my own business	53,51	17,84	27,57
3. The need for a stable and steady income is more important to me than the potential to gain more from my own business	30,82	27,57	41,62
4. I have enough business knowledge to start my own business	33,52	28,65	37,84
5. I know different ways that a business could be funded	23,25	31,89	43,79
6. I know the concept of social entrepreneurship	22,70	21,62	55,68
7. I identified in my region various social problems that could be solved by entrepreneurial initiatives	20,54	26,49	52,98
8. I would like to work in a social enterprise	27,57	30,81	41,62
9. I am involved in various projects and social activities	56,76	19,46	23,78
10. If I had the necessary funds, I would initiate a social business	16,22	21,08	62,70
11. I prefer to be involved in activities that do not bring me very large financial income, but allow me to help those around me	21,08	28,65	50,27
12. In my own business, I have integrated a social responsibility component	13,52	28,11	58,38
13. Private social entrepreneurship initiatives can solve the social problems in the region more effectively than the state	11,35	38,38	50,27
14. I consider that NGOs and other civic initiatives play an increasingly important role in solving social problems in recent years	11,89	24,32	63,78
15. Social entrepreneurship can only be applied successfully in rich countries	52,43	22,70	24,87
16. Companies should be compelled to invest in social projects	10,81	26,49	62,70
17. Romania does not have the necessary culture to promote social entrepreneurship	22,16	21,08	56,75

Source: The Authors.

The structure of the respondents based on their age is as follows: 62.33% are under 30 and the rest of 36.67% are over 30 years old. Considering the respondents' gender, 64.33% are female, 35.67% are male, and in terms of home environment, the majority of 75.67% reside in urban areas and 24.33% in rural areas. Relating to the total number of respondents, 59% of them are enrolled at the bachelor level and 41% are enrolled at the master level. In terms of the employment of questioned students 29.34% of respondents are not employed, 67.66% are employed and 3% are entrepreneurs.

Entrepreneurial intentions are more prevalent in men (53.65% of them are inclined to open their own business), compared to women who have shown this option in the proportion of 44.03%; those surveyed with residence in the urban area showed entrepreneurial tendencies in the proportion of 46.43%, compared to 44.11% in rural areas. The respondents at the bachelor level education have entrepreneurship tendencies in the proportion of 46.89% while at the master level the proportion is of 43.74%. The results are significantly close, which indicates that there are no noticeable differences between the level of higher education and the tendency towards entrepreneurship.

Regarding social entrepreneurial intentions by gender, the differences between the two groups are moderate and a possible explanation of the increased share on social issues in women is that, in general, women show a higher interest in this field (Figure 1).

Figure 1. Intentions in the field of social entrepreneurship by gender. Source: The Authors.

Social entrepreneurship intentions according to the home environment have a higher value for rural areas than for urban areas (Figure 2), which is explained by a greater awareness of social problems' existence and the fact that they see a way to solve them through social entrepreneurship initiatives.

Figure 2. Intentions in the field of social entrepreneurship according to home environment. Source: The Authors.

The analysis based on respondents' surveys shows that 50.76% of those enrolled at bachelor level education and 52.49% of those enrolled at master studies reveal intentions of social entrepreneurship, which could be explained by their more in-depth knowledge but also by the positive implications of such an approach.

Regarding confidence in the state and NGOs, besides civil society, there are no significant differences between urban and rural areas, respectively 51.85% and 52.05%, which is explained by the fact that Romanian citizens believe the state has the task of solving social problems. However, the analysis by categories of studies shows relatively significant differences between undergraduate students and postgraduate students, respectively 53.56% and 49.27%, indicating that higher education level leads to tilting the balance towards entrepreneurial initiatives and not to state's and other charitable organizations' intervention.

Analysis of the whole number of respondents, which has the structure of 29.66% unemployed, 67.66% employees and 2.68% entrepreneurs, shows that the entrepreneurial intentions of the respondents are 44.22%, the social entrepreneurship intentions reach 45, 95%, and 57.19% of respondents consider the state and other non-governmental organizations as being responsible for solving social problems (Figure 3).

Figure 3. Representation on the three categories of indicators analyzed. Source: The Authors.

Comparing with the situation at the national level, where trust in the state and associations and foundations active in the social field, where the share is 43%, it can be concluded that this increased level registered in the SV - Oltenia area is generated by social problems that are far more serious here, while the local population awaits state intervention, amid a mitigated entrepreneurial spirit.

4. Conclusions

The results of the study performed on a sample of 300 students of Faculty of Economics and Business Administration, University of Craiova, show that the field of social entrepreneurship is known by about 56% of those surveyed, over half of them have identified and know the social problems that can be solved by this initiative and they are willing to get involved in social activities.

The difference between the entrepreneurial intentions and those of social entrepreneurship is insignificant at the level of the investigated group (1.73%). This result is confirmed by more than half of the respondents (62.7%), who believe that social projects should be included in the activities of any type of business. The sustainable development of companies from an economic, social and human point of view implies the adaptation of the common principles of entrepreneurship to the tendencies of human and social development.

While the intention to have own business is significantly diminished by the fear of failure and of not having a stable and constant income (53.51%), in the case of the intention to develop social business, factors such as lack of experience and involvement in social projects and activities constitute major barriers (56.76%).

The lack of necessary funds is the factor that most influences the intention of setting up social enterprises in the analysed area (about 63% of the respondents are of this opinion). The support of 70,000,000 Euros offered by the European Union to Romania in order to set up social enterprises, for the integration on the labour market of the people from vulnerable groups and in support of the fight against poverty, dedicated exclusively to the less developed regions (Centru, Sud-Est, Sud Muntenia, Nord-Est, Nord-Vest, Vest, Sud-Vest Oltenia) can partially solve this problem (Ministerul Fondurilor Europene, 2018).

Knowing the factors that influence the intentions of social entrepreneurship is a lever that can be used to stimulate this field, knowing that, through their creative potential, social businesses have proven in many developed countries the ability to change the course of social inequalities.

The limitations of the present study are represented by the fact that the investigations considered a relatively small number of participants which were enrolled as students at both bachelor and master study programmes at the Faculty of Economics and Business Administration, University of Craiova. It is foreseen to extend the study to entrepreneurs who develop businesses in different fields of activity and employees from private and public companies.

The realities of the Romanian society show some accentuation of the social problems, which leads to the conclusion that a more appropriate approach would be to shift the focus from maximizing the profits of the companies also towards solving the social, ecological and especially ethical aspects, in order to improve the quality of life.

Disclosure statement

No potential conflict of interest was reported by the authors.