Revista Iberoamericana de
Economía Solidaria e
Innovación Socioecológica
Vol. 3 (2020), pp. 147-167 • ISSN: 2659-5311
P 
Empresa social; emprendedor social; iso-
morfismo reflexivo; campo organizacional;
Social enterprise; social entrepreneur;
reflexive isomorphism; organizational field;
Los conceptos de empresa social y emprende-
dor social han estado sujetos a un interés crecien-
te en Hungría, pero el campo aún carece de una
comprensión y regulación claras. Aún así, en los
últimos años, varios actores clave han aparecido
y han dado forma al campo organizacional emer-
gente en ciertas direcciones. Basado en la teoría
del isomorfismo reflexivo, el presente trabajo ana-
liza los enfoques de estos actores dominantes en
Hungría y también examina las interpretaciones
de los profesionales de las empresas sociales. La
investigación emplea análisis de documentos para
explorar los principales actores, enfoques y narrati-
vas presentes, y entrevistas semiestructuradas con
20 emprendedores sociales para dar cuenta de las
experiencias de la práctica. A través de estos mé-
todos, se discute la influencia de los actores y dis-
cursos dominantes en las opiniones y experiencias
de los emprendedores sociales, lo que contribuye
a la comprensión del desarrollo del campo organi-
zacional de la empresa social en Hungría.
The concepts of social enterprise and so-
cial entrepreneur have been subject to growing
interest in Hungary, but the field still lacks clear
understanding and regulation. Still, in recent
years, several key actors have appeared and have
shaped the emerging organizational field in cer-
tain directions. Based on the theory of reflexive
isomorphism, the present paper analyzes the
approaches of these dominant actors in Hungary,
and also examines the interpretations of practitio-
ner social entrepreneurs. The research employs
document analysis to explore the main actors,
approaches and narratives, and semi-structured
interviews with 20 social entrepreneurs to account
for the experiences from practice. Through these
methods, the influence of the dominant actors
and discourses on the views and experiences of
social entrepreneurs is discussed, which contribu-
tes to the understanding of the development of
the social enterprise organizational field in Hun-
Julianna Kiss**
PhD, Department of Decision Sciences,
Institute of Business Economics, Corvinus University of Budapest
Códigos JEL
: L31.
Fecha de recepción: 2/12/2019 Fecha de aceptación: 5/9/2020
* Funding information: The paper has been produced as part of a research supported by
the project nr. EFOP-3.6.2-16-2017-00007, entitled Aspects on the development of intelligent,
sustainable and inclusive society: social, technological, innovation networks in employment
and digital economy. The project has been supported by the European Union, co-financed by
the European Social Fund and the budget of Hungary.
**Acknowledgements: The author is grateful to the members of the Corvinus University
of Budapest Social Innovation Research Group, especially György Pataki, for their continuous
professional support.
149RIESISE, 3 (2020) pp. 147-167
The concept of social enterprise has been subject to growing interest all
over Europe in the past decades. Still, according to the theory of reflexive
isomorphism (Nicholls 2010), the social enterprise sector can be regarded as
an emerging organizational field without strict rules and boundaries. In such
an emerging sector, the so-called dominant paradigm-building actors, such
as the state, private development and support organizations or networks,
are capable of shaping the field according to their own institutional logics.
In Hungary, in recent years, several organizations identifying as social
enterprises have appeared, public and private support and funding
programs have started, networks have formed, and researches have been
undertaken. The concept began to have an increasing role in public policy
as well, as certain EU co-funded grant programs have currently been using
the term. However, despite the growing interest, social enterprise still lacks
clear understanding, definition, legislation or label. Thus the organizational
field can be regarded as emerging in Hungary.
The main research question is how the dominant paradigm-building
actors have influenced the emergence and institutionalization of the social
enterprise organizational field in Hungary. To answer the question, the paper
explores the approaches and narratives of the main paradigm-building
actors in Hungary, and also analyzes the interpretations and experiences
of practitioner social entrepreneurs. The research employs the methods of
document analysis and semi-structured interviews conducted in the spring
of 2017 with 20 social entrepreneurs.
According to the findings of the research, the main discourses shaping
the social enterprise field in Hungary focus on hero entrepreneurs and
business model ideal types, but have certain specific restrictions on legal
forms and the employment of disadvantaged people. However, in practice,
a wider set of organizations with various social goals, economic activities,
legal forms, revenue structures and governance models identify as social
enterprises. Still, their operation shows increasingly similar features as the
organizational field becomes more institutionalized, due mainly to the
influence of the dominant paradigm-building actors of the sector.
In the following sections, first the theoretical background is introduced,
and the methodology of the research is outlined. After, the dominant
Julianna Kiss
150RIESISE, 3 (2020) pp. 147-167 ISSN: 2659-5311
paradigm-building actors in Hungary are presented, and the interpretations
and experiences of practitioner social entrepreneurs are summarized.
Finally, the main conclusions are drawn, through which contributions to the
understanding of the social enterprise organizational field in Hungary are
The concept of social enterprise appeared both in Western Europe and
the United States in the late 1980s and 1990s (Defourny and Nyssens 2009).
In recent years, many definitions have been constructed to describe the
concept, but no standardized definition has emerged so far. Still, distinct
schools of thought can be identified (Dees and Anderson 2006, Defourny
2014). Initial definitions focused on organizations described usually by the
concept of the non-profit sector or the social economy (the commercial
non-profit approach of the earned income school of thought); while later
trends somewhat modified these definitions. In the case of mission-driven
business approach of the earned income school of thought, organizational
forms broadened to include for-profit organizations as well. In the social
innovation approach, emphasis was placed on innovation and the personality
of the innovative social entrepreneur. The EMES definition emphasized in
particular the limitation of profit distribution and the democratic, collective,
participatory nature of governance (Defourny and Nyssens 2009).
In examining the emergence and institutionalization of social enterprises,
researchers have utilized the following theories as listed by Teasdale (2011)
and Gordon (2015): state/market failure theory; resource dependency
theory; voluntary failure and interdependency theory; social origins theory;
and institutional theory. According to Hota et al (2019) the most applied
theory has been institutional theory, which the present paper also draws
on, focusing essentially on the similarities between actors in certain
organizational fields (Battilana et al. 2008, Giddens 1984), in particular
utilizing the theory of reflexive isomorphism by Nicholls (2010).
In the 1980s, neo-institutional theories mainly examined the stability
of established structures, and the similarities between actors in certain
organizational - or institutional - fields, primarily caused by the aspirations of
organizations for legitimacy (Dart 2004, Battilana et al. 2008). In particular,
DiMaggio and Powell’s (1983) theory of institutional isomorphism sought
to answer why there are such surprising similarities in organizational forms
and practices. However, in these theories economic actors were presented
as embedded in the institutional environment. In the 1990s, the study of
institutional change became more important, and focus was shifted to
institutional entrepreneurship, according to which actors with sufficient
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151RIESISE, 3 (2020) pp. 147-167
resources can contribute to the creation of new institutions and the change
of existing ones (DiMaggio 1991).
Theory of reflexive isomorphism (Nicholls 2010) regards the social
enterprise sector as being in a pre-paradigmatic state, meaning that it has not
yet reached paradigmatic consensus, does not have a universally accepted
definition of the term or a well-established research agenda – though
today the field is academically more established (Sassmannshausen and
Volkmann 2018). In a pre-paradigmatic state, the sectoral boundaries are not
clearly determined, institutional patterns are lacking; similar organizational
solutions are not dominant. Therefore, the so-called main paradigm-building
actors are actively involved in processes that promote the emergence of an
organizational field as a closed system. Doing so, these dominant, resource-
rich actors have the power to shape “the legitimacy of an emerging field to
reflect their own institutional logics and norms” (Nicholls 2010: 618), by e.g.
supporting some organizations and not others (Vandor and Leitner 2018).
These paradigm-building actors according to Nicholls (2010) —examining
the United Kingdom— are the state, development and support organizations
(foundations, fellowship organizations), networks and the academia.
The state can have influence over the field by legislation, policies or
funding. It follows the business or commercial model ideal type narrative,
often using the notions of sustainability and scale, highlighting efficiency and
being more responsive than state-owned public services to social problems.
However, this approach sees social change as achievable without tension and
disharmony, which is not true in reality (Dey and Steyaert 2010); and its focus
on market income can lead to the retrenchment of the welfare state and the
privatization of welfare services (Nicholls and Cho 2006, Young 2009).
Foundations (public or private) give grants, offer consultancy services,
build fellowships, carry out research and implement education activities,
while fellowship organizations are similar to foundations, aiming to build
communities of practice. These actors usually invest private capital and
follow the venture philanthropy model, thus aim at maximizing return on
investment, though not in a financial but social sense. They typically only
select an elite group of social enterprises in their programs. They employ
the so-called hero entrepreneur logic, which emphasizes the central role of
heroic social entrepreneurs, drawing on „the institutional logic, narratives,
and myths of commercial entrepreneurship that present successful action
as the product of the exceptional individual” (Nicholls 2010: 621). However,
the individual nature of the hero social entrepreneur concept is at odds
with the consensus-based, community, participatory approach that should
applied in identifying and solving social problems (Nicholls and Cho 2006),
and can result in a passive attitude of citizens towards social change (Dey
and Steyaert 2010).
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Network builders are membership organizations of social entrepreneurs
and support them by e.g. providing office space or business advice. They
work with local, grass roots, bottom-up initiatives and aim at maximizing
community commitment and responsibility. Therefore, they employ
narratives based on community models and social change logics,
which emphasize advocacy, social justice, action networks, community
engagement and empowerment.
Academic scholarship works with different narratives. While certain schools
of thought champion the business models and hero entrepreneur logics (e.g.
Harvard Business School SEI), other schools (e.g. the EMES research network) can
serve as an alternative utilizing „the social innovation tradition that conceptualizes
social entrepreneurship as being a process of change in the delivery of public
goods and social/environmental services” (Nicholls 2010: 626).
In the initial, emerging phase of an organizational field, conflicts between
the different discourses and narratives are typical; the organizational field is
characterized by institutional incoherence and ambiguity (Pinch and Sunley
2015). However, in the long run, the logics and discourses of stronger
organizations are expected to dominate the field, such as the hero social
entrepreneur logic (legitimizing development and support organizations), and
the business models (legitimizing outsourcing state welfare services), while
the logic of communitarian action linked to social justice and empowerment
(legitimizing network builders) is marginalized (Nicholls 2010, Mason 2012).
In Hungary, in addition to taking into account these dominant discourses,
the relations between international and domestic actors also have to be
accounted for. Karanda and Toledano (2012) point out that social enterprise
narratives do not necessarily have the same meaning in different contexts.
Based on Alasuutari (2013), the introduction of international concepts
(such as social enterprise) usually leads to a kind of struggle in the local
environment, in which local actors defending their views and interests,
translate global principles and concepts – if they affect existing discourses
and practices – into local contexts. According to Hazenberg et al (2016),
the types of dominant actors present in a country are powerful factors in
shaping the field. Therefore, it is important not only to show the different
international actors involved in the SE field, but also take notice that the
approaches in the Hungarian context might show characteristics specific to
the country.
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153RIESISE, 3 (2020) pp. 147-167
The main research question of the paper is the following: how have
the dominant paradigm-building actors influenced the emergence and
institutionalization of the social enterprise organizational field in Hungary.
In order to answer the question, the research identifies and explores the
approaches and narratives of the paradigm-building actors (first objective),
and also analyzes the interpretations of practitioner social entrepreneurs
(second objective).
The research is based on qualitative methodology, exploring the
underlying layers of this social phenomenon, and explaining them in a
complex and contextual way (Ritchie and Lewis 2003). In order to achieve
the first objective, narrative literature review was employed looking at the
relevant research results about the social enterprise sector and its dominant
actors in Hungary (researching the key words social enterprise and Hungary),
and the relevant documents of the main paradigm-building actors identified
(websites, booklets, reports, etc.) were analyzed. In order to achieve the
second objective, semi-structured interviews with 20 social entrepreneurs
(creators and managers of social enterprises) conducted in the spring of
2017 as part of the authors’ PhD dissertation were analyzed (Kiss 2018).
The research utilized purposeful sampling (Patton 1990), thus the sample
demonstrate a great variety in terms of settlement type (7 social enterprises
from the capital, 9 from other cities and 4 from villages participated); regional
distribution (all seven regions of Hungary were represented); legal form (3
foundations, 3 associations, 4 non-profit companies, 7 social cooperatives
and 3 for-profit organizations were examined – though often one initiative
had more legal forms); and age (date of founding varied between 1997
and 2014). Additionally the types of founders (individual, municipal, church)
and target group (people with disabilities, the Roma, women, young
people, the elderly, the long-term unemployed, conscious consumers,
NGOs, communities and active citizens) were also diverse; and the social
objectives and economic activities also varied from initiatives focusing on
the employment, empowerment and social inclusion of disadvantaged
or disabled people; through developing disadvantaged settlements and
Table 1: Main paradigm-building actors and approaches according to Nicholls (2010)
Main paradigm-
building actors
and support
State Network builders Academia
Main narratives
employed by
Hero entrepreneur
narrative logic
Business model
ideal types
change logics
Source: own compilation based on Nicholls (2010)
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154RIESISE, 3 (2020) pp. 147-167 ISSN: 2659-5311
communities; to preserving local culture; protecting the environment or
developing active citizenship and civil society (for more information on the
interviewees see Kiss 2018).
The interviews were conducted face-to-face, and lasted an average of
90 minutes. The main topics covered were the interviewees’ understanding
and interpretation of the concept of social enterprise; the story of their
initiative from its creation through the turning points to present day
operation, especially focusing on the main actors involved; the current
situation and characteristics of the social enterprise; their future plans; and
their opinions about the current situation of the sector. Data analysis started
already during the interviews, codes and categories were created from the
empirical material (Kvale 1996).
The concept of social enterprise was introduced to Hungary in the
late 1990s and early 2000s, but the term remained little known for some
years. However, recently, the social enterprise concept has started to
gain attention, and various actors are present in the organizational field
(European Commission 2019). In the following section, based on Nicholls
(2010), the approaches and narratives of the main paradigm-building actors
are presented, and their influence on the emergence and institutionalization
of the social enterprise field in Hungary is analyzed.
Certain international private development and support organizations are
relevant to the institutionalization of social enterprises. In fact, the concept
was introduced to Hungary by two such organizations: Ashoka in 1995 and
NESsT in 2001.
Ashoka was the first international development organization that started
operating in the Hungarian social enterprise field, and has focused on
individual social entrepreneurs. In its interpretation, these exceptional
individuals undertake systemic measures with an entrepreneurial mindset, to
“tackle social problems at their root cause with their innovative and practical
solutions” (Ashoka n.d.). Ashoka supports individuals chosen through a
rigorous selection procedure providing individual scholarships for three
years, as well as professional training and mentoring, through e.g. teaching
needs and health assessment, scaling models, business models, impact
reporting or story-telling. It has a large-scale network of investors, volunteer
partners and consultants, who provide pro bono advice. Ashoka places
high emphasis on efficiency, impact and measurability, and throughout the
years, market-based sustainability and business revenue has become more
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155RIESISE, 3 (2020) pp. 147-167
important in its approach (Tímár 2017). Thus Ashoka follows the venture
philanthropy approach expecting a maximum return on the investment in
a social sense.
NESsT defines social enterprise as a “consciously designed and
operated entrepreneurial activity that is created to solve social problems
in an innovative way. It is governed by a dual goal: besides the
improvement of the organization’s financial sustainability, its aim is to
have relevant social impact. All this is achieved through the continuous,
responsible and high quality sales of products and services” (Tóth et
al. 2011: 6). NESsT’s main activities have included capacity building,
mentoring, financial support and providing strategic networking
opportunities. In the first 10 years of its work, NESsT followed the so-called
engaged-investor approach, which – as one form of venture philanthropy
– consisted of professional support and financial investment in early
stage social enterprises. It held workshops on business models and
readiness for such initiatives, and incubated them for 5-7 years to help
them become self-sustainable and replicate their business models. Since
2010, NESsT has also invested through a variety of financial instruments
in more established organizations intending to scale their activities in
the field of dignified jobs and sustainable income, also providing tools
for performance and social impact measurement (OECD 2017). NESsT
originally supported social enterprises run by non-profit organizations,
but since 2009, it widened its portfolio to for-profit organizations as well.
Its initial broad approach supporting a wide range of social objectives
narrowed down to social enterprises that create employment and viable
income generation opportunities (NESsT n.d.).
In addition to the NESsT and Ashoka, in recent years, new domestic and
international development and support organizations have also appeared
in the organizational field, which usually follow similar approaches (here
only some recent examples are shown to indicate the main directions, for
a more complete list, see European Commission 2019). Civil Support Non-
profit Ltd. – a domestic development organization – in its impact investment
program launched in 2016 targeted social enterprises in all legal forms
that had social aims, could demonstrate their social value and present a
given amount of sales revenue (Civil Support 2016). Badur Foundation –
an international foundation active in Hungary since 2016 – provides skills
development, professional mentoring and financial support for investment-
ready and scalable foundations, associations, non-profit companies and
social cooperatives that solve social problems in a sustainable, market-
oriented way providing employment opportunities to people living in deep
poverty and disadvantaged communities especially focusing on Roma
people (Badur 2018). The ERSTE SEEDS program – managed by Erste Bank
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and Erste Stiftung – in 2018 provided funding, training and mentoring
focusing primarily on business planning, marketing and management skills
for non-profit legal forms and social cooperatives that could prove their
financial sustainability, intended to increase their economic activities and
thus improve their social impact (Erste Bank, 2017).
These primarily international development and support organizations
have focused on improving certain skills of social enterprises (e.g. business,
marketing, impact measurement and management), usually through
providing small amounts of funding and long-term professional assistance.
Based on Nicholls (2010), their approaches can be best categorized as
the hero entrepreneur and business model ideal type narratives due to
emphasizing the heroic individual as well as the importance of market-based
business models. Additionally, certain programs have had restrictions on
legal forms only allowing non-profit organizations and social cooperatives
to apply, and the social objective is also sometimes narrow, focusing on the
employment or other type of income generation of disadvantaged social
groups, which conforms to the approaches of the European Union and the
Hungarian state (see below).
The definition of social enterprises at a European level appeared in 2011
in the European Commission’s Social Business Initiative (SBI), which in line
with the Europe 2020 Strategy seeks to improve funding, visibility and the
legal environment through 11 priority measures (European Commission
2013). According to this definition, “the Commission uses the term ‘social
enterprise’ to cover the following types of business: those for which the social
or societal objective of the common good is the reason for the commercial
activity, often in the form of a high level of social innovation; those where
profits are mainly reinvested with a view to achieving this social objective;
and where the method of organisation or ownership system reflects
their mission, using democratic or participatory principles or focusing on
social justice (European Commission, 2011). In this approach, businesses
employing disadvantaged people and businesses providing goods and
services to vulnerable people are regarded as social enterprises. Thus the
definition of the EU is closest to the business model ideal type narrative.
However, the importance of democratic, participatory governance is also
included, which connects it to narratives based on community models and
social change logics.
The influence of the EU over the institutionalization of the sector has
been relevant, as the Hungarian state has supported initiatives mainly via
EU co-financed programmes and following EU priorities. The purpose of
the developments has mostly been the creation of jobs and providing
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157RIESISE, 3 (2020) pp. 147-167
services for disadvantaged social groups and in disadvantaged regions
– conforming to the EU narrative on employment (G. Fekete et al. 2017a,
European Commission, 2019). These short-term project based funding
sources have opened opportunities for the sector, but have been criticized
for being too bureaucratic, inflexible, unrealistic and not manageable to
sustain (G. Fekete et al. 2017b, Kiss and Mihály 2020).
As social enterprises do not have a separate law and can appear in
various legal forms, e.g. foundation, association, non-profit company, social
cooperative (G. Fekete et al. 2017b), the state has shaped their operation
through legislation connected mainly to the development of these legal
forms, as well as the laws regulating public benefit activities. The regulations
were introduced and reformed in the decades after the regime change
from state socialism to democracy in 1989, and pointed to the direction
of cooperation between the state and non-profit organizations (Kuti 2008).
However, since the change of government in 2010, new pieces of legislation
have decreased the autonomous operation of organizations by making
the participation institutional members (local governments, minority self-
governments or charitable public benefit organizations) compulsory for
social cooperatives, and obliging associations and foundations receiving
a certain amount of international funding to register and communicate as
organisation receiving support from abroad (European Commission 2019).
Regarding policy, no long-term and comprehensive strategy for the non-
profit sector or the social economy has been developed since the regime
change, and the influence of civil society organizations on public policy and
decision-making has remained weak (Szalai and Svensson 2018). Today, a
paternalistic, centralizing approach of welfare provision is characteristic,
previously existing partnerships and forums were eliminated, and certain
civil society organisations forming criticism towards the performance of the
state were openly attacked (Edmiston and Aro 2016, Kuti 2017). At the same
time, social enterprises, that had not appeared in policy documents before,
were first mentioned in the 2014-2020 Partnership Agreement (Prime
Minister’s Office 2014), where their financial sustainability was urged to be
strengthened in order to fulfil their long-term employment role.
Regarding funding, until recently, EU co-financed programs supporting
employment, rural development and mostly social cooperatives could be
connected to the concept of social enterprises (G. Fekete et al. 2017a,
Kiss 2018). However, in 2016, the first funding mechanism specifically
targeting social enterprises via grants and other connected initiatives
(e.g. a preferential loan construct) was launched in order to facilitate the
employment of disadvantaged people co-financed by the European Social
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Fund, entitled “Promotion of social enterprises - priority project EDIOP-5.1.2”.
Other EU co-funded programs to strengthen the social economy, solidarity
economy and community supported agriculture also appeared, thus
creating a top-down development of the sector. Besides, from the central
budget, programs have funded social cooperatives with local government
members organised on the basis of public employment (OFA 2016).
In order to apply for the calls launched in the framework of the priority
project, applicants must demonstrate solid business sustainability and social
indicators connected to the social objectives of the program (IFKA 2016).
Thus the narrative of the state can mainly be connected to the business
model ideal type in the classification of Nicholls (2010). At the same time,
the current approach of the state is somewhat specific to Hungary.
The definition of social enterprise given in the funding mechanism is as
follows: “non-profit and civil society organisations can be considered social
enterprises that have business objectives besides their social objectives,
reinvest their profit in order to achieve their social goals, and prioritize the
principle of participatory decision-making in their budget and organisational
operation” (NGM 2015: 6). This definition shows that the Hungarian state
follows the approach of the EU, and regards social enterprises as businesses
that aim to solve social problems in a democratic, participatory way.
However, at the same time, current processes of centralization apparent in
legislation, policy and funding have decreased the autonomous, bottom-up
functioning of social enterprises.
The specificities of the current state programs also include restrictions on
the basis of the legal forms of the organizations. These funding programs
are available for non-profit organizations and social cooperatives – and the
focus is not on economic solidarity or system-level change irrespective of
organizational forms (Szalai and Svensson, 2018).
There is a restriction on the basis of social objectives as well, as the
supported projects must contribute to the employment of disadvantaged
social groups. Besides, funding programs for social cooperatives have been
strongly connected to public work programs – state programs provided
mainly by local governments aiming to decrease the unemployment
(European Commission, 2019), which have been proven problematic,
especially due to decreasing the autonomy and democratic governance of
the organizations and further marginalising their members (Edminston and
Aro 2016).
Only one alliance of social enterprises exists in Hungary, which specifically
uses the term and directly aims at advocating for these organizations. The
National Alliance of Social Enterprises (TAVOSZ) was founded in 2015 and
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159RIESISE, 3 (2020) pp. 147-167
according to its website, its members are “social enterprises that perform
value-added work, produce high quality products and provide niche services
alongside their social mission, employing disadvantaged people. They are
at a competitive disadvantage in the market due to low production capacity,
capital strength and isolation” (TAVOSZ 2018). The alliance mainly focuses
on the representation of the members’ common professional interests, and
implements programs that increase their visibility and promote their market
access. However, its impact on policy and its advocacy work is rather limited.
Therefore, it is more connected to the business model ideal type than
community and social justice logics, which are the usual logics of network
builders according to Nicholls (2010).
These latter logics also appear in Hungary in traditional civil society
networks, community or solidarity economy initiatives, or the network of
social cooperatives (National Alliance of Social Cooperatives). However,
these networks do not specifically use the social enterprise concept, and
mainly due to the lack of openness for cooperation by the state, do not have
relevant influence on public policy.
The research projects implemented so far have used various definitions.
The earlier definitions placed social enterprises in the non-profit sector
similarly to the commercial non-profit approach (G. Fekete and Solymár
2004; G. Fekete 2007, Petheő 2009). However, recently, broader approaches
neglecting the restriction on legal forms, utilizing EU funding and definitions
also emerged (SELUSI 2011, SEFORIS 2016). Thus different international
schools of thought have appeared in Hungary, however, critical reflection of
the adaptability and applicability of the concept to the Hungarian context
has been scarce (G. Fekete et al. 2017a).
The most recent research on social enterprise entitled “Basic research
on the operation of social enterprises” intended to give a comprehensive
overview of the sector (G. Fekete et al. 2017b). It employs a wider approach
as according to its definition, “a social enterprise can be any type of
organization as long as it has a social purpose and a demonstrable social
impact as well as revenue from the market, sales or service provision” (G.
Fekete et al. 2017b: 11). This approach can be regarded as similar to the
business model ideal type by Nicholls (2010). Other approaches, such
as the social innovation approach —as described in Nicholls (2010)— also
appear, but are not as influential in Hungarian research.
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Though in the narratives of the main paradigm-building actors social
enterprise is often connected to the employment of disadvantaged groups
and certain legal forms, recent research focusing on operating social
enterprises shows a more diverse picture (SEFORIS 2016, G. Fekete et al.
2017b). The 20 interviews analyzed in Kiss (2018) also demonstrate a great
variety (see the description of the sample above). The common feature of
all social enterprises interviewed was the social objective and the existence
of market-based economic activities – though the percentage of business
revenue in the total budget of the organizations also varied.
Regarding self-identification, the majority of the interviewees did
not know about social enterprises, when they started their initiatives.
Others had heard about the concept, but did not connect it to their
initiatives. Their identification as social entrepreneurs came later, mostly
due to external influences, in most cases participating in programs of
development and support organizations or applying for public grants.
"We did not create it as a social enterprise, it took half a year and then we
realized that we are really something different.(Interviewee 18) Some
of the newer organizations, however, were created by their founders
specifically as a social enterprise.
The definitions given by the social entrepreneurs for social enterprise
were diverse, with most of them emphasizing the simultaneous presence
of the usually broadly interpreted social objective – not only focusing on
Table 2: Main paradigm-building actors and approaches in Hungary
actors in
and support
research, e.g.
G. Fekete
et al 2017b
employed by
actors in
narrative logic
ideal type
restrictions on
legal forms
and focus on
model ideal
type with
emphasis on
and focus on
model ideal
type with
reduction of
restrictions on
legal forms,
and focus on
model ideal
type with
focus on
model ideal
Source: own compilation
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161RIESISE, 3 (2020) pp. 147-167
employment —and market-based business activities. In addition, non-
distribution of the profits, connections to certain legal forms, innovation
and democratic or participatory decision-making— relevant to certain
international schools of thought – also emerged as themes, but none of
these concepts was dominant in the interviews. "I like the definition, where
it is about integrating the social and business purposes, they need to be
balanced. (Interviewee 9) Thus most of these definitions can be regarded
as similar to the business model ideal type narratives.
The stories about the creation and development of the organizations
were diverse, but certain common patterns emerged, which in most cases
were influenced by the dominant paradigm-building actors, such as the
state or private development and support organizations. The start-up phase
of the organizations was almost always assisted by a grant or investor
– even in the case of for-profit organizations. Public grants and thus the
state were especially influential in case of setting up social cooperatives.
Social enterprise development and support organizations present in
Hungary (mainly Ashoka and NESsT) also played an important role in
several interviews providing funding and continuous mentoring. Besides
the role of the development and support organizations and the state, some
other influences – e.g. network builders and professional alliances, as well
as universities – were also sometimes mentioned, but were not regarded
decisive in the development of the organizations.
The founding and legal form of a new organization was often attributable
to the influences of the main paradigm-building actors, e.g. some
interviewees mentioned the advice of development organizations to found
a non-profit company in order to have a more market-oriented organization,
while others founded social cooperatives to receive public grants. "If the
Ministry had chosen a different direction, the legal form might have been
different. (Interviewee 17) In some cases, legal forms were also changed
or added later on; several interviewees mentioned the simultaneous
operation of different legal forms in order to be able to achieve their social
and economic aims due to the difficult bureaucracy in Hungary. In some
cases, the acquisition of funds was accompanied by a change in the legal
form as well: a social cooperative at the investor’s request, a for-profit ltd.
became a non-profit company due to a grant. Another social cooperative
was planning to change the organizational form due to the compulsory
membership of the local government.
Another recurring development characteristic was ending public
benefit welfare services provided for the target groups mostly because
of the current centralization tendencies and lack of state funding for such
activities. One interviewee tried to find resources for this service, but in the
absence of funding, the organization carried out the activity on a voluntary
Julianna Kiss
162RIESISE, 3 (2020) pp. 147-167 ISSN: 2659-5311
basis. "We provide this service to this day, without funding, but we can’t stop,
today unfortunately we don’t have state funding. (Interviewee 7) Another
interviewee reported that the services they provided through a grant
program did not work anymore after the grant period.
Focusing on employment was also connected to grant programs in the
case of some social cooperatives specifically. For some social cooperatives,
the explicit target to employ disadvantaged people was not part of the initial
activities, but later became an important objective. "We didn’t specifically
think that we wanted to employ people with disabilities, we just saw that
there was such a trend” (interviewee 11)
Initiatives based on volunteering often became more professional and
hierarchical due mostly to the expectation of funders as well. “Now this
form that is just starting to take shape, I think it is going towards a much
purer form, towards a much more centralized decision-making mechanism.
(Interviewee 20)
Concerning their future plans, interviewees from foundations and
associations tend to plan more market-oriented. This is mostly due to a less
supportive state environment that does not favour civil society organizations.
Due to the ever-decreasing state support and not suitable expectations of
calls for application, turning to the European Union and other foreign private
donations, the development and marketing of new products or services
are typical. At the same time, organizations initially sustained mainly by the
market – social cooperatives, for-profit companies – plan to apply for grants
or start investments, also changing their legal forms to non-profit in order to
achieve their goals.
The present paper provided an analysis about the emergence and
institutionalization of the social enterprise organizational field in Hungary
based on the theory of reflexive isomorphism (Nicholls 2010). According
to this theory, the social enterprise sector can be regarded as an emerging
organizational field, where the so-called dominant paradigm-building
actors, such as the state, private development and support organizations,
networks and the academia are capable of shaping the discourses in a way
that legitimizes their own logics and norms.
In Hungary, in recent years, several actors have appeared in the field. The
main paradigm-building actors involved are primarily international private
development and support organizations (through professional support
and funding programs); the European Union (through policies and funding
programs); the state (through legislation, policies and funding programs).
Advocacy organizations and alliances (through building networks and interest
representation) and the academia (universities and research centres through
investigating the subject) also appear in the field but have less impact.
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163RIESISE, 3 (2020) pp. 147-167
The approaches of the international private development and support
organizations can usually be categorized as the hero entrepreneur and
business model ideal type narratives, sometimes with restrictions on legal
forms and focus on the employment of disadvantaged social groups. The
state follows the approach of the EU (most connected to the business model
ideal type with an emphasis on democratic and participatory governance),
but with certain characteristics specific to Hungary, such as the limitation
of organizational autonomy, restrictions on legal forms and focus on
employment. The most relevant network builder organization is also more
connected to the business model ideal type emphasizing employment,
while the most recent research also follows this approach. Thus the main
discourses shaping the social enterprise field in Hungary are the hero
entrepreneur logic and the business model ideal type narrative introduced
by international actors based on international definitions, but have certain
characteristics specific to the institutional context of the country due
primarily to the current approach of the Hungarian state.
When looking at the social enterprise field in practice, a broader
picture emerges, than what is considered acceptable according to these
approaches. Social enterprises appear in various legal forms, with diverse
social goals, economic activities, revenue structure and governance
models. Practitioner social entrepreneurs generally use a broad approach
to define the term, only making the social objective and business activity as
criteria – thus the dominant interpretation among social entrepreneurs is
similar to the business model ideal type. However, despite the diverse field,
throughout the development of the organizations, increasing similarities
can be observed including ending public benefit welfare services; changing
and adding legal forms; becoming more professional and hierarchical; and
starting to focus on employment. These similarities are usually due to the
influence of the state and development and support organizations, which
can be regarded the dominant actors in the sector, and have the most
influence in shaping the social enterprise organizational field in Hungary
according to their preferred narratives.
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