Between Coercive and Mimetic Institutional Isomorphism: Social Enterprise and the Universal Scandinavian Welfare State

Bernard Enjolras, Linda Lundgaard Andersen, Malin Gawell and Jill M. Loga

Introduction

Social enterprise (SE) is often depicted as combining entrepreneurial and social dimensions, and as operating between the market and the state (Baglioni 2017). Other characterisations (e.g., Nicholls 2006) underscore innovation and market orientation as major features of these initiatives. Social enterprises are innovative in that they generate new organisational forms and leverage market resources for the public good. In doing so, they “challenge the status-quo by reconfiguring accepted value creation boundaries (public/private, for-profit/non-profit, and economic/social)” (Nicholls 2006: 11). However, especially when social enterprises operate within a highly institutionalised ecosystem such as the Scandinavian welfare state, one should not overlook two critical issues related to this particular context: the issue of economic sustainability and the issue of institutional isomorphism.

Social enterprises’ economic sustainability, especially for those social enterprises that provide welfare services, is significantly influenced by the institutional arrangements of the welfare state, as these arrangements constitute a major element of their ecosystem. First, the existing welfare arrangements define the opportunity structure for the development of social enterprises. The nature of social rights and benefits (whether they are universal, selective or subsidiary) guaranteed by the state and the type of welfare services that are the responsibility of the state (vs. the citizen, family, community) define the scope of the potential “market” for social entrepreneurs. Secondly, welfare regimes institutionalise different forms of welfare mixes between for-profit, non-profit and public actors, involving different financing and regulatory schemes. Whether welfare services are provided exclusively by public agencies, by nonprofit actors, by for-profit actors or by a combination of public, nonprofit and for-profit actors is the result of sets of regulations that also limit or enable social enterprises.

Furthermore, social enterprises, when operating within the institutional framework of the Scandinavian welfare state, are likely to be

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subjected to different institutional isomorphic pressures (DiMaggio and Powell 1983). Institutional isomorphism refers to “an inexorable push toward homogenisation of institutional fields” driven by—in addition to the isomorphic force of market competition—three institutional isomorphic processes: coercive isomorphism, which stems from political influence and the problem of legitimacy (e.g., government regulation, legal environment and fiscal regulations); mimetic isomorphism, resulting from standard response to uncertainty (e.g., innovation processes, management techniques); and normative isomorphism, associated with professionalisation.

Welfare states grant citizens with social rights (Marshall 1950). For Esping-Andersen (1990), these social rights are characterised by three dimensions: the degree of de-commodification implied by these rights; the system of stratification (into social classes) stemming from these rights; and the repartition of responsibility between the market, civil society, family and the welfare state resulting from these rights (welfare mix). These three dimensions of social rights allow Esping-Andersen (1990), through a cluster analysis of welfare-state variations, to distinguish different types of welfare regimes: a liberal welfare state, a corporatist-statist welfare state and a social democratic welfare state.

The social democratic welfare state is typically found in Scandinavia (Sweden, Norway, Denmark); it is characterised, according to Esping-Andersen (1990), by the fact that the principles of universalism and decommodification are extended to the middle class (in contrast to what is the case in the liberal regime, which is characterised by means-tested assistance, and in the corporatist-statist regime, where rights are attached to class and status). The universalistic nature of social rights and the central role played by the state in the Scandinavian welfare state give to the welfare-provision system a particular shape, which also constrains and enables the development of social enterprises.

In this chapter, we delve into how the institutional framework shaped by the universalistic Scandinavian welfare state and the recent reforms of its mode of operation inspired by new public management (NPM) influence the opportunity structure for the development of social enterprises in Scandinavia. More precisely, we examine whether there exists, for social enterprises, within the Scandinavian welfare system, a “third way” between two types of institutional isomorphism (namely coercive and mimetic isomorphism) that would enable social enterprises’ innovative capacity and economic sustainability. Indeed, as we will demonstrate, in a highly institutionalised welfare provision system such as the Scandinavian welfare state, and in a context that is simultaneously characterised by the implementation of NPM reforms, social enterprises risk to be caught between the Charybdis of becoming integrated into the public welfare system (through contracting) and the Scylla of behaving like for-profit actors.

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In order to address this question, we first give an overview of the Scandinavian welfare model; we then turn to the recent trends characterising social-policy reforms and SE development in the three Scandinavian countries: Denmark, Sweden and Norway. Finally, we discuss the implications of the institutional landscape shaped by the Scandinavian welfare model for the future development of social enterprise in Scandinavia.