The Contribution of Social and Conventional Enterprises to Employment and the Dependence of Their Ability to Generate Jobs on the Level of Government Spending on Social Services

Social enterprises are a new phenomenon. Like non-profit organizations, social enterprises are concerned with social, cultural or environmental issues. However, social enterprises largely finance their activities with revenues that they generate by selling goods and services in the open market. Research has shown that social enterprises contribute to employment in two ways: by generating new jobs and by helping socially disadvantaged individuals enter the labour market through a specific type of social enterprise: the work integration social enterprise (WISE). Research in Canada, Serbia and the Czech Republic suggest that the social enterprises sector could be used in order to reduce unemployment. However, despite the abundance of theoretical research, no quantitative research has yet been carried out into whether the contribution of social enterprises to employment is relatively high or low. Using data from the 2015 adult population survey (APS) of the Global Entrepreneurship Monitor (GEM), which includes data on social and conventional enterprises in 33 countries all over the world, this paper carries out a quantitative empirical study into whether social enterprises create more jobs than conventional enterprises. In addition, since social enterprises are found to flourish in different environments than conventional enterprises, it is examined whether the level of government spending on social services influences the ability of social and conventional enterprises to generate jobs. The results show that for social enterprises in general, the odds of a growth in employees are about 2,699 percent higher than the odds for conventional enterprises. The results regarding the ability to generate jobs in countries with limited government spending on social services are insignificant and therefore inconclusive.