3.2.1.3 The concept of stakeholder participation in Greek legislation regarding social enterprises

The Greek tailor-made legal form for social enterprises is a hybrid legal entity named Social Cooperative Enterprise, the English translation for the term ‘Κοινωνική Συνεταιριστική Επιχείρηση’ hereafter (Koinsep) introduced in the Greek Social Entrepreneurship Law of 2011.1 Greek legislation mentions three distinct types of Koinsep: the Koinsep of Integration, the Koinsep of Care and the Koinsep of Collective and Productive Purpose, all of which are subject to the same rules, rights and responsibilities. Additionally, the Greek Koinsep has a statutory social purpose which varies for each of the three distinct types of Koinsep (i.e. work integration of vulnerable groups, the provision of social care to the disadvantaged, the production of goods and the provision of services of a collective significance).2 The social cooperative differs from the traditional Greek civil cooperatives which aim to fulfil economic, social and cultural objectives for the benefit of the members.

The Koinsep governance structure is associated with membership, although its decision-making processes and voting are disconnected from the ownership of capital through the application of democratic processes, thus following a democratic governance paradigm (as opposed to a stewardship paradigm). Traditionally, cooperatives are membership organisations characterised by their members’ participation and the influence that these members exert over decision-makers following their appointment through democratic election processes.3 Democratic decision-making processes determine the functioning of the two major Koinsep governing bodies with distinguished competences: (i) the decision-making body with the highest competence that meets annually, i.e. the general meeting of the members; and (ii) the decision-making body for routine management, i.e. the managing committee.4

The governance powers should be characterised by equality in the sense that all admitted members who are necessarily cooperative shareholders of one mandatory cooperative share have equal rights with respect to the decision-making processes of the social enterprise. In the Greek Koinsep, equality and democracy are expressed in the voting rules that apply when decisions are made, whereby – regardless of the number of cooperative shares that a member owns (one mandatory cooperative share and additional optional cooperative shares) – a member has the right to possess only one vote in the decision-making processes and exercised in the general meeting of the members and/or the managing committee. This is also known as ‘one man one vote’ rule.5 Additionally, every Koinsep member enjoys the rights that membership confers equally in respect of governance. Thus, every member will participate equally: (i) in the highest competences of decision-making, which means that every member can participate in the decision-making processes of the general meeting of the members, decide on the most important matters of the organisation by conferring opinions and decisions (orally or with written statements), seal the decisions by voting with one vote and request and acquire information regarding the Koinsep’s state and affairs; and (ii) in the competences of routine management, namely by electing and appointing the members of the managing committee and/or by being elected and appointed as a member of the managing committee.

Beyond equality and democracy in the exercise of the rights of the cooperative members, the Greek Koinsep is a multi-stakeholder organisation based on multi-stakeholder ownership and membership. Multi-stakeholder ownership is subsequently translated into certain decision-making roles of various stakeholders with powers which are equally conferred and exercised with the other members.6

If the term ‘stakeholder’ entails participation in the Greek Koinsep and in the decision-making activities of the Koinsep of any group or individual who can affect or can be affected by the activities of the Koinsep to achieve its purpose,7 then multi-stakeholder ownership and membership in the Greek Koinsep is not reflected in the classification of membership on the basis of multiple predefined types of shares or members. Primarily, cooperative shareholders and members of the Greek Koinsep can be any natural person and a certain number of legal persons (one-third of the total number of members). Public institutions are excluded from membership and ownership. Theoretically, in this setting, any group or individual who can affect or who can be affected by the activities of the Koinsep could be integrated in one group under membership. Examples include the providers and beneficiaries of the goods and services that the Koinsep provides as well as its financiers, customers and clients. However, this is not something that is stipulated in the Greek Social Entrepreneurship Law of 2011. This is what Campi et al. meant when they concluded in their empirical study that the legal form is a weak indicator of whether a social enterprise has a single – or multi-stakeholder nature, because

They also noted that ‘the membership-ownership structure is the key indicator to be analysed in order to identify the various categories of stakeholders’.9 As such, Pache and Santos showed how competing (commercial and social welfare) logics influence social enterprises on what legal structures, governance and organisational structures and practices they should adopt.10 This in turn influences the founders and leaders of social enterprises on the choice of legal and organisational structures and processes with the aim to control the organisation and ensure accountability to stakeholder groups.11 In the Greek Koinsep, this is exactly the case.

Other than the cooperative owners and members, the employees of a Koinsep are only admitted and internalised in membership and ownership and in governance, respectively.12 The employees, for instance, are subject to the standard procedure for appointing new members. The procedure requires the approval of the managing committee and subsequently the approval of the general meeting of the members. The underlying existing employment relationship can be maintained and does not conflict with the rights conferred by membership. The employees may also stem from various disadvantaged groups, especially in a Koinsep of Integration.13 This does not mean, however, that various other types of stakeholders, for instance financiers, volunteers, beneficiaries or clients, do not request their admission in membership. It does not also mean that other types of stakeholders do not interact, either formally or informally, with the decision-makers of the Greek Koinsep, nor does it mean that the decisions do not affect other types of stakeholders of the Greek Koinsep because they are not included in the decision-making processes by law. This is precisely why the issue of membership of the stakeholders of a Koinsep needs to be examined further.

Theoretically, stakeholders who are granted Koinsep membership enjoy equal rights and obligations together with all the Koinsep members regarding their participation in decision-making activities. Through membership, stakeholders may acquire equal roles in the governance structure for the following positions and competences:

The theoretical analysis of the roles and rights of stakeholders in the governance of the Koinsep as prescribed in the Koinsep’s legal form can be seen as stakeholder participation mechanisms to the extent that they are: (i) formal or informal – by having a legally binding basis in legislation or in the constitutional documents, i.e. AoAs and statutes, for instance of the social enterprise; (ii) direct/indirect – by allowing or not allowing stakeholders to physically participate in the decision-making processes of social enterprises; and (iii) structural/non-structural (regular/ad hoc) – by taking place on a routine or non-routine basis.

As such, cooperative membership in the Greek Koinsep legal form allows and requires a minimum participation of stakeholders in the general meeting of the members on the basis of legal rights and/or obligations that are either stipulated in law or in the constitutional documents of the Koinsep, i.e. in a formal manner.

The participation of stakeholders as members in the general meeting of the members is a means of participation in decision-making that can be exercised in a direct manner. Stakeholders are actually required to physically attend and participate by voting directly in certain regular decision-making processes in a structural manner. Additionally, cooperative membership requires from stakeholders as members to appoint representatives in the managing committee and/or to be appointed as members of the managing committee, and thus attend the decision-making processes and represent other stakeholders. The obligation of the members to appoint or be appointed as representatives and members of the managing committee is also a formal participation mechanism which may be exercised in a direct as well as an indirect way and in a regular manner. Therefore, the stakeholders who are members of the managing committee can directly and physically participate in governance through regular decision-making processes. They can be represented indirectly as well, namely by the appointed representatives of their choice in the decision-making processes of the managing committee. Finally, while being cooperative members, stakeholders can formally and directly request information regarding the Koinsep’s state of affairs.

Although the above is a convenient theoretical perspective for further development, a previous study undertaken by a Greek scholar, Adam, has shown that in a ‘precursor’ legal form for social enterprises in Greece (i.e. a social cooperative tightly regulated for the socio-economic integration of mentally disabled persons), the multi-stakeholder character was mainly driven by the legal and institutional framework rather than the actual participation of stakeholders in the management and governance of the social enterprise.14 By examining the level of participation of local partners as members in 16 such social enterprises, Adam noted that their membership materialised as a coercive necessity because of the legal framework rather than as an actual cooperation.15 Accordingly, the multi- stakeholder character was not translated into formal participation of stakeholders in the governance of the organisation.16 Additionally, Campi et al. noted that the participatory governance of stakeholders in various social enterprises was exercised in a formal manner according to which stakeholders have a real voting power and not just ‘a symbolic one’.17 In contrast, social enterprises were characterised ‘by a high degree of informality’, something which also affects their decision-making processes.18 This has led us to formulate the following research question:

RQ1: How is the participatory governance (the role and rights of various types of stakeholders in decision-making processes) of two selected Greek Koinsep organisations realised (formal, informal or regular manner) through memlbership?