3.6.3.1 The roles of stakeholders in the examined cases: A cross-national examination

The analysis of the national tailor-made legal frameworks in Belgium, Greece, and the UK revealed that stakeholders, or certain types of stakeholders such as for instance employees, could – theoretically – acquire similar roles in the examined organisations. Hence, they could thereby exercise specific competences (powers) based on stipulated legal rules (Table 3.15). Employees, for example, could participate as members and owners of shares and accordingly fulfil the roles of decision-makers, controllers, supervisors, and consultants of the organisation, and/or as recipients of information.

The empirical findings on a per-case study and per-country level (Table 3.16) indicated that in the majority of the examined Greek case studies, the role of stakeholders as members and owners of shares was not fully implemented in practice (in Case Studies 1 and 2, Table 3.16). In Case Studies 1 and 2, apart from the founding members, no stakeholder group was found to have acquired membership. Notably, the acquisition of membership and ownership of shares by a particular type of stakeholder, i.e. the employees, specifically enabled in the Koinsep legal framework, was also not fully implemented in practice in Case Studies 1 and 2 (Table 3.16). The acquisition of membership and ownership of shares by stakeholders, including employees as well as other types of stakeholders, was only implemented in practice in Case Study 3 (Table 3.16). The Koispe (i.e. Koinsep of Integration) legal form in Case Study 3 provided for a mandatory legal obligation to classify categories of cooperative shares capable of being provided to several types of stakeholders. The cooperative shares were offered to employees and to other types of stakeholders, and they were supported by the provision of one equal vote to the processes of the general meeting.

Additionally, the appointment of employees and other types of stakeholders as decision-makers was only implemented in practice in Case Study 3. Here, there was a legal obligation for the management board to comprise members who represent the different classes (categories) of stakeholders elected by the general meeting.

In all the examined Greek case studies, the law excluded certain types of stakeholders from the membership, ownership of shares, and governance of the Koinsep. For example, the law excluded public institutions from the membership, ownership of shares, and governance of the Koinsep of Care, i.e. Koinsep Merimna Ygeias (in Case Study 2) and the Koinsep of Collective and Productive Purpose, i.e. Koinsep Ekati (in Case Study 1). This exclusion did not apply to the Koinsep of Integration and, accordingly, to the Koispe legal form, i.e. to the Koispe Athena-Elpis (in Case Study 3). Additionally, legal persons were limited by law to a certain number, i.e. to 1/3 of the total number of the members, to participate in the membership, ownership of shares, and governance of the Koinsep (in Case Studies 1 and 2). Moreover, certain types of stakeholders, in particular persons with mental disabilities, were excluded by law from the higher decision-making positions, i.e. in the management board of the Koispe Athena-Elpis in Case Study 3.

The supervising role of employees and other types of stakeholders as members who can participate in the general meeting and/or in other supervising bodies was also not implemented fully in practice by stakeholders, due to the absence of pertinent stakeholder membership in both Case Studies 1 and 2. The role of supervisor-stakeholder is only implemented in practice in Case Study 3, due to the stakeholders’ participation as members in the general meeting’s activities. However, in the same case study, the participation of stakeholders as members of the supervisory board was limited pursuant to legal provisions which excluded certain types of stakeholders, i.e. the persons with mental disabilities (Type A members), from the composition of the supervisory board of Koispe Athena-Elpis.

Furthermore, only in Case Study 3 it was found that employees and other types of stakeholders act as controllers of the members in the general meeting and as appointed decision-makers in the management board in representation of certain stakeholder categories.

In all three Greek case studies, stakeholders – and particularly employees – provide advice and consultancy to decision-makers based on various informal processes. As such, they acquire a consulting role in the governance of the social enterprise. The consulting role of stakeholders was exercised with respect to: (i) technical and operational issues; (ii) decisions made by the governing bodies; and/or (iii) employment issues (see Table 3.16).

Concerning the roles of stakeholders in the Belgian social enterprises, the majority of the examined Belgian case studies (i.e. Case Studies 5 and 6, Table 3.16) revealed that the selected social enterprise did not implement in practice the role of stakeholders as members and owners of cooperative shares. In Case Studies 5 and 6, besides the founding members, no stakeholder group was found to have acquired membership. The acquisition of membership and ownership of shares was not fully implemented in practice concerning one particular type of stakeholder dictated in the VSO legal framework, i.e. employees. The same conclusion applied to other types of stakeholders (examples are provided in Case Studies 5 and 6 concerning the beneficiaries and the clients; see Table 3.16). The exercise of membership and ownership of shares by stakeholders was only implemented in practice in the social enterprise which was examined in Case Study 4. In the legal form employed by this social enterprise, a classification – in the form of categories of shares – was established. For each type of stakeholders, i.e. employees, clients, and/or other types of stakeholders, another category of shares was created in the company’s AoA (as was the case in the Greek Case Study 3).

Additionally, in Case Study 4, the provision of voting rights to employees and to other types of stakeholders was also included in the social enterprise’s AoA. This was not the case in the other two Belgian social enterprises, i.e. in Case Studies 5 and 6, in which similar provisions in the social enterprises’ AoA concerning the stakeholder, e.g. employee participation, were not found. In contrast, in Case Study 6, a legal provision excluded the participation of certain stakeholders (namely employees) in the membership and governance of Volkshuisvesting, which was included pursuant to legal rules in domestic Belgian law, i.e. the Flemish Housing Code of 1999.

Furthermore, the board structures identified in the Belgian case studies were hybrid structures. They combined directors selected on the basis of their skills and/or independent directors, combined with directors elected and appointed to represent particular categories of the cooperative shareholders (in Case Studies 5 and 6) and/or stakeholders (in Case Study 4). In the examined board structures, the appointment of employees or representatives of employees particularly as decision-makers and managers was only implemented in practice in Case Study 4. In Case Study 4, a provision in CORE’s AoA required the board to include and represent different classes (categories) of shares provided to employees and to other types of stakeholders. The participation of employees in the board structures was not identified in the other two case studies concerning Microstart and Volkshuisvesting, i.e. in Case Studies 5 and 6, where no such provision was found in the applicable AoA.

In fact, the type of pertinent stakeholder, i.e. the employees, was excluded from the membership and ownership of shares in the examined social enterprise in Case Study 6. This case study concerned Volkshuisvesting, i.e. a social housing enterprise, in which only regulated types of institutions from the public and the private domain (e.g. the Flemish government and certain banks) were eligible to acquire membership and shares, and thus to participate in the governance. Accordingly, the acquisition of membership by multiple types of stakeholders, including employees, was only implemented in practice in Case Study 4. In conclusion, only in Case Study 4, employees and various other types of stakeholders were found to act as controllers of the other members and as managers and decision-makers, which was not the case in the other two examined Belgian case studies, i.e. Case Studies 5 and 6 (Table 3.16).

Furthermore, similar to the Greek case studies, various types of stakeholders – including employees and also, for instance, clients and beneficiaries – participated and provided advice and consultancy to decision-makers in various informal processes in all the examined Belgian case studies. As such, stakeholders in those case studies had a consulting role in the governance of the social enterprises. The consulting role of stakeholders was exercised in the examined Belgian case studies with respect to: (i) technical matters; (ii) certain operational themes relating to the provided service and products; (iii) employment issues; (iv) stakeholder satisfaction; (v) strategy; and (vi) the decisions made by the governing bodies (Table 3.16).

In the majority of the examined UK social enterprises, the role of stakeholders as members and owners of shares was not implemented in practice. In Case Studies 8 and 9, besides the founding members, no stakeholder group was found to have acquired membership. For instance, the participation of the community in the membership of Stratford PLCIC was not realised in Case Study 9, in which the community had not yet become a member nor an owner of shares as of April 2017 (the period of conducting the research). The participation of stakeholders in the membership of the CIC was only implemented in practice in the social enterprise Breadshare examined in Case Study 7. However, this participation remained inactive in terms of participation in the governance of the enterprise in question. In Case Study 7, the inactive members of the CIC limited by guarantee never appeared in the decision-making processes of the general meeting to exercise their voting rights.

Unlike in Case Studies 3 and 4, the participation of stakeholders in the membership and ownership of shares based on a classification (categories of shares) for various types of stakeholders was not provided in the AoA of any of the examined UK social enterprises with share capital (i.e. in Case Study 8 and in Case Study 9). Neither was the participation of stakeholders in the membership and ownership of shares stipulated in any of the applicable tailor-made laws for the CIC.

The appointment of directors and managers from the stakeholder basis was only implemented in practice in Case Study 7. The social enterprise Breadshare in Case Study 7 was not obliged, pursuant to the tailor-made legal framework, to include stakeholders in membership and/or governance. However, in the social enterprise in this case study only, the directors were selected on the basis of a hybrid system. This hybrid system required the selection of directors from a broader stakeholder basis, but not in a manner that represented certain stakeholder groups or categories of members-stakeholders, e.g. employees, in the organisation. Rather, the selection was based on the skills and the daily and active engagement of directors in Breadshare’s affairs.

In fact, in the other two UK case studies (Case Study 8, i.e. concerning GTS Solutions, and Case Study 9, i.e. concerning Stratford PLCIC), the board structures comprised mainly directors who were selected according to skill and/or performance, or directors-shareholders, or directors appointed directly by the shareholders. More particularly, employees and other types of stakeholders were precluded from the governance of the examined social enterprise in Case Study 8, in which the decision-making power was concentrated in one person, namely the founding member-sole active shareholder and two experts- directors in law and finance.

Accordingly, considering that the participation in the membership and governance of stakeholders was not implemented in practice in any of the enterprises covered by the UK case studies, stakeholders could neither act as controllers of the members nor as directors. These two roles were crucial in safeguarding the community interest objectives of the CIC and the involvement of the community in the CIC’s activities. However, similar to the Greek and Belgian case studies, in all the examined UK case studies various types of stakeholders – including but not limited to employees, i.e. clients and beneficiaries – participated and provided advice to decision-makers based on various informal processes. As such, stakeholders still had a consulting role in the governance of the examined organisations. In other words, they were stakeholders-consultants. The consulting role of stakeholders was exercised in the examined UK case studies with respect to: (i) services and products; (ii) decisions made by the governing bodies; and (iii) decisions concerning community issues, for example (Table 3.16).

To summarise, in the majority of the examined Greek, Belgian, and UK case studies, the role of stakeholders, including employees and others as members and owners of shares, was not fully implemented in practice (seven out of nine case studies, Table 3.16). Accordingly, in the majority of the examined case studies, it was demonstrated that employees or other types of stakeholders, e.g. consumers, had no real – or only symbolic – voting power in the decision- making processes of the governing bodies in the examined social enterprises.

The role of stakeholders as members and owners of shares was implemented in practice in two examined case studies only, i.e. in Case Studies 3 and 4 (Table 3.16), through a similar mechanism. This mechanism entailed the classification in the form of categories of shares provided to several types of stakeholders. Either this classification provided voting rights to employees and other types of stakeholders as embedded in the AoA of the social enterprise, or such voting rights were stipulated by law. This is known as formal participation in the case studies. The provided voting rights related to the provision of either one vote in the general meeting or to a voting cap, i.e. votes up to 5% – 10% of the number of votes deriving from all the shares represented in the general meeting.

In these two case studies, i.e. Case Studies 3 and 4 (Table 3.16), employees and other types of stakeholders were internalised as members in the governance of the organisation and acquired a voting power in the decision-making processes. The appointment of employees and other types of stakeholders as decision-makers was implemented in practice in these two examined cases, whereby the organisations’ AoA or other legal obligation dictated by law required the board to represent the different classes of shareholders and members.

The appointment of stakeholders as decision-makers was implemented in practice in one more case study, i.e. Case Study 7. In Case Study 7, members of the board were selected by a broader stakeholder basis, but not in such a way that they represented certain stakeholder groups or categories of members-stakeholders in the organisation’s governance.

The examined case studies in Belgium, Greece, and the UK comprised social enterprises with governance structures which can be characterised as follows: (i) independent directors appointed on the basis of their skill and performance (two out of nine case studies, i.e. in Case Studies 8 and 9); (ii) directors elected/appointed by members to represent certain categories of members- shareholders and/or stakeholders (three out of nine case studies, i.e. in Case Studies 1, 2, and 3); and (iii) hybrid structures that combined both aspects, i.e. skills and representation (four out of nine case studies, i.e. in Case Studies 4, 5, 6, and 7).

The membership of employees and/or the membership of other types of stakeholders was not realised in the majority of the examined case studies in all jurisdictions. Likewise, the respective roles of stakeholders, i.e. as decision- makers, controllers of the organisations, supervisors of the decision-making processes, and/or recipients of information concerning the social enterprises’ affairs, were not implemented in practice either. Among the examined case studies in Belgium, Greece, and the UK, only two case studies, i.e. Case Studies 3 and 4 (Table 3.16), allowed stakeholders to participate in supervisory bodies and/or in supervising processes of the governing bodies. As such, in their majority, the case studies demonstrated that stakeholders could not fully participate in the decision-making processes of social enterprises in a formal manner, i.e. as members and as owners of shares and, accordingly, as decision- makers, controllers, supervisors, and recipients of information. However, they could influence decision-making through informal processes developed in other organisational settings.

Table 3.16: Partially ordered meta-matrix I