3.6.3.2 The level and scope of involvement of stakeholders

The identified participatory governance mechanisms were:

The participation of stakeholders was then exercised either as a coercive necessity in compliance with the legal framework through membership when this was formal, or, alternatively, as actual cooperation between the stakeholder and the social enterprise through membership or without membership in an informal manner.

Participation ‘as a coercive necessity in compliance with the legal framework’ entails the participation of stakeholders in the membership of a social enterprise due to a legal right. However, in some of the examined case studies (in Case Study 3), the ‘coercive’ membership could not be materialised into actual participatory governance, subject to several constraints. In other words, stakeholders did not fully exercise the decision-making rights provided for them through membership. In Case Study 3, there was a legal limitation in the exercise of particular legal rights related to the exclusion of persons with mental disabilities (Type A members) from the higher positions of governance.

In contrast, ‘membership as an actual cooperation’ entails the materialisation of actual cooperation between stakeholders and decision-makers in the governance of the organisation. This cooperation is subject to no constraints and takes place in a facilitating environment. In the examined case studies, ‘membership as an actual cooperation’ was implemented in practice either through the stakeholders’ participation in membership and/or without the participation of stakeholders in membership (as was the case in Case Study 4). For instance, the participation of stakeholders in the governance of the examined social enterprises via informal processes always comprised an indication of actual cooperation between the social enterprise and the stakeholders. Indeed, this cooperation was always based on the decision of the principal decision-makers, i.e. founders, shareholders, and/or members to involve stakeholder non-members in the governance of the organisation. Unlike the situation outlined above, this decision – and the subsequent cooperation – was not coerced by the regulatory environment.

Consequently, the majority of the Greek case studies, i.e. Case Studies 1 and 2 demonstrated that formal participation of stakeholders (including employees) was not fully exercised (Table 3.16). However, the Greek Koinsep legal framework was nevertheless enabling to the participation of one type of stakeholder – the employees – in the ownership of shares, membership, and consequently the governance of the organisation. Nonetheless, various types of stakeholders (including the employees) acquired an informal consulting role in the governance of the organisation, resulting in a form of actual cooperation between the stakeholders and the decision-makers.

Unlike Case Studies 1 and 2, in Case Study 3 (Table 3.16), the formal participation of stakeholders in membership and governance resulted from a coercive necessity to comply with the legal framework. Nevertheless, this could still not fully materialise into actual participatory governance due to a legal constraint. In Case Study 3, this happened to a certain type of stakeholder, i.e. the mentally disabled. However, the development of informal organisational processes, which accommodated the feedback of these particular stakeholders, indicated the intention of the examined social enterprise to cooperate with stakeholders when making decisions.

In the examined Belgian case studies, the majority of social enterprises, i.e. Case Studies 5 and 6 (Table 3.16), did not allow for the formal participation of various types of stakeholders, including employees. Nevertheless, the participation of employees was permitted and encouraged by the VSO legal framework. However, the formal participation of stakeholders (i.e. employees) in the membership, ownership of shares, and thus in the governance of the social enterprises, as underpinned by a legal entitlement, was not fully implemented in practice in the majority of the examined Belgian case studies, i.e. in Case Studies 5 and 6 (Table 3.16). The formal participation of stakeholders was not fully implemented either, as a result of complying with the applicable legal framework. However, informal mechanisms were developed in all the examined Belgian case studies to accommodate the feedback of stakeholders in decision- making.

In fact, from the three Belgian case studies examined, only Case Study 4 developed both formal and informal means of participation for stakeholders in their organisational structure. One example of a formal mechanism is the development of categories – a classification in the AoA of membership and ownership of shares provided for certain types of stakeholders – i.e. for students-employees and clients. This indicated the intention of the examined organisation to generate actual cooperation between stakeholders and decision-makers.

In the majority of the UK cases studies, i.e. in Case Studies 7 and 8 (Table 3.16), participatory governance through membership, ownership of shares, and thus participation in decision-making was not formally and fully realised in the examined social enterprises. In Case Study 7, in particular, although stakeholders (i.e. clients) participated in the membership, their participation in terms of exercising governance remained inactive due to their own choice. Membership was not exercised as a coercive necessity in compliance with the legal framework. The legal framework did not require, and neither did it forbid, the participation of stakeholders in the membership of the CIC organisation.

Other types of informal stakeholder mechanisms were also developed in these case studies to accommodate the feedback of community stakeholders regarding adopted decisions. The informal stakeholder mechanisms were developed in the organisational functioning of the examined social enterprises. Moreover, in Case Study 9, the participatory governance by community stakeholders had not yet been formally realised as of April 2017 (the time of conducting the study). The participation of the community in the ownership of shares, membership, and eventually in the governance of the organisation was one of the community objectives of the examined PLCIC (in Case Study 9). However, Case Study 9 demonstrated that the young and emerging character of the organisation did not enable the realisation of this community objective. Accordingly, few but limited informal types of stakeholder mechanisms were established by the examined CIC, in Case Study 9, with the objective of collecting the stakeholders’ feedback concerning certain decisions and organisational activities.

This cross-national perspective reveals that in the majority of the examined Belgian, Greek, and UK case studies (i.e. six out of nine case studies, see Table 3.16), the formal participation of stakeholders in the membership, ownership of shares, and thus in the governance of the social enterprise was not fully implemented in practice. In fact, among Case Studies 3 and 4 (Table 3.16), in which the formal participation of stakeholders was implemented in practice, in Case Study 3, membership was materialised as a coercive necessity to comply with the legal environment. However, in Case Study 3, due to legal constraints, membership was not fully translated to stakeholder participation in all the levels of governance. Likewise, membership remained inactive in Case Study 7, and as such it was not fully translated to stakeholder participation in governance. Accordingly, membership and formal participation only materialised as an actual cooperation between stakeholders and social enterprises in Case Study 4. Nonetheless, the participation of stakeholders by means of informal stakeholder mechanisms in the examined case studies was always implemented in practice as an indication of actual coo-peration between stakeholders and the social enterprise in question.

The examined case studies demonstrated certain formal mechanisms of participatory governance provided for in the tailor-made laws for social enterprises. Formal mechanisms were the acquisition of membership and/or ownership of shares through a classification of shares provided to stakeholders, or similar mechanisms introduced in the constitutional documents of social enterprises. The formal stakeholder mechanisms accommodated the participation of stakeholders in the decision-making processes of social enterprises at different levels of governance. Another type of mechanism was also identified in Case Study 2, i.e. a public-private monitoring committee, and a similar one in Case Study 9, i.e. a public-private consultation for the use of land. Those stakeholder mechanisms were also categorised as formal stakeholder mechanisms prescribed into laws other than the tailor-made laws. However, they were irrelevant for this study, as this study examines formal participatory governance mechanisms prescribed and provided in tailor-made laws for social enterprises.

The examined case studies also demonstrated the existence of various informal stakeholder participatory mechanisms developed in the organisational functioning of the examined social enterprises in all the examined jurisdictions. Informal mechanisms were designed to solicit the feedback of stakeholders in an unofficial manner, which is not dictated by law or the social enterprises’ constitutional documents. They comprised the broader categories of the following types of participatory mechanisms (see Table 3.17): (i) written or oral communication by email or through phone calls; (ii) participation in consultation meetings with decision-makers; (iii) technology interactions (newsletters, websites, social media); (iv) stakeholder thematic events; (v) stakeholder meetings; (vi) stakeholder committees; (vii) open governance processes for stakeholders that were also non-members; (viii) satisfaction surveys; and (ix) consultation processes for technical matters.

The identified formal and informal stakeholder mechanisms in the examined case studies was further categorised in a way that indicated the proximity of participation between the stakeholder and the examined social enterprises. Accordingly, the examined stakeholder participation mechanisms were characterised as ‘direct’ to the extent that they facilitated the stakeholders’ physical and/or direct participation without the use of intermediaries in the participating process. In contrast, indirect stakeholder participatory mechanisms were categorised as those which facilitated stakeholder participation using intermediaries and indirect channels.

Accordingly, an aggregate analysis of the (x) data matrices of participatory stakeholder mechanisms undertaken in each case study revealed the following findings. The overall, direct participation (in Table 3.18, 93.5%) in the governance of social enterprises in Belgium, Greece, and the UK outperforms indirect participation (in Table 3.18, 6.5%) of stakeholders through mechanisms which are either formal or informal, but mainly informal. Accordingly, the stakeholder participation mechanisms were predominantly informal and direct. This was observable to the extent that the formal participation of stakeholders in the governance of the examined social enterprises – including the type of formal participation implemented through membership – was implemented in practice to a lesser extent in all the examined cases. Exceptions were found in Case Studies 3 and 4. Consequently, it is implicit that the number of direct and informal stakeholder mechanisms exceeds the number of direct and formal stakeholder mechanisms. The number of direct and informal stakeholder mechanisms also exceeds the number of indirect and informal mechanisms in the examined case studies. The aggregate analysis indicated that in all the examined case studies in all the examined jurisdictions, the number of identified informal stakeholder mechanisms (74.2% of the total number of identified stakeholder mechanisms in all the examined countries in Table 3.18) was significantly higher than the number of identified formal stakeholder mechanisms (25.8%). Additionally, the aggregate analysis revealed that the number of identified informal and direct stakeholder mechanisms (71%) was significantly higher than the number of identified formal and direct stakeholder mechanisms (22.6%), informal and indirect stakeholder mechanisms (3.2%), and formal and indirect stakeholder mechanisms (3.2%) on an aggregate as well as on a per- country level.

Similarly, the identified formal and informal stakeholder mechanisms were further categorised in a way that indicated a frequency of participation between the stakeholders and the examined social enterprises. Accordingly, the examined stakeholder participation mechanisms were characterised as ‘regular’ to the extent that they were exercised in regular, continuous and timely intervals, or that they concerned predefined topics. In contrast, ad hoc stakeholder participatory mechanisms were categorised as those that were exercised whenever an issue emerged. Subsequently, an aggregate analysis of the (x) data matrices of participatory stakeholder mechanisms revealed that regular participation of stakeholders (70.9%, see Table 3.18) in the governance of the examined social enterprises in Belgium, Greece, and the UK outperformed the ad hoc participation (29.1%) of stakeholders. Ad hoc participation was exercised through mechanisms which were either formal or informal, but mainly informal. The aggregate analysis indicated that the number of identified regular stakeholder mechanisms was significantly higher than the number of identified ad hoc stakeholder mechanisms. Accordingly, it can be similarly deduced that informal and regular participation (48.4%) outperforms not only formal and regular participation (25.8%), but also informal and ad hoc (25.8%) participation. The results show that the formal participation is less implemented in practice in all the examined cases than the informal participation on an aggregate as well as on a per-country level.

Chart 3.1 and Chart 3.2 demonstrate the aggregate concentration of the participatory stakeholder mechanisms identified in the case studies’ (x) data matrices towards being predominantly informal, regular, and direct. Chart 3.2 displays this in a three-dimensional way. In Chart 3.2, the variables of ‘formal/ informal’, ‘direct/indirect’, and ‘regular/ad hoc’ are visualised in the three axes to indicate the characteristics of identified participatory stakeholder mechanisms (visualised in Chart 3.2 as balloons). Such participatory stakeholder mechanisms have acquired either a positive or a negative value (i.e. either 1 or -1) in Chart 3.2. The value is positive, i.e. equals 1, when each participatory stakeholder mechanism identified in the case studies’ (x) data matrix has been found to be individually formal, direct, or regular. The value is negative, i.e. equals -1, when each participatory stakeholder mechanism identified in the case studies’ (x) data matrix has been found to be individually informal, indirect, or ad hoc. The size of the portrayed balloons in Chart 3.2 is also a parameter of value. It indicates the aggregate concentration of the identified participatory stakeholder mechanisms towards being predominantly informal, direct, and regular (see Balloon A with the biggest size in Chart 3.2). Chart 3.2 portrays that the examined social enterprises were found to employ 14 participatory stakeholder mechanisms which are informal, direct, and regular.