3.1.5.1 Limitations, practical implications and future research

Social enterprises have contributed substantially to the promotion of sustainable development and inclusive growth in Europe. This article elaborated on tailor- made legislation regarding social enterprises. We particularly examined how the VSO tailor-made legislation for social enterprises in Belgium influences the participation of employees and other types of stakeholders in the decision-making processes. We tested this question by conducting three case studies relating to three cooperatives with a social purpose, each in another sector; respectively, the renewable energy sector, the microfinance sector, and the social housing sector. Main achievements, from an academic perspective, are: (i) the contribution to the emerging legal theory with respect to the VSO tailor-made legislation; and (ii) the generation of empirical findings which build on and contribute to existing theoretical foundations regarding the participation of stakeholders in the governance of social enterprises.

Primarily, our findings in the three case studies confirmed that even though the Belgian tailor-made legal framework regarding social enterprises is conducive to employee participation in the decision-making processes, the concept of employee participation differs in the examined cooperatives with social purpose in the three sectors. In some cases, the direct and formal participation of employees in the decision-making processes of the social enterprise came with the acquisition of a legal right, i.e. membership right/share. The acquisition of membership rights/shares allows employees to participate in a direct way in the decision-making processes of VSO social cooperatives, by: (i) exercising voting rights in the general assembly, subject to a regulated cap, i.e. 10%; and indirectly by (ii) electing the members of the board of directors. Additionally, we found indirect participation of employees via informal and unregulated participation settings in all three cases in the different sectors. In one sector, employee participation was excluded by special sectoral legislation.

From a practical point of view, this article also contributes to a social entrepreneur’s understanding of the substance and the implementation of the VSO legislation in Belgium. The enrichment of the discussion with empirical findings of current best practices will also induce Belgian social entrepreneurs to consider creating more inclusive and participatory models in governance and decision- making.

In this article, we limited our research and focused mainly on the examination of the formal participation of employees and stakeholders in the decision-making processes of social enterprises and the effects of tailor-made legislation for social enterprises. We provided only limited references to informal means of employee and stakeholder participation as a more elaborated examination is required to test the informal and non-institutionalised dynamics that take effect in the absence of enabling legislation.

Furthermore, even though the participation of other types of stakeholders is not supported by the VSO legislation, cooperatives with a social purpose have in practice independently developed both formal and informal means to include stakeholders in the decision-making processes. One example of stimulating formal stakeholder participation is the creation of a specific category of shares for certain types of stakeholders. The opportunity to purchase membership rights/shares enhances the incentives for stakeholders to participate in the decision-making processes, either directly by: (i) exercising voting rights in the general assembly, often subjected to a regulated cap, i.e. 10%; and indirectly by (ii) electing members-representatives in the board of directors. We also found examples of informal stakeholder participation in the decision-making processes in the examined case studies. Taking into consideration the existing legal framework, the theoretical framework regarding governance, and the criticism regarding the application of stakeholder theory to the governance of social enterprises, there are additional issues that future research can address. What needs to be further examined is how formal and informal participation of stakeholders can improve: (i) the accountability of the decision-making organs within social enterprises; and (ii) the transparency of the decisions towards stakeholders and the society. The empirical findings of this article indicate that employees and stakeholders have better and direct access to information in the cooperatives with a social purpose which are keen to encourage formal participation of stakeholders and employees in the decision-making.