3.1.4.4 Incentives for formal versus informal participation of employees and stakeholders

In this Sub-section we will compare: (i) the incentives that stimulate employees and stakeholders to acquire membership rights/shares, which provide them formal access to decision-making processes; with (ii) the incentives that stimulate other categories of stakeholders to participate indirectly to decision-making using informal processes and means of communication. With this part we aim to contribute to the theoretical discussion that was initiated by Campi et al.1

Employees and stakeholders can formally participate in the decision-making processes of social enterprises by exercising their voting rights at the general assembly and by electing representatives at the board of directors. The provision of membership rights/shares to employees is a legal requirement under the VSO legal regime that applies to cooperatives with a social purpose. It can be implemented by including this right in the AoA. A variation is to introduce a special type of shares for employees. The VSO legal regime does not require the provision of membership rights/shares to other type of stakeholders like clients, supporters and beneficiaries. Although not legally required, a VSO can provide membership rights/shares to other type of stakeholders. Some have formalised this by creating a special category of shares for stakeholders, e.g. CORE. The existence of provisions regarding membership rights/shares to both employees and stakeholders in the AoA generates an enabling environment for employee and stakeholders’ participation. At CORE, all students-volunteers who operate the cooperative have purchased Type C shares (Interview with YG and G, 13 November 2014). They perceive the possession of membership rights/shares as a means to acquire insights as to how the organisation functions and how the legal framework can be used to safeguard their interests (which are of a non-financial character) in decision-making (Interview with YG and G,13 November 2014). In respect of the purchase of one share of €100, a student-volunteer mentions ‘I immediately filled in the information form to become a shareholder Type C (…)’ (Interview with G, 13 November 2014). The underlying idea behind CORE’s success and development is that participation, membership/shareholdership and the communication of the social mission, will on a continuous basis generate new projects with a social purpose and new clients (who will also become a member/shareholder) (Interview with SJ, 16 February 2015). CORE is a for-profit cooperative with a social purpose, which aims to bridge entrepreneurship with education. Profits cannot be distributed to the cooperatives’ members/shareholders. They are rather reinvested in the cooperatives’ social purpose and growth in the form of new projects. A part of CORE’s mission is the promotion of social and cooperative entrepreneurship for the fulfilment of social objectives, which ultimately leads to the execution of projects and to decision-making processes, which is influenced substantially by values of equality, democracy and participation. Thus, students- volunteers are incentivised to participate and become members/shareholders. Simultaneously, they are educated and they acquire professional experience in industrial engineering aimed at promoting rational energy use, sustainable mobility and social entrepreneurship. They also build up a strong network, which allows them to communicate and promote further the idea of sustainable energy use in all aspects of daily life and social entrepreneurship (Interview with YG and G, 13 November 2014).

Clients and stakeholders also purchase CORE shares to support the cooperative financially and to have access to the decision-making processes by voting. A Type B member/shareholder, who is an academic and a scientist, mentions ‘I’m not interested in getting that money back, so for me that money is gone, but it is well-spent’ (Interview with JW, 13 November 2014). He believes that investing in human capital, i.e. students-volunteers who work together with stakeholders and members/shareholders on projects concerning rational energy use in mobility, is very valuable, especially because in the current business landscape, the major business players have not yet developed solutions in this area (Interview with JW, 13 November 2014). Another example is the Belgian company Pantarein, also a Type B member/shareholder of CORE. Pantarein designs the construction and operation of factory plants. In collaboration with CORE students-volunteers, they advise on energy optimisation for the consumption of water in factory plants such as textile factories (Interview with FM and PO, 16 February 2015). Even though the representatives of Pantarein are invited to participate in all the decision-making processes of CORE, they have only been engaged in a few of them. They feel that they contribute to the fulfilment of the social mission by influencing the decision-making processes, directly or indirectly, by sending emails and by reporting on existing and new projects to the board of directors (Interview with FM and PO, 16 February 2015).

If a cooperative with a social purpose does not offer to employees and/or to other stakeholders the chance to buy membership rights/shares, they thus have no formal power to participate in the decision-making processes. In that situation, the only way of exercising influence is through informal participation. Interests, suggestions and ideas communicated to managers, directors and to self-selected representatives. The contribution by employees and stakeholders to the fulfilment of the social purpose is in that situation restricted to the operational side of the cooperative while decisions and information are communicated indirectly, and only to those parties that need to be involved. At Microstart, employees are sceptical about whether they would purchase shares or acquire membership rights/shares even if the opportunity of acquiring membership rights/shares was offered to them (Interview with CO, 16 June 2015). Personal interests and motivations generally have not yet been aligned with the fulfilment of the social purpose that the cooperative serves. An employee mentions:

Even though the employees trust the decisions that are taken by the board of directors and the general assembly, they feel the urge to participate in a more direct way in the decision-making processes.

It is perceived by Microstart’s employees that if Microstart would provide membership rights/shares to employees and clients, the mix of such different types of members/shareholders could improve the decision-making processes because the operational side of the social enterprise would then be formally represented. Furthermore, our interview data suggest that informal communication between the board, management, employees and stakeholders has generated the impression that there is asymmetry of information between the Microstart branches in Brussels and outside Brussels.

Finally, our interview data indicate that at Volkshuisvesting, employees and stakeholders have no urge to be involved in the cooperatives’ affairs nor are they actually aware of the opportunities that exist to informally participate in the decision-making processes (Interview with MP and S, 18 February 2015).