The tension between social enterprises and municipalities

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1 The tension between social enterprises and municipalities Daphne Bressers Thesis research master in public administration and organizational science University of Utrecht Prof. Dr. Mark van Twist Prof. Dr. Steven Van de Walle 1

2 Foreword Introduction Background Statement of the research/research problem Objective of the research Scope of the research Research questions Conceptual and theoretical framework Social entrepreneurship The concept of social entrepreneurship Social entrepreneurs in the field of labor History and development of social entrepreneurship The system of labor participation How the system is financed How the system is organized Current and future changes in the social system Logics Interacting logics What are logics? Logic of municipalities Logic of social entrepreneurs The intersection of municipalities and social entrepreneurs Where do social entrepreneurs and municipalities meet? Model of interaction The model of interaction between social entrepreneurs and municipalities The potential tension between social entrepreneurs and municipalities Conclusion Methods Research setting & methods Competing logics Qualitative research design Research method Context of the research

3 3.2 Background interviews and information Background research concerning the social system Background conversations Cases Case selection Case description Data analysis Coding process Reliability and validity Results Economic area Where do social entrepreneurs and municipalities meet in economic terms? Logics of municipalities Logics of social entrepreneurs The tension between municipalities and SE in economic terms Legal area Where do social entrepreneurs and municipalities meet in legal terms? Logics of municipalities Logic of social entrepreneurs The tension between municipalities and SE in legal terms Communicative area Where do social entrepreneurs and municipalities meet in communicative terms? Logic of municipalities Logic of social entrepreneurs The tension between municipalities and SE in communicative terms Conclusion: do social entrepreneurs and civil servants experience tension? Conclusion and Discussion Reflections & limitations Future research

4 Foreword In January 2013 I started up my own company. With this company we sell ice-cream on festivals, markets and events in Rotterdam. To transport the ice-cream and the freezer we bought a Vespacar P2. This vehicle is highly unique on the Dutch roads and this led directly to problems in relation to the government. After we bought the car we contacted the state service for the Dutch Roads (RDW) to check whether the car needed an examination before it could enter the road. One technical advisor of RDW told us that the vehicle needed an examination because due to the size of the vehicle, the vehicle belongs the administrative category of cars. Another technical advisor told us that the vehicle did not need an examination, due to the engine capacity the vehicle was clearly a moped. Eventually, it did not become clear whether the vehicle is car or a moped and to what administrative category the vehicle belongs. After this, we sought for a covered parking place. In the centre of Rotterdam there were, according to the website of the municipality, many free parking places owned by the municipality. One can apply for a parking place by filling in an online application form. In one of the boxes it was required to fill in the sign of the car. For the Vespacar we did only have an insurance number, but not an official sign of the Dutch state. We called the municipality to see if we could fill in a separate form. Several civil servants discussed the issue and after five telephone calls they informed us that it was not possible to place a Vespacar in the garage because the parking places are only meant for car. This experience made me think about social enterprises, they are comparable to Vespacars. They are not a typical BV and not a typical foundation. They work in a hybrid world, in which economic and social values are combined. They are unique and do therefore not fit into the administrative systems of government and this could cause tension between government and entrepreneurs. Due to the existence of Vespacar from the year 1975 I also understand the existence of the controlling and regulating government. The Vespacar was eventually not examined by the RDW and therefore we now do not have a handbrake and the wipers do not always work. This could cause danger to the safety of ourselves and of other people. The government has an important role to protect the safety of all citizens in the Netherlands. In this research it was interesting to look more closely at the points of view of entrepreneurs and civil servants. 4

5 In the past half year I have been an intern at the Ministry of the Interior and Kingdom Relations and at the same time I started my own company. This was an interesting experience that together with the research about the tension between social entrepreneurs and municipalities taught me much about the functioning of public administration. In this research I was able to speak to many interesting people. I want to thank all the respondents that cooperated in this research. In addition I also want to thank the team citizenship at the Ministry of the Interior and Kingdom Relations for the time to conduct the research and for the feedback that was given on the research. I want to thank Prof. Dr. Mark van Twist for the support and the feedback during the entire research process. Also, I want to thank Prof. Dr. Steven Van de Walle for the feedback during the whole thesis trajectory. Finally, I want to thank my family for the support during my entire study career. 5

6 1. Introduction 1.1 Background ICT companies that work with autistic people, restaurants that work with mentally disabled people, a brewery that works with psychiatric patients, a call center that works with blind people, a taxi service that works with ex-prisoners, a supermarket that works with physically disabled people, a bike repair service that works with patients in mental health care, art producers that work with long-term unemployed people, a fashion company that works with a group of multicultural unemployed women, cafes working with mentally disabled people, a bakery that works with people with a physical handicaps and production companies that work with deaf people. These companies are only a few examples out of the many entrepreneurial initiatives using the qualities of people with a certain distance to the regular labor market in their production processes. The employees learn a job in a regular and commercial company in which they are needed and of which the products and services are actually sold in a competitive market. An interesting example is Van Hulley, a company working with a group of unemployed women from different ethnic backgrounds that manufactures underwear from old blouses. These women learn a craft, learn the Dutch language, learn the basic principles required to maintain a job such as being on time, and produce a product that is sold in a commercial market. Another interesting example is Specialisterren, an ICT company that works with autistic people. These people receive certified education, learn how to function in an everyday company and perform tasks for companies such as the Rabobank and Hema. These enterprises thus combine social and economic goals and are known as social enterprises. Although social entrepreneurship is not a new phenomenon (Bornstein & Davis, 2010), the development of social entrepreneurs can no longer be ignored in economic and social terms (Ridley- Duff & Bull, 2011; Bridge et al., 2009; Bonanni et al., 2012; Sampon, 2011; OECD, 1999), however, the academic literature in the field of social entrepreneurship is still limited (Nicholls, 2008; Mair & Mari, 2005). Social entrepreneurship is not stimulated by the government in a top-down manner, but is initiated bottom-up (Bornstein & Davis, 2010; Sampson, 2011). Entrepreneurs such as De Prael, a brewery that hires people with a background of receiving psychiatric treatment; Broodje Apart, a restaurant that hires mentally disabled people; or De Verbinding, a company that hires deaf people all these organizations are concerning themselves with the labor participation of people with a so-called distance to the labor market. Such a bottom-up development is interesting in times in which the government tries to top-down stimulate the labor participation of people with a distance to the labor market (Letter to the cabinet, 27 th of June 2012). Social enterprises can be a solution for creating job opportunities for people with a distance to the labor market. 6

7 In a recent cabinet proposal, the Dutch cabinet designed a quota for the labor participation of people with a distance to the labor market. In the upcoming ten years, jobs will be created for people with a disability of these jobs will be created in commercial companies and jobs at the government. In addition, different laws on the labor participation of disabled people will be integrated into one law, the so-called law on participation (Letter to the cabinet, 27 th of June 2013). This cabinet proposal will be in the second chamber by the end of 2013, and when the new law will be accepted it will commence at the 1 st of January The government in the Netherlands thus wants to stimulate the labor participation of disabled people in regular companies. The government tries to stimulate these people to participate in society, to earn money and to develop their skills. In 2011, the Dutch Ministry of Social Affairs and Employment commissioned a research conducted by TNO in which the barriers between social entrepreneurs in the field of labor experience and the government were indicated. Barriers such as non-existing legal forms for these entrepreneurs, difficulties in gaining permits, difficulties receiving subsidies, a difficult cooperation with public institutions such as the UVW and the political effect on the work of social entrepreneurs. In addition, TNO (2011) indicated that the government can also support social entrepreneurs by providing them information, giving out subsidies, creating a network and (politically) supporting the organization. It is interesting to notice that the government wants to stimulate the participation of people with a distance to the labor market, but on the other hand social enterprises that are initiated bottom-up still experience barriers in contact to government. Several authors point at the importance of the role of government in the succession of social enterprises (Korosec & Berman, 2006 & Shirir & Lerner, 2006; Hoogendoorn, 2011; Van Twist et al. 2012; Sampson, 2011), the barriers can cause tension that therefore can negatively influence the development of social enterprises. The tension between social entrepreneurs and municipalities can be explained by the existence of competing logics. Social entrepreneurs and government act from different logics which in a moment of interaction come together. Municipalities act from the logics of the democracy (responsive government) the law (decent government) and efficiency and effectiveness (performing government) (Bovens et al.; 2012; Dryzak, J.S, 2001; Van der Wal, 2010). On the other hand, social entrepreneurs act from an entrepreneurial logic (running a company; economic goals), a social welfare-logic (creating social impact) and public sector logic (working in the social domain) (Nicholls, 2006; Bornstein &Davis, 2010; Dees, 2007). The different logics come together in for example the application for a subsidy and can cause tension, for example between the universal law of municipalities and the social entrepreneurs that perhaps do not fit into the policy- and regulation categories of the municipality. As mentioned before, several authors point at the importance of governance in the development of social entrepreneurship (Korosec & Berman, 2006; Sharir & Lerner, 2006; Hoogendoorn, 2011; Van Twist et al., 2012; Sampson; 2011), but no research has been conducted about the tension between social enterprises and municipalities. With 22 interviews with civil servants and social entrepreneurs this research will investigate whether social entrepreneurs and municipalities experience tension, and if so, whether this tension can be explained by the existence of different logics. It will do so by answering the following research question: 7

8 Do social entrepreneurs experience tension in contact with municipalities, and if so, how can the different logics explain this tension? 1.2 Statement of the research/research problem Due to the functioning of social entrepreneurs in the public domain, social entrepreneurs are more often confronted with government than commercial entrepreneurs. Social entrepreneurs act in the same area as the government, and government has indicated many rules to ensure the public values (Bozeman, 1993; Moore, 2013; Du Gay, 2005) that are connected to the social component of social entrepreneurs. Social enterprises operate in the social domain, but are not initiated by the government. They give content to the domain according to their own vision or passion, whether the idea would fit in the current and regular government policy is not always important. Social entrepreneurs often place themselves outside the standard procedures (Schulz et al., 2012). New companies in the public domain could raise all sorts of questions for the government. What if these companies do not fit into the standard rules and procedures (Rob, 2012; WRR, 2012)? What if a company works with public money? Do we need additional certificates and permits? What if a company is politically sensitive? (Schultz et al., 2012). And there are many other questions. The municipalities have to make decisions when the social enterprises decide to approach government. All starting social enterprises will meet the regulating, financing or producing government at one point in time (Schulz et al., 2012). Regulating institutions have a range of instruments to steer the behavior of subordinate groups. Often the distinction is used between law and procedures, financial steering and softer forms of steering such as information, convincing or seducing other parties to do something (Majone, 1989; Bemelmans-Vicet et al., 1998; Bakker en van Waarden 1999). These three areas of law and procedures, finance and organizational suit the areas that non-academic research of umbrella organizations of social entrepreneurs indicated as the three areas in which government and social entrepreneurs meet (Greenwish, 2012; Social Entreprise NL, 2012): Financial area (e.g. start-up capital, subsidy, housing) Legal- procedural area (e.g. Law, permissions, certificates) Communication area (e.g. Information, facilitating, advising, political support) In these three areas, the logic of government organizations meets the logic of the social entrepreneurs. Hannan (2007) defines logic in the domain of organizations as follows: socially constructed rules, norms and beliefs constituting field membership, role identities and patterns of appropriate conduct that are transmitted through regulatory, normative and cognitive processes (p.12). Logics are thus more than rationalities and also imply the context of a person. At a moment of interaction the logic of municipality meets the logic of social entrepreneurs and when the logics compete this could lead to tension. 1.3 Objective of the research As mentioned before, the development of social entrepreneurs can no longer be ignored (Ridley- Duff & Bull, 2011; Bornstein & Davis, 2010, Bridge et al., 2009; Bonanni et al., 2012; Sampson, 2011; OECD, 1999). More and more citizens no longer wait until the 8

9 government will solve the problem, but will start their own initiatives (Nicholls, 2006; Bornstein & Davis, 2010). Government cannot solve every problem. Hoogendoorn (2011) argues: governments are increasingly focusing on social entrepreneurs as a vehicle to address a range of social, ecological, and economic problems, such as generation employment for those with a distance to the labor market, providing social cohesion, regenerating deprived inner city areas, and recycling (p. 26). The importance of social enterprises is expected to increase in the Netherlands (Nota doedemocratie, 2013; WRR; 2012; RoB, 2012). Therefore, this research has three main objectives: To give a better insight in the dealing of the government with new (bottom-up) initiatives in the public domain; Government policy has an impact on the success of a social enterprise (Korosec & Berman, 2006; Sharir & Lerner, 2006), therefore, the possible tension that can be found in the relation between social entrepreneurs and government needs to be investigated; To add to the limited academic literature in the field of social entrepreneurship. 1.4 Scope of the research In this research I will examine the conflicting logics between social entrepreneurs and municipalities. Both parties act in the social domain, but act according to another set of logics. Social entrepreneurs do appear in all sectors, like health care and (green) energy. The field of work seems highly relevant to investigate because the social entrepreneurs in this field work with employees that are concerned with governmental laws and payments (e.g WWB, Wajong). The social entrepreneurs in the field of labor thus have a clear tie to the government which requires them in most cases to interact with government. In addition the field of labor is interesting in current times of budget cuts and the aforementioned current developments in the law on participation. The system is changing which could have an effect on the interaction between the two parties. The governmental level of municipalities is appropriate to investigate in this research because social entrepreneurs act within one municipality and meet at this level the government in the legal, economic and communicative terms. 1.5 Research questions In this research I will answer the following research question: Do social entrepreneurs experience tension in contact with municipalities, and if so, how can the different logics explain this tension? Sub research questions: When and why do government and social entrepreneurs meet? How do social entrepreneurs and government relate in financial/economic terms? What underlying logics can be indicated? 9

10 How do social entrepreneurs and government relate in legal- procedural terms? What underlying logics can be indicated? How do social entrepreneurs and government relate in communicative terms? What underlying logics can be indicated? Do social entrepreneurs and municipalities experience tension? How can the tension between municipalities and social entrepreneurs be explained? 10

11 2. Conceptual and theoretical framework 2.1 Social entrepreneurship The concept of social entrepreneurship In 1999, the OECD already pointed at the importance of social enterprises: the past few years have witnessed the emergence and expansion of social enterprises (SE). This new type of enterprise and its political, economical and financial importance can no longer be underestimated (p. 8). Other authors also point out the importance of social entrepreneurship to make positive contributions to the economy in terms of innovation, productivity and growth (Carree and Thurik, 2010; Hoogendoorn, 2011). In the literature about social enterprises there are many definitions of social entrepreneurship. Some argue that there is no clear definition of the domain (Zahra et al., 2009; Mort et al., 2002). In general, social enterprises are concerned with three P s, namely: People, Planet (environment/durability) and Prosperity (economy and financially) (Brabander et al., 2009). Social entrepreneurs appear in all different sectors, such as work reintegration, health care, energy, safety and sports. An example of a social enterprise is Granny s finest. The founder of the company visited his grandma and noticed that several old women in the care centre were making scarves. One of the woman was making a scarf without a purpose; no one would eventually actually wear the scarf. The founder decided to start a company in which fashionable scarves are manufactured by grandmas. The scarves are sold in a store in Rotterdam, in a web shop and were also shown in the Amsterdam fashion week. Each Wednesday these grandmas come together to manufacture the scares that are designed by starting designers. These grandmas come together, meet new people and therefore are less lonely. In return the grandma s are on a regular basis invited to go on a trip. This social enterprise thus clearly combines a several elements in one business model. This wide range of social enterprises makes it difficult to define the concept and to define a common denominator in different countries. In general, social enterprises are businesses that are bottom-up initiated and combine a social goal with an economic goal. Alter (2007) gives a useful definition and defines social enterprises as: Any business venture created for a social purpose- mitigating/ reducing a social problem or market failure, and to generate social value while operating with the financial discipline, innovation and determination of a private actor. (p. 12). This definition will be used in this research. I would like to add to this definition that social enterprises do not only solve market problems, but also generate social values where government failures can be found (Bozeman, 1983). Social entrepreneurs in general place the social impact/value above the economic value: social impact first (Bornstein & Davis, 2010). The social value of social entrepreneurs can become visible in the output (organic clothes that do not harm the environment), or the process (hiring disabled people to work in a restaurant), or both (hiring psychiatric patients to become a taxi driver in an electric car). Van 11

12 Twist et al.(2012) point at the differences between the concepts of social entrepreneur, social enterprise and social entrepreneurship. Generally, an entrepreneur is the person that is involved in the activity, entrepreneurship is the activity and an enterprise is the organization. These three concepts are not necessarily the same; an entrepreneur can act for example without an enterprise. Social entrepreneurs highly differ in the amount of money they receive from the government for their company (Sireau, 2011, Alter, 2006; Bornstein & Davis, 2010; Krosenbrink, 201; Ridley- Duff & Bull, 2011). Some entrepreneurs are fully independent of government support, while others rely on subsidies. In chapter 2.2 I will elaborate more on these government provisions. Social entrepreneurs can exist in different legal forms. A social enterprise can be a foundation, but also be a BV. In the Netherlands social enterprises do not have a special legal form. In the Netherlands social entrepreneurs often have a BV and a foundation (TNO, 2011). Roughly stated with the foundation (Ambi status) the company can accept money/gifts and with the BV one can earn money. In England and Italy there are special legal forms for social firms, and in Germany there is a different tax box for social entrepreneurs (Hoogendoorn, 2011). Social entrepreneurship is fundamentally different than corporate social responsibility. Large commercial companies can also have social aims, in which they support for example local communities in areas in which they operate. These companies have a social aim next to their commercial aim, but the primarily focus stays at the commercial side of the business (Bornstein, 2010). The social goal is in social enterprises the primary focus, this in contrast to commercial businesses that have a primary focus on generating economic value. In a social enterprise the founder or shareholders are not the only ones who profit from the value that is created in the enterprise. It also contributes to a bigger group in society or society as a whole. An example is brewery The Prael in Amsterdam, where people with a psychiatric background can work. In this case not only the owner of the brewery profits from the company, but also the employees who are able to work and perhaps could use this experience for a job in the future. Social entrepreneurship is also different from civil initiatives (Alter, 2007; Mair & Marti, 2006; Robberts & Woods, 2005; Granados et al., 2011). A civil initiative could for example be when citizens living in the same street together decide to protect their street. These citizens could make appointments about on what day which person in the street will guard and protect the environment and properties of the neighborhood. This initiative differs from social entrepreneurship because it does not necessarily have a business model. In social enterprises there is money involved. Finally, they differ from public-private companies, because those are initiated by the government. Social entrepreneurs are bottom-up initiated Social entrepreneurs in the field of labor In this thesis I will focus on social entrepreneurs in the field of labour. Social enterprises concerned with the labour market are also known as social firms (Nicholls, 2006). The (social) value of these entrepreneurs can be found in the production process or services that an entrepreneur offers through the involvement of people with a distance to the labour market. People can have all sorts of distances to the labour market, but the similarity between these people is that in most cases they are unable or have difficulties in finding a regular job in a 12

13 regular company. This concerns a wide range of people, for example people that have been detained, people that have been unemployed for a long time, people with a mental or physical disability, and blind or deaf people. The social entrepreneurs start up a company in which the employees can learn a craft, learn to be social in contact with others and have the chance to fully participate and have value for the society. Among the social entrepreneurs in the field of labour there are many differences. The percentage of people that work in these companies with a distance to the labour market can vary between 25% - 75% (Smit et al., 2008). In addition these companies can differ in the employees they hire or are concerned with. I argue that the social enterprises concerned with the employment of people with a distance to the labour market can be divided into two categories. Kevin Robbie (2005) indicated the following spectrum that clearly points at these two categories: Source: Kevin Robbie (2005) p. 7. On the right side of the spectrum social entrepreneurs can be found that are concerned with people that due to mental and physical disabilities in different gradations cannot fully work independently. In most cases these people have a day care program and there is a focus on care and accompaniment. A social entrepreneur can provide in the day care activities of these employees. On the left side of the spectrum social entrepreneurs can be found that are concerned with people that due to all sorts of causes experience a distance to the labour market. Some people are for example unemployed for a long time, others are blind or deaf. The difference with the social entrepreneurs on the right side of the spectrum is that the employees do not need day care and therefore can work relatively more independently. An interesting enterprise on the right side of the spectrum is the restaurant Broodje apart. The founder of the enterprise was involved in a car accident. After her recovery she was not able to find a job. With the money she received as a compensation for the accident she decided to start up her own company in which each person gets the opportunity to work. Broodje apart is now a well know restaurant in Schijndel. The restaurant works with a diverse group of people.most of the employees have a mental or physical disability. The company provides in education, work experience and produces qualitative food for a commercial price. The company has extended in the last couple of years and now also has a gift shop in which the employees can develop a large diversity of skills. Most employees work on basis of daycare and the guidance in the company is paid with the PGB of the employees. An interesting example of a company on the left side of the spectrum is Taxi- E. The goal of the company is to maximize the comfort of the customer and to minimize the impact on the environment. The company has only electric cars. In addition the company has an aim to have a highly social policy with regard to employees. The company hires for example ex-prisoners who due to their background have difficulties finding a job. Taxi-E gives these employees the change to reintegrate in the society. 13

14 The group of employees in a company influences many aspects and structures of the business. In addition this also influences the contact with different governmental organizations. People on the right side of the spectrum often also need extra health care support. These persons are often concerned with arrangements of AWBZ (PGB) or Wajong. People close to the left side of the spectrum are more able to work independently and are often concerned with the arrangements of WW/WWB/Wajong/WSW. I will elaborate more on the structure of the social laws and social system in chapter 2.2. Although social entrepreneurs also have a mix of groups they work with, in this research I chose social entrepreneurs with a focus on the left side of the spectrum. I will define these entrepreneurs as follows: Social entrepreneurs that work with a group of employees that has due to all sorts of reasons a distance to the labour market, but does not need health care support History and development of social entrepreneurship Although social entrepreneurship recently receives much attention, it is not a new phenomenon. Examples of Florance Nightingale in the ninetieth century who build the first professional school for nurses and revolutionized hospital constructions show that entrepreneurship in the public domain is not new (Bornstein & Davis, 2010). Still with the changing role of the government in the 80 s, the recognition that the government is not able to solve every problem and the rising level of education accelerated this development (Bornstein & Davis, 2010; Hoogendoorn, 2011). Hoogendoorn (2011) points at the fact that social entrepreneurship is most prevalent in high income countries. The OECD (1999) argues that the development of social entrepreneurship can no longer be ignored for the phenomenon is growing throughout Europe. In the recent decade new support organizations for social entrepreneurs came up, such as the Skoll foundation and the Schwab foundation. Research centers and teaching programs for social entrepreneurs have been established, including universities as Harvard University (the social enterprise initiative at the Harvard Business School) and Oxford (the Skoll centre for social entrepreneurship). In addition the academic attention for social entrepreneurship has risen and resulted in articles and special issues in for example the Journal of World Business (Hoogendoorn, 2011). In the Netherlands the university Utrecht School of public administration and organizational science started courses on entrepreneurship and several platforms for social entrepreneurs have been established, such as the organization Social Enterprise NL. The development of social entrepreneurship is a part of a larger development, in which citizens seem to take more initiatives into their own hands (Bornstein & Davis, 2010). Van Twist et al. (2009) talk about the breach of trust of citizens towards the ability of politicians to solve all the economic, societal and individual problems. People do not longer wait for government to solve their problems, but come up with new solutions (Sampson, 2011). Ted van de Wijdeven (2012) recently confirmed this development in the book Doe Democractie (Do-democracy). In political terms the subject of civil initiatives and citizenship received much attention in the United Kingdom with the line of argument of the Big Society, initiated by Cameron who was inspired by Philip Blond. In short Philip Blond argued that due to the 14

15 economic, democratic and social crisis in the United Kingdom, neither government nor the market can solve all problems. Citizens have to take initiative and change their environment (Blond, 2010). Also, in Scandinavia the development received much attention where the collaboration between government and society is emphasized (Siisianen & Blom, 2009). In the Netherlands this development receives attention with the growing number of support organizations for social entrepreneurship (e.g. Greenwish, Kracht in Nederland) and the recent cabinet nota of the do democracy. 2.2 The system of labor participation Social entrepreneurs in the field of labor will be confronted with employees that due to their distance to the regular labour markets in most cases are connected to a particular law. The law these employees are concerned with does also determine the organization a social entrepreneur has to contact with. The social system is thus an important part of the context of social enterprises and will therefore be explained in this chapter How the system is financed The social system in the Netherlands provides each person a livelihood. This implies that the government provides an income and in some cases a compensation for high healthcare costs for each person that is unable to independently earn a sufficient income. The system is financed either by national/employee insurances or money from the national state and thus from general taxes. The national insurances are paid by each person in the Netherlands through taxes a payment or pension. Employee insurances are paid by employees and are automatically retracted form loan. Social provisions take care of the so called safety net. Social provisions are paid form the general taxes (Janssen, 2012). Insurances National insurances AOW AKW ANW AWBZ TOG WMO Social system Employee insurances WW ZW WIA (WAO) (Source: Janssen, 2012) Social provision WWB Wajong TW Wsw 15

16 2.2.2 How the system is organized Social entrepreneurs in the field of labor have to work with the social system. Their employees are related to different laws and therefore are also connected to different organizations. Social entrepreneurs have to contact the municipality, UWV and CIZ. Different laws have been assigned to different public organizations. The executing part of the department of social affairs of the municipality is popularly called the sociale dienst and CIZ is called the zorg kantoor. Organization Municipalities UVW Health insurance that executes the law Law WWB WW ZVW WSW ZW AWBZ WMO WIA TW Wajong Wazo Suborganization Social service UWV (werkbedrijf) Care office (sociale dienst)/ (zorgkantoor), Department of Indication for laws social affairs by CIZ Focus Work/ income Work/ income Healthcare/ care (Source: Janssen, 2012) Municipalities Municipalities are concerned with the laws of WWB, WMO, and WSW (Janssen, 2012). The WWB (Wet Werk en Bijstand, law of employability and assistance) provides an income to people that, due to for example long term un-employability, are not able to independently earn a minimal income. If a person worked for a couple of years, this person will first receive money from the law of WW (UWV). In general for each year of work one receives one month of WW. After this period one is concerned with WWB. In addition municipalities are assigned to execute the WSW. The WSW (Wet Sociale werk voorziening, law on social workplaces) arranges special workplaces for those who can due to psychological/physical disabilities not function in regular labor process. The municipalities have to create an adjusted workplace for people that cannot work in a regular company and that are assigned to the WSW. Municipalities often have (sheltered) social workplaces to execute the WSW that are often concerned with assembly work and landscaping. The central government gives according to the law on social workplaces (WSW), budgets to municipalities to support these social workplaces. The municipality partly subsidizes the social workplaces, and partly these social workplaces are financed by the revenues of the workplace. Municipalities are also concerned with the execution of the WMO. The Law of WMO (Wet Maatschappelijke Ondersteuning, law social support) determines that municipalities have to support citizens participating in society through provisions such as wheelchairs and adjustments of houses. This law tries to stimulate the participation of people in society. 16

17 UWV UWV, the Dutch institute for employee insurances (Uitvoeringsinstituut werknemersverzekeringen) is an independent administrative office (ZBO) of the ministry of social affairs and employment that is organized on a regional level. UWV is a central point for employers and employees and tries to find a match between these two groups. UWV has the tasks to stimulate and help unemployed people to find a job. UWV provides re-integration trajectories and education to prepare employees for a future job. UWV is assigned to execute the laws WW, ZW, WIA, TW, WIA, Wajong, Wazo (Janssen, 2012). For this research only the law of WW, ZW, WIA and Wajong are relevant. The law WW (Werkloosheid Wet, law of unemployability) ensures a minimal income to unemployed people. The durance and level of the payment depends on the years of work of an employee. In general for each year of work, one receives one month of income. In addition the UWV is concerned with the ZW. The law ZW (Ziekte wet, law on illness) provides an income for example for (ill) unemployed people and people with a temporary job. In general employers have to pay for a maximum of two years for their employees. After this period the state will pay for these employees. In addition the UWV takes care of the payment of the Wajong. The law Wajong (Wet werk en arbeidsondersteuning jong gehandicapten, law of employability and employment support for young disabled people) provides an income to people that are or did become disabled below the age of 17 and therefore not able to have a full time job or cannot work in regular circumstances. The UWV is also assigned to arrange the law WIA. The law WIA (Before: WAO, Wet werk en Inkomen naar Arbeids vermogen, law of employability and income relatively to ability) provides an income to people who are due to a illness or disability unemployed for a period longer than two year. CIZ CIZ (centre for indication of health care) gives indications and controls the requests for the AWBZ (Algemene Wet Bijzondere Ziekenkosten, Law of special health care). This insurance supports high costs of health care that regular insurances companies would not support. This law provides for example compensation in costs of a long term stay in health care institutions. The guidelines for the request are formulated by the ministry of health, welfare and sports. The AWBZ provides a compensation for the costs for extra health care. This compensation can be in kind (natura) or in money (PGB). If a client chooses for compensation in kind, this person can for example go to a specialized health centre. If a client chooses for money and a personal budget (persoons gebonden budget) one can individually buy care. The CIZ can give indications for personal care, nursing, accompaniment, treatment, stay in an institution and a short term stay. Also the CIZ can give an indication for day care. In this day care people can for example work and learn. (www.ciz.nl) Current and future changes in the social system In the upcoming two years several changes have been planned in the system. More laws will be transferred to the municipalities. This process of decentralization has the aim to make the laws integrated and more efficient. The process of decentralization brings along three major changes. 17

18 First the AWBZ that first was the task of care offices will be integrated into the WMO and thus becomes a task of the municipalities. The WMO will be adjusted and more people will be assigned to the WMO instead of the AWBZ. The PGB will still exist but due to the relatively smaller budgets the PGB it is expected that the PGB budget will be less. Secondly, the GGZ care of youth will become a task of municipalities. Thirdly, the municipality has to execute the new law of participation. This law is extended and will be discussed in the second chamber in the end of With the approval of this proposal the law Wajong will be a task of the municipality. In addition the municipalities are responsible for creating new jobs in the public and private sector for people with a distance to the labor market. In the beginning of 2013 a 5% quota was introduced for each company with more than 25 employees. In the proposal that will be in the second chamber by the end of 2013 it is proposed to create new jobs up to The municipality thus has the integrated task of stimulating people with a distance to the labor market to work (Source: Kamerbrief actualisering brief over decentralisaties op het terrein van ondersteuning participatie en Jeugd, ). With the decentralization the laws that concern people with a disability will be in the hands of one organization: the municipality. First a person was obliged to contact the municipality/uwv for an income and CIZ/ Care offices for the compensation of the costs of health care. Still with the decentralization the budgets will increase significantly. Major budgets cuts have to be realized in for example the WSW and Wajong Logics Tension between two parties can be understood by competing logics of both parties. If one party for example has a particular kind of resources, this party has different kinds of logics to open up these resources to another party. If a social entrepreneur for example asks for a permit at a municipality, the municipality considers for example trough the logic of the law and the democratic logic whether they give the permit. If the democratic and political risks are too high the permit is probably not granted. The logic in the interaction thus determines the result of the interaction. I argue that the tension between social entrepreneurs and municipalities can thus be explained by looking closely at the different logics that prevail in moments of interaction Interacting logics All actors in the public domain have to deal with a diversity of logics, reagardless of their position in the public domain (Mayntz & Scharpf, 1995; Van Gestel et al., 2009). Nicolette van Gestel (2010) argues that especially in sectors like education, the social security system or health care, there are many interests from different actors and these actors act from a different set of logics. The different logics can cause tension between two parties. WRR (2004) and Hemerijck & Helderman (1995) also point at tension between the logics of institutional and provision organizations. Due to the complexity of problems government cannot act according to just one logic (Aberbach & Christensen, 2009; Mohoney et al., 2009). The government acts according to the legal, efficient & effective (economic) and political logics (Clemens & Cook, 1999; Pandey & Wright, 2006; Bovens et al., 2012). Also entrepreneurs do not act from one logic, and 18

19 function in a hybrid world (Alter, 2006, Bornstein, 2010) in which an entrepreneurial, socialwelfare and public sector logic play a role (Peach & Chowdhury, 2012). In the interaction between social entrepreneurs and municipalities both act from their own logic that determines the decisions and acts of the both parties. These logics can explain the type of interaction between social entrepreneurs and municipalities What are logics? In the social sciences there are, in contrast to for example math, no unified tools or methodologies for building a theory or argument and thus come to a universal logic. According to Hannan et al. (2007) the essential problem lies in the use of language. Language often leaves room for interpretation and nuances. Hannan et al. (2007) point at the difference between extensionally and intentional logic. The extensionally logic is often described as the classical or first order logic. An often quoted example within the extensionally logic is: all men are moral; Socrates is a man; Socrates is moral. The first order logic must impose two important requirements. First, the theoretical statement must be universal and does not admit any exception. In addition the concepts used must be universal. Extensionality logic simplifies the logic but is also makes it more abstract and rough. Hannan et al. (2007) points to the fact that in the social sciences statements are often less uniform and they can allow exceptions. Modern intentional logic leaves space for nuances and exceptions. In society there are all sorts of domains in which different logics prevail. The main role of logic in science is to clarify the notion of logical interference or a sound argument. The modern concept of logic points at the arguments that suit in the context of the domain. Reay & Hinings (2013) point at this use of the concept of logics and point at the shared rules, norms and structures that create logic in a certain domain. According to Hanna (2006) logics are intrinsically normative. Hannan (2007) defines logic in the domain of organizations as follows: socially constructed rules, norms and beliefs constituting field membership, role identities and patterns of appropriate conduct that are transmitted through regulatory, normative and cognitive processes (p.12). This definition will be used in this research. Reason and rationality are closely related to logic. Hanna (2006) argues: rational human animals are essentially logical animals, in the sense that a rational animal is defined by its being an animal with an innate constructive modular capacity for cognizing logic (p.68). A logic thus comes from a rationality. Still, the concepts are not exchangeable because statements that are logical do not always have to be rational. In this research the concept of logics will be used because logics also point at the constructed rules, norms and beliefs. Decisions and acts of social entrepreneurs and civil servants are probably in most cases not only let by rational decisions, but are also influenced by the context of these two groups. In research concerning logics an important question to answer is: how can one recognize logics? Much research has been conducted in the field of competing logics (e.g. Thornton, 2002; Reay & Hinings, 2009; Mullins, 2006). These authors try to identify different types of logics. It is interesting that most of the researchers chose two competing logics, for example the logics of professionals and the logics of market (Thornton, 2002). This research also consists of two major types of logics, namely the logic of municipalities and the logic of social entrepreneurs, but these logics are divided into three separate types of logics. In the research concerning competing logics the logics are described in a precise manner and 19

20 characteristics of each logic are identified, these characteristics can be used to identify different types of logics in the data Logic of municipalities The logic of municipalities consists of three sub-logics. The following three logics can be distinguished (Bovens et al., 2012; Dryzak, 2001; Van der Wal, 2010): Effective and efficient: performing government Legality: decent government Democracy: responsive government Effective and efficient: performing government The first logic is the economic logic in which concepts of effectiveness and efficiency prevail. The concept of effectiveness refers to the achievement of the before established goals and to the optimization of the cost-benefit equation (Bovens et al., 2012). The problems in the society are always bigger than the means to solve to these problems, therefore, choices have to be made (Snellen, 2002, Bovens et al., 2012). These concepts did become highly important in public administration due to the growing costs of the welfare state. The awareness about the performance of public organizations played an important role in the most significant political changes and government reforms in recent history (Rainey, 2009). The development of new public management that prevailed in the eighties was also led by economic and financial considerations (Pollitt & Bouckart, 2012). The mindset connected to this development can still be found in current policies. This development of new public management consists of five concepts, namely: the market, decentralization, transparency, management culture and entrepreneurship. The first concept is the market. Public organizations have to become similar to private companies and have to try to maximize the efficiency, effectiveness and productivity of the organizations. With the least amount of money, a large amount of services and products have to be delivered. The second concept is decentralization. Government has to contract out tasks to organizations that can carry out the public tasks better and more efficiently. The organization has to be more flexible and less hierarchic to be better able to make decisions and to save costs. The third concept is transparency. By making the organization more transparent more rational choices can be made. The transparency of the organization makes it also easier to control the results of the organization. The fourth concept is the management culture. The managers in the organizations have to keep an eye on the efficiency and effectiveness of the processes. The fifth concept is entrepreneurship. Managers and civil servants have to be creative with their means. All employees have to think in an entrepreneurial and innovative manner. Risk taking is a part of the entrepreneurial attitude. To see whether an organization is effective and efficient, the output and the effects of the organizations have to be measured (Waal & Kerklaan, 2004). Rainey (2009) points at the discussions concerning the goal and performance criteria of public organizations, the multiple authorities and actors in the government system do not always agree on the performance criteria of public organizations. The performance of public organizations is hard to measure and steer. Waal & Kerklaan (2004) mention six considerations that public organizations have to make in designing a performance model: 20

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