Research article – Model of social incubation in Romania

Authors:

Claudia Petrescu – Researcher, Research Institute for Quality of Life, Romanian Academy

Adriana Neguț – Researcher, Research Institute for Quality of Life, Romanian Academy

Gabriel Stănilă – Sociologist, Centre for Not-for-profit Law (Romania)

Published on: 2021/11/08

In the last fifteen years, social enterprises have been one of the main factors of social inclusion and community development in Romania. The study “Model of social incubation in Romania” (developed within the ERASMUS+ 2019-1-RO01-KA204-063879 project – Social entrepreneurship in local communities) aims to analyze the mechanisms and services of incubation and acceleration for social enterprises and the main challenges which they face. Romanian social incubation models were analyzed through a methodology that includes a mix of data collection methods: social document analysis, secondary data analysis, public policy analysis, in-depth interviews with representatives of social enterprises and business incubators.

Incubation and acceleration programs for social enterprises in Romania offer the following types of services: training and support for basic elements in entrepreneurship, networking opportunities, marketing and research support, support for financial management, development of presentation skills and participation to auctions/ competitions, access to resources, identification of strategic partners, access to investors, access to mentors, consulting for the sale of products/ services.

However, these services are at different stages of development and delivery to social enterprises and are to a very small extent adapted for social entrepreneurs. Incubation and acceleration programs for social enterprises are underdeveloped or they lack services such as access to bank loans, guarantee programs, loan funds, support for intellectual property rights, support for compliance with existing regulations regarding social enterprises (legal advice, human resources advisor).

At the same time, the support services for social enterprises provided by public institutions are lacking, mainly due to the limited understanding of the field and its importance. There is a need to improve the capacity of public institutions to provide information about and for social enterprises, to support them both for the establishment and, in particular, for the development of their products and services, to create a space for the exchange of ideas, etc.

As a definition, the European Commission considers that the business incubator is “a place where newly created companies are concentrated on a limited space. The aim is to increase the development chances and survival rate of these companies by providing a space with the necessary facilities and utilities, providing managerial support and support services” (European Commission, 2002, Benchmarking of business incubators, Centre for Strategy and Evaluation Services). The main purpose of business accelerators is to “accelerate the business creation process and prepare entrepreneurs to receive a capital inflow” (OECD & European Union, 2019). The services offered are similar to those of business incubators and include training in management, development of a business growth strategy and preparation of the business for obtaining external investments. Accelerators are aimed especially at start-ups or those already on the market and who want to obtain financing either for the development or creation of new products/ services.

Due to the lack of permanent/ continuous sources of funding dedicated to social businesses, the incubation services for them are not sufficiently developed. European funds dedicated to the establishment of social enterprises are granted for periods of 3-4 years, followed by a minimum of 2-3 years in which they are missing. In addition, the level of bureaucracy is high and does not offer a very high flexibility to grant administrators regarding the support services that can be offered for starting a social business and supporting them after the establishment. It is necessary to be able to provide a wider range of incubation services for social businesses both before and after their establishment.