Over the last two decades, entrepreneurs’ activities and business approaches have evolved considerably. Since the 2008 crisis, and even more so due to the awareness and expectations derived from adopting the United Nations’ Sustainable Development Goals (SDGs) in 2015, entrepreneurship has shifted toward more social, environmental, and (good) corporate governance. Many researchers have suggested that laws should be adapted for this new paradigm. The objective is to go beyond the corporate social responsibility practices that a particular company can or has to adopt as a unilateral and external commitment. Therefore, company law has been amended to create new forms or statuses for social enterprises. However, this (r)evolution is far from complete. Different initiatives, including legal reforms in fields other than company law (e.g., public procurement law or competition law), and the commitment from the business community itself, are spreading these ideas as part of the new theory of the firm reflecting companies’ new role in society. The reception of the United Nations’ SDGs foretells that we are facing a paradigm shift in the expectations of companies to obtain a social license to operate. It also exceeds the legal sphere and poses important economic challenges.

Social enterprises (SEs) cover an increasingly extensive and multiform spectrum of economic activities. However, the difficulty in analyzing them begins with the concept’s boundaries, as it alludes to different realities that depend on the context in which the term is used. There is no consensus on the concept of social enterprise. Through their design of public policies, academics, and even social entrepreneurship, national legislation and governments highlight different patterns as essential features of the phenomenon. Unsurprisingly, the specific legal forms emphasize different characteristics in terms of quantity and type. Cooperatives and mutual societies have the highest features, while different emerging forms insist on income generation through unconventional structures and social innovation. In both cases, they are considered social enterprises. The universe is quite wide: blended firms, low-profit limited liability companies (e.g., L3C), benefit corporations, dual- or multi-purpose entities, and flexible- or social-purpose corporations, to name the most well-known forms of recognized social enterprises. In addition, this conceptual difficulty becomes more complex when we consider the cultural realities of different countries. The recent publication of a comparative report titled “Social enterprises and their ecosystems in Europe” (2020) by the European Commission charts the diffuse content of social enterprises within the internal laws of states.

A first attempt to define the concept of social enterprise leads to identifying two main approaches that can be geographically connected to the Anglo-Saxon world and continental Europe.

The Anglo-Saxon world tends to adopt a functional approach and focuses on the objectives pursued by social enterprises. A company is considered social if it targets the creation of societal value independent of the legal form adopted. Thus, the company is social by its purpose and not by the way it is organized. Companies are therefore recognized as social enterprises, even if they have a non-profit purpose flanked by an economic activity that generates income exclusively allocated to this purpose. However, for-profit companies coupled with an activity that intentionally results in positive social and environmental impacts can be considered social enterprises. Companies involved in social innovation can also be regarded as social enterprises. Attention is paid to the entrepreneurs and the social changes they produce through their economic activities.

Meanwhile, in the continental tradition, social enterprises are defined through an institutional approach. The focus is either on the social inclusion of given invisible or marginalized groups with public aid that allows this to be done or on some intrinsic social, economic, and governance characteristics, marking the boundaries of social enterprises. Following this institutional approach, most social enterprises are private non-profit organizations that provide goods and services aligned with their explicit purpose of benefiting the community. Within this context, the spectrum of social enterprises depends on the confluence of economic (ongoing production of goods or provision of services, high degree of autonomy, significant level of economic risk, and minimal amount of paid work), social (the explicit aim of benefitting the community and initiative promoted by a group of citizens), and governance (decision-making power separate from capital ownership, participatory nature, and limited distribution of profits) factors.

The Anglo-Saxon approach to social enterprises has materialized in various ways. One of the most widespread is that of the certified benefit corporation and that of the benefit corporation legal model. Certified benefit corporations (also known as B Corporations or B Corps) are companies that obtain a particular certification from a non-profit entity. B Lab and Sistema B in Latin America are part of a global network to transform the global economy to benefit people, communities, and the planet. Their private certification system is based on the so-called benefit impact assessment (BIA), which helps enterprises measure their impact on several areas, such as the environment, communities, customers, employees, and governance. B Corps are usually referred to as “triple impact companies” because they pursue the development of a given economic activity and induce a positive transformation in the community and environment. These are commercial companies where transparency, worker participation, and social or environmental purposes are considered together with the profit-making goal, creating community well-being that can be quantified under generally acceptable metrics and verifiable standards by any stakeholder. Hence, the three main characteristics of this form of entrepreneurship are (i) beneficial purpose, (ii) social balance, and (iii) transparency for any stakeholder. These companies are certified in the United States, Canada, Europe, Australia, and New Zealand through B Lab, a non-profit organization based in Wayne (Pennsylvania). In Latin America, certification comes from Sistema B (B System) with the support of B Lab. B Corp’s long history and extensive coverage have consolidated it as one of the most known and respected global standards to recognize public purpose-driven companies. In Europe, the model based on a certification process is gaining strength among some companies, especially in the United Kingdom, Italy, the Netherlands, France, Spain, and Germany, thereby expanding the list of social enterprises.

The second form, born within the Anglo-Saxon context, is the Benefit Corporation legal model, which emerged in the aftermath of the subprime crisis in 2010, with the state of Maryland enacting the first law, recognizing benefit corporations as a differentiated type of company. As of 2013, 37 states within the United States (in addition to the District of Columbia) have joined the movement. In another four, there are currently bills on the topic under discussion. The majority of laws enacted in the U.S. are inspired by the Model Law prepared by William H. Clark Jr., with the support of B Lab and the American Sustainable Business Council. The U.S. design has been inspirational for Canada, Italy, France, and several Latin American countries, such as Colombia, Ecuador, Peru, and Uruguay, which have recognized similar corporate forms or statuses. Legislative policies in Latin America have not ignored this phenomenon. The Ibero-American General Secretariat (SEGIB) and the United Nations Development Program (UNDP) conducted a research project to support 22 governments in Latin America, Portugal, and Spain, creating a regulatory and legislative framework that recognizes and dynamizes public-purpose-driven companies.

This handbook aims to serve as a map that helps navigate the archipelago of social enterprises. This is divided into three parts. The first one describes different aspects of the social enterprise movement. The term is assigned to it by sociology. It is designated as an informal network (or a set of networks), characterized by a continuous commitment of individuals and groups who seek to promote collective action to pursue a common goal. Livia Ventura explains the link between the social enterprise movement and the birth of hybrid forms of organization that materialize altruism in the market. Carlos Vargas Vasserot describes the gradual recognition of social enterprises in the European Union and their importance through specific regulatory models. Giulia Neri-Castracane deals with the governance dimension of social enterprises with two proposals to reconcile American and European approaches to the concept. Sigrid Hemels addresses social enterprises’ controversial tax treatment. Mathieu Blanc, Jean-Luc Chenaux, and Edgar Philippin develop another increasingly interesting theme within social enterprises projected for any company, the corporate purpose and how social administrators must achieve this as part of the governance system. From a general perspective, Millán Díaz-Foncea and Carmen Marcuello explain the conceptual debate and approaches generated by social enterprises. This is complemented by the chapter in which Antonio Fici describes the situation in the European Union after the 2011 Social Business Initiative. Daniel Hernández Cáceres traced the link between social enterprises and cooperatives. Finally, Federica Massa Saluzzo, Davide Luzzini, and Rosa Ricucci conducted a comparative analysis between for-profit and non-profit firms to demonstrate how social entrepreneurs create a systemic change in the economy.

The second part of the handbook deals with benefit corporations and B Corp certification. It begins with a presentation of trends and perspectives on the phenomenon by Mario Stella Richter, Maria Lucia Passador, and Cecilia Sertoli. This phenomenon requires a suitable behavior framework that B Corps have in the market; this innovative analysis has been conducted by Maria Cristiana Tudor, Ursa Bernardic, Nina M. Sooter, and Giuseppe Ugazio. The B Corps movement began as a private certification process led by B Lab and its subsidiaries worldwide. It has not stopped even when the figure, with the same or different name, has been taken onboard by legislation. Ana Montiel Vargas explains the role of the B Lab and the process of certificating B Corps. The following three chapters, address different legal aspects related to this form of company. Luis Hernando Cebriá introduces the Law of benefit corporations and other public purpose companies. Brian M. McCall explains their reception in the Common Law Tradition. José Miguel Embid Irujo explores the viability of benefit corporations in systems where the figures have no legal recognition. Finally, Jonathan Normand and Veronica Devenin provide real-world lessons on stakeholder capitalism, demonstrating how the B Lab & B Corp movement catalyzes societal change.

Finally, the third part provides an international overview of purpose-driven companies worldwide. The chosen method consists of selecting relevant countries whose list follows an alphabetical order and requests one or more local authors to describe the situation of their respective legal systems. In some countries, laws and regulations of various nature dealing with social enterprises or some of their forms already exist; in others, it is still a custom that delineates their physiognomy. The list of selected countries is as follows: Argentina (Dante Cracogna), Australia (Ian Ramsay and Mihika Upadhyaya), Brazil (Rachel Avellar Sotomaior Karam and Calixto Salomão Filho), Belgium (David Hiez), Canada (Cynthia Giagnocavo), Chile (Jaime Alcalde Silva), China (Jian Li, Meng Zhao and Caiyun Xu), Colombia (Francisco Reyes Villamizar), Ecuador (Esteban Ortiz Mena and José Ignacio Morejón), France (David Hiez), Germany (Gerald Spindler), Hong Kong (Ka Kui Tse, Rebecca Choy Yung, Yanto Chandra and Gilbert Lee), India (Puneeta Goel, Rupali Misra, Suman Lodh, Monomita Nandy, and Nandita Mishra), Italy (Livia Ventura), Japan (Nobuko Matsumoto), Luxembourg (David Hiez), Mexico (Luis Manuel C. Méjan), Peru (Claudia Ochoa Pérez and Juan Diego Mujica Filippi), Portugal (Deolinda Meira and Maria Elisabete Ramos), South Africa (Richard S. Bradstreet and Helena Stoop), South Korea (Hyeon Jong Kil), Spain (Paula del Val Talens), Switzerland (Henry Peter and Vincent Pfammatter), The Netherlands (Coline Serres and Tine De Moor), The United Kingdom (Stelios Andreadakis), The United States (Alicia E. Plerhoples), and Uruguay (Carlos de Cores Helguera, Patricia Di Bello and Natalia Hughes). To close the third section, Carlos Vargas Vasserot refers to the situation in other European countries (Finland, Slovenia, Denmark, Romania, Greece, Latvia, Slovakia, Bulgaria, and Lithuania).

As editors, we hope that this handbook will contribute to the international knowledge and debate on social enterprises in general and benefit corporations and other forms of purpose-driven companies in particular.