Should you “internationalise” your social enterprise?

In 2015 Samuel Kalika was looking to set up a creative project in Portugal. But his idea “completely tilted”, he says, when he arrived and saw the extent of poor-quality housing in the country, contributing to high mortality rates in winter. Today, he’s the founder and director of Critical Concrete, a company that researches and educates on sustainable architecture and design. 

Kalika, who has also lived in Germany and China alongside his native France and has hosted numerous entrepreneurs from overseas at Critical Concrete, is perhaps not the typical business founder. But less nomadic entrepreneurs could also benefit from looking beyond national borders.

“If you’re a farmer in Italy, you might think: why do I need to connect with others abroad?” Ivelina Fedulova, senior project officer at Eurochambres, told Pioneers Post on the sidelines of Euclid Network’s Gathering to Grow event last week. “But maybe people in Portugal are doing something similar, in a completely different way that’s more efficient.”

Eurochambres runs the support office for the European Commission-funded Erasmus for Young Entrepreneurs programme, which enables new or aspiring entrepreneurs to spend one to six months working alongside more experienced counterparts in another country. Since 2009, some 6,000 exchanges have taken place or are about to start, including nearly 400 participants working primarily in the fields of social economy, responsible entrepreneurship or corporate social responsibility (plus many more working primarily in other sectors such as food, who may also be social businesses). 

Entrepreneurs sign up for different reasons, according to Fedulova. In some countries – like her native Bulgaria – the concept of social enterprise is “completely foreign”, she says, making it much easier to develop a business where one’s field (or, say, consumer appetite for ethical products), is more established. On the other hand, says Fedulova, an innovator might be developing “a very specific concept” – something unique that they’d be reluctant to share widely close to home. Discussing and testing ideas in overseas markets means less risk of sparking direct competition.

Expanding impact

Many social entrepreneurs see expansion overseas as a way to grow their social impact. While being rooted in the community is often core to their mission, this isn’t always incompatible with working internationally. A survey among UK social enterprises in 2013 by the British Council and Social Enterprise UK, Exporting Social Enterprise, found that 74% of those exporting to overseas markets aimed to “improve a community” in doing so.

74% of those exporting to overseas markets aimed to 'improve a community' in doing so

Evolve was set up in 2003 to improve health and education among children in England, but founder and director John Bishop says he is “always looking at other markets”. The social enterprise is about to send its first health mentor to Australia, and Bishop is hoping for more opportunities, having recently met a Greek policy-maker responsible for educational reform at a conference. “He wants wellbeing to be placed in the centre of the Greek education curriculum and he’s asking us for advice on how to do that,” he says. Getting the attention of British politicians, meanwhile, is “difficult”, Bishop claims, partly because Brexit discussions are diverting so much attention.

Some social enterprises are further ahead in their international journey. UK-based Toast Ale sells its beer in the US, South Africa, Iceland and Brazil, through a blend of licence and franchise arrangements. Moyee Coffee, a Dutch venture, has granted a licence to two Irish social entrepreneurs to sell its products; Moyee Coffee Ireland now counts Airbnb and Groupon among its corporate customers. Dialogue in the Dark, an exhibition concept developed in Germany, is now available in 21 countries, and Social Enterprise Academy, having experimented with various forms of replication, is developing 12 social license hubs outside its birthplace in Scotland.

But most social enterprises tend to think locally, or “at best nationally”, according to Mark Richardson, director of Social Impact Consulting and one of the researchers behind an EU-funded project on internationalising social enterprises, InTSEnSE.* That local focus is fine, he continues – but entrepreneurs may be missing out on opportunities to earn additional revenue or to work with beneficiaries overseas. 

And, where social enterprises do work internationally, it tends to be on a fairly small scale, such as doing some consultancy abroad or selling online to customers in other markets, says Richardson: “As a core part of the business model, it’s rare.”

Where social enterprises do work overseas, it tends to be on a fairly small scale

The InTSEnSE team interviewed 53 social enterprises in the UK, Ireland, Latvia, Lithuania, Greece, Italy and Germany that are trading internationally. Most start doing so “because of a chance encounter” or some family connection, Richardson says. “On the whole there hasn’t really been a strategic view of where they might have the best market.” 

More shining examples needed

How, then, should social enterprises get started?

Dr. Sarah Evans, a lecturer at Glyndwr Wrexham University in Wales, the lead partner on the InTSEnSE project, says a key step is “putting time and effort into finding the right partner”. But she also advises grabbing opportunities, especially while an enterprise is still small: as organisations grow, changing direction or creating partnerships may become more difficult with “more governance structures and more hurdles to jump over”. 

But, presenting their initial findings together at the Gathering to Grow event last week, Richardson and Evans above all emphasised the need for more support to help social enterprises expand overseas. That should include raising awareness of opportunities and encouraging businesses to consider an international element (and if relevant to build it into their business plans), as well as practical assistance, for example introductions to the right networks. Those with a hybrid business model may need access to finance that supports international work: grant funding is usually nationally-focused, and even EU-level funding is often disbursed through national networks. And social enterprises moving into overseas markets will often need expert advice both on market analysis and on compliance with local regulations – currently such consultancy services are unaffordable for many.

Most countries offer support both to SMEs domestically and to businesses looking to export. For social enterprises working more commercially, these may be sufficient. But for those with a hybrid model, “traditional business support organisations rarely have the skills to be able to help”, Richardson told listeners in London last week. Export programmes, for example, don’t usually have access to the networks that social entrepreneurs most need.

Traditional business support organisations rarely have the skills to be able to help

International initiatives are working to fill some of the gaps. Erasmus for Young Entrepreneurs allows aspiring entrepreneurs to learn from peers in 39 countries – with Singapore, Israel and the US now being added to the list (although it’s unclear whether the UK will continue to be involved post-Brexit). British Council programmes also enable connecting and sharing expertise across borders: its DICE programme, for example, which connects creative and social enterprises in the UK and five emerging economies, has had over 200 applications for collaboration grants.

But, among the seven InTSEnSE project countries (and possibly even worldwide), Scotland is the “shining example”, as Evans puts it. While social entrepreneurs elsewhere report a lack of appropriate support or understanding, their Scottish counterparts experience a “very supportive, encouraging environment” when looking to work abroad, explains Richardson. A government strategy published in 2016 aims ‘to increase the presence and impact of Scottish social enterprises across the world’, and comes with specific support, funding and high-profile backing. Will other countries soon follow Scotland’s lead?

*The INTSENSE project findings, including resources for educators and social enterprises, will be published by September 2019.

Pioneers Post was a media partner at Euclid Network’s Gathering to Grow event, held 6-7 December in London.

Photos: Moyee Coffee, roasted in Ethiopia, is now sold in Ireland thanks to a licensing agreement (photo credit: Bart Drion, Moyee Coffee); Participants at Euclid Network's Gathering to Grow event, with entrepreneur Samuel Kalika pictured standing, left