1.  Observations

For many years, the liberal economic development paradigm has claimed that less state interventions, maximisation of profits, technology innovation and internationalisation will generate growth and universal welfare. After several decades of more or less smooth implementation thanks to a time without major worldwide crisis, the situation changes from March 2020 with the Covid-19 pandemic followed by the invasion of Ukraine by Russian troops associated with the energy crisis leading to hyper- inflation rates.

During the same period, there has been a clear demarcation between the “social” and the “economic” in relation to research, policy development and delivery at all layers of governance from the European level to national and local and regional levels. This has seen policy developed in silos with little lateral connection or interaction with social policy seen to be separate or marginal to economic development and economic growth where the potential consequences of social, cultural and political factors were not much considered. However, a number of trends in recent years have challenged this including the war in Ukraine and related energy crisis and inflation as above as well as major demographic factors such as the huge inflows of migrants and refugees, the ageing population and growing inequalities challenges this assumption. In parallel, research suggests that social changes and social innovation can have as great an impact on economic development as technological change.

Those underestimate incidents are showing the limits of several beliefs underpinning the four mentioned dogmas revealed that the liberal theory is not able to prevent or to solve social and societal challenges without a strong State intervention and has led to an approach in relation to policy development and delivery at all levels which unhelpfully separates out economic and technological factors from social and cultural drivers for change.

Historically, the RDAs were created by the left political parties to reinvigorate the territories affected by the closure of traditional industrial production units. Naturally, regional development policies and thus the key activities of the RDAs have evolved to create or reinforce competitive advantages in relation to the new economic dogmas. In this way, activities related to social innovation have been marginalized. So time to re-examine the post war paradigm has arisen and to reimagine the way RDAs have to refresh their portfolio of activities. And it may be that those regions and localities which harness social change and respond to it are more likely to succeed in creating both developing and sustainable economies and communities^[1].

Indeed, one of the main reasons might be that the dogmas forgot the importance of place-based resilience capability. It is at local and regional level where the specific characteristics of social and cultural drivers can be captured within approaches to economic development in a way which both generates economic opportunity and also improves social cohesion. The crisis also showed that a large share of the liberal economy is depending on non-essential goods and services and that the essential ones were sacrificed on the altar of the globalization allowing the profit maximization.

These recent crises highlighted critical failures of the various components of blind ultra-liberal economic development strategies or the risk associated with an over dependency on foreign ecosystems. Indeed,

• The reduction of the role of public interventions showed clearly its limits. The unanimous cry of the representatives of sectors, which notoriously practicing tax and/or social fraud, for a strong and quick public intervention to rescue them is a clear admission of the bankruptcy of the private sector to overcome a crisis that threatens their existence;
• Globalisation is a risky game. Most of supply and value chain of essentials health, electronic and energy components or products has collapsed because an over dependency on imports and the loss of know-how, competencies and skills;
• Maximisation of profits did not spread wealth equality everywhere. The importance of "the winners take it all" syndrome leads to an increase of disparities in regional GDP/inhabitants and to social divide in many regions. Instead of disappearing, the number of people left behind the theoretical expected benefits of the liberal economy is growing year by year and it all types of areas (urban, rural, peripheral regions, ….);
• Focusing the public support only on high technology generated new forms of discriminations and illiteracy by minimising the legitimacy and the added value of all the other forms of innovation;
• The liberalisation of some public and quasi-public services finally turns into a strong reward to the shareholders instead of a better geographical coverage of quality services (banks, state of the art ICT infrastructure, health care, local shops ...) as well as a reduction of the speed of the delivery of the services (postal services, public transports, health, education, ...) or shortage of products (drugs, spare parts, electronic components …).

It is significant that social innovation and social entrepreneurship are the responsibility of the EU DG Employment and Social Affairs and not of DG R&D and DG Grow and as a consequence that-very few regions have put in place a social innovation ecosystem similar to the high tech ones. These separations of policy at EU level are often replicated at national and at local and regional level in relation to governance and also in relation to the functioning of civil society and the NGO sector too in many cases.

At the end of the day, it would be clever, for regional policy makers to add an endogenous strand based on social innovation and social entrepreneurship in their strategy as a as a safety net against the limits and excesses of the current conventional policy or at least next to the support given to it. This would include investment in local-based assets and capacity building at local / regional level to ensure greater synergy and interaction between stakeholders working on “social” policies (for example response to migration, ageing population or energy crisis) and those working on economic development (such as local governments, development agencies, civil society organisations and businesses)

A new “frugal” and “inclusive” local and regional development is needed. Social innovation can no longer be the responsibility of a few people acting at the border of regional development. Thus without access to the resources that are assigned to it. By their experiences of solving crisis due to industrial restructuration RDAs seems to have enough knowledge to deploy support services in favour of social entrepreneurs and innovators.

2.  Crisis a source of opportunity for social innovation?

If crisis means opportunities than social innovation should become a new strategic part of any regional development strategy. For RDAs this should mean adding a social innovation component to their portfolio of activities and embedding social and cultural change within their overall approach. RDAs managers and policy makers who fund them and dictate their agenda should take social innovation seriously and thus to find, with local stakeholders, answers to the following challenges:

- How to support frugal and low costs innovation processes, products, services and behaviours as a sustainable alternative to macro-economic limits and to protect vulnerable social/societal local activities?

- How to promote proxymology solutions to facilitate place-based partnerships and a shared economy and to put in place a well-functioning a social innovation ecosystem?

- How to put in place an effective inclusive entrepreneurship start-up support services scheme?

- How to use foresight and big data analysis to anticipate threats and shortage in key elements to ensure a local economic and social sovereignty?

- How to deploy a comprehensive marketing campaign to promote the "made here" and "the invented here social innovative solutions"?

- How to translate mega trends into local social benefits?

- What types of capacity development / institution building, skills, collective knowledge and training, including in the public sectors, are needed to ensure that the new forms of socio-economic activities related to a social innovative centric local economy can grow?

- How to engage local private sector businesses to reimagining their approaches to corporate social responsibility as well as to develop new markets (for example within the silver economy)

- How to take into consideration in a regional strategy the new citizens' aspirations such as on one hand those of the "consumers-leisure-services-digitalisation-teleworkers and on the other hands, those for instance of the grey, mono-parental families, socially depraved or eco-friendly citizens?

- Which form of local oriented social enterprises/non for profit organisations (crowdfunded initiatives, cooperatives, local public production enterprises,….)  could be promoted and funded as an alternative to the support to the pure profit oriented firms delivering public essential goods such as energy, housing health education, …?

- Which economic development tools are offering the best return on investment to ensure an inclusive society and therefore need to be adapted to avoid that the usual suspects will still monopolise the entire resources?

- What type of data should be collected and used in order to design a social oriented strategy? Remember that critical decisions should be backed by reliable information and data!

- Opportunities have to be related to value creation. The graph below is trying to provide ideas on how regional players can use social innovation to create values. The value creation can be apprehended through various points of views, such as the contribution to economic growth, an entrepreneurship culture, an enhanced social inclusion of citizens. To do so, regional policy makers will have to find new solutions to the following challenges:

- How will the current global trends (energy prices, climate changes, disruption of value and supply chains,…) impact the socio-economic life in the region?

- Who will be the game changers and the solution providers?

- How to assess the new needs?

- Which are the most pressing solutions to put in place and will they be fit for purpose?

Source: Authors own elaboration

3.  The current EU offer in the field of social economy action plan^[2]

The challenges and opportunities outlined above require an approach which emphasises the importance of the local and regional level. This needs to be a bottom up process so that priorities, solutions and structures can be put in place which fit the circumstances of that locality.  The EU has provided a useful framework for this which is relevant for those within member states and also a useful tool on a wider basis for example in the UK or in other none member states.

It is important also to arrive at accepted definitions and understandings of the concept of social innovation and its relationship to the wider scope of the economy and especially to consider the application of social change and social innovation not only to specifically defined “social enterprises” but across the local and regional economy as a whole.

As already mentioned DG Employment and social affairs leads the EU agenda regarding social innovation and entrepreneurship since several years. On 9 December 2021, the social innovation strategy was published and is focusing on four major issues: (1) Business support and capacity building, (2) Improving access to funding, (3) Maximising the contribution of the social economy to the green and digital transitions and (4) Boosting social innovation. The EU communication stresses the role of regional and local levels by remembering that: "Social economy business models bring value to local economies and societies by fostering their inclusiveness, resilience and sustainability. They have strong local roots and primarily aim to serve the community where they are based, retaining population, economic activities and revenues locally. As such, they contribute to drive local economic development in sectors specifically relevant to the regions, for example in rural areas, in relation to agriculture and organic food production or in the blue economy. They foster short value chains facilitating local production and consumption, and support climate action and the circular economy. They also contribute to the provision of social services that are often limited in rural and more remote areas".The European Commission will among other activities launch; a new “European Competence Centre for Social Innovation” will be set up in 2022. It will organise mutual learning and capacity building for relevant authorities and support structures. In addition, a new scheme of grants facilitating the transfer and/or scaling up of social innovation will be set up as well as under Horizon Europe a European Social Innovation Catalyst Fund engaging citizens, academics, entrepreneurs, philanthropists, impact investors and public administrators, with the aim of supporting the replication and scaling of successful social innovations to advance the objectives of the five EU Missions.

The European Commission also advocates that business incubators should expand their outreach to social and inclusive entrepreneurship^[3]. For the 2014-2020 ERDF programming period, very few OPs did dedicate a budget to support social enterprises. In fact, only 15 Member States had clearly earmarked some financial resources to support social entrepreneurs, but 6 of them allocated less than €10 million over a 7 year period!

The EU Transition Performance Index^[4]looks to heath life, work and inclusion, free or non-remunerated time and equality. More recently, the pilot PRI initiative (S4, adding a sustainable goal to the S3) has taken the issue on board, but again in a secondary priority as in the first PRI Playbook it appears that is almost a total absence of reference to social innovation and especially transformative social innovation.

Most of the above mentioned topics could be rather easily included in an RDA portfolio of activities.

4.  What is social innovation and why does it matters at regional level.

According to NESTA^[5], social innovation is about: developing new ideas to tackle social problems or meet social needs. It may be a new product, service, initiative, organisational model or new approach to the delivery of public services. It is about responding positively to social and cultural changes and harnessing them for the purposes of economic development.  Much social innovation starts locally by using local insights and initiatives to address localised problems, but many countries have still an immature social innovation system.

It is likely that the regional level will have to invest in an social innovation ecosystem because:

- Local resources are no longer enough to solve the challenges induced by the current crises and the ambitions in the field of green and digitalisation of the economy,

- Regional authorities and their economic "arms-length" organisations have to prevent or fight against socioeconomic disparities,

Those regions and localites which harness social and cultural changes in a pro active and positive way are likely to experience not only greater social cohesion but also improved economic growth:

- Wellbeing decline generates a slowdown of the economy,

- New needs and macro trends require innovative solutions.

To optimize the supports to enhance social innovation, regional policy makers can be inspired by the ingredients when building scenarios i to deploy measures to support social innovation.

Source: Authors own elaboration

To offer stakeholders the opportunity to be involved in an intervention logic approach which is supporting the shift from current activities to more socially oriented ones, RDAs could organise a series of creative workshop to define the desired impacts of a social innovation strategy. The following matrix could be used to stimulate the discussion. Of course, RDAs should not necessary implement all the identified supports but they should at least be the catalyst of the efforts to be made to create a friendly social innovation ecosystem. Nevertheless, RDAs could use pilot projects to demonstrate the positive impacts of social innovation in the region. This could speed up the acceptance of social innovation in their portfolio of activities.

5.  Social entrepreneurship

Last year, in partnership with the OECD, that DG has supported the development and promotion of an Internet self-assessment tool entitled the Better Entrepreneurship Policy Tool^[6]. Unfortunately, no EURADA member has turned their polite interest into action. This seems to be a missed free of charge opportunity as the organisation that took the opportunity have all got very interesting feedbacks regarding the current offer of support services for some of the underrepresented would be entrepreneur which often provides local solutions to the desertification of some areas. Whole areas of entrepreneurial talent which could help maximize economic opportunity are potentially being missed (here ethnicity, migrant status, gender and age are all relevant).

Evidence suggests that much entrepreneurial talent and business development potential is not maximized as certain groups are not seen as a priority for assistance, soft supports and funding. For instance, it appears that migrants are more likely to establish new businesses and become entrepreneurs that other communities And yet until now our development and support structures have not maximized this potential^[7] The OECD have taken a lead in relation to this important and disruptive initiative and it is important that development bodies at local and regional level take on board these issues in their strategies.

RDAs could have access to the following information regarding the perception of their support services to social entrepreneurs as a Dutch region did to include a social entrepreneur strand in their revised S3. They discover that if stakeholders are relatively satisfied with the offer of support services in the field of skills, markets and finance the institutions and regulatory frameworks are not reaching their expectations.

Source: BEPT exercise realised in collaboration with a Dutch panel of regional stakeholders in May 2022
 

There are at least 7 reasons why policy makers, managers of intermediary organisations and NGOs should support inclusive entrepreneurship which stimulates:

•  Innovation (not just about high technology);
• Jobs creation (even if it will be the only one of the entrepreneur himself or herself);
• Competition (a new comer always induce a reaction, it is even good if businesses having a monopole or a high comfort zone are challenged or even failed at the end of the day);
• Speedup social or cultural changes;
• Introduction of fresh blood in the eco system or the community life;
• Social cohesion (through generating income and opportunity for excluded communities);
• Social capital and social networks within and between communities.

Therefore, the Better Entrepreneurship Policy Tool focusing on 4 vulnerable groups: women, youth, migrants and long term unemployed people and social enterprises is an interesting topic in terms of social innovation as it draws attention to some of the "non-usual suspects" of policy makers and public civil servants dealing with the design or the implementation of support services for would be entrepreneurs. The list could even be extended to take on board ethnic minorities, mid age people in professional transition and ageing people. It can also help build stronger links between NGO and other organisations who work closely with excluded groups (such as migrants) and access to the mainstream providers of economic development schemes (such as business growth hubs or development agencies)

To better support social entrepreneurs, RDAs can either create dedicated incubators, crowdfunding platforms and other funding mechanisms, living labs, demo-centres, 3D printing centres, coworking spaces or blended the existing ones in order to build links and partnerships between all types of regional entrepreneurs. They should also promote the idea of procurements of social innovative solutions. RDAs could also help to enhance new forms of enterprises offering or producing social goods such as: renewable energy community, social purpose business as well as easy in easy out pre-equipped stores and shops in depressed areas to attract new activities and young entrepreneurs who could start their business without having to invest their own money or to negotiate a bank loan, …

6.  Building a social innovation agenda

In order to design a social innovation ecosystem and mobilise the relevant stakeholders, policy makers with their RDAs should undertake a 3-step journey:

a)  An assessment on how disruptive social depravation can be solved through state of the art social innovative solutions,

b)  Filling in a matrix of the perception of the delivery of social oriented support services and further development,

c)  A review of the current stakeholders involved and to be involved in a social innovative ecosystem.

The following graph can be used as a food for thoughts guide to prepare the response of the innovation ecosystem to the social/societal challenges exacerbate and amplify by recent crises.

Source: Authors own elaboration

The matrix below can be used to inspire local stakeholders to undertake an assessment of the current performance of the public support to the social sector as well as to map the stock of actors and of solution providers. The perception of stakeholders regarding the efficiency of the public intervention can be assessed through the following scale: 1Very well, 2 Good but need to be improved, 3 Low, 4 not yet available:

The next step should be to review and interpret the current and future involvement of regional stakeholders by filling the following matrix of a social innovation ecosystem:

^[1]https://www.oecd.org/cfe/leed/social-economy/

^[2]https://ec.europa.eu/commission/presscorner/detail/en/ip_21_6568

^[3]https://betterincubation.eu/

^[4]https://ec.europa.eu/assets/rtd/tpi/2021/index.html

^[5]https://www.nesta.org.uk/report/social-innovation/

^[6]https://betterentrepreneurship.eu/

^[7]https://www.compas.ox.ac.uk/2020/are-all-migrants-more-entrepreneurial-than-the-native-born/