Why do we have social enterprises, where have they come from and what was the reason for the heightened interest in them since the mid-1990’s? The last three decades have fashioned significant external challenges to the community and voluntary sector. These challenges can be summarised as the effects of significant economic change, political reactions to these changes, the retrenchment of the state from direct public service provision and the effects of globalisation.

‘A substantial transformation has been taking place in the world economic order’ (Ben-Ner, 2002, 6) and this has resulted in rapid change in both the public and community and voluntary sectors (Kearns, 2000, 3). The economic growth levels of the post-war era began to reduce after the 1960’s and from the early 1970’s the economic and political debate changed to address new issues. Defourney (2001) outlined the new issues:

‘The persistence of structural unemployment in many countries, the need to reduce state budget deficits and to keep them at a low level, the difficulties of traditional social policies and the need for more active integration policies have naturally raised the question of how far the third sector can help to meet these challenges and perhaps take over from public authorities in some areas’
(Defourney, 2001, 1)

The European financial crisis of the early 1990’s resulted in demands for structural changes and a reduction in the public sector, characterized by privatisation and liberalisation (Sátre Áhlander, 2001, 416; Kerlin, 2006, 252). Borzaga and Defourney (2001, 352) commented that ‘there is a clear and generalised coincidence between the emergence of the first experiences of social enterprises, at the end of the 1970’s, on the one hand, and the decline in the rates of economic growth and the rise in unemployment that occurred in the same decade, on the other’. The challenges were also faced in Ireland. By 1986, the Irish debt to GNP ratio had risen to 129% (Reeves and Palcic, 2004, p530). As a result, the state disengaged from sectors where there was no obvious political reason for continued state involvement (ibid 535). Reeves and Palcic (2004, 529) however noted that in the early 1980’s Irish policy to State Owned Enterprises (SOE) emphasised ‘commercialisation’ rather than liberalisation and privatization as in other industrialised countries.

Thus, at least in Europe, the financial crises from the 1970’s resulted in the community and voluntary sector being forced to address critical issues, including its own role in society, increased scope of activity to address the retrenchment of the welfare state and the issues of financing these activities.

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