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About this book

“The fourth sector” is a relatively new sector that consists of for-benefit organizations that combine market-based approaches of the private sector with the social and environmental aims of the public and non-profit sectors. This book examines trends of entrepreneurship in the fourth sector, describes specific ecosystems fostering new ventures around the world, and characterizes the most common and innovative business models. It covers as well the main effects, among others, of technological change, innovation, and institutional behavior on the sector in the last years.

Table of Contents

Frontmatter

Introduction

Abstract
New entrepreneurship ventures have emerged from the fourth sector in the last years. This book aims to address the main characteristics and driving forces of this phenomenon, the strategic business practices, and the role of the social entrepreneurship in attaining a more harmonious and sustainable development.
María Isabel Sánchez-Hernández, Luisa Carvalho, Conceiçao Rego, María Raquel Lucas, Adriana Noronha

Approaching the Fourth Sector

Frontmatter

The Fourth Sector: The Future of Business, for a Better Future

Abstract
We are facing a new trend in doing business moving beyond corporate social responsibility where new hybrid business models are formed to address a variety of societal and environmental challenges. The fourth sector can be defined as the group of organizations, models, and practices whose objective is to solve the great problems of the twenty-first century, combining elements from the three traditional sectors: the public, the private, and the nongovernmental. The fourth sector is rising in different forms in this new entrepreneurial landscape such as social enterprises, business-owned enterprises, cross-sector collaborations, and B corporations. Businesses within the fourth sector are blended value organizations because they pursue social and environmental goals at the same time that they use business methods. This chapter disentangles the meaning of the fourth sector shedding light on the new entrepreneurial ecosystems for new sustainable business models.
María Isabel Sánchez-Hernández, Luisa Carvalho, Conceiçao Rego, María Raquel Lucas, Adriana Noronha

Cultivating the Fourth Sector: Active Citizenship and Governance in the Urban Change Process

Abstract
The rapid generalization of a community based on sharing, collaboration, co-decision-making, and cooperation has given greater visibility to a range of activities and even social mechanisms in a paradigmatic transition toward what is becoming known as the fourth sector.
Active citizenship and the forms it has adopted fall into this new category. The renewed dynamism of civil society, led through properly organized citizen groups and inorganic and conjunctural social movements, can be interpreted in a number of ways, but perhaps that which fits best is the increasing delegitimization of formal power or, at least, the need to deepen the democratic system in an urban context. It is this dynamism that seems to transform collaboration as an emerging form of democracy, thus inscribing it within the set of dynamics that characterize the “collaborative society.”
All these urban transformation mechanisms become condensed in the transfer from a context of government, i.e., a formal system of articulation of actors in the public sphere, to a context of governance, i.e., an informal system, with variable geometry both in terms of scale and the nature of the actors involved. This is oftentimes a troubled process because it means an effective redistribution of power, something that is almost never peaceful or easy.
The discussion of the emergence of these new values is reflected in the narrative for the formation of, and the activity carried out by, the “Caracol da Penha” movement. The related challenge was based around a demand that a green space be built instead of a car park, which is equipped to serve not only the locals but also the entire city of Lisbon, Portugal.
Popular mobilization, the reversal of the decision by the Lisbon City Council, the use of participatory budget mechanisms, and the ability to produce and organize information and communicate it, to name just a few of the many other aspects, make this case emblematic for many other participatory processes and appear to have been a learning ground for all actors involved.
This process of reversing a unilateral decision already taken by a local power, thanks to the structured and dynamic mobilization of the local community, makes it possible to see in practice how the change of values in the power system is tending toward a more collaborative democracy in an urban context.
Jorge Manuel Gonçalves

Municipal Policies in Spain to Promote Sustainable Development Goals (SDGs): An Approach to the Fourth Sector

Abstract
This chapter analyzes the behavior of different municipal budget policies and their relationship to the Sustainable Development Goals (SDGs) established in the 2030 Agenda. Starting from a general focus on the relationship of SDGs to public spending policies (known as spending programs) in local entities, this chapter examines companies that can sign contracts with public administrations under Public Administration Contract Law. Our study aims to relate municipal budgetary actions to the SDGs and to private companies that pursue social goals as well as economic benefit—that is, firms composing the fourth sector. Characterization of the local public sector’s contribution to sustainable development through budget policies focuses on the autonomic (regional) level. The methodology is based on the information in the budgetary settlements of Expenditures and Income presented to the Spanish Court of Accounts for the period 2010–2018 in over 8000 municipalities and other Spanish local entities. The database (big data) of over 2,000,000 records was processed using data mining techniques to extract a set of indicators based on the expenditure level of each local entity and other indicators. The results also indicate the spending policies/programs related to the SDGs and the economic nature of spending with companies in the fourth sector. The results thus provide a geographical view of how local spending is distributed in Spain in absolute terms (millions of euros), per capita, and in terms of local entities’ spending on SDGs and fourth-sector companies across the different regions.
Herenia Gutiérrez Ponce, Julián Chamizo González, Elisa Isabel Cano Montero

Disability as a Driving Force of Sustainable Business Models in the Fourth Sector

Abstract
We are living in unprecedented times in which sustainability is essential to economic growth, quality of life and national stability. In this context, Solidaridad y Trabajo Virgen del Camino (SOLTRA) emerges as an example of a firm in the fourth sector that has achieved the triple bottom line of sustainability: economic, social and environmental performance. Although SOLTRA’s current efforts are mainly focused on the social sphere through the recruitment and integration of people with disabilities into the company and, consequently, into the labour market and society, it also pursues environmental and economic objectives. In the present study, we analysed SOLTRA’s business model by applying the theory of planned behaviour and the resource-based view of the firm. The information derived from in-depth interviews with SOLTRA’s CEO and top managers from the operations and human resources departments, as well as public financial and social reports, allowed us to identify the cornerstones of its business model. The model is based on incremental technology, holistic behaviour and the integration of social activities that help identify better business opportunities. In this study, several implications for managers, policymakers and citizens are provided. These findings may contribute to the development of managerial practices that can help companies to achieve better outcomes by using new approaches to solving social and environmental problems and identifying new opportunities for vulnerable citizens.
Daniel Alonso-Martínez, Beatriz Jiménez-Parra, Roberto Fernández-Gago

Reflections on Hybrid Corporations, Social Entrepreneur, and New Generations

Abstract
Our society faces such complex challenges that, more and more, it is necessary to implement new business models aimed at achieving social objectives while minimizing environmental consequences, without neglecting profit. A social, economic, and ecological balance is possible through the hybrid companies, promoted from social entrepreneurship, framed within the so-called fourth sector. These hybrid structures require people with particular characteristics and values, which invites us to wonder if the generation recently incorporated into the workplace, Generation Y, or the one that will soon join, Generation Z, will opt for this business model. This chapter shows generations’ characteristics to glimpse whether they fit the type of person that these new formulas of social entrepreneurship require. Even though there is still no evidence enough for a conclusive answer, given that the investigations’ results seem to be influenced by the samples’ origins, certain clues suggest a hopeful future.
Aurora E. Rabazo Martín, Edilberto J. Rodríguez Rivero

Social Innovation: Hybrid Models in the Fourth Sector

Frontmatter

Social Innovation in Theory and Practice: European Policies, Strategies and Experiences

Abstract
Despite the substantial knowledge accumulated over the last years about social innovation, this concept is still under construction. If, on the one hand, reflections and discussions enable maturity on the subject, on the other hand, it is also its practice that may allow a deeper consolidation. In order to solve social challenges and to achieve an effective transformation of the society, social innovation has varied strategies, according to specific problems and social, economic, political, historical and cultural contexts. Therefore, there are no generic best-practice models, as social innovation cannot be replicated, but transversal aspects may be taken into consideration, respecting the territory and the community involved, to design and implement concrete actions for change. Recognising the relevance of social innovation, this chapter addresses the topic from theoretical and practical perspectives, presenting several characteristics that frame the debate, as well as examples of social innovation strategies, incentives and supports in the European Union and its member-states. Emphasis is given to Portugal Social Innovation, which is a recent and exploratory initiative to induce social innovation using the European structural and investment funds, as well as the Fourth sector, which is referred to from the social innovation discussion and European context perspectives.
Kemilly Bianca de Mello, Hugo Emanuel dos Reis Sales Da Cruz Pinto, Wilson José Alves Pedro

Social Innovation for Sustainability and the Common Good in Ecosystems of the Fourth Sector: The Case of Distribution Through Alternative Food Networks in Valencia (Spain)

Abstract
There is increasing attention regarding the contribution of alternative food networks (AFN) for creating more sustainable communities. AFN are initiatives, which try to relocalize and democratize food systems, promoting local and organic agriculture, and reducing the distance between producers and consumers. They take different forms from cooperatives and farmers’ markets to on-line platforms, veg boxes and social enterprises. They propose socially innovative schemes and models for food distribution, which combine an orientation towards public and common good with economic self-sufficiency. In this sense, these initiatives frequently take the form of fourth sector or hybrid organizations.
The chapter tries to address the diversity and complexity of these initiatives. For this aim, it goes beyond the usual focus on one kind on AFN initiatives and tries to explore how ecosystems of AFN work. From this standpoint, it proposes an original framework based on concepts from the literature on the fourth sector and on social innovation. The framework is used to explore the ecosystem of AFN fourth sector initiatives in the city of Valencia (Spain). The study explores six different types of initiatives by using a purely qualitative strategy, which combines nine interviews with members of initiatives, with experts and with local policymakers; participatory observation; and documentary analysis. Results show that initiatives share common features but also a diversity of strategies and approaches, which may be complementary. It also illustrates the key importance of some contextual elements that both limit (e.g. regulations) and enhance (e.g. networking) these ecosystems. They also face questions and contradictions regarding issues as their limits to growth or the class bias of members.
Sergio Belda-Miquel, Eugenia Ruiz-Molina, Irene Gil-Saura

Energy Cooperatives: Socially Innovative Cooperative Enterprises in the Spanish Renewable Energy Industry

Abstract
In this work, an exploratory investigation is carried out into socially innovative initiatives with renewable energies in Spain in order to identify projects which combine renewable energy generation with democratic and equitable management and property ownership. The investigation was carried out by creating a group of search terms that could be used on an Internet search engine to query existing databases in Spain. A structured online questionnaire was then made available to the person in charge of communication at each of the active energy cooperatives. The questionnaire consisted of blocks of questions about different areas, which were ecological objectives, social objectives and the funds used for these objectives. The objective is to provide empirical evidence on the peculiarities of national businesses in this type of cooperatives, in order to find the social dimension of these social enterprises in the fourth sector. Energy cooperatives in Spain are social organizations which primarily supply community energy. Spanish energy cooperatives can be included into the fourth sector of the economy because of the service provided to society by helping the public and creating tangible results whilst being a social enterprise with a commitment to social impact. Spanish energy cooperatives positively combine ecological and social aims with economic goals.
M. Pérez-Suárez, I. Sánchez-Torné, P. Baena-Luna, E. García-Río

The Case of “La Hormiga Verde”: Recycling Electronic Waste (e-Waste) as a Paradigmatic Example of a New Entrepreneurial Trend in the Fourth Sector

Abstract
This chapter proposes a research study based on a case methodology examining the La Hormiga Verde company, an example of entrepreneurship in the Fourth Sector, within the regional scope in Spain.
Currently, society demands companies to be involved in the creation of a fairer and more sustainable economy, and hence the rise of the so-called Fourth Sector. La Hormiga Verde is a clear example of sustainable entrepreneurship in this sector, both because it is a Special Employment Centre (SEC), with almost 100% of its workforce being disabled persons, and because the company focuses its activity on processing electronic waste through the recycling of the polluting materials that this waste contains.
This is an innovative case of value creation in the Fourth Sector, due to both the regional environment in which the business project is developed and the business model it follows. Its business model stands out because of its contribution to the creation of economic value and above all social value, thanks to promoting employment among people with disabilities and to the recycling of electronic waste because of its environmental impact.
On the one hand, La Hormiga Verde creates regional economic value, thanks to its different business model based on solving two problems of local environments—reaching everywhere in its region, and meeting the recycling needs of the final consumer (households).
And on the other hand, La Hormiga Verde is a company that is strongly supported by the creation of social value. To this end, it hires people with disabilities, guaranteeing their well-being and their working conditions in the job market, as well as using social marketing strategies such as organizing recycling contests in schools and raising awareness among the younger population.
La Hormiga Verde provides solutions to a global problem through local actions, instead of vice versa. Thus, it solves some of the important challenges facing sustainable companies, and, as an SEC, provides a business model for the Fourth Sector that is replicable and viable as a contribution to the United Nations 2030 Agenda on Sustainable Development.
Juan Luis Tato Jiménez, María Victoria Carrillo Durán, María García García

Managing Creative Industries Through Cooperation: An Evidence of New Business Models in the Fourth Sector

Abstract
The existence of museums is an important pillar of the cultural and economic system in the fourth sector in both developing and developed countries. It is known that aesthetics is the most important criteria for differentiation in museum experiences; however, the importance for cultural institutions to increase incomes and revenues, improve their benefits and transform their models towards experience-focused practices has led to highlight a visitor orientation in order to make these institutions accessible to tourists and visitors. This work intends to describe the implementation of Lean Six Sigma methodologies in the context of the cooperation between several institutions evidencing new business models in the fourth sector. Firstly, a framework of such approaches is presented and secondly a rigorous managerial process is validated. Additionally, in this chapter, a guidance on process innovation is described. The main conclusions of this chapter reinforce the importance to improve the quality of leisure services regarding the nature and competitiveness of cultural services, and the relevance to intervene on certain variables at different levels of management performance. Additionally, this study provides new insights into how organizational and relational elements impact management in the fourth sector. The results and conclusions of this research are relevant not only in decisions of operational practice, but also on the management theory in the scope of this study.
Luis Manuel Cerda-Suarez

Insights and New Trends

Frontmatter

New Trends in Marketing Aimed at the Fourth Sector in the Fashion Industry

Abstract
In the current environment, markets are becoming increasingly globalized and more competitive. So, organizations are challenged to differentiate themselves or die. The textile and clothing products sector represent a very important and well-established industry that also provides a dynamic boost to the Spanish economy. Especially on the fashion industry, it can be seen how large companies aim to follow the latest trends, it is known as fast fashion.
This work analyses the case of ECOALF, it can observe that this company has implemented a marketing strategy that revolves around sustainable marketing. Briefly developing ECOALF marketing strategies we can observe the following.
Regarding product strategies. Their garments are made from recycled materials, such as plastic bottles from the bottom of the ocean, recycled nylon, cotton and wool and recycled used tyres. The production points go along with the collection’s points of the products, which are made in different countries such as Spain, Portugal, Taiwan or Japan among others. The aim is to create products that promote sustainability among consumers seeking design and quality. In addition, ECOALF does not incorporate natural fur or leather in its garment collection
Regarding the price, in the case of ECOALF, the high cost of manufacturing is reflected in the price of the final product to the consumer.
Based on multi-channel distribution, through online sales, but also with a distribution not only in their official stores (Spain, Netherlands and Germany), ECOALF has presence in different boutiques and shops in many countries: Besides having stands and points of sale in department stores.
Its communication strategy stands out because ECOALF seeks to retain and attract buyers by increasing the perceived quality of the brand, not only by increasing its social networks, or with the product placement or making alliances with more established brands in the market or celebrities. The company constantly seeks to improve the tangible attributes of its products. The philosophy behind brand management is not only based on sustainable marketing but they also want to communicate the quality of fabric and design.
The original of the case study is the change that is taking place in consumers’ purchasing decision and how the world of fashion is evolving. On the one hand, the consumer culture and, on the other hand, consumers more aware with the Fourth Sector and sustainable fashion.
Estela Núñez-Barriopedro, Maria Dolores Llombart Tárrega

Effects of the Orange Economy on Social Entrepreneurship in the City of Medellin

Abstract
The orange economy, according to the Ministry of Culture, is a tool for social development that integrates the arts, cultural heritage (tangible and intangible), cultural industries, and functional creations toward the social enterprise. It arises as a mandatory bet for the State (which could not take advantage of the oil bonanza of past years to diversify its sources of income) to be able to depend on other items other than taxes to finance itself. The big bet then is to move from dependence on mineral resources of the State (oil, coal, etc.) to depend on the fruits of the exploitation of talent, the revitalization of our cultural heritage, and new technological creations based on social for-benefit organizations. The objective was to identify the effects of the orange economy on social entrepreneurship based on the fourth sector. The research was an in-depth panel interview with three managers who created companies during the last decade focused on social entrepreneurship with an emphasis on technology. The effects of social enterprise function show that passion, simple solutions, optimism, philanthropy, global vision, and the generation of will are the consequences of the orange economy philosophy in the fourth sector. In conclusion, the orange economy within the social innovation based on the fourth sector integrates actions into their business model to create positive impacts on society and the environment. The limits of the study were the effect in the interviews because interviews were done over smartphones on account of COVID-19 and the achievement of the managers concerning the topic of orange economy.
Sandra Milena Malavera Pineda, Paula Andrea Malavera Pineda, Juan Santiago Calle Piedrahita

Understanding Sustainable Entrepreneurship in the Fourth Sector Through Integrated Balances: The Case of Uruguay

Abstract
The main purpose of this chapter is to analyse the Fourth Sector in the light of Integrated Balance (IB). From our standpoint, IB constitutes an antecedent of a future development of the fourth sector, a driving force that will define its evolution in the immediate future. IB allows a better understanding about how profits and real cost of production coexist and whether or not it is worth for traditional (pro-profit) companies to report IB. We explore how some key firms’ characteristics are associated with the productive structure of companies, which have not been sufficiently studied in the literature and help to understand which firms are more likely to report IB. Most of the companies examined in the current literature on IB tend to be large/multinational companies from wealthy economies in prosperous sectors of activity, which are ranked in international sustainable indexes (DowJones and similar). Our model incorporates also domestic ones of medium and small size in all sectors of activity, both public and private, with different levels of experience and seniority in Uruguay. Our results suggest that the public nature and the international character of a company are key not only to increase firms’ odds to report integrated balances but also the quality and quantity of these reports.
Javier Ramos, Aiblis Vidal

May “For-Benefits” Businesses Help Sustainability in Future Healthcare Services?

Abstract
Demographic changes in western societies, namely progressive ageing of the population and the increased incidence of disabling chronic diseases, have put significant pressure on health systems and are demanding a new approach to health care. The so-called Health in All Policies concept and the systems theory can provide useful insights into a new health services model that addresses population’s health needs without compromising the system future sustainability. Care integration provides a possibility to involve multiple agents from a variety of social domains, including social entrepreneurs. Their contribution to a more sustainable healthcare system is discussed here; the cases presented in this chapter are used to highlight the role they play, through their “for-benefits” businesses, in framing the future of health care.
Results indicate the relevance of different social partners, from the public and private domain, in these projects, which reveals a more integrative and inclusive approach to health problems and needs.
Conceição Maria Oliveira Cunha, Ana Alexandra Costa Dias

Beyond Business: Understanding the Foundations and Practices of Corporate Activism

Abstract
The objective of this research is to examine the emerging phenomenon of corporate activism and its relationship with the fourth sector. This chapter therefore contains a detailed review of the concepts and theories that allow for a better understanding of the issues around activism. More specifically, it describes the ecosystem in which the companies performing activist practices operate. They perform these as a result of the strategic decisions made by their businesses in different parts of the world. All of this has the aim of meeting the financial targets as well as promoting social change, demonstrating the commitment of these practices to the mission of the for-benefit organization.
To do this, we analyzed a sample of 50 activism-based business communication strategies between 2008 and 2019, representing the most important initiatives in this area. These communication campaigns have been carried out by companies that meet the criteria associated with the fourth sector. A descriptive analysis is proposed in which the time sequence of the activism initiatives is studied, before later describing the most significant characteristics of the organizations studied (type of activism, business evolution, sector analysis, and degree of controversy). The results show when and under what conditions the corporate activism actions have been carried out. As a result, the study allows us to understand and discuss the implications of this new form of relationship between companies and society.
Carlota López Aza, Teresa Pintado Blanco, Joaquín Sánchez Herrera
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