The purpose of this post is to comment on the Japanese legislative context in which the “Social Enterprise” (SE) concept may evolve.
First of all, the SE concept is still a new one in Japan. It has been introduced to Japan under the influences of American social entrepreneurship theory (mainly the social innovation school like G. Dees) and European social enterprise theory (mainly the EMES European Research Network approach) since the late 1990s (Fujii 2013). In addition, various terms such as Social Business, Social Venture, Social Entrepreneur have become accepted. However, to date we do not find in Japan any SEs with exactly the same characteristics as those in the USA or Europe. On the other hand, there are some Japanese social business structures which appear to have similar goals. Therefore, this post provides some information on the Japanese legal context and mentions new legislation which will influence developments in this sector. The analysis provides some points for empirical studies which may be conducted later.
SE research in Japan is ambiguous because, unlike Korea and the United Kingdom, Japan does not have a certification system for SEs, and, thus, the standard is currently ambiguous for distinguishing SEs (Matsunaga 2013) . In addition, although the Law to Promote Specified Nonprofit Activities was enacted in 1998, de-facto SEs running businesses with nonprofit and social goals or democratic ownership structure have existed since the late 1970s (Fujii 2013), with various types of cooperatives under separate laws (consumers’, agricultural, fishery, and others), and workers’ cooperatives. In addition, there is the existence of Social Welfare Corporations which were defined in the Social Welfare Service Law in 1951.
In Japan, various social welfare services had been mainly provided by private charitable individuals before the Second World War (Nakagawa and Laratta 2013). After the war, the government urgently needed to improve peoples’ lives. However, Article 89 of the Constitution enacted in 1947 banned the government from providing public money and property to services by charitable, philanthropic, or educational entities not subject to governmental control. With this background, the Social Welfare Corporation became institutionalized with its objective of providing social welfare services. Thus, the groups or entities led by charitable individuals with a prewar history became Social Welfare Corporations, which are still private entities.
In April 2015, the Law to Support Needy People came into enforcement in Japan. In addition to an hyper aging society with fewer children, over 2 million people have been receiving income support and the number of “working-poor” has been continuously increasing (working poor is a term widely used in Japan to refer to people who are in employment but in receipt of very law annual incomes, currently defined as less than 2 million yen, or around 15,000 euros). The Law is to prevent such working-poor from needing income support and to promote an intermediary labour market which can be situated between the labour market and a special market with welfare assistance. SEs like Social Welfare Corporations, NPOs, and for-profit companies providing services from CSR point of view are expected to promote such markets. In particular, Social Welfare Corporations are strongly expected to create actively successful cases in order to expand such markets as they are getting more public subsidies and grants compared to private companies. And the equity with other entities such as NPOs and for-profit companies is required.
According to Imamura (2013), Social Welfare Corporations are a typical example of the Japanese “associative democracy” in the social general interest service provision under the guidance of public authorities. What kind of guidance is there? That consists of privilege measures and restrictions as shown in Table 1.
Table 1. Privileges and Restrictions of Social Welfare Corporation
|1. Grants for construction/maintenance of facilities.||1. The property must belong to Social Welfare Corporation.|
|2. Tax benefits upon corporate tax, fixed assets tax, donation tax, and so on.||2. Restrictions on remaining property after its closure.|
|3. The pension or retirement benefits system for employees.||3. A certain level of property possession and restrictions of operational scheme.|
|4. Duty to be under control of a competent authority.|
To sum up, Japanese policy has been expecting Social Welfare Corporations to accomplish a substantial role which meets the privilege measures.
The purpose of this post was to comment on the Japanese legislative context in which SE concept may evolve. In the future, my aim of empirical studies is to consider what kind of practices support people with unmet needs, and how their practitioners are making full use of resources including public grants and subsidies, and co-producing services with them. As mentioned, de-facto SEs in Japan have various legal forms of organizations with different background and histories. In future empirical studies, more collaborative research projects throughout the country will be inevitably necessary in order to clarify convergence and divergence among such legal forms, based on lots of practice on the micro level. At the same time, in order to form a SE concept adapted to the Japanese context and to appeal it to policy makers, research on partnership across different levels, macro-mezzo-micro, based on the context will be required. There is a Japanese proverb to the effect that: people that notice unmet needs should take responsibility for meeting them, and in that sense, we have to cultivate SE research at least until we form a viable SE concept in Japan.
Fujii A. (2013) Social Inclusion in Japanese Workers’ Collectives, EMES-SOCENT Conference Selected Papers, no. LG13-04
Imamura H. (2013) Relational skills for horizontal solidarity in Japan : Unique relational development in co-production among social economy, for-profit, and governmental organizations, EMES-SOCENT Conference Selected Papers, no. LG13-63
Matsunaga Y. (2013) Leadership and social capital in the creation of social entrepreneurship – An empirical analysis of social entrepreneurs in Japan -, EMES-SOCENT Conference Selected Papers, no. LG13-59
Nakagawa S., Laratta R. (2013) Rethinking the Human Resource Management for a Sustainable Social Enterprise: A Study of Japanese WISEs, EMES-SOCENT Conference Selected Papers, no. LG13-26.
Yujiro Minami (MA) is a second-year student of the doctoral course with a major in Social Welfare at the Graduate School of Doshisha University, Kyoto, Japan. His MA thesis is research about participation of those affected by social risks to social enterprises in Italy (3 social cooperatives type B) and Japan ( 1 social welfare corporation and 1 NPO). The theme of his PhD thesis is Constructive Model of Partnership System for Social Enterprises’ Developmental Sustainability. He is a Research Fellow of the Japan Society for the Promotion of Science, a certified care worker, and a certified social worker.
You can contact him at: firstname.lastname@example.org