What is happening in Lithuania?
There are currently around 200 social businesses in Lithuania, but the potential is at least ten times higher, even if social enterprise models implemented by individuals are omitted. Viktorija Bražiūnaitė, Head of LiSVA, sets the scene: „In December 2023, the Seimas of the Republic of Lithuania adopted a definition of social business, incorporating it into the Law on the Development of Small and Medium-Sized Enterprises (SMEs). This change in legislation obliged the Government to create an official procedure for granting social business status, and the Law itself has recently entered into force. In November, the Ministry of Economy and Innovation published a procedure for granting and withdrawing social business status. Such steps are an important boost for the social enterprise ecosystem in Lithuania“.
V. Bražiūnaitė emphasises that the opportunity to participate in a European study for the first time is particularly significant: „The study results confirmed what our association has been consistently highlighting – the financial and systemic changes needed to ensure that social business thrives. Most importantly, we now have data backed by facts, which gives hope that responsible institutions will consider these findings and more easily make decisions that lead to change“.
During the presentation of the study, Prof. Dr Virginija Poškutė, Head of the Master’s Programme in Business Sustainability Management at the ISM University of Management and Economics, commented: „This study is an important step towards the maturity of Lithuanian social business. Participation in the ESEM helps better understand the current situation and creates a clearer image of social enterprise as a professional and promising sector. This is particularly important to increase the visibility and recognition of social business, both in the business community and society at large“.
Karel Vanderpoorten, Policy Officer for social economy at the European Commission’s Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW), emphasised that the ESEM study has a vital role in Lithuania by highlighting the challenges and opportunities for social enterprises. It provides a comprehensive understanding of the barriers to growth while highlighting the sector’s great potential to address societal and environmental challenges. This data-driven approach enables stakeholders to develop targeted strategies and foster a more favourable environment for developing social business in Lithuania.
Karel Vanderpoorten expands further: „ESEM plays a vital role in Lithuania by shedding light on both the challenges and opportunities faced by social enterprises. It provides a comprehensive understanding of the barriers hindering growth while emphasising the sector's significant potential to address societal and environmental issues. This data-driven approach empowers stakeholders to develop targeted strategies and foster a more enabling environment for social enterprise development“.
In Lithuania, the survey data was collected from 10 November 2023 to 31 March 2024 and 48 valid responses were received, with the analysis of the results completed in December 2024. Dr Ieva Žebrytė, Researcher at ISM University, explained further: „Although this is a relatively small sample size, the results provide valuable insights into the situation of social entrepreneurship in Lithuania. The research report provides a comprehensive overview of social businesses in Lithuania, analysing their demographics, stages of development, areas of impact, business models and the challenges they face“.
Women as leaders in social enterprise
Dr I. Žebrytė noted the input of women: „The study shows that social enterprises in Lithuania are driven forward by strong social and environmental goals linked to the global Sustainable Development Goals. Most businesses are tackling issues such as reducing inequalities, creating sustainable cities and promoting good health and well-being. These businesses are mostly founded and run by young, dynamic leaders, as many as 80.5% of whom are women“.
On analysing the data, Dr I. Žebrytė concluded that social businesses in Lithuania are often not identified with social innovators: „The country’s startup and fintech culture has created the impression that innovation must necessarily be related to technology. However, many activities – especially in the social sphere – can be innovative without technological solutions. This trend has been surprising and frustrating; after all, social change does not have to be limited by technology“.
V. Bražiūnaitė added: „On the one hand, this limits the assessment of social change, but on the other hand, it sends us a message about the importance of empowering social businesses to use technology and, in the long term, perhaps even to adopt innovative technological solutions. However, these are not the only relevant changes; the sector’s ecosystem remains fragmented: there is a lack of financial support, bureaucracy is holding back development, and there is still a lack of publicity and understanding of the essence of social business“.
What changes are required?
One of the biggest problems for Lithuanian social businesses and organisations is ensuring financial stability and the legal framework. V. Bražiūnaitė elaborated: „According to the survey, the average annual income of organisations is still low, and almost a third of them face difficulties in generating profits. A lack of tailored financial instruments and high collateral requirements make development difficult. The situation could be fundamentally changed by a greater focus on socially responsible public procurement and growing interest from private investors, which would open up new sources of finance. Such practices could catalyse the sector to achieve the goals to strengthen our country“.
According to Dr I. Žebrytė, an important accent is that social enterprises are not only looking for support or grants, but must be able to sell their products and services. Cooperation with municipalities and traditional businesses and a stronger link with the public procurement system could be the key to strengthening social companies and increasing their social impact.
V. Bražiūnaitė is convinced: „Social business in Lithuania has a huge potential to stimulate sustainable economic growth and address pressing societal issues. To thrive, a strong support infrastructure and coordinated efforts – impact measurement training, simplified legal procedures and public education campaigns – are needed to change attitudes towards social business. By fostering cooperation between policymakers, business and civil society, Lithuania can grow a vibrant ecosystem where the social business will become an important part of the toolbox for building an inclusive and resilient society“.
Lithuanian Social Business Association is the National Partner of the European Social Enterprise Monitor, international consortium led by the Euclid Network. The National Partner is responsible for the contents of the ESEM Lithuania 2023–2024 Report. ISM University of Management and Economics [ISM vadybos ir ekonomikos universitetas], Lithuania, is the ESEM Lithuania 2023–2024 research partner and co-sponsor: this research was partially funded by the grant No. S-MIP-23–111 from the Research Council of Lithuania and by the Vice Rectorate for Research and Faculty ISM University of Management and Economics and was co-sponsored by the Ministry of Social Security and Labour of the Republic of Lithuania under the Project „Lietuvos socialinio verslo asociacijos stiprinimo projektas G-A-L-I-U’24 (gebėjimai-atstovavimas-lyderystė-inovacijos-užimtumas)“ [Lithuanian Social Business Association Institutional Strengthening Project G-A-L-I-U’24 (skills-representation-leadership-innovation-employment, in Lithuanian).
