Creating value at a cost: assessing the performance of work integration social enterprises

Purpose The purpose of this study is to apply the theories of market and government failure to examine the impacts of two policy tools designed to enhance the competitiveness of Slovak work integration social enterprises (WISEs): direct wage subsidies for disadvantaged workers and indirect support through preferential access to public procurement. Design/methodology/approach A counterfactual analysis using difference-in-differences (DiD) with propensity score matching (PSM) compares the performance of WISEs with standard enterprises. The control group comprises 45,000 conventional firms, matched against 130 WISEs, and the analysis evaluates both economic and social outcomes. Findings The results show that policy tools improve WISEs’ economic performance in terms of assets, sales and value added, as well as raise wages for disadvantaged workers. However, these benefits entail high fiscal costs and limited efficiency. Wage subsidies may unintentionally encourage long-term retention of disadvantaged workers within WISEs rather than supporting their transition to the open labour market. Research limitations/implications Some social impacts of WISEs, such as quality of life or community benefits, are intangible and hard to measure; this study relies solely on quantitative data and does not capture these important qualitative effects. Practical implications Literature on WISEs often reflects a positive bias towards public support outcomes, potentially obscuring inefficiencies. These include high transaction costs, poor targeting and limited support for the most disadvantaged. Rigorous impact assessment, including counterfactual analysis, is essential for evaluating WISE performance. Originality/value This study applies rigorous evaluation methods to assess WISE performance, identifying inefficiencies in public support allocation that may hinder aid to the most disadvantaged groups.