Understanding the Emerging Fourth Sector and Its Governance Implications

Abstract

The fourth sector has traditionally been described as encompassing families, households, neighbours, and friends, however, competing definitions have recently begun to emerge. Three different strands can be observed in the fourth-sector literature. The first strand centres on the notion of one-to-one aid. The second strand centres on self-organizing civic activism. The third strand focuses on hybrid organizations. In this paper we will analyse the main commonalities and differences in the understanding of the fourth sector. Our conclusion is that despite differences, there is enough ‘family resemblance’ between the three different streams of fourth-sector discussion to warrant a synthetic reflection of the governance issues related to this novel phenomenon. As a result of that analysis, we distinguish five specific governance issues that are related to 1) the ability of the public sector to work upon shared values, 2) the empowering nature of self-organizing, 3) the need for new operational rules under the ‘sharing economy’, 4) the transitory but structuration-oriented nature of fourth-sector processes and 5) the notion that fourth-sector involvement does not necessarily improve the quality of participation.

Framing the fourth sector – dystopia or future contours?

“…One of the objectives of this research was to clarify the definition of the fourth sector, and the results obtained point to the majority trend in the scientific literature to use the term as a spectrum of hybrid organizations (HO). In the similarity analyses, concepts that could be associated with the fourth sector, such as self-organized civic activism (Rask et al, 2020), were not evident. Therefore, in the context of the fourth sector, civic activism underscores the idea of citizen-led efforts to drive social innovation and impact, thus blurring the lines between traditional sectors and fostering collaborative, community-driven solutions to complex problems, although this bottom-up approach was not clearly present in the similarity analyses.…”

“…In broad terms, the fourth sector refers to a new type of organization/model that exists alongside the traditional three sectors of the economy -the public sector, the private sector, and the nonprofit sector -, and is characterized by its focus on social and environmental impact, rather than solely on profit (Rask et al, 2020). There are currently three main approaches (see Table 1) that use the designation fourth sector, despite having very different characteristics.…”

“…The fourth sector represents a novel paradigm that bridges the gap between traditional for-profit and nonprofit sectors by integrating social and environmental objectives into business models (Piedrahita et al, 2021). Fourth-sector organizations, which might be dubbed as social enterprises or impact-driven businesses, aim to generate revenue while simultaneously addressing social or environmental issues (Martins et al, 2021;Rask et al, 2020). They operate under a hybrid model that emphasizes both financial sustainability and positive social impact.…”

“…Traditionally, organizations are categorized into the public, private, and third sectors (Avidar, 2017;Carswell et al, 2012;Hyde, 2023), and have long shaped our collective landscape by reflecting the cultural patterns, values and norms of the society in which they emerged. Nevertheless, globalization, the shifts of technological advancement, and the growing complexities of contemporary societies have reshaped the narrative of organizational existence (Fourth Sector Network, 2009;Pires, 2017;Rask et al, 2020).…”