Social enterprises straddle the border between the public and the private sector and break new ground in the allocation and management of economic resources, forming what the European Commission calls the "third system". While they all take a broadly similar approach across countries, these enterprises operate along very different lines. They do, however, seek to achieve the same goals, re-integrating disadvantaged groups into the labour market and providing goods and services. Social enterprises take an entrepreneurial approach and draw on the local environment to enhance their economic and social performance. Their emergence has aroused both enthusiasm and controversy. In the interests of rational debate, this report looks at how they are likely to develop, taking stock of existing social enterprises and highlighting the more advanced experiments.