Scandinavian countries are some of the world's happiest places to live. How is this impacting their social sector?

"We have a word for social entrepreneurs in Sweden. They're called 'Stipsters' – it means a startup hipster," says Johan Wendt, the entrepreneur behind world-leading Scandinavian social enterprise Mattecentrum.

Recently highlighted in Channel 4's series Scandimania as being the happiest place to live, Scandinavia has a unique business culture of innovation and co-operation.

In Denmark, for example, more than 40% of citizens do voluntary work. With similar co-operative values, Sweden has one of the most equal pay systems in the world – with much of their economy focused on small and medium sized businesses.

Nordic businesses are also responsible for giving us platforms such as SoundCloud, Skype and Spotify - and are pioneering in terms of digital innovation.

"Being one of the top countries in the world both when it comes to sustainability, innovation and gender equality Sweden has an excellent environment for social entrepreneurs," says Hanna Sigsjö, manager of Forum for Social Innovation Sweden. "However it is only the last few years that things have really started to happen."

This growth is underpinned by the recent establishment of social investment funds and a number of support organisations, including: Ashoka, Reach for change, SE Forum and Forum for Social Innovation Sweden.

"Social enterprises are exploding in Sweden!" says Dennis Lennartsson, chief executive of Spread the Sign. "The internet burst has caused shorter communications between the user and buyer – it's more direct. Anyone can examine an organisation and their core values, which has forced companies to become more transparent and open, creating opportunities for social enterprises."

Scandinavia's political structure is also influencing the nature of the social enterprise sector. "Being socialist countries for 100 years, Sweden and Denmark had welfare systems which meant the individual didn't have to take care of anything. Now this is changing, and social enterprises are filling the gaps," says Wendt. "This has also influenced the type of social enterprises in Scandinavia. Our social businesses tend to focus more on welfare issues such as education, healthcare, finding missing people and helping women to progress in the workplace. I think this is more the case than in the UK and US."

Another aspect driving social entrepreneurship across Europe is its youth appeal. "It's becoming fashionable to be a social entrepreneur," says Benjamin Kainz, a social entrepreneur who co-founded Young Care – an organisation which connects young workers with elderly people living in care homes. "Social businesses in Sweden are a younger movement – they are more likely to think that you can be involved in politics by using your company as a tool for change in our society, not just a company with social schemes added on."

Wendt agrees: "In Stockholm we have awesome social enterprise start-ups - hundreds of young, digital companies that are up and coming. Today a lot of young people say 'when I grow up I want to be a social entrepreneur' so the idea of social entrepreneurship in Sweden has gone from people not knowing it existed to something children want to be."

Lennartsson believes Scandinavia's sudden social business growth reflects a shift in consumer culture. "People expect that companies are 'good guys' to buy their stuff. If 'greed' was good in the 90s 'social care' is the new good now, which is a lot better."

However, despite enthusiasm for the sector, Scandinavian social enterpreneurship is still in its early stages. Sarah Prosser, country director for the British Council, feels Norway in particular still has a lot to learn from other countries. "There is little understanding here for what a social enterprise is. Social innovation as a term is beginning to have some traction, but is not really used much either. Basically we have a long way to go before it can be compared to Sweden, Finland or the UK."

So why is Norway behind its' Nordic counterparts? "I believe Norway is lagging because it's richest," says Prosser. "It doesn't have a need for social enterprises to replace missing services – though increasingly it's being trialled as a business model to encourage diversity."

Despite having the highest social entrepreneurship growth in Scandinavia, Sweden is still perceived to be behind the UK's social sector. "In Sweden we have a strong tradition that the state should solve our societal challenges. The phenomenon 'social enterprise' is fairly new in our country," says Sofia Appelgren, founder of Mitt Liv, a social enterprises which aims to increase diversity in Sweden.

Maja Frankel, director of Ashoka Scandinavia, agrees: "Social entrepreneurship is still in its early stages in Scandinavia. We need to build an infrastructure both for social intrapreneurship and social entrepreneurship to develop the field further."

Kainz sums up the Swedish social enterprise sector: "Sweden is currently a good environment for social entrepreneurs – there are many small start-ups, a stable political structure and an open mind set for new solutions and change. The social business sector is growing."

"It is not a perfect world yet, but it is getting better."