This study represents the first empirical attempt to conduct a cross-country comparison of social economy (SE) enterprises with other enterprises in the development of social and environmental innovation. Using data from a European survey with >16,000 respondents, we estimate a bivariate probit model with correlated random effects to identify the direct and indirect effects of the SE on social and environmental innovation. We demonstrate that the primary impact of SE enterprises on environmental innovation is through their influence on other enterprises. We also identify the specific levers of innovation in SE and non-SE enterprises. Our empirical findings are consistent with previous research on the SE as a laboratory of innovation and a yardstick for transformative change. Our original findings regarding contextual effects highlights a strong implication advocating public policies to promote SE for its assumed benefits as well as the tendency of SE to foster innovation within non-SE enterprises.