Social Enterprise: 21st century jigsaw

Professors Tina Saebi, Norwegian School of Economics, Nicolai Foss of the Copenhagen Business School and Stefan Linder of ESSEC Business School take us on a quest to find the missing pieces that will aid and redirect the course of research on social enterprise.

Professors Tina Saebi, Norwegian School of Economics, Nicolai Foss of the Copenhagen Business School and Stefan Linder of ESSEC Business School take us on a quest to find the missing pieces that will aid and redirect the course of research on social enterprise.

By CoBS Editor Guragam Singh. Related research: Social Entrepreneurship Research: Past Achievements and Future Promises, Journal of Management Vol. 45 No. 1, January 2019 70–95.

If one were to say that social enterprise is a new phenomenon, it would only be partly correct, for in 1953 the American economist Howard R. Bowen penned an entire book titled ‘The Social Responsibilities of the Businessman’ on the subject. Yet, the notion of social entrepreneurship as a powerful business agent that can catalyse significant transformation, has only been around for a little more than a decade. Especially in academia, the rapid growth of social entrepreneurship research, the emerging nature of the literature, and the fact that social entrepreneurship builds on different disciplines and fields (e.g., entrepreneurship, sociology, economics, ethics) have led to a rather fragmented literature without dominant frameworks.

As such, Tina Saebi, Nicolai Foss and Stefan Linder have brought to light the multidimensional nature of social enterprise, reviewed the achievements as well as shortcomings of the increasingly broad and rich social entrepreneurship research, and highlight the need to take a holistic approach—join all the pieces of the jigsaw that make up social entrepreneurship and bring them under a one roof.  

Finding unity in diversity

But in order to do so, it is important for social entrepreneurship to be recognised for what it does and does not stand for. Given the differentiated research, there has been no single definition of what differentiates social entrepreneurship for other related phenomena—CSR, philanthropy, sustainability etc. — which are often not well delineated from it. In the face of this, Saebi, Foss, and Linder focused on finding common ground among the variety of definitions.

In doing so, the researchers draw from previous research and showcase that what sets social entrepreneurship apart from its close cousins is its hybrid nature. Commercial entrepreneurship is involved with all the traditional hallmarks of finding ways of creating value—opportunity identification, resource mobilisation and the like. Social entrepreneurship on the other hand draws on the hallmarks if and only if profitability goes hand in hand with solving a social problem.

Similarly, social entrepreneurship differs from CSR in that the latter is an extension of a firm’s traditional business activity to reach out to its stakeholders and with the aim of increasing profit. Charitable and not-for-profit organisations too are different, for their funding is usually from external sources, such as the government. Consequently, their social initiatives do not compete for resources with profit-seeking ones.

As such, they draw from the idea that ‘the dual mission of social and economic value creation reflects the core characteristic of social entrepreneurship.’

Two birds with one stone

Professors Tina Saebi, Norwegian School of Economics, Nicolai Foss of the Copenhagen Business School and Stefan Linder of ESSEC Business School take us on a quest to find the missing pieces that will aid and redirect the course of research on social enterprise.

This hybrid nature of social enterprises manifests itself in two ways. The first is whether the people—whom the organisation wants to reach out to—are also active participants in the social entrepreneurship’s model. Aravind, which provides free eye-care in rural India, is an example where social value is created for the beneficiaries. On the other side of the coin is Unicus—a Norwegian consultancy that employs people diagnosed with Asperger’s syndrome—representing a model where the beneficiaries are part of the value creation chain.

The second dimension is the extent of integration of social and commercial activities. For example, commercial activities may subsidise social ones as in the case of TOMS shoes. Or, the social activity leads to economic value capture—the case of award-winning Grameen Bank, which provides collateral-free micro-credit to the destitute in Bangladesh.

When these two dimensions are crossed with each other, the resultant matrix gives 4 possibilities – as illustrated in Figure 1.

A typology of social enterprise

First, social enterprises can have a ‘two-sided value model’, such as with TOMS shoes, which gives one pair of shoes to a needy child for every pair bought. Second, SE may employ beneficiaries to produce goods or services sold in the commercial marketplace. For example, the UK’s Jamie Oliver, who trained and hired disadvantaged youths in his restaurant, proceeds from which funded the said training. Next in line is where the beneficiaries are paying customers, as illustrated by VisionSpring, which sells high-quality eyewear to the poor at affordable prices. Last is when the beneficiaries are both internal and external customers—VisionSpring not only sells its eyewear to the marginalised, but also employs them in sales and distribution.

In order to better understand the multi-faceted expression of social entrepreneurship, the research team studied close to 400 articles from crème-de-la-crème journals and focused exclusively on social entrepreneurship while discounting the similar fields of sustainable, developmental, and institutional entrepreneurship or entrepreneurship in general previously mentioned. As such, the researchers identified the factors that affected social entrepreneurship at three distinct levels—individual, organisational, and institutional—and the links that were missing.

Management phenomenon are generally multi-dimensional. As such, the research team made a multi-stage and multi-level framework capable of integrating the various levels of analysis previously discussed. Drawing on theory, this is divided into 2 stages—before and after the venture is formed.

In drawing up such a framework, the research team forged linkages between the effect of the macro-environment and the individual’s goals and beliefs (situational mechanisms), the effect of these goals on individual behaviour (action-formation mechanisms), and the effect of these in bringing about broader changes (transformational mechanisms).

These linkages are important because they try to accurately describe the relationships that affect the 3 levels of analysis. As such, pursuing these mechanisms further, both before and after the venture is formed, is necessary to fill existing gaps in academia, and to find out what makes social enterprise tick.

New-age superheroes

Social entrepreneurs are the new heroes

At the individual level, theory suggests that a key trait of social entrepreneurs is a prosocial personality—the inclination to empathise with others, coupled with qualities that promote the entrepreneurial spirit—self-efficacy, work-history with social organisations.

Yet, context is everything. While these qualities drive a person forward, people are also influenced by personal experiences—poverty, limited access to education etc.—that give a spark to further kindle the flame of emotions inside. Batman, Spiderman, the list is endless—it’s the stuff superheroes are made of. Same for these entrepreneurs. The difference is between action and intent. Social entrepreneurs need to actually seek resources, gain support and mobilise them to form their ventures. And not look back. As such, research needs to expand to what the entrepreneur does to create value after the green signal is given. To this end, organisational and institutional level analysis is equally required at the venture formation phase.

Drifting apart

Organisational analysis results have been divergent—focused either on the ability to finance a venture, or on the importance of networking, or stressing on marketing capability to name a few. Given the case-based nature of this research, little is known about the common features that can make or break the social venture, and whether these factors are different for commercial ones.

What is known is that the hybrid nature leads to rifts that need to be addressed properly in case the venture wants to thrive. This can be done in various ways, such as hiring managers who embrace this hybridity. Yet, social entrepreneurship’s mandate requires that answers be given to what kinds of social ventures exist, and what kinds may cause what problems.  

Other areas needing exploration are the link between type of venture models and the nature of the legal and organisational structure as well as in the management of the venture, the factors influencing the choice of a particular model, and the choice of model on venture success.

A common currency

Research points us to the fact that the lack of strong institutions and the unwillingness of the private sector to step-up to meet social demands gives rise to social enterprises. These have been known to tackle problems with a wide array of ills that plague society today—poverty alleviation, women empowerment, inclusive growth, and so on and so forth.

Just as a fish cannot be judged by its ability to climb a tree, so too is the case with the measurement of the impact of different kinds of social ventures. But, the end goal of any social enterprise is the same—solving a social problem while staying profitable. To this end, it is imperative that a common framework be developed to gauge and assess the effectiveness of such enterprises. This void can be filled by institutions, which set the stage for social enterprises to work in and with, and thus can set some key metrics that are acceptable by a wider scholarly audience and applicable to multiple contexts.

The road not taken

Professors Tina Saebi, Norwegian School of Economics, Nicolai Foss of the Copenhagen Business School and Stefan Linder of ESSEC Business School take us on a quest to find the missing pieces that will aid and redirect the course of research on social enterprise.

As previously seen, personal experiences are important. Yet, in societies with multiple failures, different individuals may perceive things differently. Some may want to act as the few drops of water that make the mighty ocean. Others may want to revamp the water cycle itself. To this end, exploring how institutions can affect individual behaviour—say, preference for a particular cause—is one area requiring further study.

There is also little research on the different processes for different kinds of social missions. Building on the above example of what challenge the entrepreneur takes, it is important to understand the effect of judgmental and cognitive abilities of the individual on opportunity identification and action.

Further, studies have largely focused upon sole individuals as opposed to entrepreneurial teams. This leaves a blank in social entrepreneurship research for how team dynamics may strongly affect the kind of social mission selected, design of the social venture, the motivation of the cohort and as such, the ability to secure funding and translating thought into action.  

Another area requiring exploration is the cross-level mechanisms that relate individual decisions to organisational objectives, design on a broader scale, especially after the venture has been formed.

Dive-in

But all is not over when the venture takes-off. In fact, one might say that the journey has only just begun. As such, better understanding and practice will require further work on relationships that link individual motivations to the social value created. Especially given the decision and resource conflicts that can arise out of the hybrid nature of the model.

Other incentives, such as certifications for ventures that conform to high standards, may also affect motivation and need to be analysed.

Moreover, as these ventures are formed by teamwork, it is important to study social entrepreneurship on the organisational level from an ethnographic perspective. This means looking into issues that shed light on the human condition outside of isolation—team-size, hierarchy and the like. The entrepreneur may also have empire-building on the mind when forming a venture. Or not wanting to delegate tasks. Some may perhaps lack enhanced communication skills, reducing their ability to effectively engage with other stakeholders.

The bigger picture

As such, there are many topics that require further exploration if we are to know the dark side of the moon that is social entrepreneurship. However, in doing so, we must not lose sight of the bigger picture. After all, social ventures only exist to lift human society as a whole, even if done bit by bit.

To this end, research must not be limited to the triumphs of the social venture alone but rather should also focus on whether and how these ventures truly metamorphosed society on large-scale by creating value rather than redistributing it from one group to the other. Taking us all back to Howard R. Bowen and the mid-20th century.

Professors Tina Saebi, Norwegian School of Economics, Nicolai Foss of the Copenhagen Business School and Stefan Linder of ESSEC Business School take us on a quest to find the missing pieces that will aid and redirect the course of research on social enterprise.
Tina Saebi, Nicolai Foss, Stefan Linder

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