Social Mission or Revenue Generation?

Abstract

Social enterprises are nonprofit, for-profit or hybrid organizations that use business methods to create social change (Dees 2007; Light 2005; Martin and Osberg 2007; Neck, Brush, and Allen 2009;). If it succeeds, the social enterprise model could prove to be a viable pathway to greater social justice in an era of decreasing funding for government services and nonprofits (Emerson and Twersky 1996; Harding 2004; Murphy and Coombs 2009; Wilson 2008). However, skeptics worry that the perils of privatization, bottom-line thinking, and deceptive marketing potentially embodied by the “business methods” that social enterprises employ may undermine the potential of this new approach to solving social problems (Bateman and Chang 2012; Farmer 2009; Nega and Schneider 2014). The three articles that make up this dissertation examined the ways social entrepreneurs perceived and managed tensions between social mission and market institutional logics. Their ability (or lack thereof) to reconcile these contradictory imperatives could contribute to whether social enterprises ultimately succeed or fail as vehicles for positive social change. Social Entrepreneurs at the Crossroads: Four Approaches to Responding to Dual Institutional Logics suggests that the widely accepted characterization of social entrepreneurs as compassionate individuals motivated to address intractable social problems innovatively (Alvord, Brown and Letts 2004; Lehner and Germak 2014; Mair and Marti 2006; Miller, Grimes, McMullen and Vogus 2012) is simplistic. From in-depth interviews with twenty (inter)nationally recognized social entrepreneurs I derived four distinct categories: Disillusioned Dreamers, Social Capitalists, Do-Somethings, and Bridgebuilders. Half of these respondents did not perceive tensions between logics; another quarter did not wrestle with the tensions they perceived. Only the Bridgebuilders perceived tensions and then persisted in focusing on both logics and sets of actors to harness synergies. As a result, only Bridgebuilders offer a truly hybrid model for social mission work within the current economic context, whereas the others hew toward a single dominant logic. One Size Does Not Fit All: Legal Form and US WISEs focuses on work integration social enterprises (WISEs), organizations that address the chronic unemployment of marginalized populations. The data demonstrated that contrary to the expectation that WISEs would exemplify “contested” organizations (Besharov and Smith 2014), eight of the ten WISEs studied did not experience significant conflict between social mission and market logics. Rather, WISEs generally had one logic that dominated their operations: a market logic in for-profit WISEs and a social mission logic in nonprofit WISEs. Workers’ employability emerged as an important variable, with for-profit WISEs creating jobs for more employable populations and nonprofits offering job training and “wraparound” services to harder-to-employ populations. Only two WISEs experienced substantial tensions, when social entrepreneurs attempted to prioritize a job training/services mission within a for-profit form. This data demonstrates that a job creation approach aligns best with a for-profit WISE form and a job training/services approach to a nonprofit WISE form. However, neither form has succeeded in creating a system-transforming model that successfully combines revenue generation with a robust training/services/job creation mission. This suggests that breaking traditional nonprofit and for-profit patterns to deliver substantial market and social mission outcomes within a single organization is a significant challenge. Stakeholder Resistance to Social Enterprise Hybridity examines how social entrepreneurs perceive the support of key stakeholders in their attempts to balance competing social mission and market logics. Despite evidence of social interest in ethical capitalism, this data suggests that well-resourced stakeholders push social entrepreneurs to prioritize price, revenue generation, and measurement. This includes both traditional organizational stakeholders and hybrid-specific stakeholders. Customers and clients demanded low prices and high value. Donors demanded quantification and impact measurement. Investors expected market rate financial return. Finally, social enterprise gatekeeper organizations (fellowship granting bodies) were focused on the market logic characteristics of sustainability, scale, and entrepreneurial ability, pushing the field toward market logic modes of operating. Social entrepreneurs generally responded by acquiescing to pressure to emphasize a market logic in their interactions. Counter to current literature that suggests social entrepreneurs should problem-solve to avoid single logic dominance, social entrepreneurs generally allowed price, business strategy, competition and measurement to shape their interactions with stakeholders. Given the importance of stakeholder buy-in for organizational legitimacy, the field of social enterprise needs to find a way to create and capture stakeholder support for dual logics rather than depending on individual social entrepreneurs to withstand the push toward marketization. Overall, despite persistent efforts at creative solutions to social problems by some individuals, the research shows a strong undertow for social enterprises to adopt business logics and business models.