Part III
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Introduction to Part III – Understanding the Strategy, Structure and Outcomes in Social Ventures
Jeffrey Robinson
In early 2005, one of my doctoral students and I completed an initial scan of the published academic papers and working papers on the topic of ‘social entrepreneurship’ (SE) between 1990 and 2004. We found nine papers that had been published in peer-reviewed journals and five working papers. This might not be a problem for a fledging research area if the nine papers were influential. Unfortunately, it was painfully clear to us once we reviewed the papers that there was a lack of theory building being done in the area of SE during this time period.
Furthermore, we believed that too much was being made of definitions and not enough effort was devoted to exploring the phenomenon as a means toward becoming more definitive.
One of the reasons that this volume exists is to get beyond the ‘quag- mire of definitions’ (Hockerts, Chapter 10 this volume) and begin to explore how strategy and structure interact in social ventures. We have chosen to accommodate the broadest definition of SE in this book in order to address the broadest possible audience of researchers. There are two reasons for this approach. First, when charting the landscape of an emerging phenomenon this is the best way to understand what is happening in the field. Second, the collection of theoretical app- roaches, methods and contexts provides fertile ground for future research debates and directions.
Research in SE can take two routes from this juncture. We can use existing theory to explain the phenomenon of creating and sustaining social ventures. Alternatively, we can consider how the phenomenon brings to light practices, themes and concepts where existing theories do not explain what we see on the ground. As you will see in this
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section, these two approaches are not mutually exclusive. Each of the authors of these chapters draws upon theories and concepts from orga- nization studies, strategic management and entrepreneurship but is clearly not constrained by them. In this section we explore the bound- aries of social entrepreneurial organizations and the strategies they use to achieve their noteworthy goals.
Strategy, structure and outcomes
Recent scholarship in organization theory has stressed the importance of exploring social issues management (Perrow, 2000; Hinnings and Greenwood, 2002; Walsh, Weber and Margolis, 2003). While these calls for research may open up the academic journals to publishing works in SE there is at least one distinction that should be made between the previous work in social issues management and the types of organizations we are exploring in this volume. The calls for research in social issues management typically consider how established firms interface with their societal environment or manage challenging social issues in and around their firms (see Wood, 1991 for a review).
Haugh’s grounded research of ventures in north-east Scotland could be viewed as an answer to this call. In her reporting of a longitudinal qualitative study of six social enterprises we get a glimpse of the complex interactions between these ventures and the community development of a region. By seeing beyond the economic and financial outcomes of these ventures, she is able to deeply explore the social and environmental impacts they have at the community, group and indi- vidual levels. This framework certainly points to future directions for those scholars who are interested in making the links between the organizations and their communities.
Organization scholars interested in social issues should also take note of Hockerts’ chapter on ‘social purpose business ventures’. There has been some scholarship in organization studies and strategic manage- ment describing established companies that do good works in com- munities (commonly referred to as corporate social responsibility).
Hockerts proposes a framework for understanding the creation of
‘hybrid enterprises straddling the boundary between the for-profit business world and social mission-driven public and nonprofit organ- izations’. He argues that the sources of the social entrepreneurial opportunity (activism, self-help, and philanthropy) are important for understanding the structure of a social venture. By making this argu- ment he effectively moves the conversation from organizations that do good works to organizations that were created with a purpose to do 140 Social Entrepreneurship
good works. This is an important step forward in the building of conceptual frameworks for SE.
Desa and Kotha’s chapter explores another aspect of the hybridiza- tion of organizational forms: technology social ventures. By exploring the organizational structure and strategy of an incubator, they have uncovered an incredibly interesting framework for relating the activist, philanthropic and volunteer environments to the strategic manage- ment of technologies for social innovation. What is particularly excit- ing about this research project is the potential for this exploration to yield new directions for those who study technology ventures and for those that study entrepreneurship.
These papers represent a cross-section of theory and evidence about the organization, strategy and outcomes of social entrepreneurial actors. In each of these chapters, the concepts and frameworks devel- oped are but the first steps in creating a comprehensive set of theories that inform our understanding of organizations and strategic manage- ment. I am convinced that these chapters form the first wave of schol- arship that goes beyond battles over definitions and begins to develop theory that has relevance and impact. At this juncture in the develop- ment of theories explaining the advent and the evolution of SE, it is to our field’s advantage to follow the examples and the direction set out by these scholars.
References
Hinnings, C. R. and Greenwood, R. 2002. Disconnects and consequences in organization theory? Administrative Science Quarterly,47(3): 411–21.
Perrow, C. 2000. An organizational analysis of organization theory. Contemporary Sociology,29(3): 469–77.
Walsh, J. P., Weber, K. and Margolis, J. D. 2003. Social issues and management:
Our lost cause found. Journal of Management,29(6): 859–81.
Wood, D. J. 1991. Corporate social performance revisited. Academy of Management Review,16(4): 691–718.
Jeffrey Robinson 141
10
Entrepreneurial Opportunity in Social Purpose Business Ventures
Kai Hockerts
Literature on social entrepreneurship (SE) embraces an exceedingly broad range of topics. It covers individual, organizational, as well as interorganizational level phenomena (Boschee, 1995; Bornstein, 1996;
Leadbeater, 1997; Brinckerhoff, 2000; Dees, Emerson and Economy, 2001a; Drayton, 2002; Johnson, 2002; Emerson, 2003; Mair and Martí, 2004). This paper focuses on the organizational level phenomenon of social enterprises. However, even this term leaves ample room for ambiguity.
Scholars have used the expression to describe:
• A specific ownership structure – cooperatives and other mutually owned organizations (such as producer or consumer cooperatives) are often referred to as social enterprises,
• Fundraising ventures – subsidiaries of nonprofit organizations, whose only purpose is to raise funds for the principal charitable objective (such as in the case of the WWF merchandising arm), can also be considered social enterprises (Dees, 1998a; Fowler, 2000),
• Social purpose business ventures – a final variety of social enterprise refers to for-profit businesses (such as in the case of many fair trade companies) whose main purpose of existence is to create (external) social benefits (Campbell, 1998; Larson, 2000; Foryt, 2002; Schaltegger, 2002; Volery, 2002; Hockerts, 2003; Mair and Noboa, 2003a).
Scholars may find the sources of entrepreneurial opportunity that I suggest below to be of relevance to cooperatives and fundraising ven- tures as well. However, in this paper I am principally interested in the third type of social enterprise – the social purpose business venture (SPBV). The existence of SPBVs is puzzling from a purely economic
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point of view. SPBVs purport to exist primarily to create a public good.
However, while the benefits they create are public they are nonetheless incurring private costs. How can they manage to do so? Putting social welfare first and still being a profitable business is counterintuitive.
Management research has no theoretical explanation for these phe- nomena, nor does it offer guidance for social entrepreneurs who need to navigate the fault line delineating for-profit strategies from the domain of public and nonprofit management.
In this paper I will outline a conceptual framework for the sources of entrepreneurial opportunity for social purpose business ventures. First, I review briefly the extant literature on SE. Then, I develop a concep- tual framework for SE identifying three types of social entrepreneurial opportunity.
SE as a new organizational construct
The term SE has emerged from practice rather than academic debate.
Accordingly, even today, the definition of SE remains quite fuzzy, as remarked upon by Foryt:
‘Social Entrepreneurship’ is a broad term that does not have a widely accepted precise definition. In practice, it is used to describe everything from revolutionary leaders in third world countries who are not at all involved in business to first world businessmen and women who start a socially responsible business in their home country. Thus Mahatma Gandhi and Ben Cohen of Ben and Jerry’s could be thrown into the same category. (Foryt, 2002: 1)
Although the motivation to build a viable business can be part of SE, many authors do not think this to be a necessary condition. Social entrepreneurs can thus be community leaders, activists in nonprofit groups, or government employees who identify and implement any kind of innovation that furthers social well-being. The term ‘social entrepre- neurship’ emerged in the late 1990s in the US (Boschee, 1995; Henton, Melville and Walesh, 1997; Bornstein, 1998; Dees, 1998a; 1998b;
Brinckerhoff, 2000; Dees, Emerson and Economy, 2001a; Drayton, 2002); and in the UK (Leadbeater, 1997; Warwick, 1997; Zadek and Thake, 1997; SSE, 2002). However, as Mair and Martí (2004) emphasize, examples of SE can be found around the globe.
The definitions for SE emerging from the literature are very disparate.
At the individual level SE focuses on persons driving social change and innovation. These social or civic entrepreneurscan be individual citizens, Kai Hockerts 143
community activists (Henton et al., 1997; Leadbeater, 1997; Swamy, 1990; Thompson, Alvy and Lees, 2000); or civil servants (Leadbeater, 2000; James, 2001) who use entrepreneurial spirit in order to reach social objectives. Bornstein defines a social entrepreneur as ‘a path- breaker with a powerful new idea, who combines visionary and real- world problem solving creativity, who has a strong ethical fiber and who is “totally possessed” by his or her vision for change’ (Bornstein, 1998: 36). Mair and Noboa (2003b) identify empathy, moral judgment, self-efficacy, and social support as the key aspects that distinguish social entrepreneurs.
At the organizational level SE is conceptualized in three different ways. A first perspective could by described as commercializing a nonprofit organization. In essence this view of SE brings a ‘for-profit’ phi- losophy to the many nonprofits that experienced a financial crunch in the 1980s as they found it more and more difficult to finance their work through donations and grants. Boschee (1995: 21) reports that, while nonprofits had 27 per cent of their annual operating funds in reserve in 1977, this proportion had fallen to just 1.4 per cent by the mid-1990s. By going at least partly ‘for-profit’ some organizations have started to sell what they used to give away for free in order to raise alternative income. Many nonprofits remain fearful of commercial operations undercutting their social mission (Dees, 1998a; Fowler, 2000). However, a viable business can often be the best option to gen- erate a dependable income to pay for charitable actions (Grimm, 2000).
A more upbeat interpretation of SE in nonprofit organizations is the notion that a good dose of market-orientation will help social organizations to deliver more social value for the money they spend.
By applying successful business practices (that is, by focusing on the most effective programs and using strategic planning and control mechanisms) nonprofit organizations can increase their efficiency and thus have a higher impact with a given budget (Drucker, 1989;
Boschee, 1995; Warwick, 1997; Dees, 1998a; Dees et al., 2001a;
2001b; Sagawa and Segal, 2000; Zietlow, 2001; SSE, 2002). This approach of ‘bringing business expertise and market-based skills to the nonprofit sector’ (Johnson, 2000: 6) can be best summarized as efficient nonprofit management.
There is also a research tradition to link a specific ownership struc- ture to social enterprises. Cooperatives and other mutually-owned organizations are often referred to as social enterprises by certain scholars.
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A fourth view at the organizational level found in literature is that of SE as social purpose business ventures (Campbell, 1998; Larson, 2000;
Foryt, 2002; Schaltegger, 2002; Volery, 2002; Hockerts, 2003; Mair and Noboa, 2003a) In this case an emerging social innovation is seen as a business opportunity and turned into a commercial for-profit business creating, in the process, new market space while also attaining a social objective. Typical examples would be The Body Shop or Whole Foods Market.
At the societal level SE is often understood as networks for social entre- preneursandventure philanthropy. In this case information and practical support, as well as charitable donations or equity capital, are made available to entrepreneurial individuals and organizations that have a clear social mission and require a targeted amount of funds to realize it (Christopher, 2000; EMFK, 2002; Joshua Venture, 2002; Orloff, 2002).
A typical example is the Ashoka Fellow program that has networked over 1200 recipients worldwide who are working on radical social innovation and provided grants to allow them to realize their objec- tives (Bornstein, 1998; Ashoka, 2002; Drayton, 2002). Bill Drayton, a former McKinsey consultant and assistant administrator at the US Environmental Protection Agency (EPA), founded Ashoka in the early 1980s, and is probably one of the most vocal promoters of SE. Other examples include The Schwab Foundation for Social Entrepreneurship in Geneva and London-based UnLTD – the Foundation for Social Entrepreneurs.
So far practitioners have been the main driving force for SE. Research contributions have tended to ‘spread the word’ through anecdotal evi- dence and descriptive case studies. A literature review conducted by the Canadian Centre for Social Entrepreneurship yielded only seven journal articles against a host of 16 contributions from news magazines and websites. Not surprisingly the author concludes that ‘research on social entrepreneurship lags far behind the practice’ (Johnson, 2000: 2);
a finding shared by other scholars (Prabhu, 1999; Thompson et al., 2000).
In analyzing social enterprises I focus this paper on the sources of entrepreneurial opportunities for social purpose business ventures.