Recent work has emphasized the role of context in shaping the diversification strategies of social enterprises (SEs), but our understanding remains superficial. We identify two types of context-driven diversification strategies—market development diversification (MDD) and market functioning diversification (MFD)—depending on the type of voids being addressed. We then empirically test how these diversification strategies impact the performance of SEs on the twin dimensions of financial growth and social impact. Using a mixed-method approach of qualitative interviews and a longitudinal database of Indian (...) microfinance firms (MFIs), we find that while MFD positively impacts financial growth, MDD has a positive effect on social impact. Furthermore, we find that the strategic fit (or lack of it) between the SE’s legal form and the type of diversification enhances (undermines) financial growth. However, the strategic fit between the legal form and diversification choice does not amplify social impact. The study contributes to product diversification literature, which has paid limited attention to the role of context. (shrink)

Although the simultaneous presence of multiple ambitions is inherent in hybrid venturing, pursuing social and/or environmental missions while securing commercial viability can generate ambivalence among stakeholders. In this study, we draw on the notion of “holism” to show how venture founders both embrace tensioned ambitions and sustain hybridity during critical venture development phases. Based on 6 years of data on The People’s Supermarket in the United Kingdom, we identify three distinct practices— fantasizing, bartering, and conjuring—used by founders to harness tensions (...) productively, without compromising their venture’s multiple ambitions. These practices demonstrate the founders’ ability to maintain a venture’s hybrid nature throughout the ideation, organizational, and scale-up phases, thereby shedding light on the application of “holism” within the realm of hybrid venturing. (shrink)