To shield stakeholders from exploitation, society increasingly expects organizations to engage with stakeholders. While exploitation of stakeholders is of great concern, economic literature points to the costly nature of stakeholder engagement vis-à-vis alternative mechanisms that protect stakeholders, such as competitive markets. When the costs of stakeholder engagement outweigh the benefits, why would organizations engage with stakeholders? Through an analysis of the cooperative enterprise and a comparison with its capitalist counterpart, we theorize two additional reasons why stakeholder engagement is beneficial. First, (...) we explain how stakeholder engagement facilitates long-term organizational resilience and protection of stakeholders in times of crisis, and second, we show how engagement is a decisive ingredient in answering non-economic value requirements of stakeholders. To conclude, we contribute to the broader stakeholder engagement and cooperative literature by stressing that engagement practices, and particularly democratic governance arrangements, are subject to design principles that sometimes favor stakeholders in capitalist firms. (shrink)

Despite its central position in the history of European and Christian thought on the protection of human dignity, the virtue of mercy is currently a problematic and under-developed concept in business ethics, compared to related ideas of care, compassion or philanthropy. The aim of this article is to argue for its revival as a core principle of ethical business practice. The article is conceptual in method. An overview is provided of the scope of contemporary business ethics research on related topics (...) and clarifies some of the similarities and differences between mercy and popular terms, such as compassion and prosocial behaviour. The question is then explored as to why mercy has so little traction in business ethics. Some of the history of the idea of mercy in European and Anglophone philosophy is discussed, from Anselm and Aquinas to the present day, showing how discourse on mercy came to be split into a wider concept of the prevention and alleviation of suffering (_misericordia_) and a narrower one of clemency or leniency. Aquinas’s wide concept of the virtue of _misericordia_ is developed as the basis for a principle of mercy, which is applicable directly to corporations. The practical implications of this for standards of corporate behaviour towards employees and other stakeholders are then considered through the introduction of a ‘vulnerability grid’. The grid offers a critical contrast to other analysis tools, such as stakeholder power-interest matrices. Cases drawn from empirical studies are used to illustrate application of the grid and to challenge some common assumptions of stakeholder theory. (shrink)

Stakeholder engagement has grown into a widely used yet often unclear construct in business and society research. The literature lacks a unified understanding of the essentials of stakeholder engagement, and the fragmented use of the stakeholder engagement construct challenges its development and legitimacy. The purpose of this article is to clarify the construct of stakeholder engagement to unfold the full potential of stakeholder engagement research. We conduct a literature review on 90 articles in leading academic journals focusing on stakeholder engagement (...) in the business and society, management and strategy, and environmental management and environmental policy literatures. We present a descriptive analysis of stakeholder engagement research for a 15-year period, and we identify the moral, strategic, and pragmatic components of stakeholder engagement as well as its aims, activities, and impacts. Moreover, we offer an inclusive stakeholder engagement definition and provide a guide to organizing the research. Finally, we complement the current understanding with a largely overlooked dark side of stakeholder engagement. We conclude with future research avenues for stakeholder engagement research. (shrink)

Social enterprises combine activities, processes, structures, and meanings associated with multiple institutional logics that may pose conflicting goals, norms, values, and practices. This in-depth multi-source case study of an ecological social enterprise in Malaysia reveals how the enactment of the family logic interacts with the market and ecological logics not only in conflicting but also in synergetic ways. By drawing attention to the institutional logic of the family in social entrepreneurship, this study highlights the heterogeneity of social enterprises. The findings (...) have implications for research with social enterprises and family-owned firms in relation to the ethical obligations of these organizations and the interactions of multiple logics. (shrink)

An increasing amount of research has examined the management of competing logics, and possible tensions arising between them, within “hybrid organizations.” However, the ways in which the relationships of hybrids with other organizations shape the conciliation of these logics and tensions have received limited attention so far. In this theoretical paper, we examine how hybrid organizations deal with interorganizational collaboration, in particular whether and how their hybridity can be maintained when they partner with “dominant-logic organizations.” Drawing on empirical literature on (...) social enterprise–corporate collaborations, we develop a framework and several propositions on how competing logics and their balancing within hybrid organizations may be affected by interactions with organizations underpinned by one dominant logic. We suggest that influences will mostly depend on the type of collaboration pursued. A collaboration based on a lower level of engagement and interaction between the two partners is likely to give precedence to one logic over the other, reducing inter-logic tensions but possibly compromising organizational hybridity. By contrast, a collaboration featuring numerous interactions and mission compatibility may facilitate sustained hybridity if tensions are acknowledged and managed. Our propositions contribute to the literatures on hybrid organizations, interorganizational collaboration, and social enterprise. (shrink)

The development of commercial revenue streams allows traditional nonprofit organizations to increase financial certainty in response to the reduction of traditional funding sources and increased competition. In order to capture commercial revenue-generating opportunities, traditional nonprofit organizations need to deliberately transform themselves into social enterprises. Through the theoretical lens of institutional entrepreneurship, we explore the institutional work that supports this transformation by analyzing field interviews with 64 institutional entrepreneurs from UK-based social enterprises. We find that the route to incorporate commercial processes (...) and convert traditional nonprofit organizations into social enterprises requires six distinct kinds of institutional work at three different domains; these are—“engaging commercial revenue strategies”, “creating a professionalized organizational form”, and “legitimating a socio-commercial business model”. In elaborating on social entrepreneurship research and practice, we offer a comprehensive framework delineating the key practices contributing to the transformation from traditional nonprofit organizations to social enterprises. This extends our understanding of the ex-ante strategy of incorporating commercial processes within social organizations. Furthermore, the identification of these practices also offers an important tool for scholars in this field to examine the connection of each practice with different ethical concerns of social entrepreneurship in greater depth. (shrink)

ABSTRACT:In this study, we investigate how different internal and external stakeholders influence the innovation strategy of a social enterprise to adopt product, process, and partnership innovations that impact either social or commercial performance. Relying on survey data from a sample of work integration social enterprises, we find that in situations of turbulence, administrative leaders do not significantly influence the innovation strategy of a social enterprise. Instead, board members and external stakeholders seem to play a role. Our study contributes to strategic (...) and business ethics research on social enterprises and, more broadly, to the literature that explores how business organizations combine social value creation and wealth generation. (shrink)

A growing body of research looks into business-led efforts to create social value by improving the socio-economic well-being of Base of the Pyramid (BoP) communities. Research shows that businesses that pursue these strategies—or BoP businesses—face distinct sets of challenges that require unique capabilities. There is, however, limited effort to synthesize current evidence on the mechanisms through which these businesses create social value. We systematically review the literature on BoP businesses, covering 110 studies published in business and management journals. We start (...) by using bibliographic analysis to map the broad contours of the literature in terms of its common theoretical and empirical approaches, intellectual core, and evolution in time. We subsequently conduct a qualitative content analysis on the identified articles to synthesize their main findings. The analysis leads to a conceptual framework that explicates the antecedents, constraints, capabilities, and contingencies that drive social value creation. In addition to providing a rich and systematically organized account of the evidence, our analysis provides a critical reflection on the ethical dilemmas of social value creation efforts for the BoP, and outlines promising avenues for future research. (shrink)

Process models are valuable conceptual tools to help in understanding the approaches to value creation in social enterprises. This teaching case illustrates the application of a process model about creating, building, and sustaining a social enterprise with a mission to provide clean water to communities in need. The social enterprise generates revenue in support of community water projects and works with community stakeholders in different locations throughout the world to provide sustainable clean water solutions. The case study uses primary data (...) from semi-structured interviews, direct observations of a community project, and archival sources to demonstrate application of the process model. The study shows how the social enterprise developed as a promising idea; was implemented through an operating model with resources to support social impact; and continues to build and evolve while guided by the social mission. The paper concludes with a discussion and teaching note on ways to use the case for educational purposes to enhance learning about the social value creation process. (shrink)

Business Ethics: A European Review, EarlyView.

Using an ethical approach to the study of employability, we question the mainstream approach to career self-direction. We focus on a specific category of employees that has been neglected in past research, namely vulnerable workers who have been unemployed for several years and who have faced multiple psychosocial problems. Building on the Ability-Motivation-Opportunity model, we examine how establishing clear expectations, developmental inducements, and social organizational goals can foster employability competences of vulnerable workers. Our study took place in the particularly relevant (...) context of social enterprises, which have a primary goal to enhance the employability competences of vulnerable workers. Multilevel analysis of data from 38 CEOs of social enterprises, 121 leaders and 594 workers, demonstrated that establishing clear expectations and developmental inducements enable vulnerable workers to anticipate and optimize their employability competences. Furthermore, a positive association was found between establishing clear expectations and the balance dimension of employability, yet only in social enterprises that prioritize social organizational goals, suggesting the need to recognize the extent organizational goals shape opportunities for vulnerable workers. Establishing clear expectations and developmental inducements can therefore enhance vulnerable workers’ employability competences in supportive contexts; however, there may be detrimental side effects to drifting away from social organizational goals. (shrink)

To remain financially viable and continue to accomplish their social missions, nonprofits are increasingly adopting a hybrid organizational form that combines commercial and social welfare logics. While studies recognize that individual organizations vary in how they incorporate and manage hybridity, variation at the level of the organizational form remains poorly understood. Existing studies tend to treat forms as either hybrid or not, limiting our understanding of the different ways a hybrid form may combine multiple logics and how such combinations evolve (...) over time. Analyzing 14 years of data from Canadian nonprofits seeking funding for social enterprise activities, we identify two novel dimensions along which a hybrid form may vary—the locus of integration and the scope of logics. We further find that as the commercial logic became more widespread within the nonprofit sector, variants of the hybrid form shifted from primarily emphasizing the commercial logic to more equally emphasizing both the commercial and social welfare logics and integrating the two logics in multiple ways. Drawing on these findings, we contribute a multi-dimensional conception of hybrid forms and theorize how form-level variation in hybridity can arise from organization-level cognitive challenges that actors face when combining seemingly incompatible logics. We then build on this theorizing to offer an alternative perspective on commercialization of the nonprofit sector as a contextually dependent rather than universal trend. (shrink)

This study introduces a human empowerment framework to better understand why some businesses are more socially oriented than others in their policies and activities. Building on Welzel’s theory of emancipation, we argue that human empowerment—comprised of four components: action resources, emancipative values, social movement activity, and civic entitlements—enables, motivates, and entitles individuals to pursue social goals for their businesses. Using a sample of over 15,000 entrepreneurs from 43 countries, we report strong empirical evidence for two ecological effects of the framework (...) components on prosociality. We find that human empowerment lifts entrepreneurs’ willingness to choose a social orientation for their business, and reinforces the gender effect on prosociality in business activity. We discuss the human empowerment framework’s added value in understanding how modernization processes fully leverage the potential of social business activities for societies. (shrink)

Inclusive businesses that combine profit making with social impact are claimed to hold the potential for poverty alleviation while also creating new entrepreneurial and innovation opportunities. Current research, however, offers little insight on the processes through which for-profit business organizations introduce social innovations that can profitably create social impact. To understand how social innovations emerge and become sustained in business organizations, we studied a telecom firm in Kenya that successfully extended financial services across the country through a number of mobile (...) banking innovations. Our qualitative analysis revealed the strong role of being embedded in local networks and structures for initiating and implementing social innovations. Strong embeddedness enhanced the pragmatic and ethical imperative for internalizing social issues, but also provided access to diverse resources for implementing and legitimizing social innovations. However, hybridization processes that emphasized social issues introduced organizational tensions by increasing goal diversity and requiring adapting organizational processes and structures. The case shows how developing a mission-driven identity enabled the sustenance of social innovations by providing a meta-narrative that bridged goal diversities and rationalized organizational change. (shrink)

India is the emerging country with the world’s greatest social banking program, so Indian banks are required to finance the weaker sectors of society that are excluded from the traditional financial system, while also providing mainstream banking services to non-priority sectors. For social banks to promote the ethical–social management of their dual mission and to be successful in today’s business environment, they must be as efficient as possible in both dimensions of their banking activity. Whereas the efficiency of Indian banks (...) in the financial dimension is well understood, to date there has been no research evaluating their double bottom-line of achieving social and financial goals. Our study applies an innovative Network Slack-Based DEA model to evaluate how efficient Indian public banks are when providing credit to priority and non-priority sectors. We also explore the main factors influencing bank efficiency. Results suggest that Indian public banks have performed relatively well in both activities, although social efficiency has been slightly greater than financial efficiency. Moreover, their commitment to priority sector lending has not come into conflict with the profit-seeking objectives of mainstream banking services. As regards determinants of social and financial efficiency, there are countervailing forces played by regional wealth, bank size, branch networks, and rural location. Our findings are therefore useful for stakeholders of Indian public banks as they indicate if these entities have adequately managed their double bottom-line, and hence if they are critical for poverty alleviation and development in India. (shrink)

This paper explores how fair trade social enterprises manage paradoxes in stakeholder-oriented governance models. We use narrative accounts from board members, at governance events and board documents to report an exploratory study of paradoxes in three FTSEs which are partly farmer-owned. Having synthesized the key social enterprise governance literature and framed it alongside the broader paradox theory, we used narratives to explore how tensions are articulated, how they can be applied within an adapted paradox framework, and how governance actors seek (...) to mitigate paradoxes. The paper contributes to current debates in social enterprise scholarship concerning hybridity :455–476, 2010; in Institutional logics in action, Part B, 2012), hybrid organizing :397–441, 2014) and operational tensions :407–442, 2013) by illustrating empirically how the central social/enterprise paradox manifests in FTSEs governance arrangements. We build on the paradox categories proposed by Lüscher and Lewis :221–240, 2008) and adapted in Smith et al. :407–442, 2013) by developing a recursive model of legitimacy-seeking governance processes, conceptualizing how boards seek to mitigate, but not necessarily resolve, paradoxes. (shrink)

Individuals start and join social enterprises to catalyze social impact but may not subjectively experience their work as impactful. In this article, we inductively uncover when social enterprise members question the impactfulness of their work and how they engage in sensemaking to experience their work as impactful. Exploring the experiences of members across two social enterprises with different missions, we provide insights into instances creating ambiguity of or discrepancies in impactfulness and unearth how individuals navigate these in different circumstances with (...) two distinct sensemaking practices: internalizing and compensating. We reveal the efforts required to experience work as impactful, highlight the heterogeneity and agency in maintaining this perception, and suggest a potential dark side for members and missions of social enterprises. (shrink)

Is there a link between how a firm manages its internal and external stakeholders? More specifically, are firms that give employees stock ownership and more say in running the enterprise more likely to engage with external stakeholders? This study seeks to answer these questions by elaborating on mechanisms that link employees to external stakeholders, such as the community, suppliers, and the environment. It tests these relationships using a sample of 347 private, mostly small-to-medium size firms, which completed a stakeholder impact (...) assessment organized by the non-profit B Lab. The results support the hypotheses that both employee ownership and employee involvement are positively associated with external stakeholder engagement. Further, we found that certification plays a role, as employee ownership contributes to external stakeholder engagement only in certified B Corporations, and not in firms that merely completed the B Lab Impact assessment. Our findings have import for stakeholder engagement frameworks, as we show that there is interplay between internal employee stakeholders and external stakeholders that may be important to overall firm–stakeholder management. (shrink)

Understanding how hybrid organizations resist mission drift and sustain the joint pursuit of their plural goals over time remains a central theoretical and practical concern in the business and society literature. In this article, we mobilize an organizational politics approach to elucidate how hybrid organizations react to mission drift and strive to rebalance the relationship between their conflicting missions. Drawing on an in-depth longitudinal analysis of a project developed within a multinational worker co-op to reverse mission drift, we elaborate a (...) process model showing how shifting patterns in the mobilization of episodic and systemic forms of power provoke critical changes in the way that plural missions are construed and enacted within hybrid organizations. This study also contributes to the field of co-operative organization and management studies by revealing that the transfer of organizational practices within multinational co-ops is more critically shaped by power relations and conflicting interests rather than, as much of the previous literature has argued, by host country institutions. (shrink)

Social entrepreneurship increasingly involves collective, voluntary organizing efforts where success depends on generating and sustaining members’ participation. To investigate how such participatory social ventures achieve member engagement in pluralistic institutional settings, we conducted a qualitative, inductive study of German Renewable Energy Source Cooperatives. Our findings show how value tensions emerge from differences in RESCoop members’ relative prioritization of community, environmental, and commercial logics, and how cooperative leaders manage these tensions and sustain member participation through temporal, structural, and collaborative compromise strategies. (...) We unpack the mechanisms by which each strategy enables members to justify organizational decisions that violate their personal value priorities and demonstrate their varying implications for organizational growth. Our findings contribute new insights into the challenges of collective social entrepreneurship, the capacity of hybrid organizing strategies to mitigate value concessions, and the importance of logic combinability as a key dimension of pluralistic institutional settings. (shrink)

As Social Economy financial institutions, credit unions have traditionally been considered less efficient than traditional banking entities. However, like banks and savings banks, they have to be as efficient and competitive as possible to survive in today’s business environment, especially at times of crisis. To date, there have been very few studies on their efficiency and practically none for the crisis period. Moreover, almost all the existing studies assess only financial efficiency, without considering their social function. This study examines the (...) levels of both financial and social efficiency in Spanish credit unions as well as their main determinants during the recent crisis. We apply the two-stage double bootstrap data envelopment analysis methodology based on panel data corresponding to all the credit unions active in Spain between 2008 and 2013. The empirical results indicate that financial and social efficiency achieved an acceptable level, although on average the former was slightly greater than the latter. We also find that both age and merger and acquisition activity were positively influential on the financial efficiency of credit unions but had a significant negative effect on their social efficiency. Moreover, the regional location of such entities and the financial crisis were also crucial determinants of both types of efficiency. Our findings are therefore useful for all the stakeholders of credit unions to know if these entities have been efficient according to a double bottom line accounting in the crisis period and hence to maintain successful social management that is compatible with satisfactory financial efficiency. (shrink)

This study endorses the use of data envelopment analysis, which uses benefit-of-the-doubt weighting to evaluate the social, economic and overall performance of social enterprises. This methodology is especially useful for creating composite indicators based on multiple outputs expressed in different measurement units, and allows for enterprise-specific weighting of the different objectives. Applying this methodology on a unique longitudinal dataset of Flemish sheltered workshops suggests that social enterprises may face different types of mission drift. Further, our results show that top-performing social (...) enterprises are more economically and socially efficient than low performers. These top performers also have a stronger economic orientation, which sheds new light on the balance between social and economic orientations in social enterprises. (shrink)

We analyse the tensions in a hybrid collaboration and how these are mitigated using boundary-spanning community impact, leading to compatibility between distinctive institutional logics. Our qualitative longitudinal study undertaken during 2011–2016 involved reviewing literature and archival data, key informant interviews, workshop and focus groups. We analysed common themes within the data, relating to our two research questions concerning how and why hybrids collaborate, and how resulting tensions are mitigated. The findings suggest a viable model of service delivery termed hybridized collaboration (...) in which the inherent tensions from different institutional logics do not prevent success. Paradoxically, multiple logics are a basis for the partnership’s existence, but the ability to achieve different and occasionally conflicting aims simultaneously can be difficult, resulting in tensions. We offer two novel insights. First, we highlight how social enterprise hybrids collaborate locally and in multi-organizational relationships. We found that the initial opportunity to collaborate was catalysed by the existence of shared objectives. Pre-existing relationships between organizations, and the existence of synergistic capabilities also influence the choice of partners. Secondly, we identify how tensions arise, and are mitigated via several factors including the pre-existing relationships, allowing for regular “spaces of negotiation” between collaborators, the shared social mission, community social impact, the resulting public relations, and shared resources and knowledge. (shrink)

In this study, we employed a combination of bibliometric analysis and a structured review approach to examine the social entrepreneurship (SE) research. Our bibliometric analysis involved 2517 articles containing 155,846 references and we analyzed the data in three time periods: 1990–2009, 2010–2014, and 2015–2020 to detect longitudinal trends. This analysis helped us to identify the intellectual foundation of each period and the evolution of the intellectual structure of SE research. We specifically identified 13, 9, and 11 clusters that constituted the (...) philosophical foundations of SE research for the periods 1990–2009, 2010–2014, and 2015–2020 respectively. A longitudinal comparison of three periods helped us to trace the evolution of the intellectual structure of SE research. Further, the structured review, involving 106 recent influential articles, enabled us to identify 10 recent dominant themes of SE research. Building on our bibliometric and structured review approach, we developed an organizing framework for guiding future SE research across six dimensions: ethics, individual, community, collaborative, organizational, and contextual. (shrink)

Process models are valuable conceptual tools to help in understanding the approaches to value creation in social enterprises. This teaching case illustrates the application of a process model about creating, building, and sustaining a social enterprise with a mission to provide clean water to communities in need. The social enterprise generates revenue in support of community water projects and works with community stakeholders in different locations throughout the world to provide sustainable clean water solutions. The case study uses primary data (...) from semi-structured interviews, direct observations of a community project, and archival sources to demonstrate application of the process model. The study shows how the social enterprise developed as a promising idea; was implemented through an operating model with resources to support social impact; and continues to build and evolve while guided by the social mission. The paper concludes with a discussion and teaching note on ways to use the case for educational purposes to enhance learning about the social value creation process. (shrink)