Social Enterprises as Hybrid
Organizations: A Review and
Research Agenda*
Bob Doherty, Helen Haugh1 and Fergus Lyon2
The York Management School, University of York, Freboys Lane, York YO10 5GD, UK, 1Judge Business School,
University of Cambridge, Trumpington Street, Cambridge CB2 1AG, UK, and 2Middlesex University, The
Burroughs, London NW4 4BT, UK
Corresponding author email: bob.doherty@york.ac.uk
The impacts of the global economic crisis of 2008, the intractable problems of persistent poverty and environmental change have focused attention on organizations that combine enterprise with an embedded social purpose. Scholarly interest in social enterprise (SE) has progressed beyond the early focus on definitions and context to investigate their management and performance. From a review of the SE literature, the authors identify hybridity, the pursuit of the dual mission of financial sustainability and social purpose, as the defining characteristic of SEs.They assess the impact of hybridity on the management of the SE mission, financial resource acquisition and human resource mobilization, and present a framework for understanding the tensions and trade-offs resulting from hybridity. By examining the influence of dual mission and conflicting institutional logics on SE management the authors suggest future research directions for theory development for SE and hybrid organizations more generally.
Introduction
The phenomenon of social enterprise (SE) has attracted the attention of policy-makers and practitioners around the world (Wilson and Post 2013) and the associated rise in scholarly interest is reflected in the growing tally of publications in the academic press about SE as a distinct category of organizations
(Cukier et al. 2011; Lepoutre et al. 2013; Lumpkin et al. 2013). Early SE research was dominated by efforts to define their distinctive characteristics and explain their emergence (Chell 2007) and was succeeded by studies that investigated SE management and performance. Much of the early writing on SEs was atheoretical and searching for the positive
(Parkinson and Howorth 2008; Sepulveda et al.
2013) and, in response, more recent research has advanced new theories to explain their emergence
(Tracey et al. 2011), management (Battilana and
Dorado 2010; Pache and Santos 2011) and, more critically, the ethics, power and emancipatory aspects of SE (Teasdale 2012).
This review contributes to the development of theoretical approaches to explaining the management processes employed by SEs. Social enterprises pursue the dual mission of achieving both financial sustainability and social purpose and, therefore, do
The authors would like to thank colleagues, the three reviewers and editor for the insightful suggestions that have helped develop this paper. This article is the outcome of a truly collaborative effort and all three authors contributed equally.
The support of the Third Sector Research Centre funded by the Economic and Social Research Council, Cabinet Office and Barrow Cadbury Trust is gratefully acknowledged.
*A free Teaching and Learning Guide to accompany this article is available at: http://onlinelibrary.wiley.com/journal/
10.1111/(ISSN)1468-2370/homepage/teaching___learning
_guides.htm bs_bs_banner International Journal of Management Reviews, Vol. 16, 417–436 (2014)
DOI: 10.1111/ijmr.12028
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International Journal of Management Reviews published by the British Academy of Management and JohnWiley & Sons Ltd.
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02148, USA not fit neatly into the conventional categories of private, public or non-profit organizations. From a review of the scholarly literature, we find that SEs are a prime example of a hybrid organizational form
(Pache and Santos 2012) in that, by spanning the boundaries of the private, public and non-profit sectors, they bridge institutional fields (Tracey et al.
2011) and face conflicting institutional logics (Pache and Santos 2012).
Extending previous reviews of SE (Austin et al.
2006; Chell 2007; Dacin et al. 2010; Dees 1998;
Zahra et al. 2009), we provide a theoretical framework to explain how SEs respond to and manage conflicting logics. This goes beyond the overly positive reporting of the potential of SE and identifies the tensions inherent when organizations attempt to craft a balance between pursuing commercial and social objectives. By placing SE hybridity centrally, we do not seek to provide an exhaustive account of everything written on SE. Instead, we review the literature that examines the characteristics and implications of SE as a hybrid organizational form, drawing on a range of literature on SE and social entrepreneurship. This approach is employed to identify directions for SE research and theory development. This review is timely and responds to Wilson and Post’s (2013) observation that there has been insufficient focus on the nature of SE organizational forms and how these forms are explained by hybridity. In our review of the international literature on SE management, we are guided by two questions: ‘What are the critical management issues and tensions arising from bringing together the financial and social objectives of SE?’ and ‘How should future research proceed in order to understand better the fields of SE and hybrid organizations more generally?’We employ the concepts of organizational form and hybridity to examine SE management and draw out suggestions for theorybuilding.
In doing so, we provide an explanation for and critical analysis of the emergence of a part of the economy that is, as yet, under-theorized, and contribute to wider debates concerning organizational hybridity in management research.
Social enterprise and hybrid organizational forms
This paper explores the concept of SE as an organizational form that has emerged as the boundaries between the private, public and non-profit sectors have become blurred and more fluid. An organizational form is an ‘archetypal configuration of structures and practices’ that is ‘regarded as appropriate within an institutional context’ (Greenwood and Suddaby 2006 p. 30). To be categorized as a distinct organizational form, individual organizations manifest those characteristics that are identified with a specific category of organizations (Romanelli
1991). Interest in organizational forms has focused on defining the boundaries between different forms
(Brandsen and Karré 2011; Romanelli 1991), on form convergence (D’Aunno et al. 1991; Powell
1987) and on examining the processes through which new forms emerge (Nee 1992; Ruef 2000; Tracey et al. 2011). The critical review of the literature presented in this paper identified hybridity as an explanatory concept that captures the complexity of
SE management processes and creates a space for theory development to explain their emergence, management and performance. We thus seek to extend the literature on organizational forms by reviewing the impact of hybridity on management processes. This is important, as research has found that internal organizational processes mediate the external and internal demands faced by hybrid organizations (Jay 2013).
By definition, hybrids are the offspring of two different species (OED 2010) and, in the organization and management literature, the term has been employed to describe organizations that span institutional boundaries (Brandsen and Karré 2011; Jay
2013; Pache and Santos 2012; Smith 2010) and operate in multiple functional domains (Ruef 2000).
Drawing on the previous conceptualizations of hybridity, we define hybrid organizational forms as structures and practices that allow the coexistence of values and artefacts from two or more categories.
Hybrid organizational forms therefore draw on at least two different sectoral paradigms, logics and value systems, and in the case of SE, relate to the emergence of novel institutional forms that challenge traditional conceptions of economic organizing
(Wilson and Post 2013).
In adopting the concept of hybridity to examine
SE, we draw particularly on the distinctions between different economic sectors (public, private and nonprofit) and the assumption that categories of organizations manifest generic structural features and characteristics that are in some way ‘pure’ and indicative of these distinct and recognizable sectors
(Billis 2010; Somerville and McElwee 2010). Such categories are presented as idealized forms in which
418 B. Doherty et al.
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International Journal of Management Reviews published by the British Academy of Management and JohnWiley & Sons Ltd. organizations, through alignment with categorical logics and discourse, acquire legitimacy. To elaborate,
Billis (2010) presents organizational templates for the categories of private, public and non-profit organizations. Thus, private-sector organizations are guided by market forces to maximize financial return, owned by shareholders, governed according to size of share ownership, and generate revenue from sales and fees. Organizations in the public sector are characterized as guided by the principles of public benefit and collective choice, owned by citizens and the state, and resourced through taxation.
Finally, non-profit-sector organizations pursue social and environmental goals, are owned by members, governed by private election of representatives, staffed by a combination of employees and volunteers and generate revenue from membership fees, donations and legacies. Specifically, non-profit distributing organizations are legally prohibited from distributing any residual ‘earnings’ to those with a managerial or ownership interest (Hansmann 1980).
Organizational forms that are not aligned with the idealized categorical characteristics outlined are labelled hybrids. By pursuing financial and social aims, SEs are thus a classic example of hybrid organizations (Billis 2010; Dees and Elias 1998;
Defourny and Nyssens 2006; Evers 2005; Liu and
Ko 2012; Murphy and Coombes 2009; Pache and
Santos 2010; Young 2001) in that they combine properties associated with private, public and non-profit organizations. Review approach
This review encompasses research on SE, community enterprise, social ventures and social entrepreneurship
(Cukier et al. 2011) and draws on scholarly work from across the fields of management and entrepreneurship. We include publications that explicitly investigate SE and social entrepreneurship and make reference, directly or indirectly, to hybridity. The review does not include papers that report corporate SE initiatives aiming explicitly to increase shareholder value, the trading activities of public-sector organizations or the literature on SE impact. To ensure that we captured the diversity of
SE scholarship, a two-stage process was adopted to select articles to review. To begin, a keyword search using the search engine Proquest was employed to generate a list of articles. The search terms were selected to ensure inclusivity and focus on SE management.
Using a series of keywords the search for
‘social enterprise’ and ‘management’ generated 40 papers, ‘social entrepreneurship’ and ‘management’ generated 66 papers, ‘social entrepreneur’ and ‘management’ generated 7 papers and ‘social entrepreneurs’ and ‘management’ generated 29 papers.
Combining these searches and deleting multiple references to the same article produced a list of 110 individual papers, which we then categorized by journal rating. The first stage of the review is based on the 68 papers published in management and entrepreneurship journals rated as four or three in the
Association of Business Schools Academic Journal
Quality Guide prepared in 2010 (Harvey et al. 2010).
The sample includes articles from Entrepreneurship
Theory and Practice (6), Academy of Management
Review (4), Academy of Management Journal (1),
California Management Review (1), Organization
Studies (1) and the Journal of BusinessVenturing (1).
In the second stage, we employed a reverse search technique in which additional papers were sourced from the citations in the selected journal papers. This snowballing technique generated a further 61 papers.
The additional articles include journal publications, books and book chapters on SE management.
Analysis of the methodologies adopted in the reviewed papers is presented in Table 1. The literature reviewed is dominated by qualitative research, and only 15% of papers employed quantitative analysis techniques. This may be explained by the lack of agreement concerning SE characteristics and the consequent problems associated with creating a large
Table 1 Research methodologies in reviewed publications
Number of papers Qualitative Quantitative Exemplars Theory only
N (%) (%) (%) (%)
Stage 1 (in higher-ranked journals) 68 42.6 14.7 14.7 44.1
Stage 2 (other literature referred to in stage 1 papers) 61 26.2 14.8 26.2 32.8
All papers 129 34.6 14.6 20.0 38.5
Note: some papers adopt more than one methodology.
Social Enterprises as Hybrid Organizations 419
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International Journal of Management Reviews published by the British Academy of Management and JohnWiley & Sons Ltd. population database and identifying valid and reliable analytical variables. Approximately 20% of papers reviewed used exemplar SEs to illustrate theoretical and conceptual propositions. These papers have been distinguished from papers that adopted formal qualitative research methods such as case studies, participant observation and depth interviews.
When publications in journals identified in
Stage 1 are compared with the articles generated in
Stage 2, it can be seen that in higher-rated journals there is more emphasis on theory, more rigorous qualitative empirical work and less use of exemplars.
Analysis of the geographic location of research
(Table 2) reveals that a greater proportion of papers draw on European evidence: this may be explained by the heightened political interest in SE in Europe. In each geographic area, the proportion of theory-only papers is similar; however, more quantitative studies have used data from NorthAmerica (28%) and Rest of
World (29%) compared with Europe (13%).
The centrality of the concept of hybridity to SE management processes emerged from the analysis of the literature. To structure the presentation of this review, we have been guided by the framework created by Austin et al. (2006) – the most cited article about SE and social entrepreneurship on
Google Scholar (in April 2013). Their framework for analysing social entrepreneurship and its distinctive features compared with commercial entrepreneurship is composed of: opportunity and mission; capital and the acquisition of financial resources; and people (mobilization of human resources). However, their framework did not elaborate the tensions associated with crafting a balance between the achievement of commercial and social objectives and the operational mechanisms employed by SEs. Using their framework, we explore new insights into hybridity arising from SE, which in turn provide a new explanatory lens to advance their original framework further. To situate our review in the existing literature, we first consider the different interpretations and contexts of SE activity.
Conceptualizing social enterprise
A SE is an organization that trades, not for private gain, but to generate positive social and environmental externalities (Santos 2012). Definitions of SE are abundant, and reflect distinct regional differences
(Kerlin 2010). For example, in the US, SE discourse is dominated by market-based approaches to income generation and social change (Austin et al. 2006;
Dees 1998; Defourny and Nyssens 2010), whereas in
Europe, SE is located in the cooperative tradition of collective social action (Borzaga and Defourny 2001;
Defourny and Nyssens 2010; Nyssens 2006). The
UK borrows from both traditions, and the government-proposed definition states that an SE is
‘a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners’ (DTI 2002, p. 13).
All these definitions draw out the two defining characteristics of SE: the adoption of some form of commercial activity to generate revenue; and the pursuit of social goals (Laville and Nyssens 2001;
Mair and Martì 2006; Peattie and Morley 2008;
Peredo and McLean 2006). Thus, SEs differ from organizations in the private sector that seek to maximize profit for personal gain by prioritizing social change above private wealth creation: typical social objectives include reducing poverty, inequality, homelessness, carbon emissions and unemployment
(Dart 2004; Murphy and Coombes 2009). Hence,
SEs are associated with pro-social motivations of wealth-giving, cooperation and community development
(Lumpkin et al. 2013). For example, a social firm is an organization that, as part of its mission, employs people who are disadvantaged in some way,
e.g. through disability. The dual mission to achieve financial sustainability and create social value by integrating the socially excluded and disadvantaged into the workplace categorizes a social firm as a SE
(Borzaga and Defourny 2001).
Table 2 Geographic location of reviewed publicationsa
Number of papers Europe North America Rest of the world
N (%) (%) (%)
Stage 1 (in higher ranked journals) 68 52.9 42.6 19.1
Stage 2 (other literature referred to in stage 1 papers) 61 68.9 29.5 13.1
All papers 129 60.0 36.2 16.2 aPapers were classified according to the source of empirical evidence. In theory-only papers, the institutional location of first author was used. 420 B. Doherty et al.
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Social enterprise strategies to generate revenue from commercial activity, e.g. trading goods and services and contracting for services, share some overlap with organizations in the private and public sectors (Wallace 1999), yet are distinct from traditional non-profit organizations that rely on grants, donations and bequests. However, the extent of commercial activity required for an organization to be categorized as a SE ranges from minimal to total reliance on trading income (Austin et al. 2006;
Foster and Bradach 2005; Peredo and McLean 2006).
Thus, SEs might rely on a combination of unearned income and commercial revenue or rely completely on trading income to meet their social objectives. For example, 100% Fairtrade-certified organizations seek to improve the livelihoods of producers in developing countries by securing corporate compliance with sourcing policies that are designed to enable farmers to receive a fair price for the produce they supply and implement sustainable farming practices
(Davies et al. 2010). The strategy of generating revenue from trading, in combination with promoting the economic and social advancement of farmers, categorizes 100% Fairtrade organizations as SEs.
In summary, therefore, different types of SEs, such as social firms and Fairtrade-certified suppliers, collectively constitute a population of hybrid organizations that have achieved some success in attracting and anchoring resources in communities, fostering legitimacy with stakeholders and collectively promoting the establishment, growth and sustainability of other SEs. The emergence of significant numbers of SEs, however, differs between countries and, in the next section, we review the explanations for this variation. Social enterprise context
The significant growth in interest in SE in many industrialized, emerging and developing economies
(Seelos and Mair 2005) has been attributed to four social, economic and political trends. First, changes in the nature of philanthropic giving have pushed formerly donor-dependent organizations to seek more commercial sources of revenue (Dees 1998).
Second, new models of public service delivery have created market opportunities for new entrants, including SEs (Bransden et al. 2005; Chell 2007;
Evers 2005; Fawcett and Hanlon 2009; Haugh and
Kitson 2007; Perrini et al. 2010). Third, interest in alternative economic systems and novel forms of capitalism has directed attention and resources towards the market potential of SEs (Amin 2009;
Hemingway 2005; Hudson 2009; Wilson and Post
2013). Finally, policy and practitioner responses to deficiencies in economic justice and rising inequality increasingly look to SE as a solution to market failure (Austin et al. 2006; VanSandt et al. 2009).
The recent academic interest in SE has identified two important contextual considerations. First, a historical review finds that the meaning of SE has changed over time (Teasdale 2012). From a temporal perspective, SE is not a new organizational form, but a product of the evolutionary development of nonprofit or voluntary organizations (Billis 1991; Kerlin
2010; Peattie and Morley 2008; Young and Salamon
2002), cooperatives and mutual organizations
(Nyssens 2006). This evolutionary account blurs the boundaries between different organizational forms and positions SE at the intersection of the private, public and non-profit sectors (Defourny and Nyssens
2006). A key factor in this explanation is the marketization of the non-profit sector, in which nonprofit organizations are encouraged to focus on generating commercial income from service delivery contracts (Eikenberry and Kluver 2004; Liu and Ko
(2012; Mullins et al. 2012), thus distinguishing between ‘organic hybrids’ (enterprises that have evolved from classical, or pure, voluntary organizations to SEs) and ‘enacted hybrids’ (organizations that are established, from inception, as SEs). There is also some evidence of ‘relabeling’ by organizations to self-define as SEs as the category becomes more widespread in policy and practice (Teasdale et al.
2013).
Second, the rate of emergence of SEs is further shaped by country-level institutional factors (Austin et al. 2006; Borzaga and Defourny 2001; Dees 1998;
Defourny and Nyssens 2010; Kerlin 2010; Lepoutre et al. 2013; Nyssens 2006). Their location at the intersection of economic sectors characterized by different norms and practices (Cooney 2006) means that SEs face pressures to respond to conflicting institutional demands (D’Aunno et al. 1991). Typically, these demands are the market/commercial logic to achieve business success and the social welfare/community logic to create social value
(Mullins et al. 2012; Pache and Santos 2010; Tracey et al. 2011). At the same time as both achieving financial sustainability and creating social value
(Pache and Santos 2010; Townsend and Hart 2008;
Young 2001), the environment in which SEs operate is further characterized by increasing competition
Social Enterprises as Hybrid Organizations 421
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International Journal of Management Reviews published by the British Academy of Management and JohnWiley & Sons Ltd. between organizations in the non-profit and private sectors (Weisbrod 1997) and between non-profit distributing organizations (Chetkovich and Frumkin
2003).
Extending the analysis of context presented by
Austin et al. (2006), the papers in our review highlighted the institutional differences between countries played out in transnational and national policies to promote SE. In the US, rising policy interest has led to the establishment of the Office of Social Innovation and Civic Participation, and, in the UK, the
Big Society initiative has been implemented by the
Office for Civil Society (Alcock 2010; Teasdale
2012). More recently, the European Union created the Social Business Initiative to further the agenda of
SE (European Commission 2011). These policies have encouraged the establishment of new SEs and the adoption of commercial activity by non-profit organizations. The policies to support SEs have also been critically interpreted as the forced marketization of the non-profit sector, which pushed non-profit organizations to adopt commercial strategies that conflicted with their social mission (McKay et al. 2011) and contribution to civil society
(Eikenberry and Kluver 2004). Mason (2012) argues that successive UK governments have attempted to influence the SE discourse in order to facilitate reform in the public sector. Similarly, the discourse of SE has been resisted by many non-profit distributing organizations that seek to distance themselves from popularization initiatives that might undermine the achievement of social objectives (Parkinson and
Howorth 2008; Sunley and Pinch 2012).
Within these different and changing contexts, there is evidence that SE hybrids face tensions that impact operationally on their goals and acquisition of resources. The relationship between SE hybridity and management is reviewed in the following sections, in which we explore mission, access to financial resources and the mobilization of effort from different stakeholder groups. We then discuss how the associated tensions have been managed by SEs.
Social enterprise mission
The impact of SE dual mission is manifested clearly in managing the tensions between commercial opportunity exploitation and pursuit of social mission (Adams and Perlmutter 1991; Zahra et al.
2009). Although it is legitimate for SEs to generate profits, they are not profit maximizing (Wilson and
Post 2013). Social enterprises differ from commercial ventures in terms of the centrality of their social mission (Chell 2007), the fundamental role that the social mission plays in their market offering and the consequent responsibility of SE founders and managers to find ways of successfully pursuing economic and social goals (Santos 2012). Social enterprises have been conceptualized as focusing on value creation for the benefit of society or the environment, rather than the value capture typical of commercial enterprises (Santos 2012). The dual mission therefore shapes the processes of opportunity recognition and exploitation in that value capture is tied, either directly or indirectly, to social value creation.
The pursuit of financial sustainability and social objectives requires the generation of sufficient revenue to invest in business activities at the same time as maintaining investment in social projects
(Moizer and Tracey 2010) to create social value
(Mair and Martì 2006) and drive forward social change (Alvord et al. 2004; Steyaert and Katz 2004).
This challenge requires SEs to craft a balance between acquiring resources to build and maintain competitive advantage and using resources to engage with their key stakeholder groups. Although the trade-off between economic and social objectives has been acknowledged (Austin et al. 2006), an alternative view is that the creation of social value might be closely linked or even integral to the successful achievement of economic outcomes (Wilson and
Post 2013) that, in turn, generate financial resources to be employed to achieve their social mission (Dacin et al. 2010, 2011).
To create social value, SEs have developed innovative strategies, new resource configurations
(Austin et al. 2006; Zahra et al. 2009) and novel governance structures (McCarthy 2012; Membretti
2007). The strategic innovativeness of SEs is frequently asserted (Alvord et al. 2004; Bridgstock et al. 2010; Weerawardena and Mort 2006) and has been attributed to managing the demands of multiple stakeholders (Bridgstock et al. 2010), combining resources in new ways to meet social needs (Mair and Martì 2006), building social capital (Evans and
Syrett 2007) and finding new ways to advance social change (Murphy and Coombes 2009; Steyaert and
Katz 2004). The innovativeness of SEs has also been linked to resource constraints that, in turn, have created opportunities for new markets, products and services (Mair and Martì 2006; Seelos and Mair
2005; Di Domenico et al. 2010).
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Innovative capacity is known to vary over time, and public policies have played a major role in stimulating innovation through programmes that encourage and reward innovation (Osborne et al.
2008). A critical reading of the SE literature reviewed finds limited contributions to understanding the determinants and processes of SE innovation and the relative innovativeness of SEs when compared with other organizational forms. More generally, Austin et al. (2006) propose that innovation in commercial enterprises usually focuses on the creation of new products and services, in contrast to SE, where the social mission is more often about the reconfiguration of existing products or services to create social value for disadvantaged groups. In addition, the innovation imperative is not universally appropriate, and many SEs achieve sustainability through delivering tried and tested services (Amin 2009).
From a critical perspective, recent studies of the pursuit of dual mission have challenged the overly positive accounts of SE and explain how hybridity may lead to mission drift (Carroll and Stater 2009;
Jones 2007; Pache and Santos 2010) in which the social objectives of the SE are sacrificed to achieve financial sustainability (Brandsen and Karré 2011;
Eikenberry and Kluver 2004). Managerial tensions arise from the attempts to maximize both financial and social performance (Battilana and Dorado
2010; Zahra et al. 2009) when the pursuit of social goals conflicts with managerial rationality, which prioritises financial objectives. A shift in organizational mission from social to commercial orientation also impacts on stakeholder perceptions of SE legitimacy (Dart 2004; Nicholls 2010c).
Although the rationale of SEs is to create social value (Perrini et al. 2010), Pache and Santos (2010) propose that SEs face conflicting institutional demands arising from the dual logics embedded in different regulatory, social and cultural environments in which they operate. They identify two types of conflict, namely where stakeholders agree on the objectives but disagree on the means of achieving them – this situation is mildly challenging for SEs and is mainly dealt with by compromise and avoidance – and where stakeholders disagree over the goals themselves – this is more challenging and unlikely to result in compromise. Empirically, it was found that SEs managed their hybridity by selective coupling and strategically incorporating intact elements from both logics (Pache and Santos
2013).
To maximize social impact, SEs have adopted strategies to grow and increase the scale of their activities. Strategic growth is critically examined in studies of SEs that seek to scale up both their financial and social (or environmental) impact (Hockerts and Wustenhagen 2010; Vickers and Lyon 2012).
Social enterprises that pursue greater social value creation might either exploit opportunities to expand organically by increasing market penetration and the scale of their own activities, or share ideas and encourage the replication of a successful model by other organizations (Bloom and Chatterji 2009; Lyon and Fernandez 2012). Growth in social impact might also be generated by social franchising models
(Bradach 2003; Dees et al. 2004) in which, in exchange for a fee (and additional payments), the franchisee purchases a business format that has already been tested for financial viability and social impact. The low uptake of SE franchise opportunities has been explained by difficulties associated with identifying a format that can be packaged and licensed (Dees et al. 2004), attracting franchisees with sufficient assets to purchase a franchise as well as the desire to navigate the space between financial and social objectives (Tracey and Jarvis 2007) and using a standard commercial format and social intervention to respond to local conditions (VanSandt et al. 2009).
In examining the processes and challenges associated with achieving a dual mission, same-sector and cross-sector partnerships have emerged as an important theme in the strategic management of SEs (Di
Domenico et al. 2009; Sakarya et al. 2012). The hybrid nature of SEs increases the complexity of management processes, in that each partner seeks to maximize the returns to the goals of their own organization aswell as achieving the aims of the partnership.
By building on the resource complementarities of the partners, the intended outcome is that both partners gain from the partnership (Sakarya et al. 2012). Partnerships might involve commercial relationships between organizations in the supply and distribution chain of either the SE or the partner i.e., a form of vertical alliance (Lyon 2011), or be related to the achievement of the social mission of either partner
(Nwankwo et al. 2007). Davies and Ryals (2010) identified that the type of partner changes during SE evolution. In the pre-venture and early stages of SE creation, ‘family members’ who share purpose are recruited and, as the SE increases in size and impact, new resources are acquired through adding new more distant ‘network partners’.
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To conclude this section, the framework set out by Austin et al. (2006) identifies the importance of
SE mission and the extent to which this is shaped by the pursuit of both commercial and social objectives.
Austin et al. (2006) also note that dual mission could be a source of tension; however, they leave unexplored the nature of these tensions, such as mission drift and stakeholder perceptions of legitimacy. By exploring how mission is shaped and legitimized by the adoption of a hybrid organizational form, further insights are provided in this paper into how SEs innovate and grow. The critical perspective also reveals how mission can be obscured or lost through hybridization. We now turn to the influence of hybridity on SE acquisition of financial resources.
Social enterprise and financial resources
This section examines the financing of SEs in more detail and identifies the tensions and challenges associated with generating revenue and managing multiple income streams. Although Austin et al. (2006) emphasize the difficulties that SEs encounter when mobilizing financial resources and suggest that tensions could be overcome through partnerships to leverage and manage financial resources, the papers in our review extend their analysis to include the impact of hybridity on access to financial resources and their deployment. Dacin et al. (2010) note that SEs are good at managing resource dependence and use their community embeddedness and relational ties with stakeholders to secure external resources that, in turn, create opportunities for social action. Social enterprises leverage relationships with stakeholder groups to initiate creative mechanisms that overcome barriers to accessing resources in the external environment.
The strong relational ties with stakeholders are thus the conduit for resources and the foundation of cooperative working arrangements that seek to fill institutional voids. The SE’s social mission is a source of legitimacy (Dart 2004) that, in turn, is a critical resource that can be leveraged with internal as well as external constituencies. Although combining commercial activity and social purpose in one organization might seem paradoxical, by spanning categorical boundaries, organizations signal increased flexibility (Pontikes 2012) and gain wider access to resources and multiple sources of legitimacy
(Minkoff 2002).
The inward flow of financial resources is essential to sustain an organization and might be derived from commercial revenue, internal reserves, grants, donations or forms of loan finance. Teasdale (2010) shows how SEs draw on different aspects of their hybrid identity to attract commercial revenue, grant funding, private donations and other forms of philanthropy.
Social enterprises employ their dual mission in a form of organizational impression management, through which they seek, and achieve, legitimacy by constructing different marketing communication narratives to meet the expectations of different stakeholder groups (Teasdale 2010). The SE dual mission to generate economic and social value also creates opportunities for generating commercial income from ethical consumers (Doherty et al. 2009;
Golding and Peattie 2005; Zahra et al. 2009) and contracts to deliver public services (Bridgstock et al.
2010; Mullins et al. 2012; Munoz and Tindsley
2008). Challenges arise in terms of measuring the social value, however, in that the markets in which
SEs operate may put greater emphasis on economic value rather than social impact, and thus poor financial performance is punished more readily than poor social performance (Austin et al. 2006).
Although it has been reported that SEs increasingly seek finance from banks and venture capitalists
(Bryson and Buttle 2005), research by Sunley and
Pinch (2012) found that the majority of SEs with asset locks restricting individual pecuniary gain continued to rely on public-sector grants and were cautious about adding debt to their financial architecture.
In addition, strong relationships with key stakeholder groups (e.g. philanthropists, social activists, campaigners, customers and volunteers) can all be leveraged for access to capital (Mair and Martì
2006). In this way SE hybridity confers flexibility and legitimizes the acquisition of finance from both commercial sources and philanthropic sources
(Chertok et al. 2008). Dees (1998) notes that, as most SEs are neither purely commercial nor philanthropy-dependent, they can leverage their dual mission to gain access to below market-rate capital and secure preferential terms from financiers. This is especially valuable for early stage SEs and those operating in resource-scarce environments.
More critically, two factors constrain SE access to finance. First, the requirement to internalize social costs means that SEs generate less profit than might be created if they adopted full economic costing
(VanSandt et al. 2009). This is supported by Liu and
Ko (2012), who propose that, in some SEs, economic
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International Journal of Management Reviews published by the British Academy of Management and JohnWiley & Sons Ltd. benefits may be foregone in order to adhere to social mission, e.g. Fairtrade-certified SEs commit to paying the Fairtrade-stipulated minimum price to producers of raw materials, even when this is above the market price. Dees (1998) also identifies that the dual-pricing strategies typically adopted by SEs that set the price of refurbished furniture and electrical products on the basis of family income impacts on the financial performance of the SE. Lumpkin et al.
(2013) therefore propose that commercial ventures are more attractive to investors in terms of generating cash flow, and therefore have a greater chance of securing traditional bank loans or venture capital.
To overcome the capital constraints faced by SEs, new legal forms have been established to make it easier to raise equity (Lasprogata and Cotton 2003).
These include the Low Profit Limited Liability
Company, the Benefit Corporation and Flexible
Purpose Corporation in the US (Battilana et al.
2012), the Community Interest Company in the UK
(Nicholls 2010a) and social cooperatives in Italy
(Thomas 2004). These new legal structures redress the previous costs associated with the requirement for SEs to create two legal structures to accommodate their dual mission – one to trade or access capital, and the other to secure the fiscal advantages of charitable status for receiving grants, donations and bequests.
More recent developments in social investment vehicles have created new sources of finance for SEs.
This new and evolving category of funds is financed by investors seeking opportunities to lend to organizations that create social value at the same time as generating some financial return (Nicholls 2010b).
The range of different forms of social investment aiming to meet the need for funds that combine financial returns with social and philanthropic goals includes investment programmes that offer loans at preferential terms for SEs and philanthropic venture capital such as the Acumen Fund (Lumpkin et al.
2013, Scarlata and Alemany 2010).
Social enterprise hybridity also impacts on the volume and speed of returns on investment.
Although the financial returns are lower than those generated by private organizations, investors accept the negative differential in exchange for social return on investment. The time required to generate social returns requires investors to be patient, and some investors are focused on more long-term change
(Murphy and Coombes 2009; VanSandt et al. 2009).
Research that has explored the emergence of social investment funds has found that take-up of funds is influenced by SE investment readiness and debt aversion
(Mason and Kwok 2010; Sunley and Pinch
2012). However, the relative newness of social investment funds on the financial landscape means that the volume of financial capital available is less than the traditional venture capital market (Nicholls
2010b).
To conclude this section, SE hybridity can both help and hinder access to financial resources.
Although SE hybridity has been noted to provide access to a wider range of resources (McCarthy
2012), it is also a source of confusion, as SE products and services do not fit neatly into established funder categories (Bridgstock et al. 2010). By combining different institutional logics (Battilana and Dorado
2010; Pache and Santos 2010), hybrid organizations are, by definition, sites of contradiction, contestation and conflict. Organizations that are difficult to categorize suffer disadvantages in terms of loss of legitimacy (Brandsen and Karré 2011; Minkoff
2002), which, in turn, reduces access to resources
(D’Aunno et al. 1991) and increases organizational mortality (Barron et al. 1994). Social enterprises manage these tensions by striving to balance the positive and negative impacts of hybridity on the acquisition of financial resources.
Social enterprise and human resources
Human resources are the third construct in Austin et al.’s (2006) framework: namely, managers, employees, volunteers and trustees. The majority of
SEs are small, resource-constrained (Bridgstock et al. 2010) and do not have sufficient financial resources to pay the market rate to employees; they thus rely on non-financial incentives to motivate staff
(Austin et al. 2006; Dees 1998). More recent studies exploring employment and volunteering have found the social component of the dual mission to be instrumental in enabling SE leaders to recruit
(Battilana and Dorado 2010) and mobilize effort from employees, volunteers and supporters (Haugh
2007; Membretti 2007; Thompson et al. 2000). The combination of enterprise and social mission has frequently been cited as a motivating force that provides employees with the intrinsic rewards of job satisfaction and as contributing to community impact
(Bacchiega and Borzaga 2001). Non-pecuniary incentives are used to recruit and motivate both paid staff and unpaid volunteers from other sectors and, in turn, have been linked to managerial problems asso-
Social Enterprises as Hybrid Organizations 425
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International Journal of Management Reviews published by the British Academy of Management and JohnWiley & Sons Ltd. ciated with employees from the private sector transitioning to SE practices, processes and values
(Battilana and Dorado 2010). The successful achievement of dual mission requires SE managers to seek a balance of staff with both commercial and social sector knowledge (Liu and Ko 2012).
However, existing research has not explored the operational tensions faced when managing teams in which members bring different practices and hold differing values. Although Austin et al. (2006) note that managing relationships with volunteers and stakeholders brings new management challenges, the nature of these challenges and their resolution are not elaborated. With regard to managing human resources, the hybrid nature of SE organizations has raised concerns that exposure to markets will reorient their shared cultural values towards competition and away from public benefit (Weisbrod 1988). This has the potential to impact on their leadership, employee relations, recruitment, culture and the management of relationships between employees and volunteers
(Royce 2007; Young 2001). Also, owing to the relative small size of SEs, some large customers such as public-sector organizations use their greater power to overly influence, even dictate, the culture and human resources practices of SE (Cornelius et al. 2008).
Volunteers are an important resource for SEs, especially when facing skills shortages (Salamon et al. 2003). To create a harmonious environment in which employees and volunteers work together, SEs need to find effective strategies to manage the needs of these different stakeholder groups (Borzaga and
Solari 2001). More critically, unlike paid employees, who might be expected to comply with the managerial demands, volunteers are free to withdraw their labour if they disapprove of the strategic direction the organization is pursuing (Royce 2007). Also, according to Liu and Ko (2012), staff turnover is higher in
SEs with employees and volunteers compared with those with employees only and, therefore, prior to recruiting and relying on the efforts of volunteers, the costs and motivational advantages of volunteers needs to be carefully evaluated. In addition, owing to the focus on external social impact, some SEs neglect investment in internal social responsibility issues, particularly the management of their own human resources (Cornelius et al. 2008).
Social enterprise hybridity also blurs the distinction between client and beneficiary stakeholder groups, which in turn impacts on operational issues.
The business model of Work Integration SEs and
Intermediate Labour Market SEs is to employ and train the long-term unemployed to enable them to then secure mainstream employment (Nyssens
2006). For these SEs, hybridity is manifest in terms of employees occupying the dual role of client and employee and the use of resources to assist both the personal development of the employee (as a client) as well as the performance of the employee (as an agent). Although the investment of resources generates social value for the client and society, the additional costs of achieving the social mission would not be incurred in a commercial organization that recruited fully trained employees.
Within the SE and social entrepreneurship literature, much attention has been given to the founders of SEs (Nga and Shamuganathan 2010; Thompson et al. 2000). However, research that investigated the psychological traits of SE founders has been criticized for prioritizing the role of the heroic individual at the expense of the collective endeavour of teams (Corner and Ho 2010) and focusing on corporate social entrepreneurs who pursue social value creation from within corporate structures
(Hemingway 2005). More recently, attention has shifted towards understanding the personal values of social entrepreneurs and how the tension between individualistic orientation and collectivist sense of duty can be alleviated through SE dual mission (Moizer and Tracey 2010). What is clear, however, is that growth in interest in SE activity has created a situation in which the demand for leaders with appropriate skill sets exceeds supply (Salamon et al. 2003).
Social enterprise founders and leaders also influence the choice of structures and processes to monitor and control strategic and operational activity and ensure accountability to stakeholder groups
(Cornforth and Spear 2010). Social enterprise boards are reported to be highly diverse and vary in governance structure (Mason 2010; Smith and Teasdale
2012). In contrast to trustees of private enterprises,
SE board members are rarely remunerated
(Cornforth 2004; Stone and Ostrower 2007).
Although SEs are more likely to recruit board members on the basis of expertise (Low 2006), restrictions on remuneration may impact negatively on SE capacity to recruit trustees with both commercial skills and a full understanding of the social mission (Smith 2010). According to Lumpkin et al.
(2013), SE dual mission means that different stakeholder groups have salient, yet different, claims on the performance of the SE, which, in turn, increases
426 B. Doherty et al.
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International Journal of Management Reviews published by the British Academy of Management and JohnWiley & Sons Ltd. the complexity of appropriate governance structures and accountability processes.
The democratic principles and community-based structures of SE organizations such as cooperatives increases the extent of stakeholder involvement in their governance (Cornforth 2004; Low 2006;
Somerville and McElwee 2010; Wilson and Post
2013). Although stakeholder governance structures facilitate greater accountability to staff, clients and beneficiaries, there is evidence that SE board members are not necessarily representative of their communities, especially in relation to gender representation
(Lyon and Humbert 2012). Naturally, governance structures and processes will be determined, at minimum, by the legal form and reporting obligations of the SE (Mason 2010), but SE dual mission means that board members are simultaneously exposed to institutional pressures to achieve financial sustainability, generate social value and build and maintain close relationships with a range of different stakeholder groups.
As with the review of literature on mission and financial resources, this section has reviewed how SE hybridity impacts on the management processes related to managing relationships with a range of stakeholder groups. Of particular importance is the impact of the respective values and approaches of different stakeholder groups, whether employees, volunteers or board members. Different stakeholders hold their own views concerning the appropriate balance between commercial and social mission.
Managing internal and external governance tensions and ensuring accountability to stakeholders is thus a key management challenge faced by managers of hybrid organizations.
Discussion
In their recommendations, Austin et al. (2006) called for further research to examine how the characteristics of SEs affect their management, particularly with regard to mission and resource mobilization. Subsequent analyses by Zahra et al. (2009) and Dacin et al.
(2011) have provided further insight into SE distinctiveness; however, the implications of conflicting logics on SE management have previously not been explicitly drawn out. Hybridity emerged from our review as fundamental to SEs and thus an appropriate and useful lens through which to critically analyse the challenges associated with managing conflicting institutional logics. In hybrid organizations, previous research has noted that strategies to respond to competing external demands include compromising, avoiding, defying and manipulating
(Jay 2013; Pache and Santos 2013), and deleting, compartmentalizing, aggregating and synthesizing to cope with internal identity struggles (Jay 2013; Kratz and Block 2008). Our review of the SE literature elucidates that hybridity creates both challenges and opportunities, which, in turn, influence mission and resource mobilization, particularly in relation to the tensions, trade-offs and creating novel operational processes for managing conflicting demands. Table 3 presents a new framework of the implications of SE hybridity on mission and resource mobilization, and summarizes the challenges, tensions, trade-offs and management processes.
First, SE mission requires managers to craft a balance between social/welfare logic (value creation) and market/commercial logic (value capture)
(Santos 2012). Social enterprises pursue dual missions and operate in resource-scarce environments; this is often in the service of disadvantaged groups such as the long-term unemployed and the socially excluded. Through the lens of hybridity we explain that spanning institutional boundaries means that
SEs need to manage conflicting, and competing, commercial and social logics (Battilana and Dorado
2010; Battilana et al. 2012) as well as the demands of multiple stakeholder groups (Bridgstock et al.
2010). This leads to tensions arising from conflict in the relative prioritization of financial over social goals (Zahra et al. 2009), which may, in turn, lead to mission drift and potential problems with stakeholder legitimacy (Nicholls 2010c). To resolve the tensions, SEs apply trade-offs such as intentionally foregoing profit to maintain the balance between value capture and creation (Santos 2012). In our review of the literature, we synthesized two operational mechanisms to manage these tensions: the use of the social mission as a force for strategic direction (Lumpkin et al. 2013); and finding the optimum conditions where the generation of commercial revenue can be linked successfully to the creation of social value.
Secondly, SE hybridity impacts on the acquisition and mobilization of financial resources. Although, by spanning institutional boundaries, SEs signal increased flexibility (Pontikes 2012) and leverage multiples sources of legitimacy (Chertok et al. 2008;
Dart 2004), the focus on social value creation is perceived to be less attractive to mainstream banks and venture capital organizations, as they may
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Table 3 Implications of SE hybridity
Distinctive features Challenges Tensions Trade-offs Examples of management processes Mission To achieve business and social goals
To manage the demands of multiple stakeholders and maintain legitimacy
To develop relationships with partners with different logics
Conflicting demands between needs of clients and needs of other stakeholders
Disagreements on priorities held by different groups
Ensuring mission does not drift away from multiple goal achievement
Sacrificing social value creation for economic value capture
Purposely not seeking profit maximization Use social mission as a force for strategic direction
Find optimum conditions where social value creation leads to profitability and competitive advantage
Financial resource mobilization SEs may not be perceived as viable clients by mainstream financial institutions Lack of understanding of SE and social value by those controlling access to financial resources
The relative importance of earned versus other income
Ethical issues involved in access to different sources of income
Conflicting expectations and demands between different stakeholders
Operating under financial constraints due to inadequate financial resources
Dual pricing strategies for different client groups
Investors persuaded to accept a lower and slower rate of return in exchange for social value creation
Cross subsidization by targeting income sources that generate a surplus for reinvesting in social mission
Leveraging a mix of financial capital from both commercial and philanthropic sources
Access to lower than market rate capital from social investors
New legal forms to encourage investment Human resource mobilization Limited financial resources constrain SE salaries and wages
Skill shortages and lack of competences in combining social and commercial objectives Attracting and retaining volunteers with appropriate skills
Managing motivation and rewards of employees and volunteers
Volunteers not perceived to have skills and experience in some areas of service delivery Selection process of board members to provide a balance of social and commercial expertise
Balancing payment of higher SE salaries and investing in achieving social mission
Recruiting volunteers versus high turnover of volunteers
Higher SE salaries and wages reduce the attractiveness of SE to donors, volunteers and other stakeholders Balance of staff and board members with social and commercial and skills
Use of non-pecuniary measures to motivate and reward employees, volunteers and trustees
Social and commercial training for trustees and other stakeholders
428 B. Doherty et al.
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International Journal of Management Reviews published by the British Academy of Management and JohnWiley & Sons Ltd. generate less profit than other clients (VanSandt et al.
2009). In addition, hybridity makes it difficult for financiers to categorize SEs, and they are poorly understood by mainstream sources of finance
(Battilana and Dorado 2010; Brandsen and Karré
2011). This creates tensions in relation to the prioritization of commercial over social objectives.
Trade-offs to resolve the tensions include dual pricing strategies and generating social returns at the expense of financial return on investment (see
Table 3). Management mechanisms include crosssubsidization business models, leveraging mixed funding streams, accessing social investment funds and the adoption of new legal forms for SE that accommodate dual mission and make it easier to raise equity (Battilana et al. 2012; Nicholls
2010a).
Thirdly, hybridity also provides an important avenue to advance understanding of SE management of human resources. Owing to financial resource constraints, SEs are reported to pay employees below the market rate (Zahra et al.
2009), and this limits access to skilled employees.
However, SE social mission is believed to be a nonpecuniary incentive for employees, volunteers and other stakeholders (Battilana and Dorado 2010;
Haugh 2007; Membretti 2007). Many SEs also rely on the efforts of volunteers and trustees who donate their knowledge and skills free of charge. Although volunteers may provide important skills, Liu and
Ko (2012) noted that tensions existed between employees and volunteers, particularly if SE social mission has drifted towards greater commercial focus. This may lead to trade-offs between paying high salaries to attract skilled employees and investing resources in recruiting and training volunteers, which, in turn, reduces the resources available to create social value and the attractiveness of the
SE to social investors. In addition, SE boards are responsible for overseeing the achievement of financial sustainability and social value creation at the same time as meeting the accountability demands of a wider variety of stakeholders than for-profit organizations (Wilson and Post 2013).
This leads to tensions in securing the appropriate board representation of commercial and stakeholder engagement expertise. Management mechanisms to cope with SE hybridity include skillsbased trustee recruitment, explicit use of social mission to motivate stakeholder groups and crosstraining of employees, volunteers and trustees (see
Table 3).
Future research suggestions
This review of the literature has investigated the implications of hybridity for SE mission, finance and people, and in doing so has highlighted several gaps in knowledge concerning the enactment of SE management processes. We now build on the review by proposing four research questions that offer opportunities for theory development.
To what extent have different institutional frameworks and contexts supported or discouraged the establishment of hybrid organizations?
The persistent global problems of poverty, inequality and development suggest that demand for hybrid organizations that successfully pursue the dual mission of achieving financial sustainability and social value creation are likely to increase. Yet, knowledge of SE management internationally is, as yet, partial. Few studies have investigated SE management beyond Australasia, North America,
Northern and Western Europe, and a small number of countries in South America. We encourage scholars to gather more information about SE and social entrepreneurship in countries and contexts about which we know relatively little, e.g. African nations, China, countries in the Middle East and Russia. Specifically it would be worthwhile to investigate the institutional conditions that promote the establishment and growth of SEs, and those that hinder their creation and growth. What lessons can be learned from successful and impactful SEs in different countries and contexts that would inform our understanding of the influence of institutional conditions on the emergence of hybrid organizations?
How do hybrid organizations successfully pursue conflicting objectives and secure competitive advantage?
Strategic management theory suggests that organizations achieve competitive advantage from the singleminded pursuit of one objective (Hunt and Morgan
1995). Attempts to combine social value with financial sustainability might be expected to lead to tradeoffs
(Austin et al. 2006). However, as alluded to by
Dacin et al. (2010), might there be circumstances in which financial performance is enhanced by the social mission of an SE? The simple dichotomy between economic and social purpose has been
Social Enterprises as Hybrid Organizations 429
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International Journal of Management Reviews published by the British Academy of Management and JohnWiley & Sons Ltd. challenged by the Fairtrade movement, in which long-term investments in building sustainable supply chains that involve local farmers have been fundamental to ensuring production continuity (Nicholls and Opal 2005). Theory development to explain and predict the conditions under which SE dual mission can be achieved would enhance knowledge of how, why and where hybrid organizations are most effective. The dual mission also raises challenges for measuring performance and impact. There is, therefore, a need for greater understanding of how organizations account for both social and financial value. How are the resource requirements of hybrid organizations satisfied, and to what extent does hybridity influence innovative resource exploitation?
The inward flow of resources is essential for SEs to achieve financial sustainability and generate social and environmental value. Social enterprises exploit commercial opportunities to develop revenue streams and create a surplus that can be reinvested in their social aims. However, little is known about how SEs create and sustain a balanced income portfolio and how they decide on the appropriate level of surplus or profit. There is also a need to examine how SEs continue to use grants, philanthropic funding and unrestricted donations to give them time to establish commercial sources of income. Social enterprise with a mixed income portfolio might simultaneously be endeavouring to balance receiving donations and generating a profit. Social enterprise involvement in different markets creates opportunities for investment from internal surplus and external financial resources, whether in the form of grants, loans or even equity investment. While there is much attention to the supply of such external finance, evidence of the location of the demand for different types of loan finance is lacking. Where SEs take on loan finance and equity investment, there may be an effect on the organizational values and culture, yet little is known of such consequences. A theory to explain how SEs sustain relationships with an array of stakeholders that have competing objectives at the same time as developing market-based strategies would advance understanding of how hybrid organizations create and leverage resource portfolios. How do board members, managers, employees and volunteers of hybrid organizations respond to the tensions inherent in the contrasting value systems of private, public and other non-profit distributing organizations?
Social enterprise hybridity means that employees, volunteers and board members face the challenge of trying to achieve a balance between pursuing and satisfying multiple organizational and personal goals.
When working for a hybrid organization, SE staff and volunteers also seek to combine multiple shared values related to competition in the private sector, the collaborative ethos of cooperatives, the social values of charities and the public service ethos of the state.
Social enterprise hybridity also creates challenges related to establishing effective governance structures and accountability processes to report to multiple stakeholder groups. Research that explored how a functioning balance is achieved between governance and accountability would provide insight into the cultural environment of SEs, their propensity for culture change when working in partnership with other organizations – e.g. cross-sector partnerships and collaborations – and develop new knowledge about employee and volunteer recruitment, motivation and rewards. The pursuit of dual mission requires SEs to navigate between the demands of different stakeholder groups who each make claims on the organization’s objectives. Some SEs are hierarchically structured, while others have a tradition of cooperative governance and democratic ownership in which the staff, beneficiaries and users are co-owners. Wider stakeholder involvement may engender increased accountability, but little is known about the effect of consultation processes, which may be lengthy and combative, on strategy development and implementation. Research that investigated the processes adopted for securing stakeholder support at the same time as protecting organizational ability to respond swiftly to conditions in competitive markets would be of theoretical interest to scholars interested in the processes and dynamics of flexibility and legitimacy in hybrid organizations.
Conclusion
This review is at a point in time when SE research has matured beyond definitional debates and embraced the analysis of institutional and organizational processes associated with their creation and management. Social enterprise research is
430 B. Doherty et al.
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International Journal of Management Reviews published by the British Academy of Management and JohnWiley & Sons Ltd. characterized by approaches that have bridged organization theory, management practice, social policy, sociology, geography, political science, environmental science and economics. We adopted an interdisciplinary approach in this review to bring together contributions from across these domains.
The eclectic disciplinary approach is reflected in the recent diversity of theories employed by scholars as
SE research matures. Although much attention in the leading academic journals has focused on advancing institutional theory, other relevant areas for theory development include social innovation, value creation, ethics, power and social finance.
Three broad themes were investigated: mission, financial resources and human resource mobilization.
In each theme, we reviewed the main debates and identified the key question that remains unanswered in each domain. More generally, we find that: the SE literature contributes to important debates concerning the role of markets, government and civil society in the provision of public goods around the world; there is an emerging evidence base concerning
SE establishment and growth in many, but not all, countries; and SE discourse in different countries and contexts is closely linked to policy debates and interventions. By exploring the concept of hybridity in organizational behaviour, management and entrepreneurship, wider theoretical implications can be drawn for management studies. As the boundaries between organizational forms become increasingly blurred, there is a need to understand how dual, or multiple, mission affects organizational processes.
This review has critically analysed much of the literature on this emerging area of management studies; however the process of identifying the relevant literature has three limitations. The review approach included papers in more highly cited journals, and not all the literature in other publications has been included. Secondly, the articles are dominated by qualitative studies, several of which have advanced new theoretical contributions. Quantitative
SE research remains rare and is a major priority for developing statistically robust national and international analyses. There is also a geographical bias, although this is partly explained by the nature of the existing peer-reviewed research outputs. Literature on SE is largelyWestern and, given the importance of
SE developments in Africa and Asia, this is a gap that future studies should aim to address.
This review provides insights into both SE theory and practice. First, we build on previous SE reviews and develop a framework to explain the tensions and their resolution that are created by the pursuit of dual mission. The pursuit of dual mission makes SEs challenging organizations to establish, lead and manage – the emphasis on ‘entrepreneurship’ at the expense of the ‘social’ and has often focused attention on the role of the enterprising social entrepreneur and their heroic characteristics. Our review clarified the need to consider the development of a wider range of human resources, competences and skills in SE management.
Social enterprise managers face challenges in managing the identity of a hybrid organization, responding to market pressures from customers and competitors, and integrating the typical mix of employees and volunteers. The hybrid form both creates tension and allows the space to cope with competing logics. This paper shows how there is a need to build on existing research distinguishing SE as an organizational form, and to draw on recent theoretical developments in the field that have examined how SE organizations have found ways of balancing the positive and negative effects of hybridity, such as mission drift and challenges to legitimacy.
The review provides evidence that hybrid organizations develop management processes to respond creatively and innovatively to conflicting logics. In this regard, SEs provide examples of the potential benefits of managing the tensions associated with bridging institutional fields.
In practice, the challenges summarized need to be addressed at the same time as maintaining commitment to social mission and nurturing relationships with stakeholders. Social enterprise managers also need to be skilled in acquiring and leveraging resources, and developing and enhancing organizational capabilities. In many SEs, strategic choices are driven more by social and ethical values rather than economic considerations, especially compared with private or public-sector organizations. The evidence informs us that most SEs tend to be a coalition of multiple stakeholder groups, each with their own, often diverging, priorities. In practice, this means that the strategy development process will involve time and resources devoted to networking, communicating, lobbying and negotiating with stakeholders to achieve a consensus on key issues to avoid mission drift, build and retain legitimacy contemporaneously with developing new approaches to mobilizing financial resources and managing people. The framework presented summarizes the challenges, tensions and trade-offs associated with SEs and is offered as a guide to scholars and practitioners who manage, advise, teach and research the field of SE.
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International Journal of Management Reviews published by the British Academy of Management and JohnWiley & Sons Ltd.
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