- Open Access
Social enterprises in the Indian context: conceptualizing through qualitative lens
Journal of Global Entrepreneurship Researchvolume 8, Article number: 1 (2018)
Adopting an inductive theory building approach through qualitative research methodology of data collection and analysis spread across six months, followed by inter-rater reliability testing using quantitative technique, this empirical study researches the meaning of the ‘social enterprise’ construct in the Indian context, and develops a conceptual framework that represents the construct. This sets an orientation needed for aspiring social entrepreneurs and social entrepreneurship researchers to ease out their understanding of the ‘social entrepreneurship’ phenomenon within the boundaries of an Indian context. The contested nature of the phenomenon in discourses across the globe is largely due to local/regional/national variations in practice. ‘Market Orientation’, ‘Social Value Creation’, ‘Social Entrepreneur’, and ‘Balanced Impact’ emerged as key constructs comprising Indian social enterprises. The principle philosophical paradigms for this theory construction are Social Constructionism and Interpretivism, which give impetus to reflective and analytical thought trials for extracting the conceptual framework interwoven in textual data. The study sets course for further research to refine the vocabulary list, identify conceptual densities, create scales for statistical inquiries, and enable further inclusiveness of the conceptual framework.
A rich collection of peer-reviewed scholarly literature is available today after close to two decades of social entrepreneurship research. This has escalated acceptance and enabled better understanding of the phenomenon globally. The proliferation of grey literature, as well as empirical and conceptual literature, has led to the discovery of different dimensions of the phenomenon across different local/national/regional contexts (Peredo & McLean 2006; Dacin, Dacin, & Matear 2010; Doherty, Haugh, & Lyon 2014; Sengupta & Sahay 2017a). The phenomenon is interpreted differently in different countries and regions, given the diversity of historical and contextual factors. Thus, the meaning of the ‘social entrepreneurship’ construct is localised, in accordance with the local practices. However, the convergence of concepts emerging on the construct across peer-reviewed scholarly literature leads to a common understanding that social enterprises are of a hybrid nature, which marries ‘market’ and ‘social’ for a double bottom line (Sengupta & Sahay 2017a). Hoque and Nahid (2015) had suggested that business mission and market exploitation are quite central constructs in the phenomenon of social entrepreneurship, in addition to the social missions. This contrasting logics of economic and social bottom-line, talked with seemingly equal depth, has been causing the contested nature and complexity in comprehension of the phenomenon (Tan, Williams, & Tan 2005; Hill, Kothari, & Shea 2010; Kittilaksanawong, Hu, Shou, & Chen 2012; Choi & Majumdar 2014; Doherty et al. 2014).
India is a country with socio-economic and cultural diversity, and a very high population. The country offers no legal definition for social enterprises. The ecosystem of social entrepreneurship in India is created by different organizations and universities/institutes advocating, promoting, and supporting social enterprises. Multiple stakeholders such as these have formulated their own meaning of social entrepreneurship in India; their work being influenced by the social, economic, and cultural diversity across the geographical length and breadth of the country, and the regulatory frameworks of the state and central governments. The novelty of this study is in its effort to come up with a framework on what a ‘social enterprise’ means in the Indian context. The framework was developed from narrative accounts (social constructions) of stakeholders interviewed in this study. Due to the theory building nature of this research, the social constructionist approach was used for data collection, and grounded theory coding for data analysis. The key constructs that emerged to be clustering together to form the concept of social entrepreneurship in the Indian context are social value creation, market orientation, social entrepreneur, and balanced impact.
Social enterprises: Perspectives
Perspectives from academic literature
The phenomenon of social entrepreneurship had been in progressive discussion for a long time, due to the raising need and significance of rapidly changing economic, environmental, social and political factors (Bornstein 2004). The need originates in the inability of governments in providing innovative solutions for sustainably meeting social challenges. Quite consequentially, policy-makers and practitioners have been attracted towards the phenomenon of social entrepreneurship, considering the potential of this movement to cause change sustainably (Wilson & Post 2013).
The core factor differentiating social enterprises from the commercial ones is the goal to build solutions for social problems through the creation of business ventures, thereby marrying managerial efficiency and innovation with a passion for driving social change, whereas the commercial ones focus more on business or technology leadership (Sengupta & Sahay 2017b). The agenda of these organizations is to accelerate human welfare through relevant products or services (Sengupta, Sahay, & Croce 2017), at the same time, being market oriented to produce them for the welfare objective (Nicholls & Opal 2004; Jay 2013). The beneficiary community includes every stakeholder from the families or communities served, to employees and business partners. The diversity of such stakeholders, which are equally important to a social enterprise, causes performance tensions in social enterprises (Haigh & Hoffman 2012; Smith, Gonin, & Besharov 2013). But the success of a social enterprise in the extent of impact disseminated is not just related to how innovative or how balanced it is in its market and social orientation, but significantly on the relationship it bears with the social cause-attractors and the contextual factors (Wiguna & Manzilati 2014; Trivedi & Misra 2015). The movement of social entrepreneurship enables the unbundling of the socio-political adversities posing contextual constraints in perpetrating positive social change. The repeated governmental failures in solving social problems, such as in the emerging economies (Sengupta et al. 2017) and the nature of capitalism to be pro-profit-maximization led to the emergence of the social entrepreneurship movement. (Sen 2007; Trivedi & Stokols 2011). The social entrepreneurship phenomenon has been well researched on both sides of the Atlantic. But the social entrepreneurship concept in the Asian context and in the context of emerging economies, is in need of extensive empirical investigation to identify what is relevant and replicable from the social entrepreneurship structures and systems developed in the West (Doherty et al. 2014; Sengupta & Sahay 2017a; Sengupta et al. 2017). In the emerging economies, the social cause-attractors (Dietz & Porter 2012) are very elementary and the critical issues are triggered by shared necessity (Defourny & Kim 2011); such as, livelihood generation, poverty eradication, rural entrepreneurship, improved education, to name a few. These are addressed through group collectivism, and implemented by connecting beneficiary indigenous communities within the format of micro-institutional structures such as self-help groups (Poon, Zhou, & Chan 2009; Chan, Kuan, & Wang 2011; Sloan, Legrand, & Simons-Kaufmann 2014; Kao & Huang 2015). The social entrepreneurship process generates both economic and social value in these emerging economies (Sengupta et al. 2017).
However, though the phenomenon has gone through many developments, there is still need of far more consensus among policy makers, practitioners and researchers on what social entrepreneurship actually means (Choi & Majumdar 2014). The Global Entrepreneurship Monitor (GEM) defined social entrepreneurship in their special reportFootnote 1 in 2016 as “any activity, organization or initiative that has a particularly social, environmental or community objective”. The definition is inclusive of the core mission, which is strongly linked to community mobilization and environment protection. However, research is in a continuous debate on whether social enterprises are for-profit or not-for-profit. Perceptions include viewing social enterprises as for-profits for the poor (Seelos & Mair 2005) or not-for-profits using for-profit techniques to raise money to meet their goals (Boschee & McClurg 2003). And then, there are those who perceive social innovation as the key to social entrepreneurship, irrespective of whether commercial activities are adopted or not (Martin & Osberg 2007). Sengupta and Sahay (2017a) suggest, after observing a convergence of concepts in a systematic literature review, that a social enterprise is a hybrid organization that tries to achieve both market orientation and social value creation for a double bottom-line. However, the phenomenon is strongly influenced by contextual, structural and institutional forces, thereby leading to regional perspectives (Kerlin 2010; Sengupta & Sahay 2017a). Therefore, in a few select parts of the world, policy makers have given different identities to social enterprises, thereby acknowledging their contribution and creating an eco-system supportive for the evolution of the enterprises.
Legal identities for social enterprises
The eco-system for supporting social enterprises in South Korea is strong. As per the “Social Enterprise Promotion Act” of the South Korean government, those organizations are certified as social enterprises, which carry out business activities through production and sales of goods and services for social purposes, such as generating livelihood for residents in vulnerable social groups.Footnote 2 The priority of such enterprises is supposed to be the pursuit of social purposes by reinvesting profit in the business or community; and not adopting profit-maximization approaches.
The legal framework of UK defines social enterprises as businesses with social objectives as primary mission. It means that they should use their assets for public good, and surpluses are to be reinvested in the business and community, rather than redistributing among owners and shareholders.Footnote 3 The companies which come under the jurisdiction of such a definition, are Community Interest Companies (CICs), Limited Companies, and Industrial and Provident Society.
The European definition of social entrepreneurship surfaced first in Italy, after which it disseminated and evolved through discourse and practice across the EU. As per the European definition, known as EMES3 (Emergence of Social Enterprise in Europe), social enterprises are not-for-profit private organizations commenced by communities, involved in production of goods and services specifically for the benefit of communities, bearing high autonomy and full responsibility of their economic situation.Footnote 4
Two schools of belief in the US social entrepreneurship sector4, which evoke an unending debate, are the Social Innovation School and the Social Enterprise School. The Social Enterprise School postulates the fulfillment of the social objectives with the aid of commercial strategies. Quite contrary to that, the Social Innovation School believes that social innovation is primary to social entrepreneurship, whether business centric activities are conducted or not. These two factions of belief reflect across the social entrepreneurship literature, which factors into the complexity and never ending solution to the definitional debate.
In India, the central and state governments have not given legal identity to social enterprises. What has been achieved until date is the provision of registering companies under Section 8 (previously, Section 25) of the Companies Act, 1956. Section 8 companies can promote ‘commerce, art, science, religion, charity or any other useful object’, under the condition that all income and profit, if made, is re-invested for the objectives of the company, and not to be paid as dividend to board members. This does not explicitly talk about social enterprise as a legal identity for the Indian context. This situation, coupled with multiple stakeholder approach towards the meaning of the phenomenon in the Indian context, as discussed earlier, stimulated the authors to explore the meaning of social entrepreneurship in the Indian context, so that the suggested framework can come to aid for social entrepreneurship researchers, academicians, practitioners, and policymakers.
Approach and context
In India, social entrepreneurship is still an ‘understudied topic’ despite the fact that the country is known globally for having many social entrepreneurs working towards bringing change at the grassroots (Tiwari et al. 2017). The authors were not able to identify any past scholarly peer-reviewed research which explored the meaning and dimensions or constructs coming together to form social entrepreneurship in India. Quite interestingly, most scholarly peer-reviewed social entrepreneurship research already conducted till now in the Indian context have skipped the inductive research necessary for clarifying what the term ‘means’ as per the context, and moved on to case development, impact studies, finding social entrepreneurial intensions, or studying social innovation. While those are also essential areas of enquiry, it is a logical flaw to research the phenomenon without discovering what it means in the local context, and by making definitions based on literature in western context for an empirical enquiry in the Indian context. Western perspectives would be more as guiding tools for advancing the social entrepreneurship concept in the local context of the Asian countries which have entirely different culture, societies, and problems. The relevance and novelty of this empirical study is that it intends to research the meaning of social entrepreneurship in the Indian context by exploring the social construction of different sector experts, who are the brains working fingers to the bone to build the social entrepreneurship eco-system in the country.
To formulate a conceptual framework that would be close to a consensus on what a social enterprise means in practice in the Indian context, a qualitative lens of enquiry was adopted with a social constructionist approach. Social Constructionists believe that knowledge is not discovered; it is constructed by the subjective reality of everyday life (Berger & Luckmann 1991; Andrews 2012). Reality is constructed not from within a person but from social realm (Burr 1995). An organization is a society itself which changes, evolves, sustains, through interpersonal interactions (Kemeny 2002). Social constructionists do not believe in biological reductionism (i.e. human behavior is a result of underlying natural essence).
Interview data, which are social constructions of respondents in an empirical study (‘empirical’ meaning based on observation or experience; not statistical research as the myth goes), are often termed as ‘personal narratives’. It is sometimes argued that a challenge of research based on narratives is that the data would have exaggerations, personal biases, emotions, and passions. But it is important to remember that narrative based research has strong roots in the ontological and epistemological stances of the researcher (Berger & Luckmann 1991) which gives value to oral or written texts and language for understanding ‘reality’ (Bruner 1986, Polkinghorne 1988). These are data which give us a strong understanding of the ‘context’, with the personal experiences and opinions (which can be often mistaken as bias), emotions, passion, explanations, that brings us closer to an understanding of ‘life and social relations’ (Riessman 1993; Gummesson 2006; Eriksson and Kovalainen 2015). In fact, typical quantitative research approaches (which are number driven research rather than narrative driven) have been found to be divorced from an attention to purposes and their relations, and more inclined towards application of ready-made formulas (Zyphur and Pierides 2017). Gummesson (2006) opined: “Research in management disciplines, neither basic research nor applied research, can rely on mainstream quantitative techniques. These are two shallow as they can harbour too few variables, do not put studied phenomena in their proper context, and sweep persona under the carpet.” While the authors do not advocate such strong usage of language, they do appreciate these opinions that Zyphur and Pierides (2017) postulated in the Journal of Business Ethics and Gummesson (2006) did in Management Decision, which appreciate that the use of narratives (such as interview data) is now a rising trend in business research to advance theories in different areas, such as strategic management, management communication, organizational studies, entrepreneurship, institutional environment, and even marketing and sales (Eriksson and Kovalainen, 2015). Moreover, social entrepreneurship cannot be detached from human emotions, experiences, and passion. Therefore this inductive research gives value to the experiences and personal feelings and opinions of the respondents, as ontologically speaking, those are important data points for this study.
This research follows the philosophy of social constructionism also because it uses grounded theory for framework / theory construction on the meaning of a social enterprise organization in a specific context. The respondents’ views on these constructs are constructed by the subjective reality of their everyday life, which is influenced by the social realm that they are a part of. For the researcher too, this would be a subjective view of reality. At the same time, there is interpretivism in this research. Interpretivists also value subjective experience of humans, but they develop objective science to describe it (Young & Collin 2004). Since we will be suggesting a framework, we are actually developing an objective science to describe what we learnt about the constructs from the subjective experience of the respondents. Therefore, the qualitative lens used to describe, interpret, and explain the construct of social entrepreneurship, can also be said to be interpretive. In entrepreneurship research, qualitative approach is often recommended to identify relational structures among processes and constructs to facilitate theory building for subsequent quantitative research (Yin 2003; Eisenhardt & Graebner 2007).
Sampling and data collection
Expert interviews are a time tested valid tool for theory generation (Bogner & Menz 2009). Exploratory interviews were conducted with respondents who possess “contextual knowledge”. Purposive sampling was used for selecting respondents who can be source of rich information (Patton 1990). The selection of the experts was on the assumption that they were in possession of relevant knowledge pertaining to the subject. These experts, being from different stakeholder communities, gave rich and diverse data. From experts surfacing through initial purposive sampling, snowball sampling was further done to reach out to other experts with substantial contextual knowledge. A total of 20 experts were interviewed, with 40 to 50 min spent on most interviews, some stretching to even one hour. Table 1 gives further information about them.
Names of experts and organizations have not been disclosed for anonymity. The absence of legal definition in India leads to lack of any government record of social enterprises. Therefore, senior professors/researchers with exhaustive background on social entrepreneurship research were consulted to reach out and interview an initial set of experts. Snowballing from these experts led to the rest of the expert interactions. The combined experience of all the experts taken together had a wide geographical coverage from western India, across northern and eastern India, to the north-eastern states of India. The experts were all senior ranked, mostly in their middle ages. The social enterprises approached (Table 2) were across different sectors; start up as well as scaled up, and for-profit, not-for-profit and Section 8 Company. Most social enterprises approached have past and active projects in more than one sector.
The respondents included social investors, founders of social enterprises, project heads of social entrepreneurship fellowship programs, and project heads of donor organizations. All interviews and discussions started with how the respondents define social enterprises, which led to snowballing of further questions and responses leading to further exploration of the phenomenon. While a few interviews were recorded with permission, field notes were taken in the rest where recording was not possible or permitted on ethical grounds. Interviews/field notes were subsequently transcribed for data analysis.
Transcriptions are subject to a coding technique for identification of thematic patterns (Patton 1990). These themes, which are empirical evidence emerging from the data, support the formulation of emergent theory and theoretical propositions. The interviews and the coding process stop when the researcher reaches to the point of theoretical sufficiency for analytical generalization (Strauss & Corbin 1990; Sandberg 2000; Creswell 2005; Eisenhardt & Graebner 2007).
The transcriptions and field notes were subject to three levels of coding as postulated by Charmaz (2006): (a) initial coding, (b) focused coding, and (c) conceptual coding, to come up with a list of key vocabularies (social constructions) grounded in the context of Indian social enterprises. In initial coding, all data was coded, leading to 86 codes. In focused coding, these codes were further segregated into more compact codes. In theoretical coding, the codes were further combined to bring more refinement, observe conceptual density, and unravel the framework. The coding of the data from expert interviews was done using qualitative data analysis tool, Atlas.ti. The list of vocabulary generated by the coding process would fall under key constructs that would lead to formulation of the conceptual framework. These vocabularies are reliable as they were grounded in the narratives of expert respondents; the narratives being social constructions of the reality of the social entrepreneurship environment of which the respondents were an integral part. Nonetheless, the authors chose to assess inter-rater reliability as it is an important method to assess rigor (Armstrong, Gosling, Weinman, & Marteau 1997). While a great many qualitative researchers would not like to believe in assessing the inter-rater reliability of qualitative findings of a research, Armstrong et al. (1997) found inter-rater reliability to be particularly helpful in bringing more reliability on the packaging of codes under certain constructs. This study, therefore, brings further reliability on the findings reached through grounded theory coding, by using multi-rater reliability tests like Krippendorff’s Alpha, postulated by Klaus Krippendorff (2004), and Fleiss’s Kappa Statistic, postulated by Joseph L. Fleiss (1971). Computing this ensured that the vocabularies explaining the constructs were close to representation of reality. The application of the tool is independent of the number of units of analysis. The formula for computing Krippendorff’s Alpha is:
α = Krippendorff’s alpha reliability.
Do = Observed disagreement.
De = Expected disagreement.
If the raters (can be of any number more than two) agree completely, Do would be 0, and thus α would be 1. When the raters are not able to distinguish the vocabs and disagree to the list coming together to form the constructs, α would be 0. So the range of α is from 0 to 1. Closer to 1 would mean that the degree of agreement is high, thereby leading to reliability of the list of vocabulary in terms of its inclusion under a construct. 0.7 is a good cut off for closer inter-variable reliability. Any vocabulary having the majority disagreement were omitted.
The Fleiss’s Kappa statistic is calculated by the formula:
K = Fleiss’s Kappa reliability.
P (A) = Proportion of times that the raters agree.
P (E) = Proportion of times that we expect the raters to agree by chance.
When the raters do not agree other than by chance, the value of K is zero, thereby leading to the conclusion that there is total lack of reliability. When the raters totally agree, the value of K is one, which indicates perfect reliability. A result of K > 0.8 is considered a good reliability.
Results and discussion
Conceptual development from the narratives
Social enterprises explore opportunities to create social change and gathers intelligence on how to address those opportunities by applying for-profit principles. One of the social entrepreneurs believed:
“A social enterprise is an enterprise which identifies a social problem in a local context, applies a business plan, and utilizes it as an opportunity to ensure a gradual process of social change”.
The local context of opportunities makes a social enterprise gather context-specific intelligence needed for accessing market opportunities. A for-profit with a business model would be a corporate. A social enterprise would be, as one of the social entrepreneurs believed,
“An enterprise having a social angle with a business model”.
Both social mission and market oriented business modeling are mandatory, and not optional, in the pursuit of social entrepreneurship. However, the social mission is the primary objective of the enterprise. Market orientation is borrowed from the for-profit business models to act as enablers for achieving scalability and sustainability of the social mission. All experts corroborated this in their interviews. One of the entrepreneurs, whose enterprise is registered as a Trust, mentioned adoption of earned income strategies for the purpose of community development. Another respondent, whose enterprise is registered as a private limited company, differentiated social enterprise as one, which creates.
“Financial incentives to help them become self-sustaining in creating social impact”.
A social investor clearly mentioned:
“A social enterprise is one that creates social value, which is greater than private value, and is sustainable with business-like operations, thereby breaking the stereotyping of the social sector and creating new markets”.
The recurrence of importance on social mission over wealth-maximization, while achieving sustainability and scalability in social mission, through social value creation activities as well as an orientation towards market principles and forces, repeatedly emerged in the interviews as a prime argument differentiating social enterprises from NGOs, or from pure for-profits.
The director of a nationally reputed educational institution engaged in entrepreneurship education and incubation, mentioned that while the ardent and hardest of social values had been historically created by NGOs and market value by businesses entities,
“Social enterprises bring both segments together to create social value in a manner that is sustainable commercially. This is a very interesting marriage that leads to the talk about social entrepreneurship, where it is not that the NGOs will create social value and businesses will create economic value; but a triple bottom line – social bottom-line, economic bottom-line and environmental bottom-line”.
This marriage between market and social is a key factor to the identity of a social enterprise. This leads to a debate on which of these constructs has precedence over the other. On this note, it is interesting to hear the CEO of one of the most reputed social entrepreneurship fellowship programs in India say,
“A social enterprise is an enterprise that creates social value that is greater than private value and is sustainable with the operations of the business. The government has been taking its hands away from social welfare. Private sector is least bothered. Social entrepreneurship has opened up alternative approaches to people. They have broken the stereotyping of the social sector and created new markets.”
This indicates that though the business orientation towards exploration of market and response to market need is vital, the social cause takes an important slice of the phenomenon because one of the factors differentiating social enterprises from commercial ones are the target consumers, which are ‘beneficiary communities’ in this case. A seasoned social entrepreneur strongly commented,
“What you sell, who you sell to, and how inclusive is your business model, would give you the identity of a social enterprise”.
The community of beneficiaries accessing the products or services of social enterprises and the consequent social change of those communities are important dimensions of the phenomenon. Social value creation in the form of social change is closely tied to the phenomenon, sometimes with higher importance, and sometimes with equal importance, to market orientation. An expert leading one of the social entrepreneurship fellowship programs in India mentioned:
“A social enterprise is one which has a social context attached to it which is being addressed with a market oriented business model to resolve issues related to a target group of beneficiaries. Social change has to be the outcome of the enterprise.”
The frequent reference to business model, market and social value by the experts indicate the need of a social enterprise to have a market-driven for-profit model for bringing growth in the beneficiary community. Quite interestingly, the experts echoed a similar consensus that while it is imperative for a social enterprise to have a market-oriented solution to a social problem; it is not of relevance whether they have registered their legal identity as a for-profit or a not-for-profit. The Director of a social incubator specifically implied in her interview that the social purpose and the impact fetch far more relevance and importance than the legal identity of the social enterprise. She said,
“In India you are a private limited company, for profit partnership, a society or even a trust; but I believe you can be any of these to be a social enterprise. You could be social entrepreneur in any sector; you can even be a social entrepreneur with a project. The idea is whether the impact of what you are doing is balanced or skewed. It is easy to say that you should not just have a good financial impact but also a good social impact. However, I also believe that there are people who just think of social impact, and not about financial impact. Even that, is not social entrepreneurship. Social entrepreneurship for me is something that touches upon all three aspects of financial, social, and environmental. It tries to create a balance among these three.”
The respondents believed that this balanced impact differentiates social enterprises from commercial enterprises, as the latter is focused majorly on profit, rather than people and planet. The difference in the legal identities of social enterprises may have an impact on the way they develop market orientation and create social value. The legal identity of a not-for-profit organization facilitates the organization to also access revenue from local governments, which may be a relatively difficult task for a for-profit registered social enterprise. And in the initial years of scalability of a social enterprise, accepting grants from the government is not a sacrilege, as any enterprise, while setting up the business, “asks for financial support from family members and friends”, as says one of the respondents, thereby making it pointless to use the word ‘grant’ as a taboo for the social sector.
This may sound idealized. To be precise, the question is whether the enterprise is oriented towards achieving this balance. The founder of one of the incubators mentions that while the balance is a utopia, what identifies a social enterprise is the chase for achieving that utopia. The tension between private value generation and social value generation is a key dimension in the phenomenon of social entrepreneurship (Fig. 1). What differentiates social enterprises from commercial enterprises is the importance of the social mission, but not undermining the relevance and criticality of market orientation to fulfill that social mission. This combination of two different logics enables the sustainability and scalability of a social enterprise, and therefore is core to the social entrepreneurship phenomenon. A perfect combination will be utopic. What is observed is that social enterprises are those that strive to achieve both private and social value, and a good balance of the two; despite the road being one of struggle, irrespective of the legal identity of the company.
An expert respondent, heading a social entrepreneurship fellowship programme, shared the same set of beliefs with a strong stance:
“The legal identity of a business should not decide whether it is a social enterprise. Its identity should be decided on whether it has a social change model. It does not matter whether it is for-profit, not-for-profit, or hybrid. Moreover, there cannot be a definition of social entrepreneurship on the basis of whether a social enterprise is for-profit, not-for-profit, or hybrid. It has to be an inclusive definition on the basis of the end result achieved using a blended model of for-profit and not-for-profit.”
By blended model he spoke about the merging of a market oriented approach and social value creating mission:
“When we are referring to an enterprise with a social mission that is being fulfilled with a market-oriented approach, we are refereeing to one with a blended model that is inclusive of market orientation as well as social value creation.”
This marriage between the market and the social enables social enterprises to create both social and economic value, which facilitates them, as an expert said, “create financial incentives that helps social enterprises become self-sustaining”.
It is the blended model of social value creation and market orientation that differentiates social enterprises; not just because of impact, but also in achieving sustainability. Experts from a donor organization mentioned:
“Sustained social change happens when the enterprise operations scale up using business practices. Social opportunity and social change is definitely linked to business model. A social enterprise is an enterprise, which identifies a social problem in the local context, applies a business plan, and utilizes it as an opportunity to ensure a gradual process of social change.”
The application of a business plan means the assessment of existing community necessities central to its development and creation of markets based on the necessity, which is tapped by generating both economic and social bottom line. The experts added that a social enterprise “converts social opportunity into a business opportunity to create social change”.
Another dimension that emerged as a key to sustainability and scalability of a social enterprise is the qualities of the social entrepreneur himself. An expert made an interesting comment that “if the entrepreneur is right, the enterprise will stand”. Another expert quite passionately voiced that ‘creativity’ and ‘compassion’ is important:
“If you want to do something, you need to have your heart in the right place. There are talks of strategy and most of that big stuff in sector, but we are not talking about the creativity and compassion.”
Another expert mentioned,
“Social enterprises are enterprises, which shape innovative solution for large-scale impact in underserved community”.
Innovation is integral to entrepreneurship as “entrepreneurship without innovation has no root and innovation without entrepreneurship has no fruit” (Sahay & Nirjar 2006). In the context of social entrepreneurship, social change is brought by bringing in socially innovative solutions, leveraged by business modelling. One of the respondents, who had many years of experience in the sector, mentioned, that the success of a social enterprise depends on the change maker. A change maker is the person with innovative ideas; ideas that have some potential to scale up and eventually become replicable. According to the expert, the social entrepreneur is the key; the entrepreneur is able to build up ‘social capital’ that becomes a participant in enabling market orientation in a social enterprise for bringing change. The creativity and compassion of a social entrepreneur drives him and the enterprise towards community engagement and create SHGs (Self-Help-Groups) in the communities, which is a strong form of social capital. However, the contribution of the social entrepreneur is not just in capacity building and creation of social capital at community level, but also in capacity building within the organization. That calls for the social entrepreneur to build managerial capacity of the social enterprise by recruiting and retaining a dedicated team of men and women who have compassion and business acumen for sustainability and scalability of the social enterprise. An expert made an interesting reference to this when he said that if the social entrepreneur moves out, the enterprise should not fall, but should sustain with the managerial capacity built into it by the entrepreneur.
The narratives clearly, and logically, bring out four key constructs — social value creation, market orientation, social entrepreneur, and balanced impact — as important dimensions to the meaning of social entrepreneurship. Activities targeted at social value creation, orientation towards the market, and the qualities of the change maker (social entrepreneur), emerge as drivers for the scalability and sustainability of a social enterprise in the pursuit of its social mission. The final level of coding (selective coding) lead to the creation of a social entrepreneurship framework (Fig. 2) that is a snapshot of what a social enterprise means in the Indian context in the absence of a legal identity, which, if existed, would have specifically defined which enterprise, can be called a social enterprise in India. Until the time the Indian parliament or state judiciaries come up with a legal definition of social enterprises in India, this framework would be able to facilitate aspiring entrepreneurs, future investors, policymakers, CSR wings of corporates, and universities, to understand social entrepreneurship as grounded in practice in the Indian context. The following statement comprehensively explains the framework and the meaning of ‘social enterprise’ in the Indian context:
A social enterprise is an enterprise that tries to attain sustainability and scalability in their social mission (which is their primary mission) through a blend of social value creation, market orientation, and entrepreneurial qualities, in order to achieve a balanced impact, irrespective of the legal identity of the social enterprise.
While the previous section establishes logic for all the four constructs, and the clarification on the choice of legal identity, the authors would like to discuss more on the construct of market orientation and social value creation. Quite interestingly, review of literature shows that traditionally market orientation has been defined as a construct in the context of large businesses of the west. There, market orientation has been traditionally postulated as a construct consisting of market intelligence generation, dissemination of intelligence, and the response to intelligence (Narver & Slater 1990; Jaworski & Kohli 1993; Dong, Zhang, Hinsch, & Zou 2016). Past research had proposed that the notion of market orientation formulated in the west in the context of larger corporations is inadequate for organizations with social missions in developing economies, because these organizations are much smaller in size and scale of operations, with in-depth engagement in specific communities (Modi 2012). Through some literature it is known that social enterprises adopt marketing capabilities to penetrate potential markets for not just awareness and revenue generation, but also to attract additional resources for more growth opportunities (Mottner & Ford 2005; Liu, Eng, & Takeda 2015; Dohrmann, Raith, & Siebold 2015). Despite previous research reiterating that market orientation affects the performance of social enterprises, there has been little empirical examination of what social enterprises actually adopt in market orientation for deploying market-based resources (Liu et al. 2015; Dohrmann et al. 2015). This construct definitely needs deeper exploration in the context of social entrepreneurship in India.
The term “social value” mostly signifies the wellbeing of people and communities, built on a set of basic values. In social psychology, social value orientation is connected to research on social dilemmas and is defined as “the importance an individual attaches to their own and others’ outcomes in situations of social interdependence” (Joireman et al. 2001). Social value creation is a term frequently used in literature, though there has been inadequate effort to conceptualize it (Sinkovics, Sinkovics, Hoque, & Czaban 2015). In social entrepreneurship literature, social value creation is inclusive of altruistic and virtuous behavior, and promotion of social purposes (Choi & Majumdar 2014). It is an intervention creating positive change, i.e. social value, for subjective well-being and life satisfaction (Kroeger & Weber 2014) of people seeking subsistence, or amour propre, or freedom from subjection or enslavement (Sinkovics et al. 2015). Social value creation is achieved by successfully attending complex and diverse ‘social cause-attractors’ (Dietz & Porter 2012), i.e. social issues, with priority over economic value. While popular wisdom talks about the social mission leading to the creation of social value, not much of social entrepreneurship literature was found which elicited the concept of social value (Stevens, Nathalie, & Johan 2015). This construct has come up with some indicative vocabularies. Nevertheless, it needs to be more explored in depth in the context of social entrepreneurship in India.
Measure of agreement for further reliability
The qualitative tool of coding in grounded theory is a strong tool for generating codes for creating conceptual frameworks or for postulating new theory. However, achieving inter-rater reliability would add more rigor to the the data analysis process and establish more accuracy in the representation of the vocabulary under the identified constructs (Armstrong et al. 1997). Krippendorff’s Alpha was computed to ensure that the vocabularies explaining the constructs were close to representation of reality. Krippendorff’s Alpha was a coefficient of reliability developed by Krippendorff (2004). In this study, this tool had been used to measure the agreement among four raters (all PhDs) who rated the list of vocabularies to nominate them under four key constructs– market orientation, social value creation, social entrepreneur, and balanced impact. The highest Krippendorff’s Alpha as well as Fleiss’s Kappa was 1, which was of Balanced Impact. That was quite evident due to the common understanding of the construct. For market orientation, social value creation and social entrepreneur, the α values were 0.93, 0.964 and 0.829 respectively, and K values were 0.929, 0.964, and 0.828 respectively (Table 3). The results confirmed significant inter-rater reliability of the vocabulary list with respect to the constructs, thereby validating the reliability of the constructs in terms of being decisive elements in the suggested operational/working definition of social entrepreneurship.
Entrepreneurial activities with exclusive social missions have been on the rise in recent decades, leading to the emergence of the term “social entrepreneurship” to identify them. People in transient and emerging economies may find it very natural to create businesses with social missions. There in need to understand Indian social enterprises with in-depth case studies from different regions of the country because, as an expert said rightly, “no two communities or regions are same, which makes the context quite different for different social enterprises”. Detailed qualitative research would be needed, involving ethnographic observation of the practices of social enterprises and case specific interviews/focus groups with multiple stakeholders, to identify conceptually strong dimensions of market orientation and social value creation. This research sets that stage. Future research would also need to build a scale for measuring the impact of market orientation activities, social value creation activities, and entrepreneurial qualities, on the scalability and sustainability of social enterprises in India. The authors plan to take up these issues in the coming years and contribute to the evolution of the social entrepreneurship phenomenon.
Source: http://gemconsortium.org/report/49542, Accessed on 22nd January 2017
Source: http://www.fomin.org/Home/FOMINblog/Blogs/DetailsBlog/ArtMID/13858/ArticleID/7098/Ecosystem-for-supporting-social-business-in-South-Korea.aspx, Accessed on 22nd January 2017
Source: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/31677/11-1400-guide-legal-forms-for-social-enterprise.pdf, Accessed on 22nd January 2017
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The authors wish to acknowledge the critical feedback and support received from the Centre of Research, Birla Institute of Management Technology, Greater Noida, and Dr. Srinath Jagannathan of Indian Institute of Management, Indore. They also wish to acknowledge the support of Dr. Pooja Ghosh of IIT, Delhi, for technical assistance. The authors also wish to acknowledge the cooperation of all the respondents in this study who took their time out from their practice and engaged in substantial discussions on the concept of social entrepreneurship. The authors thank from the core of their heart to the reviewers for their excellent comments which pushed the authors towards more rigor for bringing the paper to its current form so as to offer novelty.
Subhanjan Sengupta is pursuing his doctoral program at Birla Institute of Management Technology, Greater Noida, where the PhD program is affiliated to Mohanlal Sukhadia University, Udaipur. His teaching interests include strategic management, marketing management, and social entrepreneurship. His research interests are in strategy, entrepreneurship, and qualitative research methodologies. He is the corresponding author and may be contacted at email@example.com.
Arunaditya Sahay is a Professor of Strategic Management and a Dean of Research at Birla Institute of Management Technology, Greater Noida. His teaching and research interests include innovation, entrepreneurship, sustainability and CSR. He has been a turnaround manager, corporate entrepreneur, researcher, educator and an institution builder. He has advised leading companies in the area of “Corporate Strategy”. He was the lead consultant in many projects sponsored by European Union, Govt. of India and corporates. He can be reached at firstname.lastname@example.org.
The authors declare that they have no competing interests.
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