Fostering social enterprises through business model innovation and individual social entrepreneurial orientation

Abstract

Social enterprises have been considered to be the “the second invisible hand of the economic system”. However, there are still few of them and the ones present today usually have two interrelated bottlenecks: lack of funds and difficulties to scale. On one hand, encouraging more people with intrinsic social entrepreneurial characteristics to develop social enterprises could arguably raise its numbers. However, there has been little progress in the development of a scale to identify individuals with a social entrepreneurial orientation. On the other hand, scaling and funding have been partially overcome through business model innovation (BMI) and adapting commercially viable business models to the social context, but the extant literature is limited and lacks a solid empirical foundation. To explore these topics, first, a 26-item instrument was developed to measure individual social entrepreneurial orientation. Second, a retrospective analysis of a single case study was performed to track the evolution of an organization's business model as it went from being a traditional, donation-based NPO, to a dynamic sales-driven social enterprise. Third, through a multiple case study, the value dynamics of the freemium business model were explored in the context of social enterprises. Our findings add to the literature by providing a validated scale using both EFA and CFA that provides more depth into measuring the social entrepreneurial orientation of individuals. In addition, we identify BMI change drivers and outcomes and show how a platform-inspired business model and more specifically the freemium business model can enhance value creation and value capture in social enterprises.