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The Social andEconomic Mission ofSocial Enterprises:Dimensions,Measurement,Validation, and RelationRobin StevensNathalie MorayJohan Bruneel

Social entrepreneurs have a dominant social mission and generate revenue to ensurefinancial viability. However, most research treats the extent to which social entrepreneursactually adhere to social and economic mission as a black box. Performing higher orderconfirmatory factor analysis on a sample of social enterprises (N∼270), this study identifiesdimensions and validates measures for understanding and delineating social and economicmissions, and shows how the two constructs relate to each other. The theoretical untanglingand the empirical validation of social and economic missions as distinct constructs—andmultiple potential constellations of attached relative importance—opens up opportunities forquantitative hypothesis-testing research in social entrepreneurship.

Introduction

Scholars, governments, media, and nongovernmental organizations increasinglyrecognize the importance of social entrepreneurial approaches to problems the world isfacing today (Christie & Honig, 2006). Research interest in social entrepreneurship (SE)increased in parallel and became an important research topic in entrepreneurship. SEoriginated in the not-for-profit sector (Harris, Sapienza, & Bowie, 2009; Sud, VanSandt,& Baugous, 2009; Weerawardena & Mort, 2006) as a response to diminishing governmentinvolvement in the economy and society (e.g., Nicholls, 2006; Sharir & Lerner, 2006).Essentially, social enterprises—irrespective of terminology, and organizational or legalform—have in common that they explicitly focus on creating social value (Austin,

Please send correspondence to: Robin Stevens, tel.: +32-9-248-88-43; e-mail: [email protected], toNathalie Moray at [email protected], and to Johan Bruneel at [email protected].

PTE &

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DOI: 10.1111/etap.12091

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Stevenson, & Wei-Skillern, 2006; Dorado, 2006; Nyssens, 2006; Peredo & McLean,2006), and that they are sustainable through trading (Birch & Whittam, 2008; Chell,2007; Di Domenico, Haugh, & Tracey, 2010; Department of Trade and Industry[DTI], 2007; Haugh, 2007; Peredo & Chrisman, 2006; Tracey & Jarvis, 2007) referring toa continuous activity, producing and selling goods and/or services (Nyssens).

Social enterprises place high value on the creation of social value and vary in theirambition for economic value creation (Dorado, 2006; Schuler & Cording, 2006). As Mairand Marti (2006, p. 39) report: “The main difference between entrepreneurship in thebusiness sector and SE lies in the relative priority given to social wealth creation versuseconomic wealth creation.” Next to being the key defining characteristic of SE, previouscontributions suggest both the importance and uniqueness of combining social and eco-nomic missions in, for example, bricolage (Di Domenico et al., 2010), identity formation(Battilana & Dorado, 2010), franchising (Tracey & Jarvis, 2007), and choosing organi-zational form (Townsend & Hart, 2008).

Although both the social and economic missions are inherent to social enterprises(Certo & Miller, 2008), research to date has specifically focused on the importance of adominant social mission from a theoretical perspective. As such, the “social” is largelytaken for granted and the “economic” is considered as a crucial framework condition.Furthermore, current research has defined the mission of social enterprises generally interms of the tension between social and economic goals (e.g., Neck, Brush, & Ellen, 2009;Peredo & McLean, 2006). While goals are important, the mission of social enterprisescan be manifested in other dimensions as well (Austin et al., 2006).

The question to what extent the social and economic missions indeed refer to distinctconstructs and how they relate to each other has not been investigated to date. Buildingon established theoretical constructs, this paper identifies a number of dimensions andmeasures that contribute to our understanding of the social and economic missions asdistinct predispositions in social enterprises. More specifically, we argue that the tensionbetween the social and economic missions of social enterprises is reflected in the orga-nization’s goals, values, and identity. We also assess the relation between the social andthe economic missions in social enterprises. In contrast to the majority of empiricalresearch on social enterprises, which mainly involves case studies (Certo & Miller,2008), we employ a unique, well-defined sample of social enterprises (N∼270) to assessthe reliability and (construct) validity of our model through structural equation modelingtechniques.

This research is important and contributes to the literature in several ways. First, itcontributes to the aforementioned discussion about the qualification of the social at theorganizational level. The importance of (non)economic goals in organizations and itssubsequent behavior is widely acknowledged (Astrachan & Jaskiewicz, 2008; Chrisman,Chua, Pearson, & Barnett, 2012). The study is an important first step in answering the callfor more research into understanding the difference in importance of the social versus theeconomic mission in influencing the behavior of firms (Certo & Miller). Whereas existingliterature emphasizes the importance of goals, our study shows that the tension betweenthe social and economic missions of social enterprises is also reflected in the values andidentity of these organizations. This extension to values and identity of social enterprisesis important as goals are not always enough to define the social mission. For example,microfinance institutions are accused of “mission drift” as the boundaries betweenthese organizations and mainstream banking are blurring (Mersland & Strøm, 2010). Onemay not identify this drift in mission in the goals since microfinance institutions are stillserving poor people by supplying them with savings, credit, insurance, and paymentservices. However, “social drift” of microfinance institutions may be more easily seen in

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their organizational values and identity (Battilana & Dorado, 2010).1 This paper thereforeopens the possibility for empirical research that actually measures the relative importanceof the social and economic mission of social enterprises, providing insight into thedistinctive nature of the social enterprises’ dual mission (Short, Moss, & Lumpkin, 2009).Gaining a better understanding of the distinctive nature of this offers one of the mostsignificant opportunities to move the literature forward (Dacin, Dacin, & Tracey, 2011).

Second, by revealing the relation between the social and economic missions, we gobeyond merely defining and measuring (Gupta, Smith, & Shalley, 2006). We provideinsights into how the two constructs relate to one another—as opposing forces or comple-mentary aspects of the organization. Whether the social and economic missions aretwo ends of a continuum or orthogonal is an important debate in the SE literature. Forexample, Townsend and Hart (2008) suggest that these are difficult to combine becausethey require a different legitimation process, eventually resulting in institutional ambigu-ity. This argument is reflected by Austin et al. (2006, p. 3) who claim that “commercialand social dimensions within the enterprise may be a source of tension.” The results of ourstudy lend initial support for a continuum approach toward the social and economicmission in the spectrum of social enterprises.

The remainder of the paper unfolds as follows. We first offer a succinct overviewof the SE literature. Second, we elaborate on the dimensions for measuring and validatingthe social and economic mission of social enterprises. Next, we discuss the survey designand the data analysis. More specifically, we report on the reliability and validity of thedimensions and subsequent measures, and how they relate to each other. Finally, wesummarize the main arguments of this study and offer some suggestions for furtherresearch.

The Social in Social Entrepreneurship

Social entrepreneurship or entrepreneurial activity that primarily serves a socialmission has increased in recent decades (Austin et al., 2006; Peredo & Chrisman,2006; Peredo & McLean, 2006), emerging as a response to diminishing governmentinvolvement in the economy and society (e.g., Nicholls, 2006; Sharir & Lerner, 2006). Assuch, it originated from the not-for-profit sector (Dees, 1998; Harris et al., 2009; Mort,Weerawardena, & Carnegie, 2003; Sud et al., 2009; Weerawardena & Mort, 2006) andextended rapidly to the private and public sectors (Johnson, 2000). This paper definessocial entrepreneurship as “entrepreneurship with an embedded social purpose” (Christie& Honig, 2006; Peredo & Chrisman; Peredo & McLean), which is sustainable throughtrading (Birch & Whittam, 2008; Chell, 2007; DTI, 2007; Haugh, 2007; Peredo &Chrisman; Tracey & Jarvis, 2007) and not limited to a particular organizational form(Birch & Whittam; Chell; Mair & Marti, 2006). “Social enterprise” as a term refers to theenterprise as organization, while “a social entrepreneur” is the individual who sets up asocial enterprise and is generally referred to as a “change maker” (e.g., Barendsen &Gardner, 2004; Sharir & Lerner; Shaw & Carter, 2004; Van Slyke & Newman, 2006).“Social entrepreneurship” refers to the whole field of social entrepreneurship as anumbrella concept including both the individual social entrepreneurs and the social enter-prises (Nicholls).

1. We thank an anonymous reviewer for this suggestion.

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There is a general consensus that social enterprises focus on the social mission orthe creation of social value (Austin et al., 2006; Dorado, 2006; Nyssens, 2006; Peredo &McLean, 2006) and, consequently, scholars define social entrepreneurship as “entrepre-neurship toward creating social value” (Austin et al.). However, we found only a fewsocial entrepreneurship papers, specifying the concept of social value, which seem toindicate a tautological problem. How can we conceptualize the characteristic features ofa social enterprise if we do not clearly delineate what we mean by social and economicvalue? Researchers in the realm of social entrepreneurship have attempted to resolve thistautological problem in two ways.

First, a group of researchers have taken a pragmatic approach by being specific indefining social value in their particular research context. For example, some researcherslink social value to addressing social challenges in communities, referring to communityentrepreneurship (e.g., Johnstone & Lionais, 2004; Peredo & Chrisman, 2006; Wallace,1999). “The regeneration or expansion of local economic activity (Wallace, p. 161)” or“a potential strategy for sustainable local development in poor populations (Peredo &Chrisman, p. 309)” are key issues from this perspective. Korosec and Berman (2006,p. 449) see social entrepreneurship as “organizations and individuals that develop newprograms, services, and solutions to specific problems (such as chemical dependency,unwanted pregnancy) and those that address the needs of special populations (such aschildren with disabilities, caregivers for Alzheimer’s patients, veterans).” In the work ofSeelos and Mair (2005), the social is about efficiently catering to basic human need thatexisting markets and institutions have failed to satisfy. Social needs are “the goal ofachieving sustainable development” (Seelos & Mair, p. 244). Similarly, Certo and Miller(2008) refer to social as the fulfillment of basic and long-standing needs such as providingfood, water, shelter, education, and medical services to those who are in need. Otherspecifications are “a sustainable method of enabling disadvantaged groups to improvetheir position” (Hibbert, Hogg, & Quinn, 2002, p. 299), “to alleviate social exclusion andunemployment” (Haugh, 2007, p. 165) and “raising public awareness of an issue ofgeneral public concern” (Waddock & Post, 1991, p. 394). In the study of Sharir and Lerner(2006, p. 7), social is about “answers to social problems whether educational, welfare,environmental or health related.” Finally, Neck and colleagues (2009) see the environmentas one of the many social problems the world is facing today. This approach results in verydiverse (and often narrow) interpretations of social value, of who social entrepreneurs are,and what they do. Although this approach is relevant in concrete research contexts, thisapproach is difficult to sustain at the conceptual level when studying a heterogeneouspopulation of social enterprises.

Second, researchers have adopted generic conceptualizations of social value which issupported by the idea that “social” means very different things to different people (Seelos& Mair, 2005). The term “social value” is considered to be subjective and varies greatlyfrom one context to another, so the term is consequently imprecise and difficult to measure(Murphy & Coombes, 2009; Zahra, Gedajlovic, Neubaum, & Shulman, 2009). Peredo andMclean (2006, p. 59) broadly suggest that social values “contribute to the welfare orwell-being in a given human community,” whereas Murphy and Coombes (p. 326) imply“an underlying range of basic values that are desirable and important in a civilizedsociety.” Brickson (2007, p. 866) in turn defines social value as “that which enhanceswell-being for the earth and its living organisms.” The common denominator of thesedefinitions is their almost ideological stance toward advancing the well-being of people,communities, and societies (“the public or common good”) built on a set of basic values.Economic value creation is not primarily concerned with the public good but withenhancement of economic return and shareholder wealth (Austin et al., 2006; Dees &


Anderson, 2002; Hibbert et al., 2002; Meyskens, Robb-Post, Stamp, Carsrud, &Reynolds, 2010; Moss, Short, Payne, & Lumpkin, 2010; Murphy & Coombes; Peredo& Chrisman, 2006; Sharir & Lerner, 2006; Wallace, 1999).

Social enterprises are companies which are founded with a mission to bring aboutchange in a specific socially oriented way rather than to provide “an (economic) returnon investment” (Strothotte & Wüstenhagen, 2005). As a result, social enterprises aim tocreate social value rather than personal wealth for the leader (Chell, 2007; Dees, 1998).Consequently, scholars acknowledge—at least theoretically—a continuum of possibili-ties, with varying degrees of importance attached to the social and the economic (e.g.,Grimes & Victor, 2009; Peredo & McLean, 2006; Townsend & Hart, 2008; Zahra et al.,2009). Clearly, the extent to which a firm adheres to a social mission is often a matter ofrelative priority between its social and economic missions (Certo & Miller, 2008; Chell;Dacin et al., 2011; Desa, 2007; Mair & Marti, 2006; Miller & Wesley, 2010; Peredo &McLean, 2006; Tan, Williams, & Tan, 2005). It is the attempt to combine the social andeconomic missions that makes social entrepreneurial organizations unique (Grimes &Victor), although balancing social wealth with the desire to make profits and maintaineconomic efficiency is no simple matter (Zahra et al.). As suggested by Dacin et al., amission-focused conceptualization of social enterprises is generally accepted and pro-vides the potential to explore the balancing act between the social and economic missions.

Building on the generally accepted theoretical assumption that social entrepreneurshave a dual social and economic mission (Dacin, Dacin, & Matear, 2010; Townsend &Hart, 2008), this paper identifies and validates measures for capturing the social missionand economic mission in a social entrepreneurship context. To deepen our understandingof these missions, we are further interested in how both constructs relate to each other.This endeavor contributes to the aforementioned discussion about the qualification of thesocial and economic in social enterprises.

Understanding Social and Economic Mission

We conceptualize the social and economic missions of social enterprises as multi-dimensional constructs. A construct is multidimensional when it consists of a number ofinterrelated attributes or dimensions and exists in multidimensional domains (Law, Wong,& Mobley, 1998). Organizational missions are central to organizations because theyprovide companies direction in relation to overall strategy. However, missions are ambigu-ous and difficult to articulate as there are a wide range of meanings attached to the concept(Raynor, 1998). The multiple meanings reflect the multidimensional nature of the missionconcept (Sidhu, 2003). The SE literature has adopted the multidimensional nature of thesocial and economic missions and acknowledges that the essence of these concepts cannotbe captured by a single construct. For example, Dacin et al. (2011) argue that the dualityof a social enterprise’s mission may be mirrored in the organization’s values. Moss et al.(2010) found traces of normative and utilitarian organizational identities in the missionstatements of social enterprises. They conclude that social enterprises reflect both socialand economic missions in the language of their mission statements. In their analysis ofsocial venture capitalists’ decision criteria, Miller and Wesley (2010) equate the tensionbetween the social and economic missions of social enterprises with the extent to whichorganizations focus on social goals. It is important to establish the construct clarity whendeveloping new constructs. Four conditions have to be met to achieve the construct clarityof the social mission and economic mission (Suddaby, 2010).


Reaching construct clarity requires first and foremost a clear definition of the con-struct (Suddaby, 2010). The social and economic missions of social enterprises are higherorder constructs of the dimensions values, identity, and attention to goals. The social andeconomic missions are theoretical abstractions that represent the common, underlying linkbetween the described dimensions that ties them (Law et al., 1998). The social mission ofsocial enterprises refers to value creation for the “public good,” whereas their economicmission refers to value creation for “private gain” (Austin et al., 2006).

Second, next to the definition, the scope conditions of new constructs have to beestablished because organizational constructs lack universality and tend to be highlysensitive to and contingent on contextual conditions (Suddaby, 2010). The constructs’social mission and economic mission are organizational level constructs, contingent onthe type of organization, as they are limited to social enterprises in the broad spectrum ofsocial entrepreneurship. Whereas commercial enterprises are only focused on their eco-nomic mission, a distinctive feature of social enterprises is their social mission in additionto the economic mission (Certo & Miller, 2008). These two constructs may also be subjectto boundary conditions of time as the relative balance between social and economicmissions may vary over time due to institutional pressures (Dacin et al., 2011).

Third, studies that develop new constructs should establish the relation with otherconstructs. As pointed out by Suddaby (2010), new constructs are rarely created de novobut the result of creative building upon preexisting constructs. Previous research hasassociated the social/economic mission of social enterprises with the organization’svalues (Dacin et al.), identity (Moss et al., 2010), and goals (Miller & Wesley, 2010).Below, we clearly describe the relation of the dimensions values, identity, and goals withthe latent higher order constructs’ social and economic missions (Suddaby).

A final condition of construct clarity is the notion that the construct, its definition, itsscope conditions, and its relationship to other constructs must all make sense in a logicallyconsistent manner (Suddaby, 2010). This need for coherence arises from the inherentlymultidimensional nature of management research as constructs frequently become mul-tidimensional. Here, we provide coherence by arguing that (1) the social and economicmissions are multidimensional constructs (Sidhu, 2003) which (2) are very importantin the context of social enterprises (Dacin et al., 2011), and that (3) these constructs arearticulated in the organization’s values (Austin et al., 2006), identity (Moss et al., 2010),and goals (Miller & Wesley, 2010). Consequently, we suggest that the social and eco-nomic missions demonstrate greater resilience than their component elements (Suddaby).

In the following paragraphs, we explain the relations and the rationale for selectingthe dimensions values, identity, and goals. Each dimension has considerable theory andresearch that contributes to developing an integrative theoretical foundation for a socialand economic mission. It is important to show that these dimensions have conceptualindependence but show empirically discriminant validity (Luthans, Avolio, Avey, &Norman, 2007). In other words, the relations between the overall constructs and theirdimensions must be specified (Law et al., 1998).

Values

Academics have long discussed values and the relation between individual values andthe organization. Values are relatively enduring and stable over time (Dose, 1997), affectbehavior (Elizur, Borg, Hunt, & Beck, 1991), and have an impact on decision making(Judge & Bretz, 1992; Mumford, Helton, Decker, Connelly, & Van Doorn, 2003). Workvalues refer to what a person wants from it in general and are guiding principles forevaluating work outcomes and for choosing among different work alternatives (Ros,


Schwartz, & Surkiss, 1999). Interestingly, personal characteristics in general (Cambra-Fierro, Hart, & Polo-Redondo, 2008; Lepoutre & Heene, 2006; Spence & Rutherfoord,2003) and work values of owners/managers in particular are key factors in sociallyresponsible business practice in small and medium-sized enterprises (SMEs) (Murillo &Lozano, 2006). Indeed, managers may engage in social practices because their moral orethical values compel them to do so (Waldman, Siegel, & Javidan, 2006). For example,environmental strategies are significantly influenced by the individual managerial inter-pretations of these environmental issues (Sharma, 2000). This happens particularly insmall enterprises, where the entrepreneur is likely to exert control over organizationaldecisions, and is therefore more influential than managers in larger or older enterprises,where there is a separation of ownership and control (Gimeno, Folta, Cooper, & Woo,1997). As a result, in larger and older firms, professional managers, wider ownershipdispersion, and independent boards of directors may dilute the relation between the valuesof the director and the values of the organization (Chrisman et al., 2012).

Unsurprisingly, the social entrepreneurship literature has emphasized the importanceof the individual social entrepreneur who plays a central role in social enterprises(Barendsen & Gardner, 2004; Dacin et al., 2010; Robinson, 2006; Sharir & Lerner, 2006;Shaw & Carter, 2004; Van Slyke & Newman, 2006). Definitions of SE at the individuallevel focus on the founder of the initiative (Mair & Marti, 2006), who is generally referredto as a “change maker” (e.g., Barendsen & Gardner; Sharir & Lerner; Shaw & Carter;Van Slyke & Newman), acting upon an opportunity and gathering resources to exploit it.The values and the morality of the individual social entrepreneur (e.g., Spear, 2006)are important in understanding the social in social entrepreneurship (Mort et al., 2003;Thompson, Alvy, & Lees, 2000; Waddock & Post, 1991). Social entrepreneurs shouldhave the values to be committed to helping others and choose to work for the communityrather than for personal financial gain (Thompson et al.). As a result, only certain indi-viduals with particular values, capabilities, and skills seem to be attracted to socialentrepreneurship (Zahra et al., 2009). Social enterprises are started by individuals witha pro-social value posture who are not driven by private gains (Estrin, Mickiewicz, &Stephan, 2011). These social entrepreneurs are altruistic in their activities and place socialvalues above profitability (Dacin et al., 2011). In this context, the motives for SE are oftenbased on ethical motives, moral responsibility, and altruistic reasons (Mair & Marti), solooking at the individual characteristics is crucial in describing new venture creation(Gartner, 1985).

As a result, a key dimension that informs on the social and economic missions of asocial enterprise, is the level of other-regarding and self-regarding values of the socialentrepreneur (Agle, Mitchell, & Sonnenfeld, 1999; Murphy & Coombes, 2009; Santos,2012; Van de Ven, Sapienza, & Villanueva, 2007). In other words, to what extent isbehavior ultimately self-interested or do individuals act in ways that benefit others, evento their own disadvantage? The self-interest dimension is important and varies widelyamong individuals. Things people perceive as important are connected with their self- orother-regarding values which influence the decisions organizational leaders make. Thelevel of self- and other-regarding values influences the social and economic missions ofthe organization, because the balance between self- and other-regarding values “is specificto each individual and shapes the types of activities and organizational behavior in whichhe/she engages” (Santos). Individuals who place a strong weight on others’ interest willtend to associate together in the context of organizations focused on maximizing thebenefits for others in society (Santos).

As a result, we argue that the level of self- and other-regarding values informs us aboutthe social and economic missions of social enterprises.


Organizational Identity

Organizational identity is a well-established and well-researched construct in man-agement studies. Researchers define organizational identity as members’ shared percep-tions about their organization’s central, distinctive, and enduring qualities (Brickson,2007; Dutton & Dukerich, 1991; Dutton, Dukerich, & Harquail, 1994; Dyer & Whetten,2006; Fiol, 1991, 2001, 2002; Foreman & Whetten, 2002). Basically, organizationalidentity is the answer to the question “who are we”? Voss, Cable, and Voss (2006) claimthat organizational identity is formed by top leaders’ establishment of the core values andbeliefs that guide and drive the organization’s behavior. As such, organizational identityresides in institutional claims, available to members in the central, enduring, and distinc-tive properties of their organization (Ravasi & Schultz, 2006). These institutional claimsare explicitly stated views of what an organization is and represents, tending to changeonly rarely. Scholars use organizational identity in a variety of contexts and to study anumber of phenomena. For example, Fiol approaches organizational identity as a corecompetence contributing to competitive advantage, and according to Brickson (2005,2007), the concept of organizational identity is well positioned to learn how businessesrelate to stakeholders and why they relate to them as they do. Similarly, Basu and Palazzo(2008) argue that organizational identity is most appropriate to understand how managersthink about their key relationships with others—including stakeholders and the world atlarge. Consequently, there is a growing interest in examining organizational identity as adeterminant of corporate social performance (Dyer & Whetten). In this context, the notionof organizational identity suggests that firms will engage in socially responsible businesspractices when to do otherwise is unthinkable—these concerns have been central to whowe are as an organization (Dyer & Whetten).

The literature acknowledges that the social in SE can be reflected in the organizationand its characteristics (Nyssens, 2006). Nyssens suggests social organizational dimen-sions such as “decision-making power not based on capital ownership” and “a participa-tory nature, which involves the various parties affected by the activity” as key issues insocial enterprises reflecting their social character. Similarly, community-based enterprisesare thought to be managed, owned, and governed by the people in a manner that is meantto yield sustainable individual and group benefits (Peredo & Chrisman, 2006). Conse-quently, most members will participate in some relatively direct way in monitoring anddirecting the enterprise’s activities and be committed to a common undertaking (Peredo& Chrisman). As a result, researchers have linked SE to the literature on organizationidentity to explain and study SE (Moss et al., 2010). For example, Miller and Wesley(2010) build on organizational identity theory to examine how the dual identity of socialventures influences the assessment of social venture capitalists. In their view, the organi-zation identity of social enterprises is intrinsically dualistic because it borrows elementsfrom both the social and the commercial sectors. Grimes (2010) found how organizationswithin the social sector employ performance measurement as a tool for making sense ofSE as an organizational identity.

As a result, a key dimension in the identity of organizations that informs us aboutthe social and economic mission of the social enterprise is the level of normative andutilitarian identity. Many, if not most, organizations are hybrids composed of multipleidentities (Albert & Whetten, 1985). Foreman and Whetten (2002) define organiza-tional identification in terms of multiple and competing identities—a normative system,emphasizing traditions and symbols, internalization of an ideology, and altruism, and autilitarian system, characterized by economic rationality, maximization of profits, andself-interest. Normative organizations are generally founded upon the ideological vision


of a charismatic leader (Albert & Whetten). A utilitarian organization is oriented towardeconomic production with the values of economic rationality, maximization of profit,and minimization of cost, and for which financial return is both a condition of continu-ing operation and a central symbol of success (Albert & Whetten). The normative andutilitarian identity is a well-established and researched phenomenon (e.g., Glynn, 2000).Moss et al. (2010) examined the identities of 104 award-winning social ventures througha content analysis of their mission statements and found that these ventures exhibit bothutilitarian and normative organizational identities. Additionally, the authors foundthat social ventures manifest a greater normative identity in the mission statements thancommercial ventures.

Building further on these insights, we argue that the level of normative and utilitarianidentity can reflect the social and economic missions of social enterprises.

Attention to Social and Economic Goals

Attention is a limited resource for firms and a central concept in management research(Cyert & March, 1963; Simon, 1947). Ocasio (1997) defines attention as “the noticing,encoding, interpreting, and focusing of time and effort by organization decision-makerson both (1) issues; the available repertoire of categories for making sense of the environ-ment: problems, opportunities, and threats; and (2) answers; the available repertoire ofaction alternatives: proposals, routines, projects, programs, and procedures.” Firms cannotattend to all issues concurrently and must continually divide their attention among thedifferent goals of their organization (Cyert & March; Greve, 2008) and to numerousenvironmental stimuli (Hambrick & Mason, 1984; Ocasio). Firm behavior can beexplained by looking at how firms distribute and regulate the attention of their decisionmakers (Barnett, 2008; Ocasio; Rhonda, Engleman, & Van de Ven, 2005). For example,research confirmed the influence of attention on learning processes (Rerup, 2009),headquarters–subsidiary relationships (Ambos, Andersson, & Birkinshaw, 2010), entryinto new markets (Eggers & Kaplan, 2009), formation of service orientation in thebusiness strategy (Gebauer, 2009), and innovation (Yadav, Prabhu, & Chandy, 2007). Asa result, the focus of attention has profound implications for the strategic orientation of anorganization (Bouquet & Birkinshaw, 2008; Cho & Hambrick, 2006; Eggers & Kaplan;Ocasio; Tuggle, Sirmon, Reutzel, & Bierman, 2010).

Social entrepreneurship is an approach to understanding social needs (Townsend& Hart, 2008) and about achieving social goals through commercial activity (Moizer &Tracey, 2010). In this view, social entrepreneurship is a process toward the creation ofsocial value (Mair & Marti, 2006; Moss et al., 2010), while the question of who and howthe social value is reached is of less importance (Dacin et al., 2011). For example, thestrategic goal of the organization can be achieved irrespective of organizational or judicialform (Birch & Whittam, 2008; Chell, 2007; Mair & Marti). The process involves recog-nizing and exploiting opportunities to create this social value, employing innovation,tolerating risk, and declining to accept limitations in available resources (Peredo &McLean, 2006). The ability to leverage resources that address social problems is central(Dacin et al., 2010; Mair & Marti), and the process can have both differences andsimilarities with commercial entrepreneurship (Austin et al., 2006).

As a result, the attention to social and economic goals in SE informs us about thesocial and economic mission of the social enterprise. The extent to which firms attend tosocial goals has been discussed outside the SE literature as socially responsible businesspractices—implying firms have a responsibility beyond their wealth-generating function(Aguilera, Rupp, Williams, & Ganapathi, 2007; Barnett, 2007). Firms operate in a context


where managers increasingly have to attend to social and environmental goals (Berrone &Gomez-Mejia, 2009; Den Hond & De Bakker, 2007; de Villiers, Naiker, & van Staden,2011)—next to the traditional economic goals (Cyert & March, 1963; Greve, 2008). Firmsare held accountable on their impact on society and environment (Wood, 1991), and thereis a growing societal and political consensus that organizations need to address socialissues, questioning the narrow focus on profit maximization (Brickson, 2007; Margolis &Walsh, 2003). This results in firms that have both the objectives of profit maximization andsocial performance (Husted & Salazar, 2006). Logically, one of the key issues is then therelation between the goal of pursuit for profit and shareholder value and the goal to act insocially responsible ways and to increase social benefits (Campbell, 2007; Marquis,Glynn, & Davis, 2007). In an entrepreneurship context, this social responsibility refers tothe extent to which entrepreneurs want to achieve financial and nonfinancial objectives(Choi & Gray, 2008).

Akey insight in this respect is offered by Carroll (1979) who presents four distinct typesof responsibilities for firms to consider, giving insight in their attention toward social andeconomic goals. More specifically, the author suggests four stances, representing increas-ing levels of engagement on social goals. The first responsibility of business is economic innature—the production of goods or the delivery of services society expects and to sell themat a profit. Second, a business has to fulfill its economic mission within the framework oflegal requirements. Next, ethical responsibilities refer to society’s expectations over andabove legal requirements which are considered to be intrinsically good. These responsi-bilities involve activities the organization should do, if it wants to do the right thing. Finally,the discretionary social activities are of a nonenforced, rather philanthropic nature referr-ing to those responsibilities for which society has no clear-cut message for business.McWilliams and Siegel (2000) refer to the ethical and philanthropical perspectiveas corporate social responsibility defined as “the actions that appear to further somesocial good, beyond the interests of the firm, required by law.” Assessing the level of socialresponsibility is not a clear-cut process (Aupperle, Carroll, & Hatfield, 1985), althoughCarroll’s model still enjoys considerable popularity among scholars and might accuratelydescribe how managers see their social responsibilities (Wood, 2010).

We argue that assessing the level of attention to social and economic goals informs uson the social and economic missions of social enterprises.

In summary, this study theorizes that the social and economic missions are distinctreflective or latent higher order constructs (Diamantopoulos, Riefler, & Roth, 2008; Lawet al., 1998), encompassing the dimensions organizational identity, values, and goals (seeFigure 1). More specifically, social mission can be manifested in the dimensions norma-tive identity, other-regarding values, and attention to social goals, whereas economicmission can be reflected in a utilitarian identity, self-regarding values, and attention toeconomic goals. The multidimensional construct is the commonality and shared varianceacross the dimensions (Law et al.). The dimensions are different ways the construct isrealized (Law et al.). Because the values of founders/top managers have such strongimprinting effects on the organization in general and in social enterprises in particular(Zahra et al., 2009), the three dimensions as well as the two higher order constructs areorganizational level constructs.

Methodology

Building on the theoretical constructs, measures to capture values, organizationalidentity, and attention to social and economic goals are developed. Collecting data via an


e-mail survey to the directors of a well-defined sample of social enterprises, confirma-tory factor analysis (CFA) was used to assess the reliability and validity of each ofthe constructs and to determine whether or not they pertain to the same higher orderconstructs.

Population and Sample

Scholars recognize sampling decisions as crucial in SE research in which accessinglarge-scale databases is particularly challenging and “creative solutions are needed toprovide the adequate sample sizes necessary to utilize rigorous application of multivariatetechniques” (Short et al., 2009, p. 176). To this end, scholars can either (1) put together arespondent-driven sample of social enterprises or (2) do purposive sampling (Kerlinger,1986; Short, Ketchen, & Palmer, 2002) and start from a sample frame of social enterprisesthat are generally considered or expected to be driven by social goals. Following the latterapproach (for details see Table 1), this study built a sample frame in Flanders (Belgium)from four sources. First, a list was used of all integration enterprises which are enterprisesthat want to create temporary or long-term employment for a specific target populationthrough productive activity (Nyssens, 2006). Second, two existing lists of people–planet-oriented cooperatives (put together by sector experts from Coopkracht and VOSEC) weremerged. Coopkracht is a consultation platform in Flanders for people–planet-orientedcooperatives. VOSEC is the official member organization of social enterprises inFlanders. Further, the investment portfolios of the social investors were analyzed, and theprojects that were financed between 2004 and 2007 were listed. Only the social investorsthat invest in Flanders (i.e., Kringloopfonds, Hefboom, Netwerkrentevrij, and Trividend)were considered. The goal of the investors is to finance organizations in the social andsustainable economy by equity participation and/or loans. Finally, organizations thatadopted an additional judicial label specifically developed for enterprises that explicitlywant to meet social goals were identified. These are referred to as Vennootschappenmet Sociaal Oogmerk (VSO), and their social objective can be internally or externally

Figure 1

Theoretical Model

Social mission

Economicmission

Other-regarding values

Normative identity

Attention to social goals

Attention to economic goals

Utilitarian identity

Self-regarding values


oriented. Associates can pursue only a limited capital gain. The foundation of the judicialform of VSO can be positioned within a tendency in which governments increasinglycreate judicial labels or new organizational forms. The community interest companies(CIC) in the UK (Nicholls, 2010) and, more recently, the L3C and the B-Corporationin the United States (D’Intino, 2010) are new organizational forms, whereas the VSO inFlanders is an additional label attached to the legal form of a Ltd, PLC, or cooperative. Thetotal resulting sample frame after removing the overlaps is 484.

Next to social and economic mission measures (see the Measures section), data werecollected on the number of integration employees, start-up capital, age, and judicial form.Financial data were gathered from the annual financial statements such as turnover,accumulated profit, and start-up capital. To maximize response rate, several follow-up callsresulted in a total response of 270 social enterprises (response rate of 56%). To check thereliability of our sample, we compared the respondents and nonrespondents on a number ofstructural features such as age, size, distribution of judicial form, and sector distribution(business services, public services, wholesale distribution, and others). We found nosignificant differences between respondents and nonrespondents which provides confi-dence that the sample is representative for the sample frame (Armstrong & Overton, 1977).

Sample Characteristics

Our sample displays the following characteristics. Although the social enterprisesdiffer greatly in age (from start-up to well-established enterprises of 89 years), the sampleconsists of mostly young (median 11 years) and small (median 10 full-time equivalent[FTE]) enterprises. Thirty-four percent (n = 91) of the sample consists of nonprofit orga-nizations, while all other organizations have a for-profit judicial form: 35% (n = 95) arecooperatives, 13% (n = 35) limited liability companies, and 15% (n = 41) public limitedcompanies. The nonrespondents are not significantly different in age (median 15 years) andsize (median 15 FTE) from the sample firms. The nonrespondents also show a similardistribution in judicial form as the respondents: 25% (n = 53) nonprofit organizations, 42%(n = 91) cooperatives, 18% (n = 38) limited liability companies, and 15% (n = 32) publiclimited companies.

Measures

The following paragraphs explain the construction of the measures. Unless otherwisestated, respondents rate the items on scales ranging from 1 (completely disagree) to 7(completely agree). Scholars (Berson & Avolio, 2004; Roth & Ricks, 1994) stress the

Table 1

Sample Frame

Integrationenterprises (2007)

Portfolios of socialinvestors (2007)

Triple bottom linecooperatives (2007) VSOs (2007)

Official list of Flemish

government (n = 170)

4 institutional social investors

that invest locally (n = 230)

Constructed by FEBECOOP

and VOSEC (n = 89)

CD-Rom Balanscentrale

(n = 100)

Total valid N (overlaps removed) = 484 Response = 270 Response rate = 56%


importance of managers and leaders in specifying and clarifying the organization goals,making them appropriate respondents for this study. The questionnaires were filled in by thechief executive officer (CEO) of the social enterprise. As in previous research (Aupperleet al., 1985; Foreman & Whetten, 2002), the constructs were measured at the individuallevel, although organizational identity and attention to social and economic goals areorganizational level phenomena. Theory expects self- and other-regarding values to haveimplications at the organizational level, especially for SMEs. We based our measures onwell-established operationalizations, which is a common practice in higher order constructdevelopment (e.g., Luthans et al., 2007; Spreitzer, 1995). The use of previously validatedmeasures for each of the dimensions reduces the potential for common method bias(Spector, 1987). A complete overview of all the items is provided in the Appendix.

Other- and Self-Regarding Values. Based on the measurement instrument of Rokeach(1972), Agle et al. (1999) constructed a measure capturing the level of self-interest andother-regarding interest. Values are expected to vary on a continuum ranging from profitmaximization, firm-centered values to other system-centered values. The authors developedseven items of which three represent self-interested values and four items other-regardingvalues. “A comfortable life (a prosperous life)” and “wealth (making money for myself andfamily)” were considered as self-regarding values, while “helpful (working for the welfare ofothers)” and “loving (being affectionate, tender)” are examples of other-regarding values.To establish further validation of self-regarding and other-regarding values, we use a relativemeasure that captures the importance of profit maximization to the firm compared to fourother issues (for instance, firm longevity—see Autio, Sapienza, & Almeida [2000] for asimilar approach to measure growth orientation). Respondents allocate 100 points amongthese five different issues. The correlation between the relative importance of profit maximi-zation and self-regarding values is positive and significant (.31, p < .05), and with other-regarding values is negative and significant (−.29, p < .05). In addition, we examined thecorrelation between profit realized in 2007 and self-regarding and other-regarding values,respectively. These correlations are .15 (p < .05) and .03 (p = n.s.).

Normative and Utilitarian Identities. To measure the extent to which the social enter-prises adhere to a normative and utilitarian identity, the operationalization of Foremanand Whetten (2002) was used. The questionnaire included four items that represent theutilitarian identity (e.g., importance of price of products or services) and four items thatrepresent the normative identity (e.g., social relationships with other members). Twoadjustments were made to the original set of items to fit the questionnaire to our researchpopulation. In detail, two cooperative items were changed into two items attributed tosocial enterprises in general (e.g., quality of work is more important than profit) asdescribed by Nyssens (2006). Note that perceived organizational identity was measured(Foreman & Whetten), and as with the study of Voss et al. (2006), the study capturesleaders’ beliefs about organizational identity by measuring their perceptions about thecore values and ideology. We used two other measures that are growth related to validatethe operationalization of normative and utilitarian identities. As suggested by Moss et al.(2010), growth should be associated with a utilitarian identity in social enterprises. First,we correlated our survey measures with the annual average growth in sales obtainedfrom the firms’ financial account available through BEL-FIRST.2 The correlation with

2. BEL-FIRST is a financial database that contains detailed financial information on more than 320,000Belgian companies. It is provided by Bureau van Dijk.


utilitarian identity is positive and significant (.26, p < .05), while the correlation betweennormative identity and annual average sales growth is negative but not significant (−.07,p = n.s.). Second, we correlated these measures with a relative measure that capturesthe importance of maximizing sales growth relative to four issues (for instance, firmlongevity—see Autio et al. [2000] for a similar approach to measure growth orientation).Respondents allocate 100 points among these five different issues. The correlationbetween utilitarian identity and the relative importance of sales growth is positive andsignificant (.24, p < .05), while the correlation between normative identity and the relativeimportance of sales growth is negative and significant (−.19, p < .05).

Attention to Social and Economic Goals. To capture the enterprises’ attention to socialand economic goals, the measure of Aupperle et al. (1985) was used, which has beenemployed successfully in numerous studies (e.g., Agle et al., 1999; Angelidis & Ibrahim,2004; Ibrahim & Angelidis, 1995; Ibrahim, Angelidis, & Howard, 2000; Ibrahim, Howard,& Angelidis, 2008). The purpose of Aupperle et al.’s instrument is to measure the degreeof social responsibility based on the Carroll (1979) definition and reflects the attentionmanagers give to social and economic goals. Respondents allocate 10 points among fouritems representing four areas of responsibility, such as “being as profitable as possible”(economic responsibility), “abiding by laws and regulations” (legal responsibility), “moraland ethical behavior” (ethical responsibility), and “voluntary and charitable activities”(discretionary or philanthropic responsibility). The instrument was shortened to a manage-able four sets of four items in our questionnaire although the original instrument contains20 sets. Aupperle et al. indicate that each set of items searches the same basic information.Other researchers have limited the original set to three 4-item groupings (Agle et al.). Weused the areas “economic” and “philanthropic” in the analysis to capture the attention toeconomic and social goals, respectively. Using an ipsative scale has several advantages.First, it reduces common method bias by giving a different type of question (other thanLikert scales) to the respondent. Second, the measure reduces socially desirable answers(Aupperle et al.). Third, the measure forces the respondent to choose between the socialand the economic or score both equally and rather low, whereas in Likert-type questions,respondents are likely to score both aspects high and make no explicit choice. Wecross-validated this measure with the respondent’s answer to two statement items in thestudy’s survey to measure the extent to which firms give attention to economic and socialgoals: (1) Economic and financial performance are an important goal of this firm,(2) Selfless contributing to social problems is an important goal of this firm (both state-ments are measured on 1 to 7 Likert scale with 1 = totally disagree and 7 = totally agree).The correlation between the attention to economic goals and the first-statement itemis positive and significant (.57, p < .05) and with the second-statement item negativeand significant (−.53, p < .05). The correlation between the attention to social goals andthe first-statement item is negative and significant (−.40, p < .05) and with the second-statement item positive and significant (.43, p < .05).

Pretest

A pretest sample (N∼35) was selected randomly from a database of the socialeconomy in Flanders (n = 594), after excluding the two strata that are included in oursample frame. A draft questionnaire was sent out to the directors of the 35 organizationsby e-mail. The respondents were contacted by phone to ask for direct feedback on thequestionnaire (response n = 17). The pretest resulted in typographical adjustments,


rephrasing the items which were not clearly articulated for the respondents, and adaptingthe Aupperle et al. measure to the specific regional context.

Data Analysis

The goal of the data analyses is to assess the reliability and validity of the measuresand assess the existence of higher order reflective constructs social mission and economicmission. In contrast to aggregate constructs, CFA is the appropriate technique to test theexistence of latent higher order constructs (Law et al., 1998). To minimize potentialinterpretational confounding, the validity of the measurement model is established beforetesting the structural model (Hair, Black, Babin, Anderson, & Tatham, 2006).

Model Fit and Construct Validity

The higher order CFA validates our measurement instrument by testing a second-order factor structure that contains two layers of latent constructs. All the considerationsand rules of thumb apply to second-order factors just as they do to first-order factors (Hairet al., 2006). The ultimate criterion in deciding to form a second-order measurementmodel is theory (Hair et al.). As a result, a primary validation criterion becomes how wella higher order factor explains theoretically related constructs.

Because the variables of the model are all manager rated and collected in the samesurvey instrument, an important concern prior to model building has to be addressed:common method variance. Although the procedure has some limitations (Podsakoff,MacKenzie, Lee, & Podsakoff, 2003), Harman’s single factor tests this concern. If methodvariance is a significant problem, a simple model (e.g., single-factor model) should fitthe data as well as a more complex one. A model in which all variables were allowed toload onto a single factor (Hoobler, Wayne, & Lemmon, 2009; Korsgaard & Roberson,1995) demonstrated poor fit (RMSEA = 0.125, CFI = 0.83, IFI = 0.83, NNFI = 0.81,Chi-square: 760.2 with p < 0.01 and df = 152). A principal component analysis on allsurvey measures further assessed the risk of common method bias. If common methodvariance is a serious problem in the study, a single factor will emerge from a factoranalysis or one general factor to account for most of the covariance in the variables. Theanalysis returns five factors with eigenvalues greater than 1 (Konrad & Linnehan, 1995;Scott & Bruce, 1994). Thus, multiple factors emerge, and the first factor does not accountfor the majority of the variance. These results indicate that our findings are less likely tobe affected by common method bias.

The means, standard deviations, and correlation coefficients of all constructs appearin Table 2. The correlations indicate significant correlations between the different con-structs in the model. For example, there is a strong positive significant relation betweenattention to social goals, normative identity, and other-regarding values, and a strongnegative significant correlation among attention to social goals, utilitarian identity, andself-regarding values. In general, the table indicates those relations as was expected fromtheory and shows no unusual relations.

With LISREL 8.5 (Scientific Software International, Skokie, Il, USA) we analyzedthe data using the maximum likelihood method. Structural equation modeling enablesresearchers to examine the relationships among a large number of variables simultane-ously, extracting the relative impact of each variable on the proposed model. The tech-nique permits accounting for the error associated with the measurement of the variables.Figure 2 summarizes the results of the higher order CFA. Items are specified to load only


onto their respective construct, and all error variances are specified as uncorrelated(Hair et al., 2006). From the original set of items, we removed four items (one item thatmeasured normative identity, utilitarian identity, self-regarding values, and other-regarding values, respectively).

To test the proposed model, different authors tend to favor different fit indices, andthere seems to be little consensus on what the appropriate indices are (Hinkin, 1995).The study follows Hair et al. (2006) and reports the Chi-square value, together with thedegrees of freedom, the CFI or TLI, and the root mean square error of approximation(RMSEA), which provide sufficient unique information to evaluate the model. Scholarsaccept values of up to .08 for the RMSEA (Bagozzi & Yi, 1988; Hu & Bentler, 1999).The CFI and TLI should exceed the 0.9 threshold (Hu & Bentler, 1998). Finally, theChi-square value is compared to the degrees of freedom. The ratio Chi-square valueto the degrees of freedom should not exceed 5 to 1 (Hinkin). Overall, the model fits thedata well as the fit indicators meet all criteria (RMSEA = 0.07, CFI = 0.92, IFI = 0.92,NNFI = 0.91, Chi-square: 349.41 with p < 0.01 and df = 145).

The construct validity of our measurement model is evaluated by testing (1) unidi-mensionality of the constructs, (2) reliability, (3) convergent validity, and (4) discriminantvalidity. Constructs show unidimensionality when each set of alternate indicators has onlyone underlying trait or construct in common (Anderson & Gerbing, 1988). The overall fitof the measurement model (items of different constructs were not allowed to correlate),and the significance of the regression coefficients provide evidence of unidimensionality.For reliability, values greater than about 0.6 are desirable (Bagozzi & Yi, 1988), andCronbach’s alpha of all constructs exceed the 0.6 threshold (Bagozzi &Yi) and range from0.6 to 0.9. The significant size of the factor loadings in our model is an indicator of theconvergence validity. All factor loadings were well above the 0.5 rule of thumb (Hairet al., 2006) except for 1 item in the utilitarian identity construct which was significantlyrelated but had a loading of 0.4. However, the recommended minimum in the socialsciences is usually 0.4 (Ford, MacCallum, & Tait, 1986; Yli-Renko, Autio, & Sapienza,2001). The analyses include testing the convergence validity by looking at the varianceextracted for which the recommended minimum is 0.5 (Fornell & Larcker, 1981). Theconstructs meet this criterion (variance extracted ranges from 56% to 80%). Analyzingthe variance-extracted percentages for any two constructs compared with the square of thecorrelation estimate between these two constructs (Fornell & Larcker) tests for discrimi-nant validity (the extent to which a construct is truly distinct from other constructs). The

Table 2

Descriptive Statistics and Correlations

Constructs Mean SD 1 2 3 4 5

Attention to social goals 2.9 1.32

Attention to economic goals 1.9 1.45 −.71**

Normative identity 5.7 0.87 .36** −.44**

Utilitarian identity 5.2 1.17 −.41** .36** .00

Other-regarding values 5.6 0.87 .28** −.33** .45** .07

Self-regarding values 2.9 1.14 −.34** .38** −.15* .31 .08

* p < .05, ** p < .01


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variance-extracted estimates should be greater than the squared correlation estimate.The data show this condition was met when examining each pair of constructs in ourmeasurement model. Comparing all combinations of models with the correlation betweentwo constructs constrained to equal 1 with an unconstrained model is a second methodto test discriminant validity. A significantly lower Chi-square value for the model withthe unconstrained correlation provides support for discriminant validity (Anderson &Gerbing). The differences Chi-squares (1df) are all statistically significant at p < 0.001. Asa result, the manager-rated scales are distinct from one another. In sum, the analysesvalidate the constructs in our model.

Structural Model

Figure 2 provides the standardized path estimates, which are in line with other second-order CFAs (e.g., Dahling, Whitaker, & Levy, 2009; Jerez-Gomez, Cespedes-Lorente, &Valle-Cabrera, 2005; Spreitzer, 1995). The parameter estimates indicate support for allpaths in our theoretical model and superordinate construct social mission and economicmission. Attention to social goals (γ = 0.91, p < 0.01), other-regarding values (γ = 0.44,p < 0.01), and normative identity (γ = 0.65, p < 0.01) are all significantly related to thesecond-order construct social mission. In parallel, attention to economic goals (γ = 0.93,p < 0.01), self-regarding values (γ = 0.52, p < 0.01), and utilitarian identity (γ = 0.93, p <0.01) are all significantly related to economic mission. Finally, as theoretically pro-posed, there is an inverse relation between the two second-order constructs socialand economic missions (γ = −0.96, p < 0.01). Taken together, these results provideinitial support that the social/economic mission of social enterprises is manifestedby other-regarding/self-regarding values, normative/utilitarian identity, and attention tosocial/economic goals.

Discussion, Limitations, and Future Research

This paper set out to conceptually capture dimensions for the social and economicmissions in social enterprises as they are inherently established to achieve both missionsat the organizational level (Mair & Marti, 2006). To date, research has treated thedifference between the social and the economic missions of social enterprises largely asa black box within the enterprise. This research takes an important step toward developingand validating a multidimensional measure of the social and economic missions in socialenterprises. For achieving this purpose, we theoretically developed a reflective modelin which the latent multidimensional constructs social and economic missions of socialenterprises manifest themselves in organizational values, identity, and attention tosocial and economic goals. CFA provides evidence of construct validity, that other-regarding values, normative identity, and attention to social goals are significantly relatedto the social mission, and self-regarding values, utilitarian identity, and attention toeconomic goals are significantly related to the economic mission.

The significant negative relation between the social and economic mission suggeststhat the constructs are at two ends of a continuum. Higher levels of social mission implylower levels of economic mission and vice versa. This result may have various explana-tions. Building on arguments of Gupta and colleagues (2006), the strong inverse relationcould be the result of the idea that the social mission and the economic mission in a socialenterprise both compete for scarce organizational resources. Thus, by definition, more


resources devoted to the social mission implies fewer resources left for developing actionsthat are geared toward the economic mission. However, as resource scarcity and theextent to which organizations compete for scarce resources may differ across sectors(Castrogiovanni, 1991), we do not argue that a universal argument can be made in favorof either continuity or orthogonality (Gupta et al.). Although in a context of resourceconstraints the continuum approach is appealing, it is theoretically possible that in aparticular environment social enterprises can be high and low on both the social andeconomic missions. However, the mind sets and organizational routines that encouragesocial mission may be completely different from those needed for achieving the economicmission, pointing to the challenge of integrating both perspectives in the day-to-daymanagement of the organization. Research has acknowledged the importance of resolvingtensions that possibly emerge from conflicting demands associated with the social andeconomic missions, and the key role of decision makers in shaping organizational levelgoals and strategies do actually manage this (e.g., Tracey, Phillips, & Jarvis, 2011).From this perspective, it has been argued that for social enterprises, the issue of internalrepresentation—giving voice to both the economic and social missions in the organization(Pache & Santos, 2012)—is crucial in resolving these tensions. Future research shouldempirically examine the performance implications of treating the relationship between thesocial and economic missions of social enterprises as a continuum or orthogonal.

Future research should also address some of the limitations inherent in this first studyof the social and economic missions of social enterprises. First, it is important to test thewider generalizability of these constructs in more demographically diverse samples and indiverse organizational settings, going beyond social enterprises. In this study, the externalvalidity to the population of social enterprises is assured. Not only does the sample consistof a broad range of different types of social enterprises, the nonresponse analysis alsoshows that the sample is representative for the sample frame and its reference population.Future studies should address the validation of the social and economic missions as latentconstructs by developing indices that can potentially be used in understanding to whatextent and how mainstream entrepreneurial start-ups and SMEs position themselves intheir orientation toward adhering to a social and economic mission. Especially in an erawhere it is increasingly expected that these ventures will address social concerns in theircommunities, this becomes all the more relevant.

Second, understanding and measuring the social and economic missions as latentconstructs is potentially useful for studying the impact beyond values, identity, andattention to goals. The proposed model is a reflective model meaning that the relationstems from the higher order to the dimensions. Although we have explained thoroughlyour selection of the dimensions values, identity, and attention to goals, these dimensionsare not necessarily exclusive or exhaustive. However, these dimensions, in and of them-selves, open up several avenues for further empirical work. For example, differencesin relative importance attached to the latent constructs social and economic missions—using summary measures—are likely to lead to different profiles of social enterprises anddistinct decisions and outcomes at the organizational level. Further, as researchers havetreated the social mission as equivalent across social enterprises, future research questionscould focus on investigating the explanatory power of differences in relative importanceof the social and economic mission on strategy; resource management (Certo & Miller,2008); and outcome variables such as revenues, growth, and (perceived) performance.

Third, an important limitation of the study is that the measures capture the perceptionsof CEOs or their delegates about the social and economic mission of their enterprise,which does not necessarily reflect reality (Aupperle et al., 1985). Although this problemis recognized, there is a tendency to rely on the opinions or assessments of key decision


makers because it is very hard to gather actual performance measures (Carroll, 2000;Turker, 2009). The CEOs or their delegates were targeted because they typically possessthe most comprehensive knowledge of the firm’s history, strategy, processes, and perfor-mance (Carter, Stearns, Reynolds, & Miller, 1994). Further, the robust validity checks andtests for common method bias in this study are aimed at countering this inherent meth-odological problem. Additionally, we do not comparatively value different social factorsbut treat social value and social mission as an overall category containing different “types”of social value (e.g., providing jobs to people, fight social exclusion, address environmen-tal pollution). Future research should extend the internal view adopted in this study byadopting a multistakeholder perspective on the social and economic missions of socialenterprises. For example, these could include the perspective of the board of directors aswell as external stakeholders such as (social) investors and government agencies provid-ing, in varying degrees, supporting subsidies for social enterprises.

Fourth, it is important to note that one of the measures, the attention to social andeconomic goals, employs a forced choice or ipsative scale format. This measure alreadyincludes the assumption that one is either focusing attention on social or economic goals(i.e., precluding the possibility that the attention to these goals might mutually supporteach other). This is in line with the assumption that firm attention is a limited resource(Cyert & March, 1963; Simon, 1947). As a result, they cannot attend to all issuesconcurrently and must allocate their attention to the different goals of their organization(Cyert & March; Greve, 2008). Two issues nuance the impact of the ipsative format. First,respondents could score the social and the economic dimensions equally strong. If respon-dents would have scored the items this way and indicated that their social enterprise hasequally strong social and economic missions, then we would not have found a stronglynegative relationship. Consequently, respondents did indeed imply a negative relationshipbecause they assess the dimensions that way. Second, the measure is not completely anipsative measure. We only take into account the economic and philanthropical dimension.This means that respondents could score high on economic and social dimensions andscore low on ethical and legal dimensions (which were excluded from the analysis).Although it has disadvantages and these nuances, the ipsative scale contributes to theinverse relationship between social and economic missions. Future studies could validateour finding by using an alternative, nonforced choice measure of attention to social andeconomic goals.

Finally, longitudinal research is clearly needed to assess whether the relationshipbetween social and economic missions remains the same over time. Such changes relateboth to organizational level characteristics and to changes in the institutional environmentthat seem to be particularly relevant for social enterprises. At the organizational level forexample, longitudinal research following nascent social entrepreneurs, in their adherenceto the social and economic mission, may provide insight into the dynamics and potentialstruggles they experience in managing the trade-off between the potentially conflictingdemands as they grow from the start-up phase into maturity. This struggle could be dueto growth problems (Gilbert, McDougall, & Audretsch, 2006) or the fact that a clearlystipulated strategy is only emerging during the first years. At the institutional field level,an environmental jolt may significantly impact the level of organizational munificence,which refers to the level of resources available in an environment (Wan & Yiu, 2009).The result of destabilizing environmental jolts is often a reexamination of institutionalizedlogics and practices and a reorientation of organizational strategies and processes (Sine& David, 2003). Social enterprises are typically confronted with a regulated marketmaking them especially vulnerable to institutional changes, impacting their legitima-tion and potential for resource acquisition. Addressing how changes in the institutional


environmental impact and potentially catalyze changes in the relative importance attachedto social and economic missions at the organizational level, including its relation withstrategy and resource management, is particularly relevant.

Conclusion

In its development and validation of dimensions and measures of social and economicmission, this paper is a step in the direction of disentangling the relation between the socialand the economic missions of social enterprises. In this perspective, the proposed dimen-sion of values, identity, and attention to organizational goals and measures are not to be usedin a normative sense (i.e., to decide what is socially entrepreneurial and what is not). AsPeredo and McLean (2006, p. 64) state: “There is no exact way of fixing the border belowwhich the importance of social goals fails to qualify something as social entrepreneurship.”Investigating the degree to which social and mainstream entrepreneurs adhere to the socialand economic missions in relation to other organizational and institutional level character-istics are the challenges ahead. Our hope is that this study may inspire entrepreneurshipscholars to embark on substantive research addressing these challenges.

Appendix: Survey Items

This appendix gives a detailed overview of the items used to measure the differentconstructs.

Values

Respondents rated each item on a 7-point Likert scale indicating the importance of theself-regarding and other-regarding values (1, least important, to 7, most important). Itemsare displayed in Table A1.

Table A1

Items: Self-Regarding Values and Other-Regarding Values

Factor loading Mean SD

Other-regarding values (Cronbach’s alpha 0.74)

Helpful (working for the welfare of others) 0.89 5.73 1.03

Compassion (feeling empathy for others) 0.65 5.58 1.09

Equality (brotherhood, equal opportunity for all) 0.56 5.73 1.10

Loving (being affectionate, tender)†

Self-regarding values (Cronbach’s alpha 0.6)

Comfortable life (a prosperous life) 0.42 5.25 1.28

Wealth (making money for myself and family) 0.93 3.81 1.46

Pleasure (an enjoyable life)†

† Excluded from analysis.


Organizational Identity

Respondents answered to the following question on a 7-point Likert scale (1, not im-portant, to 7, most important): “please indicate your perception of the importance thatthe social enterprise places on each of the following aspects of the enterprise” (seeTable A2).

Table A2

Items: Normative and Utilitarian Identity

Factor loading Mean SD

Utilitarian identity (Cronbach’s alpha 0.69)

Economic value of products 0.79 5.01 1.58

Customer service 0.42 5.94 1.63

Price of products and services 0.72 4.89 1.63

Professionalism/expertise of staff†

Quality of products or services†

Normative identity (Cronbach’s alpha 0.62)

Community involvement 0.62 5.76 1.16

Quality of work is more important than profit 0.65 5.89 1.19

Democratic decision-making 0.50 5.73 1.16

Social relationships with other members†

Education and training of organizational members†

† Excluded from analysis.

Attention to Social and Economic Goals

To measure the attention to social and economic goals of social enterprises (seeTable A3), we asked the following question to our respondents: “Based on their relativeimportance and application to your firm, please allocate up to, but not more than, 10 pointsto each set of four statements.” We then took the four items that measured the economicperspective and the four items that measured the discretionary perspective to build theconstructs attention to social goals (Cronbach’s alpha 0.79) and attention to economicgoals (Cronbach’s alpha 0.91).


Table A3

Items Social and Economic Goals

Factorloading Mean SD

It is important to our organization that:

(legal) a. legal responsibilities are seriously fulfilled.

(econ) b. long-term return on investment in maximized. 0.84 1.59 1.41

(discr) c. we have the possibility to participate in activities that address social issues.

(ethic) d. when securing new business, promises are not made which are not intended

to be fulfilled.

0.78 3.43 1.86

It is important to:

(econ) a. allocate resources on their ability to improve long-term profitability. 0.81 2.18 1.56

(legal) b. comply with new laws.

(discr) c. examine regularly new opportunities and programs which can result

in an increase in value for society.

0.61 3.28 1.74

(ethic) d. recognize and respect new or evolving ethical/moral norms adopted

by society.

Our organization is successful when:

(econ) a. it is consistently profitable. 0.86 2.32 1.83

(legal) b. it fulfills its legal obligations.

(ethic) c. it fulfills its ethical and moral responsibilities.

(discr) d. it fulfills its philanthropic and charitable responsibilities. 0.63 2.34 1.38

It is important that the organization attends to:

(econ) a. being as profitable as possible. 0.93 1.82 1.70

(discr) b. addressing societal problems. 0.81 2.79 1.76

(legal) c. abiding by laws and regulations.

(ethic) d. moral and ethical behavior.

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Robin Stevens is Visiting Professor in the Faculty of Economics and Business Administration, GhentUniversity, Tweekerkenstraat 2, 9000 Ghent, Belgium.

Nathalie Moray is Visiting Professor at the University College Ghent, Kortrijksesteenweg 14, 9000 Ghent,Belgium.

Johan Bruneel is FWO Postdoctoral Research Fellow in the Faculty of Economics and Business Administra-tion, Ghent University, Tweekerkenstraat 2, 9000 Ghent, Belgium.

We would like to thank Jan Lepoutre for insightful discussions and suggestions on the paper and Anneleen VanBoxstael and Marie-Astrid Balcaen for supporting the data collection. Geoffry Kistruck, Ute Stephan, andJames Wallace helped by reviewing earlier versions of the paper. We thank Reitske Megank and Yves Rosseelfor assisting with the data analysis. Finally, we gratefully acknowledge the feedback of the session participantsat the Babson Entrepreneurship Research Conference 2010 and the Entrepreneurship Division of the Academyof Management 2010.


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