Supporting Social Entrepreneurs. the Effects of Organizational Maturity and Business Model

Supporting Social Entrepreneurs. The effects of organizational maturity and business model on perceived support needs

Peter Vandor, WU Vienna University of Economics and Business - Institute for Entrepreneurship and Innovation; Hinnerk Hansen, WU Vienna University of Economics and Business - Institute for Entrepreneurship and Innovation; ReinhardMillner, WU Vienna University of Economics and Business – Nonprofit Management Group

Social Entrepreneurs tend to be characterized as “unusually resourceful in being relatively undaunted by scarce assets in pursuing their social venture” (Peredo & McLean, 2006, 64) or “acting boldly without being limited by resources currently in hand” (Dees, 2001, 4). Still, social entrepreneurs do not operate in a vacuum and depend on various forms of support and resources to establish and grow their social ventures and impact. Hence, the question of how to support social entrepreneurs and their initiatives becomes of increasing relevance (Lyon & Sepulveda, 2009). In spite of the growing call for measures to enable social entrepreneurship on a broad scale (e.g. by the World Economic Forum, Skoll Foundation and others), very little is known about the actual activities and resources required for incubating and sustaining social ventures.
As of now, the support needs of social entrepreneurs have received limited attention in social entrepreneurship research (for an exception see Korosec & Berman (2006) on municipal support for social entrepreneurship). Findings are largely peripheral across essays, case studies or surveys and commonly are of qualitative nature (e.g. Thompson, 2002, 429). Furthermore, just as it is a common understanding that “there is no one type of social entrepreneur” (Barendsen & Gardner, 2004, 47), the needs of social entrepreneurs are heterogeneous and may vary over time. Research on the incubation of business entrepreneurs suggests an influence of organizational maturity on the type of support (Rice, 2002; Hytti, U. & Maki, K., 2007), however the transferability of such findings to the domain of social entrepreneurship is still to be tested (Dorado, 2004). Also, the approach of value creation can create different support demands, depending on the business model and the scale and scope of the intended impact (e.g. Zahra 2009).
Rigorous and distinctive research still remains to be conducted in order to answer where, when, whom and how to best support within the social entrepreneurship spectrum. Against this background, this paper is guided by the following research questions: (1) What are the support needs of social entrepreneurs? (2) How are these support needs influenced by (a) organizational maturity and (b) the way, value is created by the organization.
Drawing on suggestions from literature, potential support needs of social entrepreneurs with particular regards to the individual development (e.g. Thompson, Alvy, & Lees, 2000), organizational design (e.g. Austin, Stevenson, & Wei-Skillern, 2006), and environment (e.g. Sharir & Lerner, 2006) have been identified. Findings from literature were complemented with a qualitative pre-study comprising 22 semi-structured interviews with social entrepreneurs, experts and supporters of social entrepreneurship. The synthesis of qualitative results and literature research allowed us to explore and define 17 distinct areas, in which social entrepreneurs actively seek support, such as fundraising or maintaining personal motivation. Moreover, potential determinants of support needs were identified and included in the study as potential differentiators, such as perspectives on diverse types of social entrepreneurs (Zahra 2009, BoscheeMcClurg, 2003), business models and varying stages of organizational maturity (Harding, 2006). These results laid the ground for a subsequent quantitative study.
Data for the quantitative part of our study has been gathered within the active member´s database of The Hub – “a global community of people from every profession, background and culture working at 'new frontiers' to tackle the world's most pressing social, cultural and environmental challenges.” (The Hub, This context has been particularly chosen, as The Hub hosts not only a high number but also a vast diversity of social entrepreneurs with regards to their characteristics, stages, sectors and models. Within the HUB network, members of seven countries (The Netherlands, Austria, Sweden, UK, Spain, Switzerland, Czech Republic) were contacted via online-questionnaire, generating 118 completed surveys corresponding to a response rate of 16% of active community members in these countries.
Preliminary findings indicate that building a network of supporters and partners and developing a sustainable income model rank very high among the areas in which social entrepreneurs seek support. Strikingly, support needs vary little over the stage of organizational development, suggesting that entrepreneurial challenges are constant or reoccur over the entire incubation and growth phase.
Analysis of the business models however reveals major differences, especially between earned-income and third-party funded business models – with the latter requiring significantly higher assistance in sustaining financial resources and team motivation. An in-depth analysis presented in the paper is supposed to get more detailed insights in how Social Entrepreneurs might be supported at various stages in their endeavor.