Supportive Ecosystems for Social Enterprises: The Role of Family Firms

Abel Diaz Gonzalez¹, Jennifer J. Griffin⁵, Philippe Eiselein^2,4,  Nikolay Dentchev^2,3

¹School of Business and Economics, Maastricht University (The Netherlands) 

²Vrije Universiteit Brussel (Belgium)  

³University of National and World Economy (Bulgaria)  

⁴Odisee University of Applied Sciences (Belgium) 

⁵Loyola University Chicago (US)  

Keywords 

Social Enterprises, Family Firms, Ecosystems, Support, Institutional Theory

Extended Abstract

Entrepreneurs founding social enterprises (SEs) are known for their aspirations to address challenging social and environmental issues by creating innovative business solutions (Mair & Marti, 2006; Smith & Woodworth, 2012). SE business models are driven by the dual ambitions to pursue social impact and financial sustainability, creating a complex, hybridized business environment (Grassl, 2012). To stay financially viable and scale social impact entails managing tensions among and the resources provided by team members, funders, suppliers, clients, and government officials who impose multiple, often conflicting pressures (Ebrahim, Battilana, & Mair, 2014).

SEs need to develop particular competencies, access to capital, approval from governments, and interpersonal skills (Kyndt & Baert, 2015) to attract and leverage different resources (e.g., human, monetary, technical, informational) to keep their businesses afloat (Battilana, Sengul, Pache, & Model, 2013; Doherty, Haugh, & Lyon, 2014). As a result, social enterprises operate within a complex setting of uncertainties, due to the founder, dependence upon resources, and the ambitions to create an organization delivering value and addressing complex social issues (Saebi, Foss, & Linder, 2018). Often SEs operate in challenging local environments with ongoing entrenched issues that have not been solved by local governments, nonprofits, SMEs, and other institutions. Collaboration to catalyze effective change might require re-imagining the scale of the social issues (Weick, 1984), bringing in new resources, or experimenting with new collaborations among non-traditional partners and local actors to catalyse effective change (Phillips, Lee, Ghobadian, O'Regan, & James, 2015).

Embedding SEs in a supportive ecosystem is seen as one mechanism to resolve some longstanding SE challenges. Supportive ecosystems are composed of a variety of actors with complementary knowledge and resources encouraging interaction that is beneficial for the involved actors (Autio et al., 2014; Roundy, 2017). Ecosystems become a flexible backbone connecting SEs, linking resources to ideas, providing encouragement, and coaching as advisors willing to give frank advice. By providing unglamorous mutual support that frequently may not show up in profit and loss statements, ecosystems can help a phoenix emerge from the ashes. Ecosystem support for SEs can range from access to different types of resources such as human, financial, and physical including knowledge, information, and networking expansion possibilities (Biggeri, Testi, & Bellucci, 2017; Goyal, Sergi, & Jaiswal, 2016; Letaifa, 2016).

How the underpinning mechanisms of a supportive ecosystem enable SE success remains underexplored (Theodoraki, Dana, & Caputo, 2021). For instance, current research on SEs often focuses on the individual entrepreneur (e.g., training, access, personal network) and/or the organizational resources and capabilities (e.g., geography/location, governance, products) rather than the enabling environment of a supportive ecosystem for SEs (c.f., Gonzales, 2021), and more specifically, the role of family businesses in nurturing and scaling social enterprises. Multi-generational family firms may be an overlooked actor that could uniquely enhance a supportive SE ecosystem. A well-established family, engaged for a long-term in the community, providing a viable business model, with a large number of siblings, cousins or next generation descendants that may want to start a new business can influence SE ecosystems. They might have a variety of resources (e.g., monetary, information, technology, networks) with a prosocial/community orientation of some family firms.

In this paper, we explore if and how family firms may contribute to an enabling environment for social enterprises as part of the SEs supportive ecosystem. To guide our research question, we borrow insights from institutional theory (DiMaggio & Powel, 1983; Galaskiewicz, 1991; Scott, 2005) to analyse the meso level of organizational contexts. That is, the external normative, mimetic, and coercive pressures that guide organizational behaviour and enhance the probability of survival through isomorphism. We complement institutional theory’s focus on norms and rules with a resource dependency perspective (Pfeffer & Salancik, 2003) which suggests that senior management coalitions and access to the specific resources that the firm depends upon, influences the organizational behaviours. That is, examining the type, and depth of support that SEs are dependent upon (e.g., financial or non-financial resources and relationships) from its ecosystem, inclusive of family firms, is related to the SEs ability to remain financial viable and sustain its social impact. We develop our arguments based on several case studies (Eisenberg & Miller, 1987; Yin, 2003) of family firms s that support social enterprises.

We gather data on several case studies through participant observations and secondary data in news articles and the web and are guided by our two research questions:

• What type of support can SEs expect from FFs?

• How do SEs and FFs benefit one another (uni- or bi-directional support) when cooperating within an ecosystem?

Our study intendedly examines the direct, and indirect, relationships that potentially emerge among FFs and SEs. We are keen to examine the benefits across the ecosystem (financial, non-financial) in establishing an enabling environment for attaining SEs socially desirable goals (Margolis & Walsh, 2003).

We hypothesize that family firms can facilitate SEs directly through tangible resources such as dedicated infrastructure and funding sources. In some cases, the family members might be the social entrepreneurs and/or create several SEs. Alternatively, established family firms may indirectly support SEs through the provisioning of intangible resources/capabilities such as information networks, access to providers of capital/material (e.g., other family members or other family firms), management acumen as counsellors, or encouragement of an entrepreneurial spirit, to nurture nascent ideas during the early stages of start-ups. Overall, we expect SEs to have a higher probability of achieving social objectives and financial viability if they have a supportive ecosystem with family firms. Further, we expect family firm members directly affiliated with supportive ecosystems are likely to have a higher probability of SEs achieving social objectives and financial viability; and a larger number of SEs moving beyond the start-up phase and scaling not only their social impact but also improving their business performance and operations.

Further, it is our intention to advance theory on how can FFs and SEs coexists: how are these relationships created, what are the main motives and to what extent this can be mutualistic. In our study, we explore if social enterprises initiated by members of a family business are more likely to thrive/prosper due to the dense network of resources (technology, connections, monetary, support) of an enabling ecosystem of the family and/or the family firm. This research complements the oft-considered resource-based environment (i.e., monetary resources) of social enterprises as we explore tangible and intangible resources that might be uniquely available to family members including stakeholder relationships, familiness including identity (Frank et al., 2017), entrepreneurial spirit, or mentorship. Innovatively combining intangible resources (Surroca, Trio, & Waddock, 2010), we believe, may contribute to increased probability of social enterprise start-ups and/or success. We continue to collect different cases of different family firms in Belgium that have been involved in supporting SEs across the ecosystem. By the time of the conference, we hope to have finalized our data collection process and drafted a full version of this paper.

References

Adner, R., & Kapoor, R. (2016). Innovation ecosystems and the pace of substitution: Re-examining technology S-curves. Strategic Management Journal, 37, 625-648. doi:10.1002/smj.2363

Audretsch, Cunningham, J. A., Kuratko, D. F., Lehmann, E. E., & Menter, M. (2019). Entrepreneurial ecosystems: economic, technological, and societal impacts. J Technol Transf, 44(2), 313-325. doi:10.1007/s10961-018-9690-4

Battilana, J., Sengul, M., Pache, A.-C., & Model, J. (2013). Harnessing Productive Tensions in Hybrid Oranizations: The case of work integration social enterprises. Academy of Management Journal.

Biermann, R., & Harsch, M. (2017). Resource dependence theory. In Palgrave handbook of inter- organizational relations in world politics (pp. 135-155): Springer.

Biggeri, M., Testi, E., & Bellucci, M. (2017). Enabling Ecosystems for Social Enterprises and Social Innovation: A Capability Approach Perspective. Journal of Human Development and Capabilities, 18, 299-306. doi:10.1080/19452829.2017.1306690

Cao, Z., & Shi, X. (2021). A systematic literature review of entrepreneurial ecosystems in advanced and emerging economies. Small Business Economics, 57(1), 75-110.

Carayannis, E. G., & Campbell, D. F. J. (2010). Triple Helix, Quadruple Helix and Quintuple Helix and How Do Knowledge, Innovation and the Environment Relate To Each Other? International Journal of Social Ecology and Sustainable Development, 1, 41-69. doi:10.4018/jsesd.2010010105

Deyer, W. G, Jr, Whetten, D. A. 2006. Family firms and social responsibility: Preliminary evidence from the S&P500. Entrepreneurship Theory and Practice, 30(6), 785–802.

DiMaggio, P. & Powell, W. W. 1983. The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48:147-160. Reprinted in DiMaggio & Powell (eds.), 1991. The New Institutionalism in Organizational Analysis, Chicago, IL: University of Chicago Press, pp. 63-82.

Doherty, B., Haugh, H., & Lyon, F. (2014). Social enterprises as hybrid organizations: A review and research agenda. International Journal of Management Reviews, 16, 417-436. doi:10.1111/ijmr.12028

Ebrahim, A., Battilana, J., & Mair, J. (2014). The governance of social enterprises: Mission drift and accountability challenges in hybrid organizations. Research in Organizational Behavior, 34, 81- 100.

Eisenberg, N., & Miller, P. A. (1987). The Relation of Empathy to Prosocial and Related Behaviors Stress, Coping, and Adaptation View project Prosocial Motivation View project. Psychological Bulletin, 101, 91-119. doi:10.1037/0033-2909.101.1.91

Frank, H., Kessler, A., Rusche, T., Suess-Reyer, J., & Weismeier-Sammer, D. (2017). Capturing the familiness of family business: Development of the family influence familiness scale (FIFS). Entrepreneurship Theory and Practice, 41(5), 709-742.

Galaskiewicz, J. 1991. Making corporate actors accountable: Institution-building in Minneapolis-St. Paul. In DiMaggio & Powell (eds.), The New Institutionalism in Organizational Analysis, Chicago, IL: University of Chicago Press, pp. 293-310.

Goyal, S., Sergi, B. S., & Jaiswal, M. P. (2016). Understanding the challenges and strategic actions of social entrepreneurship at base of the pyramid. Management Decision, 54, 418-440. doi:10.1108/MD-11-2014-0662

Gras, D., Conger, M., Jenkins, A., & Gras, M. (2020). Wicked problems, reductive tendency, and the formation of (non-)opportunity beliefs. Journal of Business Venturing, 35(3). doi:10.1016/j.jbusvent.2019.105966

Grassl, W. (2012). Business Models of Social Enterprise: A Design Approach to Hybridity. ACRN Journal of Entrepreneurship Perspectives, 1, 37-60.

Guerrero, M., Liñán, F., & Cáceres-Carrasco, F. R. (2020). The influence of ecosystems on the entrepreneurship process: a comparison across developed and developing economies. Small Business Economics. doi:10.1007/s11187-020-00392-2

Hillman, A. J., Withers, M. C., & Collins, B. J. (2009). Resource dependence theory: A review. Journal of Management, 35(6), 1404-1427.

Kyndt, E., & Baert, H. (2015). Entrepreneurial competencies: Assessment and predictive value for entrepreneurship. Journal of Vocational Behavior, 90, 13-25.

Letaifa, S. B. (2016). How social entrepreneurship emerges, develops and internationalises during political and economic transitions. European J. of International Management, 10, 455. doi:10.1504/EJIM.2016.077424

Memili, E., Welsh, D. H. B., & Luthans, F. (2013). Going beyond research on goal setting: A proposed role for organizational psychological capital of family firms. Entrepreneurship: Theory and Practice, 37, 1289-1296. doi:10.1111/etap.12066

Miller, D., & Le Breton-Miller, I. (2005). Managing for the long run: Lessons in competitive advantage from great family businesses. Harvard Business School Press.

Miller, T., Grimes, M., McMullen, J., & Vogus, T. (2012). Venturing for Others With Heart and Head: How Compassion Encourages Social Entrepreneurship. Academy of Management Review, 37, 616-640.

Miller, D., & Le Breton-Miller, I. (2021). Family firms: A breed of extremes? Entrepreneurship Theory and Practice, 45(4), 663-681.

Pfeffer, J., & Salancik, G. R. (2003). The external control of organizations: A resource dependence perspective: Stanford University Press.

Phillips, W., Lee, H., Ghobadian, A., O'Regan, N., & James, P. (2015). Social Innovation and Social Entrepreneurship: A Systematic Review. Group & Organization Management, 40, 428-461. doi:10.1177/1059601114560063

Roundy, P. T. (2017). Hybrid organizations and the logics of entrepreneurial ecosystems. International Entrepreneurship and Management Journal, 13, 1221-1237. doi:10.1007/s11365-017-0452-9

Saebi, T., Foss, N. J., & Linder, S. (2018). Social Entrepreneurship Research: Past Achievements and Future Promises. Journal of Management, XX, 1-26. doi:10.1177/0149206318793196

Scott, W. R. (2005). Institutional theory: Contributing to a theoretical research program. Great minds in management: The process of theory development, 37(2), 460-484.

Surroca, J., Tribo, J. A., & Waddock, S. A. 2010. Corporate responsibility and financial performance: The role of intangible resources. Strategic Management Journal, 31: 463-490.

Theodoraki, C., Dana, L.-P., & Caputo, A. (2021). Building sustainable entrepreneurial ecosystems: A holistic approach. Journal of Business Research. doi:10.1016/j.jbusres.2021.11.005

Tracey, P., & Stott, N. (2017). Social innovation: a window on alternative ways of organizing and innovating. Innovation, 19(1), 51-60.

Van Gils, A., Dibrell, C., Neubaum, D. O., & Craig, J. B. (2014). Social Issues in the Family Enterprise.

Family Business Review, 27(3), 193-205. doi:10.1177/0894486514542398

Wakkee, I., van der Sijde, P., Vaupell, C., & Ghuman, K. (2019). The university's role in sustainable development: Activating entrepreneurial scholars as agents of change. Technological Forecasting and Social Change. doi:10.1016/j.techfore.2018.10.013

Yin, R. (2003). Designing case studies. Qualitative Research Methods, 359-386.

Zellweger, T. M., Eddleston, K. A., & Kellermanns, F. W. (2010). Exploring the concept of familiness: Introducing family firm identity. Journal of Family Business Strategy, 1(1), 54-63. doi:10.1016/j.jfbs.2009.12.003