Academic journal article Innovation: Organization & Management

Social Enterprises: An Multi-Level Framework of the Innovation Adoption Process

Academic journal article Innovation: Organization & Management

Social Enterprises: An Multi-Level Framework of the Innovation Adoption Process

Article excerpt

Social enterprises (SEs) have been viewed as a possible solution to non-profit organizations' (NPOs) financial and operating problems (Foster & Bradach 2005). Given the makeshiftsolutions put forth to address these challenges (Moss Kanter 1999), many stakeholders lacked confidence that existing non-profits could solve resolve these issues. As NPO executives' searched for a solution, SE emerged with the potential to yield major societal impact by creating novel solutions that addressed the root causes of social problems, promoting financial independence, and utilizing effective organizational systems (Dees 1998; Cannon & Fenoglio 2000; Austin et al. 2006; Jones & Keogh 2006). These new organizations represent a radical change in the delivery of social services. Interest and enthusiasm surrounding this new way of doing things in the non-profit arena has garnered global interest and spawned a body of scholarship that examines characteristics of social entrepreneurs, the structure of the organizations they create, and the conditions that foster the emergence of these new social-purpose organizations.

Unfortunately, most SEs fail (Dees 1998; Chell 2007). Research (Klein & Sorra 1996) reveals that the problem lies not with the innovation but with challenges that emerge when evaluating and bringing an innovation into the organization. Many NPO executives became so enthralled with the profit-generating potential of SEs that they ignored the complexity of implementing the innovation and their organization's capability to manage it. Like the tail wagging the dog (Dees 1998), NPO executives created SEs that failed to generate sustainable revenue streams, wasted valuable resources (Foster & Bradach 2005), and led stakeholders to question NPOs' commitment to generating social solutions over profits. Instead of solving problems, creating a SE may lead to unintended challenges and disruptions for NPOs.

This article examines two research questions: What factors influence or hinder an existing NPO's adoption of the SE innovation, and do these factors differ during the adoption process? Central to this research question is the conceptualization of the SE as an innovation. When an existing NPO creates a SE, it is adopting an innovation - an idea or behavior new to the organization (Damanpour 1991). Although it may be common to conceptualize an innovation as a technology-based artifact, new reporting methods, business models, and organizational structures are also innovations. Simply, an innovation is a process, product, or system that is new to the adopting organization. In this discussion, SEs are entrepreneurial NPOs that embrace creative and innovative ways to address social problems, develop management skills, and creating organizational sustainability using a strategic approach that is engenders long-term growth and scalable revenues stream (Mason et al. 2007; Brozek 2009).

As a new organizational form (Dart 2004), a SE incorporates new theories of how to operate and compete in the social service sector. These new theories include 'the assumptions that shape any organization's behavior, dictates its decisions about what to do and what not to do, and define what the organization considers meaningful' (Drucker 1994, p. 95). Scholars (Dees & Anderson 2003; Brozek 2009) propose that these new theories may incite radical or disruptive change because they integrate different operation methods - borrowing from entrepreneurial, nonprofit, and for-profit firms (Brozek 2009) - to create sustainable solutions and financially secure organizations.

Consequently, bringing a SE into an existing NPO can spark a process of creative destruction (Schumpeter 1934) that may require adopting a new strategic focus, organizational roles and responsibilities, and stakeholder relationships. This disruptive process may be problematic for an existing organization where embedded routines, relationships, and cultural values drive the organization towards stability and order when confronted with change (Salipante & Golden- Biddle 1995; Christensen & Overdorf 2000). …

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