Internal oriented resources and social enterprises’ performance: How can social enterprises help themselves before helping others?

Abstract

The ultimate mission of a social enterprise is to address the most pressing social or environmental issues in society. However, the majority of the social enterprises in the emerging context, such as Malaysia and Singapore, are confronted with struggles for survival and challenges of low performance leading to the issue of financial sustainability. Based on the resource-based view, this empirical study established a framework to assess the influence of the most prominent internal oriented resources (i.e., entrepreneurial orientation, social salience and business planning), which were moderated by socio-economic context, towards the financial and social performance of social enterprises. A quantitative survey method was applied in the collection of data, which were analysed using the Partial Least Square Structural Equation Modelling approach. A total of 181 Malaysian and Singaporean social enterprises were surveyed. The research findings reveal that the entrepreneurial orientation, in innovative, proactive and risk-taking terms, generates a substantial impact on financial performance, but no significant impact on the social outcome. The social salience of the enterprise founders was found to have a significant influence on their social achievement, but not on their financial achievement. The results challenge the conventional knowledge that assesses the performance of a hybrid entity such as a social enterprise through single or consolidated dimensions. Furthermore, Importance-Performance Map Analysis demonstrated a contrasting situation towards financial and social performance. Specifically, in achieving financial excellent, social enterprises should pay more attention to entrepreneurial orientation and reduce their social salience posture. However, to improve their social performance, they should concentrate on social salience and lower their entrepreneurial orientation. This, again, demonstrates the complexities and conflicting demands of hybrid organisations like social enterprises. Hence, in a highly favourable socio-economic context (i.e., Singapore), the negative impact of social salience on financial performance would become irrelevant. On the other hand, the positive influence of business planning towards social performance is more significant in a less favourable environment (i.e., Malaysia). These findings help social enterprise practitioners to determine their organisations’ strategic direction and offer a guiding model to social investors, policymakers and researchers. The results also improve our understanding of the mixed results occurring in previous literature and pledge opportunities for further research.