Sink, swim, or drift: How social enterprises use supply chain social capital to balance tensions between impact and viability

Abstract

AbstractSocial enterprises seek solutions for some of society's most pressing problems through the development of commercially viable businesses. However, pursuing social impact is often at odds with financial viability, and social enterprises need to engage with a wide range of stakeholders to access tangible and intangible resources to overcome this tension. Although the current literature emphasizes the need for social capital within social enterprises' supply chain relationships, it does not consider the costs associated with the development of such capital. This article examines how social enterprises develop social capital in their supply chain relationships and how this social capital affects their ability to pursue impact and viability. Using data from in‐depth interviews with nine social enterprises, the findings indicate that the roles and positions of beneficiaries in supply chains determine the appropriate forms of social capital needed to sustain simultaneous impact and viability. The empirical insights highlight that structural and relational capital are most valuable within core supply chain relationships, whereas cognitive capital is most beneficial within peripheral relationships aimed at enhancing competitiveness. Further, social enterprises sometimes relinquish power in their supply chain relationships to prioritize impact but develop relational capital to mitigate threats of opportunism. This study advances a contingent view of social capital in cross‐sectoral supply chain relationships and provides valuable implications for managers pursuing impact.