Social business models : effectuation in action

Abstract

Social businesses combine features from profit-maximizing businesses and non-profit organizations that exist to satisfy social objectives. Little is however known about how a social venture unfolds through processes of opportunity identification, evaluation and exploitation. Adopting a processural lens for analysis, the current study seeks to answer the leading question: ‘How are opportunities formed and developed in social enterprise to ensure sustained value creation? This is done through connecting three related bodies of knowledge: entrepreneurship, social entrepreneurship, and the business model literature to inform related queries that are directed towards (a) the description of a holistic pattern that demonstrates how a social entrepreneurial journey unfolds over time to ensure sustained value creation, (b) the explanation of the role that business model plays in the social entrepreneurial process, and (c) the identification of the role and pattern that processural theories (causation and effectuation) play to explain the social entrepreneurial process. With application to the Furniture Resource Centre (FRC) group, a leading UK social business, empirical analyses suggests two complementary opportunity-based views of the social entrepreneurial process; both of which support the dominance of an effectual approach to explain the formation and development of social entrepreneurial opportunities. These are ‘social entrepreneuring as a transformation from inchoate demand to a new artifact’ and ‘social entrepreneuring as an emergent opportunity-based hierarchy’.