Social enterprises and market performance: The moderating roles of innovativeness, sectoral alignment, and geographic localization

Abstract

Despite the growing attention on social enterprises, the extant research lacks an overarching theory and a solid empirical basis to examine these enterprises’ performance implications. This study addresses this gap by taking a novel research approach with new data to identify social enterprises and by comparing market performance within social enterprises and between social and commercial ventures. Using the Kauffman Firm Survey (KFS) longitudinal dataset of 4,928 new ventures in the United States between 2004 and 2010, we find that new social enterprises tend to survive significantly longer, but do not achieve higher sales growth than commercial ventures. Our econometric analyses among 232 social enterprises further show that social enterprises perform better when they offer innovative products or services, participate in social sectors, and localize their businesses.