Social Entrepreneurship and Nonprofit Management: Negotiating Institutional Complexity

Abstract

Nonprofit organizations (NPOs) increasingly view social entrepreneurship as means to expand their mission scope while simultaneously diversifying revenue streams and strengthening financial foundations. However, the pursuit of social entrepreneurial ventures often incites a tug-of-war phenomenon between the deep-rooted social welfare logic of the parent nonprofit organization and a newly-evolving commercial logic at the subsidiary social enterprise. The present study seeks to understand how nonprofit organizations navigate such logic conflicts as they strive to become more entrepreneurial. Based upon case studies of two NPOs, we found divergence in organizational identity, legitimacy, and mission/vision between parent nonprofits and their subsidiary social enterprises as they struggled with a defining question: Are we a program or are we a business? Our research indicates that organizations reconcile such cognitive dissonance through four distinct processes: connecting, variegating, separating, and augmenting social welfare and commercial logic spheres. We thus contribute to the social entrepreneurship and nonprofit management literatures by illustrating ways in which non-commercial organizations may address issues of logic divergence when engaging in revenue-generating commercial activities.