Abstract
The development of commercial revenue streams allows traditional nonprofit organizations to increase financial certainty in response to the reduction of traditional funding sources and increased competition. In order to capture commercial revenue-generating opportunities, traditional nonprofit organizations need to deliberately transform themselves into social enterprises. Through the theoretical lens of institutional entrepreneurship, we explore the institutional work that supports this transformation by analyzing field interviews with 64 institutional entrepreneurs from UK-based social enterprises. We find that the route to incorporate commercial processes and convert traditional nonprofit organizations into social enterprises requires six distinct kinds of institutional work at three different domains; these are—“engaging commercial revenue strategies”, “creating a professionalized organizational form”, and “legitimating a socio-commercial business model”. In elaborating on social entrepreneurship research and practice, we offer a comprehensive framework delineating the key practices contributing to the transformation from traditional nonprofit organizations to social enterprises. This extends our understanding of the ex-ante strategy of incorporating commercial processes within social organizations. Furthermore, the identification of these practices also offers an important tool for scholars in this field to examine the connection (or disconnection) of each practice with different ethical concerns of social entrepreneurship in greater depth.
Highlights
Traditional nonprofit organizations (NPOs) are being affected by the reduction of private donations and government funding, and are facing an increasingly competitive business environment in the modern era (Dart 2004; Liu et al 2015; Toepler 2006)
We define a social enterprises (SEs) as a form of NPO that makes use of productive activities to generate commercial revenue in support of its social mission. This definition is in line with the Earned Income School of thought1 that stresses the vital role of SEs in organizing a range of commercial practices to help diversify their funding base and manage the risks associated with income generation (Bacq and Janssen 2011; Defourny and Nyssens 2012). We argue that this practice of turning traditional NPOs into SEs fits the description of institutional entrepreneurship
In line with this aspect of institutional entrepreneurship, our analysis suggests that the incorporation of commercial processes within traditional NPOs involves the engagement of commercial revenue strategies
Summary
Traditional nonprofit organizations (NPOs) are being affected by the reduction of private donations and government funding, and are facing an increasingly competitive business environment in the modern era (Dart 2004; Liu et al 2015; Toepler 2006). 168,000 social organizations were registered in English and Wales in 2017, the highest level in almost a decade (Hillier 2018) In response to these challenges, scholars suggest that traditional NPOs can acquire commercial revenue streams to ensure financial self-sufficiency (e.g., Bush 1992; Maier et al 2016; Pache and Santos 2013). A new form of NPO that is more entrepreneurial, market-oriented, and businesslike often emerges from these complex activities (Dart 2004; Maier et al 2016) Scholars describe this new form of NPO as “social enterprises (SEs)” (Fitzgerald and Shepherd 2018; Liu et al 2015).
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