Abstract
A variety of social enterprises (SEs) have recently emerged in many different countries in an effort to resolve diverse social problems. However, the value creation mechanism of SEs has not yet been disclosed. The purpose of this study is to reveal the value creation mechanism of SEs in manufacturing industry. To do so, we verify the role of social entrepreneurship and examine the effects of product innovation attributes and social capital on social value creation and financial performance by using structural equation modelling. Then, we conduct interviews with six experts in SE fields. According to the results of empirical study, the social entrepreneurship works as an antecedent of product innovation and social capital in SEs and the degrees of products’ simplicity, usability and standardization positively affect the social value creation of SEs. In addition, the social value creation works as a complete mediator between the product innovation of SEs and their financial performance. The interviews suggest policy implications for successful social value creation and sustainability of SEs. This research contributes towards further studies on innovation of SEs and provides social entrepreneurs with guidelines in planning their innovation strategy or developing their products.
Highlights
Governments, non-profit organizations and for-profit companies have been making significant efforts to alleviate social problems such as unemployment, poverty and lack of education among people suffering from extreme poverty
This study addresses the following questions: Does entrepreneurial orientation of social entrepreneurs affect product innovation implementation and social capital utilization to create social values? Do product innovation or social capital of social enterprises (SEs) positively affect their social value creation or financial performance? Does the social value creation of SEs directly contribute to financial performance?
The social value creation works as a complete mediator between the product innovation of SEs and their financial performance
Summary
Governments, non-profit organizations and for-profit companies have been making significant efforts to alleviate social problems such as unemployment, poverty and lack of education among people suffering from extreme poverty. A variety of social enterprises (SEs) have recently emerged in many different countries in an effort to resolve such problems and to secure the sustainability of society [5]. Alter [7] defined a SE as a business that creates social benefits through financial management, innovative methods and decision-making processes similar to those of normal companies. The ultimate goal of a SE is to create social benefits and resolve social problems rather than maximize profits. It creates and spearheads social innovation by using resources and engaging in business activities just as a regular company would. A SE is an innovative hybrid organization pursuing both social values and economic profit
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