Empirical investigations of the impact of external drivers on the growth of social enterprises

Abstract

Despite the increase of societal issues and the economic importance of social enterprises, our knowledge of how different external drivers impact the growth of social enterprises is still nascent and limited to theoretical contributions. This dissertation starts to fill in this gap by empirically investigating the question, Do external drivers of growth impact social enterprises differently to commercial entities, and if so, how? The research question is approached using three external drivers of growth: economic cycles, digitalization, and public research and development (R&D) funding. The main contributions of this paper are as follows: it strengthens the empirical knowledge pool of social enterprise growth using robust econometrical methods and data and complements our understanding of the reasons for the distinctive growth patterns of social enterprises by combining and testing current theories on small and medium enterprise and social enterprise growth.

The results demonstrate that the growth pace of social enterprises equals that of other enterprises, but the impact of the external drivers affecting their expansion in the short and medium term diverge. It is concluded that social enterprises outperform commercial enterprises during economic downturns and the opposite is true during economic booms. In addition, investing in digital capabilities boosts the growth of social and commercial enterprises to the same extent, but s s hampered their productivity. Furthermore, the degree of hybridity and societal orientation are found to play an integral role in the development of social enterprises in the context of public R&D funding in times of crisis. Although market-oriented hybrids have successfully utilized public funding to boost their post-crisis business performance, socially oriented hybrids have not been able to access the same benefits.

However, social enterprises are not underachievers in terms of financial growth or performance. The results of this research should encourage policymakers to further acknowledge the distinctive growth patterns of social enterprises, their role as buffers during times of economic turbulence, their vanguard role in deploying new technologies, and both their best- and worst-in-class positions within national innovation systems.