Tracy Thompson Jill Purdy William Kaghan Milgard School of Business University of Washington Tacoma

Transcription

1 Tracy Thompson Jill Purdy William Kaghan Milgard School of Business University of Washington Tacoma Marc Ventresca Saïd Business School Oxford University Support from the Center for Leadership and Social Responsibility, Milgard School of Business, University of Washington Tacoma is gratefully acknowledged

2 Despite increased emphasis on social responsibility, the systems supporting small business development devalue social motives and are almost exclusively profit-oriented. o Funding via angels, VCs, commercial banks and IPOs (Kerr & Nanda, 2011) o Legal forms and corporate charters (Raz, 2012) o Value chain lacks information on partner practices o Consumers are skeptical about greenwashing (Delmas & Burbano, 2011)

3 Social entrepreneurs are butting up against a powerful, well-resourced, incumbent, institutionalized and taken-for-granted model of capitalism that assumes the common good is best pursued by a business sector which is run by the invisible hand and the unfettered pursuit of profit. Social enterprise advances conscious capitalism which puts social value creation on par with profit, but the community of actors pursuing this goal is diverse and underorganized.

4 A relational view of institutional fields o Alternative to standard industrial economics view of industry and strategy view of competition intensity o Fields are "richly contextualized spaces where disparate organizations involve themselves with one another in an effort to develop collective understandings regarding matters that are consequential for organizational and field-level activities (Wooten & Hoffman, 2008: 138). o Fields become defined, structured and institutionalized as members begin to interact, share information, develop patterns of dominance and coalition, and develop mutual awareness of a shared interest (DiMaggio & Powell, 1983).

5 How to study early moments in emerging fields of economic activity? Evolutionary Economic Sociology provides a useful research approach o Addresses how social values and collective arrangements are made and unmade: how things arise and how they change (Hughes, 1971: 53). o Views institutional fields as clusters of conventions, defined as informal and formal ways of doing, interpreting, and feeling things in particular situations. o Emphasizes the mechanisms through which people actually do things together in ways that generate routines and enable adaptation (Becker, 1986; Biggart & Beamish, 2003).

6 A going concern, a currently operating organization with a definite origin, a distinct identity, and a recognized boundary that collaborates and competes with other organizations (Lounsbury & Kaghan, 2001) while participating in discourse about the functioning of macro-level systems (Callon & Latour, 1981; Hamilton, 1994; Suddaby et al, 2010). An inhabited institution (Hallet & Ventresca, 2006) comes alive through what actors are doing on a daily basis.

7 To understand the varied activities of early moments of a field, we ask: 1. As social entrepreneurs pursue their goals, what other actors do they interact with? 2. What is the nature of their interdependence? What do they need from other actors? What are they doing with them? 3. As they interact, what opportunities are they encountering and how are they taking advantage of them? What problems or areas of indeterminacy are they encountering and how are they solving them?

8 Why Seattle? o Long history of philanthropy and entrepreneurship o Home to numerous B Corps o Adopted Social Purpose Corporation legislation in 2012 o Center for Impact and Innovation (CII) this unique facility houses one of the largest concentrations of social entrepreneurs in the country. Together, we re creating a space to educate inspiring leaders, fund their ideas, incubate their social ventures, and lead the revitalization of Pioneer Square as a center of impact and innovation.

9 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun B Corps Cert. SPC Reg.

10 Archival, interview and ethnographic data o Created database of existing social enterprises o Conducted 14 interviews of 10 people in 9 organizations o Participated in meetings and social media o Participant observation 1 day/week over 4 months Analysis Tools o Network analysis o Content analysis using open coding (NVivo 10)

11 = Social Enterprise Company = Social Enterprise Company and Support Organization = Support Organization RQ 1. As social entrepreneurs pursue their goals, what other actors do they interact with?

12 Knowledge and resources to develop their businesses Information on sources of capital Work space and events space Connections to specialized legal advice on how to structure and operate their businesses Interaction with entrepreneurs who share their values RQ 2. What is the nature of their interdependence? What do they need from other actors? What are they doing with them?

13 Four key areas of activity: 1. Extensive use of partnering 2. The development of new forms of expertise 3. Responses to limited access to capital 4. The coining of new language RQ 3. What opportunities are they encountering and how are they taking advantage of them? What problems or areas of indeterminacy are they encountering and how are they solving them?

14 Nature of Partnership Duration Initiated Personnel linkage between two orgs permanent, ongoing Feb 2011 relationship Creation of social networking group permanent, ongoing Dec 2011 Alliance to create competition/event permanent, ongoing on an Jan 2012 annual basis Creation of social networking group permanent, ongoing May 2012 Alliance to create competition/event permanent, ongoing on an Aug 2012 annual basis Alliance to co-locate permanent Oct 2012 Alliance for customer/supplier permanent, ongoing Dec 2012 relationship Personnel linkage between two orgs temporary Dec 2012 Alliance to create an event temporary, too early to tell if it will be repeated Jan 2013

15 The ambiguous legal framework for social enterprise requires nonstandard solutions to support creating both social good and profits over time. Lawyers note the fragmentation of legal practices, the need to develop patches and one-off solutions via contract law and shareholder agreements and even the need sometimes to shoe horn a client into becoming a nonprofit. Seattle has a small but growing community of social enterprise lawyers. The passage of the Social Purpose Corporation (SPC) law means the framework for advice is becoming clearer. 16 of the 43 companies registered as SPCs used a law firm. Of those 16 registrations, 6 came from one firm, 3 from another, and the remaining 7 from other firms.

16 Only 1 of the 5 social enterprises studied was financed through traditional venture capital. o If you have a social business, that doesn t really compete very well on a financial basis with a non-social business. The risk profile is higher and the returns are lower. Emerging solutions: o A for-profit business plan competition added to an established system for funding new nonprofits o Identifying impact investors and impact angel funds o Crowd funding (community-based investment) o Donor-advised funds

17 Labels for organizations include: o social enterprises o conscious companies o social businesses o social ventures Distinct from legal form or B corp certification o We are agnostic about how the organization is set up. Labels for individuals include: o social entrepreneurs o impact professionals o inspiring persons

18 While actors are borrowing practices from both the corporate and nonprofit sectors, significant efforts are being made to build an alternative infrastructure with practices that are unique to the sector. Purposeful infrastructure-building creates capacity and stabilizes emerging interactions by creating venues where those interactions occur with more routine frequency.

19 In contrast to research that emphasizes deliberate efforts of institutional entrepreneurs to create new fields (e.g. Lawrence & Phillips, 2004) or to theorize new practices (Maguire, Hardy & Lawrence, 2004), our research suggests a less deliberate path may be possible. In contrast to Morrill s stage model of field emergence (2006), we see innovation occurring even as actors are mobilized and the structuration of the field has begun.

20 Collaborative partnerships appear to be an important first step in building the social enterprise field. Dorado (2005) describes this work as convening. Convening is not a direct effort to solve a particular problem or enact a specific change. It is about creating a network that can develop the capabilities to address the larger change.

21 It is too early to tell if efforts to remake corporate capitalism into conscious capitalism will succeed or even be sustained. The emergence of social enterprise as a distinct field would nullify criticisms that CSR is merely a public relations effort, an attempt to preempt governmental regulation through self-regulation, or an inefficient use of resources (Frederick, 2006). If the ideas of conscious capitalism take root and become more broadly institutionalized, then our current understandings of social responsibility, whether it is seen as implicit or explicit (Matten & Moon, 2008), will require similar reframing.

22 Thank You

23 Subject Organizational Form Type of Business Founded Social Entrepreneur For profit, B-Corp Hydrokinetic turbines for clean 2007 energy generation Social Entrepreneur For profit, B-Corp Online services for nonprofits 2011 Social Entrepreneur For profit, SPC Non-interest loans for local 2012 businesses Social Entrepreneur (2 For profit, B-Corp Co working and event space provider 2012 interviews) Social Entrepreneur For profit, B-Corp Social enterprise incubator 2012 Regional Rep (3 interviews) Nonprofit Services to support social enterprise 2006 Attorney For profit Legal services NA Individual Investor Nonprofit Impact philanthropy 2007 Dean Nonprofit Graduate business education 2002 Founding Faculty Member (2 Nonprofit Graduate business education 2002 interviews)