A Quantitative Comparison of Social and Commercial Entrepreneurship

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A Quantitative Comparison of Social and Commercial Entrepreneurship: Toward a More Nuanced Understanding of Social Entrepreneurship Organizations in Context a

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SOPHIE BACQ , CHANTAL HARTOG & BRIGITTE HOOGENDOORN

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D’Amore-McKim School of Business, Northeastern University, Boston, MA, USA b

Panteia/EIM Business and Policy Research, Zoetermeer, The Netherlands c

Department of Applied Economics, Erasmus School of Economics, Erasmus University Rotterdam, Rotterdam, The Netherlands Version of record first published: 22 Feb 2013.

To cite this article: SOPHIE BACQ , CHANTAL HARTOG & BRIGITTE HOOGENDOORN (2013): A Quantitative Comparison of Social and Commercial Entrepreneurship: Toward a More Nuanced Understanding of Social Entrepreneurship Organizations in Context, Journal of Social Entrepreneurship, DOI:10.1080/19420676.2012.758653 To link to this article: http://dx.doi.org/10.1080/19420676.2012.758653

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Journal of Social Entrepreneurship, 2013 http://dx.doi.org/10.1080/19420676.2012.758653

A Quantitative Comparison of Social and Commercial Entrepreneurship: Toward a More Nuanced Understanding of Social Entrepreneurship Organizations in Context SOPHIE BACQa, CHANTAL HARTOGb & BRIGITTE HOOGENDOORNb,c a D’Amore-McKim School of Business, Northeastern University, Boston, MA, USA; bPanteia/EIM Business and Policy Research, Zoetermeer, The Netherlands; cDepartment of Applied Economics, Erasmus School of Economics, Erasmus University Rotterdam, Rotterdam, The Netherlands

ABSTRACT This study empirically addresses the differences between social and commercial entrepreneurship by using the largest available quantitative data source, namely the Global Entrepreneurship Monitor (GEM) 2009 survey on social entrepreneurship in Belgium and The Netherlands. We use a combination of exploratory statistical analyses and qualitative techniques to generate propositions on the organizations and initiatives that social entrepreneurs are involved in and contrast them with our understanding of commercial entrepreneurs. This study contributes to answer the call for more quantitative research and simultaneously argues that, despite the potential contribution of large-scale data, the validity and reliability of measurement instruments cannot be seen independently from their particular context. With this important observation in mind, our findings indicate a predominance of younger social organizations or initiatives that rely to a great extent on government funding, whereas earned income is limited. Furthermore, social entrepreneurs show less ambition in terms of employment growth and progression to more mature stages of the entrepreneurial process compared with commercial entrepreneurs. KEY WORDS: Social entrepreneurship, commercial entrepreneurship, organizational features, Global Entrepreneurship Monitor (GEM), quantitative analysis, context

1. Introduction Social entrepreneurship, broadly defined as individuals, organizations, or initiatives engaged in entrepreneurial activities with a social goal (Seelos and Mair 2007, Bosma and Levie 2010), has received increasing recognition from the public sector, the media, the population at large as well as from scholars *Corresponding author. Email: [email protected] Ó 2013 Taylor & Francis

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(Short et al. 2009, Hoogendoorn et al. 2010). Despite this growing attention and recognition, social entrepreneurship is still a research field in its infancy, characterized by conceptual ambiguity, blurry boundaries with other fields, a limited number of empirical studies, and a modest base for theory building and testing purposes (Hoogendoorn 2011). As far as empirical research is concerned, case-study design predominates, and insights tend to be based on successful social entrepreneurs and their organizations (Sharir and Lerner 2006, Dacin et al. 2010). Limited variety in research design may partly be explained by a lack of large-scale quantitative datasets (Short et al. 2009) and methodological challenges to measure social entrepreneurship (Lepoutre et al. 2011). As a consequence, there is a lack of knowledge regarding this type of entrepreneurs, the occurrence of this phenomenon, and the factors that influence successful social enterprise initiatives. However, a limited number of large-scale datasets have been recently explored or designed (e.g., the Panel Study of Entrepreneurial Dynamics, known as ‘PSED II’, the US 990 tax form, the Global Entrepreneurship Monitor (GEM), and the Flash Eurobarometer Survey on Entrepreneurship), offering ample opportunities to enable social entrepreneurship research to evolve beyond descriptive purposes toward more predictive purposes (Snow and Thomas 1994). Whereas most of the datasets consist of secondary data, the GEM,1 the largest data collecting effort on regular entrepreneurial activity, integrated the first theory-based data collection approach specifically designed to measure social entrepreneurial activity across countries. As such, this unique dataset is taking account of some of the ongoing controversial debates in this particular field, such as the importance of the social mission within the hierarchy of objectives, the importance of innovation, and sources of funding (Lepoutre et al. 2011). Moreover, the methodology to measure entrepreneurship as applied by the GEM was designed as a global measurement instrument with the objective to capture the different perspectives that exist across regions and countries. Whereas this is one of the unique merits of this dataset, it is not without disadvantages. The purpose of capturing different perspectives of social entrepreneurship and increasing the universal applicability of the concept results in sacrificing specificity (i.e., properties and characteristics) and is known as ‘conceptual stretching’ (Sartori 1970, Collier and Mahon 1993). In particular, Kerlin (2009) demonstrates, drawing on social origins theory, that a region’s history can shape socioeconomic conditions that influence the emergence and characteristics of social entrepreneurial activity. Hence, the availability of these data simultaneously offers opportunities to increase our knowledge of social entrepreneurial activities and raises questions on the validity of the data in a specific context. Both aspects are addressed in this paper. This research paper adopts a quantitative, exploratory, and propositiongenerating approach to elementary questions about social entrepreneurship and its activities in particular, and compares these insights to our understanding of commercial entrepreneurs. More precisely, our research objective is to generate testable insights into what organizations or initiatives social

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entrepreneurs are involved in. We focus on the organizational dimension as the concurrent social and financial value creation is likely to result from innovative business models and sustainability strategies that might differ from commercial ones. The question of the distinction between social and commercial entrepreneurship is exploratory by nature as no dominant pattern could be established in the literature. Therefore, we apply an inductive approach to the subject matter and use different sources of information. For this purpose, we first provide an extensive literature review of key organizational characteristics (i.e., age of organization or initiative, size, funding, and innovation) of both commercial entrepreneurship and social entrepreneurship before complementing these views with insights from two sources of empirical data. As our quantitative data source, we draw on data from the GEM 2009 survey for Belgium and The Netherlands. In addition, we enrich the insights from our quantitative data and the literature review with in-depth interviews with a variety of key informants from both countries with the purpose of interpreting the data in its particular context. Key informants consist of national experts in social entrepreneurship, representatives of the nonprofit/NGO sector, or the corporate social responsibility (CSR) movement. Common patterns, covering organizational characteristics such as the firm age, size, funding sources, or degree of innovation, are subsequently formulated as propositions to be confirmed in future research. In addition, a critical reflection on issues of measurement and formulation of the survey questions used by GEM is provided in the discussion. The contribution of this paper to the extant literature on social entrepreneurship is threefold. First, and most importantly, this study extends our current knowledge of social entrepreneurial activities by comparing social entrepreneurship organizations to their commercial counterparts on a range of characteristics including the age of the firm, the number of people it employs, its funding sources, or its degree of innovation. This contrasts with other empirical studies that tend to focus on a given set of (usually successful) social entrepreneurs and omit control groups. Second, this study not only extends our current knowledge of this subject, but also formulates propositions that may serve as a basis for theory building and testing purposes. Third, from a methodological point of view, this study offers insights from what may be considered as the most state-of-the-art dataset currently available on social entrepreneurial activity in a field that is dominated by case studies. We address the issue of ‘conceptual stretching’ (Collier and Mahon 1993) by stressing the importance of the surrounding socioeconomic context to the nature of social entrepreneurship activities and to the validity and interpretation of the data. This critical positioning of the paper is all the more relevant given the expected stream of research using this particular dataset that is likely to emerge in the years to come. This paper proceeds as follows. Section 2 reviews the extant conceptual and empirical literature on social entrepreneurship organizations and initiatives. Section 3 presents the data, followed by a description of the methodology used to investigate our research question. In line with our methodological

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choices, Section 4 presents our results regarding various aspects of the organizational dimension of social entrepreneurial activity. We address the extent to which the insights gained from our large-scale survey data add, confirm, or contradict the extant literature and we complement our results by qualitative insights gained from interviews with key informants. For each studied aspect, we formulate research propositions. These propositions are discussed in Section 5, along with opportunities for future research. The study limitations including an exchange of views on measurement validity are discussed in Section 6 before concluding.

2. Literature: Social Entrepreneurship and Organizational Characteristics 2.1. Social Entrepreneurship In this section, we set the stage for further exploration of the organizational characteristics of social entrepreneurship. We do so by reviewing entrepreneurship and social entrepreneurship literatures and by addressing corresponding controversial debates. Before providing a literature review of social organizational characteristics, social entrepreneurship will be defined. Despite definitional ambiguity, there seems to be consensus that it is motivation and the relative importance of social value creation (as opposed to economic value creation) that distinguishes social entrepreneurs from commercial entrepreneurs (Zahra et al. 2009, Dacin et al. 2010). In this paper, we broadly define social entrepreneurial activity as ‘individuals, organizations or initiatives engaged in entrepreneurial activities with a social goal’ (Seelos and Mair 2007, Bosma and Levie 2010). This definition reflects some basic assumptions about social entrepreneurship on which the empirical part of this study is based: (1) social entrepreneurship is a process of entrepreneurial activities that include discovering, evaluating, and pursuing opportunities and that does not necessarily involve new venture creation; (2) social entrepreneurship includes formally constituted and informal organizations and activities initiated and launched by individuals or teams; (3) social entrepreneurship intentionally aims to pursue a social goal but may also pursue other objectives such as financial ones. Hence, this definition of social entrepreneurship captures an extensive range of praxis: it encompasses nonprofit, for-profit, and hybrid forms of organizations, originating from the private, the public, or the third sector without any restriction on their legal form, income earning strategies, scope of activities, innovativeness, or sectors in which they operate. This does not mean that these aspects are not highly debated among scholars. In particular, the importance of innovation and the role of earned income versus other sources of funding are subject to ongoing debate. These two elements are also at the source of variety among social entrepreneurship organizations and initiatives that are worth investigating (Terjesen et al. 2012). These two aspects together with organizational characteristics, such as the age of the social organization and their size, are addressed in the remainder of this paper.

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2.2. Age of the Social Entrepreneurship Organization or Initiative Several empirical studies that concern the age of social businesses or activities all point in the same direction: they tend to be young and mainly represented in the early stages of the entrepreneurial process. Hoogendoorn and Van der Zwan (2011), for example, using a sample of approximately 6,000 social entrepreneurs in 36 countries, find that organizations are mainly represented in the pre-start-up or infancy stage of creating a social business. A UK-based study by Harding and Cowling (2006) shows evidence of a relatively high rate of ‘nascent social entrepreneurship’, a significantly lower rate of ‘young social business entrepreneurship’ and a relatively higher rate of ‘social established entrepreneurship’.2 Still in UK, another study conducted by the Social Enterprise Coalition finds, based on 962 telephone interviews with senior individuals within British social enterprises, that a third of them had been in existence for four years and that 50% of the enterprises began their activities after the year 2000 (Leahy and Villeneuve-Smith 2009). Terjesen et al. (2012) found that few social entrepreneurs manage to run their venture for more than 42 months, although they note that innovation-driven economies (which Belgium and The Netherlands are both part of) show higher rates of established social enterprises. In other words, there seems to be a large number of recently created social businesses. Hence, we expect the age of social entrepreneurship organizations (or initiatives) to be rather low compared with commercial entrepreneurship.

2.3. Size of the Social Entrepreneurship Organization or Initiative While the age of social entrepreneurship organizations has only been subjected to a few empirical studies, size in terms of employees has been more discussed in the literature. When it comes to human resources, social entrepreneurs are working with a wide variety of employees in terms of formal and informal relations and types of contracts (Turner and Martin 2005, Vidal 2005, Nyssens 2006). A study by Vidal and Claver (2006), based on 15 Spanish social enterprises, distinguishes between two types of social organizations: market-oriented versus care and services provider. The former have greater professional resources and fewer volunteers both in terms of time and money, whereas the latter have a greater presence of volunteers in the workforce. In care and services provider type of enterprises, employees normally have a temporary relationship with the social enterprise and a part-time working week is the norm; in market-oriented enterprises, indefinite full-time employment contracts prevail. Still, given the relatively broad meaning generally attributed to social entrepreneurship organizations, it has been somewhat difficult for researchers to conclude on any trend regarding their size in terms of turnover or numbers of employees. Leahy and Villeneuve-Smith (2009), in their UK-based Social Enterprise Survey, conclude that social enterprises are similar to businesses in general in that a large majority is small and medium sized (i.e., turnover below £25 million and/or fewer than 250 employees). However, differentiating between categories of social organizations, such as

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NGOs, nonprofits, and hybrid organizations, may be useful in order to determine whether social entrepreneurship shows a different pattern from that of commercial entrepreneurship. Whereas the literature review of the previous two organizational characteristics (i.e., age and size) is mainly based on a limited number of empirical contributions, the next two characteristics are represented in a larger set of empirical studies with a more conceptual setup. Both characteristics (i.e., earned income and innovativeness) are subject to ongoing debate, as we develop in the coming sections. 2.4. Earned Income Two approaches to social organizations’ funding predominate at the conceptual level. On the one hand, some expect social entrepreneurship organizations to be funded by means of earned income-generating activities – i.e., income resulting from some form of sale of a product or service (Oster et al. 2004, Mair and Martı 2006). This trend has emerged over the last few years, especially in the United States (US), in reaction to an increased demand on their services and important cuts in public funding (Phills et al. 2008) and against a background of a long tradition of market reliance. The generation of earned income is argued to be a more reliable path to financial sustainability, compared with donations and grants (Dees 1998a). Accordingly, several researchers (e.g., Emerson and Twersky 1996, Weisbrod 1998, Boschee 2001) have advocated the role of earned income in reducing social organizations’ dependence on outside sources of funding and allowing cross-subsidization. On the other hand, the opponents to this ‘earned income approach’ (Defourny and Nyssens 2010, p. 40) have argued that earned income is not a sufficient condition (Mair and Martı 2009). They argue that ‘social entrepreneurship is about finding new and better ways to create and sustain social value’ (Battle Anderson et al. 2002, p. 192). Even when organized as for-profits, social organizations’ focus should be on the social value proposition rather than on its economic activities. As such, Light (2005, p. 18) insists that ‘social entrepreneurs need not (to) engage in social enterprise or use market-based tools to be successful’. This movement considers earned income as one of the many options to fund a social organization or initiative. Other options are monetary resources such as subsidies, donations, and grants, and nonmonetary resources such as volunteers, even though some for-profit social organizations now turn to venture capitalists. Despite the ongoing debate, social entrepreneurship organizations or initiatives do, in practice, turn to different sources of funding (e.g., earned income, fees from users, public subsidies, and volunteers), depending on their profit status, among others. When organized as nonprofits, for example, they are likely to turn to government subsidies and private donations because a nondistribution constraint prevents the distribution of generated profits in the form of stocks and dividends to remunerate financial investors. Such a funding mix has been found at the empirical level, both in Europe (mainly UK) and in US.

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A recent study of European charities shows that 47% of their sources come from earned income – voluntary workforce representing 45% of their income and 8% coming from investment (Defourny and Nyssens 2010). Focusing on the UK context, Peattie and Morley (2006) insist on this funding mix as a unique characteristic of social enterprises. They find that the majority of social enterprises surveyed turned mainly to grant and donation funding, the rest being dependent on earned income. Still in UK, Smallbone and Welter (2001) find that social enterprises fund their activities by a mix of market, nonmarket, and nonmonetary resources such as voluntary work. Vidal (2005) finds that 80% of Work Integration Social Enterprises’ (WISE) income comes from earned income (2/3 to the private sector and 1/3 to the public sector), the remainder coming from subsidies, grants, and fixed-asset disposals. However, Amin et al. (2002) find that most social enterprises operate on a local scale and only a small proportion manages to make the transition from philanthropy and government subsidy to financial independence through earned income. In addition, a study conducted in US by Foster and Bradach (2005) shows that earned income counts for only a small share of funding in most nonprofit domains and few ventures actually make money. This could be due to the challenges induced by the tension between implementing earned income strategies while pursuing a social mission (Pharoah et al. 2004, Foster and Bradach 2005, Seelos and Mair 2005). Indeed, whether earned income strategies need to be directly related to their mission remains subject to debate.3 Being able to keep a balanced mix between earned income streams, grant funding, and/or partnerships with a for-profit organization, has been seen as the key to sustainability (Reis and Clohesy 2001, Hare et al. 2007). Given these preliminary empirical findings, we suspect that social organizations and initiatives have recourse to a mix of resources, including but not restricted to earned income strategies. 2.5. Innovativeness of the Social Entrepreneurship Organization or Initiative Innovation is considered as a fundamental element of entrepreneurship (Schumpeter 1990 [1934], Drucker 1985). According to Schumpeter, innovation may involve new products or services, as much as new methods of production, new markets, new sources of raw materials, or the reorganization of an industry. Adopting the Schumpeterian view on social entrepreneurship, numerous scholars have highlighted the innovative behavior of social entrepreneurs (e.g., Dees 1998b, Thompson et al. 2000, Mair and Martı 2004, Nicholls 2006b). In particular, the importance of innovation has been put forward by all the partisans of the so-called ‘Social Innovation School’ (Catford 1998, Schuyler 1998, Dees 1998a, Dearlove 2004, Roberts and Woods 2005, Austin et al. 2006) according to which innovation is one of the social entrepreneurship’s defining characteristics. As such, innovativeness helps distinguish social entrepreneurship from ‘traditional nonprofits’ (Drayton 2002, Martin and Osberg, 2007, Lepoutre et al. 2011). On the contrary, in their typology of social entrepreneurs, Zahra et al. (2009) argue that different types of social initiatives are not all equally innovative in terms of social

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significance. In particular, the social engineers, in comparison to social bricoleurs and social constructionists, are most likely to achieve social change through innovation. With regard to the sources of this innovative behavior, Weerawardena and Sullivan Mort (2006) suggest that increased competitiveness forces this type of organization to be innovative in all its social value creation activities, whereas Roberts and Woods (2005) and Mair and Schoen (2007) ascribe innovativeness to a general lack of resources. Despite this ongoing conceptual debate on the importance of innovativeness for social entrepreneurial activities, innovation is one of the three attributes of the ‘entrepreneurial orientation’, along with ‘pro-activeness’ and ‘risk-taking’ (Miller 1983) and hence it deserves empirical investigation. Shaw and Carter (2007), for example, conclude from their case study analyses that innovation and creativity is one of the five main themes of social entrepreneurship to be borrowed from the entrepreneurship literature. However, as the authors state, innovation in the social context involves searching for and applying novel solutions to intractable, long-lasting social problems. Weerawardena and Sullivan Mort (2006), as well as McDonald (2007), find that social entrepreneurs themselves perceive their organizations as innovative. McDonald’s (2007) research subsequently shows that self-reported innovativeness is related to the actual number of innovations developed and adopted. This finding indicates that the respondents had a reasonably good idea of how innovative their institutions were in comparison to competitors. The same study also finds that mission-driven nonprofit organizations are more likely to develop and adopt innovations faster than competitors. Despite the ongoing debate on the importance of innovation for social entrepreneurial activities, empirical investigations are still rather limited, in particular those based on large-scale data. It seems fair to conclude that this characteristic, as well as the pursuit of earned income strategies, has mainly been taken for granted as one of the social entrepreneurship’s defining elements, rather than being empirically grounded (Hoogendoorn et al. 2010). Therefore, this issue deserves further exploration that will be addressed in this paper. The next section describes the data used and methodology applied in this study.

3. Data and Methodology In this section, we first present our data sources; second, we introduce our mix-methods approach. 3.1. Data Sources and Definitions Only a few large-scale datasets are currently available to quantitatively study social entrepreneurship. PSED II, for example, offers the advantage of a fiveyear longitudinal window. However, among the 1,214 ‘nascent entrepreneurs’

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who were identified based on a random digit dialing method of over 30,000 US adults, only 94 social entrepreneurs can be identified when using the entrepreneur’s motivations to start a new business (e.g., ‘help others; help community’ or ‘aid in economy; economic development’). In US, the 990 tax forms filed annually by any nonprofit may be another option to study social entrepreneurship organizations that are organized as nonprofits and have a certain amount of earned income. Similarly in Canada, the Registered Charity Information Return form (T3010) can be used to identify federally registered charities. Those forms are collected every year and the dataset offers up to six years of longitudinal data. In this study, we use the Adult Population Survey (APS) conducted by GEM, the largest available data source, to provide insights into social entrepreneurship organizations’ distinguishing characteristics. More specifically, we used the 2009 microlevel data on Belgium and The Netherlands.4 GEM is an international research program providing harmonized annual data on entrepreneurial activity at the national level. The main objectives of the GEM research program are to enable a cross-country analysis of the level of entrepreneurial activity, uncovering determinants of entrepreneurial activity, identifying policies that may stimulate the level of entrepreneurial activity, and examining special topics of common concern and/or those that are specific to an individual country. GEM teams of researchers collect data in each participating country using a standardized telephone survey among at least 2,000 randomly selected individuals from the adult population (i.e., aged between 18 and 64 years). Within the GEM annual survey, the entrepreneurially active adult population is identified by means of an initial question that inquires whether the respondent is ‘alone or with others, currently trying to start a new business or owning and managing a business, including any self-employment or selling any goods or services to others’. We refer to this group as ‘commercial entrepreneurs’ throughout the remainder of this paper. In addition, the entrepreneurially active population can be split into the percentage of the adult population that is actively involved in setting up a new business (‘nascent entrepreneurial activity’), the percentage of the adult population that is an owner– manager of a business less than 3.5 years old (‘young entrepreneurial activity’), and the percentage that is an owner–manager of a business that was created more than 3.5 years ago (‘established entrepreneurial activity’). In 2009, GEM conducted a special study on social entrepreneurship.5 Data on social entrepreneurial activity were collected in 49 countries, including Belgium and The Netherlands. In order to identify the socially entrepreneurially active population, GEM asked each respondent the following question: ‘Are you, alone or with others, currently trying to start or currently owning and managing any kind of activity, organization or initiative that has a particularly social, environmental or community objective?’ We refer to this group as ‘social entrepreneurs’. Whether an objective is considered social or not thus depends on the respondents’ perception. Note that referring to ‘activity, organization or initiative’ is broader than ‘starting a new business’ or ‘owning and managing a business’. In addition, the word ‘social entrepreneurship’ is

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avoided and hence the data aim to measure this construct through a series of indirect questions. When a respondent answered positively to both abovementioned questions, a control question checked whether or not these initiatives are the same.6 Similar to commercial entrepreneurship, different phases of social entrepreneurship can be distinguished, including nascent social entrepreneurial activity, young social entrepreneurial activity and established social entrepreneurial activity. The GEM 2009 dataset shows considerable variation in the prevalence of social entrepreneurship across countries, ranging from 0.1% in Guatemala to 4.3% in the United Arab Emirates (Bosma and Levie 2010, Hoogendoorn and Hartog 2010). With respect to the Belgian and Dutch data, we observe rather low prevalence rates (1.7% and 0.9% of the adult population, respectively). Furthermore, the data reveal that social entrepreneurial activity is less prevalent than commercial entrepreneurship. Whereas, in total, 151 individuals from the pooled Belgo–Dutch adult population (n ¼ 6,122) are involved in social entrepreneurial activities (both starting and owning–managing a social activity, organization, or initiative), commercial entrepreneurs are over three and a half times more numerous than social entrepreneurs (n ¼ 553). Although some individuals are involved in both types of entrepreneurial activity, these results indicate that social entrepreneurship accounts for about onefifth of the total entrepreneurially active population in Belgium and The Netherlands. In addition, we generated qualitative data to complement our exploratory quantitative findings by means of face-to-face interviews with key informants in both Belgium and The Netherlands. Key informants are national experts in social entrepreneurship, representatives of the nonprofit/NGO sector and the CSR movement. We purposefully chose key informants coming from different perspectives, various backgrounds and sectors. An overview of key informants, their professions and backgrounds, can be found in Table A.1 in Appendix. The next section presents the methodology applied before presenting the results addressing our research question. 3.2. Research Methodology To generate empirically grounded propositions on social entrepreneurship and its distinctiveness regarding commercial entrepreneurship, we investigate a series of organizational characteristics by using a combination of quantitative and qualitative techniques. After offering a brief overview of the current insights on both entrepreneurship and social entrepreneurship literatures, we explore the GEM data through descriptive analyses and consistently assess the descriptive of both commercial and social entrepreneurs. These outcomes are then compared with the literature insights and our qualitative interviews that shed light on some remarkable results that take account of context specificity. Key informants were asked, by means of a semi-open interview guide, (1) to reflect on the descriptive results obtained from our exploratory data analyses and (2) to comment on the questions used by the GEM researchers to identify the socially entrepreneurially active adult population.7 Given their

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position on the national landscape, they contributed to putting our findings into context. Propositions are generated when (1) common patterns between the extant literature and our descriptive results are identified or (2) a combination of the quantitative insights from the GEM data and the qualitative insights from the key informants give rise to do so. The results of our quantitative analysis enriched with the insights of the key informants and generated propositions are presented in the next section, followed by a discussion in Section 5. A critical reflection on the GEM questions that emerged from our discussions with the key informants, stressing the importance of a substantive understanding of local contingencies, is provided in Section 6. 4. Results In this section, quantitative insights regarding characteristics of the social entrepreneurship organization or initiative are combined with insights gained from interviewing key informants. We describe and analyze the current knowledge of commercial and social entrepreneurship by subsequently focusing on several characteristics: the age of the organization (or initiative), the size of the organization (or initiative), the sources of funding, and the degree of innovation. Subsequently, findings are framed as testable propositions for future research. 4.1. Results on Age Table 1 presents prevalence rates for social and commercial entrepreneurship by phase for Belgium and The Netherlands. For commercial entrepreneurship, the prevalence rates of established business entrepreneurs are higher than nascent and young business entrepreneurs considered separately. Social entrepreneurship, however, seems to be a rather early-stage activity as the prevalence rate of total early-stage social entrepreneurship (nascent plus young business entrepreneurs) is relatively higher than the social established business entrepreneurship prevalence rate. Our data suggest that social organizations and initiatives are relatively younger compared with commercial organizations and, hence, over-represented in the early stages of entrepreneurial engagement, with about 60% (see Table 1: 1.52/(1.52þ0.99)) of all individuals engaged in social entrepreneurship being involved in an early-stage activity while almost 40% is involved in an Table 1. Involvement in social and commercial entrepreneurship, by phase, The Netherlands and Belgium pooled percentage of the adult population (18–64 years of age) Phase in the entrepreneurial process Social Commercial

Nascent

Young business

Total early stage

Established business

0.86 2.37

0.69 2.44

1.52 4.79

0.99 4.45

Source: GEM Adult Population Survey 2009.

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established activity. For commercial entrepreneurs on the other hand, the distribution over early-stage and established activities is more or less in balance. This observed pattern of the age of the social entrepreneurship activities by phase confirms previous empirical research findings. According to Hoogendoorn and Van der Zwan (2011), one explanation could lie in the rate of business closure and related challenges social entrepreneurs face when setting up their activities. However, additional insights into why this is the case are needed. We thus asked our key informants to interpret those first descriptive findings regarding the age and they came up with three interesting suggestions relating to the entrepreneur, the environment or the newness of the phenomenon. First, they suggested that social entrepreneurs’ possible lack of leadership skills and entrepreneurial ability contributes negatively to the survival prospects. Whereas it has been repeatedly mentioned that serving social and financial objectives simultaneously makes the conduct of business more complex, influences survival and growth, and puts higher requirements on the social entrepreneur’s entrepreneurial ability and leadership skills (Austin et al. 2006, Dorado 2006, Mair and Martı 2006, Zahra et al. 2009, Moizer and Tracey 2010), our experts suggested insufficient human capital to be at the root of social organizations being underrepresented in more mature stages of the entrepreneurial process. In addition, this raises a new debate about whether this type of entrepreneurship appeals to a certain type of individual, such as idealistic individuals who draw their legitimacy from social and moral sources rather than their exceptional entrepreneurial ability and leadership skills. Whereas the literature on leadership in social business is relatively scarce, it has been acknowledged to play a key role in the success of social entrepreneurial ventures (Alvord et al. 2004). Eisenbeiss (2012) offers an interesting framework and novel approach to address leadership issues in the context of social entrepreneurial initiatives. Eisenbeiss argues that, in the case of social entrepreneurship and given the specificities of social ventures (e.g., idealistic vision of the future, stakeholder versus shareholder orientation, self-transcendent versus self-centric value orientation), we need to consider leadership in a wider stakeholder context. First, she argues the currently dominant leadership theories – transformational leadership (e.g., Bass 1985) and social exchange (e.g., Dienesch and Liden 1986, Graen and Uhl-Bien 1995) – explicitly or implicitly focus on explaining leadership effectiveness in terms of economic performance and tend to neglect other social or environmental outcomes. As a result, they consider leadership as a control-oriented tool that relies on reward and punishment mechanisms. Second, those classic theories of leadership focus on the leader–follower dyad, which might prove to be irrelevant in the wider stakeholder context associated with social entrepreneurship. As a result, a broader meaning might need to be attributed to those who depend on the leader (i.e., the followers) to include a vast array of stakeholders (e.g., donors, beneficiaries, volunteers, and government). Eisenbeiss (2012) advocates considering a ‘new’ leadership paradigm anchored in lateral and trust-based relationships. Therefore, although crucial for the success of social ventures, entrepreneurs involved in the process of starting or managing social initiatives

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might need to pay extra attention to the type of leadership they exert, and this type might differ from what is usually preached in traditional, commercial enterprises. For instance, based on Eisenbeiss (2012), one could argue that the more a social entrepreneurship organization matures and its business model proves to be successful, the more the social entrepreneur leading the organization will display types of leadership that create a sense of purpose (‘visionary leadership’), a sense of involvement (‘shared leadership’), and self-transcendence motivation (‘value-based leadership’) for the stakeholders. As a second explanation, the intentions of social entrepreneurs and the influence of government subsidies were mentioned repeatedly. In the Belgo– Dutch context, it is likely that a considerable part of social activities are organized as projects subsidized by the government and are, by definition, not meant to last. Indeed, subsidies are often granted for a period of no longer than three to four years, which corresponds to the definition of a young business as used in the GEM survey (i.e., a business that is less than 3.5 years old). Moreover, if social entrepreneurs are willing but unable (i.e., lack of entrepreneurial ability or effective leadership skills) to continue their operations without drawing on public sources, they will not turn their efforts into established activities. Whether social entrepreneurs do not have the intention or are unable to turn their activities into lasting actions led one of our key informants to conclude: ‘The Netherlands is a cemetery of unfinished projects’. Third, the low rate of established social business entrepreneurship could also be explained by the fact that social entrepreneurship is perceived as a relatively young phenomenon – even if it has been argued that throughout history social entrepreneurs have always been around but were never recognized as such (Nicholls 2006b, Alter 2007, Bornstein 2007). In addition, the long tradition of private initiatives in both Belgium and The Netherlands (Veldheer and Burger 1999) and the substantial nonprofit sectors in both countries (Burger et al. 1999, Mertens et al. 1999) suggest that ‘activities, organizations or initiatives that have a particularly social, environmental or community objective’ are not particularly new. These insights, along with the quantitative results, point in the same direction: social entrepreneurship organizations and initiatives are relatively young and social entrepreneurship may be considered as an early-stage phenomenon. Hence, we formulate the following propositions. Proposition 1a: Social entrepreneurship organizations or initiatives are on average younger than their commercial counterparts and are mainly represented in the pre-start-up or infancy stage of the entrepreneurial process. Proposition 1b: The age of the social entrepreneurship organization or initiative is positively related to the availability of entrepreneurial skills and is related to the type of leadership.

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Proposition 1c: The age of the social entrepreneurship organization or initiative is negatively related to the involvement of government funding in the sector in which it operates. 4.2. Results on Size Figure 1 provides insights into the current number of people working in social and commercial entrepreneurial activities. Here again, a distinction has been made between early-stage and established activities. As Figure 1 illustrates, about 6% and 10% of social early-stage entrepreneurs and social established entrepreneurs, respectively, have no people working in their activity. Surprisingly, very many social established business entrepreneurs have 20 or more people working in their organization, while the majority of social early-stage entrepreneurs have between 1 and 19 people working in their activities. In comparison, most commercial entrepreneurs (whether involved in early-stage activities or running an established business) employ either no people or 1 to 5 people. One possible explanation for the difference in the number of workers between social entrepreneurial activities and commercial businesses could lie in the number of volunteers. Traditionally, volunteers are well represented in nonprofit, charitable organizations. A Dutch chain of fair-trade shops may serve as an illustration: one third of the 400 retail shops of the ‘Wereldwinkel’ employs a group of 40 volunteers for each shop whereas a regular retail shop employs on average 7.5 (paid) employees (Rijt-Veltman 2010). Table 2 provides details on the characteristics of workers active in social entrepreneurship organizations or initiatives and includes the number of volunteers.8 As can be seen from Table 2, the average number of people working in a social entrepreneurial activity equals 15 for early-stage activities and 44 for

Figure 1. Current number of people working in social and commercial entrepreneurial activities, by phase, The Netherlands and Belgium pooled.

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Table 2. Characteristics of workers in social activities, organizations, or initiatives, by phase, The Netherlands and Belgium pooled

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Social early-stage Social established activities activities Number of people working (average), of which: Number of volunteers (average) Number of part-time workers (average) Expected number of people working in 5 years (average)

15 13 8 20

44 18 18 43

Source: GEM Adult Population Survey 2009.

established activities. The number of volunteers working in the social activity, organization or initiative also increases when the organization matures. The same pattern can be observed for part-time workers. Interestingly, the share of volunteers in the total number of workers is relatively higher for social early-stage activities (13 out of 15) than for social established business activities (18 out of 44). This might suggest that once the social business has become a lasting activity, there are more opportunities for a paid job. Finally, the expected number of people working in five-year’s time suggests that social early-stage entrepreneurs expect their social activity to grow at an average annual growth rate of 5.92%. This can be interpreted as ‘moderate growth entrepreneurship’ (Morris 2011). However, and quite surprisingly, socialestablished business entrepreneurs expect to have about the same number of people working in their activities, i.e., an average null, or even negative, annual growth rate. This further suggests that, in more advanced stages of the entrepreneurial process, social entrepreneurs do not really have high growth ambitions, at least not in terms of employment growth. This finding may be related to organizations’ lack of prospects in terms of social opportunities and income-generating capacity or their hobby/voluntary characteristics. Commercial entrepreneurs, however, have more growth ambitions as the net expected job growth in a five-year period is 17 employees for commercial early-stage activities and seven employees for commercial established enterprises, as follows from the GEM survey (not shown in Table 2). Given the wide spread in the number of employees and volunteers across social organizations, key informants were consulted. According to them, the data capture at least two different types of organizations. On the one hand, they suggested that there are, among social early-stage entrepreneurial activities, many publicly financed projects. Given the relatively short lead-time of public funding, those projects are not meant to be large scale in terms of employment. On the other hand, established social entrepreneurship organizations could refer to the very large, established professional nonprofits or NGOs. These two relatively extreme situations do not allow us to draw a proposition regarding the size of social entrepreneurship organizations in general and thus we restrict our proposition to: Proposition 2: Social entrepreneurs are less ambitious in terms of employment growth than commercial entrepreneurs.

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4.3. Results on Sources of Funding Respondents of the GEM survey were asked whether any of the revenue of their activity, organization or initiative with a social, environmental or community objective originated from income, for example through the sale of products or charging for services. If yes, the respondent was then asked what percentage of total income came from the sale of products or services. Table 3 provides an overview of the sources of income of social activities, organizations, and initiatives by phase. Table 3 shows that nearly two-thirds of the social established businesses (100  37.8 ¼ 62.2%) do not derive their income from their activity, organization, or initiative. In contrast, the majority (58.0%) of the social early-stage entrepreneurially active generates at least some revenue from income. This counter-intuitive result (one might have thought that, as the social entrepreneurship organization or initiative matures, it relies more on sales than on grants and subsidies) could depict the observation of key informants that the GEM survey captures large, long-lasting, government-funded nonprofits as social established businesses as was already suggested by our key informants. However, of those social organizations and initiatives that indicated that they did, indeed, derive some revenue from sales of products and services, it is evident that the established entrepreneurs depend less on other sources than their early-stage counterparts (21% and 42%, respectively). Hence, in line with previous studies, our data suggest that social entrepreneurship organizations or activities rely on a mix of funding sources. This leads to the following proposition. Proposition 3: The funding mix of social entrepreneurship organizations or initiatives is dominated by sources other than earned income from the sale of products and services.

4.4. Results on Innovativeness In general, as suggested but not tested, social entrepreneurs are expected to show and execute some degree of innovation in their activities. Table 4 displays the degree of innovation offered by the social entrepreneurs’ activities, differentiating between early-stage and established activities. Table 3. Sources of income of social activities, organizations, and initiatives by phase, The Netherlands and Belgium pooled Social early-stage Social established activities activities Any revenue coming from income, for example, through sales of products or charging for services? (% yes) Percentage of total income that comes from the sale of products or services? Source: GEM Adult Population Survey 2009.

58.0

37.8

57.6

79.3

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Table 4. Degree of innovation of social activities, organizations, and initiatives, by phase, The Netherlands and Belgium pooled, percentage of the adult population (18–64 years of age) involved in social entrepreneurship who agree with the statement

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Social early-stage Social established activities activities Social activity offers new type of product or service (%) Social activity offers new way of producing product or service (%) Social activity offers new way of promoting or marketing product or service (%) Social activity attends new or so far unattended market niche of customer (%) If social activity did not exist, the customers’ needs would be served elsewhere in the market (%)

37.4 38.0

24.3 23.0

41.4

24.5

42.1

23.9

48.4

47.1

Source: GEM Adult Population Survey 2009.

It follows from Table 49 that social entrepreneurs perceive their social businesses or activities as quite innovative. More precisely, the results underline the innovativeness of social early-stage entrepreneurs relative to social established business entrepreneurs. Social early-stage entrepreneurs not only perceive themselves as relatively more innovative than social established ones in terms of providing, producing, or promoting a new product/service, but also in terms of entering a new or so far unattended market niche or customer. In other words, irrespective of the type of innovativeness, social early-stage entrepreneurially active individuals are more positive about their innovativeness compared with social established entrepreneurs. The same pattern holds for commercial entrepreneurs: commercial established business entrepreneurs are less positive about their innovativeness compared with their early-stage counterparts (not shown in Table 4). This finding suggests that as (social) entrepreneurial activities mature, they become less innovative. Perhaps new businesses or activities need to be innovative in order to survive in the market while established activities are less driven by this imperative. Given the similarities between social and commercial entrepreneurship with regard to innovation, we do not formulate any specific proposition. The next section discusses the propositions we have formulated as well as the research opportunities they offer.

5. Discussion of Propositions and Future Research Opportunities For the purpose of generating empirically driven propositions, we brought together insights from previous empirical investigations and complemented them with insights from GEM 2009’s unique large-scale survey data on social entrepreneurship and with insights from interviews with key informants in both Belgium and The Netherlands. In cases of common patterns between the extant literature and our results, or when a combination of the data and

18 S. Bacq et al. Table 5. Generated propositions 1a 1b

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1c 2 3

Social entrepreneurship organizations or initiatives are on average younger than their commercial counterparts and are mainly represented in the pre-start-up or infancy stage of the entrepreneurial process. The age of the social entrepreneurship organization or initiative is positively related to the availability of entrepreneurial skills and is related to the type of the leadership. The age of the social entrepreneurship organization or initiative is negatively related to the involvement of government funding in the sector in which it operates. Social entrepreneurs are less ambitious in terms of employment growth than commercial entrepreneurs. The funding mix of social entrepreneurship organizations or initiatives is dominated by other sources than earned income from the sale of products and services.

the insights from the key informants gave the occasion to do so, we generated propositions. Table 5 lists them. When considering the propositions derived in this study and reading Table 5, an image of social entrepreneurship organizations or initiatives emerges that raises questions about the actual entrepreneurial behavior of this group. First, the socially entrepreneurially active share of the adult population seems to have difficulties moving into more mature stages of the entrepreneurial process (Proposition 1a), which is further reflected in the age of the activity (Proposition 1b) or, put differently, the survival of the social organization or initiative. Furthermore, one could wonder whether the age of the social organization reflects the presumed complexities of this type of activity, including multiple goals, as was suggested by Hoogendoorn and Van der Zwan (2011), or whether this type of entrepreneurship appeals to a certain type of individual, such as idealistic individuals who draw their legitimacy from social and moral sources and who do not possess the required entrepreneurial skills and drive. Second, it is worth noting the low growth ambitions of social entrepreneurs in terms of job creation, in particular for established social entrepreneurs (Proposition 2) compared with commercial entrepreneurs. It is considered a stylized fact of small businesses that those that grow, even at a modest level, are more likely to survive (Phillips and Kirchhoff 1989, Storey and Greene 2010). Whether or not this also holds for social entrepreneurship organizations is currently under researched but it seems plausible to assume that those initiatives that are able to grow are more likely to generate higher levels of social wealth or social impact. Evidently, it remains unanswered whether social entrepreneurs are indeed less ambitious than their commercial counterparts, whether their prospects in terms of opportunities and income generating make them more realistic and hence modest in their growth ambitions, or whether employment growth is perceived as an inappropriate measure for the ambition of social entrepreneurial ventures. Third, an additional relevant item of interest for this discussion, and in particular for policy makers, is the role of subsidies versus revenue generation by charging for products and services, and the subsequent survival prospects of

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the social organization. Indeed, social entrepreneurship organizations’ funding mix is dominated by other sources than earned income from the sale of products and services (Proposition 3). Sources of funding and sustainability or viability of social organizations are recurrent topics in the social entrepreneurship literature (Boschee and McClurg 2003, Sharir and Lerner 2006, Weerawardena and Sullivan Mort 2006, Haugh 2009). Being dependent on governments and single stakeholders, such as wealthy individuals, private corporations and foundations, is associated with lower survival prospects and implies a risk of failure or bankruptcy once funding stops. In addition, if these particular sources of income (e.g., gifts, grants, bequests, and donations) are to be used for predefined purposes only, they will restrict autonomous strategic decision-making and will affect a social venture’s long-term success and viability (Haugh 2009). The collective logic that seems to dominate the discourse on social entrepreneurship is that business and entrepreneurship are the way forward for social organizations (Parkinson and Howorth 2008), including generating independent sources of earned income. Whereas fewer subsidies and more earned income may increase the survival prospects of social initiatives, it may also leave the most pressing social and environmental needs unaddressed since social organizations purposely locate their activities in areas where markets function poorly (Di Domenico et al. 2010) and with a limited potential to capture the value created (Mair and Martı 2006). In all, the relationship between subsidies, earned income strategies and performance in terms of impact and social wealth creation offers a promising path for future research. The next section discusses some limitations of this research and its instrument validity, as well as the research opportunities it opens up to.

6. Context Specificity, Measurement Validity, and Limitations This section consists of two subsections. The first subsection concerns the context specificity and the measurement validity of the data and reflects some additional insights from the key informants. The second subsection presents this study’s limitations and expounds on the future research avenues it offers for the field of social entrepreneurship. 6.1. Context Specificity and Measurement Validity As stated in the Introduction, the methodology to measure entrepreneurship as applied by the GEM was designed as a global measurement instrument with the objective to capture the different perspectives that exist across regions and countries. At the same time, it has been repeatedly suggested that social entrepreneurship manifests itself differently in different socioeconomic contexts (Nicholls 2006a, 2006b, Kerlin 2009, Mair 2010). This subsection aims to address the specificity of the Belgo–Dutch context enriched with additional insights from our local key informants with regard to the validity of the data.

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First, the context in which our results are to be interpreted needs explanation. The Belgo–Dutch context on which this study is based is characterized by, besides a high level of income and a good functioning market, a welfare state regime that delegates a large proportion of public service delivery to private and non-governmental organizations, financed by collective arrangements (Burger et al. 1999, Mertens et al. 1999, Salamon et al. 2003). This results in a highly developed nonprofit sector mainly in domains such as health, education and social services. Even though public financial support is increasingly under pressure, support for strategic development of the social enterprise sector remains in the hands of public institutions. These socio-economic-political characteristics differ from other regions in the world, such as US, where social entrepreneurship is characterized by the influence of the market, reflecting a long tradition of market reliance (Mair and Martı 2009, Bacq and Janssen 2011). The strong logic of subsidization was one of the items that was repeatedly put forward by our key informants and that is typical to the Belgo–Dutch context. This is directly reflected in Proposition 1c that suggests a negative relationship between the age of a social entrepreneurship organization or initiative and government funding, and in Proposition 3 that concerns the funding sources of social initiatives. Bearing the suggestions of Mair (2010), Kerlin (2009), and Nicholls (2006a, 2006b) in mind – that the occurrence and type of social entrepreneurship manifests itself differently in different contexts – requires capturing contextual considerations in our propositions. However, how to meaningfully distinguish between different contexts is still an under explored issue in the literature. From an institutional perspective, a first distinction could be made between an institutional voids perspective (i.e., a context characterized by the absence of property rights, well-functioning markets, active governments, among others) (Mair and Martı 2009, Dacin et al. 2010) and an institutional support perspective (i.e., a context characterized by the presence of favorable institutions). A more fine-grained approach by Mair (2010) suggests that the occurrence and types of social entrepreneurship may well vary across different types of capitalism (Hall and Soskice 2001, Amable 2003, Jackson and Deeg 2008). Distinct institutional configurations generate a particular systemic ‘logic’ of economic action of influence on social entrepreneurial activity, including the type of needs or opportunities these entrepreneurs address. In this line of reasoning, the Belgo–Dutch context reflects cooperative economies in which the role of the government is considered dominant in the redistribution of wealth and the care of social needs. Further exploration of the different typologies of contexts including the ‘varieties of capitalism’ seems a fruitful path for future research at the national or regional level and opens up new research opportunities to understand the mechanisms at play within a given context. Next to the context in which our results need to be interpreted, issues of measurement and formulation within this context are not to be ignored. This is particularly critical given the background of definitional ambiguity and the relative newness of large-scale, quantitative data collection in the field of social entrepreneurship. Although the GEM 2009 questionnaire was based on

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earlier versions used in UK and US (Lepoutre et al. 2011), the initial question used by the GEM consortium to identify social entrepreneurs underlines the broad perspective of the concept and raises questions about what it is that this survey measures in a particular context. Mair (2010) puts it eloquently by stating that social entrepreneurship not only means different things to different people but also different things to different people in different locations. To be able to obtain a better, overall understanding of the small group of respondents in the Belgo–Dutch context who answered positively to the defining question ‘Are you, alone or with others, currently trying to start or currently owning and managing any kind of activity, organization or initiative that has a particularly social, environmental or community objective? This might include providing services or training to socially deprived or disabled persons, using profits for socially oriented purposes, organizing self-help groups for community action, etc.’, we asked our key informants to reflect on this question from the perspective of the group they represent. That is to say, we gathered key informants’ perceptions of how the respondents may have interpreted the question. Two main insights arose, including a mixture of professional language used in the defining question and a certain resistance to social entrepreneurship. First, it followed from the interviews that the coexistence of different perspectives of social entrepreneurship reflects a mixture of professional language. Social entrepreneurship comes into existence at the intersection of state, market, and civil society (Nicholls 2006a, 2006b, Kerlin 2009) and hence can be characterized as a mixture of related but different phenomena, each with its own logic of exchange, institutions associated with it, types of goods and services, and their own professional language.10 A mixture of the latter is reflected in the question used in the GEM 2009 survey. It was suggested by the key informants that, at least in Belgium and The Netherlands, the professional language from one sector does not resonate with the language of another sector. In particular, it was indicated that terms used in the first part of the question, such as ‘owning and managing’, strongly refer to business logic. On the other hand, the examples used in the second part of the question (e.g., ‘providing services or training to socially deprived or disabled persons, using profits for socially oriented purposes, organizing self-help groups for community action’) were perceived as being associated with the nonprofit sector, which is heavily government-subsidized in those two countries. As a result, the key informants who shared this understanding of the question stated that respondents from the nonprofit sector would answer negatively to this question because they do not recognize themselves in the business language. The same holds for more business-oriented respondents who may not identify with the nonprofit rhetoric. Even if we might want to label them as social entrepreneurs, we will not capture them with this question because they cannot identify their activities with the examples used at the end of the question that are more related to traditionally subsidized nonprofit initiatives. Hence, key informants argued that only a very small group of respondents is likely to feel comfortable with the language used in the question and therefore identify themselves as ‘social entrepreneurs’.

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Second, our interviewees indicated a certain resistance to social entrepreneurship. According to some of the Dutch interviewees, given the omnipresence of the government in the provision of social services (in practice outsourced to private nonprofits), the Dutch social sector is perceived as over organized and, as long as there is no lack of resources (i.e., subsidies), entreprendre in the social sector is not a natural thing to do. Belgian key informants also put forward this very strong logic of subsidization. One of them explained the low level of social entrepreneurial activity by the minor presence of financing models in Belgium and that one has to know rich families to leverage funds. Hence, initiatives that blur the boundaries between private and public sectors may cause a certain resistance to social entrepreneurship and may influence the adoption of social entrepreneurship in the Belgo– Dutch context. Both observations (i.e., mix of professional language and a certain resistance to social entrepreneurship) may explain the relatively low rate of social entrepreneurial activity found in Belgium and The Netherlands compared with other countries. What is even more interesting to be learned from these observations, with the Belgo–Dutch context being illustrative, is that stretching the concept of social entrepreneurship to a worldwide comparison may provide us with a false understanding of differences in degree of the phenomenon as long as we do not dispose of a substantive understanding of local contingencies including language, logics, and values. So, even when a call for more quantitative research is a valid one, data do not speak for themselves and require conceptual refinement and hence a detailed understanding of differences in kind of social entrepreneurial activities emerging from different contexts. 6.2. Limitations A consequence of the relatively limited number of social entrepreneurs in our dataset restricts us in the methodological options available to explore the data. For instance, it was not possible to split our sample into different categories of social entrepreneurs, such as those who start a new venture and those who do not, or distinctions based on legal structure (for-profit and nonprofit), type of industry, size or growth ambition. On the contrary, we chose to explore the data by focusing on different organizational characteristics and, for this purpose, we limited our analyses to the use of descriptive statistics. Applying a multivariate setting that allows investigating characteristics in relation to each other is a valuable next step. Our research suggests above all that (large-scale) data on social entrepreneurial activity cannot be interpreted regardless of their context. As such, our findings could be addressed either as unique characteristics and dynamics of social entrepreneurship in its proper context or as issues of measurement and formulation. Based on our interviews with the field’s key informants, we have the impression that the initial question intended to identify the social entrepreneurs does not measure the prevalence of ‘social entrepreneurship’ but rather the active involvement or active leadership in addressing social,

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environmental or community needs. Whether this is typical for the Belgo– Dutch context or applies to a broader range of countries remains a subject for future research.

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7. Conclusion The purpose of this study was to generate empirically driven propositions relating to a phenomenon that has increasingly attracted researchers’ attention for almost two decades: social entrepreneurship. This objective was also sketched in response to the currently limited knowledge of the distinguishing features of social entrepreneurship organizations based on quantitative studies. Therefore, this study adopted a quantitative, exploratory and proposition-generating approach to key questions about social entrepreneurship organizations or initiatives and contrasted them with our understanding of commercial entrepreneurs. We applied an inductive approach using different sources of information: extant empirical literature, data from the GEM 2009 survey on social entrepreneurship for Belgium and The Netherlands, and qualitative views from in-depth interviews with key informants. Five propositions were generated. Although these propositions are still to be thoroughly tested, they seem to question the taken-for-granted innovative and ambitious picture of social entrepreneurship that has been widely spread in the media and successful cases of social entrepreneurs as a subject of scholarly endeavors. That is, social entrepreneurship’s entrepreneurial core might not be as strong as expected and the young age of such initiatives might be due to a certain lack of entrepreneurial skills and ambition – or to a high dependence on government subsidies. Next to these propositions, additional insights gained from interviews with local experts demonstrated that analyses based on newly generated quantitative data on a poorly understood concept require substantive understanding of local contingencies. Hence, the same analyses replicated in different types of contexts are likely to yield different results or may yield somehow comparable results but probably for different reasons. Overall, this study not only extends our current knowledge of the distinguishing organizational features of social entrepreneurship, but our mixmethods approach also generated empirically grounded propositions that hold promise in helping this particular field to evolve beyond descriptive purposes toward more predictive research with a critical note on measurement applicability and validity throughout different contexts. Acknowledgements We would like to express our appreciation to all key informants for their cooperation and for sharing their opinions and expertise with us. In addition, our thanks go to Jolanda Hessels, Frank Janssen, Jan Lepoutre, Enrico Pennings, Andre´ van Stel, Roy Thurik, and Sander Wennekers for their constructive comments on earlier versions of this paper, which were presented at the Seventh Annual Satter Conference on Social Entrepreneurship,

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November 2010, New York, USA, and at the 24th RENT Conference, November 2010, Maastricht, The Netherlands. The paper was written with financial support from the Intercollegiate Center for Management Science, Erasmus School of Economics, and the research program SCALES (www. entrepreneurship-sme.eu) carried out by Panteia/EIM and financed by the Dutch Ministry of Economic Affairs.

Notes 1. See also www.gemconsortium.org. 2. ‘Nascent social entrepreneurship,’ ‘young social business entrepreneurship,’ and ‘social established 3. 4.

5. 6. 7. 8. 9. 10.

entrepreneurship’ are expressions borrowed from the GEM terminology. See Section 3.1 on ‘Data Sources and Definitions’ for an explanation of their meaning. Different schools of thought have different opinions on the relationship between earned income and mission. See Bacq and Janssen (2011), Defourny and Nyssens (2010), and Hoogendoorn et al. (2010) for an overview of different schools of thought and their distinguishing features. In contrast to the aggregate level data that are available for all the 49 participating countries, the microlevel data are available only for the national team of the country concerned; data from the other participating countries are not freely available. Since this study is the result of cooperation between the Belgian and the Dutch teams, we were able to use the data relating to these two countries. For more details on the methodology of measuring social entrepreneurial activity within the GEM, see Terjesen et al. (2012). We chose to consider this category of respondents as social entrepreneurs. They are thus not counted as commercial entrepreneurs. All interviews were recorded and transcribed – their average length was 1 hour. Data on the number of volunteers and part-time workers are not available for commercial entrepreneurs. These specific measures for innovation are available only for social entrepreneurs, not for commercial entrepreneurs. The intermediate space at the crossroad of market, state and civil society has been claimed to represent: associations (Streeck and Schmitter 1985), third sector (Pestoff 1992, Evers and Laville 2004), social economy that incorporates social enterprises (Nyssens 2006, Defourny and Nyssens 2009), social ventures (Kievit et al. 2008), and social entrepreneurship (Nicholls 2006a, 2006b).

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28 S. Bacq et al. Appendix Table A.1. List of key informants and their involvement in social entrepreneurship Profession

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Belgium Philippson Foundation

Ashoka representative in Belgium Researcher in CSR at Louvain School of Management Prof. in economics at Universite´ Catholique de Louvain / Founder of the EMES network Project manager at SAW-B (Walloon and Brussels Alternatives Solidarity) Post-doctoral researcher at Oxford University Coordinator of the Advising Cell of CREDAL (‘Solidarity money bank’) The Netherlands Researcher and account manager for CSR in SME at EIM Business and Policy Research Prof. of Volunteering, Civil Society and Businesses and of Strategic Philanthropy at Erasmus University, The Netherlands Ass. Prof. at the Department of Public Administration and Political Science, Nijmegen University, The Netherlands/EMES representative Director SSO (Foundation for social entrepreneurs)

Involvement in social entrepreneurship

Interview date

Belgian foundation aiming to stimulate sustainable human development in Central and Western Africa through the support of African social enterprises Belgian branch of the global organization that invests in innovative social entrepreneurs PhD dissertation on ‘Toward the stakeholder company: Essays on the role of organizational culture, interaction, and change in the pursuit of corporate social responsibility’ Researcher in social economy for numerous years

June 15, 2010

SAW-B supports the development of an economy based on the respect of human and environmental values PhD dissertation on ‘Explaining Organizational Diversity in Fair Trade Social Enterprises’ 90% of CREDAL’s clients are nonprofit organizations, the remaining are cooperatives

Researcher and account manager on studies of and advice on environmental policy, effects of environmental legislation, socially responsible enterprising, and sustainable consumption Prof. since 2003 with research focus on strategic philanthropy, volunteer/nonprofit management, corporate community involvement, and business-society partnerships

June 16, 2010 June 16, 2010

June 17, 2010

June 18, 2010 June 24, 2010 July 6, 2010

June 15, 2010

June 25, 2010

Research focus on urban regeneration and housing, government - civil society relationships and innovations in governance

June 29, 2010

Entrepreneur in the creative industry and director at ‘Stichting Sociaal Ondernemerschap’

June 29, 2010 (continued )

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Table A.1. (Continued) Profession

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Director Franssen and Scholten consultancy Consultant Ashoka Netherlands Chairman Social Venture Network Netherlands Consultant GreenWish and PhD Social Entrepreneurship and the Business Sector (UVA)

Involvement in social entrepreneurship Author of the book ‘Sociaal Ondernemen in Nederland’ (Social Entrepreneurship in The Netherlands) and one of the founders of SROI method Dutch branch of the global organization that invests in innovative social entrepreneurs Chairman of a support network for entrepreneurs in the field of Social Responsibility and Sustainable Development As a consultant at GreenWish, she supports initiators and entrepreneurs who start social initiatives and promotes this type of initiatives at public authorities, and private institutions

Interview date July 1, 2010

July 1, 2010 July 1, 2010

July 2, 2010