How does a social startup decide for the market? It may depend on the type of founder

How does a social startup decide for the market? It may depend on the type of founder

How does the founder of a social enterprise decide to start a “hybrid” business instead of a traditional charitable organization? According to a new study by Stefan Dimitriadis, Matthew Lee, Lakshmi Ramarajan and Julie Battilana, the decision has a lot to do with the genre of the founder.

by Carmen Nobel

People-Talking-Hats.jpg2016 Christine Su, co-founder and CEO of PastureMap. The for-profit software company helps sustainable ranchers to register their grazing practices on mobile devices. (Photo courtesy of Echoing Green.)
A division of labor traditionally separates companies from charities: companies focus on trade, while charities engage in social activities. But more and more, the founders of social enterprises interested in improving society are following hybrid business models that combine both aspects. Instead of relying solely on donations or grants, hybrid organizations generate their own business income, enabling them to pursue a social mission.

Although hybrid models can improve financial sustainability, they also present entrepreneurs with new challenges. Hybrids are at risk of losing sight of their social mission in their quest for income generation. It can also be risky and difficult to finance a hybrid business: venture capitalists may be rejected by the idea of ​​financing an organization that cares about their social task, while charitable foundations of an organization that looks skeptical of companies stand.

So how does the founder of a social enterprise decide to start a hybrid charity instead of a traditional charity? New research suggests that the decision has a lot to do with the genre of the founder.

Overall, social enterprises created by women are much less involved in income-generating business activities than men. However, in communities where women’s leadership of traditional women is more of a cultural norm, women-owned social enterprises are more likely to be entrepreneurial.

These are some of the key findings of the study, “Blurring Borders: Gender and Local Community Interaction in the Commercialization of Social Enterprises,” published in a recent issue of the journal Organization Science. The paper was written by Stefan Dimitriadis, a Ph.D. student in the Department of Organizational Behavior at Harvard Business School; Matthew Lee, Assistant Professor of Strategy at INSEAD; Lakshmi Ramarajan, Associate Professor of Business Administration with Anna Spangler Nelson and Thomas C. Nelson; and Julie Battilana, Professor of Business Administration with Joseph C. Wilson at HBS and Professor of Social Innovation with Alan L. Gleitsman at the Kennedy School of Harvard.

“While cultural beliefs that isolate women from commercial activities may result in women using their business activities less frequently than their male counterparts, these effects are tempered by cultural beliefs about gender and activity. write. “The presence of female entrepreneurs in the same community mitigates the gender role of founders in the use of businesses.”

Previous research has focused on the decision to choose between hybridization and social enterprise. For example, in one study, Battilana and Lee discovered that a parent who worked in a for-profit organization, unlike a non-profit organization, would increase the chances of finding a business in Canada. commercial character.

The team hypothesized that gender-related cultural norms could also play a role.

“Gender-based cultural beliefs connect women with personal qualities such as charity, altruism and communalism, qualities that are compatible with the goals and motivations of the social sector,” they write. “Men, on the other hand, are seen as competitive stereotypes, risk-taking, and agent traits that are compatible with the goals and motivations of the business world.”

To determine whether gender plays a role in the social enterprise sales strategy, researchers analyzed a sample of 584 applications for a new social initiative competition sponsored by Echoing Green, a global non-profit organization. and networking opportunities for new leaders of social change. The competition is prestigious Past recipients have been highly successful in their missions, including Teach For America, a nonprofit organization that recruits younger graduates to teach in downtown areas, and Carbon Lighthouse, a business organization that helps businesses. to neutralize their buildings. (To avoid this, Teach For America was founded by a woman and a carbon lighthouse by two men.)

The researchers then developed a five-point marketing scale ranging from a project based solely on non-commercial funding sources (charity donations and core grants) to five for commercial-only based projects. Sale, for example.

The researchers found that, for foundresses, the number of women companies in the community of applicants was positively linked to the market choice.

While men rather marketed social projects as a whole, the effect seemed to be related to the presence of women in companies in particular communities; Researchers tested the effects of female leadership in politics and civil society, but found no similar effect.

Then, over a two-year period, they analyzed a vast array of new US nonprofit organizations that represented 31,160 new companies listed in the NCSC National Guide NonStar Research Database in Canada. from the National Center for Charitable Statistics. ,

The results of this second analysis reflected the first: Overall, new women-led non-profit organizations were much less inclined to market social initiatives than male founders. However, women-led organizations in areas with a higher concentration of women in leadership positions are much more likely to market their businesses than those in which women-owned businesses are in short supply.

The study reflects Eching Green’s own observations regarding its application basis.

“Echoing Green has learned over the course of its 30-year history that candidates identified by women on our scholarship offer fewer commercialized social enterprises, and this new research confirms the wider relevance of this data and our anecdotal experiences – the role of gender in society, risky marketing, “says Liza Mueller, director of operations and knowledge management at the New York organization.

“The results of research on the proximity and presence of women in leadership positions confirm our theory of change that different communities – in a variety of dimensions – are critical to increasing global equity and sustainability,” says Mueller. “We believe that improved access to other leaders and models, as well as resources that include quality legal advice in choosing a suitable revenue model, can help remove cultural and structural barriers.” Leadership and organizational development, especially social and non-executive executives.

Beyond the implications for social enterprises, the results showed how cultural beliefs can influence women’s entrepreneurship in general. “The presence of women entrepreneurs in a local community is likely to weaken cultural beliefs by separating women from commercial activities,” the researchers write. “We hope that our study will allow further research into the overlapping of gender and organizational processes, as well as the challenges and opportunities that it offers to individuals and society.”

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