Chapter 9: The dynamics and long-term stability of social enterprise
The research literature pays relatively little attention to the long-term dynamics of social enterprises. This is an especially important lacuna because all social enterprises contain intrinsic tensions that can lead to long-term instability, fundamental transformation or demise. In particular, social enterprises try to balance market success with social impact, and a host of different organizational forms have been devised to achieve different versions of this balance. This chapter offers a new conceptual framework, based on the concepts of stable and unstable equilibrium, for understanding the long-term stability of different forms of social enterprise. This framework allows us to analyze the kinds of instabilities associated with different organizational forms of social enterprise, hence the likelihood of their success in maintaining their intended balance of social and market goals. The utility of this framework is illustrated here by analyzing case studies of six ventures, spanning several different nonprofit and for-profit arrangements, each coping with the tensions between achieving social purpose and market success. While this research is in its early stages, the analysis suggests several implications for the practice of social entrepreneurship. In particular, social entrepreneurs must be explicit about the balance of social impact and market success they seek, they must adjust their funding and governance arrangements to address that balance, they must anticipate and plan for the long term as well as for the immediate future, and they must be willing to experiment and make adjustments as experience and knowledge about new and classical forms of social enterprise continue to build.
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