Shaping Social Enterprise

Understanding Institutional Context and Influence

Janelle A. Kerlin

• Publisher: Emerald Publishing Limited
• Year: 2017
• Print ISBN: 9781787142510
• eBook ISBN: 9781787146310
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

'Shaping Social Enterprise' offers the first tested framework that helps identify institutional influences affecting social enterprise. For well over a decade, scholars and practitioners have known that social enterprise looks different in different contexts but few have attempted to understand why. Kerlin's work in this area is the first to consider the influence of large institutions such as government, economy, civil society, and culture on the development of social enterprise. This book provides an in-depth assessment of Kerlin's theoretically-based framework for understanding these institutional and other influences by means of quantitative analysis as well as qualitative critiques from eight countries that help validate and refine it. The concluding chapter offers a revision of the framework based on the critiques. New features include more attention to culture and micro- and meso-level forces as well as the introduction of optional framework components that address rarely occurring country situations. Two new social enterprise country models are also added and new applications of the framework are detailed.

CHAPTER
1

The Macro-Institutional Social Enterprise Framework: Introduction and Theoretical Underpinnings

Janelle A. Kerlin

The concept of social enterprise continues to raise the interest of people around the world. From practitioners to policymakers, activists, and funders of the social good, social enterprise has captured the imagination and hopes of a growing cross-section of society that seeks to find a more sustainable answer to the problems of society (Lundstrom, Zhou, von Friedrichs, & Sundin, 2014). Though definitional issues remain, in practice, many have simply seized upon its core components: market-based revenue generation with social benefit as a primary aim. Indeed, a vast and growing number of diverse activities, programs, and organizations actualize this concept on a daily basis across the globe. With its seemingly limitless opportunities and enduring fascination, the question of what makes social enterprises what they are in today’s societies has become a central question. In an attempt to address this question, this volume considers the influence on social enterprise of some of societies’ most powerful forces: institutions.

Institutions and their role in the making of particularly situations of poverty and poverty alleviation have gained increasing attention as scholars seek to understand root causes (Acemoglu & Robinson, 2012; Banerjee & Duflo, 2011; Hazenberg, Bajwa-Patel, Mazzei, Roy, & Baglioni, 2016; Mair, Martí, & Ventresca, 2012; Roy, McHugh, Huckfield, Kay, & Donaldson, 2015). Institutions can range from the largest macro-level organizations found on national and international levels to the smallest entities on the local level. These can include the more obvious national, regional, and local governments as well as the less obvious institutions of civil society, the market economy, and entities working on an international level such as the European Union. In addition to these formal institutions, the informal institution of culture, expressed in the values, norms, and beliefs of societies, is also of interest. Indeed, there is evidence that all of these institutions help shape many aspects of social enterprises from their organizational form to their governance structure, program activities, funding strategies, outcomes, and many others even their incidence in a country (Kerlin, 2009, 2013, 2015; Stephan, Uhlaner, & Stride, 2015). Given that these institutions look different in different countries, it follows that the social enterprises they influence will look different across countries as well. Understanding how institutions shape social enterprises can not only help explain why and how they look different in different places, but also assist in knowing where to intervene to support their work in diverse contexts.

Indeed, understanding social enterprise has become a preoccupation for an increasing number of researchers from a growing number of fields (Doherty, Haugh, & Lyon, 2014; Lundstrom et al., 2014). Until recently however, the only research that discussed the influence of institutions on the development of social enterprise was qualitative case studies that often compared social enterprise across countries or regions (Borzaga & Defourny, 2001; Chell, Nicolopoulou, & Karataş-Özkan, 2010; Dacanay, 2004; Defourny & Kim, 2011; Defourny & Nyssens, 2010; Galera & Borzaga, 2009; Kerlin, 2006, 2009; Mair et al., 2012; Nyssens, 2006). Based on this work, there is now a general consensus both within and without this group that differences in social enterprise across countries can be explained in part by variations in institutional context (see also Austin, Stevenson, & Wei-Skillern, 2006; Dacin, Dacin, & Matear, 2010; Defourny & Nyssens, 2016; Young, Searing, & Brewer, 2016).

However, much remains to be done in this area specifically in terms of systematic research to identify patterns of institutional influence across countries and their discrete influence on social enterprise. Though there was early reference to the influence of government, market, and civil society institutions, these were not examined systematically to understand patterns across countries until recently. Kerlin (2009) made a first attempt with her preliminary typology of social enterprise country models based on qualitative country and regional studies in her edited book, Social Enterprise: A Global Comparison. However, this foundational study was lacking in theoretical and quantitative rigor and the work of other authors was in its infancy as well. Indeed, based on an extensive review of research on hybrid organizations, Doherty et al. (2014, p. 429) suggested that the field address among other questions: “To what extent have different institutional frameworks and contexts supported or discouraged the establishment of hybrid organizations?”

Unfortunately, research on this and related questions has moved slowly in part due to a lack of data but also a reliance on one or two approaches to studying the phenomenon. This included either qualitative country case studies of social enterprise as discussed above, theoretical musings on the topic (Kerlin, 2013), or, with the newly available global entrepreneurship monitor (GEM) data (Lepoutre, Justo, Terjesen, & Bosma, 2013), advanced quantitative analyses that attempt to link country-level variation in institutions with variation in social enterprise that sometimes involved testing of basic theory (Estrin, Mickiewicz, & Stephan, 2013; Hechavarría, 2016; Hoogendoorn & Hartog, 2011; Puumalainen, Sjogren, Pasi, & Barraket, 2015; Stephan et al., 2015). What was lacking was a framework approach that rigorously incorporates all three: theoretical development of a framework tested by qualitative and quantitative empirical research that mutually informs one another (Haugh, 2012). To address this weakness in the research, this volume proposes to test a theoretically-based framework through quantitative and qualitative research with the goal of creating a tool that identifies different configurations of informal and formal macro-institutions that shape specific social enterprise country models.

Indeed, the focus of this book is Kerlin’s Macro-Institutional Social Enterprise (MISE) framework originally introduced in an academic journal article in 2013 (Kerlin, 2013). The article first established the theoretical underpinnings for the framework by drawing on the theory of historical institutionalism, a discussion briefly reviewed in this chapter. Based on this, it described and illustrated apparent causal paths between major socioeconomic institutions that appear to influence the development of social enterprise in countries. This is also described below. To preliminarily test the framework, the article included limited case studies of five countries which showed that socioeconomic country-level data representing the institutions matched in a predictable fashion with varying characteristics of the social enterprise phenomenon in those countries. Social enterprise models for each type of country social enterprise situation were then created.

To further test the MISE framework, Kerlin solicited social enterprise researchers from around the world through a call for papers to apply the framework to their countries and provide a qualitative critique of it in the process. Four country critiques were selected from this process. Another researcher, Thema Monroe-White, used multilevel regression analysis to run an initial quantitative test of the framework drawing on the GEM data. Though missing data on civil society, the quantitative analysis showed that specific configurations of macro-level institutions could explain a significant part of the variance in social enterprise across countries. The four country critiques and the quantitative critique were published in a special issue of the Social Enterprise Journal edited by Kerlin in 2015 (Kerlin, 2015).

This volume picks up this research stream by not only including the four qualitative country critiques (South Korea, Spain, Australia, Chile) from the Social Enterprise Journal special issue but by also adding four new country critiques of the framework (Sweden, China, Zambia, Romania). With the help of Muhammet Emre Coskun, it also updates the quantitative analysis by rerunning it with newly available civil society data as reviewed in Chapter 2. The concluding chapter of this book then draws on the critiques to revise the MISE framework and associated social enterprise country models. The newly revised framework is therefore published here for the first time.

Understanding Terms

Before proceeding further, we clarify here some of the commonly used terms in the book. The first term, as expected, is social enterprise. We use a broad definition to capture the large variation in what is considered social enterprise in the countries in this volume and elsewhere. Following Kerlin (2009), we use the definition of any market-based approach to address social issues where social benefit is a primary aim and a business source of revenue provides support for an activity or organization. We assume that environmental concerns are subsumed in this definition. Generally speaking, we ascribe to a view that allows for more narrow definitions of social enterprise to be crafted at the country level to accommodate different contextual forces that are shaping it in the first order.

Other terms involve the broader concept of institutions. We use a definition of institutions by Scott (2008, p. 49) that encompasses both formal and informal structures that have achieved a high level of resilience: “Institutions are comprised of regulative, normative, and cultural-cognitive elements that, together with associated activities and resources, provide stability and meaning to social life.” Formal institutions are, “structures of codified and explicit rules and standards that shape interaction among societal members” (North, 1990 in Hechavarría, 2016, p. 1026). Informal institutions are “enduring systems of shared meanings and collective understandings that, while not codified into documented rules and standards, reflect a socially constructed reality that shapes cohesion and coordination among individuals in a society” (Scott, 2005 in Hechavarría, 2016, p. 1026). Importantly, North (1990) proposes that a country’s culture is a reflection of its informal institutions. Also relevant from sociology is the idea that the logic and rationale underlying formal institutions (seen as solutions to societal problems) are based in informal institutions (North, 1990; Scott, 2005). Thus, we share the view that cultural values undergird and shape formal institutions.

In this work, we consider both formal institutions and informal cultural institutions on three levels of society: macro, meso, and micro. Drawing from political science, macro-level institutions include government, economy, and civil society presence on a national-level and macro-level cultural values are those that can be isolated at a country level. Meso-level institutions are regional governments including provinces and counties as well as large municipalities that often have these designations (Keating, 2013). Meso-level institutions can also be regional economies and regional-level civil society actors such as federations, networks, and capacity-building intermediaries that support and connect micro-level organizations among themselves and with higher order entities (Mair et al., 2012; Shea, 2011). Micro-level institutions are local-level governments, civil society, and economies. We use the term “micro-level stakeholders” to include both individuals and local organizations (Hazenberg et al., 2016). Finally, though varying cultural values are found on the meso- and micro-levels we find that ‘meso- and micro-level intangible resources,’ as we term them, to be important and prominent manifestations of the values on these levels and thus our focus. These intangible resources include social capital, community resiliency, and mutual dependency among others (Putnam, 1993). Much of our orientation here was informed by details found in the qualitative country chapters and summarized in the concluding chapter.

The Theory of Historical Institutionalism¹

The MISE approach proposes that macro-institutions and processes can account for a large part of the variation in social enterprise across different countries. This is in line with the theory of historical institutionalism which suggests that institutions, both formal and informal, can create causal paths whereby the development of newer institutions is shaped by both the constraints and supports offered by prior and present institutions. This approach to institutions also emphasizes the importance of underlying power relationships, both in terms of how power is involved in the creation of institutions and how institutions then create and structure power in different ways. Specifically, historical institutionalism asserts that “Effective institutions influence – at the individual as well as the collective level – beliefs, normative commitments, and preferences. Their major ...

Table of contents

• Cover
• Dedication Page
• Chapter 1 The Macro-Institutional Social Enterprise Framework: Introduction and Theoretical Underpinnings
• Chapter 2 An Updated Quantitative Assessment of Kerlin’s Macro-Institutional Social Enterprise Framework
• Chapter 3 South Korea: Government Directed Social Enterprise Development: Toward a New Asian Social Enterprise Country Model☆
• Chapter 4 China: The Diffusion of Social Enterprise Innovation: Exported and Imported International Influence
• Chapter 5 Romania: Fostering Social Enterprise in a Post-Transitional Context: Caught between Social Enterprise Country Models
• Chapter 6 Spain: Understanding Social Enterprise Country Models across Time and Sub-Country Regions☆
• Chapter 7 Chile: The Influence of Institutional Holdovers from the Past on the Social Enterprise Country Model☆
• Chapter 8 Sweden: Tracing Social Enterprise across Different (Social) Spheres: The Interplay among Institutions, Values, and Individual Engagement
• Chapter 9 Zambia: Innate Resource Legacies and Social Enterprise Development: The Impact of Human Agency and Socio-Spatial Context in a Rural Setting
• Chapter 10 Australia: Understanding Future Social Enterprise Model Development through Individual-Level Policy Discourse Analysis☆
• Chapter 11 Conclusion: Revising the Macro-Institutional Social Enterprise Framework
• Index