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Year: 2019
Published in: Social Enterprise Journal
Cited as: Tykkyläinen, S. (2019). “Why social enterprises pursue growth? Analysis of threats and opportunities.” Social Enterprise Journal 15(3): 376-396.

Abstract

The purpose of this study is to extend theoretical understanding on social enterprises’ growth orientation. Inspiration is drawn from the fundamentals of prospect theory and threat-rigidity theory, as the role of external threats as a source of growth orientation is largely absent from the social enterprise growth literature. According to previous studies, social enterprises grow mainly because of their social mission and social opportunities.Design/methodology/approach The qualitative research is conducted by analysing thematic interviews from seven, growth-oriented social enterprises operating in Finland.Findings The study provides novel insights on social enterprises’ growth orientation by drawing attention to the plurality of growth motivations and showing the importance of perceived threats as the origin of their growth pursuits. Goals of growth are defined mainly in terms of organisational and financial performance of the firm.Practical implications Social enterprise managers and boards are encouraged to cooperate in analysing the significance of external threats and opportunities for their business and to concentrate on defining measurable social goals to ensure balanced growth.Originality/value The study demonstrates that the behavioural theories offer a beneficial departure point for studying social venture growth. By clarifying the role of the perceptions of the firm’s internal actors and showing that growth is sometimes seen as a response to external threats, the study increases theoretical understanding on social enterprises’ growth orientation.

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Future Research

The following areas for future research are suggested:
1) the potential of applying the premises of behavioural theories in investigating social enterprises’ risk-taking and decision-making is regarded substantial. The context dependence of risk-preferences arouses questions such as are social enterprises more growth-oriented during the recession than in economic boom or vice versa? Are there differences in how the internal actors of the firm evaluate the prospect of gains and losses, and if so, under which kind of circumstances do the assessments differ?
2) testing findings from firm growth research in social enterprise context could be beneficial to see whether and how managers’ growth motivation and specified goals of growth influence on social enterprises’ realised growth.

Social Entrepreneurs

“The findings have implications also for practitioners. The internal actors of social enterprise are encouraged to create a shared understanding on why growth is considered important for the firm: is the growth a reaction to an external threat, driven by an opportunity or perhaps by an internal motivation? If external environment is the driver, then its influence should be assessed against prospect of losses and gains, on the one hand, and in terms of social and financial missions of the firm, on the other. Finally, the growth motivations should be concretised in the form of measurable goals to increase the likelihood
of balanced growth.”