October 2021
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Social enterprises, as hybrid organizations, pursue a social mission by resorting to market mechanisms in achieving their organisational goals (Mair & Martí, 2006; Santos, 2012). Most social enterprises use commercial activities as a means of delivering the social mission to their beneficiaries. Therefore, the alignment of both commercial and social institutional logics becomes fundamental for these organizations to achieve sustainability and avoid mission drift (Battilana et al., 2017; Ebrahim et al., 2014). While social organizations aim at responding to the interest of various stakeholders (beneficiaries, communities, investors) interests, in a democratic and participatory way; commercial organizations predominantly focus on fulfilling the interests of shareholders (dominant stakeholders) (Mair et al., 2015). Therefore, besides combining two institutional logics, social enterprises include in their governing processes a variety of stakeholders, in which diverging interests and viewpoints can be found (Ebrahim et al., 2014; Galaskiewicz & Barringer, 2012; Pache & Santos, 2013). This means they represent a multi-stakeholder model (Low, 2006). Organizational governance refers to all the processes that affect how organizations direct, control and are accountable to stakeholders (Cornforth, 2003). Thus, it plays a strategic (direction), and controlling (monitoring) role, and it supports organizations in managing diverse relations. In the context of hybrid organizations, governance also helps organizations to navigate across the multiple institutional logics, and to respond to certain risks that derive from these (Cornforth, 2012). Looking specifically at failed social enterprises, we intend to bring in a fine-grained analysis on how social enterprises, as hybrid organizations, combined and balanced multiple institutional logics and responded to the interests and viewpoints of various stakeholders. To do so, we collected data through semi-structured interviews and institutional documents during the years 2016 and 2017, in Gqeberha, South Africa. We draw on the four categories defined by Kraatz and Block (2008), in which organizations respond to the demands of multiple institutional logics. The preliminary results show that one social enterprise opted to compartmentalize different institutional demands. In specific, this compartmentalization took the form of a segregated hybrid. This means that social and commercial organizational activities were separated into two different legal entities. The other social enterprises chose to respond to these competing institutional logics by integrating and managing these internally. Also, they aimed at reaching a cooperation amongst all the stakeholders involved. Exploring the complexity of these institutional dynamics, in light of the failed social enterprises in a developing country, contributes both to theory development and enhancement of practices. In terms of theory, we intend to bring additional inputs on the multi-level governance processes of social enterprises, in specific when balancing institutional logics and achieving sustainability. For praxis, we aim at demonstrating that there is no one single way of governing an organization, yet certain mechanisms must be in place.
