Copyright © Taylor & Francis Group, LLC
ISSN: 1049-5142 print/1540-6997 online
Social Entrepreneurship in Nonprofit
Organizations: An Empirical Investigation of the Synergy Between Social and Business
DAVID DI ZHANG and LEE A. SWANSON
Department of Management & Marketing, Edwards School of Business,
University of Saskatchewan, Saskatoon, Saskatchewan, Canada
Social entrepreneurship in nonprofit organizations has emerged as an increasingly important domain, both in academic research and in practice. This article attempts to further enhance our understanding of the management of nonprofit organizations by investigating the way they balance social and business objectives.
Over 200 senior managers of nonprofit organizations participated in our structured telephone interview. The data revealed that many organizations worried about the potential for reduced or lost funding, especially during economic hard times. Issues of sustainability usually headed their list of concerns. Many of these organizations sought to establish revenue generating business streams to offset expected funding shortfalls. The data suggested that over 70% of the nonprofit organizations we interviewed resided in the social entrepreneurship zone. Our results also showed that maintaining a social objective and managing a viable business can be complementary and mutually beneficial activities.
KEYWORDS social entrepreneurship, social purposes, social outcomes, profits, business management, revenue, government policy, financial and nonfinancial measures
Address correspondence to David Di Zhang, Department of Management & Marketing,
Edwards School of Business, University of Saskatchewan, 25 Campus Dr., Rm. 172, Saskatoon,
Saskatchewan, S7N 5A7, Canada. E-mail: firstname.lastname@example.org
D. D. Zhang and L. A. Swanson
Nonprofit organizations (NPOs) serve an important role in society by providing unique goods and services that are not delivered by the for-profit or public sectors (Lyons, 2001). As their operating environment becomes increasingly competitive, NPOs must adapt their missions and strategies in order to build sustainable organizations (Weerawardena, McDonald, &
Sullivan Mort, 2010). Under this context, social entrepreneurship in NPOs has emerged as an important domain, both in academic research and in practice. This article attempts to further enhance our understanding of the management of NPOs by investigating whether social entrepreneurial NPOs operate differently and deliver better results.
Organizations that apply prudent business management practices to sustain missions focused on generating social improvements are considered to be social entrepreneurial (Swanson & Zhang, 2010). The concept of social entrepreneurship has evolved from its original focus on nonprofit entities.
It now encompasses organizations at and between the for-profit and nonprofit poles; and includes some public sector entities that apply business practices to sustain operations that generate revenues and deliver social outcomes (Dees, 1998; Skoll Centre for Social Entrepreneurship, 2009; Sullivan
Mort, Weerawardena, & Carnegie, 2003; Weerawardena & Sullivan Mort,
2006). Compared to the management of traditional for-profit companies, however, our understanding of the management of NPOs is still limited.
Particularly, as Cooney (2011) observed, there has been limited empirical data and few business models showing how NPOs apply business-like practices to manage their on-going operations to achieve the intended outcomes.
This article revisits the origin of social entrepreneurship research in the nonprofit sector and examines how NPOs implement business management programs, apply their dual emphasis on social and business outcome measures, and capitalize on the synergy between social and business objectives.
In doing so, we supply empirical evidence to