SMEs have a substantial role in employment opportunities within regions. However, the possibilities for vulnerable workers remain limited, especially in terms of long term employment. Social enterprises often step into this gap, providing job opportunities for these specific employees (Roy et al., 2017). Social Enterprises can contribute to a more inclusive labor market by providing job opportunities but also facilitating the transition to the ‘regular’ labor market. At the moment this is especially relevant as the current demand for employees is high and the labor market experiences several changes (e.g. digitalization). These trends require a more inclusive labor market in Western countries (Stigter & Wilthagen, 2022; Wilthagen & Stolp, 2021).

In the Northern Netherlands, social enterprises aim to facilitate employment possibilities for this group of employees. Besides providing job possibilities and personal development trajectories; these enterprises aim to work together, with other social enterprises as well as regular employers and local governments, for long-term solutions in inclusive employment. In other words, the entrepreneurial ecosystem is in motion to innovate the current labor market. In this context we understand the entrepreneurial ecosystem as ‘a set of interdependent actors and factors coordinated in such a way that they enable productive entrepreneurship within a particular territory’ (Stam & Spigel, 2016, p. 1). We are interested in the ecosystem of social enterprises, as the current body of literature mostly focuses on entrepreneurial ecosystems in general (e.g. Stam & Spigel, 2016; Stam & Van de Ven, 2019; Hendricksen et al., 2022).

For the current study we performed a case study. The case study focuses on a social enterprise with a program to facilitate women in vulnerable positions, towards better chances on the labor market. The program consists of several local enterprises that each provide an internship for one of the women in order to build their network, develop skills and lower barriers towards long-term employment. The following research question will be answered:

How can the local ecosystem for social entrepreneurs be formed and supported in order to develop social revenue?

The case study is conducted using the method of realistic evaluation. The participants of the program (both the social enterprise, the involved companies, as well as the participating women) were in dialogue with the researchers. During this dialogue answers to the following question were formulated: what works for whom under which circumstances?

The results imply practical improvements of the work facilitating program. Furthermore, insights are gained on the ecosystem surrounding the social enterprise. As such, knowledge on what these ecosystems look like, as well as implications for the facilitation of successful ecosystems were found.

Our societies face social, mental, physical and economic challenges surrounding a vast group of persistently unemployed persons. Simultaneously, our societies also face employment related crises in sectors such as healthcare, hospitality services, mobility services, assembly and mounting and servicing of renewable energy sources. Employers and municipalities fail to unlock the potential of the persistently unemployed. Social enterprises, in contrast, show how this potential can be unlocked by finding, relating to, guiding and developing capabilities, and continuing to support unemployed in their newfound jobs. However, many social enterprises are also facing challenges to obtain revenues to cover for their valuable and higly-appreciated person-centric and consequently small-scale and labour intensive approaches. From a more systemic perspective, we observe that social entrepreneurs have somewhat comparable, but unique approaches; municipalities have a large variety of concurrent and ever-changing arrangements that seems hard for entrepreneurs to grasp, and employers with a demand have a focus on scale and standardization and lack flexibility to carve jobs, which leaves them in the end understaffed.

It is in this context that a group of organizations with a shared objective to support 1000 persistently unemployed to obtain structural employment, and establish a systemic change through collective business action. However, the scope, structure and form of this BCA is up for debate, or design.

A collective business action can be operationalized through a loosely coupled network of business organizations, a purpose-driven alliance (Boonstra & Eguiguren, 2023), a collaborative business model (Rohrbeck et al, 2018), a multi-stakeholder meta-organization (Berkovitz, 2017), or a business cooperative (. However, to our knowledge, no design tools to facilitate the design of a business collective action exists, although there are practitioner approaches to value-driven networks (Caluwe and Kaats, 2023), purpose-driven alliances (Boonstra & Eguiguren, 2023), and business model design approaches to cooperatives (Mazzarol et al., 2018) and collaborative business models (Grefen, 2015; Derks et al., 2022).

We aim to explore this gap by an action research approach (Checkland, 1991) to explore the considerations of the participants, the value propositions towards unemployed, potential employees and the municipality, as well as the desired infrastructure and governance to support the business collective action.

Leadership in social entrepreneurial ecosystems (SEEs) is characterized by shared responsibilities across diverse actors, including government agencies, non-profits, private enterprises, and intermediaries. Rather than focusing solely on who assumes leadership roles, this study examines how leaders fulfill these roles. The decentralized nature of leadership in SEEs makes understanding the different ways leadership is enacted particularly valuable. This study investigates how leadership operates through qualitative research involving 25 in-depth interviews with key actors in the Netherlands and Belgium, conducted between August and December 2023. The findings reveal four types of leadership in SEEs: Distributed Leadership, where leadership is shared among multiple actors; Facilitative Leadership, where leaders enable and step back to let the ecosystem sustain itself; Strategic Leadership, which connects key players and drives policy; and Balancing Leadership, which aligns social impact with personal incentives to ensure sustained participation. These insights highlight how different leadership typologies foster collaboration and direction in SEEs.

Exploring social innovation and creation of sustainable social impact: The role of social enterprises

Abstract

Social innovation (SI) has become the focal discussion point within the policy paradigm and the contemporary academic as a way forward in tackling urgent societal challenges, there remains a lack of understanding of how social enterprises practice social innovation that enables the creation of social impact. The concept of social innovation is viewed as a fertile landscape for transformative and disruptive social change because it offers the profound potential to provide innovative solutions to social needs (Tracey & Stott, 2016) and harness a better alignment of business performance goals and social progress (Martinez et al., 2017). Despite the increasing recognition of contributions that social enterprises make towards the well-being of deprived communities, the lack of strong ethical underpinning to social innovation is observed to be a reason for the failure of many social innovations (Bhatt, 2022; Bull & Ridley-Duff 2018). Therefore, we suggest the exploration of ethical analysis of SI policies and practices from the viewpoint of Sen’s capabilities approach, to redefine the role of dominant social actors (i.e. social enterprises) in the pursuit of creating social impact.

Although the address of social problems is the underlying drive for social entrepreneurship (Teasdale et al., 2022), limited is still unknown how social enterprises engage in social innovation to generate social capital and transformation. A growing number of studies have highlighted the core to implementing social innovative practices by social enterprises requires social enterprises' ability to leverage the legitimacy in supportive communities (Jayawarna et al., 2020), enabling mechanisms to facilitate collaborative partnership between multiple stakeholders, and empowering the user communities while operating in institutional complexity (Cherrier et al., 2018) to play a greater role in the co-creation of services for socially productive outcomes (Bunduchi et al., 2023; João-Roland & Granados 2023).

Social enterprises targeting sustainable development goals are on the rise due to institutional support of social innovation observed to be at an advanced stage of development (Vezina et al., 2019). However, many third-sector organizations and social enterprises in particular are struggling to alleviate social problems by generating sustainable social impact due to the fact that the essential resources, robust capabilities, and extensive networks are required to effectively address such complex issues (Böhm et al., 2022). These challenges are mainly due to a lack of organizational and management capabilities, in addition to the misalignment of economic, political, and ethical responsibilities (Cherrier et al., 2018). Hence, a better understanding of the social innovation processes adopted by social enterprises is required to also facilitate research on sustainable social impact that focuses on the development of capabilities.

The traditional for-profit organizations primarily focus on profit and productivity maximization, which mostly leads to engaging in practices that deviate from ethically accepted norms (Ometto et al., 2018). This focus often results in normative practices that conflict with ethical considerations. In contrast, social enterprises are driven to enable transformative change within society, and consequently, ethical principles play a central role in shaping their social and economic activities. Owing to the hybrid nature of social enterprises, collaborative partnerships between for-profit organizations and social enterprises have become the norm to foster the outcomes of social innovation (Bhatt, 2022) with the aim of contributing to the greater good of society. The goal of social innovation is to achieve social change systematically, with the ethos of transforming unjust social system (Teasdale et al., 2022), within this context, social enterprises experience significant ethical challenges, particularly regarding which ethical principles should guide social innovation policies and practices, and what constitutes the fundamental essence of social change.

There is severe pressure on social enterprises to do things differently (Lettice & Parekh 2010), and therefore is an urgent need to explore the management of social innovation from the ethical standpoint to fully understand the positive social impact in the form of capabilities development of deprived or marginalized communities. Recognizing the growing need and support for social actors (i.e. social enterprises) to tackle societal issues (Ometto et al., 2018) this research suggests that the strong ethical underpinning of social innovation must be driven by a capabilities approach and suggest pathways for creating sustainable social change. Qualitative interview evidence from 8 social enterprises in UAE is utilized to address our main research question:

• To what extent do social innovation practices of social enterprises as part of their social responsibility agenda enable the creation of sustainable social impact?

A better understanding of the dynamics of social innovation is necessary to not only expand the integrated understanding of ethical underpinning of socially responsible activities, but also to provide guidelines for the development of creating social impact (i.e. capabilities development) by the social enterprises.

Literature Review

Social Innovation and Social Enterprises

Social innovation is a multi-layered concept and has increasingly been referred to as a relational, situated, and multilevel strategic process for – disruptive–transformative social change (Logue, 2019), grounded in developing, promoting, and implementing novel solutions to social problems, and pursued by organizations or individuals with prosocial motivations (Voegtlin et al., 2023). In the quest to redefine social innovation as a concept, which is regarded as a polysemous concept (Phillips et al., 2015), Ayob et al. (2016) maintained that the key themes: social relations; societal impact; social relations and societal impact; and technological innovation and social relations play an important role to comprehend social innovation as a ‘process’. They noted from the review of academic text produced between 1989 and 2013 that social Innovation as a concept has evolved from a sociological focus and entered into the social change and political paradigm to soak up technological innovations and approaches, per se, aiming at tackling societal issues. Thus, social innovation is a process where social relations stem from restructuring power that enables innovation to generate utilitarian social value.

The pursuit of utilitarian social goals prevails in much of the policy and practitioner discourse, wherein cross-sector relationships between business, government, and non-profit (Logue, 2019) drive the socio-political and economic development of deprived communities (Mumford, 2002). These interactions foster the emergence of new forms of social relations, uniting actors from government, business, and civil society to address a wide array of societal needs and social problems (Cajaiba-Santana, 2013; Haxeltine et al., 2013), which are diverse (e.g. poverty, inequality, exclusion, education, health, employment, environment, etc) (Moulaert & MacCallum, 2019).

Much of the literature focuses on the role of distinctive civil society actors, such as social enterprises, in integrating social innovation as a “process” (Phillips et al., 2019) within their ethical policies and practices to address unmet social needs and complex problems (Ghafar et al., 2023). This is where the literature on social innovation within social enterprises highlights the importance of ‘partnerships’ in designing social innovation processes that are considered beneficial for both organizational approaches to deal with social issues and seeking economic survivability of newly established social enterprises (João-Roland & Granados, 2023). The fundamentals of partnerships emanate from the principle that collective value generated through collaboration exceeds the value that each actor could achieve independently.

Governance and Social Innovation

From the perspective of the multi-scaler nature of social innovation, policymakers have increasingly become interested in projecting innovation and innovation processes to generate interaction between arenas and actors (Moulaert & MacCallum, 2019; Nicholls & Murdoch 2016) aiming at creating social impact. Social innovation extends beyond a mere short-term answer to the failures and inconsistencies of neo-liberal models. Hence, it emphasizes actions aimed at fostering a shared vision of more desirable outcomes as a result of systemic social change. Social innovation demands the bureaucratic model of governance to circumvent its rigidities to embrace flexibility in terms of openness to change (Reynolds et al., 2017), rearranging social roles to forge the collaboration between ‘enablers’ including networks, public institutions, corporations, and non-profit organizations (Baker & Mehmood, 2015) in their response to unsatisfactory and problematic social situations.

The bureaucratic ‘control and command’ model of governance - valued for its stability, predictability, and risk-aversion – is not well-regarded for its openness to change or open innovation processes. Whereas, a wider social perspective view advocates that social innovation by nature requires to be territorially and socio-culturally embedded. Social enterprises appear to have less influence on combining local political opportunities and organizational strategies (Galego et al., 2022) under the bureaucratic governance model to trigger institutional changes in public social innovation policies (Parés et al., 2017).

Capabilities Approach

Capabilities theory was developed by the foundational work of Amartya Sen (1992, 1999) and Martha Nussbaum (1999), deeply informed by Aristotelian philosophy, where the core characteristic of capabilities refers to an “individual’s freedom to achieve what they have reason to value” (Cornelius et al. 2008, p. 363) – namely, what individuals are effectively capable of doing and being (individuals’ effective states of doing and being are referred to by Sen as functioning). It is vital to refute the assertion that capabilities theory is either merely a reformulation of Aristotelian theories, or a simple Aristotelian approach; rather, it is an approach that recognizes the most powerful conceptual connections to Aristotle’s perspective on ethics and economics (Van Staveren 2007), with special reference to human development and well-being (Nussbaum 1988, 1990).

Nussbaum (1999) and Sen (1999) classify capabilities into three types. These are basic capabilities (reflecting the innate ability of individuals to function as human beings), which can be transformed into internal capabilities (with the support of the surrounding environment), and combined capabilities, defined as internal capabilities combined with suitable external institutional and material conditions for the exercise of the function. Renouard (2011) takes the stance of relational anthropology and argues that combined capabilities are developed by individuals entering into relationships with others. This prevails in Sen’s later works, where he focuses on identity of agents rather than economic agents, where human beings enhance their capabilities by performing actions in relationship with other human beings (Sen 1999, 2007).

From the capabilities perspective, social enterprises are as institutions whose primary objective is to create social change by providing individuals opportunities and freedom to develop their functional capabilities at a level worthy of human dignity (Nussbaum 1999: 5). These are the practices that any social enterprise can enjoy if the capabilities approach is used as a backbone to social innovation practices. The capabilities approach has been considered a unique approach in the literature (Cornelius et al. 2008) to introduce into social responsibility agenda in terms of questioning an organization regarding fulfilment of their duties towards the well-being of deprived members of community’ development (Bertland, 2009).

Methods

Multiple case studies approach was adopted as it is deemed appropriate for developing theories, new insights, and knowledge about contemporary phenomena within real-life contexts (Yin, 2003, p. 13). For this study, we selected UAE based social enterprises whose social responsibility agenda aims at promoting sustainable development goals and how their social innovative practices generate sustainable social impact for the marginalized and disadvantaged groups of communities. Empirically, social enterprises’ innovative approach to deal societal issues such as ‘poverty’ received global recognition (Ometto et al., 2018). United Nations Research Institute for Social Development (UNRISD; 2022) emphasizes the need for socially innovative solutions to fix the social fabric of civil societies, tampered by extreme inequality and crisis.

Data were collected from multiple sources covering social enterprises years of growth to explore their social responsibility agenda and SI practices. Semi-structured interviews were conducted with the founders, CEO, and managers of 8 social enterprises. A total of 16 interviews were conducted in English and each interview typically lasted an hour. All the interviews were recorded and transcribed. We reached theoretical saturation (Strauss & Cobin, 1998) having analysed the multiple sources, including observations in situ, attended meetings, and external documents (reports and archival data) and conducted the interviews. A grounded approach to theory building was adopted in this research (Strauss & Corbin 1998). First, the 16 case SEs interview transcriptions and field notes were read to familiarize analyzing authors with the data (Eisenhardt, 1989). Then NVivo was used to facilitate coding, defining SEs’ social innovation practices as themes. The analysis process started with transcribing, coding and categorising the data into different sets and then comparing them in order to identify trails that led to answers to the research questions. Therefore, coding and thematic analysis were used to identify the constructs and concepts grounded in textual data to build theory (Strauss & Corbin 1998).

Findings and Discussion

Social responsibility and Social Innovation

Social enterprises studied in this research depict broader views of how virtue obligations underline their social responsibility agenda to tackle social and economic challenges in deprived societies (Hartwell & Devinney, 2024). Social responsibility from the viewpoint of social enterprises reflects a complex mixture of ‘social’ and ‘innovative’ activities that generate social impact, some of which involve social activities and investments that, alone, may not appear logical in terms of measuring outcomes but make sense over the longer term. For example, one social enterprise invariably involved with corporations to strategically utilize corporations’ philanthropic contributions to design socially innovative practices such as providing financial and non-financial support to empower women to incubate their small startup ideas in favored communities and projects. The rationale for eliciting social responsibility is their innovative approach was the wider concept of alleviating poverty by removing the financial constraints and institutional turbulence affecting deprived members of the community. Empowering women with skills development and incubating income generation streams with marketization strategies, were particularly apparent in most cases, where exhibition of social responsibility was exhibited through their socially innovative practices:

‘Our beneficiaries are living under the poverty line […] we understand their needs and our initiatives are unique […] there is lack of support from both private and government’ Co-CEO of SE 2

‘I do not follow any specific ethical principles to base my community development work […] my moral values and pain for poor members of society guides my social business ethos’ CEO of SE 1

These quotes show that when social enterprises are faced with a particular societal challenge, working to narrow guidelines about social responsibility restricts organisations’ flexibility to adapt unwritten moral and ethical guidelines, especially when implementing social innovation practices.

Social Innovation and Mission Drift

This research echoes the findings of Bhatt (2022, p. 744) that social enterprises are encountered with ethical complexity when it comes to underline social responsibility in their social innovation policies and practices. The ethical complexity arises from the contradictory moral systems about right and wrong (Ayob et al., 2016). The heterogeneity and complexity of a social system (Bhatt, 2022) in which a foreign social enterprise commits to transform social change swings between the objective principles of ethics and contextual values and norms of a given society. Due to the emerging role of social enterprises, operating within international settings, and given the context of UAE, the absence of a comprehensive regulatory framework further allows social enterprises to underpin their ethical reasoning in social innovation. There is a lack of prior research exploring the ethical underpinning of social enterprises operating in the Arab region.

Partnership and Social Innovation

The real and meaningful ambitions of deprived communities are often overlooked within corporate and institutional structures, policies, and practice reforms. Our findings add to previous understanding (Hartwell & Devinney, 2024) by showing how populist parties (i.e. an influential cooperate in partnerships) represent an exclusive view of societal issues and their socially innovative solutions and small scaled enterprises coercively pressurized to avoid any actions that might be seen as opposing populist values. Interviewees spoke of implicit theme that corporations are powerful actors within an entrepreneurial ecosystem:

‘We work very closely with our partners to accommodate their social agenda […] sometimes we do have opposing views of how each stakeholder views social responsibility […] our decision making on social innovation practices is fluid […]’ CEO of SE4.

This raises the question of the extent to which social enterprises incorporate these aspirations into their social responsibility agenda and reflect in social innovation practices This research emphasizes how the powerful influence of corporations can lead to mission drift wherein social enterprises are compelled to prioritize one aspect of their social mission to achieve the overall social impact – a topic of exploration that is underexplored in previous research. The prior studies focus on how the pursuit of profit maximization motives, with the underlying reasoning of sustaining and scaling the organizational core mission, at the expense of the social mission (Ometto et al., 2018) potentially led to mission drift.

Social enterprise studied in this research demonstrates a good strategic approach of partnering up with well-known corporates in their pursuit of creating social change. Given the complex institutional environment and emerging ecosystem (Sud et al., 2009) these social ventures operate, it is deemed important to adopt a collaborative strategy to engage with actors in the process of developing social innovation (Raynor, 2019) and to scale their impact to new markets (Biggeri et al., 2017). Many social enterprises in the region echo their initial struggle to identify suitable networks in the process of designing social innovation. Lettice and Parekh (2010) contend that the inability of social enterprises to locate link-minded and resourceful organizations can negatively impact social innovation. Over time, social enterprises invested in developing their organizational capacity to develop and significantly improve their collaborative relationships with different actors from different sectors (Edwards-Schachter & Wallace, 2017) in the pursuit of scaling positive social impact arising from social innovation.

According to Scott (2007), organizational behavior is shaped by three institutional pillars: the regulative, cultural-cognitive, and normative. In the context of the UAE, where third-sector organizations are still evolving, it can be argued that the regulative pillar remains underdeveloped, with a lack of specific government regulations and formal agreements. The cultural-cognitive pillar reflects widely accepted norms and values, shaped by individual cultural backgrounds and subjective interpretations of moral judgment. In contrast, the normative pillar defines the reasoning processes grounded in assumptions and accepted norms across social, professional, and organizational interactions.

Given the absence of regulatory reforms that clearly define the expected behavior of new social ventures, it is reasonable to suggest that most social enterprises in the UAE operate within the continuum of cultural-cognitive and normative frameworks. These social ventures, driven by strong altruistic values and seeking social acceptability and legitimacy (Ghafar et al., 2023), base their actions on normative ethics (Cherrier et al., 2018), providing moral justifications as they pursue opportunities for social impact.