Governance characteristics as antecedents for organizational performance in social enterprises
21 September 2016
Ghent University, Aula Universiteit Gent - Voldersstraat 9 - 9000 Ghent
Prof. dr. Nathalie Vallet
Prof. dr. Mirjam Knockaert (Universiteit Gent)
PhD defence Saskia Crucke - Faculty of Applied Economics
Social entrepreneurship, broadly defined as entrepreneurial, market-based approaches to address social issues, is increasingly recognized as an effective way to tackle a variety of unsolved social problems, such as poverty, social exclusion or ecological damage. The predominant social mission distinguishes social enterprises from traditional for-profit organizations, that create social value at the periphery of their activities. Setting up an economic activity differentiates social enterprises from social movements and charitable and philanthropic initiatives. By consequence, social enterprises are considered as a distinct category of organizations, positioned between profit and nonprofit organizations and are, in recent years, increasingly described and studied as ‘hybrid organizations’. They are further characterized by their commitment towards multiple, possibly conflicting, goals. Because of these multiple goals, hybrid organizations face the challenge of combining activities that are not always compatible and of dealing with a variety of stakeholders with divergent expectations towards the organization. In particular, social enterprises face specific challenges regarding organizational governance, which may be defined as ‘systems and processes concerned with ensuring the overall direction, control and accountability of an organization’.
The aim of this dissertation is to study the challenges social enterprises are exposed to in terms of organizational governance. More specifically, we focus on the board of directors, as an interface between the social enterprise and its external environment. We study how stakeholder involvement in the board may support social enterprises in dealing with diverging stakeholder expectations regarding the financial and non-financial performance of social enterprises, which is vital to obtain enduring stakeholder support.
In study 1 we examine stakeholder representation in the board, obtained by appointing board members, connected with or representing specific stakeholder groups. We specifically study the relation between stakeholder representation in the board and the engagement of the board in its service role, encompassing networking with the external environment, giving advice to executives and participating in decision-making.
The non-financial results are core to the performance of social enterprises. However social enterprises face the difficulty of measuring the non-financial results, which is important to secure stakeholder support. In study 2, we develop, in close cooperation with social enterprises, a measurement tool for assessing the non-financial performance of social enterprises.
Finally, in study 3, we take an overarching view and examine how stakeholder involvement in the board impacts board service performance and subsequent organizational performance of social enterprises.
In this dissertation, research was performed in close cooperation with social enterprises, sectoral federations and the Flemish government. Study 2 was carried out at the request of the Flemish government as part of the Policy Research Centre Work and Social Economy (Steunpunt Werk en Sociale Economie).