Maximising and maintaining social value in the long term – the influence of embeddedness in addressing organisational challenges following Social Enterprise growth

Abstract

Polanyi argued that throughout history the economy was embedded in society, serving as a tool to make provision for societies’ needs; but in capitalist market economies the market dominates the system, subordinating society to its work (Polanyi, 2001). Although social enterprise offers potential for re-embedding the economy into serving society (Roy & Hackett, 2017), balancing competing social and market demands can prove difficult (Tracey & Phillips, 2007). This becomes particularly apparent when a social organisation seeks to maximise social value through organisational growth. Focus on growth can distract from social goals due to concerns about securing investment, implementing processes, structures and quantitative performance indicators that meet the needs of resource providers rather than beneficiaries (Battilana & Lee, 2014).

Although social enterprise offers potential for re-embedding the economy into serving society (Roy & Hackett, 2017), balancing competing social and market demands can prove difficult (Tracey & Phillips, 2007). Inspired by Polanyi’s conception of embeddedness we argue that maintaining connections to service beneficiaries and frontline employees is critical to retaining social value alongside growth. This departs from Granovetter’s emphasis on economic benefits underpinning much embeddedness and network research that focuses on how social relationships provide people, funding or ideas, to resource emerging enterprises in an environment of scarcity (Dufays & Huybrechts, 2014). Putting society front and centre we examine how social embeddedness influences social value in the context of institutional pressures to purse economic logics (Polanyi 2001). This builds upon Smith and Stevens (2010) explanation of how geographic focus and entrepreneurial ‘type’ influences the nature of embeddedness and scaling of social enterprise, to examine how the degree of embeddedness influences organisational development and social value over time. We conceptualise social enterprise as ‘practicing an ethic of care’ (Andre & Pache, 2016), taking a process view that considers geographical, social, economic and political contexts.

Drawing on ethnographic observation, in depth interviews and organisational records we contrast two social enterprises in differing contexts; an organisation with a capital-city head office and countrywide network of branches; and one focused in a low-income local community. Capital SE achieved growth by scaling up into new geographical regions, initially maintaining social embeddedness by fostering a caring culture supported by management structures and organisational practices (André & Pache, 2016). Volunteer, employee and beneficiary engagement enabled Capital SE to maintain social value alongside substantial growth accompanied by bureaucracy and professionalisation of service delivery indicative of broader changes in the social sector experienced under Blairism (Dey & Teasdale, 2016). Intensified market pressures associated with bureaucracy and professionalisation of service delivery first (Dey & Teasdale, 2016), and austerity following the financial crisis later, created increasingly precarious funding regimes reducing size and availability of contracts. Capital SE was forced into an increasingly competitive private-sector model that emphasised value for money. These internal and external factors combined to undermine the primacy of maintaining social connections and led to marginalisation of social goals.

City SE provides contrast; having achieved growth through diversification and retained a strong geographical focus that enabled strengthened local roots and social embeddedness to develop deep connections with employees and beneficiaries. When withdrawal of a council contract threatened jobs the organisation mobilised in collective resistance by continuing to provide the service and maintain social value for clients and employees. Despite their efforts, City SE lost their contract and given the resources expended the organisation almost collapsed. A small team continues to provide services, surviving in a precarious environment; their embeddedness a core factor in maintaining commitment and motivation focused on delivering social value. However, over-embeddedness has presented a barrier - despite maintaining social value it may have prevented maximisation (Uzzi, 1997).

We argue that maintaining embeddedness with clients, employees and other stakeholders is central to creating a sustainable social organisation that avoids mission drift by retaining an ethic of care (André & Pache, 2016). Although maintenance is possible with scale, these structures and processes are at risk from financial cutbacks during crisis. Our case studies offering practical insight into the necessity of erecting and protecting formalised structures that create and maintain embeddedness when scaling social enterprise, and highlights risks from an over-embeddedness that can present a barrier to social innovation. Linking issues of scale and social value to broader political economy and neoliberalism, we draw on Polanyi to put this into the broader institutional context, drawing attention to the conflicting logics that social must enterprises navigate.

• author: Raffaelli, Paola and Nowak, Vicky
• publishing date: 2019
• type: Contribution to conference
• publication status: unpublished
• subject: Business Administration
• conference name: 7th EMES International Research Conference
• conference location: Sheffield, United Kingdom
• conference dates: 2019-06-24 - 2019-06-27
• language: English
• LU publication?: no
• id: 91f8cd0e-ed01-47b6-92aa-5697eb7ea294
• date added to LUP: 2020-12-04 15:40:58
• date last changed: 2020-12-04 16:08:25