Rethinking business growth through the case of social enterprises

[We’re pleased to welcome authors Thomas Bauwens of Utrecht University, Benjamin Huybrechts of Emlyon Business School, and Frédéric Dufays of KU Leuven. They recently published an article in Organization & Environment entitled “Understanding the Diverse Scaling Strategies of Social Enterprises as Hybrid Organizations: The Case of Renewable Energy Cooperatives,” which is currently free to read for a limited time. Below, they reflect on the motivations and innovations of their research:]

What motivated you to pursue this research?

Economic organizations do not always pursue endless business growth. Rather, they may focus on “scaling” or, in other words, strategies to maximize societal impact that include, but are not restricted to, business growth. Arguably, this holds especially true for social enterprises, i.e. companies that develop economic activities with the explicit mission of addressing social or environmental issues and that reinvest their profits as a means to achieving this mission rather than as an end in itself.

Looking at renewable energy cooperatives in Flanders, a specific type of social enterprise which enables citizens to collectively own and manage renewable energy projects at the local level, we observed that these organizations adopted contrasted scaling strategies. Some strategies entailed a certain degree of conventional business growth (growing the membership, investing in large renewable energy production assets, etc.), while others were more disconnected from it and aimed at diffusing social innovations or deepening social impact, for example tackling energy poverty and helping energy-poor households reducing their energy bills through energy conservation and efficiency measures. Some organizations also clearly combined (moderate) organizational growth with open diffusion to maximize societal impact. This observation motivated us to shed light on the rationale behind this diversity of scaling strategies.

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

With increasing awareness of environmental problems amongst society in recent years, the role of community- or citizen-led sustainable initiatives, including renewable energy cooperatives, has attracted growing attention. For instance, in 2016 the European Commission recognized for the first time, in a proposed legislative measure of the Clean Energy Package, the role of community-based energy projects in the energy transition. These initiatives, however, can oftentimes face several challenges with growth. For example, when they seek financing to scale their impact, they run the risk of mission drift because investors often have demands that are contradictory with their values.

In what ways is your research innovative, and how do you think it will impact the field?

We find that the different scaling strategies can be understood through the choices made at the founding stage, in particular, how the organizational mission is positioned on the continuum between mutual interest, i.e. serving the interests of the members, and general interest, i.e. serving the broader interest of society or specific disadvantaged target groups. Moreover, through examining three organizations active in a common field, we find mutual influences, as the scaling choices of each organization are also influenced by the positioning of the other organizations in the field. Therefore, we highlight how social enterprises may collaborate to collectively achieve the pursuit of their multiple missions.

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