KENNESAW, Ga. | Oct 2, 2019

At the core of family business research is an ostensibly simple motivation; to explore the role and impact of integrating family members, values, and motivations in the strategy and governance of a firm. This straightforward phenomenon, grounded in millennia of practice and informed by decades of expansive research, remains a fascinating topic for a growing population of scholars and business leaders. This depth of interest results from the fact that – while family-owned business may be a natural and intuitive structure – coordinating the values, logics, and goals between overlapping but disparate social systems is a complex process with wide-ranging implications for not only the firms, but also industries, communities, and families. Fortunately, family business research is not alone in this task. Multiple domains of organizational scholarship, as well as in the broader social sciences, have concentrated efforts on understanding how firms can emerge, survive, and thrive while balancing heterogeneous goals. This is particularly true of social entrepreneurship research, which focuses on firms with a “dual mission of social and economic value creation” (Saebi, Foss, & Linder, 2018; pg. 72).

            Social enterprises’ dual pursuit of social and economic value creation is conceptually aligned with the tendency of family businesses to balance the pursuit of firm and family-centered economic and non-economic goals, such as family welfare and transgenerational succession goals. This suggests a possible shared logical framework between social enterprise and family business that is rife with potential conceptual and empirical overlap. This is supported by a growing body of research revolving around the heterogeneity of firm populations and the implications of integrating non-economic social values, logics, and goals into the operation, strategy, and performance standards. These cognitive and conceptual overlaps indicate a need for an integrated research agenda as scholars in these domains study “similar circumstances and challenges” (Bacq & Lumpkin, 2014; p. 270). As greater scholarly attention is granted to the non-economic and socially oriented behaviors and outcomes of business, on-going research being done at the Family Enterprise Center (FEC) is aimed at enhancing our understanding of how family firms and social enterprise develop, evaluate, and enact social missions that coordinate the economic and non-economic needs of increasingly diverse stakeholder populations. The goal of this research is both to provide a conceptual framework for increased interdisciplinary research and more effective measurement instruments studying firm goals and outcomes; as well as inspire a greater understanding of the multiple heterogeneous goals of entrepreneurs that can guide our professional support and services to serve the needs of our student entrepreneurs and business community.

What is Social Entrepreneurship, why is it so Popular, and why is it Important?       

            Entrepreneurs are not purely economic creatures and possess values, motives, and purposes beyond the generation of wealth. And yet, hitherto the predominant logic in studying and supporting entrepreneurship and firm ownership has been highly economically structured, with the general logic being that as firms become more successful financially, the owners will have greater agency to leverage their excess of resources towards their idiosyncratic goals. This traditional logic is challenged by the emergent presence of social entrepreneurship, which considers the social motivations and goals of firm owners and attempts to integrate them into the core operating logic and strategy of the firm.

            Broadly, social entrepreneurship refers to the emergence and development of firms that balance both social and economic value creation. As such, social entrepreneurship is not directly concerned with tangentially similar topics of corporate philanthropy, corporate social responsibility, or non-profit enterprise. While each of these topics is broadly intertwined with the general notion that economically motivated firms have social missions and engage with non-economic stakeholders in diverse and interesting ways, a core component of social enterprise revolves around the notion that the social mission of the firm is intrinsic to the operations of the firm and not merely benefiting from the economic performance of the firm. This difference is neither minor nor merely semantic as it relates to the values and goals underpinning entrepreneurial activity and the strategic logics introduced by these entrepreneurs to innovate industries and solve social problems. While the notion of social enterprise is not new, the number of entrepreneurs and business leaders directly attributing firm strategy and competitive tactics to purpose driven social missions has rapidly increased over the last several years (Saebi et al., 2018).

           A myriad of explanations have been posited to help explain and frame this phenomenon; including the role of innovation and exit strategies shifting goals of entrepreneurs towards acquisition exits which creates a vacuum for community or locally oriented small business entrepreneurship (Newth, 2016), the greater transparency of firm operations allowing consumers to make informed purchase decisions aligned with their social values (Dao & Martin, 2017), the social incentives and communities that have emerged to support value driven entrepreneurship (e.g. B-Corps; Stecker, 2016), and the decreased barriers (e.g. online shopping) attracting customers to artisanal and craft businesses that historically would have been difficult to support with a more centralized local economy (Peart & Knowles, 2018). Regardless of the source, the evidence clearly shows that at the same time more entrepreneurial ventures are being recognized as high valued rapid growth firms (e.g. unicorns), the role of small business is becoming increasingly motivated and able to develop their business in such a way that both generates wealth for its owners and responds to calls from social stakeholders in support of their employees, local communities, society at-large, or the natural environment. This shift illustrates the importance of small business strategy research to broaden its scope to further recognize that emergent small businesses may not merely be aspiring large conglomerates but instead represent a distinct organizational form driven by owner goals and purpose that cannot be adequately articulated in the financial performance of the firm. As entrepreneurship researchers, centers, and consultants become faced with increasingly diverse motivations and goals of entrepreneurs and small business owners, they may find support and inspiration from the family business domain which has studied the impact of firms intertwined economic and social missions for decades.

Family Business, Non-Economic Goals, and Social Missions

            The strategic salience of family centered non-economic goals remains one of the most significant behavioral and strategic idiosyncrasies of family firms that informs their distinctiveness (Chrisman et al., 2012). The fact that family centered goals not only inform the decisions of family businesses but may be prioritized over the economic performance of the firm, has inspired contemporary research and serves as the catalyst for the increasingly interdisciplinary nature of the family business domain. This presents an opportunity for social enterprise scholarship to build from decades of family business research in order to better understanding the nature of non-economic goals and missions informing the behavior of for-profit firms, as well as the boundary conditions and risks that emerge alongside those goals. Indeed, the “social value” generated by family business is not always community or socially oriented, and often is geared towards particularly benefiting the firm’s owning family, even those that may not have an active role in the business itself. This suggests the need for clarifying the nature of “social” stakeholders in social entrepreneurship.  For instance, if the goal of social entrepreneurship is to pursue “solutions to neglected problems with positive externalities” (Santos, 2012; p. 335), it would be difficult to reconcile this logic with family business research illustrating that the primary social benefit of firm performance is often centered on one family’s welfare or sustained family ownership, even at the expense of other stakeholders (e.g. employees; Neckebrouck, et al., 2018). Recognizing boundary conditions will aid in developing better theory around both the particular and common aspects of these organizational forms.

            Clearly, these fields share similar research motivations, develop similar research questions, and explore similar phenomena. In facilitating research and providing professional services at the nexus of these areas, the research being done at the FEC illustrates the intertwining nature of these fields and provide a foundation for developing inroads into greater integrative research, and for recognizing the expanded scope and audience of hitherto siloed research in these domains. Towards this end, in a recent study, Randolph and colleagues (2019) studied the social missions of 350 small businesses and found that when social stakeholders were concentrated on localized groups (i.e. employee and community stakeholders) the social mission was not only more salient in the firm’s behavior, but firms were rewarded with additional economic performance benefits as well, through employee retention, increased customer patronage, and increased perceived value created in their products and services. Further, when the social goals of the family owners were disconnected with their local community and instead concentrated on primarily intra-family outcomes (wealth generation) these firms experienced reduced performance outcomes, regardless of family ownership; illustrating the importance of stakeholder mediation in developing family firm strategy. While this research remains in an early stage, these promising findings provide a strong foundation for extending the relevance of family business research and professional services to a growing population of entrepreneurs seeking to develop firms that not only generate wealth for their owners, but also considers the diversity of values, goals, and inspirations of the entrepreneurs that found them.