INTRODUCTION
The traditional view has primarily seen social entrepreneurship as a one-way process, where social entrepreneurs (such as NGOs, charities or even not-for-profit organizations), driven by compassion and pro-social sentiment (Miller, Grimes, McMullen, & Vogus, Reference Miller, Grimes, McMullen and Vogus2012), take up an activity that creates social and economic values. Nevertheless, it is increasingly recognized that the process of social entrepreneurship is far from unilateral, but can also develop new opportunities to create value for society by means of commercial and market-based activities. Such activities can generate profits, a substantial portion of which can be distributed among the community members or invested for their benefit, or other social causes (Bacq & Janssen, Reference Bacq and Janssen2011; Chell, Reference Chell2007; Peredo & Chrismann, Reference Peredo and Chrismann2006; Prahalad, Reference Prahalad2000; Si et al., Reference Si, Yu, Wu, Chen, Chen and Su2015).
Prahalad (Reference Prahalad2000) was among the first to suggest that we need to move the discussion beyond the confines of social welfare and developmental economics and develop a new mindset to consider the world's poorest as ‘profitable consumers’. To this end, social entrepreneurship should be seen as an alternative two-way process, addressing both social and economic concerns, to bring social inclusion, equity, and development to disadvantaged groups in society (Shaw & de Bruin, Reference Shaw and de Bruin2013; Tapsell & Woods, Reference Tapsell and Woods2010). Consistent with these progressive thoughts, we subscribe to the definition of social entrepreneurship as proposed by Bacq and Janssen (Reference Bacq and Janssen2011: 376): ‘[social entrepreneurship is] the process of identifying, evaluating and exploiting opportunities aiming at social value creation by means of commercial, market-based activities and of the use of a wide range of resources’. This interpretation is particularly important and appealing to emerging economies which are constantly faced with profound economic and social challenges. It is for this positive and transformative contribution of social entrepreneurship to society that many governments across the world are encouraged to nurture and support these enterprises (Ratten & Welpe, Reference Ratten and Welpe2011).
Unfortunately, our understanding of the mechanisms underlying the simultaneous creation of social and economic values in social enterprises, and the factors contributing to this dual objective, is still rather fragmented. This caveat is further intensified by our limited understanding of the mechanisms behind the entrepreneurial process (McMullen & Dimov, Reference McMullen and Dimov2013; Moroz & Hindle, Reference Moroz and Hindle2012). Despite the plethora of studies that explain the entrepreneurial process (Baker, Gedajlovic, & Lubatkin, Reference Baker, Gedajlovic and Lubatkin2005; McMullen & Dimov, Reference McMullen and Dimov2013; Moroz & Hindle, Reference Moroz and Hindle2012; Steyaert, Reference Steyaert2007), none of the proposed frameworks are sufficient to decipher the black box of the relevant process adopted within social enterprises. Our study aims to bridge these two gaps in the literature by offering new empirical insights into the process of value creation adopted by social entrepreneurs. To this end we ask: How do for-profit social entrepreneurs create social and economic values? and What factors and micro-processes contribute to the creation of social and economic value in for-profit social enterprises?
Our focus is specifically on for-profit social entrepreneurs. While extant empirical research has mostly focused on not-for-profit social entrepreneurs, we acknowledge that these for-profit social entrepreneurs have the potential for development as societies transform towards market-orientation (Sepulveda, Reference Sepulveda2015).
Furthermore, despite acknowledging that theories are context specific (Patomäki & Wight, Reference Patomäki and Wight2000), there has been hardly any research on social entrepreneurs within emerging market contexts (i.e., Blackburn & Curran, Reference Blackburn, Curran, Curran and Storey1993). Yet, being faced with continuing difficult economic problems, emerging markets have become alarmingly dependent on social entrepreneurs for provisions of welfare and innovation (Sardana & Zhu, Reference Sardana and Zhu2017; Sepulveda, Reference Sepulveda2015). As a result, understanding how social entrepreneurs create value in these regions becomes increasingly eminent.
Our study contributes to the above gap as well. By blending a deductive (theory inspired) and an inductive (data inspired) logic of analysis (Denis, Lamothe, & Langley, Reference Denis, Lamothe and Langley2001; Pajunen, Reference Pajunen2006), we decode distinct characteristics of the value creation process adopted in two emerging markets − China and India − and test the aptness of traditional theories within these contexts (Welch, Piekkari, Plakoyiannaki, & Paavilainen-Mäntymäki, Reference Welch, Piekkari, Plakoyiannaki and Paavilainen-Mäntymäki2011). With this focus in place, we are able to propose context-specific theoretical lenses that offer practical and theoretical implications for the international business audience and the entrepreneurial process literature more specifically.
The rest of this study is structured as follows. The introduction is followed by an exposition and discussion of prior research on social entrepreneurship, particularly within the context of emerging markets. Methodological considerations are offered next, along with a detailed description of the data and data collection process. Data analysis and findings are subsequently presented and discussed. Finally, practical implications and limitations are provided.
THEORETICAL BACKGROUND
Research on Social Entrepreneurship
Despite the palpable interest in social entrepreneurship among policy makers, practitioners, and academics, the field is still considered to be ‘at a promising stage of infancy, short on theory and definition but long on motivation and excitement’ (Perrini, Vurro, & Costanzo, Reference Perrini, Vurro and Costanzo2010). Indeed, a systematic literature review by Dohetry, Haugh, and Lyon (Reference Dohetry, Haugh and Lyon2014), comprising of 129 published research articles on the topic, showed that the key focus in this research area remains establishing a definition of a social enterpise as well as building a consensus around the seemingly antagonistic nature of the ‘social’ and ‘commercial’ facets of social enterprising (Dacin, Dacin, & Matear, Reference Dacin, Dacin and Matear2010; Mair & Marti, Reference Mair and Marti2004; Zahra, Gedajlovic, Neubaum, & Shulman, Reference Zahra, Gedajlovic, Neubaum and Shulman2009). Interestingly, and while several scholars have sought to clarify the distinctiveness of social enterprising, often offering variant resource or skill-based expectations (e.g., Doherty et al., Reference Dohetry, Haugh and Lyon2014: Meyskins, Robb-Post, Stamp, Carsrud, & Reynolds, Reference Meyskins, Robb-Post, Stamp, Carsrud and Reynolds2010; Weerawardena & Mort, Reference Weerawardena and Mort2006), social entrepreneurs are still acknowledged as merely a ‘sub-species’ within the entrepreneur family (Dees, 1998).
Consequently, to seek distinction, a majority of people subscribing to the narrower definition of social entrepreneurship still often see it either as a philanthropy-driven voluntary not-for-profit organization or a non-profit organization using market mechanisms to creatively raise funds (Perrini et al., Reference Perrini, Vurro and Costanzo2010; Shaw & Carter, Reference Shaw and Carter2007). Luckily, this view is increasingly being challenged nowadays (such as Dohetry et al., Reference Dohetry, Haugh and Lyon2014; Prahalad, Reference Prahalad2000). A more recent view considers social enterprise as an innovative organizational design that can be non-profit or for-profit, but prioritizes social value creation over profits and economic rent seeking (Etchart & Comolli, Reference Etchart and Comolli2013; Mair & Schoen, Reference Mair and Schoen2007), which essentially is the key distinguishing characteristic. Social enterprises can therefore exhibit significant heterogeneity in the organizational model they choose (Perrini et al., Reference Perrini, Vurro and Costanzo2010). For-profit social enterprises, however, being a new and unfamiliar organizational form, have challenged our comprehension of their underlying properties and mechanisms, and most importantly their ability to bring about social welfare and a sustainable market performance, thus requiring more investigation.
Social Entrepreneurship and Emerging Markets
Recognized as a key player in initiating and driving structural transformation of an economy and the society, the importance of entrepreneurship and particularly of social entrepreneurship in emerging market contexts is becoming increasingly important (Haugh, Reference Haugh2005; Naudé, Reference Naudé2010). Consequently, more and more emerging countries are investing significant resources to boost entrepreneurship. To this end, China and India have both taken concerted policy decisions to boost entrepreneurship within their economies. For example, the Chinese government has committed itself to several reforms that encourage investments in micro businesses (Roberts, Reference Roberts2014). Policies are also being developed to boost procurement by public services from social businesses (Roberts, Reference Roberts2014), while many NGOs are in the process of becoming self-sustaining enterprises (FYSE, 2012). Similarly, the Indian government has created a new and separate Union Ministry for Skills Development and Entrepreneurship with a strategic imperative to promote grassroots entrepreneurship.
The growth of social entrepreneurship in emerging markets has been accredited to the ability of social entrepreneurs to successfully address persistent social and economic problems (Etchart & Comolli, Reference Etchart and Comolli2013), and offer viable solutions where the traditional commercial and public organizations have failed. Viewing the world's poorest as ‘profitable consumers’ that can positively contribute to society and the market (Prahalad, Reference Prahalad2000), social entrepreneurs are inventing new business models and new affordable markets for low-income consumers. Examples of such solutions are among others, the micro-financing schemes (Armendariz & Morduch, Reference Armendáriz and Morduch2010), and the installation of ‘e-choupals’ (i.e., electronic marketplace) in India.
Admittedly, the context, especially the institutional and market voids developed within, often plays a catalyst role in shaping the various opportunities for social entrepreneurship in these markets (Perrinni et al., Reference Perrini, Vurro and Costanzo2010). It is not surprising that a particular focus has been recently placed on the role of social enterprises within the rural areas of emerging markets. Not only does a significant population reside within rural areas − i.e., 43% in China and 67% in India (World Bank, 2017) − with increasing demands for social support, but finding means and resources is extremely challenging for the companies operating within these areas (Mehrotra & Verma, Reference Mehrotra and Verma2015). Surviving and succeeding in such challenging contexts requires an entrepreneur to be able to innovate and contribute to society by creating social and economic values (Maclean, Harvey, & Gordon, Reference Maclean, Harvey and Gordon2013), and building the right collaborative and co-operative relationships within communities (Ratten, Reference Ratten2014). It is hence reasonable to assume that social entrepreneurship is more likely to occur in rural contexts, where there are significant socio-economic and environmental problems that will make it less attractive to any other entrepreneur primarily motivated by economic concerns.
The Social Entrepreneurship Process
Despite the voluminous research on entrepreneurship, including social entrepreneurship, disproportionate focus has been on the actors, that is, the entrepreneurs, and their actions. While entrepreneurial cognition has contributed significantly to our understanding of entrepreneurial incentives, goals, and actions, its singular focus on the individual entrepreneur has neglected other key aspects of the entrepreneurial process, such as its embeddedness in the social context (Holmquist, Reference Holmquist, Steyaert and Hjorth2003; Jack & Anderson, Reference Jack and Anderson2002). As a result, our understanding of the mechanisms underlying value creation in enterprises, and particularly in social enterprises, has been rather fragmented. It is for this reason that Holmquist (Reference Holmquist, Steyaert and Hjorth2003: 77) has long argued that ‘entrepreneurship as a phenomenon cannot be understood in full unless we change focus from the actor to the action’. This has led Steyaert (Reference Steyaert2007) and other scholars (i.e., Downing, Reference Downing2005) to focus on entrepreneurship as a process, and prescribe the mechanisms employed for its success.
In recent years, there has been an increasing interest in developing a better understanding of the entrepreneurial process (McMullen & Dimov, Reference McMullen and Dimov2013; Moroz & Hindle, Reference Moroz and Hindle2012; Steyaert, Reference Steyaert2007), and different aspects have been put forward in an attempt to map out its underlying mechanisms (i.e., Morris, Kuratko, & Schindehutte, Reference Morris, Kuratko and Schindehutte2001; Shook, Priem, & McGee, Reference Shook, Priem and McGee2003). A multitude of theoretical lenses have explained parts of the process (i.e., creativity, opportunity recognition, strategizing and planning) (Steyaert, Reference Steyaert2007; Suddaby, Bruton, & Si, Reference Suddaby, Bruton and Si2015), and several frameworks have been developed accordingly. Yet, none of these frameworks are sufficient to provide a clear understanding of the entrepreneurial process as a whole (McMullen & Dimov, Reference McMullen and Dimov2013; Moroz & Hindle, Reference Moroz and Hindle2012). At the same time, atomistic analysis of various functions or a particular phase or even an action prevents us from developing the linkages and scaffolding between one phase and/or actions and another, without which it becomes difficult to appreciate the significance of influential factors in each phase that facilitate the next phase.
The above caveats have led McMullen and Dimov (Reference McMullen and Dimov2013) to suggest that it is important to consider the entrepreneurship process as a journey rather than an action, thus bringing focus back on understanding the entirety of the process and not just its parts or an aspect (such as funding or resource mobilization). To this end, empirical studies should not only focus on a particular action or an activity, but on the sequencing of activities as well, along with their distal outcomes, such as new venture creation and development. As McMullen and Dimov succinctly explain: ‘Each event on the path to the eventual outcome is necessary to explain the outcome, but by itself is not sufficient: what is sufficient are all the events that occur after it, without which it would be plausible to presume that the outcome would not occur as actually observed’ (Reference McMullen and Dimov2013: 1488). By considering multiple aspects of the studied venture, we can develop a historical account of what happened within and also how events have concurrently unfolded (Venkataraman, Van de Ven, Buckeye, & Hudson, Reference Venkataraman, Van de ven, Buckeye and Hudson1990). Meanwhile, converging and reconciling divergent and dichotomous viewpoints under one holistic framework, we can simultaneously investigate the multiple decisions being made within a venture, while extrapolating how generally different stages link to one another and which are the main antecedents in each stage.
The method proposed by McMullen and Dimov (Reference McMullen and Dimov2013) is novel, bur it comes with certain limitations. The approach can be gainfully used to develop a more holistic understanding of the new venture creation. However, it can be easily compromized by the complexities of the endeavour, forcing the researcher to focalize upon one aspect at a time.[Footnote 1 ] While McMullen and Dimov (Reference McMullen and Dimov2013: 1487) argued that there is value on ‘separating each entrepreneurial effort and treating it as a different observation in its own right’, partitioning of the observation space horizontally (i.e., efforts that are illustrated as continuing) can come only with the sacrifice of temporality (or time line) as each new venture phase will call for distinct and inter-related entrepreneurial efforts. Furthermore, there is an implicit assumption that all efforts begin at the same time and continue until the outcome can be observed (McMullen & Dimov, Reference McMullen and Dimov2013: 1486). The latter might be true only if the categorization is too broad, such as at function level (i.e., human resources or finance) because there is always an ongoing activity (or a decision to be made) in a given functional domain. Nevertheless, it would be more fruitful to focus on the overall journey of the venture and define broad intuitive stages to identify the key antecedents that play an important role in each stage. Identifying intuitive phases helps to avoid neglecting temporality, as evident in Scarbrough, Swan, Amaeshi, and Briggs (Reference Scarbrough, Swan, Amaeshi and Briggs2013). The multiple ongoing actions across various functions in a venture eventually lead to an ultimate outcome, namely, establishment, survival and/or growth of the venture. It is also to be borne in mind that all actions for that phase will not necessarily begin and end in that very phase; the actions may transcend intuitive phases. It is also very much likely that an action will scaffold other action(s) (e.g., winning a major contract from a customer and then using that to secure a debt funding), as is evident in case studies by Venkataraman et al. (Reference Venkataraman, Van de ven, Buckeye and Hudson1990). The aforementioned is the methodological approach taken in this research, which we believe also progresses the idea proposed by McMullen and Dimov (Reference McMullen and Dimov2013).
Today we recognize that the entrepreneurial process starts typically with the recognition of an opportunity (Bhave, Reference Bhave1994; Jack & Anderson, Reference Jack and Anderson2002; Morris et al., Reference Morris, Kuratko and Schindehutte2001) and the entrepreneur's commitment to the idea of a new venture (Forbes, Reference Forbes1999). Once the entrepreneur commits to the idea, that idea goes through a phase of refinement, reframing, and development that leads to objectives that are viable, pragmatic, and contextually embedded. Viability and pragmatism essentially relates to resources and networks that can be secured to progress the venture. Table 1 provides a snapshot view of how other scholars’ compilation of the entrepreneurship process relates to ours. This process transforms early ideas into ideas that are closer to reality and thus more easily accepted by the relevant stakeholders. In addition, the process allows entrepreneurs to effectively act upon the ideas by determining and acquiring the necessary resources for their execution (Forbes, Reference Forbes1999; Morris et al., Reference Morris, Kuratko and Schindehutte2001). Despite the entrepreneurial process being non-linear, it arguably follows three key stages (as shown in Figure 1): 1) commitment to pursue an opportunity (i.e., definite ‘motive’); 2) further development and refinement leading to the establishment of definite objectives (i.e., practicable actions leading to ‘means’); and 3) realization of those objectives (i.e., maturing and subsequent achievement of an ‘opportunity’). Drawn by the similarities to McMullen and Dimov's (Reference Kazanjian2013) proposed idea, we identify these processual dimensions to establish motive, means, and opportunity. Yet, we do not identify specific functional tasks key in a particular phase (e.g., Kazanjian, Reference Kazanjian1988). Unlike Kazanjian (Reference Kazanjian1988), we consider resource acquisition as an activity that will happen throughout the entrepreneurial process and is not necessarily limited to conception and development. We acknowledge that relevance and intensity of a set of activities and/or activities relating to a functional domain may vary across phases, and will be context-dependent.
Table 1. Contrasting views on the entrepreneurial process
Figure 1. Entrepreneurial process
Our research seeks to follow the path prescribed by McMullen and Dimov (Reference McMullen and Dimov2013) and observe the social entrepreneurial process from start to finish. Furthermore, as we identify the sequence of activities and events in each venture, we focus on identifying key factors causing the activities and contributing to the outcome. The literature-derived entrepreneurial process model discussed above provides us with a research anchor as it initiates and guides (but not limits) empirical analysis (Pajunen, Reference Pajunen2006; Perrini et al., Reference Perrini, Vurro and Costanzo2010). However, the empirical research will help refine and extend the proposed model, and shape our understanding of the entrepreneurial process undertaken by social entrepreneurs. As we implement this approach, we identify factors that enable social entrepreneurs to overcome challenges to the creation of social and economic value, which then becomes one of the key contributions. Being specific to social entrepreneurs in China and India, these factors add to our understanding of the process of social entrepreneurship within this unique social context, as suggested by Welter (Reference Welter2011) and Zahra (Reference Zahra2007), among others.
METHODOLOGY
Research Design
In our study, we examine a small number of social entrepreneurs in two different contexts to investigate a social phenomenon, namely, the creation of social value by social entrepreneurs. In other words, the case here is the individual, the social entrepreneur (as in Jack & Anderson, Reference Jack and Anderson2002; and Svejenova, Reference Svejenova2005), whereas the unit of analysis is the process employed by social entrepreneurs in creating social value in each country (Fletcher, Zhao, Plakoyiannaki, & Buck, Reference Fletcher, Zhao, Plakoyiannaki and Buck2018).
In the present research, we use an in-depth, multiple case study approach for data collection in our comparison of two different countries ─ China and India. A case study approach has been chosen because it allows for intensive research of new topic areas in a manner that is not restricted by limited or narrowly defined variables (Eisenhardt, Reference Eisenhardt1989; Eisenhardt & Graebner, Reference Eisenhardt and Graebner2007). This methodology is both theoretically and practically appropriate as the research question being investigated is in a relatively new area of social entrepreneurship that has received less attention in the past (Sardana & Zhu, Reference Sardana and Zhu2017). The multiple case study approach is also preferred here, since it provides a stronger base for theory building: ‘the theory is better grounded, more accurate and more generalizable (all else equal) when it is based on multiple case experiments’ (Eisenhardt & Graebner, Reference Eisenhardt and Graebner2007: 27). Inspired by the philosophical underpinnings of the critical realism paradigm, however, our focus is deeply grounded in the process and the contextual conditions under which social enterprise survive (Easton, Reference Easton2010), and not simply on the patterns observed. Our approach allows for a more distinct explanation of the mechanisms under investigation. To this end, we employ a comparative case study approach to allow for a cross-national conceptualization of the entrepreneurial processes examined (Baker et al., Reference Baker, Gedajlovic and Lubatkin2005; Bartlett & Vavrus, Reference Bartlett and Vavrus2017).
Context of Analysis
The context of analysis is the social for-profit entrepreneurs operating in rural areas of China and India. People living in rural areas face significant challenges in accessing even basic amenities and infrastructures (such as water, sanitation, primary health and education). In several remote rural areas in China and India, governments (local or national) also find it prohibitive to reach and deliver services that are necessary for the proper functioning of markets (e.g., banking facilities, provision of supply chain and warehouse facilities for the procurement of produced goods). Poverty and associated problems in rural areas are thus a big concern for China and India (Tewari, Reference Tewari2015; Tiezzi, Reference Tiezzi2018).
Both countries, particularly their rural areas, exhibit several social and institutional similarities that render them vulnerable to the same problems and barriers associated with entrepreneurial endeavours (i.e., heavy government influence). Generally speaking, cultural norms and way of life in rural areas of both China and India are also overwhelmingly conservative, and many traditional rules and systems place constraints on innovative ideas and actions. Rural society is accustomed to the traditional way of doing things and does not challenge the existing rules and systems easily (Lan, Zhu, Ness, Xing, & Schneider, Reference Lan, Zhu, Ness, Xing and Schneider2014). These severe limitations and challenges have prevented the rural population, which is largely underprivileged and lives below poverty line, to be considered as ‘profitable customers’ as suggested by Parhalad (Reference Prahalad2000). However, it is these persisting constraints in rural areas, coupled with the promise held by on-going economic reforms and transformations for the prosperity of the masses, which have provided a fertile ground for innovative social entrepreneurs and/or people in rural communities to take the lead by changing and breaking the old established norms. Some of these social entrepreneurs are inventing ingenious ways of leading social development in a sustainable and non-paternalistic way.
Rural social entrepreneurs face many challenges when adopting new approaches and encounter strong resistance from time to time. Normally, resistance against change comes from a traditional mindset and social hierarchy within the villages (Lan et al., Reference Lan, Zhu, Ness, Xing and Schneider2014). External forces such as officials and other interest groups might also intervene and resist change (Mehrotra & Verma, Reference Mehrotra and Verma2015). There could be other limiting factors relating to operational capacities, poor processes due to limited IT capabilities and organizational structures, problems relating to workforce retention and management, and scaling up (Mehrotra & Verma, Reference Mehrotra and Verma2015). In addition, different stages of market transitions provide different opportunities as well as constraints. Therefore, these rural social entrepreneurs must be able to overcome difficulties with self-determination, proactive thinking and action, self-control and persistence, and be able to implement their strategy effectively (Li, Young, & Tang, Reference Li, Young and Tang2012). These unique characteristics enable rural social entrepreneurs to survive during the process of reform and transformation.
Taking the above into account, we choose to focus on the rural areas of China and India due to their economic significance for their respective countries, and because the social process and benefits are more clearly observed in these less deprived areas (Jack & Anderson, Reference Jack and Anderson2002). While rural businesses have been examined in the past (i.e., Blackburn & Curran, Reference Blackburn, Curran, Curran and Storey1993), social entrepreneurship has not been well investigated. As a result, our understanding of how social entrepreneurs create value in these regions remains fragmented, possibly biased by our generic appreciation of how businesses act. Meanwhile, we posit that the analysis of the two countries together can offer us novel insights and a more comprehensive understanding of the mechanisms associated with the social value creation process among social entrepreneurs within emerging markets in general.
Data Sampling
Our method of identifying social enterprises is similar to the method used by Sinkovics, Sinkovics, and Yamin (Reference Sinkovics, Sinkovics and Yamin2014) and is purposive in nature (Fletcher et al., Reference Fletcher, Zhao, Plakoyiannaki and Buck2018). We identified social entrepreneurs in China by selecting a number of rural social enterprises in Yunnan and Zhejiang provinces. To select deserving social enterprises for the study, we also took the advice of scholars from Renmin University, who had developed extensive expertise in the study of rural studies. In India, we started with the extensive list of social entrepreneurs published by the Ashoka Foundation, but realized that the list comprised mainly not-for-profit social entrepreneurs. We thus supplemented our list extensively by referring to articles on several social entrepreneurs (particularly those taking a for-profit approach) published by Yourstory.com.
For the selection of our final sample (Patton, Reference Patton2015; Fletcher et al., Reference Fletcher, Zhao, Plakoyiannaki and Buck2018), a strict screening process was adopted which was split into four distinct stages. Our first concern − Stage One − was to differentiate between for-profit social entrepreneurs and not-for-profit social entrepreneurs, and exclude the latter from our study. Nevertheless, since we were interested only in social entrepreneurs who are successful in their endeavours to create social value, in Stage Two we narrowed our focus to social entrepreneurs that exhibited prestige and gained recognition in their respective communities (Sinkovics et al., Reference Sinkovics, Sinkovics and Yamin2014: 696). Using the above criterion, we were able to exclude for-profit social enterprises that boast of a healthy balance sheet, but offer minimal actual contribution to social value creation, and/or use the label of ‘social entrepreneurs’ for personal benefit only (Sardana & Zhu, Reference Sardana and Zhu2017).
In Stage Three, the data sample was further narrowed down to concentrate on social entrepreneurs who were primarily working within rural areas. This distinction was important for clearer ‘context-shaped justifications’ (Poulis, Poulis, & Plakoyiannaki, Reference Poulis, Poulis and Plakoyiannaki2013: 312), since the needs and requirements for social value creation are likely to be different in rural and urban settings. The availability of secondary information and willingness to participate narrowed down our sample further (Poulis & Poulis, Reference Poulis and Poulis2012). Finally, we contacted ten entrepreneurs in China and India respectively, but only five entrepreneurs responded positively to our call in China and six in India. We decided to focus on five cases in each country for consistency and easier comparability.
Tables 2a and 2b provide a detailed background of the five social entrepreneurs chosen in each country. Given this is a preliminary research project with the purpose of identifying issues and exploring the processes of social entrepreneurship engaged in rural areas, these case studies are deemed optimal to provide sufficient theoretical insights for further development in future research (Eisenhardt, Reference Eisenhardt1989; Easton, Reference Easton2010).
Table 2a. Descriptive profile of five rural-focused social entrepreneurs in China
Table 2b. Descriptive profile of five rural-focused social entrepreneurs in India
The Interview Process
To demystify the entrepreneurial process and decode the process of how social value is created, we worked ‘backwards from events (cause-of-effects explanations)’ (Welch et al., Reference Welch, Piekkari, Plakoyiannaki and Paavilainen-Mäntymäki2011: 749). To this end, in-depth semi-structured interviews were conducted specifically with the founding social entrepreneurs to understand ‘why’ they did and ‘what’ they did. This is one of the primary methods suggested by McMullen and Dimov (Reference McMullen and Dimov2013). The other method of conducting a ‘truly’ longitudinal ethnographic study is to direct observations and interviews across several time periods, as suggested by Blazejewski (Reference Blazejewski, Piekkari and Welch2011: 256). While this method is praiseworthy and an ideal approach to develop an in-depth insight, we considered it to be too time consuming and, to an extent, impractical in relation to the idea of holistically understanding the sequential process of founding a new venture, as suggested by McMullen and Dimov (Reference McMullen and Dimov2013). Blazejewski (Reference Blazejewski, Piekkari and Welch2011) also suggests that a longitudinal approach may not be best suited to all case study research. It is then not surprising when McMullen and Dimov (Reference McMullen and Dimov2013) mention a ‘bottom-up computational modelling’ approach as a viable alternative to ex-post study, to better understand the entrepreneurial process. The ‘longitudinal’ designate study by Venkataraman et al. (Reference Venkataraman, Van de ven, Buckeye and Hudson1990) [and described by McMullen and Dimov (Reference McMullen and Dimov2013) as an example of a study adopting sequential process approach] also gathers data using interviews at only two cross-sectional time events to study a particular type of event that has proven catastrophic for a company.
The temporal research perspective for this study is ex-post and the temporal data perspective is retrospective as per Blazejewski (Reference Blazejewski, Piekkari and Welch2011: 256). The interviews were focused on episodic details of the entrepreneurial process which the entrepreneurs adopted in each case. Due care was taken to safeguard against selective recollection of positive outcomes. Questions were asked and prompts used that directed the interviewees to speak about learning from failures and shortcomings in the course of the entrepreneurial journey (Sardana & Scott-Kemmis, Reference Sardana and Scott-Kemmis2010). This approach was crucial in developing insights into what led to decisions and behaviours, and thus understand how these actions resulted in a successful outcome over a period of time; that is, establishing a successful for-profit social enterprise which created social value in rural areas and continuing to do so since its foundation. It is the continuing popularity and existence of the venture while contributing to social value creation that can be seen as a tangible outcome of the entrepreneurial process, for ‘the entrepreneurial journey continues as a means to survive in a constantly shifting landscape’ (McMullen & Dimov, Reference McMullen and Dimov2013: 1496). Identification of this outcome is particularly important in the context of for-profit social enterprises where self-sustainability is as much of interest and concern as is the social value creation.
To best utilize the limited time available for interviews with the social entrepreneurs, secondary information about the social enterprise was gathered (refer to Table 3) using online research, news items, YouTube interviews/talks (in some instances), and company websites (including annual reports and press releases) prior to meeting with the entrepreneurs. News items on a particular company were gathered by performing a Google or Baidu search and taking note of items reported on the websites of the respective companies. In the case of Indian companies, one can potentially find more (and chronological) information by searching the Factiva database owned by Dow Jones and Company. In the case of Chinese companies, another valuable source of information are reports on the social entrepreneurs prepared by Renmin University, and/or government reports in some cases. Collating secondary information allowed researchers to initiate and conduct targeted discussions with each social entrepreneur on specific episodes that occurred over the life of the new venture. The approach is inspired by Bhaskar's critical realism or what is termed ‘contextualized explanation’ by Welch et al. (Reference Welch, Piekkari, Plakoyiannaki and Paavilainen-Mäntymäki2011), with the explanation of an action by the actor being both interpretive and causal, and the actions being influenced and shaped by the social context. In addition, since each entrepreneur's story related to different points in time, further secondary data of the relevant time period was collected after the interviews where required. This additional step was imperative for a deeper appreciation of the milestones reached by the interviewees. A great deal about the episodes described in the interviews were reconstructed by researching media sites, YouTube and other country-specific sources, such as Yourstory.com in India.
Table 3. Sources of secondary information
Note: Some is <=20; Moderate is <=50 but >20; Several is >50
Since all identified social entrepreneurs in India were professionals and English is a common language of communication for them, the interviews conducted in India were in the English language, and therefore transcribed verbatim. The interviews conducted in China were in Chinese and were translated into English, accurately representing the meaning, by one of the researchers who is a native Chinese speaker. The duration of each interview was between 1 and 1.5 hours.
Data Analysis
Having five different cases from each country of analysis, with at least one interview of an hour, combined with additional information gathered from several secondary sources, resulted in an enormous stream of data. While it is possible to gain a sense of the data at the collection stage (Miles & Huberman, Reference Miles and Huberman1994), it was decided early in the process that it would be almost impossible to analyze efficiently all the collected data without the use of a good management tool. Such a tool was imperative for us to code the data in a way that made it possible to create objective themes and patterns for discussion (King, Reference King, Cassell and Symon2004; Spencer, Ritchie, & O'Connor, Reference Spencer, Ritchie, O'Connor, Ritchie and Lewis2003). NVivo™ software was chosen for this purpose.
We used both a deductive and inductive approach to analyze our data. This approach, defined by Welch, Plakoyiannaki, Piekkari, and Paavilainen-Mäntymäki (Reference Welch, Plakoyiannaki, Piekkari and Paavilainen-Mäntymäki2013) as ‘revisionist repertoire’, is typically followed when the focus of attention is theory refinement rather than theory building (Welch et al., Reference Welch, Plakoyiannaki, Piekkari and Paavilainen-Mäntymäki2013: 253–254). Scholars who have successfully used this approach, tend to blend a deductive (theory inspired) and an inductive (data inspired) logic in their analysis (Denis et al., Reference Denis, Lamothe and Langley2001; Pajunen, Reference Pajunen2006), fostering a richer theoretical framework without having to reinvent concepts that are already known (Denis et al. Reference Denis, Lamothe and Langley2001).
Adopting a deductive logic, we hence explored existing literature and its assumptions to develop an initial framework and expectations of the phenomenon under investigation; a ‘guideline(s) for data collection and analysis’ as described in Pajunen (Reference Pajunen2006: 1266). Embracing an inductive logic, we collected context-specific data to distinguish between alternative explanations associated with the context under investigation (Easton, Reference Easton2010; Tsui, Reference Tsui2004).
Based on the above approach, we employed a ‘directed’ thematic approach for our data analysis (Aronson, Reference Aronson1995). Although our analysis started with a coding scheme based on existing literature, the codes did not remain fixed; on the contrary, they were ‘refined throughout successive iterations between theory and data’ (Welch et al., Reference Welch, Piekkari, Plakoyiannaki and Paavilainen-Mäntymäki2011: 743), hence simultaneously ‘directed’ by the empirical findings. For example, several codes, such as relevant experience, relevant education, formal research, learning by doing, business plan, perseverance, network and innovation, have long been found to be associated with entrepreneurship literature. We included these in our analysis so we could compare our findings with existing literature from typical commercial entrepreneurs (Dees, Reference Dees1998; Meyskins et al., Reference Meyskins, Robb-Post, Stamp, Carsrud and Reynolds2010). Nonetheless, in adopting an inductive, ‘open coding’ approach (Korsgaard & Anderson, Reference Korsgaard and Anderson2011), several additional codes unique to social entrepreneurship were identified (e.g., compassion, survival of the community, networking with government officials and government as a major client).
This initial round of analysis produced several codes that were then sorted according to themes or classifications that have been typically used by entrepreneurship scholars to categorize or situate their research work. The emerging codes were thus broadly categorized into intuitive themes based on the ten social entrepreneurs’ responses. The themes related to: 1) the entrepreneurs’ characteristics and leadership role; 2) the business opportunity being pursued; 3) the context of decision making; 4) the process of decision making; and 5) other miscellaneous factors affecting the entrepreneurial process. This stage of analysis not only helped us in building a perspective on the data at hand, but also encouraged us to move to a more contextual level of analysis.
In the latter iterative rounds of analysis, we concentrated on aggregating the codes[Footnote 2 ] into manageable numbers of themes that reflected the entrepreneurial process as proposed in Figure 1, while accounting for each context of analysis, namely, India and China. Hence, distinct frameworks for each country were developed as seen in Figures 2a and 2b.
Figure 2a. Entrepreneurial process of ‘social value’ creation by social entrepreneurs - CHINA
Figure 2b. Entrepreneurial process of ‘social value’ creation by social entrepreneurs – INDIA
EMPIRICAL FINDINGS
The findings of the empirical research are presented in this section under three major headings, namely, commitment to create ‘social value’, establishment of a pragmatic and contextualized ‘social value’ objective, and realization of ‘social value’ objectives.
The commitment to create a ‘social value’ theme focuses on the personal motivation and the values of the entrepreneur (or the entrepreneurial team) in our sample. These motivations have a direct bearing on both setting up of a ‘social value’ agenda for a new venture and thereafter making it a primary objective, such that the venture is distinguishable as a social enterprise (Austin, Stevenson, & Wei-Skillern, Reference Austin, Stevenson and Wei-Skillern2006). After all, without an inclination and determination to make an effort to contribute to the common good of the society, the existence of a social enterprise is not a possibility.
Meanwhile, the creation of a social value objective of a social enterprise must reflect the direct needs of the people and should be achievable in a reasonable timeframe. Additionally, since social entrepreneurs seek to create social value using market mechanisms, they need to demonstrate integrative thinking that is able to do justice to the twin objectives of the common good and economic sustenance of the venture through market mechanisms (Tracey, Phillips, & Jarvis, Reference Tracey, Phillips and Jarvis2011). Consequently, the second theme in our analysis rests on the pragmatic approach taken by social entrepreneurs in transforming personal motivations into tangible social objectives of the venture.
Last but not least, once a pragmatic and contextualized social objective has been conceived and established, it is important to realize and implement it. The realization of ‘social value’ objectives is the third theme in our analysis and is demonstrated through social entrepreneurs: 1) make contextualized and informed decisions; 2) manage legitimacy; and 3) seek alignment to the objectives and views of the government.
The three themes mentioned above are directly related to our empirical enquiry on the process of creating social value objectives and their realization. We first discuss separately each country's findings; this approach allows us to gain a clear comprehension of the motivations and mechanisms of value creation associated with each context and its actors[Footnote 3 ] (Bartlett & Vavrus, Reference Bartlett and Vavrus2017). Subsequently, in the discussion section, we compare and contrast our findings to identify similarities and differences between the two contexts, so we can reach a deeper appreciation of how the context is affecting value creation in social enterprises within the examined emerging markets (Bartlett & Vavrus, Reference Bartlett and Vavrus2017; Welch et al., Reference Welch, Piekkari, Plakoyiannaki and Paavilainen-Mäntymäki2011).
THE CASE OF CHINA
Commitment to Create ‘Social Value’ in China
While ‘compassion’ is commonly acknowledged as the key motivating factor for social entrepreneurs operating in deprived areas (Miller et al., Reference Miller, Grimes, McMullen and Vogus2012), our analysis demonstrated that the phenomenon is actually more complicated and multifaceted. In fact, the key driving forces behind the Chinese social entrepreneurs in our study are their personal aspiration for growth and development (Germak & Robinson, Reference Germak and Robinson2014), and their ambition to bring about change in their community. This survival-oriented motivation (Carsrud & Brännback, Reference Carsrud and Brännback2011) is so strong that it has taken the form of social entrepreneurship, resulting in development at the local grassroots level. Encouraged by factors such as a better education, work experience or social standing that bestowed them with natural leadership abilities and credibility within the community (Waddock & Post, Reference Waddock and Post1991), these social entrepreneurs undertook leading business positions within their communities and became avid proponents for the survival and upliftment of these communities.
I was educated in the country and stayed on as a school teacher after I graduated. I returned to my village because my parents were getting older. When I returned, I found the village was so poor in every aspect, including income level, infrastructure, school system, and medical care. Because I was educated, I started to teach others about new ways of producing tea and marketing, and helped to develop a new school. (Quote by C2)
Establishment of a Pragmatic and Contextualized ‘Social Value’ Objective in China
Acknowledging the requirement for social entrepreneurs to balance the often antagonistic objectives of common good and economic sustenance (Mair & Marti, Reference Mair and Marti2004; Tracey et al., Reference Tracey, Phillips and Jarvis2011), a pragmatic approach in transforming personal motivations into tangible social objectives was rather expected. Indeed, our findings from the study of Chinese social entrepreneurs demonstrate clearly this integrative and pragmatic thinking. These social entrepreneurs exhibit a dual goal orientation in their ventures, striving simultaneously for economic growth and community sustainability (Hartigan, Reference Hartigan2006; Miller et al., Reference Miller, Grimes, McMullen and Vogus2012). They do so by articulating the needs of their community and customers, after having developed a strong knowledge of the social context and its individualities. As C3 explained, he initially envisioned the idea of eco-tourism so he could attract city dwellers from Shanghai and benefit of his village and community, while preserving the local culture and environment.
Shanghai has a lot of high rise buildings, but we have many high mountains, ethnic culture, clean water, air and a pristine environment, which Shanghai does not have. We need to protect not only the natural beauty of our village, but also our cultural traditions, including preserving the old architecture. We can develop in a balanced way, by improving public services and facilities, combining our culture and ethnicity with ecological and economic development in a sustainable way. (Quote by C3)
Meanwhile, catering to the needs of other important stakeholders is also deemed essential for the survival of the venture. A particular emphasis is placed on catering for the needs of the benefitting village community. Social entrepreneurs who take into consideration the viability and achievability of their social value creation objectives by reducing the risk profile of their ventures, seem to more effectively convince the members of their community of their ‘big cause’ (Fox & Kotler, Reference Fox and Kotler1980) and have better chances of meeting their overall objectives, as evident in the quote below.
I needed capital for building the new hotel. I did not simply get a loan from bank, but I developed a kind of membership among our regular customers to join our hotel. I asked them to put nominal money in so I could reserve a big room for them in my hotel. It was like an investment. When they came to visit us, they would see the business potential. So they were happy to put money in and my hotel was built up quickly. (Quote by C4)
The above finding is not surprising per se, if we take into account the challenges faced within the examined regions. Despite the increasing participation of private/hybrid[Footnote 4 ] types of companies in China (Nee & Cao, Reference Nee and Cao2005), these companies still have limited discretion in resource acquisition and allocation (Bruton & Ahlstrom, Reference Bruton and Ahlstrom2003; Zhang, Reference Zhang2015). As a result, personal connections play the most important role in the success of any entrepreneurial endeavour, especially in the most deprived regions of the country (Bruton & Ahlstrom, Reference Bruton and Ahlstrom2003; Burt & Burzynska, Reference Burt and Burzynska2017). However, since doing business in China still remains a risky and uncertain venture (Peng, Reference Peng1997), offering some assurance from the entrepreneur can have a significant impact on the investment decision.
Realization of ‘Social Value’ Objective in China
Contextualized and informed decision-making process
Several empirical studies have shown that a strategy or a decision that is tailor-made for a specific context has superior performance (Schneider, Reference Schneider1989; Slevin & Covin, Reference Slevin and Covin1997). After all, every decision making process is linked to the social, cultural and ecological environment (Tapsell & Woods, Reference Tapsell and Woods2010). Meanwhile, prior experience (Mitchell, Reference Mitchell1997) and education are also central to the entrepreneurial process and decision making process (Ahlstrom & Ding, Reference Ahlstrom and Ding2014; Sardana & Scott-Kemmis, Reference Sardana and Scott-Kemmis2010). Using experience, conceptual and procedural knowledge can be accessed and integrated with superior monitoring and self-regulatory skills. It is these qualities that an experienced decision-maker utilizes to help address uncertainties related to decision making. Experience in strategic planning, developing a business plan, developing global markets and operations, financing and strategic alliance formation were found to be positively related to performance (Reuber, Reference Reuber1997).
Our cases in China provide sufficient support for these arguments. Banking on relevant experience and education, social entrepreneurs tend to deliberate on issues and problems, and make logic-based decisions. For example, C5 was a senior engineer before his retirement and while working with villagers, he was able to use his specialized knowledge of developing innovative techniques in bamboo plantation and production, quickly improving the income level among the village members.
Our findings further reveal that flexibility in adapting processes and thinking, and making them congruent to the external context are essential to entrepreneurial success. In addition, since in most cases resources are scarce (Bruton & Ahlstrom, Reference Bruton and Ahlstrom2003), a careful course of action is required. It is hence not surprising that planning was mentioned by all entrepreneurs interviewed. Interestingly though, they all placed limited emphasis on written business plans and controls, mostly due to the complexities imposed by such formal structures.
Managing legitimacy
The social standing of entrepreneurs is the most important factor for gaining legitimacy in China, providing them credibility and legitimacy that can positively affects their social venture. This social standing can arise from any factor, such as education and/or the position/authority held. We see this aspect present across all our cases either due to higher qualifications and/or due to the position held within the community. C4 explicitly suggests the importance of personal background and experience in gaining legitimacy among stakeholders:
I was an army man and working in the cities before returning back to my village. I have built very good business networks and accumulated knowledge for developing new business. Therefore, I became a natural leader to establish the new village co-operative when I returned. (Quote by C4)
Legitimacy of the social enterprise is also enhanced when stakeholders are involved and trusted in decision making. This is particularly important when the organization is a co-operative and opinions of individual members need to be respected.
The new co-operative has a new way of managing village business. We have a board of elected members among village people. We make a collective decision on the development plan right from initial stage of preserving the ancient tea trees and protecting the forest, to cleaning the village and developing new infrastructure, so that tourists can come in. (Quote by C1)
It is hence not surprising that Chinese social entrepreneurs agreed on the important role of influential networks but also the supportive system of government officials.
Aligned to government
In line with the above discussion, Chinese social entrepreneurs seem to consider networking with government officials as crucial to their success, making an extra effort to keep them satisfied in order to win grants or contracts for services/products. In addition to networking with government officials, implementing policies and frameworks outlined by the government is also important. This conveys the message that the social enterprise is aligned with the government's agenda, and thus makes itself eligible for the government's largesse. Indeed, prior studies indicated that guanxi with government officials is very beneficial but only when the goals of the stakeholders are cooperative and well aligned (Tjosvold, Peng, Chen, & Su, Reference Tjosvold, Peng, Chen and Su2008), or as C1 explains:
I have been village chief for many years and experienced the transformation from ‘commune system’ to ‘individual household responsibility system’ then to ‘voluntary co-operative system’…. Sustainable development needs to rely on government support first and secondly on the co-operation of village members. (Quote by C1)
THE CASE OF INDIA
Commitment to Create ‘Social Value’ in India
Consistent with Miller et al. (Reference Miller, Grimes, McMullen and Vogus2012), we find that compassion does play the most important role in motivating Indian social entrepreneurs, particularly those having a good social standing due to education from an esteemed institution, or coming from a privileged background, or having a high social status because of a prior job position. These individuals acknowledge the huge opportunity costs, while indulging in a social venture.
We guys got some sort of decent education and ended up with IITs and IIMs, so in some way [we] became privileged because of selection and education….but very sort of sensitive to the gross inequalities around us. As an Indian, you encounter so much absolute poverty every day. We may have only two responses: either shut your mind to it or do something about it. (Quote by I1)
Meanwhile, the social entrepreneurs with privileged backgrounds in India tend to perceive ‘social value creation’ as a challenge that they would like to take up to satisfy their intellectual and higher order achievement motives. They are inspired by the challenge to create newer and more effective systems, innovate and pursue creative business models and processes that could address significant social needs in a satisfactory manner (Zahra et al., Reference Zahra, Gedajlovic, Neubaum and Shulman2009).
It is pretty much a market issue. Over six hundred million [rural] people [in India]…they get bad quality products at higher prices. And how do you provide these people access to quality products? So it was more of an intellectual challenge on the process and the fact that I wanted to do something here where my family is. (Quote by I5)
Establishment of a Pragmatic and Contextualized ‘Social Value’ Objective in India
A pragmatic approach in transforming personal motivations into tangible social objectives is also clearly demonstrated among the Indian social entrepreneurs. Developing a good knowledge of the social context and their key stakeholder seems to be paramount for Indian entrepreneurs as well, so they can achieve a desired balance between community service and profit making. For Indian social entrepreneurs, however, key stakeholders are the end customers and not the community per se. To this end, motivating the end customers and rallying them to their ‘social objectives’, their ‘big cause’ (Fox & Kotler, Reference Fox and Kotler1980) is pertinent to their success. The following quote demonstrates clearly how a big cause was used by Indian social entrepreneurs to rally people to the cause of their venture.
Usually networks like VISA or MASTERCARD limit the kind of things you can do. India requires smaller value payments which don't happen because of the business model of larger payment networks. This was what I set this company for. It was a very ambitious goal for a garage start up to say that we'll make the new payment system or the first domestic payment system in India. (Quote by I4)
Furthermore, perseverance plays an important role in the establishment of the social value creation objectives as observed in the quotes below.
The first venture fund that gave us money was a lady who interviewed me the first time. I had a professional relationship with her for five and a half years, and she had already refused twice saying they'll not give money before they actually said yes. (Quote by I2)
This took almost two and a half years to reach the level where it could be done as a pilot. When we started this project we didn't have mobiles in mind. Since mobiles had become a very big factor in the interim, we decided to take a close look at mobiles and see if we could do this payment system without using cards and without using terminals. So, we started from scratch and invented a new product. (Quote by I4)
Realization of ‘Social Value’ Objective in India
Contextualized and informed decision-making process
As mentioned earlier, prior experience and education are paramount to a contextualized and informed decision making process, as well as necessary parameters for the realization of the social objectives of social entrepreneurs. Our evidence indeed confirms that most of the Indian social entrepreneurs not only had higher education in management or their respective domains, but also rich relevant experience prior to their endeavours. The quote from I1 (example 1 in Table 4) shows the importance of prior experience that contributed to his learning and influenced his thinking. Learning by doing is thus an important and critical element in the entrepreneurial context (Sardana & Scott-Kemmis, Reference Sardana and Scott-Kemmis2010) and the adaptive style of decision making is thus clearly seen among social entrepreneurs.
In the first model created, we decided areas in which Indian villages lacked, but cities have, i.e. distribution access [to] energy, cook stove, sanitation… but what we had to find in the beginning was a process [of selecting] multiple items. Which are the easily marketed products? We also give importance to sustainability… so, we found light sells easy…we started light… whereas a cooking stove is harder to sell.(Quote by I5)
Table 4. Further indicative quotes
Furthermore, flexibility and quick thinking is also identified by the Indian entrepreneurs as key to success, potentially turning a challenging situation into an advantage (see example 2). Interestingly though, Indian entrepreneurs are particularly keen to use more formal plans of actions and formal monitoring and evaluation mechanisms. As evident by I1, the idea behind such an approach is not to eliminate all the surprises, but to be better prepared for them, that is, to plan to learn (Murmann & Sardana, Reference Murmann and Sardana2012).
… at least mentally you have a construct of what is a business; you know that you have to worry about finance, you have to worry about HR, you have to worry about strategy, worry about regulation, business quality… all kinds of things. I became CEO at the age of 27, and since then every night when I go to bed and again in the morning, I do a 360 degree scan of my businesses; whenever I see that there is some deficiency, it becomes the task of the day… you work on that part of the problem strangulating your growth. (Quote by I1)
Managing legitimacy and government alignment
As in the case of Chinese social entrepreneurs, pragmatic legitimacy is an important facet of success among their Indian counterparts, especially due to the increasing role played by funders and their growing demand for professionalism and accountability even in the social sector (Nicholls, Reference Nicholls2010). Thus, if social entrepreneurs sometimes fail to gain pragmatic legitimacy on their own, they seek to compensate by ‘borrowing’ it.
You need some credibility. So, I went to IIT [Indian Institute of Technology] Madras and started from the incubator because I knew that on my own I had no credibility. I was a 22 year old out of a college, so IIT Madras was the stamp; rural technology business incubator was the stamp. (Quote by I2)
Furthermore, social entrepreneurs are often strategic in their thinking as they are attentive and persistent in their objective to benefit from opportunities that may not just provide them with short-term monetary benefit, but will also lend them much-needed legitimacy in the long-term, such as having a reputed multinational company as one of the clients (see example 3). Like any other entrepreneur, social entrepreneurs spend considerable time developing influential and useful networks for themselves (see example 4). Interestingly though, while they try to align their objectives to the government initiatives so they can gain necessary support and occasionally funding from it, Indian entrepreneurs are particularly careful in developing their networks, so they can include influential members of the society and the business world (i.e. board members).
DISCUSSION
Comparison between the China and India Contexts
Comparing the findings from the two contexts, we can observe that there are several – as expected – similarities in the process of value creation among the examined social entrepreneurs. After all, as mentioned already, both countries indicate several social and institutional similarities that render them vulnerable to the same problems and barriers associated with entrepreneurship endeavours (i.e., poverty, heavy government intervention, and limited access to finance). Interestingly though, key differences between them provide a clearer picture of how the process of value creation is translated and deployed in each context, validating the significance for the current contextual analysis (Welch et al., Reference Welch, Piekkari, Plakoyiannaki and Paavilainen-Mäntymäki2011).
Our findings regarding for-profit social enterprises in general present a socio-economic engagement process that is based on common prosperity and collective interest rather than emphasizing wealth creation and capital accumulation for oneself (Buchholz, Reference Buchholz2009). Social entrepreneurs come from a variety of backgrounds and have different motivations. They may also have different social value creation objectives for their ventures; nonetheless they are all united in their determination to create social value through market mechanisms, utilizing their venture as a means to achieve those goals. More specifically, among our sample, most Indian social entrepreneurs can be seen as outsiders in relation to rural villages; they are well-educated professional people, who have compassion and/or strong motivation, even a sense of responsibility, to help rural people. In contrast, most Chinese social entrepreneurs belong to rural communities with motivation of personal growth as well as bringing a change in their community. These Chinese social entrepreneurs are seen to be driven to a greater extent by their instinct for their own survival and that of their communities, rather than compassion.
Such differences could be attributed to contextual individualities of each group. On the one hand, Chinese managers have long been perceived as rather paternalistic and collective in their behaviour (Cheung & Chan, Reference Cheung and Chan2005); hence a focus on growth and development of their community is to be expected[Footnote 5 ]. This is particularly intensified in the deprived rural areas examined, which, not having reached full economic liberalization, tend to suffer from severe market voids and inequalities (Fan, Wang, & Zhu, Reference Fan, Wang and Zhu2007; Zhang, Reference Zhang2015). On the other hand, the Indian culture is strongly influenced by values of philanthropy and generosity, as well as low individualism (Singh, Reference Singh1990). Therefore, a sense of responsibility, even guilt, towards the less privileged is not uncommon, at times overpowering any personal need for achievement and success.
Meanwhile, contrary to the traditional view that community service and profit making are antagonistic to one another (Mair & Marti, Reference Mair and Marti2004), our evidence clearly shows that these two approaches within the examined for-profit social enterprises reinforce each other, as suggested already by Mair and Marti (Reference Mair and Marti2006) and Miller et al. (Reference Miller, Grimes, McMullen and Vogus2012). To achieve such a dual mission, a pragmatic approach in transforming personal motivations into tangible social objectives was observed in both contexts. Clarity of business ideas and emphasis on the establishment of a good business model or proposition also contribute to establishing an objective that is pragmatic, achievable and caters to the needs of all stakeholders. Nevertheless, whereas social entrepreneurs in China are mainly focused on the needs of their community and manage to actively encourage their members in rent generation, the focus in India has been predominately placed on the end customer who actually pays for the products/services, a difference that can be, however, heavily influenced by the ownership type of the companies examined (cooperatives in China and private companies in India).[Footnote 6 ]
Furthermore, perseverance seems to be another common key contributing aspect of social entrepreneurship. Starting a typical new business venture in itself is a difficult task and requires considerable determination to overcome challenges (Markman, Baron, & Balkin, Reference Markman, Baron and Balkin2005). Social entrepreneurs face an even more difficult task in balancing both social value creation and business sustainability, rendering perseverance a true factor of success, irrespective of the context.
Finally, when looking closely at the realization of social objectives between the two countries, we can observe several similarities in the processes adopted but also certain context-specific variations. First, we observe that social entrepreneurs in both China and India make contextually embedded decisions central to their entrepreneurial process. Social entrepreneurs are seen to make decisions that are well informed and relate to the social and economic environments in which they are living, so that they can optimally realize their social value creation objectives. In order to achieve these, they make use of their education, prior experience and expert advisors. They are also eager to learn from their actions and mistakes that they make along the way. As they learn new things and realize that a change is required, they are open to adapt and make necessary changes. Our evidence shows that most social entrepreneurs experienced failures in the process of developing social ventures, but they also learned from the experience. On-the-job learning and pro-active acquisition of knowledge from experts throughout the process are thus crucial for success.
Nevertheless, while Chinese social entrepreneurs are mainly dependent on their prior experience and less formalized structures of planning, Indian social entrepreneurs favour formal plans, monitoring and evaluation mechanisms. Acknowledging that the Indian culture is strongly embedded in a tradition of low tolerance to failure, self-reliance and solitude (Zhou & Zhou, Reference Zhou and Zhou2017), the adoption of monitoring and evaluating mechanisms is not surprising per se. What is rather surprising is, however, the reluctance of Chinese entrepreneurs to adopt similar methods; this can perhaps be explained by the fact that most of the respondents in China are practitioners, with less formalized education which may prevent them from adopting more complicated procedures.
Interesting observations can be made when looking at how the Chinese and Indian social entrepreneurs are managing legitimacy. Personal social standing (education, prior experience, status in society) is proven of equal importance for social entrepreneurs in both contexts. After all, entrepreneurs draw on these factors to gain pragmatic legitimacy (Nicholls, Reference Nicholls2010) and their act of forming a social enterprise based on social norms and values gives them even moral legitimacy. Nevertheless, interesting differences are noted in the development of their social capital. While the Chinese social entrepreneurs depend heavily on government officials and their community actors, often involving them in their decision making, the Indian entrepreneurs show a preference for influential members of the society and the business world. To this end, continuous innovation announcements, either in new business models or technologies, often serve as an incentive to attract new stakeholders and private investors from the domestic and/or international markets. In other words, whereas in China social ties (guanxi) remain still closely linked to the government and the official regime (Phan, Zhou, & Abrahamson, Reference Phan, Zhou and Abrahamson2010), in India the role of private partnerships and affiliations is constantly increasing (Prabhu & Sanjay, Reference Prabhu and Sanjay2015; Zhou & Zhou, Reference Zhou and Zhou2017).
Last but not least, both contexts are very similar in aligning their objectives with government initiatives. Since China and India are primarily collectivist societies, where relationship is given a high degree of significance over formal structures and norms (Burt & Burzynska, Reference Burt and Burzynska2017), this finding is to be expected. Yet it is a clear indication of how different mechanisms of entrepreneurial success can be accredited to the particularities of the national context and why it is of paramount importance to examine that context more closely (Welch et al., Reference Welch, Piekkari, Plakoyiannaki and Paavilainen-Mäntymäki2011).
Integrated Framework of For-Profit Social Entrepreneurs in Rural Areas of China and India
For-profit social entrepreneurs have a difficult task to create social value while being profitable. Ethical values are thus the corner stone for social entrepreneurs in overcoming the conflict between the mainstream capitalist system on the one hand, and social aims of their enterprise on the other. Due to the social value objectives built on their ethical values, social ventures cannot operate like any other profit-driven venture in the capitalist system. Social entrepreneurs therefore need to develop a clear social vision and mission for their organizations, as well as lead by motivating employees and stakeholders to put their social objectives above self-interest. In addition, social entrepreneurs also make deliberate efforts to build and manage legitimacy by creating a network of individuals who are highly regarded in society and whose association to the venture is seen as their endorsement to the cause. Based on these considerations and our findings, we have extended the initial proposed framework of entrepreneurial process to a new framework that reflects the contextualized social value creation process by social entrepreneurs (see Figure 3).
Figure 3. Integrated framework of the entrepreneurial process of ‘social value’ creation by social entrepreneurs in emerging markets
The suggested framework for the process of social value creation makes a valuable contribution to the existing literature on the entrepreneurial process and on social entrepreneurship in general. We specifically show that social entrepreneurs in China and India gained by embedding themselves in the structure of the local context, and enacting the structure to define their social objectives, as well as to realize them (Jack & Anderson, Reference Jack and Anderson2002). This research therefore inspires researchers to validate some or all of the framework in various other contexts. Future research in this direction will not only help us develop a better understanding of the entrepreneurial process within social enterprises, but will also showcase the aspects of this process and how they apply in different contexts.
CONCLUSION
In this study, we set off with the purpose of deciphering the factors and the process adopted so that social entrepreneurs can generate simultaneously social and economic value. While at the forefront of social entrepreneurship literature (McMullen & Dimov, Reference McMullen and Dimov2013; Moroz & Hindle, Reference Moroz and Hindle2012; Steyaert, Reference Steyaert2007), past research has been incapable of decoding the black box of social entrepreneurial process. Main reasons for this caveat are the inability of past empirical frameworks in capturing the dual purpose of social entrepreneurship, and the inaptness of past traditional approaches in apprehending the contextual distinctions among social entrepreneurs. The latter becomes particularly problematic within the emerging market context, as these markets present significant departures from the traditional assumptions (Burgess & Steenkamp, Reference Burgess and Steenkamp2006). Yet, despite recognizing that theories are contingent on the context where developed (Patomäki & Wight, Reference Patomäki and Wight2000), there has been limited research on the social entrepreneurship process within the emerging market context (Blackburn & Curran, Reference Blackburn, Curran, Curran and Storey1993).
The above gap in the literature provides us with a unique challenge and an opportunity. Emerging markets, faced by constant economic and social challenges, are highly dependable on social entrepreneurs for their economic survival and growth (Sepulveda, Reference Sepulveda2015). As a result, more and more social entrepreneurs have been operating within these markets in an attempt to alleviate the problems associated with these markets, making them perfect laboratories for testability of old theories and practices on social entrepreneurship within the specific contexts.
Our research is a step in the direction of contextualized entrepreneurship research, as this helps shed light on how entrepreneurs navigate and manage difficult contexts and institutional voids (Smallbone, Welter, & Ateljevic, Reference Smallbone, Welter and Ateljevic2014). Acknowledging the limitations of traditional theories, but also the constraints of doing research in an emerging market context[Footnote 7 ] (i.e., Bekaert & Harvey, Reference Bekaert and Harvey2003; Cohen & Ravishankar, Reference Cohen, Ravishankar, Symon and Cassell2012; Symon & Cassell, Reference Symon and Cassell2012), we blend a deductive and an inductive logic of analysis (Denis et al., Reference Denis, Lamothe and Langley2001; Pajunen, Reference Pajunen2006) to decode distinct characteristics of the value creation process adopted in the two examined contexts, China and India. The deductive approach allowed us to utilize existing literature to generate initial expectations of the social entrepreneurial process (Pajunen, Reference Pajunen2006). The inductive approach allowed us to collect context-specific data (Tsui, Reference Tsui2004). As such we are able to test the aptness of traditional theories within (Welch et al., Reference Welch, Piekkari, Plakoyiannaki and Paavilainen-Mäntymäki2011), further advance our understanding of the cross-national variations within the entrepreneurial process (Baker et al., Reference Baker, Gedajlovic and Lubatkin2005), and propose context-specific theoretical lenses (Sardana & Zhu, Reference Sardana and Zhu2015; Tsui, Reference Tsui2004) that can offer essential practical and theoretical implications for the international business audience.
The evidence from this study re-confirms our initial approach towards the definition of social entrepreneurship as a way of creating a win-win solution by increasing the social and economic value for the individual, community and society. We find that social entrepreneurship can be a useful approach for sustainable development at the local, regional and national level. We therefore define social entrepreneurship in this article as:
the creative force of this alternative socio-economic engagement, where entrepreneurs use market-based approaches to increase economic value for themselves and their stakeholders, while also serving the community and its underserved members.
This favourable outcome is achieved by social entrepreneurs embedding their actions in the social context, with a full understanding of the needs of their community and other significant factors (e.g., the social structure and the influence of government officials), as shown in our extended framework. This approach thereby calls into question traditional paternalistic approaches to poverty alleviation, and links development of society to innovation and entrepreneurship at grassroots level (Bruton, Ahlstrom, & Si, Reference Bruton, Ahlstrom and Si2015).
At the same time, our study confirms the significance of a contextual analysis by showcasing key differences between the Chinese and Indian social entrepreneurs in our sample, associated with both, the factors determining their decisions and the processes adopted subsequently. More specifically, and while we observe that both Chinese and Indian for-profit social enterprises concurrently pursue their dual objective of social and economic value creation, they are driven by variant motives. These motives influence differently their overall commitment on social value creation, how this commitment is decoded into tangible social objectives, and finally how it is translated within the implementation process.
Overall, we offer three main contributions in the current body of research. First, we decipher the key stages adopted by social entrepreneurs from the inception of the idea to the implementation along with the key drivers and determinants of the process. A key methodological contribution here is the empirical application and progression of McMullen and Dimov's (Reference McMullen and Dimov2013) idea to study the entrepreneurial process as sequence of events where the outcome is ‘distal’. Second, by offering distinct context-specific evidence of the similarities and differences between the social entrepreneurs within China and India, our study substantiates the methodological efficacy of the contextualized explanation approach. This is an important methodological contribution allowing us to gain a deeper appreciation of how context is affecting value creation in social enterprises within the examined emerging markets (Bartlett & Vavrus, Reference Bartlett and Vavrus2017; Welch et al., Reference Welch, Piekkari, Plakoyiannaki and Paavilainen-Mäntymäki2011). Last but not least, by virtue of the Asian context of the study, this research further contributes to the growing demand to undertake research in Asian countries and progresses Asian management thinking, theory extension and development (Meyer, Reference Meyer2006).
Limitations and Future Research Directions
This research is based on a limited number of selected case studies in China and India. Therefore, future research should conduct a larger scale survey in both countries in order to collect more evidence so that our findings relating to social entrepreneurship can be further generalized. In addition, there are other interesting research questions that should be pursued in later studies that will complement our findings and enrich our insights: How are social entrepreneurs able to compete with commercial entrepreneurs and stay viable while operating in the same business area? Are there any personal traits or characteristics that help some social entrepreneurs overcome the conservative mindset and social hierarchy found in rural China and India, thus making them more likely than others to succeed? How do social entrepreneurs manage and influence powerful external agents (such as government officials) to bring about a desired social change? Do social entrepreneurs have to compromise on their ethical practices to overcome a difficult situation in order to realize their social objectives? Future research directions also need to focus on comparative studies of conventional entrepreneurs and for-profit market-based social entrepreneurs in order to gain a better understanding of the distinctions between the two.
APPENDIX I
Table A-1. Progression of Analysis by Clustering Codes into Major Themes
