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Article

Exploring International and Inter-Sector Differences of Social Enterprises in the UK and India

by
Philipp Kruse
School of Science, Faculty of Psychology, TU Dresden, 01069 Dresden, Germany
Sustainability 2021, 13(11), 5870; https://doi.org/10.3390/su13115870
Submission received: 23 March 2021 / Revised: 19 May 2021 / Accepted: 19 May 2021 / Published: 24 May 2021
(This article belongs to the Special Issue Social Businesses and Social Entrepreneurship in the Face of Sustainable Development Challenges)
Versions Notes

Abstract

:
Social Entrepreneurship (SE) describes a new entrepreneurial form combining the generation of financial and social value. In recent years, research interest in SE increased in various disciplines with a particular focus on the characteristics of social enterprises. Whereas a clear-cut definition of SE is yet to be found, there is evidence that culture and economy affect and shape features of SE activity. In addition, sector-dependent differences are supposed. Building on Institutional Theory and employing a mixed qualitative and quantitative approach, this study sheds light on the existence of international and inter-sector differences by examining 161 UK and Indian social enterprises. A content analysis and analyses of variance were employed and yielded similarities as well as several significant differences on an international and inter-sector level, e.g., regarding innovativeness and the generation of revenue. The current study contributes to a more nuanced picture of the SE landscape by comparing social enterprise characteristics in a developed and a developing country on the one hand and different sectors on the other hand. Furthermore, I highlight the benefits of jointly applying qualitative and quantitative methodologies. Future research should pay more attention to the innate heterogeneity among social enterprises and further consolidate and extend these findings.

1. Introduction

Despite a persistent increase of average global wealth resulting from continuous economic growth [1], a more detailed look at the quality of human life on our planet suggests that along with this development comes a rise in social inequality [2,3]. Whereas international differences between nations decreased over the years, intranational inequality is growing [4]. Thus, national governments face the challenge of tackling inequalities in their countries to avoid a wide array of negative consequences ranging from higher crime rates [5], poorer health outcomes [6], and social unrest [7] to the risk of segmentation with parts of society “feeling left behind” [8]. For years, one feasible solution for tackling these problems was a governmental program aiming at the promotion of NGOs whose target is to support marginalized groups such as drug addicts or homeless people. However, relying on this strategy alone bears notable risks given that NGOs are largely donor-dependent [9] and sometimes suspected to exert political influence on the groups or persons supported, ultimately resulting in a refusal of NGO help [10]. Another way to fight social inequality and avoid the problems NGOs face can be social entrepreneurship (SE).
SE combines the aspiration to create social value with the traditional entrepreneurial goal to generate revenue. This enables a social enterprise to be independent from donors and financially self-sustaining [11]. As the management of this double bottom line combining a social and financial mission has caught the interest of many nascent entrepreneurs, an acknowledgeable rise of such enterprises and related programs targeting the support of social entrepreneurs can be noted worldwide [12]. Furthermore, social enterprises also became a topic of interest for scholars from different disciplines, e.g., business, sociology, and psychology. Given the novelty of SE as a scientific field, one of the first key issues to be solved was to get a more thorough understanding of what defines a social enterprise [13,14]. Given the diverse set of disciplines and their different perspectives on SE, a wide variety of, at times even ambiguous, definitions was formulated hampering a common understanding of what the core features of a social enterprise are [15]. Conducting a literature review in order to identify the most agreed-on features of social enterprises in the literature, Kruse et al. [16] came up with a new and integrative definition. They defined a social enterprise as ‘an enterprise whose business model is to address unmet socioeconomic needs in communities in an innovative and financially sustainable way by creating social value and generating revenue for the enterprise and its stakeholders’ (p. 98). However, one largely neglected aspect in the quest for a universal definition is whether such a definition can be appropriate given (i) the vastly different political, economic, societal, and cultural surroundings of social enterprises worldwide and (ii) the many different sectors social enterprises operate in.
In fact, the assumption that international differences in politics, economy, society, and culture affect the face of entrepreneurial activity is backed convincingly by Institutional Theory [17] on the one hand and increasing empirical evidence on the other hand [18,19]. However, as this evidence is almost exclusively based on broadly operationalized self-reported data on SE activity drawn from the Global Entrepreneurship Monitor (GEM), an in-depth investigation of international differences based on distinct core features of social enterprises is still missing.
Furthermore, and given the highly diverse sectors social enterprises operate in [20], inter-sector differences amongst social enterprises in the same country are also likely. Whereas differences have already been identified in SE case studies and self-report surveys [21], systematic, empirical, and criteria-based comparisons are rare. Supporting this view, Gupta et al. [22] concluded that ‘exploring the process and challenges of SE in different industries would be very insightful’ (p. 222) and that a ‘good potential for comparative studies on social enterprise […] from developed and developing countries’ exists (p. 222). Thus, they considered the combined investigation of international and inter-sector differences particularly fruitful and highly needed.
Consequently, the aim of the current study was two-fold. First, it was examined whether significant differences occur comparing social enterprises from the UK and India, two countries with acknowledgeable cultural and economic variances. Second, the study investigated whether amongst UK and Indian enterprises inter-sector differences emerge on the national level. In order to reach this aim, I followed the recommendations by Gupta, Chauhan, Paul, and Jaiswal [22] and combined a qualitative content-analysis technique [23] of 161 UK and Indian social enterprise websites based on the criteria of social enterprises by Kruse, Chipeta, Surujlal, and Wegge [16] with a quantitative analysis of variance. Doing so, a more fine-grained investigation compared to previous studies relying on quantitative GEM data only becomes possible.
In the following sections, SE is conceptualized as a new form of entrepreneurial activity, and cultural and economic influences on SE are outlined with reference to Institutional Theory. In addition, central limitations of previous research in the field are presented. Deriving two research questions, international differences comparing the UK and India and differences emerging from different sectors social enterprises operate in are presented. After outlining the methods, the results are shown and discussed. Finally, implications and limitations of the study are mentioned.

1.1. Conceptualizing Social Entrepreneurship

Starting with the first scientific investigations of entrepreneurial activity in the 18th century, entrepreneurship had a clear focus on revenue generation and profit. As Cantillon [24] outlined, entrepreneurs buy goods and invest time and effort to transform and sell them at a higher price. This has been setting the pace for a predominantly economic perspective on entrepreneurship and its potential to earn money [11]. Whereas the creation of financial value for entrepreneurs themselves and their stakeholders remains in the focus of entrepreneurship scholars, the tendency to also study positive “side effects” of entrepreneurial activity, e.g., employment, improvements in infrastructure or social care systems is increasing [25,26]. Going beyond positive side effects, Young [27] took the perspective that creating social value in entrepreneurship can be as important as financial value. This was the cornerstone for a concept referred to as social entrepreneurship (SE).
The main difference between SE and traditional, i.e., commercially minded, entrepreneurship lies in the management of a so-called double bottom line [12]. This signifies that social enterprises pursue a social mission, e.g., helping poor people or marginalized groups, yet aspire to be financially independent by generating their own income [28]. As an example, the Italian social enterprise San Patrignano successfully managed to reintegrate drug addicts and former prisoners by employing them as bakers or dog trainers selling their products and services to the local community [29,30]. Consequently, in contrast to traditional enterprises with corporate social responsibility strategies, San Patrignano’s business plan purposely included the social mission of the enterprise as an equally important target. Whereas there are also acknowledgeable similarities comparing social and commercial enterprises such as opportunity recognition and risk taking [11], going more into detail yields uniqueness of SE. As a first example, social entrepreneurs operate in an even riskier environment than traditional entrepreneurs, finding it harder to convince investors from a business model (i) that offers worse perspectives for a high return on investment, as the target groups of social enterprises are usually not financially lucrative, and (ii) according to which a large amount of profit generated needs to be re-invested to create the social value intended [31,32]. Consequently, and in order to avoid the phenomenon of a mission drift, defined as the tendency to let the social mission slide to maintain one’s financial profitability [33], social entrepreneurs need a high degree of ambiguity tolerance to persistently counterbalance and negotiate the two missions. The second example is the drive to initiate ‘pattern-breaking’ change (p. 48) in society [34]. Consequently, innovativeness plays an even higher role in SE given the many different forms of social inequality and the diverse challenges resulting from the quest for appropriate and financially self-sustaining solutions.
Assembling the most important and agreed on characteristics of social enterprises in a systematic review, Kruse, Chipeta, Surujlal, and Wegge [16] concluded that a social enterprise can be defined as ‘an enterprise whose business model is to address unmet socioeconomic needs in communities in an innovative and financially sustainable way by creating social value and generating revenue for the enterprise and its stakeholders’ (p. 98). Whereas this definition intends to address the problem of a blurry common understanding of SE and offers an integrative perspective, several scholars argue that a universally applicable definition of SE is unsuitable to cover all aspects and pay reference to its multidisciplinary nature [35,36]. Particularly, culture and economic circumstances are supposed to affect features of social enterprises as the next section outlines in more detail.

1.2. Cultural and Economic Influences on Social Enterprises

Enterprises, regardless of their business model, are open systems and interact with their environments. As Institutional Theory suggests, institutions, i.e., deep aspects of social structure acting as guidelines and constraints of individual and organizational behavior [17,37], form a carcass of taken-for-granted rules to operate in. Going more into detail, informal and formal institutions can be identified. Informal institutions are implicit sets of rules derived from societal norms (normative institutions) and culturally shared values (cognitive institutions). Consequently, they act as rather “soft” guidelines for behavior by the means of (i) positive reinforcement for socially and culturally approved and (ii) punishment for disapproved behavior. In the context of SE, Urbano et al. [38] highlighted the role of social values and networks as important informal institutions in entrepreneurial emergence by triggering SE activity. Consequently, (i) altruistic social values and norms such as helping poor and marginalized social groups and (ii) a culture putting strong emphasis on social care and egalitarianism as well as autonomy are considered favorable for SE emergence [18]. In line with this reasoning, Jaén, Fernández-Serrano, Santos, and Liñán [19] found that national culture may exert an influence on the degree of SE. Particularly, the Latino American culture scoring high on egalitarianism and the North American culture scoring high on autonomy emerged as feasible for social enterprises. In addition, Kedmenec and Strašek [39] showed that some of the cultural dimensions identified by Hofstede [40] favor or disfavor SE activity. According to their investigation of more than 40 countries worldwide, there is evidence for a negative relationship between SE activity and power distance, i.e., the level of strict hierarchies in a country and a positive relationship with femininity, i.e., the degree to which social care is considered valuable in a nation. The latter finding was supported by Canestrino et al. [41] who also showed that high national levels of uncertainty avoidance, i.e., the degree to which risks are deemed negative, are negatively correlated with SE activity. However, also contradictory findings exist signifying that in cultures scoring high in uncertainty avoidance, social capital is preferably transferred to social rather than commercial enterprises [42].
Formal institutions, conceptualized as objective and “hard” restrictions and incentives resulting from governmental actions and interventions or economic circumstances, can also be considered relevant for social enterprises. As social enterprises intend to financially self-sustain the fulfillment of their social mission, one can presume that reliable and efficient governments favor social enterprises as much as commercial ones [38,43,44]. Indeed, this was also empirically shown by Puumalainen, Sjögrén, Syrjä, and Barraket [18] for established yet not for nascent social enterprises. However, considering that young SE activity is usually driven by social problems not addressed by an (inefficient) government [45], it does not come unexpected that SE motivation is higher in countries with weaker governments. Complementing this reasoning from an economic perspective, Kruse et al. [46] showed that in countries with a lower economic level, the correlation of several motivational predictors of SE intention is higher compared to countries with a higher economic level. This was also backed by Williams [47] who revealed that entrepreneurs originating from rural and marginalized areas in the UK have a higher propensity to engage in SE.
Important to note is that informal and formal institutions do not exist separately and are inter-connected [48]. Illustrating this in a comprehensive case study, Newth [49] pointed out that in early stages of SE, there is a continuous process of contestation involving expectations, beliefs, relevant stakeholders, and formal institutions. Another in-depth case study by Tracey et al. [50] added to this finding and highlighted the importance to take all institutional aspects and levels into account when evaluating the motivation of social entrepreneurs. Recently, two large-scale quantitative studies offered additional evidence on the importance of informal [51] and formal institutions [42] for social enterprises. However, informal and formal institutions are not equally important over the lifespan of a social enterprise. Building on the model by Urbano, Toledano, and Soriano [38], informal institutions such as social values and networks are essential during SE emergence whereas favorable formal institutions benefit established social enterprises.
In sum, several previous studies have already focused on different contexts SEs operate in through the lens of Institutional Theory [42,51,52,53] and found evidence for the presence of contextual influences. However, going more into detail yields three central limitations of the current study landscape. First, the most frequently used data source for empirical research is the Adult Population Survey (APS) on social entrepreneurship conducted by the Global Entrepreneurship Monitor (GEM). The GEM is a global research program intending to enable researchers to conduct large-scale cross-cultural studies to identify and investigate differences in entrepreneurship levels worldwide. Whereas this data source has several advantages such as a largely standardized data-acquisition procedure, a great variety of countries represented in the data, and the sheer number of participants, one major problem emerges from the operationalization of SE. Participants affirming the question ‘Are you, alone or with others, currently trying to start or currently owning and managing any kind of activity, organization or initiative that has a particularly social, environmental or community objective?’ are considered social entrepreneurs [52]. However, as previously outlined in the conceptualization of SE, current scientific understanding of this entrepreneurial form is more narrow and focused on social objectives. Consequently, considering that distinguishing between SE, environmental entrepreneurship [54], and community entrepreneurship [55] with the abovementioned item is not possible, studies using the response to this item to operationalize SE activity face the high risk of a contaminated dependent variable covering several multi-mission forms of entrepreneurship. Second, the APS data are acquired using interviews. Thus, the responses mirror the personal perception of participants’ entrepreneurial activity. Given that perceptions may differ massively when rating one’s own entrepreneurial activity [56] and the cultural influence on perception [57], another concern regarding the reliability of the GEM data emerges. Third, whereas we have evidence on the influence of contextual factors on SE based on comparisons of two or multiple countries, what has largely been neglected so far are differences depending on the sectors social enterprises operate in. As outlined by Gupta, Chauhan, Paul, and Jaiswal [22], the industry a social enterprise is affiliated to may impact opportunities and barriers faced by these enterprises and in turn also its features. Again, using the GEM-data sources seems inadequate, as the data are aggregated to the national level driven by the purpose of examining intercultural aspects. However, statistically speaking, by focusing on the mean SE activity in every country one neglects the variance amongst social enterprises in this country. Thus, more fine-grained analyses regarding inter-sector differences in SE are still lacking, particularly considering that inter-sector differences may emerge differently comparing developed and developing countries [22].
As addressing the abovementioned limitations requires a comprehensive definition of SE core characteristics and data that is (i) broad enough to cover at least one developed and one developing country and (ii) not exclusively based on self-reports, the current study focused on the UK, as one of the developed countries with the highest SE levels, and India, a developing country increasing its support for the creation of social enterprises. Furthermore, in both countries, a reliable source of independently validated data on operating social enterprises exists, as will be outlined in the methodology section. This makes the UK and India particularly suitable for this study’s purposes.
In the next sections, notable differences in informal and formal institutions relevant for SE activity are outlined focusing on India and the UK. In addition, potential differences emerging from the different sectors social enterprises operate in are presented.

1.3. Differences Comparing the UK and India

1.3.1. Informal Institutions

Regarding normative and cognitive institutions, apparent differences between the UK and India should be acknowledged. The UK’s society is considered traditionally “western”, i.e., liberal, open, and individualistic with a particular emphasis on personal freedom and equality [58]. In contrast, the history of India is dominated by a hierarchical classification of people in the so-called caste system. This religiously rooted system largely pre-determines one’s social status and obligations, as the membership in a caste depends on the very caste one is born in. Of particular note are the “untouchables” who are considered outcasts and limited to a life in poverty and social negligence. Whereas the strictness of the social segregation is decreasing in modern urban India, depending on the region and particularly in rural areas, the heritage of the caste system can still be recognized [59].
Considering culture differences based on the cultural dimensions identified by Hofstede [40], it seems that India scores higher in power distance, lower in individualism, slightly lower in masculinity, and slightly higher in uncertainty avoidance. This signifies that in India, which is part of the Southern Asian cultural cluster, differences in and dependency on hierarchies are more willingly accepted, individual interests are less important than collective interests, and work for the sake of society such as social care is more appreciated, yet security and rules to avoid risks are more pronounced compared to the UK as a representative of the Anglo cluster. These differences are also highlighted by the relative distance between the two cultural clusters [60].

1.3.2. Formal Institutions

Comparing the UK and India, many similarities occur in the political system. This is mainly due to the colonial heritage, as India was a former British colony. As an example, in both countries, a two-chamber democratic system headed by a Prime Minister exists [61]. However, from an economic perspective, India is considered to be on a lower level compared to the UK. Whereas the former is listed as a factor-driven economy according to the Global Entrepreneurship Monitor (GEM) signifying the lowest level of economic development, the UK is outlined as an innovation-driven economy equaling the highest economic level. Consequently, as India is still largely dependent on its natural resources to be exported to other countries, the UK turns out to be a nation with high emphasis on services and innovations that are largely independent from mineral resources or cheap labor [62]. Furthermore, the equal distribution of wealth in India is also worse compared to the UK as suggested by the Gini coefficient that is remarkably higher indicating higher inequality levels (India: 35.70; UK: 33.20). Thus, it becomes clear that whereas the political systems are relatively similar, the economic development of both countries to date sees the UK on a higher level.
As shown above, there are acknowledgeable differences comparing the informal (societal structure and culture) and formal (government and economic stage) institutions. However, so far it remains unclear to which extent these differences manifest in differences regarding social enterprises in India and the UK. Thus, the following research question was derived:
RQ1: Are there empirical differences comparing features of Indian and UK social enterprises?

1.4. Inter-Sector Differences in Social Entrepreneurship

Over the years, evidence that there are differences between enterprises operating in different sectors has increased. Whereas early work focused on rather “hard” factors such as wage differences [63], “softer” criteria such as volunteering have been found to be related to the sector employees work in [64]. Furthermore, as Van Reenen [65] stated, given more challenging markets and developments such as globalization and digitalization, inter-sector differences are likely to even increase in industrialized nations. Thus, inter-sector diversity of enterprises has been gaining attention as an important factor to consider in a national enterprise landscape.
Given the high amount of challenges in a national society, the wide variety of people suffering from social inequality in many different ways, and several possible approaches to address these problems, there are also high levels of diversity in SE. One study highlighting this diversity was conducted by Thompson and Doherty [21] and featured a series of case studies on UK and international social enterprises. Elaborating on these cases, they showed that despite sharing the core aspiration of creating social value in a financially sustainable way, remarkable differences regarding the business model, the target group, or the founder(s) of the social enterprise occur. In addition, it was found that the wide variety of sectors represented contributed remarkably to diversity in the social enterprise landscape. In a survey study, Wachner, Weiss, and Hanley [20] tried to map the areas social enterprises predominantly operate in and found ‘an eclectic range of sectors’ (p. 16) whose services ranged from basic needs supply for education and training to finance. Going more into detail, the study compared different sectors and found acknowledgeable descriptive differences regarding the importance of profit making. Whereas in agriculture and energy, a big share of social enterprises paid attention to financial sustainability and independence from donations, in education and sanitation, the aspiration to financially self-sustain the enterprise was considerably lower. Thus, building on the growing evidence of inter-sector differences even in a national economy, the high levels of diversity in SE, and the findings by Wachner, Weiss, and Hanley [20], it is reasonable to presume that inter-sector differences also occur amongst social enterprises in the UK and India. However, as the previously presented studies are (i) based on single cases or survey data making them susceptible to a wide range of biases [66] and (ii) limited to a very small range of indicators such as profitability, empirical evidence based on non-self-reported data considering more facets of social enterprises is necessary to get a more robust and detailed understanding of these inter-sector differences [22].
Consequently, the following research question was derived:
RQ2: Are there empirical inter-sector differences regarding the features of social enterprises in India and the UK?

2. Materials and Methods

2.1. Data Acquisition Procedure

The data for this study were collected in spring and summer 2020 using the two entrepreneurial databases Social Enterprise Mark (SEM) and Impactpreneurs (IP). Run by the identically named company, the SEM database contains the largest list of accredited social enterprises in the UK. The accreditation of SEM-listed enterprises is based on clear-cut criteria ensuring that all companies included fulfill core criteria of a social enterprise whereas the main criterion is financial and social hybridity. This is in line with the scientific consensus of the central feature attributed to social enterprises. The IP database has the aspiration to provide a comprehensive overview of the SE landscape worldwide and a particular focus on Indian social enterprises. Distinguishing between for-profit, non-profit, and hybrid social enterprises, the understanding of SE in this database is broader; however, using a reliable filtering option, the rather narrow understanding of social enterprises as hybrid enterprises in this study can be met. In contrast to the SEM database, there is no official accreditation process for the listed enterprises, yet all enterprises listed undergo a suitability check by the founders and employees of IP.
Searching the SEM database for small and medium-sized social enterprises (i) with their headquarters in the UK and (ii) a completed accrediting process, a total of 109 social enterprises was found. Of these 109 enterprises, one had to be excluded as the accrediting process had not been completed at the time of data acquisition for this study. Four additional enterprises had to be excluded, as the websites linked in the SEM database were not accessible and no detailed information on these enterprises could be gathered. Thus, the final sample of UK social enterprises was n = 104. Searching for small and medium-sized social enterprises (i) labeled as “hybrid enterprises” and (ii) with their headquarters in India with the IP database resulted in 81 enterprises found. Of these 81 enterprises, ten had to be excluded as they operated multi-nationally and had only a branch of their business in India. This reduced the number of valid enterprises to 71. In addition, 14 enterprises had to be dropped as their websites were not accessible, casting doubt over their existence at the time when the study was conducted. Consequently, the sample of Indian social enterprises entering further analyses was n = 57, resulting in a total sample of N = 161 social enterprises.

2.2. Qualitative Analysis—Coding

Based on the total sample, the enterprise websites were used to code the relevant variables for the current study:
(i)
All social enterprises with their headquarters in India were coded as 0, and all UK-based enterprises were coded as 1.
(ii)
The selection of sectors was guided by the study by Wachner, Weiss, and Hanley [52] that identified the most frequent sectors social enterprises operate in. As not all sectors used in this study were found in a sufficiently high number (k ≥ 5), some sectors had to be excluded. Enterprises that could not be assigned to one of the sectors proposed by Wachner et al. [52] were either inductively combined to form a new sector if there was enough overlap and the condition k ≥ 5 social enterprises per sector was fulfilled or assembled to the category ‘other’. The categories that were coded from 0 to 7 were ‘business services’ (n = 14), ‘community services’ (n = 9), ‘disability employment’ (n = 12), ‘education and training’ (n = 19), ‘finance’ (n = 9), ‘health and social services’ (n = 53), ‘agriculture, environment, and energy’ (n = 17), and ‘other’ (n = 28).
(iii)
The coding of social enterprise characteristics was conducted based on the definitional criteria of social enterprises suggested by Kruse et al. [16]. Enterprises in line with the criterion were coded as 1; enterprises not matching this criterion were coded as 0. The criterion ‘has a business model’ was coded as 1 if the vision and mission of the enterprise were operationalized in a written statement. The criterion ‘generating revenue’ was coded as 1 if a clear income-generating strategy was outlined by the enterprises and/or the annual income was accessible. The criterion ‘addresses socioeconomic needs unmet by national systems or private sector’ was coded as 1 if the aspiration of the enterprise was the support of socially or economically disadvantaged groups and/or the solution of a socio-economic problem. The criterion ‘creates social value’ was coded as 1 if the entrepreneurial action aimed at helping people and achieved a social impact. Yet, this impact did not have to be quantified. The criterion ‘targets financial sustainability’ was coded as 1 if the enterprise was not entirely dependent on donations and government support and/or financially independent. The criterion ‘innovatively combines and exploits resources’ was coded as 1 if the enterprise operated in a creative and novel manner to fulfill its mission following the guidelines by Dawson and Daniel [67]. The criterion ‘contributes to a sustainable development of a community’ was coded as 1 if the enterprise purposefully strived for an improvement of community life.
The coding was conducted in line with the criteria formulated by Mayring [23], i.e., a categorical system composed of the criteria described in the above sections (i) to (iii) was used. Coding was performed by three expert coders. In the first phase of the coding procedure, all coders worked independently on the material. In the second phase, the coding tables were compared and the intercoder reliability was calculated. Ranging between 93% for the category ‘innovatively combines and exploits resources’ and 100% for ‘India/UK coding’, all different codings were thoroughly discussed and solved to mutual consent.

2.3. Quantitative Analysis—Analysis of Variance (ANOVA)

The coded data were entered into the statistics program SPSS Statistics 27 and analyzed with ANOVAs to identify statistically significant mean differences in social enterprise features comparing India and the UK (RQ1) and the different sectors in both countries (RQ2). Beforehand, the descriptive distribution of the data and the assumption of variance homogeneity as important pre-conditions of an ANOVA were checked. In all analyses, the size of the social enterprises was entered as a control variable.

3. Results

3.1. Differences between the UK and India (RQ1)

In order to gain an overview of the data, it was checked in which of the seven definitional categories inter-country differences could be identified on a descriptive level, as these are a necessary pre-condition for an ANOVA. It was found that only in three categories (‘generates revenue’, ‘targets financial sustainability’, and ‘innovatively combines and exploits resources’) descriptive differences between the UK and India occurred. Consequently, only these three categories were included in the subsequent ANOVA.
Examining the pre-condition of variance homogeneity, results of the Levene test yielded no indication of variance inhomogeneity based on the medians of all three categories. Thus, an ANOVA using the General Linear Model was computed.
The ANOVA results suggest a significant difference between UK and Indian social enterprises in the category ‘innovatively combines and exploits resources’ (F [1, 159] = 225.05, p < 0.01) and a marginally significant effect for ‘targets financial sustainability’ (F [1, 159] = 3.60, p = 0.06). No significant difference was found in the category ‘generates revenue’ (F [1, 159] = 1.43, p = 0.23). The effect for ‘innovatively combines and exploits resources’ (partial η2 = 0.59) can be labeled as medium to high [68,69] and signifies that social enterprises in India were rated significantly higher on innovativeness than UK social enterprises. The marginally significant effect points toward a higher level of financial sustainability in UK social enterprises. For a summary, see Table 1.

3.2. Inter-Sector Differences (RQ2)

Checking the Indian sample for the distribution of sectors, four different sectors fulfilling the criterion of k ≥ 5 emerged, namely ‘education and training’ (k = 9), ‘health and social services’ (k = 20), ‘agriculture, environment, and energy’ (k = 17), and ‘other’ (k = 8). These four categories entered further analyses. ‘Finance’ had to be dropped as only three social enterprises were assembled to this category. No indication of variance inhomogeneity using the Levene test was found.
Computing ANOVA based on the General Linear Model, a significant overall effect of the sector was found (F [3, 53] = 3.27, p < 0.05). According to the effect size (partial η2 = 0.20), the effect can be labeled as small to medium [58,59]. Going more into detail using post hoc testing, it was found that this effect can be fully attributed to the category ‘generates revenue’ (F [3, 53] = 3.25, p < 0.05; partial η2 = 0.19). Regarding inter-sector differences, significant differences comparing the sector ‘education and training’ with ‘health and social services’ (p < 0.01) and ‘agriculture, environment, and energy’ (p < 0.01) emerged in a way that generating income was less pronounced in the ‘education and training’ sector in both cases. For a summary, see Table 2.
For the UK sample, all eight sectors except for ‘agriculture, environment, and energy’ fulfilled the condition of k ≥ 5 social enterprises. Thus, seven sectors entered the analysis. Similar to the other analyses, the Levene test yielded no indication of variance inhomogeneity.
The ANOVA based on the General Linear Model suggested a general sector effect (F [7, 96] = 3.93, p < 0.01). The corresponding effect size (partial η2 = 0.22) can be labeled as small to medium [58,59]. The post hoc tests suggested that this effect is mainly due to significant differences in the categories ‘targets financial sustainability’ (F [7, 96] = 2.24, p < 0.05; partial η2 = 0.14) and ‘innovatively combines and exploits resources’ (F [7, 96] = 3.69, p < 0.05; partial η2 = 0.21). On the sector level, it was found that the first significant difference was due to lower levels of financial sustainability in the ‘disability employment’ sector compared to ‘business services’ (p < 0.01), ‘finance’ (p < 0.01), ‘health and social services’ (p < 0.05), and the sector ‘other’ (p < 0.01). In addition, a marginally significant difference for ‘community services’ (p = 0.05) in the same direction emerged (Table 3). The second significant difference in innovativeness could be found between the ‘business services’ sector and ‘disability employment’ (p < 0.01), ‘finance’ (p < 0.01), ‘health and social services’ (p < 0.01), and the sector ‘other’ (p < 0.01). Furthermore, a marginally significant effect for ‘community services’ was remarked (p = 0.05). All effects yielded higher levels of innovativeness in the ‘business services’ sector. For a summary, see Table 4.

4. Discussion

The aim of the current study was two-fold. First, the extent to which social enterprises in different cultural and economic surroundings differ in their central features was explored focusing on differences between UK and Indian social enterprises. Second, inter-sector differences on the national level, i.e., inside the UK and India, were also examined. Doing so, a combined qualitative and quantitative approach was used. Conducting a content analysis of 161 websites of social enterprises based in the UK and India, the definitional features by Kruse et al. [16] served as a categorical system to identify differences on a descriptive level. Afterward, ANOVAs were used to investigate whether statistically significant differences between the two countries and the sectors in each country emerged.
Regarding RQ1 on the international differences comparing UK and Indian social enterprises, a significant difference in the definitional category ‘innovatively combines and exploits resources’ was found in favor of Indian social enterprises. Despite this, a higher degree of innovativeness amongst Indian social enterprises seems in contrast to the ranking of India as a factor-driven economy compared to the innovation-driven UK economy [62]; considering differences in institutional support for nascent and operating social entrepreneurs could shed light on this finding. In India, governmental effort to support environmental and social programs is considerably increasing yet lower than in the UK due to lacking resources and other political preferences. This limited support by governmental institutions is referred to as ‘institutional void’ [53]. Following this logic, the existence of such an institutional void motivates agents from the private sector to step in and, e.g., found a social enterprise. Notwithstanding this presumably higher motivation, challenges in the availability of necessary institutional underpinnings such as infrastructure, financial capital, or labor that are an important pre-condition for SE success also arise from an institutional void [70,71]. However, having to deal with these challenges in developing countries such as India may also boost creativity in the acquisition and exploitation of resources [45], particularly when stakeholders of the enterprise have a high sense of coherence originating from common interests. As in SE, this sense of coherence driven by the social mission is particularly high [11], synergetic effects amongst internal and external stakeholders can arise and trigger the discovery of more creative solutions to problems compared to economies with high institutional support [45]. This reasoning is backed by a content analysis by Mair et al. [72] and a study by Estrin et al. [73]. These works showed that high governmental efforts for tackling social problems in a society (‘institutional support’) are negatively correlated with SE motivation and start-up efforts. Thus, the current findings are in line with these studies [70,74,75] and support the institutional void perspective regarding social enterprise innovativeness. The marginally significant effect pointing toward financial sustainability as a more frequent target amongst UK social enterprises could also be linked to the degree of innovativeness and, consequently, institutional support. Whereas higher institutional support is beneficial for social enterprises given their dual mission of creating social and financial value [76], a higher degree of innovativeness usually corresponds to higher risks and failure rates of enterprises [77,78]. Thus, financial sustainability could be easier to achieve in the UK. Furthermore, as several previous studies show, social entrepreneurs are mainly driven by social and not financial motives (see Gupta, Chauhan, Paul, and Jaiswal [22] for an overview). Under institutional void circumstances in which social problems are more pressing and financial support is scarcer [71], financial motives could be even less pronounced and pursued resulting in financial sustainability becoming less important [47]. However, as the analyses showed, no significant differences in the generation of revenue, i.e., the actual process of acquiring financial resources, emerged which seems contradictory. One reason for this finding could lie in the sample of this study. All social enterprises included existed long enough to be listed in official SE databases. Consequently, they can be considered established social enterprises and thus successful in generating enough income to survive in contrast to other social enterprises failing too early to reach this stage. This phenomenon is commonly known as survivorship bias [79,80].
RQ2 on inter-sector differences yielded the existence of such differences in both countries. For India, a significant overall effect was found that could be fully attributed to differences in revenue generation. As the post hoc analyses showed, social enterprises operating in education and training generated less income compared to enterprises in health and social services and agriculture, environment, and energy. One reason for these differences could lie in the level of information about success factors of social enterprises in these sectors. Whereas in health and social services [81] and also in agriculture, environment, and energy [82,83] comprehensive research and successful prototypes of operating social enterprises exist, ‘little of the existing literature on enterprise education and social enterprise links the two concepts’ (p. 1009) [84]. Consequently, there is a scarcity of knowledge making it harder to think of successful concepts and, in turn, generate higher levels of revenue [20]. Furthermore, the education and training sector in India suffers from several systemic deficiencies such as a shortage of skilled personnel and flexibility [85]. Thus, generating income seems particularly hard in this troublesome sector.
Also in the UK, inter-sector differences emerged. In the category ‘targets financial sustainability’, the disability employment sector turned out as the sector with a significantly less pronounced target of financial sustainability compared to almost all other sectors. One reason for this could lie in UK politics and the health system that have been offering continuous support for the inclusion and care of physically and mentally disabled persons [86]. Following the previously outlined logic of institutional support and in line with a recent finding that supportive political systems positively affect SE entry [51], financial sustainability could be less important than the social mission of the enterprise in disability employment. Consequently, in the UK, founding a social enterprise in the disability employment sector bears a high opportunity to fulfill one’s SE’s social mission yet only yields low financial barriers. The second category with significant differences was the degree of innovativeness in which the business service sector scored higher than almost all other sectors. Considering that, over the years, business services were almost solely applied to increase or stabilize business profitability [87], founding a social enterprise in this sector could be particularly demanding compared to other sectors such as disability employment or health and social services in which a social aspect is innate. Thus, thinking of a social yet also convincing SE business plan in the business services sector could make higher innovativeness levels a necessity. High levels of competitiveness in regional and global business services [88,89] further add to this reasoning. Thus, alluding to the previously outlined complex interplay of institutional void, sense of coherence, and innovativeness [70,74], my finding hints toward similar processes comparing different sectors in one country. Consequently, the reasoning of institutional void and support could not only be relevant comparing different countries but also different sectors in the same country.
Apart from the focus on differences between countries and sectors, it is also remarkable that the majority of definitional features identified by Kruse et al. [16] yielded neither international nor inter-sector differences. Despite the acknowledgeable limitations of this study that will be outlined in more detail later on, there is first empirical evidence that the definitional features identified are suitable to describe characteristics of real social enterprises.

4.1. Implications for Research and Practice

The current study features several implications relevant for future research and practical application:
First, as my findings show, social enterprises operating in different countries differ in central definitional features such as innovativeness. Thus, more attention should be paid to (i) the appreciation of the differences of social enterprises operating in diverse economic, political, and cultural surroundings and (ii) the interplay of institutional constraints and complexity with internal SE features such as the sense of coherence amongst SE stakeholders driven by the enterprise’s social mission. Institutional Theory can help to further advance research in this direction, consolidate the current study’s findings, identify other notable differences, and, consequently, contribute to a more detailed understanding of SE.
Second, this study supports the institutional void perspective on SE given that higher levels of innovativeness were found in Indian compared to UK social enterprises. Thus, in addition to outcomes such as an individual’s motivation to found a social enterprise or nascent SE activity rather favoring the institutional support perspective [50], a more nuanced choice of SE-criteria such as innovativeness can help to further delineate the impact of institutional void and support.
Third, in addition to international differences, more attention should also be paid to inter-sector differences amongst social enterprises. In line with previous, rather descriptive findings, I provide evidence for significant differences on the sector level that should be taken into consideration for future studies. In addition, there is first evidence that the logic of institutional void and support could also be applied to different sectors in the same country that are more or less common for SE activity.
Fourth, apart from the identification of international and inter-sector differences, the current study also highlights the general suitability of the definition by Kruse et al. [16] to characterized social enterprises, as the majority of criteria was met by all enterprises included in this study. Considering this, Kruse et al.’s definition emerges as theoretically and empirically solid and could contribute to the ongoing debate on definitional features in SE.
Fifth, this study exemplifies that a combination of quantitative and qualitative methods is particularly useful to comprehensively investigate complex SE-related research questions [22,90]. The strength of this mixed-methods approach lies in the ability to (i) investigate the still-emerging field of SE in an exploratory manner and (ii) improve the validity of findings by empirical backing. Thus, researchers should be encouraged to combine qualitative and quantitative methods.
Sixth, SE practitioners and educators can benefit from the definitional features of social enterprises to provide a clearer understanding of what SE is. Furthermore, highlighting the nuances of social enterprise features can help to encourage nascent social entrepreneurs to be innovative and adapt other SE business models to conditions in their country or sector. This could increase the number and success of tailor-made social enterprises addressing regional problems and challenges appropriately.

4.2. Limitations

The current study has the following limitations:
First, only two countries, the UK and India, entered the analyses. As social enterprises are spread all over the world and conditions differ from those in the two countries chosen for this study, an examination of more countries is needed to get a comprehensive overview. Furthermore, the enterprises entering this study are not representative of either country.
Second, despite the generally large number of enterprises included, not all sectors featured a sufficiently high number of Indian enterprises to be analyzed. Thus, existent differences could have been missed.
Third, drawing the social enterprises from two databases with a pre-selection process, it is possible that the sample suffers from selection bias [66]. Thus, the current study should be replicated based on a random sample of social enterprises. In addition, survivorship bias could have occurred [79].
Fourth, only websites of the social enterprises entering the study were coded. Despite websites being an up-to-date and substantial data source, more detailed data should be acquired in direct interaction with social entrepreneurs (e.g., by conducting interviews) or by analyzing documents such as annual reports, if available.

5. Conclusions

Social Entrepreneurship (SE) combines the traditional entrepreneurial aspiration to generate financial revenue with an equally important social mission, e.g., by helping poor or marginalized groups in society. As SE gained more and more interest in different scholarly disciplines and evidence regarding notable cultural and economic influences on SE activity emerged, the question arose whether features of social enterprises differ between different countries and sectors social enterprises operate in. Addressing this question, the current study employed a mixed qualitative and quantitative approach analyzing a sample of 161 UK and Indian social enterprises. Based on a content analysis and analyses of variance, it was found that (i) significant international differences in several features of social enterprises comparing the UK and India and (ii) significant inter-sector differences in both countries emerged. Whereas the scope of this study is limited due to using non-representative data and only investigating two countries, there is first evidence that both international and inter-sector differences in SE exist. Thus, future research should pay more attention to the diversity of social enterprise features, and SE practitioners can benefit from my findings by painting a more nuanced and context-dependent picture of social entrepreneurial activities in SE courses and education programs.

Funding

The publication charges for this paper were financed by the Saxon State and University Library Dresden (SLUB). Open Access Funding by the Publication Fund of the TU Dresden.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

Study data and the detailed output of all quantitative analyses are available upon reasonable request by contacting the correspondence author.

Acknowledgments

I would like to express my deep gratitude to Franziska Schlemper and Anastasija Ratnikova for the invaluable help in data acquisition and management. Furthermore, I would like to thank Ran Mouri and Kurumi Tokisaki for their inspirational and critical support when writing this manuscript. Last but not least, I am thankful to the Saxon State and University Library Dresden (SLUB) for financially supporting this publication. Open Access Funding by the Publication Fund of the TU Dresden.

Conflicts of Interest

The author declares no conflict of interest.

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Table
Table 1. ANOVA on international differences comparing UK and Indian social enterprises.
Table 1. ANOVA on international differences comparing UK and Indian social enterprises.
Definitional CriterionMean (SD) UKMean (SD) IndiaANOVA ResultsMeaning
1. Has a business model1.00 (0.00)1.00 (0.00)-No mean difference
2. Generates revenue0.82 (0.39)0.74 (0.44)F [1, 159] = 1.43 (p = 0.23)No significant mean difference
3. Addresses socioeconomic needs unmet by national systems or private sector1.00 (0.00)1.00 (0.00)-No mean difference
4. Creates social value1.00 (0.00)1.00 (0.00)-No mean difference
5. Targets financial sustainability0.74 (0.44)0.60 (0.50)F [1, 159] = 3.60 (p = 0.06)Marginally higher in UK SEs
6. Innovatively combines and exploits resources0.15 (0.36)0.95 (0.23)F [1, 159] = 225.05 (p < 0.01)Significantly higher in Indian SEs
7. Contributes to a sustainable development of a community1.00 (0.00)1.00 (0.00)-No mean difference
Note. nUK = 104; nIndia = 57. A hyphen indicates that no ANOVA was conducted as there was no mean difference between the UK and the Indian sample.
Table
Table 2. ANOVA post hoc tests on inter-sector differences in India for the definitional category ‘generates revenue’.
Table 2. ANOVA post hoc tests on inter-sector differences in India for the definitional category ‘generates revenue’.
SectorkMean (SD) Generates RevenueCompared to|ΔM|(SE)Meaning
Education and training90.33 (0.50)Health and social services0.47 ** (0.17)Less revenue generated in education and training
Agriculture, environment, and energy0.55 ** (0.17)Less revenue generated in education and training
Other0.29 (0.20)No significant difference
Health and social services200.80 (0.41)Agriculture, environment, and energy0.08 (0.14)No significant difference
Other0.17 (0.17)No significant difference
Agriculture, environment, and energy170.88 (0.33)Other0.26 (0.18)No significant difference
Other80.63 (0.52)---
Note. As the other sectors did not fulfill the criterion k ≥ 5, they were dropped; k = number of social enterprises; |ΔM| = mean difference (absolute value); SE = standard error; ** = p < 0.01.
Table
Table 3. ANOVA post hoc tests on inter-sector differences in the UK for the definitional category ‘targets financial sustainability’.
Table 3. ANOVA post hoc tests on inter-sector differences in the UK for the definitional category ‘targets financial sustainability’.
SectorkMean (SD) Financial SustainabilityCompared to|ΔM|(SE)Meaning
Disability employment120.20 (0.45)Business services 0.59 ** (0.22)Less financial sustainability in disability employment
Community services0.47 + (0.24)Marginally less financial sustainability in disability employment
Education and training0.40 (0.23)No significant difference
Finances0.80 ** (0.26)Less financial sustainability in disability employment
Health and social services0.50 * (0.20)Less financial sustainability in disability employment
Other0.70 ** (0.21)Less financial sustainability in disability employment
Business services140.79 (43)Community services0.12 (0.18)No significant difference
Education and training0.19 (0.18)No significant difference
Finances0.21 (0.21)No significant difference
Health and social services0.09 (0.14)No significant difference
Other0.11 (0.15)No significant difference
Community services90.67 (0.50)Education and training0.07 (0.19)No significant difference
Finances0.33 (0.22)No significant difference
Health and social services0.03 (0.16)No significant difference
Other0.23 (0.17)No significant difference
Education and training100.60 (0.52)Finances0.40 (0.22)No significant difference
Health and social services0.10 (0.15)No significant difference
Other0.30 (0.16)No significant difference
Finances61.00 (0.00)Health and social services0.30 (0.19)No significant difference
Other0.10 (0.20)No significant difference
Health and social services330.70 (0.47)Other00.20 (00.12)No significant difference
Other200.90 (0.31)---
Note. As the sector ‘agriculture, environment, and energy’ did not fulfill the criterion k ≥ 5, it was dropped; k = number of social enterprises; |ΔM| = mean difference (absolute value); SE = standard error; ** = p < 0.01; * = p < 0. 05; + = p < 0.07.
Table
Table 4. ANOVA post hoc tests on inter-sector differences in the UK for the definitional category ‘innovativeness’.
Table 4. ANOVA post hoc tests on inter-sector differences in the UK for the definitional category ‘innovativeness’.
SectorkMean (SD) InnovativenessCompared to|ΔM|(SE)Meaning
Disability employment120.00 (0.00)Business services 0.50 ** (0.17)Less innovativeness in disability employment
Community services0.22 (0.19)No significant difference
Education and training0.30 (0.18)No significant difference
Finances0.0 (0.20)No significant difference
Health and social services0.12 (0.16)No significant difference
Other0.0 (0.17)No significant difference
Business services140.50 (0.52)Community services0.28 + (0.14)Marginally more innovativeness in business services
Education and training0.20 (0.14)No significant difference
Finances0.50 ** (0.16)More innovativeness in business services
Health and social services0.38 ** (0.11)More innovativeness in business services
Other0.50 ** (0.12)More innovativeness in business services
Community services90.22 (0.44)Education and training0.08 (0.15)No significant difference
Finances0.22 (0.18)No significant difference
Health and social services0.10 (0.13)No significant difference
Other0.22 (0.13)No significant difference
Education and training100.30 (0.48)Finances0.30 (0.17)No significant difference
Health and social services0.18 (0.12)No significant difference
Other0.30 (0.23)No significant difference
Finances60.0 (0.0)Health and social services0.12 (0.15)No significant difference
Other0.0 (0.16)No significant difference
Health and social services330.12 (0.33)Other0.12 (0.09)No significant difference
Other200.0 (0.0)---
Note. As the sector ‘agriculture, environment, and energy’ did not fulfill the criterion k ≥ 5, it was dropped; k = number of social enterprises; |ΔM| = mean difference (absolute value); SE = standard error; ** = p < 0.01; + = p < 0.07.
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Kruse, P. Exploring International and Inter-Sector Differences of Social Enterprises in the UK and India. Sustainability 2021, 13, 5870. https://doi.org/10.3390/su13115870

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Kruse P. Exploring International and Inter-Sector Differences of Social Enterprises in the UK and India. Sustainability. 2021; 13(11):5870. https://doi.org/10.3390/su13115870

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Kruse, Philipp. 2021. "Exploring International and Inter-Sector Differences of Social Enterprises in the UK and India" Sustainability 13, no. 11: 5870. https://doi.org/10.3390/su13115870

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Kruse, P. (2021). Exploring International and Inter-Sector Differences of Social Enterprises in the UK and India. Sustainability, 13(11), 5870. https://doi.org/10.3390/su13115870

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