ABSTRACT
The sustainable management and development of any venture is challenging under any conditions. When the venture is a social enterprise incorporating elements from different institutional logics, it is especially so (Scott and Meyer 1991). By using market-based methods to solve social problems, social enterprises are by nature areas of contradiction as they attempt to marry two distinct and ostensibly competing organizational objectives: creating social value and creating economic value (Austin et al. 2006). Social enterprises seek to create social value (Peredo and McLean 2006), but they employ a market-based organizational form to sustain this value creation (Mair and Marti 2006). They also seek to create value for customers, but instead of full remuneration posing to investors, the surplus benefits of organizational activity accrue primarily to targeted beneficiaries (Austin et al. 2006). In this sense, social enterprises are caught between the competing demands of the market logic and the welfare logic that they combine. As the degree of incompatibility between logics increases, social enterprises face heightened challenges that may threaten their sustainable development (Tracey et al. 2011). Moreover, this evidence suggests that social enterprises may be highly unstable and unlikely to retain both logics over time. As a result, social enterprises need to find ways to deal with the multiple demands to which they are exposed. The purpose of this chapter is to explore how they may do so. The existence and functioning of social enterprises poses interesting conceptual questions for institutional theory because social enterprises challenge the conceptualization of organizations as entities reproducing a single coherent institutional template in order to gain legitimacy and secure support from external institutional referents (DiMaggio and Powell 1983). A central feature of social enterprises is that the institutional logics that they embody are not always compatible (Greenwood et al. 2011). They may have to incorporate antagonistic practices that may not easily work together (Tracey et al. 2011). In addition, because adopting elements prescribed by a given logic often requires defying demands of the other logics, social enterprises may potentially jeopardize their legitimacy vis-à-vis important institutional referents (D’Aunno et al. 1991).
