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Premadasa, M.; Siyambalapitiya, J.; Jayawardhana, K.; Fernando, I. Social Entrepreneurship and Triple Bottom Line. Encyclopedia. Available online: https://encyclopedia.pub/entry/45617 (accessed on 18 June 2024).
Premadasa M, Siyambalapitiya J, Jayawardhana K, Fernando I. Social Entrepreneurship and Triple Bottom Line. Encyclopedia. Available at: https://encyclopedia.pub/entry/45617. Accessed June 18, 2024.
Premadasa, Madhuwanthi, Janaka Siyambalapitiya, Kumudu Jayawardhana, Imali Fernando. "Social Entrepreneurship and Triple Bottom Line" Encyclopedia, https://encyclopedia.pub/entry/45617 (accessed June 18, 2024).
Premadasa, M., Siyambalapitiya, J., Jayawardhana, K., & Fernando, I. (2023, June 15). Social Entrepreneurship and Triple Bottom Line. In Encyclopedia. https://encyclopedia.pub/entry/45617
Premadasa, Madhuwanthi, et al. "Social Entrepreneurship and Triple Bottom Line." Encyclopedia. Web. 15 June, 2023.
Social Entrepreneurship and Triple Bottom Line
Edit

Social entrepreneurship (SE) has gained prominence as a key segment of entrepreneurship. The unique mission and the market expectations are the key differences between social and commercial entrepreneurship. The concept of entrepreneurial orientation (EO) has grown increasingly important in the entrepreneurship context. 

social entrepreneurship social innovation dynamic capabilities triple bottom line

1. Introduction

Social entrepreneurship (SE) has recently gained prominence as a key segment of entrepreneurship. The unique mission and the market expectations are the key differences between social and commercial entrepreneurship [1]. The concept of entrepreneurial orientation (EO) has grown increasingly important in the entrepreneurship context [2]. The extant literature agrees that entrepreneurial orientation is a term established in the strategy-making process literature that represents firm-level entrepreneurship [3]. The most common dimensions to define EO in the extant literature are proactiveness, innovativeness, and risk taking [4]. The EO concept has been expanded into a variety of areas [5] and is a prominent and commonly utilized theoretical framework in management [6].
Social entrepreneurial orientation (SEO) originated as a challenge to the conventions of traditional business activities. Scholars have revealed that SEO has the overarching goal of achieving social impact, with SEO behaviors aimed at providing solutions to societal issues [7][8]. Here, social enterprises require creative and innovative ways to provide solutions to demanding social issues [9]. Further, scholars have asserted that exploring and exploiting an accumulated base of resources and competencies and developing new things are the two key challenges faced by any social enterprise. Accordingly, dynamic capabilities have been defined as a transformation of resources and competencies [10]. The dynamic capability approach illuminates innovation through the lens of the resources and competencies of an organization [11]. Meanwhile, stakeholders have the ability to shape the development of an innovation because of their importance and the resources, access, and/or legitimacy that their support would bring [12]. Hence, the development of innovations and solutions that advance the public good is the main emphasis of social innovation. In fact, the key purpose of social innovation is to build a better future [13].
However, the extant literature offers fertile ground for further inquiry since four (04) subsequent important knowledge gaps can be observed. First, despite the growing recognition of this triple bottom line in achieving performance, this aspect has not received enough academic scrutiny in the social enterprise research context [14]. As discussed, traditionally, it is believed that it exists for dual value creation—social and financial—and there is a timely need to expand this traditional view of value creation with a triple bottom line paradigm of value creation. Second, current studies lack an illustration of how social entrepreneurship provides viable ground to promote social enterprises through achieving the triple bottom line: people-focused outcomes, financial-focused outcomes, and social-mission-based outcomes [14]. Most of the research has been limited to defining the concept and addressing conceptual ambiguities, differentiating social entrepreneurship from the mainstream of commercial entrepreneurship [15][16], and examining the value creation process. While there are several studies on the factors driving SE to accomplish its goals from varying perspectives, the knowledge is still generally dispersed and fragmented [17]. Third, there is a knowledge gap in understanding how social entrepreneurship drives the process of achieving these triple bottom line goals and in identifying what the antecedents and drivers of the process are [18]. Meanwhile, the definition of social entrepreneurship varies within the context of different geographical regions. Leaving definitional disagreements aside, a recurring theme in the literature on social entrepreneurship is that it is quite similar to how standard concepts of entrepreneurship are thought of [9][19]. Therefore, re-defining the conceptual boundaries of the respective constructs while identifying key drivers and antecedents of the process is time-valued. Fourth, the extant body of knowledge does not offer a comprehensive approach or model for top-level managers to understand what kind of effect their social entrepreneurial posture can have on achieving multiple dimensions of performance. Interestingly, this is still a blurred area in the extant body of knowledge that requires the immediate attention of current business researchers [20][21][22].
In light of the variety of historical and contextual elements, the SE phenomenon is viewed differently among nations and regions [23]. As a result, the concept of social entrepreneurship has been localized to reflect local practices. Further, most of the theories and definitions of social entrepreneurship have been formed based on the developed country perspective, which makes it difficult for developing country viewpoints to comprehend SE [24]. Economic, political, and social issues are particularly severe in developing nations. SE appears to be a successful strategy for finding innovative ways to address these economic and social problems. Thus, the notion of social entrepreneurship is evolving quickly and gaining yet more attention from policymakers and entrepreneurs in developing nations [14].
As a developing country, Sri Lanka is an island with high biodiversity. Roughly 200 years ago, 90% of the land was covered in forests. However, the rate of deforestation sharply increased with rising industrialization [25]. In the 21st century, the remaining natural forests are at risk, and national forest land continues to be eroded [25]. Consequently, the “Earth Restoration” in Belipola is the world’s first analog forest that exhibits forest structures and functions that are comparable to those of a local natural forest catered to decrease deforestation in Sri Lanka. On the other hand, services for fundamental necessities such as health and education are limited, ineffective, or of poor quality in developing nations [14]. In Sri Lanka, non-communicable diseases (NCDs) such as heart disease, stroke, cancer, diabetes, and chronic lung disease account for more than 80% of deaths [26]. This serious issue was recognized by “Sehani Deshiya Oushada (Pvt) Ltd. (Buttala, Sri Lanka)”, which produces valuable organic herbal crops and their value-added products for the Sri Lankan market, with the purpose of reducing the number of patients with non-communicable diseases. Poverty reduction is a challenging and complex problem in many developing countries such as Sri Lanka and in the South Asian context as well. By giving them opportunities to generate revenue, the SE concept directly empowers those who are impacted by poverty. Thus, social enterprises can be used to provide sustainable solutions to social issues since they have the potential to generate both social and financial returns, which are more relevant to developing countries [27]. Thus, it is proved that many social enterprises simply strive to do their part in creating a better world, while some social enterprises’ entire aim is centered around protecting the environment in the developing country context. However, social enterprises aim to generate a profit and expand their business in the same way that for-profit businesses do. Profit, though, helps them to achieve their ultimate goal of expanding their social purpose. Accordingly, it is highlighted that social enterprises and sustainable businesses can play a major role in achieving the triple bottom line [28][29].

2. Entrepreneurial Orientation in the Social Enterprise Context

As one of the emerging fields of study, entrepreneurial orientation (EO) has received significant attention [30] and has become a central concept in the entrepreneurship domain [1]. Thus, entrepreneurial firms have highlighted EO as a critical competency since it is seen as a requirement of their ability to identify and exploit opportunities in order to create value [31]. The author of [32] is one of the pioneers in developing the EO construct, consisting of three dimensions, namely (a) innovativeness, (b) proactiveness, and (c) risk taking, which have fostered multiple measurement scales and jointly define the process of entrepreneurship [3][32]. Entrepreneurial action heavily relies on innovativeness since it serves as the foundation for creating innovative business ideas [33]. First, ref. [32] conceived the idea that innovativeness is the willingness to do something new and creative through experimentation, resulting in unique or enhanced products, services, or processes. Thus, the ability to recognize and respond to possibilities and solutions is a key characteristic of innovativeness. Second, proactiveness has been defined as the capability of an enterprise to seek opportunities and practice forward-looking behavior in order to exploit market opportunities in a conscious effort to sustain itself in the market while competing with other businesses [32]. Thus, proactiveness relates to how organizations pursue commercial opportunities. Third, risk taking is the degree of willingness of managers to make significant and uncertain resource commitments. It includes the propensity to take bold actions such as moving into new, unknown markets, investing a large number of one’s resources in questionable endeavors, and/or borrowing heavily [34]. EO has established itself as a distinct field within the entrepreneurship discipline, and academic studies in this area are extensive [35][36]. Despite the fact that social entrepreneurship is garnering significant attention in practice and research, academic studies on SEO remain relatively scarce [37][38].
Hence, SEO has emerged with the underlying motive of providing innovative solutions as it seeks to face societal challenges [7][8][39]. The combination of social and economic performances distinguishes SEO from activities driven by purely economic or social goals. As traced in the literature, SEO is a dynamic construct that is in its nascent stage [40], and simply, it is the effort of a social enterprise to build entrepreneurial orientation [41]. Based on the study conducted by [42], social innovativeness, social risk taking, social proactiveness, and socialness have been identified as the defining dimensions. This is based on the entrepreneurial orientation dimensions, namely innovativeness, risk taking, and proactiveness, as identified by [32], who have pioneered the development of the entrepreneurial orientation dimensions. SEO is a combination of entrepreneurial behavioral dimensions, namely innovativeness, proactiveness, and risk taking [43]. Here, risk-taking behavior is replaced by the construct of risk management, as social entrepreneurship focuses more on the opportunity for social impact regardless of financial viability. Moreover, innovativeness, proactiveness, risk management, and social mission orientation have also been identified as dimensions of SEO.

3. Dynamic Capabilities in Social Enterprise Context

Most of the definitions of dynamic capabilities indicate that they are valuable [44]. A few other scholars have specified that dynamic capabilities create value indirectly [10]. However, if dynamic capabilities rely on social entrepreneurship, which earns profits, without which it would be linked with a strategic issue without considering the cost accounting approach, the strategic process may lead to high consideration of intangible assets [45]. Dynamic capabilities are defined as a firm’s ability to produce, grow, and change its foundation of tangible or intangible resources and competencies [46]. Further, they have been defined as the capabilities of an organization to develop, modify, and improve its resources and competencies in the forms of tangible and intangible [46]. Thus, the heart of dynamic capabilities is the evolution of resources and competencies.
A prior study revealed that social entrepreneurship plays a crucial role in renewing competencies through dynamic capabilities [47]. Thus, the study concluded that there is a clear correlation between social entrepreneurship and dynamic capabilities. Further, it was revealed that social enterprises possess dynamic capabilities to create value for the community or ecosystems while also delivering long-term solutions to long-standing societal challenges [47]. Further, scholars have asserted that exploring and exploiting an accumulated base of resources and competencies and developing new things are the two key challenges faced by any social enterprise. One scholar has defined dynamic capabilities as a transformation of resources and competencies [10]. Thus, the dynamic capability approach illuminates innovation through the lens of the resources and competencies of an organization [11]. Study findings have revealed that Teece’s dynamic capacities are, in reality, steps in the process of organizing social innovation [48]. According to Teece, developing a dynamic capability requires the ability to sense, seize, and transform [45]. These stages can be classified based on the nature of dynamic capability, displays of social innovation, and dominating the organizational process. Thus, dynamic capabilities could drive social innovation.

4. Social Innovation

In the 21st century, many disciplines have been using the “social innovation” concept, and it simply refers to the configuration of social practices that respond to systemic problems that aim to improve social well-being outcomes, including the participation of actors in civil society [49]. Accordingly, innovations can be recognized as a vital component of social entrepreneurship, as entrepreneurs must participate in innovation to provide solutions for the contemporary social issues that they want to tackle [50]. Recently, social innovation has gained significant attention from both scholars and policymakers as a valuable tool that can be used to help the community tackle complicated and complex social issues [51]. It is evident that social innovations efficiently generate employment opportunities, community services, and shared resources and empower the community. Thus, they will increase the capability of the people to face challenges in a successful manner.
Recently, academics have proposed different social innovation typologies [52][53]. The typology presented by [52] is more applicable to social enterprises as it explains the organizational perspective of social innovation and presents three levels of social innovation, namely incremental innovation, institutional innovation, and disruptive innovation. Incremental innovations relating to products and services are aimed at meeting social needs, and these innovations appear during the starting phase of a social enterprise [48]. Institutional innovation denotes institutional change, and its purpose is to rethink social and economic structures to create social values [4]. Disruptive innovation is aimed at changing the whole system and envisions a shift in power dynamics and a reshaping of social hierarchies to the benefit of marginalized communities [52].
Social innovation is merely linked with social entrepreneurship and intrapreneurship [54], while some other scholars believe that social innovation can be frequently used interchangeably with social enterprises and social entrepreneurship [55][56]. Several authors have tackled concerns of social transformation using concepts of social innovation and social entrepreneurship, despite the academic heritages of their underpinning fields, innovation, and entrepreneurship [57][58]. As change agents, social entrepreneurs use systemic innovation to bring about a shift in the societal equilibrium [59]. In [60], social entrepreneurship was identified as a set of innovative actions and procedures that are used to identify, define, and exploit possibilities to increase social wealth by starting new businesses or reorganizing current ones. Thus, social entrepreneurship exists within a social innovation system that supports addressing social issues while shaping society.

5. Social Entrepreneurship and Triple Bottom Line

The triple bottom line is a notion that is strongly tied to the concept of sustainability. Sustainable development is defined as development that meets current demands while not endangering the ability of future generations to meet their own needs [61]. Many scholars have thus far attempted to include social enterprises in the structure of “hybrid organizations”, which indicates that they create dual value: social value for their target groups and financial value to stay long-term financially sustainable [62][63][64][65][66][67]. However, the evolving for-profit literature suggests that organizations should engage in securing the triple bottom line, which states that organizational achievements could be three-fold: financial, social, and environmental.
First, the financial aspect of the triple bottom line is a variable that moves with the flow of the economic factors of any enterprise. Profitability, or personal financial gain, is the fundamental motivation for business owners [68]. In other ways, it refers to the capacity of the economy to withstand challenges and evolve in the future to provide for future generations as one of the subsystems of sustainability [69]. Thus, it focuses on the economic value created by an organization for its surroundings to prosper and enhances the potential of the organization to support future generations. Second, the social aspect of the triple bottom line relates to conducting business in a way that is fair to labor, human resources, and society. Simply, it is thought to add value to society. Thus, social performance focuses on an organization’s engagement with the community to address problems related to community involvement, employee relations, and fair compensation [70]. Third, the environmental aspect of the triple bottom line is concerned with the effective utilization of environmental resources that does not compromise those resources for future generations. It entails the efficient utilization of energy resources, minimizing greenhouse gas emissions, and lowering the environmental impact [70]. Thus, the triple bottom line provides a framework to measure the performance and success of an organization in terms of financial, social, and environmental aspects.
The link between social entrepreneurship and achieving the triple bottom line is particularly important for any country as it assures the development of the economy [71], and social entrepreneurship has become one of the social, economic, and cultural global phenomena along with its rapid growth. Thus, social entrepreneurship could be able to balance its mission to create value for society while achieving financial sustainability [72]. The key aims of social entrepreneurship are to address the needs of the community and to serve disadvantaged communities while creating job opportunities. However, past studies have also revealed that it is difficult to balance these two competing objectives, namely social objectives and economic objectives. This task bias has arisen due to the excessive attention directed toward economic goals, which has led to social goals being ignored [73].
Most social entrepreneurship research studies examine the relationship between social entrepreneurship and sustainable development [74][75]. Meanwhile, the idea and implementation of the triple bottom line concept have also been discussed by previous scholars [76][77][78]. Further, studies have concluded that there is a requirement for a strong sustainable tool, which can be met by integrating the triple bottom line concept [79]. Thus, it is highlighted that social enterprises and sustainable businesses can play a major role in achieving the triple bottom line [28][29]. Accordingly, several studies have conceptually examined the relationship between entrepreneurship and the triple bottom line, and the majority of them have revealed a substantial positive link between the two factors. Thus, SE is defined by a lack of theoretical constraints, contradictory definitions and conceptualizations, gaps in the literature, and a scarcity of empirical evidence.

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