How Might Social Ventures Think About Growth?
Written by Dr. Andrea Caldwell Marquez, December 2021
Business increasingly plays an important role in addressing complex societal challenges, such as poverty, conflict, and climate change. In fact, the growing field of social entrepreneurship highlights the inspiring potential of ventures that strive to use business means (i.e., revenue-generating activities) to achieve societally-focused ends.
Both scholars and practitioners have struggled to agree upon a definition of social entrepreneurship for decades. This debate has led to an abundance of definitions for this “contested concept” and important questions such as “Do corporate social responsibility (CSR) efforts of multinational corporations constitute social entrepreneurship?” and “Can nonprofit organizations engage in social entrepreneurship?” Focusing on the means and ends of an organization helps to draw clearer boundaries. Similar to nonprofits, social ventures exist primarily to address a societal issue (i.e., their ends) – this helps to distinguish them from the secondary social responsibility efforts of profit-maximizing companies. Similar to corporations, social ventures primarily use revenue-generating activities to sustain their existence (i.e., their means) – this contrasts with nonprofits’ traditional reliance on grants and donations to fund their operations.
As fledgling organizations, social ventures (like all ventures) face a growth imperative: they need to show “traction” to attract the resources (capital, talent, etc.) that they need to survive. Unlike the evolution of a plant from seed to sprout to flower, growth in early-stage ventures is rarely graceful or predictable – but social ventures can find growth to be particularly complicated. By embracing societally-focused ends as core to their success, social ventures can face an even more challenging journey than ventures that emphasize business ends such as revenue or profit growth. If social ventures have both social and business objectives, how might they think about growth?
This question is at the core of one of my research projects. My research is grounded in an important insight from management scholar William Starbuck that growth is “not spontaneous” but rather “the consequence of decisions… [which] are, in turn, functions of the goals pursued by the members of the organization.” To explore how social ventures conceptualize growth for their organizations, my research team and I pored over the business plans for a sample of 33 social ventures and considered every reference to growth (or related concepts such as “scale”, “expansion”, “increase”, etc.). This investigation surfaced a few important questions related to growth in social ventures:
- What is/are the units of growth? By considering exactly what a venture was aiming to grow, we identified 40+ different units of growth in our sample of social ventures. This ranged from the “usual suspects” (e.g., industry/market growth, increasing revenues and/or profits) to more novel targets (e.g., personal growth, increasing access).
- Is growth an external condition or an internal focus? We observed that ventures discuss growth both in terms of external factors related to the opportunity (e.g., an increase in demand, a growing problem) as well as internal efforts to capitalize on the opportunity (e.g., growing the venture team, expanding into a new market).
- What is the level of specificity used to describe growth? We noticed that growth statements often lacked specificity in terms of what the venture intended to grow (e.g., “as the company grows”). If growth is indeed a consequence of decisions made in pursuit of the goals of an organization, these vague references may indicate a lack of intentionality and clarity with regards to growth.
- Who benefits from this growth? A final observation revealed that our sample of ventures varied in terms of who they envisioned benefiting from a specific type of growth. In particular, we noted that ventures consider how growth may impact the company itself, a key stakeholder group, and/or society-at-large. This variance can even appear across statements focused on the same unit of growth. For example, some ventures frame their future growth into a new market as benefiting the company itself, whereas others suggest that the venture’s planned expansion will benefit citizens in that community. Whereas hiring new people (i.e., employee growth) can be perceived as benefiting the venture’s operations, it may also be framed in terms of job creation that benefits society-at-large.
Our findings have important implications for social ventures and other organizations that may consider the use of social entrepreneurship toward addressing societal issues. When faced with a diverse set of objectives that reflect both business means as well as social ends, it is critical to consider the following questions:
- What type of growth does your organization (and/or the social entrepreneurs that you serve) aim to achieve? Do you have both business and social growth targets? (How) Do you measure them?
- How specific are you (or can you be) when you discussing growth for your organization? Can you refine vague references to growth to express more intentionality and clarity of purpose with regards to growth? Can you establish clear metrics by which to measure them?
- Are you more focused on external conditions or internal efforts related to growth? Can you draw (more) connections between any external factors and internal actions?
- How does (each type of) growth impact your organization’s intended beneficiaries? Are there types of growth that positively impact the organization but negatively impact its beneficiaries – and vice versa? How might you resolve this conflict?
Growth in a social venture may not mirror the beautiful evolution of a plant from a seed to a flower – but regardless it is key to the venture’s survival. Because growth rarely occurs spontaneously, it requires the focus and forethought of the organization’s leaders to establish specific goals for the organization, which can then guide the decisions made to achieve that growth.
Dr. Andrea Marquez is an Assistant Professor of Management at the Alvarez College of Business at the University of Texas at San Antonio. Her research focuses primarily on early-stage startups and entrepreneurs, with a particular emphasis on social ventures and underrepresented founders. Dr. Marquez chose to pursue a PhD in Management in large part because of her experiences supporting Business on the Frontlines. As an MBA student, she and her team supported Catholic Relief Services in Nicaragua in its work to address challenges faced by agriculture cooperatives. In 2019, Dr. Marquez served as an advisor in Colombia working alongside Fundación Ideas para La Paz to identify pathways to sustainable livelihoods for cocaleros and ex-combatants.