Digitalization as a growth driver for social enterprises

Abstract

Social enterprises' motivations for growth arguably stem from their social missions, which can result in moderate business growth due to conflicting interests and the trade-off costs of impact scaling and growing their business. Digitalization has been suggested as one method of enabling the simultaneous growth of business and social or environmental impact. In this study, we analyze the digital orientation of social enterprises and test whether our hypotheses regarding the superior business benefits of digitalization for social enterprises can be empirically confirmed. Our results show social enterprises as early adopters of digitalization, who have higher expectations that digitalization will benefit them and tend to invest more in digital technologies and capabilities than commercial companies do. However, the strong digital orientation of social enterprises does not manifest better business growth. Furthermore, the findings suggest that social enterprises' investment in social media has hampered their productivity. Our findings challenge current theoretical arguments that claim that digitalization has particular benefits for social enterprises, and we suggest that the digital antecedents of social enterprise growth are, after all, very similar to those of other small and medium-sized enterprises.