The Governance of Social Enterprises

Alnoor  Ebrahim; Julie  Battilana; Johanna  Mair

Article | Research in Organizational Behavior | 2014

The Governance of Social Enterprises: Mission Drift and Accountability Challenges in Hybrid Organizations

by Alnoor Ebrahim, Julie Battilana and Johanna Mair

Abstract

We examine the challenges of governance facing organizations that pursue a social mission through the use of market mechanisms. These hybrid organizations, often referred to as social enterprises, combine aspects of both charity and business at their core. In this paper we distinguish between two ideal types of such hybrids, differentiated and integrated, and we conceptualize two key challenges of governance they face: accountability for dual performance objectives and accountability to multiple principal stakeholders. We revisit the potential and limitations of recently introduced legal forms to address these challenges. We then theorize about the importance of organizational governance, and the role of governing boards in particular, in prioritizing and aligning potentially conflicting objectives and interests in order to avoid mission drift and to maintain organizational hybridity in social enterprises. Finally, we discuss future research directions and the implications of this work for rethinking traditional categories of organizations, namely business and charity.

Keywords: social enterprise; governance; hybrid organizations; nonprofit; performance measurement; legal form; agency theory; stakeholder management; Mission and Purpose; Social Enterprise; Corporate Accountability;

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Ebrahim, Alnoor, Julie Battilana, and Johanna Mair. "The Governance of Social Enterprises: Mission Drift and Accountability Challenges in Hybrid Organizations." Research in Organizational Behavior 34 (2014): 81–100.

Teaching Note for HBS No. 417-051. This Teaching Note provides conceptual foundations and teaching plan recommendations for the case on Vox Capital, a firm that launched one of the first impact investing funds in Brazil. The learning objectives are to understand how an impact investing fund operates (here a venture capital fund seeking both financial and social returns) and to understand how an impact investing firm can organize itself internally to balance its financial and social objectives over time.

Brothers André and Daniel Albuquerque founded the company Terra Nova in 2001 to mediate land disputes between poor families illegally living in urban areas and the official landowners—with the aspiration to improve the lives of the poor. A business-led approach to the issue, like Terra Nova’s, was innovative and contested amid the widespread belief that land disputes fell solely within the public sector’s purview. After struggling to develop a viable business model, the company received support from impact investing firm MOV Investimentos. By 2019, Terra Nova finally broke even and was exploring opportunities for scaling. But its leaders had to decide the right expansion model for the social business.

Chapter | Handbook of Inclusive Innovation | 2019

Problem, Person, and Pathway: A Framework for Social Innovators

Julie Battilana, Brittany Butler, Marissa Kimsey, Johanna Mair, Christopher Marquis and Christian Seelos

As the appetite for learning about social innovation intensifies, how can we better prepare practitioners for the work of addressing the world’s pressing social problems at the relevant scale? This chapter presents the “3P” framework that we developed to help address this challenge, grounded in our experience researching, teaching, and advising social innovators around the world. In this framework, we propose three key lenses to help social innovators contribute to social change, unpacking the nature of: the problem at hand, the person pursuing change, and the pathway to change. Considering the alignment of these 3Ps provides an organizing template for social innovators to think about how they can effectively contribute to solving social problems. We illustrate how we engage new and experienced social innovators in this learning journey by discussing our pedagogical approach as educators. In conclusion, we discuss future research directions to help address unanswered questions.

Keywords: social innovation; Social Entrepreneurship; Social Issues; Change; Problems and Challenges;

Citation:

Battilana, Julie, Brittany Butler, Marissa Kimsey, Johanna Mair, Christopher Marquis, and Christian Seelos. "Problem, Person, and Pathway: A Framework for Social Innovators." In Handbook of Inclusive Innovation: The Role of Organizations, Markets and Communities in Social Innovation, edited by Gerard George, Ted Baker, Paul Tracey, and Havovi Joshi, 61–74. Cheltenham, UK: Edward Elgar Publishing, 2019. View Details

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The Governance of Social Enterprises: Mission Drift and Accountability Challenges in Hybrid Organizations

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