Social entrepreneurship has been recognised as an effective path to address social problems. The conventional non-profit organisations (NPOs) employed the social enterprise model to transform from grant-dependent to income-generating social enterprises. Many regions including the EU, USA and East Asia governments proactively promote the social enterprise sector by constituting social enterprise legislation and alter the government’s public service policy by collaborating with local social entrepreneurs. Besides, some world leading corporations accomplish their corporate social responsibility (CSR) by investing in a social enterprise.
Since 2010, social entrepreneurship in Malaysia and Singapore encountered rapid growth, However, it is still at the seed and venture stages. The survey reports conducted by the social enterprise legal agencies, namely Malaysia Global Innovation and Creativity Centre Social Entrepreneurship (MaGIC SE) and Singapore Centre of Social Enterprise (raiSE SG), showed that, majority of the social enterprises are confronted with the criticality of survival challenges, especially in financial sustainability. Specifically, more than half unable to break-even after years of operation and face the difficulty to balance both social and financial bottom lines. The low sustainability issues hamper the social impact sought by these organisation, moreover, exhaust the valuable and limited resources that should be benefiting the underprivileged communities.
Grounded in the Resource Based View and Resource Dependence Theory, the systematic literature review identified three internal-oriented factors (i.e., business planning, entrepreneurial orientation and social salience) and two external-oriented factors (i.e., financial support and training support) that probably have a significant influence on the organisational performance (i.e., financial and social performance) of social enterprises. Besides, previous studies also recommended business planning practice and socio-economic context, respectively play an intervention role in all those factors and social enterprise performance. To justify the causal relationships between the variables and identify the predictors of an outcome, this study employed a quantitative approach by using PLS-SEM Smart PLS to test the theoretical framework and hypotheses.
The data collection was conducted between 20 September and 19 October 2017. From a total of 181 respondents, 79 (or 44%) are from Malaysia and 102 (or 56%) are from Singapore. The demographic profile showed 93% of the respondents holding the highest position in the organisation, such as director, chief officer, chairman, president or founder. 80% of the social enterprises are not more than 5 years old. Most of them are small size enterprises, 85% with less than 10 employees, 91% with less than RM or SGD 1 million per year. The social enterprises characteristics exhibited in this study are aligned with the latest survey reports like State of Social Enterprise in Malaysia (MaGIC 2016) and State of Social Enterprise in Singapore (raiSE 2017).
Based on the analysis results from the empirical data, there are five main findings concluded in this study. First, the key factor that contributes the largest impact on the financial performance of social enterprises in Malaysia and Singapore, is the entrepreneurial orientation exhibited by the leading teams. The higher their behaviour tendencies in innovativeness, calculated risk-taking and proactiveness, the greater their financial performance is foreseeable. Second, the social performance of social enterprises is well determined by the social salience of the social entrepreneurs. The prominence of the social entrepreneurs in pursuing social outcomes shapes the organisational value and development strategies, tend to generate higher social performance.
Third, business planning has demonstrated a perfect mediator role in the relationships between external-oriented factors (i.e., financial and training support) and their organisational performance (i.e., financial and social performance). This finding is crucial to explain how to increase the return-on-investment (ROI) of the external support from private, public and non-profit sectors. Fourth, the moderating effects of socio-economic context found to be statistically significant on the direction and strength of the relationship between social salience and financial performance. In a highly favourable environment with more resourceful and collaboration opportunities, the negative impact of the social salience on financial performance is irrelevant. Last, the Importance-Performance Map Analysis (IPMA) approach indicated the major factor to increase the financial performance of social enterprises is their entrepreneurial orientation. Meanwhile, the social salience is the most potential area that should be concentrated to enhance their social performance.
The research findings may advise the practitioners on their organisation’s strategic direction, and offers a guiding model to the social investors, policymakers and future researchers. All organisations, no matter big or small, face limited resources. Evidently, this is more critical for social enterprises with implied a multi-bottom lines approach. The findings and discussions in the proposed research along these lines may then advise the social entrepreneurs of the core resources and capabilities needed to be focused while executing their strategic planning. For instance, the social enterprise that encountered with financial sustainability crisis, should focus more on the behaviour tendency in terms of innovativeness, calculated risk-taking and proactiveness. Furthermore, social enterprises looking to expand their services, the socio-economic context of the new geographical area should have taken into their consideration to ensure their organisational effectiveness and efficiency.
This survey can also be considered as the voice (or express opinion) of the social enterprises in Malaysia and Singapore. Although social enterprise movements have already enjoyed a great success in many countries, the concept is still very fresh for most of the communities in this region, including legal authorities, the private sector, conventional non-profit organisations and the public. Thus, support given to social enterprises is very finite. In this light, the proposed framework can be a model to guide governments, social investors, corporate companies, NPOs and the public on how to join forces with social enterprises in forging a better future. Moreover, the findings suggest external supportive body should bundle their financial and training support with the business planning practices, to generate a significant impact on the social enterprises’ performance.