Recent events, like the 2008 Economic Crisis, Occupy Wall Street, and the Arab Spring, showcase the instability of our markets and the growing unrest of grassroots movements against neoliberal dominance. As capitalism is called into question by management scholars , social entrepreneurship (Peredo & McLean, 2006) and social enterprises (Shaw & Carter, 2007) are lauded, now more than ever, as panaceas for addressing social needs (Dart 2004) and economic volatility, especially in areas that are abandoned by both the private sector and the state (Di Domenico, Haugh, & Tracey, 2010). Nearly two decades after management theorists were urged to contribute to solving major problems affecting societal well-being (Hambrick, 1994), these two areas of enquiry - social enterprise and social entrepreneurship - have become increasingly significant in practice, as they have in academia (Peredo & McLean, 2006; Di Domenico et al., 2010).
Although the increase in social enterprise and social entrepreneurship research has led to new journals, a plethora of articles, and advances in curriculum, this area is still relatively young (Nicholls & Cho, 2006) and fragmented (Trivedi, 2010). Extant literature is criticized for being characterized by purely descriptive cases or individual ‘hero’ accounts of social entrepreneurs (Peredo & Chrisman, 2006; Nicholls, 2010), thus lacking sufficient empirical findings from which researchers can draw out generalizations. Furthermore, the literature is overwhelmingly positive (Zietsma & Tuck, 2012), highlighting, and often idealizing, the abilities of the social enterprise activity to be scalable (Kramer, 2005; Lumpkin et al., 2011), to properly address resource scarcity by diversifying between commercial and philanthropic means (Dees, 1998), and to master the social and businesslike logics into one hybrid-organization (Katre & Salipante, 2012).
There is a nascent body of non-profit literature (see Eikenberry & Kluver, 2004; Eikenberry, 2009 for a review), however, that critically examines these phenomena based on concerns that the continuous increase of business-likeness can result in a change in focus of a social enterprise’s mission from creating social value to creating economic value. In extreme cases, such a refocus would cause the organization to cease being a social enterprise if no social value was created (Tuck, Middleman, & Paredo, 2013). Although these concerns exist, the idea of social enterprise mortality, of any form, has yet to be discussed in the literature. This should be seen as peculiar since social entrepreneurs and social enterprises operate in the same way as conventional firms, in that they have to compete for resources. Therefore, it is expected that competitive forces would also cause some social enterprises to fail, where others succeed. Although extant literature idolizes social entrepreneurship and social enterprise, focusing on and urging for their growth, we must not forget about possible causes of death. It is important to ask critical questions like: What are some of ways in which social enterprises fall victim to the market environment or lose their status as a social enterprise?
Answering Bull’s (2008) call for critical reflection on the development of social enterprise activity, I theorize that there are, at least, six different ways in which a social enterprise can fail that have not been addressed in prior literature: 1) Susceptibility to Self-Justification, which is based on the literature on callings and escalation of commitment; 2) Susceptibility to Over-Expectation, based on prospect theory; 3) Susceptibility to Corporatization, based on the literatures on mission drift and business-likeness; 4) Susceptibility to Benevolence, which is based on the non-profit literature; 5) Susceptibility to Dissonance, based on competing logics literature; and, 6) Susceptibility to Acquisition, which is based on the literature on mergers and acquisitions. By theorizing social enterprise mortalities, I contribute to the literature by developing a typology to understand the possible routes of failure, which has implications for both practice and academia.
