The SE Process

I used the SE process framework proposed by Lumpkin et al. (2013), namely the antecedents, entrepreneurial orientation, and outcomes. Lumpkin et al. conducted their study to analyze whether differences, antecedents, and outcomes influenced or altered the entrepreneurial orientation in the SE context. Figure 2 provides the proposed framework.

Figure 2. SE process framework

Source: Author’s creation, adapted from Lumpkin et al. 2013

SE is characterized by its antecedents, which are different than the commercial entrepreneurship context. The antecedent is the motivations and working conditions that drive and animate entrepreneurial orientation in SE, including social mission, opportunity identification, access to capital and funding, and multiple stakeholders.

Antecedents Social Motivation/Mission

Opportunity Identification Access to Capital/Funding Multiple Stakeholders

Entrepreneurial Orientation Innovativeness

Proactiveness Risk Taking Competitive Aggressiveness

Autonomy

Outcomes

Social Value Creation Sustainability of

Solutions Satisfying Multiple

Stakeholders

32 First is the presence of a social mission and/or motivation to pursue a social purpose (Zahra et al. 2009). The social mission in SE equates to the identification of the unmet social need, opportunity for new social value creation, and environmental mission (Nicholls 2006;

Jaén et al. 2017; Robinson 2006).

A stakeholder is any individual or group affected by or affecting an organization’s ability to achieve its objectives (Freeman 1984; Jones 1995). Multiple stakeholders in SE are linked to its purpose or mission (Low 2006; Spear and Bidet 2005). Compared to commercial ventures, social entrepreneurs are likely to have broader relevant stakeholders (Low 2006), such as beneficiaries, capital providers, workforces, and suppliers (Dees 2001). Aside from these key stakeholders, the government and other special interest groups are also critical stakeholders for social enterprises (Mort, Weerawardena, and Carnegie 2003). For stakeholders to be salient to a given organization they must have three characteristics: power, legitimacy, and urgency (Mitchell, Agle, and Wood 1997). Considering these three characteristics should be useful to analyze the key actors in the social entrepreneurial process.

The social problem directs the opportunity identification in SE, which is highly influenced by the social and institutional structures in a market and community (Murphy and Coombes 2009; Robinson 2006). A balanced mingling of the entrepreneur’s past and personal experiences, society’s changes, the community’s needs, and the available social assets can also create opportunities (Guclu, Dees, and Battle Anderson 2002). The social opportunity can distinguish the social and commercial entrepreneurship14 (Zahra et al. 2019). Corner and Ho (2010) found that opportunity development in SE is more complex and messier. The process

14 Social opportunity is defined by five attributes: prevalence (prevalence of needs in human society), relevancy (the opportunity’s salience to the entrepreneur and his or her background, values, talents, skills, and resources), urgency (responses to unpredicted events), accessibility (the level of perceived difficulty in addressing a social need through traditional welfare mechanisms), and radicalness (the extent to which a major innovation or social change is necessary to address a particular problem).

33 is developed by multiple actors rather than individual entrepreneurs, and it mixes effectuation and rational economic15 elements (Corner and Ho 2010).

Some scholars argue that SE has limited resources compared to commercial businesses (e.g., Austin, Stevenson, and Wei-Skillern 2012). SEs can also rely on multiple access to capital and funding, depending on their legal structure, current situation, and needs (Elkington and Hardigan 2008). Social entrepreneurs need to attract more than merely economic capital, but also human and social capital (Guclu, Dees, and Battle Anderson 2002; Sommerrock 2010).

Economic capital includes financial and physical capital, in addition to human capital, including entrepreneurs, paid staff, volunteers (Sommerrock 2010), and collaborators. Human resources provide labor and a wide array of intangible resources, such as skills, knowledge, contacts, credentials, passions, reputations (Drayton 2002), and cultural resource (Widjojo and Gunawan 2019). Social capital originates from the organization’s connections to its environment, and it is owned simultaneously by the social enterprise and other parties (it diminishes when one party withdraws from the relationship) (Sommerrock 2010).

Entrepreneurial orientation represents configurations of policies, practices, and processes across many types of entrepreneurial organizations (Lumpkin and Dess 1996). The external environment, the social mission of the organization, and the need for sustainability may constrain the entrepreneurial orientations (Mort, Weerawardena, and Carnegie 2003).

Lumpkin et al. (2013) employ five dimensions of social entrepreneurial orientation, namely innovativeness, proactiveness, risk-taking, competitive aggressiveness, and autonomy.

Innovativeness is a preference to invest in creativity and exploration through the

15 In rational economic systems, entrepreneurs already have the desired outcome in mind while assembling the resources necessary to achieve that particular outcome. In effect, the entrepreneurs may not begin with a precise idea, but they have set of means they can use to address potential idea (skills, resources, people) (Sarasvathy 2001).

34 implementation of new products, services, and processes. Proactivity is an opportunity-searching and forward-looking view, defined by the application of new products and services ahead of the competition and by working in anticipation of potential demand. Risk-taking includes taking courageous action by venturing into the unknown, borrowing heavily, and/or investing substantial resources into businesses in unclear settings. Competitive aggressiveness is the force of a firm’s effort to outperform rivals, marked by a great offensive attitude or aggressive response to the competitors’ action. Autonomy relates to the capacity to function separately, make choices, take action, and bring forward a company idea (Lumpkin et al. 2013;

Lumpkin and Dess 1996). Table 1 provides the summary of the entrepreneurial orientation.

35 Table 1. Entrepreneurial Orientation

Entrepreneuri al Orientation

Definition: The general understanding of the five entrepreneurial indicators as summarized by Lumpkin and Dees (1996)

Indicators:

Indicators to examine the entrepreneurial performances of the five indicators in the context of commercial entrepreneurship, summarized by Lumpkin and Dees (1996)

Innovativeness

“Innovativeness reflects a firm’s tendency to engage in and support new ideas, novelty, experimentation, and creative processes that may result in new products, services, or technological processes” (Lumpkin and Dees 1996, 142)

Indicator:

Willingness and capital committed to implement/pursue new:

Products Markets Technology

The number and frequency of the above points to be introduced by the firm

Influential factors:

Resource availability to conduct experimentation (human and financial)

Resource availability to introduce and implement new products or to expand markets

Proactiveness

“Processes aimed at anticipating and acting on future needs by seeking new opportunities which may or may not be related to the present line of operation, introduction of new products and brands ahead of competition, strategically eliminating operations which are in the mature or declining stages of life cycle”

(N. Venkatraman 1989, 949)

Indicator:

Shaping new environment for market and product or merely reacting

Influential factor:

Ability to predict future and seeking opportunity Availability of resources and a supporting environment to innovate and initiate the project

Competitive Aggressiveness

“Firm’s propensity to directly and intensely challenge its competitors to achieve entry or improve position, that is, to outperform industry rivals in the market place” (Lumpkin and Dees 1996, 148)

Indicators:

Responsive to competitors

Willingness to be unconventional, to challenge competitors Influential factors:

Ability to analyze and target competitor weakness Ability to adopt and implement unconventional tactics Ability to create product value

Risk-Taking

“The degree to which managers are willing to make large and risky resource commitments, which have a reasonable chance of costly failures” (Miller and Friesen 1978, 923)

Indicators:

Venturing into the unknown

Committing a relatively large portion of assets Borrowing heavily

Influential factors:

Uncertainty of the environment Possibility of loss

Autonomy

The ability and will to be self-directed in the pursuit of opportunities (Lumpkin and Dees 1996)

Indicators:

Capacity to function separately Make choices

Take action

Bring forward a company idea Influential factors:

Resource availability Action by competitive rivals Internal organization considerations Source: Author’s creation, developed from Lumpkin and Dees (1996)

36 Outcomes are the result of the entrepreneurial process. Some outcomes that are especially salient to SE research are social value creation, the challenge of satisfying multiple stakeholders, and the sustainability and scalability of solutions generated in a SE context (Moss, Lumpkin, and Short 2008).

Social value creation in SE has a wide range of meanings, subjective and negotiable;

hence, it is highly problematic to measure (Cho 2006). Economic value creation that is typically strictly financial and tends to be limited to owners and investors is the opposite of social value creation in SE. In general, social value creation is a positive externality that does not accrue primarily to those who directly engage in goods or services exchange, but to the betterment of societies as a whole (Lumpkin et al. 2013; Fernandez 2002).

Satisfying multiple stakeholders may be difficult because so many stakeholders are salient, and they have varying intentions. However, social entrepreneurs need to make such an effort, because they rely on stakeholders to justify the need for their products/services, generate community support, provide access to resources, and create policies that enable them to enact positive social change (Lumpkin et al. 2013, 768).

Creating sustainable solutions for persistent social problems is a critical theme in both scholarly and practitioner-related SE works (Sud, VanSandt, and Baugous 2009; Dees 2001).

“Sustainability” can have various meanings. From a resource perspective, it means the organization’s long term survival rather than rapid growth (Mort, Weerawardena, and Carnegie 2003). In term of impact, it is marked by the institutionalization of the solution and the social change (Mair and Marti 2006). In an environmental perspective, sustainability means a reduction of environmental degradation (Dean and McMullen 2007), while completing a social change, so that it will not cause another social problem.

I would say that the entrepreneurial orientation is the least related to rural development, compared with the other two stages, because it does not contain the social element. Therefore,

37 as Lumpkin et al. (2013) stated, the entrepreneurial process in SE is almost the same as the process in commercial business. However, Lumpkin et al. found that the presence of multiple stakeholders affects the process, and it is quite challenging to develop autonomy and competitive aggressiveness in SE. Despite its indirect association with rural development, the entrepreneurial process stage indicates the organization strategy necessary to achieve business success, which is also an analytical factor in this study.