Differences in employee behaviour
between social enterprises, not-for-profit
and for-profit organisations
A comparison of organisational commitment, job satisfaction and
congruency of values
Nienke de Visser 11067993
Bachelor's Thesis and Thesis Seminar Business Administration Supervisor: Nesrien Abu Ghazaleh
2 Statement of Originality
This document is written by Student Nienke de Visser, who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document are original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
3 Abstract
This comparative literature research examines the differences in employee behaviour between for-profit organisations, social enterprises and not-for-for-profit organisations. This has been done by making use of the variables organisational commitment, job satisfaction and congruency of values. As the concept of a social enterprise is a new, and often perceived as promising concept to solve societal issues, it is highly relevant to check the implications on employee behaviour and to compare these with other organisational types. For-profit organisations perform better on organisational commitment levels, while both social enterprises and not-for-profit organisations obtain better results for job satisfaction and congruency of values. However, with regards to value congruency, conflicts may arise due to the fact that social enterprises combine both commercial and charitable characteristics. Overall, social enterprises seem to provide a pleasant work environment for employees. Nevertheless, more research is needed to assess the differences more thoroughly.
Index Statement of originality p.3 Introduction p.4 Theoretical framework p.6 Methodology p.15 Results p.16
Conclusion & Discussion p.22
4 Introduction
Over the last decade, social entrepreneurship has emerged as an important cultural and economic phenomenon (Newman et al., 2017). More than a dozen TED talks are dedicated to this subject, governments are encouraging social enterprises to develop, sometimes by subsidising them
(Newman et al., 2017). Although a definition of a social enterprise will be discussed more elaborative in the theoretical framework, the concept can be broadly summarised as an independent enterprise that has a social purpose and aims to meet a certain societal need (SER, 2015). Examples of Dutch social enterprises include power company Vandebron, Tony's Chocolonely, a company that produces and sells chocolate and Snappcar, that allows car owners to share their car with others (social-enterprise). The latter has currently 75.000 participants in the Netherlands, who share over 10.000 cars (SER, 2015). Snappcar thereby makes a positive impact towards reducing CO2 emission and makes participants more conscious about their car use (SER, 2015). The market share of Tony's Chocolonely has risen towards 16,7% in the Dutch chocolate bar market, which makes the enterprise a serious player with a big impact ( Tony's Chocolonely, n.d.)
Governments have embraced the concept and numerous scientific articles have been published on this topic (Cho, 2006). The late enthusiasm and interest in social entrepreneurship can be explained mainly by two recent phenomena. Firstly, the global movement towards privatization and
marketization has severely influenced not-for-profit organizations, including NGOs, whose funding for their activities from traditional sources has declined. Increasingly, not-for-profit organisations are competing with for-profit organisations within their field of activities (De Cooman et al., 2011). At the same time, the costs of programmes of not-for-profit organisations have increased (Zahra et al., 2009). Consequently, not-for-profit organisations have increasingly been urged to apply
entrepreneurial strategies and business models (Zahra et al., 2009). Secondly, social sector institutions are often perceived as providing disappointing results in achieving their goals, due to their inefficiency, ineffectiveness and unresponsiveness (Dees, 2017). As a result, various
stakeholders have started to request the non-profit sector to improve its economic efficiency and effectiveness and the for-profit sector to adopt socially responsible behaviour (Perrini & Vurro, 2006). Both developments contribute to the appeal of an entrepreneurial approach to social problems, which is associated with business-like discipline, innovation and determination (Dees, 2017). As a result, the concept of the social enterprise is increasingly being regarded as an economically viable solution to meet social needs that are neglected by both traditional business approaches and NGO approaches (Newman et al., 2017).
This shift towards a commercialisation of the non-profit-sector poses interesting questions for the field of organisational psychology. Not-for-profit and for-profit organisations differ from each other
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in mission and approach (Goulet & Frank, 2002). As a result, it is no surprise that research has measured a difference in employee attitude between the different sectors. For instance, organisational commitment is usually higher for for-profit companies than for non-profit firms (Goulet & Frank, 2002). On the other hand, non-profit employees have a higher perceived person-organisation fit or value congruence than employees in the for-profit sector (De Cooman et al., 2011). A higher person-organisation fit is desirable for an organisation as it correlates significantly with organisational outcomes such as job satisfaction, performance, organisational commitment, or turnover intention (Tak, 2011).
So far, research has been done on employee behaviour in social enterprises. Furthermore,
comparative research has been performed on the differences in employee behaviour between the non-profit and for-profit sector. However, this research is very fragmented and does often not include social enterprises, which implicates a gap in research. As the concept of a social enterprise is a new and upcoming concept, it is valuable to research its differences with other organisational forms. Consequently, this research aims to provide an elaborative study comparing employee behaviour in social enterprises, non-profit and for profit organisations.
Taken these differences into account, the construct of a social enterprise may be the "best of both worlds", as it combines features from both non-profit and for profit organisations and makes the boundaries of these types of organisations more fluid. Hence, it is relevant to check the differences in employee behaviour in social enterprises, compared to non-profit and for-profit organisations. Consequently, this is the purpose of this research. This will be done based on three concepts from organisational psychology; organisational commitment, job satisfaction and congruency of values. Thus, the research question is:
What is the difference in employee behaviour, particularly organisational commitment, job satisfaction and congruency of values, between social enterprises, non-profit and for-profit organisations?
This research is structured as follows: it will start with the relevant theoretical framework, followed by the method section, results, discussion and lastly a conclusion. A list of literature will be provided as well.
6 Theoretical framework
In order to give a clear analysis, the three types of organisations must be defined properly. Not-for-profit organisations, business enterprises and social enterprises will be discussed separately first and after that, they will be connected and compared in a framework. This framework takes shape of a continuum, as the boundaries of the three types cannot be separated completely. Next, the relevant variables will be discussed, which are organisational commitment, job satisfaction and value
congruency. Lastly, an evaluation of the connection between the organisational types and the variables will be given.
Commercial entrepreneurship
Many scientific articles have been written about commercial entrepreneurship. Three main focus points can be distinguished in research, a focus on the impacts and results of entrepreneurship, on the entrepreneurs themselves and on the entrepreneurial management process (Austin et al., 2006). In the latter, entrepreneurship is more about the attitude of the entrepreneur and about finding and exploiting opportunities. This is visible in the definition of Stevinson (1983), who defined
entrepreneurship as 'the pursuit of opportunity beyond the tangible resources that you currently
control.' This definition reflects the vision that entrepreneurship is mainly about the attitude of the
entrepreneur and requires an active attitude towards opportunities. However, for the purpose of this research, there will be less focus on the behavioural aspect of entrepreneurship and more on the main goal of the business itself.
As this research is mainly about the behaviour employees in different types of organisations, it makes more sense to define institutions based on their main organisational aims and goals than on the attitude of the entrepreneur. Nevertheless, it is important to keep in mind that for for-profit organisations, the inventiveness and the efficiency of the entrepreneur is often seen as a distinctive characteristic, compared to not-for-profit organisations (Dees, 1998).
For the purpose of this research, a for-profit organisation will be defined as a 'commercial enterprise,
profession, or trade operated for the purpose of earning a profit (economic value creation) by providing a product or service' (Friedman, 2007). This definition has been chosen because it clearly
reflects the main goal of a commercial business, namely creating economic value. This
simultaneously shows the contrast with a social enterprise, whereas the focus is on creating social value, as will be shown below. Furthermore, this definition shows how this economic value is earned, namely by providing a product or service.
7 Not-for-profit organisations
O'Neill (1989) defines non-profit organisations as 'private organisations serving a public purpose'. Nevertheless, for the purpose of this paper this definition is too broad, because it does not distinguish any key characteristics. Moreover, one could argue that a commercial business also serves a public purpose.
Other authors have confirmed this, by pointing out that not-for-profit organisations, including non-governmental organisations (NGOs) can be perceived from different interpretations. The used perspective also influences the definition, for example Martens (2002) distinguishes a juridical approach and a sociological perspective. Salamon and Anheier (1992) even discuss four types of definitions, a legal definition, an economic/financial definition, a functional definition and a structural/operational definition. This leaves room for interpretation and shows that a non-profit organisation is a phenomenon that can be understood in multiple ways.
For this research, the definition of Martens (2002) of a NGO will be used, because this covers most areas and is the most complete. In addition, it demonstrates the main goal of a non-profit
organisation, which is useful as the chosen definition of a commercial enterprise this reflects as well. This contrast shows the difference between these types of organisations and thereby contributes to a clear comparison. The definition followed of Martens (2002) describes a NGO as:
'(…) a formal (professionalized) independent societal organisation whose primary aim is to promote common goals at the national or the international level.'
Several elements can be distinguished in this definition. Societal actors refers to the fact that NGO's originate from the private sphere and their members are individuals, or local, regional or national branches of an association (Martens, 2002). The promotion of common goals refers to a certain public good, which benefits either their members or the public. They can be professionalized in the sense that may employ paid staff with specific skills. However, they are not profit-orientated.
Independency indicates that even though they may receive financial funding from official institutions, they are not under control of governmental institutions. Hence, the funding mainly consists of membership fees and private donations. Lastly, a (minimal) organisational structure is necessary to be able to provide continuous work. This structure makes a NGO a formal organisation (Martens, 2002).
8 Social entrepreneurship
Despite its increasing popularity, multiple scholars note that there is not yet a generally agreed upon definition of social entrepreneurship. This absence leads to confusion and calls for an clear
understanding of what social entrepreneurship entails and a delineation of its boundaries (Dees, 1998; Abu-Saifan, 2012; Mair & Marti, 2006; Peredo & McLean, 2006). Nonetheless, several authors have observed the main characteristics of social entrepreneurship, or described what it entails. Dees (1998) states that social entrepreneurship 'combines the passion of a social mission with an
image of business-like discipline, innovation, and determination commonly associated with, for instance, the hig-tech pioneers of Silicon Valley'. This social mission is explicit and central, and
mission-related impact becomes the central criterion, not wealth creation (Dees, 1998).
Ohana and Meyer (2010) display a merely functional approach, with a focus on the goals of social enterprises when they describe a social enterprise as a 'recent broad term to define these new
organisations which achieve social goals in an entrepreneurial way. Their aim is not profit but mission'. This mission is accomplished by improving the living standards of disadvantaged people
through economic activity, with sometimes direct involvement of these person in the production and/or sale of goods and services (Ohana & Meyer, 2010).
Newman et al. (2017) notice that social enterprises 'engage in business to achieve social impact,
whilst at the same time maintaining a focus on commercial objectives. (…) In other words, social enterprises are hybrid organisations that maintain both a social welfare logic and a commercial logic'.
All descriptions given above show certain core characteristics that a social enterprise possesses. Social enterprises use a commercial attitude in order to achieve a certain social mission. Economic activity is hereby always a means to accomplish a goal and never the end result. This also works the other way around; for social enterprises, social wealth is the main goal, whereas this is just a by-product for business enterprises (Venkataraman, 1997). Mair & Marti (2006) emphasize this contrast by arguing that 'the main difference in entrepreneurship in the business sector and social
entrepreneurship lies in the relative priority given to social wealth creation versus economic wealth creation'. Trivedi and Stokols (2011) confirm this by stating that 'while economic opportunity is at the heart of a commercial enterprise, socio-environmental problems are at the core of a social
enterprise'. Another difference is given by Austin et al. (2006), who states that there is also a
difference in the duration of focus. Whereas commercial entrepreneurship tends to focus on breakthroughs and new needs, focuses social entrepreneurship mostly on serving basic, long-standing needs (Austin et al., 2006).
Besides from differing in objectives, another distinctive feature is that social enterprises, unlike business enterprises, cannot be understood in a purely economic sense (Mair & Marti, 2006). Social entrepreneurship is always connected to its social context and the local environment. This
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simultaneously shows one of the difficulties of social entrepreneurship, the measurement of social value creation (Dees, 1988). Social impact, which is the aim of the social enterprise, cannot be expressed in financial ways. Whereas markets prove to be an useful measure for business enterprises, they are not for valuing social improvement (Dees, 1988).
As Austin et al. (2006) notice, there is no full distinction possible between social and commercial entrepreneurship, but it is rather a continuum ranging from purely social to purely economic. Even in extreme cases, both elements are present, as a charity still has some economic realities and
economic activity will still generate some social value (Austin et al., 2006). This is reflected in the continuum below as well. The scheme pictures social enterprises in the middle between NGO's and normal enterprises. Furthermore it shows a transition from impact-oriented towards profit-oriented, based on characteristics as income and reinvestment of profits.
Figure 1: Continuum (social- enterprise, n.d.)
The nature of social enterprise is contributing to the complexity of creating its definition, as social entrepreneurship automatically a blurring of sector boundaries implies. Social enterprises can take numerous (legal) forms and shapes, that may include social purpose business ventures but also hybrid organisations mixing not-for-profit and for-profit elements (Dees, 1998). In addition, the approaches to managing their activities, levels of autonomy and stakeholder involvement may vary notably (Ohana & Meyer, 2010). As a result, the current research on and most studies are still largely based on anecdotal evidence or case studies (Mair & Marti, 2005). Nevertheless, it must be noted that even 'normal' entrepreneurship lacks a unifying paradigm, so maybe the absence of one definition is not necessarily harmful (Shane & Venkataraman, 2000). Besides, although the lack of a broadly used definition may not be ideal, the above discussed descriptions are largely overlapping and the differences in approaches are often subtle.
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Nevertheless, for the purpose of this research a working definition is vital. Therefore, the definition of the Sociaal-Economische Raad (SER) has been chosen, that has been inspired by the definition used by the European Union. As this definition is therefore often used and is quite practical in nature, it provides an excellent starting point to pursue this research. The SER states that 'social enterprises
have at least in common that they are independent enterprises, providing a product or service and primarily and explicitly aim to pursue a social goal, that is, solving a social problem. This includes both enterprises that are economically independent and therefore are not dependent on subsidies and donations and enterprises that do receive subsidies or donations, but that pursue their policy independent from the government' (SER, 2015). This definition stresses the main goal of social
enterprises, its funding and its independency and thereby gives a clear basic definition of what a social enterprise entails.
Involved variables
Three types of variables have been chosen to measure the different aspects of employee behaviour in not-for-profit organisations, commercial businesses and social enterprises. These concepts are organisational commitment, job satisfaction and work values. They will be defined separately below.
Organisational commitment
Organisational commitment can be discussed from different perspectives, namely as a pattern of behaviours, a motivating force or an attitude (Dunham et al., 1994). However, the most frequently used approach is the attitudinal one, also called affective commitment, that perceives commitment as an attitude regarding the relationship between an employee and his workplace (Porter et al., 1974). This type of commitment is often expressed through common values and goals and a feeling of belonging that is accompanied by a sense of pride (Ohana et al., 2013). Meyer and Allen (1991) started conceptualising organisational commitment by defining three separate components. They argue that organisational commitment comprises a desire, a need and an obligation to maintain employment in an organisation. Each function thereby influences on-the-job-behaviour. Two years later, Meyer et al. (1993) described organisational commitment as an employee's emotional attachment and identification with the organisation. This implies that individuals who are more attached to the organisations values and objectives, become intrinsically motivated to pursue those objectives (Meyer & Herscovitch, 2001).
High levels of organisational commitment are beneficial for the organisation, as this is generally recognized to be a major determinant of organisational performance (Lok & Crawford, 2014). Furthermore, organisational commitment is negatively correlated with withdrawal behaviour and
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turnover and positively correlated with organisational citizenship behaviour (Meyer et al., 2002). Furthermore, organisational commitment is positively correlated with job attendance and has a negative linear relationship with lateness and turnover (Mathieu &Zajac, 1990). Employees who are more committed to their organisation, are more likely to exhibit organisation-serving behaviours, which benefit the organisation either directly or indirectly (O'Reilly & Chatman, 1986).
Organisational commitment can be measured in several ways. It has been measured by counting the additional hours worked (Goulet & Frank, 2002). Working extra hours is seen as an expression of willingness to put in extra effort on behalf of the organisation. Questionnaires are an often used instrument as well, particularly Organisational Commitment Questionnaire(OCQ) (Mowday et al., 1979. This 15-item questionnaire is one of the most frequently used and reliable measure of affective commitment (Turker, 2009). Responses on the propositions given are obtained on a five-point Likert-scale from strongly agree to strongly disagree (Turker, 2009). Examples of questions are: 'I really care about the fate of this organisation', 'I am willing to put in a great deal of effort beyond that normally expected in order to help this organisation be successful' and 'For me, this is the best of all possible organisations for which to work for'.
Organisational commitment has been chosen as a measure in this research, because an high level of commitment is seen as a major determinant for organisational performance (Lok & Crawford, 2014). Furthermore , connections have been found between organisational commitment and withdrawal behaviour, turnover, job attendance and organisational citizenship behaviour (Meyer et al., 2002; Mathieu & Zajac, 1990; O'Reilly & Chatman, 1986).This makes organisational commitment a relevant indicator of employee behaviour for this research. This especially applies to not-for-profit
organisations and social enterprises, as turnover remains a major issue for these organisations (Ohana & Meyer, 2010). Because higher commitment is related to a lower turnover rate, it is advisable for social enterprises and not-for-profit organisations to keep their employees as committed as possible.
The research question with regards to this topic is: Are employees of one sector more committed to their respective organisations than employees of another sector?
In the definition of organisational commitment, as provided in the theoretical framework, several elements this concept have been pointed out. Among them were common values and, emotional attachment and identification with the organisation. As social enterprises and not-for-profit organisations inherently have an explicit social mission, it could be expected that organisational commitment is higher for these types of organisations.
12 Job satisfaction
The second variable in this research is job satisfaction. The definition given by Locke (1976) is broadly accepted, that describes job satisfaction as 'a pleasurable or positive emotional state resulting from
the appraisal of one's job or experiences'. Furthermore, job satisfaction has been defined as a
measure that shows how content an individual is with their job, whether or not they like the job or individual or facets of jobs, such as nature of work or supervision (Spector, 1997). Put simply, job satisfaction broadly refers to the contentment of an employee with his or her job.
Researchers have found numerous links between job satisfaction and other concepts from organisational psychology, which makes job satisfaction an influential measure. For example, job satisfaction correlates with organisational citizenship behaviour. This implies for instance that employees voluntarily help on the job without expecting any rewards (Bies, 1989). Moreover, Judge (2001) found a link between job satisfaction and work performance. In addition, job satisfaction can partially mediate counterproductive work behaviours and deviant work behaviour (Mount et al., 2006). Furthermore, job satisfaction also prevents withdrawal behaviour, such as absenteeism and turnover (Organ & Ryan, 1995; Saari & Judge, 2004). This suggests that increasing job satisfaction can prevent withdrawal behaviour. Moreover, the job satisfaction level is even found to be an important factor influencing both physical and mental health of employees (Faragher et al., 2005).
Job satisfaction is mostly measured using questionnaires, a commonly used one is The Michigan Organisation Assessment Questionnaire (Bowling & Hammond, 2008). This questionnaire has a scale ranging from 1 (totally disagree) to 7 (totally agree) and poses quotes such as 'All in all I am satisfied with my job' and 'In general, I like working here' (Camman et al., 1979). The results give an idea of the job satisfaction of a particular employee.
Job satisfaction is a relevant measure in this research, as it has several important links with employee behaviour. As discussed above, job satisfaction correlates, among other things, with organisational citizenship and work performance (Bateman, 1983; Judge et al., 2001). These connections make job satisfaction an useful concept to discuss while comparing the three different organisational forms. Job satisfaction is not specifically relevant for one of these three organisation types, but for all three of them. The concept is one of the most widely-studied topics in organisational psychology (Spector, 1997). The simplicity of the concept, that shows how content employees are, which influences employee behaviour in numerous ways, allows for a general comparison. This makes the concept of job satisfaction a useful contribution to this research.
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Are employees of one sector more satisfied with their job within their respective organisations than employees of another sector?
Based on the definition given above, there is not something that gives rise to expect differences in the levels of job satisfaction between the different types of organisations.
Congruency of work values
The third variable is work values and the congruency of the values of the organisation and the employee. Work values are related to the way people feel about their work and how they behave at work (Judge et al., 2001). De Cooman et al. (2011) define work values as 'fundamental , wide-ranging
preferences for types of work, work environments, and work-related outcomes employees prefer or consider important in job decisions'.
When employees values are congruent with the values of the organisation, higher job satisfaction and organisational commitment has been measured (Meglino et al., 1989). Normally, non-profit organisations are expected to have a more idealistic view than for-profit organisations. If this attracts employees that have corresponding values, employees may be more intrinsically motivated to do their job than other employees. This benefits the organisation and may also be the case for social enterprises, as this type of organisation also aims to solve social issues.
An underlying issue here is the distinction between intrinsic and extrinsic motivation. Ryan and Deci (2000) define extrinsic motivation as 'the attainment of a separable outcome from the performance
of an activity, whereas intrinsic motivation is the performance of an activity for the inherent
satisfaction of the performance itself.' This means that financial rewards or a bonus scheme appeals
to extrinsic motivation, while performing an activity because it is the right thing to do, derives from intrinsic motivation. There is an ongoing debate on whether extrinsic rewards, such as compensation, are the main source of motivation, whereas others argue that intrinsic rewards have greater impact, particularly in a non-commercial setting (Tippet & Kluvers, 2009). Goulet and Frank (2002) suggest that extrinsic motivation makes employees more committed than intrinsic motivation in contributing to organisational goals. On the other hand, Frey (1997) argues that once pay exceeds a certain basic level, intrinsic factors are stronger motivators. Extrinsic factors do play a role, but intrinsic factors have been found to be significant, across the whole organisation (Tippet & Kluvers, 2009). This research nuances the role of compensation and suggests that intrinsic motivation is the more decisive factor.
Research on this topic usually gathers its data by questionnaires. Questions answered by participants are for example: 'Do you have the feeling that your values match those of the organisation?' and
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judging statements on a five-point Likert scale, such as: 'I find it important to help people with problems' and 'I am motivated because I have fun in my job' (De Cooman et al., 2012).
Congruency of values between the organisation and the employee is also an useful measure to take into account, because the concept has a large influence on individuals' attitudes and action (De Cooman et al., 2011). As a result, identification and congruence with the organisation's goals and values is very important to the achievement of the mission of the organisation (Tippet & Kluvers, 2009). This will be particularly relevant for social enterprises and not-for-profit organisations, because intrinsic rewards can compensate for of the limited availability of resources.
The research question with regards to this topic is: Is there more congruency of values between the organisations and employees in one sector than in another sector?
It is expected that for-profit employees have lower congruency of values, because values are a smaller part of the organisational identity than for not-for-profit organisations or social enterprises. In other words, many employees are attracted to work in social enterprises for altruistic reasons, they are likely to have congruent values with those organisations (Newman et al., 2017).
15 Methodology
Research design
In order to conduct this research, the following methodology has been used. Data was gathered by making use of secondary scientific sources. This implies that this information has been acquired by a researcher and has been integrated in this study. Secondary data has been used because the subject of this research is too extensive to collect primary data within the given amount of time and
resources. The data has been collected by studying and evaluating academic papers.
In sampling the data, the following search strategy has been applied. Firstly, to achieve a basic understanding of all the relevant terms and concepts, several articles are studied. Secondly, the three different organisation types and the three measures are examined separately. This provided the foundation for the theoretical framework. After this step, articles that compared the different organisation types and concepts are analysed, in order to write the results section. However, there were sometimes no results available, because such research has not yet performed. In that case, wherever it was useful to provide more context, analogies with other concepts are sought, for example with corporates social responsibility.
Measurements
Because employee behaviour covers so many aspects, it would be impossible, at least in the scope of this research, to cover the full area. Therefore, there will be a comparison between the three types of organisations on the basis of three concepts from organisational psychology: organisational commitment, job satisfaction and congruency of values. These variables are chosen from the objective that they all reflect different aspects of employee behaviour and are therefore suited to provide mere general view. A justification for the choice of each measurement has been provided in the theoretical framework.
16 Results
Organisational commitment
The question to be answered here is whether employees of one sector are more committed to their organisations than employees of another sector. This requires a comparison between the not-for-profit sector, the for-not-for-profit sector and social enterprises. Employees of not-for-not-for-profit organisations and social enterprises were expected to have the highest levels of organisational commitment, due to their identification and emotional attachment to the social mission of these types of organisations. Unfortunately, no such comparative research has been performed yet. However, Goulet and Frank (2002) compared organisational commitment across the for-profit, not-for-profit and public sector. The results showed that employees in the for-profit sector were more committed than in the non-profit sector, which contrasts the expectation on this research question. Nevertheless, organisational commitment was lowest in the public sector, even though this falls outside the scope of this
research. Goulet and Frank (2002) explain this difference by the fact that employers have increasing difficulties to attract employees, due to a tight labour market, low unemployment and low labour force growth. Thus, commercial enterprises were forced to increase their wages and benefit packages, that exceeded those of the public and not-for-profit sector. Support for this rationale can be found in the fact that compensation is indicated by employees as most important, ahead of satisfaction with helping the organisation (Goulet & Frank, 2002).
This might be problematic for the non-profit sector, as jobs are often not secure, there are limited career development opportunities and wages are usually relatively low (Alatrista & Arrowsmith, 2004). With regards to social enterprises, Ohana and Meyer (2010) identify a similar situation. In addition, they state that human resources retention remains a major issue for social enterprises, as research shows that human resource professionals in the non-profit sector chooses retention as a top issue facing their organisation. Consequently, this might lead to lowered commitment towards the social mission of the organisation (Ohana & Meyer, 2010).
However, in this case an analogy with corporate social responsibility (CSR) is useful to bring some nuance on this focus on monetary rewards. CSR can be defined as the corporate behaviours which aim to affect stakeholders positively and go beyond its economic interest (Turker, 2009). Turker (2009) found that CSR towards stakeholders, employees and customers are significant predictors of organisational commitment. This outcome is explained referring to an increasing concern of society, mainly about environmental problems. Turker (2009) claims that people have become more aware of the extent and consequences of these problems and therefore, employees are more committed towards their organisations when it has policies to limit these problems. This could mean that employees both not-for-profit organisations and social enterprises, that obviously have a social
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mission, become more committed due to the meaningfulness of the organisational purpose.
However, more and more for-profit organisations have CSR policies, which might level out this extra organisational commitment that is created by 'doing good',
Another element to be taken into account is leadership, which has been cited as a critical factor in determining the level of organisational commitment (Prabhu, 1999). More specific, the type of leadership applied can be decisive. Newman et al. (2017) distinguishes entrepreneurial leadership and servant leadership. Entrepreneurial leadership refers to influencing and directing followers towards the achievement of organisational goals that include identifying and exploiting
entrepreneurial opportunities. Servant leadership on the other hand, focuses on the development of followers and emphasizes the importance of serving others (Newman et al., 2017). For social
enterprises, a servant leadership style will lead to more committed employees, who are less likely to leave the organisation (Newman et al., 2017). However, it must be noted that social entrepreneurs often have little experience or insufficient skills in this field (Ohana & Meyer, 2010). This might be problematic for improvement of organisational commitment in social enterprises. In connection to this, Newman et al. (2017) advises supervisors in social enterprises to focus on a positive treatment of employees, forming strong relationships with followers and to help them develop and succeed. This should lead towards increasing emotional attachment to, and identification with, the
organisation (Newman et al., 2017).
In general, social enterprise employees want their voice to be heard, as they greatly value
democratic governance principles and do feel they have the right to participate in decision-making (Ohana & Meyer, 2010). This corresponds with the theory of Mottaz (1988) on how the level of organisational commitment can be improved. It have been proven that this can be done by increasing task involvement, task significance and task autonomy (Mottaz, 1988). This means that employees do appreciate having responsibility and being involved in the activities of the
organisation.
Especially interesting and meaningful tasks seem to have a very strong, positive impact on
commitment (Mottaz, 1988). This is beneficial for not-for-profit organisations and social enterprises, as it suggests that the meaningfulness of their mission can contribute to the organisational
commitment of its employees. This might make up for the lack of extrinsic rewards, such as higher pay wages, that for-profit organisations are able to afford.
Based on the definition of organisational commitment, employees of not-for-profit organisations and social enterprises were expected to have the highest level of organisational commitment.
Surprisingly, employees working in the for-profit sector are more committed towards their
organisation than not-for-profit employees. This can be explained by the fact that monetary rewards are often higher in the for-profit sector, which makes employees more committed. It is difficult to
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determine where social enterprises should be placed in this comparison, as research is lacking, but their issues show great similarities with the issues of not-for-profit organisations. Retention is an issue for both organisational types and the applied leadership style can greatly influence
organisational commitment (Ohana & Meyer, 2010; Newman et al., 2017). However, this requires investment of social entrepreneurs in their leadership skills, as they are often lacking. Furthermore, an analogy with CSR and the meaningfulness of tasks brings nuance on the focus on financial compensation, that does seem to determine organisational commitment.
Job satisfaction
In this section, the job satisfaction of employees in the three different organisational types will be compared. However, such a research has not been performed yet. Nevertheless, several comparisons between the not-for-profit and the for-profit sector have been performed. These studies generally confirm that job satisfaction in not-for-profit organisations is higher than in commercial businesses (Benz, 2005; Borzaga & Depedri, 2005; Mirvis, 1992). This higher job satisfaction is interesting, as wages in the not-for-profit sector are often lower. This suggests that monetary rewards do not have an influence on job satisfaction of employees. Light (2002) found in this context that the higher satisfaction of not-for-profit employees can be explained by the meaningfulness of their work, which compensates for the lower pay and shortages of resources. Smerek and Peterson (2007) found that the work itself is the most significant and powerful predictor of job satisfaction, followed by
opportunities for advancement and responsibility. Furthermore, effective supervisors and senior management are important predictors for job satisfaction (Smerek & Peterson, 2007).
Concerning social enterprises, there has not been much research on job satisfaction. However, Ohana and Meyer (2010) state that the more satisfied an employee of a social enterprise is, the more he will be attached it his organisation. Furthermore, they tested the relationship between job
satisfaction and the intention to quit in social enterprises. It has been found that there is a strong relationship between job satisfaction and the intention to quit in social enterprises (Ohana & Meyer, 2010). Consequently, social enterprises do not differ from not-for-profit and for-profit organisations in this sense, as Saari and Judge (2004) found evidence for a link between job satisfaction and turnover. This study has been discussed in the theoretical framework.
This leads to the conclusion that employees in the not-for-profit sector are generally more satisfied in their jobs than for-profit employees, which can be explained by the purposefulness of their jobs. However, whether this is the case for employees working for social enterprises remains unclear. One could argue that social enterprises, in accordance with not-for-profit organisations, will have higher job satisfaction levels than for-profit organisations. After all, both strive to complete a social mission.
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However, this is solely an expectation and quantitative analysis is required in order to provide an answer on this topic. Besides, as discussed, the work itself and leadership can also highly influence job satisfaction. This will obviously vary greatly between different organisations, which makes it difficult to draw a general conclusion.
Congruency of values
In this section, an answer will be given to the question whereas employees in one sector have an higher congruency of values than in another sector. No research has performed an comparison between non-profit organisations, for-profit organisations and social enterprises yet. However, analysing the scattered research on this topic provides answers as well.
De Cooman et al. (2011) compares work values between the non-profit sector and the for-profit sector. They found that there is a better fit between employees' work values and the organisational values in not-for-profit organisations than in commercial enterprises. This finding supports the expectation that employees looking for a match between their work values and the organisational values are drawn towards the not-for-profit sector. According to Devaro and Brookshire (2007), this congruency of values is especially high in the not-for-profit sector.
In connection to the congruency of work values, De Cooman et al. (2011) also found that for-profit employees were significantly more sensitive towards more externally related rewards, such as earning a reward, or avoiding punishment. In contrast, not-for-profit employees are more motivated by integrated regulation, which includes outcomes that are personally important to them. Not-profit employees value making a positive difference in people's lives more than employees in the for-profit sector (De Cooman et al., 2011). In addition, for-for-profit workers value career advancement, such as promotion and getting leadership positions, more than not-for-profit employees (De Cooman et al., 2011).
Lyons et al. (2006) confirms these findings by stating that not-for-profit employees valued contributing to society more than employees in the for-profit sector. Almond and Kendall (2000) observe in this context that not-for-profit employees seem more willing to 'donate work' and are more loyal to the organisation than employees in other sectors. This suggests that the not-for-profit sector attracts persons that have a desire to help others or to contribute in solving social problems. Lyons et al. (2006) also shows that career advancement is indeed more important for persons employed in the for-profit sector than for non-for-profit sector.
With regards to the distinction between intrinsic and extrinsic motivation, Cheverton (2007) argues that employees working for not-for-profit organisations are not primarily motivated by financial rewards, but by both wages and a desire to serve other people and society in general. This displays
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that not-for-profit employees are more intrinsically motivated, the type of motivation that is stronger connected towards organisational commitment, as has been discussed in the theoretical framework. Tippet and Kluvers (2009) support this by stating that employees of not-for-profit organisations are more intrinsically motivated and observe in that context a difference approach towards money; employees in not-for-profit organisations often conceptualise money as a means towards
accomplishing larger objectives. As a result, money is not an end in itself, but a way to achieve goals. In addition, Cheverton (2007) stresses the importance of holding to its own values as a non-profit organisation, as this differentiates non-profit organisations from their private and public
counterparts. As a result, Cheverton (2007) argues that value commitment increases performance and productivity of the staff. Building upon this, if an organisation carries out its values clearly, this will attract employees with similar values, in other words, to a higher congruency of values.
The above discussed research compares the not-for-profit sector with the for-profit sector. However, where is the social enterprise sector situated in this comparison? Ohana and Meyer (2010) have researched congruency of values in social enterprises. They observe that social and moral concerns and strong attachment to the social mission are the main reason for persons to join a social
enterprise. This coincides with employees of not-for-profit organisations, as discussed above and implies a high value congruency. Similarly, employees of social enterprises are 'ideological workers' and are particularly interested in non-monetary benefits over monetary rewards (Ohana & Meyer, 2010).
However, the construct of a social enterprise might cause tension, because those merely intrinsically motivated employees have to perform in social enterprises, that have a money oriented work
environment (Ohana & Meyer, 2010). In this new context, a different work attitude and motivation is required (Schepers et al., 2005). This may harm the intrinsic satisfaction employees of social
enterprises get from contributing to solving societal problems (Ohana & Meyer, 2010). They fear that the unique nature of social enterprises with their new entrepreneurial dynamic leads to a culture clash within the organisation, which threatens the original mission (Ohana & Meyer, 2010). This scenario finds support in empirical evidence that shows that a management that is merely oriented towards money and efficiency can severely damage the commitment of not-for-profit employees (Mirvis, 1992). Consequently, the business-oriented features of social enterprises can harm the congruency of values of its employees and thereby threatening its mission. For example market orientation, sponsorship acceptance or employment of professionals may pose a challenge to the main mission (Dolcinar et al., 2008).
As a result, it can be concluded that not-for-profit organisations normally portray more congruency between its organisational values and the work values of its employees than for-profit organisations do. Not-for-profit employees are more intrinsically motivated than for-profit employees are. Earlier
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on, the concept of a social enterprise has been presented as a combination of both a commercial enterprise and a not-for-profit organisation, that uses beneficial characteristics of both
organisational types. However, such a beneficial middle ground does not seem to exist regarding work values, because with a focus on money and efficiency, social enterprises can discourage its employees that only want to focus on its social mission. However, this strongly depends on the social entrepreneur to prevent a social enterprise from being dominated by economic considerations. This emphasizes the need to balance mission and money. Leadership can play a big role in preventing conflict due to the commercial and social interests within a social enterprise.
22 Discussion & conclusion
This literature research has examined the differences in employee behaviour between for-profit organisations, social enterprises and not-for-profit organisations. This has been done by making use of three variables, namely organisational commitment, job satisfaction and congruency of values. Since the concept of the social enterprise is such a new, promising phenomenon, it is relevant to perform a comparative research with other organisational types.
It can be concluded that the concept of a social enterprises does not negatively affect employee behaviour, but some differences have been observed with regards to the levels of organisational commitment, job satisfaction and congruency of values. This has certain implications on employee behaviour. With regards to organisational commitment, the focus on monetary rewards is the decisive factor, which makes employees in for-profit organisations more committed to their organisation. Nevertheless, meaningfulness of a task and the chosen leadership style can moderate this focus on monetary rewards. Job satisfaction is generally higher for employees working for not-for-profit organisations and social enterprises, which can be explained by the fact that working for those organisations is usually experienced as more meaningful. Regarding congruency of values a similar situation applies,
However, with regards to this variable, the unique character of the social enterprise becomes visible because it combines both traits of non-commercial and commercial enterprises. This may become a source of conflict as employees, who are aiming to solve societal problems and have to perform in a commercial setting. It might be challenging to get all employees on the same page. Therefore, it is important that the social entrepreneur uses a leadership style that unites all employees, in order to guarantee congruency of values.
It is evident that these differences within the chosen variables are largely caused by the different characters of the three organisation types. However, there is a need to perform more large-scale quantative research to assess the differences between these three types of organisations more thoroughly. This is often lacking so far. Furthermore, for this research employee behaviour is
examined based on three variables. Instead of, or in combination with these variables, one could also measure self-concordance, job involvement, employee engagement or other concepts from
organisation psychology. Nevertheless, the used variables in this research were perceived as the mere relevant ones and they are more generally accepted.
Another thing to take into account is the personal characteristics of employees that may influence the outcomes of the cited researches. At the micro-level, these personal features of employees, such as demographics, tenure and educational level, are also highly relevant (Alatrista & Arrowsmith, 2003). For instance, women are often substantially more satisfied in their jobs than men are (Smerek
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& Peterson, 2007). This might influence the job satisfaction of a certain organisation types when more women are employed in this particular type of organisation.
Last of all, due to its novelty, the concept of the social enterprise has not been fully crystallised out yet. Even though a convenient definition has been given in the theoretical framework, social
enterprises can still take many forms. Overall, it can be seen as a promising concept to provide both a solution for societal problems and a pleasant work environment.
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