The trade off between People, Planet and Profit:
the decision-making rationale of social
entrepreneurs
Emma Lisa van der Meulen
11026103 (UVA)/ 2576716 (VU)
Supervising Committee
Joeri Sol, Thesis Supervisor
MSc Entrepreneurship, Joint Degree UVA/VU
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stDraft Submission date: 15-06-2018
Final Draft Submission date: 29-06-2018
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Preface
I would like to take this opportunity to thank all people involved in the process towards finishing the work that is presented to you. First of all, my thesis supervisor Joeri Sol, who stuck with me through all my wandering and helped me to get back on track when I lost sight of the main purpose of this process, graduating, while also acknowledging and respecting my diverging and fluctuating interests in various topics. Secondly, I want to thank Enno Masurel, for listening and providing me with guidance in my planning at the time that I chose to postpone my thesis to further develop myself by means of a 9 month long internship. Lastly, I want to thank my parents who supported me in all possible ways throughout my academic development, and whom made it possible for me to graduate with not only a bachelor and a master, but with an additional second master degree. I am now confident and excited to launch my career, and cannot wait to experience what the future has in store for me. Graduating is surely not the end of my journey, so I hereby want to make a promise to myself to never stop learning and exploring my interests.
Statement of Originality
This document is written by student 11026103 (UVA)/ 2576716 (VU), Emma Lisa van der Meulen, who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The University of Amsterdam and de Vrije Univeristeit Amsterdam are responsible solely for the supervision of completion of the work, not for the contents.4
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Abstract
“… Social entrepreneurs are one species in the genus entrepreneur. They are entrepreneurs with a social mission. However, because of this mission, they face some distinctive challenges” (Dees et al., 1998, p. 2). This thesis evolves around what can be considered one of their main challenges, how social entrepreneurs balance their social mission with their commercial activities (Shepherd et al., 2014), also referred to as the pursuit of a ‘blended value’ (Emerson, 2003) or ‘triple bottom line’ (Reuther, 2011). Integrating the triple bottom in all facets of a business is believed to be the key to a sustainable economy. Therefore a better understanding on how entrepreneurs balance these multiple objectives is of vital importance. However, there is in fact no basic understanding on if, and if so how and to what extent, social entrepreneurs differ from other type of entrepreneurs with regard to their decision-making styles. Therefore, this thesis contributes to our understanding of the decision-making styles of entrepreneurs, and how these styles may differ across different types of social entrepreneurs. Firstly, the research positioned the entrepreneurs on the one hand, with regard to their business objectives, within the triple bottom line, which is divided in the people, planet and profit objectives. On the other hand, with regard to their business structure, the entrepreneurs are positioned on the social entrepreneurship spectrum. Secondly, the research provided insight on the entrepreneur’s natural and intrinsic decision-making style, by measuring to which extent people rely on intuition to come to a decision, opposed to their degree of deliberation, generally referred to as contemplation. Furthermore, to which extent people rely on satisficing behavior, opposed to maximizing behavior, and to which degree entrepreneurs rely on what they have, referred to as effectuation, or focus on where they want to go, referred to as causation. The research found that there is general no significant relation between the various types of decision-making styles and both the entrepreneurs place within the triple bottom line and place on the social entrepreneurship spectrum. This suggests that, generally, social entrepreneurs do not differ from traditional for-profit entrepreneurs with regard to their decision-making styles. There are two exceptions. The first exception is the contemplative decision-making style. The fact that contemplative decision-making style can in fact be explained by a variance in both the place on the social entrepreneurship spectrum and the profit objective is a very interesting and contradictory outcome. It was expected that these variables have a comparable relation with the dependent variables, however, for the contemplation scale, the relation seems to be reversed. The second exception is the maximization-satisficing decision-making style. There appears to be a significant and positive relation between the profit objective and the maximization scale, which could mean that a person that is more focused on making profit, displays more maximizing behavior instead of satisficing. These findings call for further research into these relations.
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Table of Content
Introduction p. 8 Theoretical Framework p. 10 Theories of Social Entrepreneurship p. 10 Entrepreneurship and Value Creation p. 10 Social Mission: Impact p. 13 Triple Bottom line: People, Planet and Profit p. 15 Social Entrepreneurship as a Spectrum p. 17 Theories of Decision-making p. 20 Decision-making: an introduction p. 20 Rationality and Irrationality p. 21 External influences on Decision-making p. 21 Internal Influences on Decision-making p. 25 General Decision-making Styles p. 27 Research Design p. 29 Problem statement p. 29 Hypotheses & Methodology p. 30 - Independent Variables p. 30 - Dependent Variables p. 32 - Environmental Load p. 34 - Control Variables p. 35 Data Collection & Target Sample p. 36 Data Analysis p. 36 Sample Description p. 36 Descriptive Statistics p. 37 Scale Verification p. 39 - Validations p. 39 - Assumptions p. 41 - Inter-item Correlations p. 41 Data Analysis p. 43 - Bivariate Correlations p. 43 - Multivariate Regressions p. 46 - Additional Analysis p. 49 Conclusions p. 52 Discussion p. 55 Limitations of the research p. 55 Suggestions for further research p. 57 Bibliography p. 59 Appendix Questionnaire Hypotheses Overview SPSS Output - Descriptive Statistics - Validation & Assumption Testing - Bivariate Correlations - Multivariate Regressions - Additional Analysis
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Introduction
Entrepreneurs are generally exposed to an extreme decision-making context, with high time pressure and uncertainty, while having to deal with high stakes and consequential extremes (Shepherd et al., 2014). If entrepreneurs fail to make adequate decisions under these circumstances, they are likely to fall into the category with 7 out of the 10 entrepreneurs that fail to continue to run a fruitful and sustainable business (Shane, 2009). An important focus in this body of research is directed towards “how, when, where, and by whom opportunities to bring future goods and services into existence are discovered, evaluated and exploited.” (Shane & Venkataraman, 2000, from Shepherd et al., 2014, p. 4) Another focal point of research on entrepreneurial decision-making is directed towards the question how entrepreneurs differ in their decision-making from non-entrepreneurs (Shepherd et al., 2014). This is in line with the general entrepreneurship research discourse, where there are many attempts to uncover a general entrepreneurial character or personality (e.g. Astebro & Herz, 2014 / Linquist, Sol and van Praag, 2015). In the review of the entrepreneurial decision-making discourse by Shepherd et al. (2014) various other topics and angles are reviewed, and accompanied with suggestions for future research and possible contributions for the discourse. Considering my personal interest in and academic focus on Social Entrepreneurship, especially their review on Social Entrepreneurial Decision-making has drawn my attention. Furthermore, ‘Social Entrepreneurship’ is an upcoming field of academic interest. A review of the literature quickly uncovers that the discourse is fragmented and that, despite the quantity of new additions of research, there is no coherent theoretical framework that captures the full scope of the concept of ‘Social Entrepreneurship’ (Weerawardena and Sullivan Mort, 2006). As a result, an unambiguous definition has not been forthcoming to date. While, the academic discourse of social entrepreneurship may be new and still under construction, the phenomenon itself is not. Social entrepreneurs have been an integral part of our society, and social entrepreneurs have been the driving actors behind the formation of many social institutions, long before we coined them as social entrepreneurs (Dees et al., 1998). Likewise, Shepherd et al. highlight the lack in understanding on how social entrepreneurs balance their economic and social considerations, and propose that future contributions are likely to “come from research exploring how entrepreneurs’ decision-making pertaining to doing good reflects both economic and social considerations and/or the decision context” (Shepherd et al., 2014, p. 17). This black box will be the focus point of this research. When looking at the existing literature of social entrepreneurship, one can find a number of research angles, since entrepreneurship, and for that matter social entrepreneurship, has a broad scope of manifestations (Weerawardena and Sullivan Mort, 2006).
9 Multiple research questions and angles are proposed by Shepherd et al. (2014), for example focusing on how entrepreneurs’ decision to do good depend on the venture’s environment and how these change over time, when entrepreneurs gain more experience. However interesting these suggested research topics are, after further and thorough study of the entrepreneurial decision-making research discourse, it became increasingly clear that there was in fact no basic understanding on if and how Social Entrepreneurs differ from other type of Entrepreneurs with regard to their decision-making styles. In this thesis I will therefore analyze the strategic decision making rationale of social entrepreneurs, as suggested by Shepherd et al. (2014) However, before research can move forward by analyzing this in detail, it is important to sketch an adequate image of the social entrepreneurial natural and intrinsic decision-making style. As an addition to the discourse, I will therefore try to find out if, and if so to what extent, social entrepreneurs differ from other type of entrepreneurs in their natural intrinsic decision-making styles. With this research I attempt to distill the social entrepreneurial intrinsic natural decision-making style, as to provide further research with a base-line measure whether or not entrepreneurial ‘intrinsic’ and ‘natural’ decision-making styles. After answering this question the discourse can be moved forward by looking at how they precisely weigh in different values in their strategic decision making, but first we need to know whether or not they are different in their decision-making without them factoring in the different objectives. Furthermore, both for the purpose of control variables and in an attempt to provide further research with some leads, I will take the environmental load into consideration, and I will include questions about the decision-makers previous experience. The choice for these, and other, control variables, will become increasingly clear after the theoretical framework.
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Theoretical Framework
In this thesis I will take a closer look at the decision-making rationale of social entrepreneurs. In this theoretical framework I will discuss relating theories on mainly social entrepreneurship and entrepreneurial decision-making. After setting up this theoretical framework the problem statement, as already briefly discussed in the introduction, will become increasing clear. Firstly, in this theoretical framework, I will start with a section on the theories of social entrepreneurship. I will build up to the theory on social entrepreneurship by briefly discussing theories on and definitions of entrepreneurship, value creation, blended value and social impact. I will continue to explain the scope of ‘social’ in this thesis, by introducing the triple bottom line. Furthermore, I will explain the range of ‘social entrepreneurship’ by introducing the spectrum of social entrepreneurship, by setting forth different shades of social entrepreneurship ranging from non-profit to for-profit, and everything in between. In the second section of the theoretical framework I will focus on theories of decision-making. I start with reviewing the academic literature of Decision-making theory and choice theory. I will continue to shortly describe the difference between respectively rationality and irrationality. Secondly I will discuss the literature known on both external influences and external influences on decision-making. I will conclude with the review of existing theories on various decision-making styles and characteristics.
Theories of Social Entrepreneurship
(Social) Entrepreneurship and Value CreationThe recent increased interest to address major societal issues in most Western European countries during the late 1960s and 1970s, has contributed to the development and evolvement of this third sector. This movement towards a more balanced democracy and improved equality in various spheres of society eventually led to the rise of numerous initiatives within the civil society (Defourny and Nyssens, 2010). Private and commercial initiatives emerged to complement political efforts towards the improvement of diverging societal issues. “In fact, the rise of social entrepreneurship represents the leading edge of a remarkable development that has occurred across the world over the past decades: the emergence of millions of new citizen organizations.” (Bornstein, 2007, p. 3-4) Approaching the turn of the century, the work integrated social enterprises, also referred to as WISE’s, became the most predominant type of social enterprise
11 (Defourny and Nyssens, 2010). This type of social enterprise belongs to the first school of thought; social enterprises were viewed as companies wherein earned income to a greater or lesser extent was allocated to support their social mission (Defourny and Nyssens, 2010). Herein we can make a distinction between what is called the “commercial non-profit approach” and the ‘mission-driven business approach’ (Defourny and Nyssens, 2010). The former is a type of social enterprise most similar to a traditional non-profit, but that uses commercial methods to finance their social goals. The latter is a type of social enterprise most similar to a traditional company, but that incorporates a social mission in their business execution. Although these two types of social organizations were the most prevailing, a second school of thought emerged; the ‘social innovation’ school of thought (Dees and Anderson, 2006). Dees (1998) defines social entrepreneurs as “playing the role of change agents in the social sector by adopting a mission to create and sustain social value, recognizing and relentlessly pursuing new opportunities to serve that mission, engaging in a process of continuous innovation, adaptation and learning.” (Dees, 1998, p. 1) This definition, belonging to the social innovation school of thought, is in line with the Schumpeterian general definition of entrepreneurship, which focuses on the entrepreneur as the change agents in the economy that seize opportunities by innovating, reforming or revolutionizing an old commodity or business in a new way, or that seize opportunities by creating new commodities or businesses (Schumpeter, 2000). Coining a definite definition of the concept of entrepreneurship stretches beyond the intention of this part of the theoretical framework, but the ideas presented can be used in our advantage to understand the concept of ‘social entrepreneurship’. In the words of Dees, “Social Entrepreneurs are one species in the genus entrepreneur. They are entrepreneurs with a social mission. [..] and we should build our understanding of social entrepreneurship on this strong tradition of entrepreneurship theory and research.”(Dees et al., 1998, p. 2) Therefore, I would like to briefly zoom out on the more general concept of entrepreneurship. The term ‘entrepreneurship’ can be traced back to its French origins, where in 1723 the word made its debut in the French Dictionary ‘Dictionnaire Universel de Commerse’, literally referring to a person who undertakes an action or a task (Carlen, 2016). From the beginning entrepreneurship thus seemed to be related to pro-active behavior in business. Common definitions of entrepreneurship also incorporate the act of business ownership or managing a business with the purpose of making a profit, and make mentions of risk taking behavior. This doesn’t take into account the importance of the act of identification of opportunity with the subsequent pursuit of this opportunity, which is an integral part of the working definition of the Harvard Business School (Stevenson, 2000). This definition also focuses on the acquisition and deployment of the necessary resources that are required for the exploitation of that opportunity. Other
12 definitions, mainly derived from Schumpeterian idea of creative destruction, evolve around the innovative aspect of entrepreneurship, wherein entrepreneurs are expected to create value by carrying out new combinations (Bull and Willard, 1993). In line with this Schumpeterian idea of entrepreneurship, “similar to a for profit firm, the purpose of which is to create superior value for its customer, the primary purpose of the social entrepreneur is to create superior social value for its clients.” (Weerawardena and Sullivan Mort, 2006, p. 25) In terms of the second school of thought, social entrepreneurs are thus not necessarily expected to turn to commercial activities, but they are individuals that create and sustain social value, regardless of the way they go about this. In the terms of this first school of thought, a broad range of different types of social enterprises can be identified: they can be structured as purely non-profit, or partly or even mostly for-profit, but they have in common that they use commercial activities to a greater or lesser extent to achieve some kind of social impact. In this thesis we will focus primarily on this latter type of social enterprises. Considering this, the concept of ‘value creation’ is what should be taken into consideration towards a full understanding of social entrepreneurship. Value creation can be understood as the act of augmenting the worth of goods or services (Smith and Colgate, 2014), which is usually done in the entrepreneurial fashion of carrying out new combinations which is intended to leads to increased value, hereto entrepreneurs acquire or deploy the necessary resources to turn this opportunity into value. However, the concept value creation has a broader scope within the social entrepreneurship, compared to the traditional for-profit businesses where value creation refers to solely to economic profits (Thompson et al., 2013). The terms “value” and “gains” encompass “… not only the profit an organization earns for its shareholders but also impact that the organization has on society and environment more generally, in terms of overall value that it creates and the overall costs that it imposes on society and environment.“ (Thompson et al., 2013, p. 334) The combination of these two different values in the mission of one organization was first coined as ‘blended value’ by Emerson (2003), as the conceptualization of the pursuit of a double-sided value, namely value creation through the combination of financial and social outputs (Nicholls, 2009). “The logic of a Blended Value analysis suggests that, first, all organizations create both financial and social value, and that, second, the two types of value creation are intrinsically connected rather than being in opposition in a zero sum equation (i.e. to generate more social value an organization must sacrifice its financial performance).” (Nicholls, 2009, p. 764) This implies that, in contrast to the zero sum rationale, businesses don’t have a valid ground anymore to ignore the impact they have or could have beyond their financial gains, since the Blended Value logic claims that financial and social performance are not necessarily mutually exclusive. The
13 ideal behind this kind of blended value entrepreneuring is that with business one can pursue financial returns while also intentionally addressing social and environmental challenges, without jeopardizing their financial prospect. And vice versa (Bugg-Levine & Emerson, 2011). The ideal of blended value even goes as far as to claim that if these diverse values are successfully and thoroughly integrated, a business can generate a greater total value, in contrast to a situation where both end goals are pursued separately. Zahra et al. (2009) introduce the concept ‘total wealth’ to fully grasp all the social and economic dimensions of social entrepreneurship, by coining total wealth as the sum of both ‘economic wealth’ and ‘social wealth’. Furthermore, they build up both sub-concepts from both tangible and intangible outcomes, such as profit, wealth, impact, happiness and general well-being, while also discounting the total generated wealth for economic costs, opportunity costs and social costs.1 They herewith made a clear schematic overview, “how both
economic and social wealth can be created by entrepreneurial entities in the pursuit of total wealth maximization. Further, the “total wealth” standard indicates how entrepreneurs can potentially shift resources in a manner that enhances wealth in one category at the expense of another (e.g., pursue economic wealth while polluting the environment).” (Zahra et al., 2009, p. 522) However useful the formula proposed by Zahra et al. (2009), it is still difficult to measure an accurate number for ‘total wealth’. Mainly considering the fact that many of the components that are taken into consideration, especially the non-tangible aspects, are non-quantifiable (Zahra et al., 2009). Impact and social benefits are proven to be hard to measure, and even harder to translate into a value to be incorporated into the formula. However, the total value standard “the social wealth standard offers a promising heuristic for evaluating social opportunities and ventures. It also delineates the distinctiveness and contribution of social entrepreneurship.” (Zahra et al., 2009, p. 522) It furthermore shows how enterprises can propagate “various gradations or combinations of both economic and social wealth generation.” (Zahra et al., 2009, p. 522) Within this range, the entire social entrepreneurship spectrum will be captured, ranging from non-profits to for-profits and everything in between, which we will return to later. Social Mission: Impact In the words of Dees (1998), “For social entrepreneurs, the social mission is explicit and central”. But what exactly is a social mission? Their social mission can be regarded as the intention to make a social impact or bringing about social change, in other words creating social value. This description of a social mission is just an example of how social value is often referred to as social impact, and 1 The formula created by Zahra et al. (2009): “Total Wealth (TW)=Economic Wealth (EW) + Social Wealth (SW). Further, TW = EW + SW, where EW = Economic Value (EV) − Economic Costs (EC) − Opportunity Costs (OC); SW Social Wealth=Social Value (SV) − Social Costs (SC).”
14 that is sometimes even regarded as interchangeable concepts. Therefore, before we focus on what exactly can be regarded as ‘social’, and in what way a social enterprise differs from a for-profit enterprise, we will shortly review the prevailing definition of ‘impact’ and respectively ‘social impact’. The definition of ‘impact’ as developed by Clark et al. (2004, p. 7), derived from the ‘impact value chain’ (image 1), states that ‘impact’ concerns “[..] the portion of the total outcome that happened as a result of the activity of an organisation, above and beyond what would have happened anyway”. It is important to note that “impacts include intended as well as unintended effects, negative as well as positive effects and both long term and short term effects” (Wainwright 2002, from Maas, 2009, p. 7). In other words, impact can be viewed as net-created total value. Image 1: Visual display of the Impact value chain (adapted from Clark et al. 2004, p. 7) In the foregoing we already established that in line with the notion of blended value potential total wealth is composed of two aspects, namely economical value and social value. Before we continue with the explanation of social value, I briefly want to discuss one definition of Social Impact, which helps us to pinpoint the demarcation of social value in this thesis. For example, social impact by Burdge and Vanclay (1996, p. 59) includes “[...] the consequences to human populations of any public or private actions that alter the ways in which people live, work, play, relate to one another, organise to meet their needs and generally act as a member of society”. This definition is primarily focused on social impact, in the sense that it refers to the added value for the human population. On the one hand, this definition is too narrow in the sense that it excluded effort towards potential positive impact on animals, nature and the environment. In this thesis the scope of social enterprises will not be limited to activities that are focused on improving the wellbeing of the human population, but also include positive value creation for the planet as well. On the other hand, this definition too broad in the sense that it includes all
15 activities that make social impact, even personal and non-structured efforts. I hereby acknowledge that social impact can also be manifested in small personal and non-structured gestures. One can surely create a value for society by spontaneously doing groceries for a sick or old neighbour in one’s free time, but for the sake of demarcation, I want to limit ‘social entrepreneurship’ within the framework of this thesis to (semi-) structured efforts which are intended to make an impact in the context of a legally documented organization. This can take the form of a company, B.V., foundation, fund, association, cooperative, partnership, partnership and even a sole proprietorship. Taking into account these considerations, the leading demarcation of social impact / social value will have a wider approach regarding the so called ‘direct object’ on which the social entrepreneurial action has its affect, but will be framed in the sense that it excludes non-structured and/or non-legislated social activities. In the following of this chapter, I will therefore firstly, introduce the triple bottom line, as to make clear what can be regarded as ‘social’ in this thesis. Secondly, I will introduce the ‘spectrum of social entrepreneurship’, to give a structured and comprehensive overview of all the different “shades” of social entrepreneurship that will be included in this thesis. Triple Bottom line: People, Planet and Profit Firstly, in this thesis social enterprises are not limited to social goals in the sense that they are only considerate of their fellow citizens, but ‘social’ implies here that these initiatives are devoted to promote (aspects of) society in its entirety, national and / or international (‘de winst van waarden’, 2000). Therefore, in this thesis, the term ‘social entrepreneurship’ will not be limited to entrepreneurship for the benefit of fellow human beings, but will also include, but is not limited to, entrepreneurial effort towards improving the wellbeing of nature, animals and/or the environment (Zetsloot et al., 2004). The social enterprises are thus focused on improving the so called triple bottom line, in reference to three areas of potential benefit of the performance metric: people, planet and profit (Reuther, 2011). The introduction of the concept can be traced back to John Elkington (1994, 1995) and secured the further development of the integration of social and environmental objectives within the business domain. For a social organization balancing the triple bottom line is now a days thought to lie at the core of sustainable social entrepreneurship, which makes it their ultimate goal to succeed simultaneously in all three dimensions (Thompson et al., 2013). I want to shortly review the three individual concepts of the triple bottom line, respectively people, planet and profit. ‘People’, what’s in a name, is focused on all efforts that create positive value for people (Elkington, 1994). In a socially responsible organization, there are good labor relations for their employees, but also with their suppliers,
16 partners and other stakeholders. They show respect for human rights, but typically make a proactive effort to advance the overall wellbeing of others beyond obeying to bare minimum human rights (‘de winst van waarden’, 2000). ‘Planet’ includes all initiatives that are focused on creating a positive impact on the natural environment. This can mean actively decreasing the environmental footprint of the business itself beyond the base line requirements of environmental regulations, or it can mean that the business revolves around actively preserving nature, such as cleaning the ocean, or filtering air pollution beyond one’s own CO2 load (‘de winst van waarden’, 2000). Planet thus stands for a proactive attitude with regard to one’s own impact on the natural environment and contributing to solving environmental problems. ‘Profit’, the last corner of the triangle, concerns the creation of economic value through the production of goods and the provision of services. An organization is profit-oriented to secure the future of the organization and profit forms the financial basis of the company. Some argue that in order to be a social enterprise profit is a prerequisite for improving the two other dimensions, since without a certain economic value creation the organization is dependent on donations or charitable grants (‘de winst van waarden’, 2000). Integrating the triple bottom in all facets of a business is believed to be the key to a sustainable economy. However, not all social enterprises combine all three objectives of the triple bottom line, but some only combine profit objectives with either creating positive impact on ‘people’ or ‘the planet’. On the one hand, when one is only pursuing the ‘profit’ part of the triple bottom line, it is just an ordinary traditional for-profit (Reuther, 2011). On the other hand, when one is only pursuing positive impact for only people and/or planet, but doesn’t have any commercial or economic objectives c. q. pursuing profit, it is nothing more than a traditional non-profit or charity organization (Reuther, 2011). These traditional for-profits and traditional non-profits, with unilateral missions, can therefore regarded as the boundaries of the Social Entrepreneurship spectrum, which will be further explained in the following section. Image 2: Visual display of the ‘People, Planet and Profit’-Triple Bottom Line (Reuther, 2011)
17 Social Entrepreneurship as a Spectrum I would like to introduce a spectrum of social entrepreneurship, based on an illustration by Johanna Mair (2012), as can be seen in the image below. Before I will Image 3: Visual display of “the Social Entrepreneurship Spectrum” (Reuther, 2011) On the one end of the spectrum we can find traditional non-profits. Non-Profit is a non-business entity or organization that is formed with the purpose of pursuing a predetermined not-for-profit goal (Smith et al., 2006), in other words a nonprofit organization is type of organization wherein all resources are allocated for the benefit of a commonly defined, mostly social objectives. This means that none of the revenues or earnings are distributed to the stakeholders, apart from the strictly necessary to enable them to contribute effectively to the commonly defined social objective. In this regard, non-profits are mostly foundations with a clearly delineated mission statement that comprises the social objective. Just right of the traditional non-profits on the spectrum we can find the income-generating non-profits, who use a so-called commercial non-profit approach. This is type of social enterprise most similar to a traditional non-profit, but who uses commercial methods to finance their social goals (Defourny and Nyssens, 2010). The companies sell commercial goods or offer commercial services, but they pursue commercial success for the sole purpose of supporting their social mission with their generated revenue. On the other end of the spectrum we can find traditional for-profits, which are companies or businesses with a purely commercial profit-objective (Thompson et al., 2013). Like the name is already implying, the main goal of a for-profit
business or company is thus to generate financial profits. In contrast to a non-18 profit, in a for-profit business or company the raised revenue or incomes can be distributed towards stakeholders, in the form of salaries, bonuses or shares, and are not re-circulated back into the organization to serve social objectives. Just left of the traditional for-profits on the spectrum we can find the socially driven businesses, to which I will refer to as a mission driven business. This is a type of social enterprise most similar to a traditional company, but that incorporates a social mission in their business execution (Defourny and Nyssens, 2010). Their ‘social cause’ is generally interwoven with their business strategy. These companies do good by doing business, and pursue both financial and social goals. The difference between a mission-driven business and an income generating non-profit is to which extend the financial profit or the social impact is either the means or the end. In an income generating non-profit the commercial activity is a means to fully support a social end, where in a mission-driven business the social impact is interwoven in the business model, but a positive financial outcome is still mainly the end goal. Mission-driven businesses are in general not founded solely to contribute to certain social cause, but are entrepreneurs that decided more or less “if I’m going to do business, I only want to do good business.” Nowadays it is uncommon for a large organization to pursue solely financial goals, would like to add another type of business, namely an ‘ethical for-profit’. This is close to a traditional for-profit business, but differs from a for-profit business in the sense that a share of the raised revenue or incomes is to serve social objectives, whereas it differs from a mission-driven business in the sense that this social objective is not an integral part of their business proposition or product offering. This type of ‘ethical for-profits’ can generally take two forms, either ‘venture philanthropy’ or ‘corporate social responsibility’ initiatives. The former, venture philanthropy, is a type of social entrepreneurship wherein a part of the generated revenue is allocated to a particular foundation founded and funded by the business, that is fully committed towards a certain social or environmental cause (Van Slyke and Newman, 2006). The latter, corporate social responsibility, refers to organization’s efforts “to operate in an honorable manner, provide good working conditions for employees, encourage workforce diversity, be a good steward of the environment and actively work to better the quality of life in the local communities where it operates and in society at large.” (Thompson et al., 2013, p. 144) However big their impact can be, most of them seem to pursue such a social strategy only for the purpose of reputation considerations (why companies can no longer afford to ignore their social responsibilities, 2012). Therefore, many organizations are committed to express or market their social initiatives for the sole benefit of improving their market position and positive branding, which in turn is only for the good of their financial position (Thompson et al., 2013).
19 Image 4: Renewed visual display of “the Social Entrepreneurship Spectrum” including the ethical for-profit As you can see in the new proposed visualization of the spectrum, the column ‘social enterprises’ is deliberately deleted. The reason for this is that I believe that all enterprises on the whole social entrepreneurship spectrum can be considered social enterprises: they all pursue a blended value ideal, by combining to multiple objectives of the triple bottom line. I furthermore re-positioned the mission driven businesses slightly more to the middle of the spectrum, since I believe that is the type of enterprise that is often spoken about when people refer to a social enterprise. The traditional for-profits and the traditional non-profits hereby form the boundaries of the spectrum. To conclude, the degree to which a company pursues either social impact or financial profit, thus decides where on the spectrum the enterprise should be situated. The more to the left of the spectrum, towards the purely non-profits, the more emphasis there is on realizing social impact, and the more social impact is regarded as the sole desirable outcome of the effort of the enterprise. The more to the right of the spectrum, towards the traditional for-profits, the more emphasis there is on reaping monetary benefits.
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Theories of Decision-making
Decision-making: an introduction Decisions are part of everyday life, and we make a lot of them. Various Internet sources even make a claim that people make average decisions of 35.000 per day (e.g. Hoomans, 2015). Although I haven’t been able to trace this claim back to a scientifically grounded research, it is obviously clear that this grand number consists of the whole ‘family’ of decision-making; habits, choices and decisions. On the very beginning of this theoretical framework, I therefore want to make a clear distinction between these three related concepts. Hereto I have created my own working definitions, to make the differences between the concepts as clear as possible. Habit; unconsciously made decisions to take a certain course of action of which there was, in theory, an alternative course of action, but that alternative wasn’t considered. Choice: a consciously made decision to take a certain course of action of which there was, in theory, an alternative course of action, and the alternative course of action was considered, but the implications of the choice were not considered. Decision: a consciously made decision to take a certain course of action for which there was, in theory, an alternative course of action, and the alternative course of action was considered, furthermore the implications of the decision were considered (thoroughly). The scope of decision-making in this thesis is thus limited to consciously made decisions, while taking into consideration the implications of either possible course of action, which is in line with the following definition of decision-making: “The process of choosing a preferred option or course of action from among a set of alternatives.” (Wilson and Keil, 2001, p. 220) The definition continues: “The decision-making process often begins at the information gathering and proceeds through likelihood estimation and deliberation, until the act of final choosing.”(Wilson and Keil, 2001. p. 220) Information gathering can be based on either explicit or tacit knowledge, or a combination of the two. Likelihood estimation and deliberation are thought to be highly personal and circumstantial, which makes them to a certain degree either rational or irrational (Dalkir, 2005). Before I continue with reviewing the academic literature of decision-making theory, I will firstly shortly describe the difference between rationality and irrationality, and secondly I will discuss the literature known on both external influences and external influences, prior to concluding with the review of existing theories on various decision-making style characteristics. They are closely related to concepts of availability of information, experience, intuition and insights, which will prove to be important aspects of decision-making theory.
21 Rationality and Irrationality In traditional theory of economics the assumption is that humans display maximizing behaviour, which implies that a person, when faced to make a certain decision, will pursue the course of action that he or she perceives to be the route towards the best possible outcome (Rittenberg and Tregarthen, 2012). This is in line with the rational choice theory, which is “the idea that all action is fundamentally 'rational' in character and that people calculate the likely costs and benefits of any action before deciding what to do.” (Scott, 2000, p. 126) The underlying assumption of this theory is the Homo Economicus principle, which can be traced back by its etymology to the ancient Latin (Persky, 1995). However, John Stuart Mill was the first to coin the term in an economical political academic context in 1836, to describe humans as rational and self-interested and “concerned with him solely as a being who desires to possess wealth, and who is capable of judging the comparative efficacy of means for obtaining that end”(Mill, 1836, from: Persky, 1995, p. 223). In other words, the rational choice theory is based on the assumption that every decision follows the rationale of an optimization-based approach (Levin and Milgron, 2004), wherein the actor pursues the course of action what they perceive to reap the maximum utility (Rittenberg and Tregarthen, 2012). Note that ‘every decision’ is a conscious choice of words, since rational choice theory distinguishes itself from other theories about rationality in the fact that “it denies the existence of any kinds of action other than the purely rational and calculative.” (Scott, 2000, p. 126) Intuitively, and based on personal experience, we can argue that not every human decision is rational. The reasoning behind the Homo Economicus and the rational choice theory is in fact correct, but it seems, however correctly reasoned, that a true rational choice can only exist in a vacuum. In reality, however, we need to factor in both internal and external factors that can bring a person to make less rational or irrational decisions (Scott, 2000). Alongside rational decisions, other forms of action can thus be identified. “Such views of action recognize traditional or habitual action, emotional or affectual action, and various forms of value-oriented action,” (Scott, 2000, p. 126) and are classified as non-rational or irrational as to oppose rational decision-making. To clarify this we will firstly discuss external influences on decision-making, and secondly internal influences on decision-making. External influences on Decision-making It has been established in the foregoing that external influences can change the decision-making process a person goes through. Before we go into detail on external influences and their implications for decision-making, we have to make a clear distinction between one’s context and physical environments. I noticed
22 that in the literature complex environments can refer to either the external physical surroundings of the individual making the decision, or it can refer to the context of the individual in the sense of the factors that the individual has to weigh in his or her decision. Therefore, from now on, the former type of ‘environment’ will be referred to as the decision-maker’s physical environment, whereas the latter will be referred to as the decision-maker’s context or environmental load. In this thesis the emphasis will be place on decision-maker’s context or environmental load. However, it is worth mentioning that the decision-maker’s physical environment can also influence a person’s decision-making. This is can be traced back to a study that claims that environmental complexity affects cognitive function (Davidson, 2011). They found a correlation between a higher measure of one’s physical environmental complexity and higher cognitive function, which implies that people were able to better assess a situation which influenced their decision-making capabilities (Davidson, 2011). Likewise, various studies claim the influence of environmental load, or the decision makers context, can have an influence on the decision-making process. Before we will proceed to which influence that is, we will firstly shortly review what is precisely meant by environmental load factors. According to Driver et al., environmental load factors are “anything that increases a person’s sense of pressure [..] Environmental load factors include frequent deadlines, uncertainty, complexity, and the prospect of important consequences, good or bad.” (Driver et al., 1998 p. 39) According to the change-of-process theory coined by Mellers et al. (1992) these environmental load factors influences the manner in which people process information, combine insights and therefore influences the way that they come to a decision. Driver et al. (1998) came to a similar conclusion. They primarily describe the relation between the change in information load and the degree of information processing. Driver et al. (1998) state that people have a natural inclination or tendency towards a certain decision-making style which they will turn to in normal conditions, or conditions as one experiences most often, but when their context changes, their decision-making style changes temporarily. In image 4, derived from their book “the dynamic decision maker”, they portray a clear model of how the degree of information is related to increased environmental load. It follows the pattern of a U-shaped curve, which implies that a person relies most on information processing in a decision-making process when environmental factors are moderate. When conditions are high or low information processing decreases. In other words, people tend to be less analytical when they perceive either high or really low environmental load. In the last section of this theoretical framework I will review different decision-making methods, for which I will refer back to this curve by Driver et al.
23 Image 5: Environmental Load and Information Processing (Driver et al., 1998, p. 39) Note that in this diagram environmental load factors are weighed equally to come to a general environmental load. However, it can be argued that specific combinations of environmental load factors should portray a different curve in the diagram. However, regardless that the research by Driver et al. does not disclose about the individual weight of the sub-factors, it can be easily argued that the relative weight of the sub-factors is highly individual and situational. Therefore, the choice to give them overall the same weight could be justified, since it regards the individual environmental load perceived by the decision-maker, which is also related to for example experience. However useful for the initial understanding of environmental load, I would like to propose another description of environmental load, which is in my opinion more useful for this thesis. Environmental load is in my opinion better described as the sum of information-load, time sensitivity, degree of uncertainty, and perception of consequences. The first two concepts information-load and time sensitivity are closely related. One aspect of information-load is the information-time ratio. In other words, how much time does a person have to process a certain amount of information? Another aspect of information-load is complexity of the information, in other words, the how difficult certain information is to process for an individual. The latter is closely related to an individual’s intellect, competence on the subject and experience. For now I will focus on the former, as individual experience with and understanding of information will be elaborated upon in the following section concerning internal influences on decision-making. The underlying rationale of the information-time ratio is the idea that individuals “have finite limits to absorb and process information during any given unit of time.”(Malhotra, 1982, p. 419) Therefore, if someone is given only a limited period of time there is only so much information they can thoroughly and analytically process, which amount of information that is personal. If the amount
24 of information passed this threshold, “such that it exceed their processing limits, overload occurs, leading to poorer decision-making and dysfunctional performance.” (Malhotra, 1982, p. 419) Another theory by Schroder, Driver and Streufeurt (1967) points out a similar relation, “that differentiation and integration in cognition and behavior increase with increasing [environmental load] until an optimal information-processing level is reached. If environmental input increases further, the information-processing level begins to decrease.” (Malhotra, 1982, p. 419) An important take away here is that increased time pressure can alter a person’s decision-making process (Ordónez and Benson, 1997), by influencing the way of information processing along the U-shaped curve as introduced by Driver et al. (1998) An underlying principle of the relation between environmental-load factors and information processing, is the degree of stress a person is coping with. They argue that an increase in environmental-load an increase of pressure on the decision-maker, which increases their stress (Driver et al., 1998). Furthermore, according to Porcelli and Delgado (2017), under influence of stress a person can shift from goal-directed to habit-based decision making. In other words, by increasing stress a person can shift from analytical decision-making, which is generally a process that relies on high information processing, towards habit-based decision-making, which is a process that relies significantly less information processing. Frequent deadlines, time pressure, but also degree of uncertainty and perception of consequences can increase stress. When studied individually an increase in these factors show similar relations to reliance on information processing as the U-shaped curve of Driver et al. The latter two concepts will now be discussed briefly. Firstly I will shortly address the degree of uncertainty. Likewise information load, the degree of uncertainty is highly personal and relative to the decision maker. In general decision-making literature, the degree of uncertainty is also referred to as risk, which is a measure of probability that weighs the potential positive outcomes with the potential negative outcomes. Secondly, considering the fact that the perception of risk is not the same for everybody, the concept is closely related to the perception of consequences. The perception of consequences refers to the way a person subjectively values a certain outcome. What can be a positive outcome for one, can be a negative outcome for the other. The individual perception on the potential consequences of a certain action will reflect in the perception of risk of the decision-maker. The term subjective expected utility reflects this relation between risk and perception of consequences, which is the personal perceived attractiveness of an opportunity in under the pressure of risk (Kahneman and Tversky, 1979). This concept thus combines risk with the perception of consequences. Various individual aspects can influence the outcome of this subjective expected utility. For example, personality traits and personal values can
25 influence the perception of consequences, whereas previous experiences can have an influence the perception of risk of a particular decision. The relation between the decision-making style and respectively personality traits, personal values, and previous personal experiences of the decision-maker will be discussed in the following section about internal influences on Decision-making. Internal Influences on Decision-making In the foregoing we established some of the most relevant external influences on decision-making. Likewise, there are also plenty internal influences and personal characteristics that influence ones decision-making. Especially with regard to social entrepreneurship personal values play a great role in the final decision taken. To which degree one values people and planet objectives, or the importance one ascribes to succeeding financially, surely influences the ultimate decisions. But there is more to it. This is captured by the self-determination theory by Deci and Ryan (2000), who state that the underlying principles of human motivation are to a great extent focused on “innate psychological needs for competence, autonomy, and relatedness.” (Deci and Ryan, 2000, p. 227) This points us in the direction of a twofold motivation towards a certain goal pursuit, intrinsic and extrinsic motivations. The key difference between intrinsic- and extrinsic motivations is to which degree a person disinterested by the task itself. Extrinsically motivated tasks might not be rewarding themselves, but there is a extrinsic reward or incentive to motivate a person to perform the task either way (Fehr and Fischbacher, 2003). Intrinsically motivated tasks are not externally motivated, but the person performing the task perceives the task itself as rewarding (Fehr and Fischbacher, 2003). This is an important distinction to fully understand the different motivations for pro-social behavior and social entrepreneurial decisions. In the words of Maner and Gailliot (2006, p. 348), “empathic concern is associated with an affective focus on the person who is suffering (rather than on oneself), and therefore promotes truly selfless motivation to provide aid.” In line with this, pro-social motivation is truly altruistic when the ultimate goal is to increase another’s welfare, without direct or indirect reciprocity (Maner and Gailliot, 2006), hence intrinsic motivation to do good. On the contrary, pro-social behavior is egoistic when pro-social behavior is extrinsically motivated and ultimately to increase one’s own welfare (Maner and Gailliot, 2006). This is the case when an action is motivated by an external incentive or alternative motive than the reward of performing the act itself. This is underlined by Bryant (2009) by claiming that especially “in ethical decision-making contexts, entrepreneurs are able to use moral imagination and self-regulation to guide their decisions on how to best to exploit an opportunity.”
26 He continues, “Entrepreneurs with high moral imagination in the decision process tend to consider problems from an ethical standpoint, take the perspective of a wide range of stakeholders, and consider unconventional alternatives. [..] Moreover, entrepreneurs with stronger self-regulation (in the form of self-efficacy and regulatory pride) are more morally aware and focus their moral awareness on personal integrity and building interpersonal trust.” (Bryant, 2009, from: Shepherd et al., 2009, p. 24) Another personal characteristic that highly influences the decision-making outcome is optimism. “Optimism refers to the tendency to expect positive outcomes even when such expectations are not rationally justified” (Hmieleski and Baron, 2009, from: Shepherd et al., 2009, p. 30), which will thus sabotage rationality of a decision. Rationality can also be decreased with an increasing degree of emotional engagement (Naqvi et al., 2006). When emotion has a strong hand in the decision, one can tend to be over optimistic about the potential outcomes or experience disproportionate risk averseness, if the fair of failure overshadows their rational judgment. This is already briefly discussed with the concept of subjective expected utility. Escalation of commitment is closely related to emotional engagement, which refers to the bias that a person is overcommitted to an already proven ineffective or failing course of action (Rice, 2011). This is a psychological phenomenon where one cannot rationally exclude already incurred costs, in economy referred to as sunk costs, from their decision to move forward. Lastly, ones previous experiences play an important part in the ultimate decision-making. For one thing, a previous experience learns you about proven effective measures and less effective courses of action. A lot of experience with similar situations or knowledge about a certain topic can enhance informed decision-making (Klein, 2015). Furthermore, it is notable that with an increasing environmental load, for example with an increasing time pressure, people with a lot of previous experience tend to follow a so called recognition primed decision strategy, which leads them to intuitively choose courses of action that have been proven effective in previous situations without actively weighing other options (Klein, 2015). Recognition primed decision strategy can also be referred to as a heuristic or a mnemonic, and refers to the act of using a rule of thumb based on previous experience or preconception, resulting in that fewer steps or alternatives in the decision-making process need to be considered to find a solution or reach a final decision (Trumbo, 2002).
27 General Decision-making Styles In general people appear to rely on one particular decision style when exposed to normal conditions, which are the conditions as that person experiences them most often (Driver et al., 1998). In the following, this particular decision style will be referred to as ones natural intrinsic decision-making style. In the foregoing I briefly discussed internal and external influences on decision-making. Considering the constant changes in these factors people tend to “shift from one style to another [..] on a day-to day basis – or sometimes even from one hour to another” (Driver et al., 1998, p. 39). After conditions return normal, the natural intrinsic decision-making style is once again adapted (Driver et al., 1998). The foundation for every decision-making is really straightforward and based on simple prioritization, which refers to the act of considering multiple options and possible outcomes, and weighing the perceived probability and implications of the different outcomes before making a decision. In the foregoing we already established that this is highly personal and circumstantial. However, people can also differ intrinsically in this approach. There are different decision-making styles that can be identified, which will be reviewed in this section. To begin with, Driver et al. (1998) suggest that there are a number of different decision-making types, which is mostly based on two differentiators: the amount of information used to come to a decision, and the amount of potential outcomes considered. The former is reflected in the difference between maximizing and satisficing. “Maximizing implies a tendency to always seek out all relevant information in a situations,” whereas “Satisficing [..] implies a tendency to take in only enough information to get a few good solutions” (Driver, 2000, p. 43). In practice, satisficers are generally satisfied when they come across a possible solution that fits the requirements of the decision, whereas maximizers continue to explore possibilities and gather more information until they come across the best possible outcome (Nenkov et al., 2008). The latter is reflected in the difference between either a multifocus or an unifocus, and is related to “the number of alternatives identified when reaching decisions” (Driver et al., 1998, p. 3). Decision-makers with a multifocus develop a great number of possible solutions, which may be carried out successively or simultaneously (Nenkov et al., 2008). On the contrary, a decision-maker with a unifocus develops just one solution or answer to the situation (Nenkov et al., 2008). Another possible differentiator is to which extent people rely on intuition to come to a decision, opposed to their degree of deliberation. The latter is generally referred to as contemplation (e.g. Koudstaal et al., 2017). “Some primarily follow their “gut” feeling and decide based on their intuition what seems best. Others, in contrast, prefer to think things over and rely on strategic reasoning
28 before they take a decision” (Koudstaal et al, 2017, p. 1). In line with the recognition primed decision strategy by Klein (2015), Koudstaal et al. (2017) state that entrepreneurs are generally more intuitive and more reliant on decision making heuristics, when compared to other strategic decision-makers like managers. This can be possibly ascribed to their dynamic and uncertain business environment, and their generally limited availability of useful information about new markets or new products (Koudstaal et al, 2017). The third differentiator that is often discussed in entrepreneurial literature (Read and Dolmans, 2012) is to which degree entrepreneurs rely on what they have or focus on where they want to go. This is referred to as either goal orientation and mean orientation, or causation or effectuation. “Effectuation takes a set of means as given and then focuses on selecting between possible effects that can be created with that set of means,” whereas causation is focused on the desired output, where after the necessary means are gathered (Sarasvathy, 2001, p. 245). Both effectuation and causation are build up from key characteristics, however they do not have to be applicable to the same degree, or even expressed at the same time. “The five sub-constructs include: (1) beginning with a given goal or a set of given means; (2) focusing on expected returns or affordable loss; (3) emphasising competitive analysis or strategic alliances and pre-commitments; (4) exploiting pre-existing knowledge or leveraging environmental contingencies; and (5) trying to predict a risky future or seeking to control an unpredictable future” (Perry et al., 2012, p. 839).
29
Research Design
Problem statement In the review of the entrepreneurial decision-making discourse by Shepherd et al. (2014) the lack in understanding on how social entrepreneurs balance their economic and social considerations is highlighted, and they propose that future contributions are likely to “come from research exploring how entrepreneurs’ decision-making pertaining to doing good reflects both economic and social considerations and/or the decision context” (Shepherd et al., 2014, p. 17). This black box will be the focus point of this research. Multiple research questions and angles are proposed by Shepherd et al. (2014), for example focusing on how entrepreneurs’ decision to do good depend on the venture’s environment and how these change over time, when entrepreneurs gain more experience. However interesting these suggested research topics are, after further and thorough study of the entrepreneurial decision-making research discourse, it became increasingly clear that there was in fact no basic understanding on if and how Social Entrepreneurs differ from other type of Entrepreneurs with regard to their decision-making styles. In this thesis I will therefore analyze the strategic decision making rationale of social entrepreneurs, as suggested by Shepherd et al. (2014) However, before research can move forward by analyzing this in detail, it is important to sketch an adequate image of the social entrepreneurial natural and intrinsic decision-making style. As an addition to the discourse, I will therefore try to find out if, and if so to what extent, social entrepreneurs differ from other type of entrepreneurs in their natural intrinsic decision-making styles. With this research I attempt to distill the social entrepreneurial intrinsic natural decision-making style, as to provide further research with a base-line measure on social entrepreneurial ‘intrinsic’ and ‘natural’ decision-making styles. After answering this question the discourse can be moved forward by looking at how they precisely weigh in different values in their strategic decision making, but first we need to know whether or not they are different in their decision-making without them factoring in the different objectives. Furthermore, both for the purpose of control variables and in an attempt to provide further research with some leads, I will take the environmental load into consideration, and I will include questions about the decision-makers previous experience. In short, to answer my research question I will try to capture the individual decision making style of the different shades of social entrepreneurs. Therefore I need to plot the respondents on the social entrepreneurship spectrum (independent variables), and I will try to distill their personal decision-making styles (dependent variables). Furthermore, I research their environmental load, level of education, previous experience and company size (control variables).30 Hypotheses & Methodology My hypothesis is that “Social Entrepreneurs” are not intrinsically different in their decision making style in comparison to ‘For-Profit Entrepreneurs’. My hypothesis is thus tat entrepreneurs are a homogeneous group, in the sense that they are individually different but that is unrelated to the ‘degree of social’ of their enterprise; they are to a certain degree satisficers or maximizers, goal or means oriented, unifocused or multifocused, intuitive or contemplative, but these individual differences don’t have a correlation with the degree of social of their enterprise. H0: the overall intrinsic and natural decision-making style of entrepreneurs is unrelated to their relative degree of social.2 Independent Variables Firstly, I need to find out how social the social entrepreneurs are. This will be researched in twofold. Firstly, by determining their position on the social entrepreneurship spectrum. Secondly, by determining the relative importance the entrepreneurs assign to respectively economic value and social value. Beforehand, I want to confirm once again the difference between the social entrepreneurship spectrum and the different social and economic objectives, represented by their place within the triple bottom line. The social entrepreneurship spectrum is solely focused on the way of doing business, not on the subject or preferable output of doing that business. After establishing this business structure, we can start to look at which type or which types of values are created within that business structure. Sure, businesses on the left of the spectrum will probably have more interest in people and / or planet objectives, and place less importance on the profit objective. Likewise, business on the right of the spectrum will probably be more commercial and profit focused, and less engaged with people and planet. However, we need both the triple bottom line and the social entrepreneurship spectrum to get an in-depth and multidimensional picture of the type of social enterprise we are dealing with. To measure this, I will firstly ask the entrepreneurs to position themselves on the social entrepreneurship spectrum. Hereto I will provide them with a short definition (maximum two sentences) of the different shades of social entrepreneurship, so that they can make an informed decision about their place on the social entrepreneurship spectrum. The respondents place themselves on the Entrepreneurship Spectrum by means of a slider that equals the spectrum. The position on the slider will be translated in a number (0-100); non-profits represent the low values, for-profit represent the high values, and intermediate values represent blended values. A higher value thus represents an increased 2 An overview of all hypotheses can be consulted in the appendix.
