Environmentally-motivated social enterprises : how institutional logics influence their international scaling up

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Environmentally-Motivated Social Enterprises:

How institutional logics influence their international

scaling up

M.Sc. Business Administration Track: International Management Master Thesis

Melissa Barbara Gutberlet | 11746564 Date of Submission: 22 June 2018 Supervisor: Dr. Francesca Ciulli Second Reader: Dr. Ilir Haxhi

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Statement of Originality

This document is written by Student Melissa Barbara Gutberlet 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 reference have been used in creating it.

The Faculty of Economic and Business is responsible solely for the supervision of completion of the work, not for the contents.

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List of Tables

TABLE 1:DEVELOPMENT ENVIRONMENTALLY-MOTIVATED SOCIAL ENTREPRENEURSHIP ... 15

TABLE 2:INSTITUTIONAL LOGICS ... 21

TABLE 3:CASES AND SELECTION CRITERIA ... 40

TABLE 4:OVERVIEW SECONDARY DATA ... 41

TABLE 5:INTERVIEW DETAILS ... 42

TABLE 6:INTERVIEW QUESTIONS LINKED TO WPS ... 44

TABLE 7:THEMES, SUB-THEMES AND CODING DEFINITIONS ... 46

TABLE 8:SUMMARY CASE 1 ... 51

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Acknowledgments

Firstly, I would like to thank my thesis supervisor, Dr. Francesca Ciulli, for guiding me throughout the research process and always providing constructive feedback. Secondly, I would like to thank all interviewees for accepting my request to interview them and for taking their time to give valuable insights. Last but not least, I would like to thank my family for their support and my friends without whom this master would not have been the same.

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Abstract

Despite a growing body of academic literature examining social enterprises, little is known about social enterprises embodying an environmental mission. While it is found that social-business tensions in the former aggravate international growth, the influence of competing logics on the international scaling up of environmentally-motivated social enterprises (ESEs) remains unknown. Both international business literature adopting a network approach to internationalization and social enterprise literature emphasize the importance of networks and partnerships for organizations, while not having been integrated yet. This study represents an attempt to fill this gap in academic literature by examining how different institutional logics in ESEs influence their network extension when scaling up internationally. By means of a multiple-case design information about the international network extension of six ESEs was collected. Findings indicate that ESEs make use of the commercial logic when actively extending their networks and entering into client-supplier relationships internationally. In international network extension through personal contacts and serendipity, either the commercial or the environmental logic is employed. Selective coupling is identified as overall hybridization strategy in the internationalization process, as ESEs selectively pick activities related to one institutional logic in order to respond to different claims. This study supports practitioners in ESEs by providing a framework for international network extension while giving contributions to academic literature.

Keywords: Environmentally-motivated social enterprise, Social enterprise, Institutional

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1. Introduction

The world nowadays is facing new challenges regarding climate change and finiteness of natural resources. In 2015, the international community adopted the seventeen Sustainable Development Goals, which are sought to be resolved by 2030. The environment underlies each of these goals. In order to achieve the 2030 agenda collaboration of different sectors and actors is needed (UN, 2015).

Social enterprises are a new organizational form operating at the intersection between the for-profit and non-profit sector. By incorporating economic as well as social and environmental goals, they are argued to offer new solutions to address growing global challenges (Amin, 2009; Boyd et al., 2009; Pearce, 2003). While there has been a drastic rise in academic literature examining social enterprises embodying a pure social mission (e.g. Mair & Martí, 2006; Zahra et al., 2009; Dacin et al., 2011) literature focusing on social enterprises addressing environmental issues remains limited. Yet, Yunus et al. (2010) highlight the possibility to address environmental issues by social businesses using specific business models. There is a set of reasons for studying specifically environmentally-motivated social enterprises (ESEs). Firstly, in compared to pure social enterprises ESEs seek to create value for the environment as beneficiary, which is not personalizable. Hence, the environment lacks a voice to communicate its needs and how to best fulfill these needs (Sama, Welcomer & Gerde, 2004); inducing the difficulty for ESEs to define the environmental issue they aim to address as well as how to alleviate damages for this specific type of environmental issue. Secondly, the evaluation of the success of the social business model, i.e. the impact assessment, of ESEs is distinct from pure social enterprises. Impact assessment represents a challenge for every social entrepreneur since social impact is non-quantifiable and multi-causal, and can be perceived differently (Pache & André, 2016; Ebrahim & Rangan, 2011). The challenges amplify for ESEs since the boundaries of the beneficiary are not clearly defined, and the environment cannot articulate feedback; whereas human beings can assess

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measures undertaken by social entrepreneurs and progress is directly observable, the environment is not able to communicate its needs. Thirdly, in contrast to pure social enterprises, contributions for the beneficiary of ESEs are not necessarily location-bound. Whereas pure social enterprises create value for a specific group of people, i.e. communities (Kannothra, Manning & Haigh, 2017), which are typically small-scale, location-bound and have strong ties and identities (Marquis & Battilana, 2009; Freeman & Audia, 2006; Portes & Sensenbrenner, 1993), the mission of ESEs can be achieved in various locations. Thus, difficulties arising from a limited geographical area for pure social enterprises do not necessarily hold for ESEs. Drawing on these specificities of ESEs, frameworks developed for social enterprises with a pure social mission fail to capture the characteristics of ESEs; consequently, there is a need to develop new frameworks.

For instance, theories developed regarding the scaling up of social enterprises do not adequately capture the aspects arising in the scaling up process of ESEs. Despite being argued to offer new solutions to global challenges (Jay, 2013; Porter & Kramer, 2011, Zahra et al., 2009) social enterprises embody the central conflict of combining competing institutional logics, i.e. balancing activities that generate profit and activities that generate impact (Pache & Santos, 2013). Tensions intensify when social enterprises seek to grow their operations internationally (Marshall, 2011; Marquis & Battilana, 2009). While academic literature states that growth is needed to achieve financial sustainability, little is known about how this process is carried out (Seelos & Mair, 2005). In the field of pure social enterprises, studies have examined growth strategies and deemed losing connection to beneficiaries as central risk (Kannothra, Manning & Haigh, 2017; André & Pache, 2016). Yet, the beneficiary of ESEs is the environment, and hence, the tensions between competing logics might induce other challenges. Vickers and Lyon (2014) offer in their study an overview of growth strategies of ESEs and the tensions emanating from competing logics. However, ESEs offering a product

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to alleviate environmental damages and thus contributing to a broader social mission have been neglected in their analysis.

In order to examine an entrepreneurial internationalization process, one stream of academic literature highlights the network approach to internationalization, which underscores the importance of networks and partnerships for internationalization (e.g., Covielle & Munro, 1997; Coviello, 2006; Johanson & Mattsson, 1988; Johanson & Vahlne, 2009). Organizations are embedded in networks of interconnected organizations and are able to internationalize by entering into new networks beyond national borders (Johanson & Vahlne, 2009). Likewise, academic literature emphasizes the importance of networks and partnerships for social enterprises (Sakarya et al., 2012; Yunus et al., 2010; Gray & Stites, 2013; Hockerts, 2015; Marshall, 2011). Despite these similarities, the network approach to internationalization and social enterprises have rarely been brought together (Marshall, 2011, Kalinic & Pater, 2013). In fact, Marshall (2011, p. 196) highlights, that “further research may be able to better illuminate the roles of social networks and personal experience in gaining the needed knowledge and expertise to carry out an entrepreneurial venture that is both socially focused and international in scope.” He further highlights the need to “focus on the particular challenges of balancing the social/for-profit tensions” (Marshall, 2011, p. 196). In an attempt to follow Marshall’s avenue for future research and to address the gaps afore highlighted, the guiding research question of this paper is: How do different institutional logics in

environmentally-motivated social enterprises influence their international network extension

when scaling up?

This study uses a case study research design in order to shed light on the use of institutional logics in the international network extension of ESEs. Six ESEs offering a product that alleviates environmental damages and thereby embodies a wider social mission were analyzed by means of secondary and primary data. The initial collection of secondary data enabled the mapping of the international activity of the ESEs. Hereinafter, primary data

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was collected by means of semi-structured interviews with key informants of the ESEs in order to examine the influence of institutional logics in the internationalization process. Findings indicate that ESEs make strategically use of the commercial logic when extending internationally through active measures or client-supplier relationships while both the commercial and the environmental logic are employed in international extension through personal contacts and serendipity. The overall hybridization strategy of ESEs internationalizing through networks is found to be selective coupling.

The contributions of this research are threefold. Firstly, this study contributes to a growing body of literature on social enterprises by examining in particular social enterprises focusing on environmental value creation, which makes them distinct from pure social enterprises. Secondly, this research provides an in-depth analysis on how competing logics are perceived and strategically used in the scaling up process of specifically ESEs and thus adds to the research stream of social enterprises and the tensions originating from different logics when scaling up. Thirdly, literature streams of social enterprises and the network approach to internationalization are being combined based on the importance of networks for both social enterprises and internationalization, which has not been done before.

The structure of the paper is as follows: The next section covers the review of relevant academic literature regarding social enterprises, institutional logics and a network approach to internationalization. Hereinafter a theoretical framework is developed, and working propositions are presented. The following section outlines research scope and methodology, followed by the analyses of the cases. Finally, results will be discussed, and contributions, limitations and future avenues presented.

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2. Literature Review

2.1. Social Enterprises

2.1.1. Definitions

Social enterprises represent a specific form of hybrid organizations. Hybrid organizational forms are defined “as structures and practices that allow the coexistence of value and artifacts from two or more categories” (Doherty, Haugh & Lyon, 2014, p. 418). Academic business literature employs the term ‘hybrids’ to indicate organizations, which span institutional boundaries (Brandsen & Karré, 2011; Jay, 2013; Pache & Santos, 2012; Smith, 2010) by combining aspects of multiple organizational forms. The increasing prevalence of pluralistic institutional environments triggers the establishment of an increasing number of hybrids (Greenwood et al., 2011; Pache & Santos, 2010; Seo & Creed, 2002). In pluralistic institutional environments organizations are exposed to different prescriptions of what constitutes legitimate behavior, what are legitimate organizational goals and what actions are recognized as legitimate to attain these goals (Lounsbury, 2007; Thornton & Ocasio, 2008). Hybrid organizational forms are argued to do well in these complex environments by being at least partial appropriate in several different institutional settings (Greenwood et al., 2011; Kraatz & Block, 2008).

Social enterprises are located at the intersection between the for-profit and non-profit sector and thus are deemed to be “a prime example” (Doherty, Haugh & Lyon, 2014, p. 418) of a hybrid organizational form (Pache & Santos, 2012). While the concept of social enterprises represents a contested research area (Mair & Marti, 2006; Zahra et al., 2009) and hence is understood slightly different by researchers and practitioners (Dees, 1998), there is general agreement that social enterprises seek to achieve a social and/or environmental impact by relying on commercial means (e.g. Santos, Pache & Birkholz, 2015; Dacin et al., 2011).

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Social enterprises develop and adopt new business models, which offer creative solutions to persistent social challenges (Zahra et al., 2009). In order to survive as a hybrid form, social enterprises need to ensure financial sustainability while advancing their social or environmental mission. Social enterprises are expected to reconcile expectations of on the one hand social or environmental value and on the other hand economic value in a systemic way (Santos, Pache & Birkholz, 2015).

In light of growing global social challenges, social entrepreneurship has received increasing attention by academia, international organizations, charities, and corporations (Wang et al., 2015; Santos, Pache & Birkholz, 2015; Battilana & Dorado, 2010; Seelos & Mair, 2005; Hemingway, 2005). Social enterprises are argued to offer new creative ways to contribute to more sustainable development and therefore need to be closely examined. While research predominantly focuses on social enterprises with a pure social mission, the next section turns to the simultaneous creation of commercial and environmental value.

2.1.2. Environmentally-Motivated Social Enterprises

In recent years protecting the environment gained increasing importance. Notably, the growing public awareness and discussion of the threat of climate change together with increasing social needs and the financial crisis have propelled the development towards a more sustainable economy and society with less carbon consumption (Murray, 2009; Scott-Cato & Hillier, 2010). People consume more green products and services, and demand sustainable practices of enterprises (Gliedt & Parker, 2007; Sumathi et al., 2014). It becomes a prevailing perception in society that sustainability and the environment need to be incorporated into the “considerations of the bottom line” (Allen & Malin, 2008, p. 829). While on the one hand the availability of natural resources and ecosystems is limited (Santillo, 2007), the economy is on the other hand identified as one primary cause for

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environmental violations (Littig & Grießler, 2005) and consequently, there are intensified calls for doing business in a greener, more sustainable way (Gast, Gundolf & Cesinger, 2017).

In line with these developments in praxis, there has been an increased interest in environmentally-motivated entrepreneurship in academic literature (Koe & Majid, 2014; Vickers, 2010). While different terms are being employed for enterprises engaging in creating environmental value, each concept is not comprehensive in fully capturing the nature of social enterprises created with an environmental mission, which induces the need to conceptualize environmentally-motivated social entrepreneurship. After examining social enterprises, this section is going to explore the contributions provided by the different concepts in academic literature regarding entrepreneurship engaging in the creation of environmental value in order to define the core characteristics of environmentally-motivated social entrepreneurship. By drawing upon literature on social entrepreneurship, ecopreneurship, and sustainable entrepreneurship, the concepts of the social economy and sustainability will be combined to highlight the key features of ESEs.

According to Neck, Brush and Allen (2009), there is a lack of collective agreement with regards to placing entrepreneurship for the environment in the domain of social entrepreneurship. Some authors see environmentally-motivated or ecological entrepreneurship solely as the adoption of environmentally responsible practices and products (Schaper, 2002) or the exploitation of economic opportunities created by for the environment relevant market failures (Dean & McMullen, 2008) and thus distinct from social entrepreneurship. However, other authors argue that the environment represents one of the social problems the world is confronted with and therefore solutions for the environment belong to the broader domain of social entrepreneurship (e.g., Neck, Brush & Allen, 2009; Hockerts, 2006; Clifford & Dixon, 2006; Mair et al., 2006). Clifford and Dixon (2006, p. 232) for instance demonstrate “a natural fit between social and ecological enterprises and entrepreneurialism.” By examining the business model of a non-profit company by means of a case study they demonstrate how

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“social and ecological entrepreneurs [can] create and develop an economically viable business whilst retaining the core environmental and social values that motivated them in the first place” (Clifford & Dixon, 2006, p. 214). Moreover, Clifford and Dixon (2006) highlight the importance of networks for the achievement of the objectives regarding the triple bottom line. Picciotti (2017) constitutes a progressive convergence of the social economy and sustainability areas in recent years due to two reasons: Firstly, the area of sustainability expands from a strictly environmental definition to the inclusion of economic and social aspects (Kates et al., 2005; Mebratu, 1998). Secondly, social enterprises produce goods and services responding to new needs related to environmental protection or the regeneration of local communities (Ridley-Duff et al., 2016; Cameron, 2009).

Schaltegger and Wagner (2011) differentiate between social entrepreneurship, ecopreneurship, and sustainable entrepreneurship. Social entrepreneurship deals as mentioned in the preceding section with organizations that focus on achieving societal goals while assuring financial sustainability. Ecopreneurship refers to entrepreneurship that is exclusively directed at the environment (e.g. Isaak, 1999; Schaltegger, 2002; Lehmann et al., 2005; Cohen, 2006). The core motivation is to create economic value by contributing to the alleviation of environmental issues, and the primary goal is earning money. Economic goals are regarded as ends of the business while environmental goals are integrated as means (see table 1). Schaltegger and Wagner (2011, p. 224) developed a framework to synthesize these streams of literature on entrepreneurship because “even though the historic trajectories of these types differ, it seems that the underlying motivations of the activities are very similar.” By including institutional entrepreneurship, they find that ecopreneurship and social entrepreneurship can be combined to sustainable entrepreneurship. “Sustainable entrepreneurship is in essence the realization of sustainability innovations aimed at the mass market and providing benefit to the larger part of society” (Schaltegger & Wagner, 2011, p. 225). Sustainable entrepreneurs seek to achieve a meaningful impact for the environment

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and the society through successful business. The primary goal is to foster sustainable development by drawing on entrepreneurial corporate activities. In contrast to ecopreneurial ventures or pure social enterprises, which regard economic goals as ends or means respectively, sustainable entrepreneurs adopt an encompassing perspective where economic goals are ends and means simultaneously (Schaltegger & Wagner, 2011) (see table 1).

Eco-preneurship Social entrepreneurship Sustainable entrepreneurship Environmentally- motivated social entrepreneurship Core motiva-tion Contribute to solving environmental problem and create economic value Contribute to solving societal problem and create value for society Contribute to solving societal and environmental problems through the realization of a successful business Contribute to solving societal and environmental problems by relying on commercial means Main goal Earn money by solving environmental problems Achieve societal goal and secure funding to achieve this Creating sustainable development through entrepreneurial corporate activities Achieve environmental and societal goals while being financially stable

Role of economic goals

Ends Means Means and ends Means

Role of non-market goals Environmental issues as integrated core element Societal goals as ends Core element of integrated end to contribute to sustainable development Environmental and societal goals as ends

Table 1: Development environmentally-motivated social entrepreneurship (adapted from Schaltegger & Wagner, 2011)

Drawing on Schaltegger and Wagner’s (2011) classification, this paper defines environmentally-motivated social entrepreneurs as a subset of social entrepreneurs that integrate characteristics of sustainable entrepreneurs. The core motivation is to contribute to solving environmental problems, which simultaneously represent societal problems, by relying on commercial means. Hence, economic goals are means in order to achieve environmental and societal goals (see table 1). In comparison to pure social entrepreneurs, environmentally-motivated social entrepreneurs identify the environment as their beneficiary and the core mission is to alleviate damages for this beneficiary. Environmentally-motivated

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social entrepreneurs differ from sustainable entrepreneurs by regarding economic goals solely as means. Sustainable entrepreneurship does not capture the fact that ESEs are inherently social enterprises, which means that they pursue environmental goals through commercial means. Specifically, ESEs address the protection of resources, ecosystems, and biodiversity while sustaining the environment as a source of life for humankind as well as protecting communities (Shepherd & Patzelt, 2011). Measures undertaken include inter alia waste and resource recovery, nature conservation, improvement of urban environments, housing, energy generation, food production (Vickers, 2010). ESEs achieve financial stability through the provision of products and services beneficial for the environment and the promotion of regional and local production and consumption. Additionally, ESEs contribute to the social development by strengthening “the web of relationships and cultures that bind groups of individuals, places and communities of interest” (Vickers & Lyon, 2014, p. 45). ESEs adopt new business models, which can be related to Bocken et al.’s (2014) classification of sustainable business model archetypes. Sustainable business models “incorporate a triple bottom line approach and consider a wide stakeholder interests, including environment and society” (Bocken et al., 2014, p. 42) and can be grouped into technological, social and organizational archetypes. Technological archetypes seek to maximize material and energy efficiency, create value from waste and substitute processes with renewables and natural processes. Social archetypes deliver functionality rather than ownership, adopt a stewardship role and encourage sufficiency. Organizational archetypes repurpose business for society and environment and develop scale-up solutions. Departing from this classification, ESEs relate to organizational innovations since they form hybrid organizational forms and develop scale-up solutions to contribute to sustainable development. Their products and services show characteristics of technological innovations, i.e. the maximization of material and energy efficiency and the creation of value from waste.

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2.1.3. International Scaling Up of Social Enterprises

Social enterprises seek to alleviate persisting inequalities in the society by adopting business models that find new solutions to complex social problems. In doing so, they seek to contribute to the maximization of total wealth, which encompasses economic as well as social wealth (Zahra et al., 2008). Social entrepreneurs are argued to address the world’s social problems (Mair & Marti, 2006). In addressing these problems they differ in their ways and realms with regards to adopting a local or an international focus (Zahra et al., 2008). Social entrepreneurs adopting the latter identify global social forces and engage in collaboration in order to tackle them. Academic literature on social entrepreneurship examines different strategies through which social enterprises can increase their impact (Dees et al. 2004; Bloom and Skolt, 2010; Bradach 2010), which can be summarized into diversification, scaling across, scaling deep, and scaling up (André & Pache, 2016). While diversification, scaling across and scaling deep refer to product and service diversification, diffusion of social practices through other actors (i.e. partners, networks, etc.) and the improvement of the current business model respectively, scaling up is a strategy aiming at reaching out to new beneficiaries in geographical locations in which the social enterprise is not yet present (André & Pache, 2016) and thus can trigger internationalization.

In the examination of the different strategies, academic literature found that scaling up is the most widely employed strategy by social enterprises (Meyerson et al., 2010). André and Pache (2016) examined managerial challenges arising when specifically social enterprises seek to scale up. Firstly, social enterprises face the need to acquire additional resources in order to scale up (Bloom & Chatterji 2009; Bloom & Skloot 2010; Bradach 2003; Dees et al. 2004). Particularly when seeking additional resources social enterprises risk putting too much emphasize on responding to the claims of resource providers, which mostly differ from the beneficiaries, and therefore run the risk of deviating from their social mission (Battilana et al., 2013; Zahra et al., 2009). Secondly, scaling up implies managing a more extensive system,

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which imposes organizational challenges on the social venture. Whereas rationalization and standardization can ensure efficiency, these mechanisms can also entail ethical challenges. By focusing too much on operational efficiency instead of social impact, social enterprises run the risk of mission drift. Thirdly, the evaluation of the scaling up process represents a challenge for social enterprises. Assessing the impact of a social enterprise in general is difficult since their success is contingent on subtle societal or environmental changes, which are hard to trace and measure (André & Pache, 2016; Ebrahim & Rangan, 2011). Academic literature defines the evaluation of social impact as a prerequisite (Bradach, 2003) as well as a monitoring tool for scaling up (Dees et al., 2004). In the process of scaling up, social enterprises run in particular the risk of focusing too much on the assessment instead of the achievement of impact (André & Pache, 2016).

Vickers and Lyon (2014) examined specifically growth strategies of ESEs and indicated scaling up as one of the leading growth strategies. In their study, they found that scaling up can be achieved through consultancy services and sharing knowledge with the aim to educate society and raise awareness. Another strategy to scale up impact is offering training and training position creation in labor-intensive sectors, often through linking opportunities offered by industrial or consumer waste with incentives created by governments. Growth potentials are high and can be achieved by building trust with the corporate and the public sector. When linking this classification with the afore presented typology of sustainable business models developed by Bocken et al. (2014), it is notable that none of these scaling up strategies comprise the technological archetypes identified. Entrepreneurial ventures offering products and services that maximize energy and resource efficiency, create value from waste or employ renewable natural processes and resources are not examined by Vickers and Lyon (2014). However, these entrepreneurial ventures seek to alleviate environmental issues and hence can be classified as ESEs. The resulting gap with regards to growth strategies of this kind of ESEs is addressed in this paper.

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2.2. Institutional Logics

2.2.1. Definitions

Institutional logics constitute a core component of the institutional theory. In their seminal work, Friedland and Alford (1991, p. 248) put forward a foundation to analyze interactions between institutions, organizations, and individuals and how these interactions shape everyday actions of entrepreneurship. They found that “organizational structures appear to be institutionally patterned in a way which cannot be explained by competitive interaction between organizations, technology, or organization-specific environmental conditions.” Further, most of the institutional orders in the Western society follow a central logic, which is defined as “a set of material practices and symbolic constructions” that constitutes the “organizing principles” and is “available to organizations and individual to elaborate” (Friedland & Alford, 1991, p. 248). Hence, institutional logics examine micro-institutionalization (Greenman, 2013). Thornton and Ocasio (1999, p. 804) depart from that definition and describe institutional logics as “the formal and informal rules of action, interaction, and interpretation that guide and constrain decision makers”. Scott (1994) describes institutional logics as social prescriptions that guide human behavior and determine legitimacy. In other words, institutional logics comprise taken-for-granted beliefs and practices that structure and guide behavior in given settings at a particular time (Greenwood et al., 2011). Institutional logics provide a cultural base in which the interests, values, and assumptions of organizations and individuals are embedded (Greenwood & Hinings, 1993; Bart et al., 2015).

In the last decade, scholars have increasingly examined the implications of multiple institutional logics for organizations (e.g., Binder, 2007; Delbridge & Edwards, 2008; Dunn & Jones, 2010; Kitchener, 2002; Lok, 2010; Lounsbury, 2007; Marquis & Lounsbury, 2007; Pache & Santos, 2010; Purdy & Gray, 2009; Reay & Hinings, 2009; Scott et al., 2000).

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Multiple institutional logics impose challenges to an organization particularly with regards to legitimacy (Kraatz & Block, 2008). Legitimacy is defined as a “generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate, within some socially constructed system of norms, values, beliefs, and definitions” (Suchman, 1995, p. 574) and is primarily achieved through the conformity with cultural prescriptions and expectations (Meyer & Rowan, 1977; Deephouse, 1999; Ruef & Scott, 1998). An organizational example, which incorporates multiple institutional logics, is a social enterprise on which will be elaborated next.

2.2.2. Institutional Logics in Social Enterprises

Social enterprises seek to achieve a social or environmental impact through the application of commercial means. Hence, they combine on the one hand a commercial logic and on the other hand a social or environmental logic (Smith et al., 2013). Drawing on their hybrid nature, social enterprises are argued to have potential to succeed in translating social needs into valuable business models (Jay, 2013; Porter & Kramer, 2011). Nevertheless, combining two logics reflects a central challenge for social enterprises, i.e. balancing activities that generate profit and activities that generate impact. Whereas profit describes the capture of economic value, impact comprises the value created for society, encompassing environmental and social achievements (Santos, Pache & Birkholz, 2015). It is defined as “significant or lasting changes in people’s lives, brought about by given action or series of actions“ (Roche, 1999, p. 21).

De Clercq and Voronov (2011) examined the institutional logics prescribing the actions of entrepreneurs attempting to achieve legitimacy by balancing sustainability and profitability. Whereas De Clercq and Voronow (2011) focus on new entrants, this thesis extends their framework and applies it to established ESEs seeking to adhere to the field-prescribed logics when scaling up internationally. The environmental logic reflects concerns

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for a sustainable development including social justice and environmental preservation backed by personal commitment to goals such as waste reduction, fair employment and the reduction of the ecological footprint (Bansal & Roth, 2000; Derksen & Gartrell, 1993; Dunlap & Mertig, 1992; Juravle & Lewis, 2009). These goals are reflected in the production focus and the marketing strategy, which cultivates the limited negative or increased positive environmental and social impact. The mission goal is to become a responsible social actor (see table 2). The commercial logic emphasizes economic viability and the generation of economic value. Thus, it comprises the generation of profits backed by a personal commitment to wealth accumulation. The production focus and marketing strategy underscore this focus, and mission, attention and strategy are directed at achieving and increasing economic returns for owners and shareholders (Nicholson & Anderson, 2005) (see table 2).

Environmental logic Commercial logic Dominant

value Ecological footprint reduction; commitment to social justice and social responsibility Wealth creation

Supporting

values Personal commitment to the environment and social causes Personal commitment to wealth accumulation

Production focus

Waste reduction, cleaner is better, development of green technologies, responsibility

Speed to market, cost reduction

Marketing focus

Cultivate limited negative or increases positive environmental and social impact

Cultivate price and product performance

Basis of mission

Build reputation as a responsible social actor Build reputation as a successful economic actor

Basis of attention

Develop and maintain low ecological footprint; promote fairness and justice

Develop and maintain financial success

Basis of strategy

Win sustainability and responsibility awards, obtain good reviews on sustainability-related issues

Secure broader market presence, establish superior market position

Table 2: Institutional logics (adapted from De Clerq & Voronov, 2011)

Research argues that social enterprises are “fragile organizations that run the risk of internal tensions and mission drift due to holding incompatible goals, and they may find it difficult to

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achieve financial sustainability” (Santos, Pache & Birkholz, 2015, p. 37). Attempts to combine the inherently incompatible logics can create internal tensions, since responding to a specific external claim might violate another (Pache & Santos, 2010). Previous research has identified several strategies that hybrid organizations adopt when facing competing institutional logics. Whereas earlier studies suggest decoupling (Meyer & Rowan, 1977) or compromising (Oliver, 1991), more current work points towards strategies to involve both competing logics (Greenwood et al., 2011; Lounsbury & Crumley, 2007; Tracey et al., 2011). Decoupling refers to the symbolical endorsement of “practices prescribed by one logic while actually implementing practices promoted by another logic” (Pache & Santos, 2013, p. 974). Organizations “conform closely to the meanings and categories ritually defined by the environment, but do not attempt seriously to implement them at the operational level” (Scott, 2003, p. 279). This strategy is difficult to sustain durably as it requires that all organizational members adhere to the same logic and protect the misalignment (Pache & Santos, 2013). Compromising refers to the attempt to comply with prescribed logics by endorsing necessary elements of differing logics in a slightly altered form (Oliver, 1991). Difficulties of this strategy may arise from stakeholders who expect the organization to adhere to a specific logic. A more recent stream of literature promotes selective coupling as hybridization strategy preferred by social enterprises. Hybrid organizations are found to selectively pick activities related to one logic in order to combine competing claims (Pache & Santos, 2013). This strategy allows organizations to “reconcile competing logics by enacting a combination of activities drawn from each logic in an attempt to secure endorsement from a wide range of field-level actors” (Pache & Santos, 2013, p. 975). Venkataraman et al. (2016) offer a new approach on how organizations can deal with competing logics by regarding logics as strategic resources “to cultivate new kinds of frames and categories” (Thornton et al., 2012, p. 182). In their research, they illustrate how a non-governmental organization (NGO) uses activities prescribed to the commercial logic in order to achieve their social mission in a poor

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rural area in Northern India. The NGO instrumentally used both the commercial and the social logic in order to achieve legitimacy and to pursue its strategic objectives. By simultaneously enacting both logics, the NGO was able to develop new social structures in the particular setting (Venkataraman et al., 2016).

Research has studied the strategies to manage competing logics employed by social enterprises based on a purely social mission in the context of growth (Kannothra, Manning & Haigh, 2017; Tracey et al., 2011) and in intra-organizational processes (Battalina & Dorado, 2010; Pache & Santos, 2013). However, research regarding social enterprises focusing on an environmental impact is scarce and in its infancy (Dahlmann & Grosvold, 2017). Another stream of literature examined the challenges induced by multiple logics in organizations seeking to achieve an environmental impact. De Clercq and Voronov (2011) examined how new entrepreneurs seek to achieve legitimacy by balancing sustainability and profitability logics. Dahlmann & Grosvold (2017) adapted an individual-perspective and analyzed how environmental managers make use of institutional work in order to respond to competing institutional logics. However, academic literature has not yet examined the complexity emanating from the environmental logic and the commercial logic in social enterprises. In particular, there is a lack of research regarding the external process of establishing networks by ESEs in order to scale up their impact internationally. This thesis attempts to fill this gap by examining the influence of competing logics in the internationalization process of ESEs.

2.3. A Network Approach to Internationalization

One stream of research on the internationalization of firms highlights the importance of networks for internationalization (Chandra & Wilkinson, 2017). Firms are embedded and operate in networks of interconnected and interacting organizations (Johanson & Vahlne, 2009; Anderson, Håkansson, & Johanson, 1994; Johanson & Mattsson, 1994). Members of a network are seen as insiders who benefit from knowledge and information within the network.

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Hence, organizations, which do not hold a position in a network, suffer from the liability of outsidership and the disadvantages of network exclusion (Johanson & Vahlne, 2009). Internationalization occurs when organizations establish and strengthen relationships in a network beyond national borders (Johanson & Vahlne, 2009). Empirical studies have shown the importance of networks and relationships in the internationalization process of small and medium-sized enterprises (SMEs). They showed that business networks influence the entry mode (Coviello & Munro, 1995; Coviello & Munro, 1997), the pattern of internationalization (Martin, Swaminathan & Mitchell, 1998), the location of foreign investment (Chen & Chen, 1998) and the first encounter abroad (Ellis, 2000). Studies on the internationalization of social enterprises are scarce (Marshall, 2011; Kalinic & Pater, 2013; Kerlin, 2010) and the network approach to internationalization has not been explicitly applied on social enterprises. This seems surprising since several authors stress the importance of networks for a social enterprise’s internationalization (Marshall, 2011; Kalinic & Pater, 2013). They found that in particular social enterprises need a strong network, which provides intellectual capital, local networks, additional capacity, and skills to facilitate internationalization (Marshall, 2011). Moreover, a strong network can assist social enterprises to overcome resource constraints, which are found to be particularly challenging for social enterprises (André & Pache, 2016). Drawing on the importance of partners and networks, which both the social enterprise literature and the internationalization literature highlight, this thesis seeks to integrate these streams of literature, which has not been done before. There is a set of relevant aspects in order to define a network, on which will be elaborated next. First, the actors in a network will be highlighted, followed by mechanisms to create a network and to extend internationally through networks.

A network comprises different actors. Most of the academic literature on networks highlights business actors such as competitors, suppliers, customers and distributors as members of a network (Håkansson & Johanson, 1992; Håkansson & Snehota, 1995; Axelsson

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& Johanson, 1992; Sharma & Johansson, 1987), while the inclusion of non-business actors is not mentioned explicitly. However, more recent studies highlight the importance of political actors in developing relationships with business actors (Johanson, 2001; Hadjikhani & Thilenius, 2005) and other studies explore networks and partnerships between businesses and social enterprises (Sakarya et al., 2012; Di Domenico, Tracey & Haugh, 2009; Gray & Stites, 2013). Moreover, Dahan et al., (2010) highlight the competencies and resources NGOs can bring to international partnerships with business actors seeking to enter developing countries in order to create and deliver social and economic value.

Academic literature distinguishes between social networks and business or organizational networks (Hilmersson & Jansson, 2012; Vasilchenko & Morrish, 2011). The former are developed through personal relationships, whereas the latter evolve from economic exchanges between organizations (Vasilchenko & Morrish, 2011). The interaction between these networks is a major theoretical issue (Uzzi, 1996; Van Wijk et al., 2004). Drawing on social exchange theory, which assumes that no economic transaction can be thoroughly analyzed without considering the social context (Granovetter, 1985), organizational networks are regarded as socially embedded (Blau, 1964; Burt, 1993; Coleman, 1988). Since the development of an organizational network is driven by one or several individuals the boundaries between the individuals and the organization become blurry (Vasilchenko & Morrish, 2011).

Networks can trigger internationalization or can be actively constructed by firms aiming at extending beyond national borders (Harris & Wheeler, 2005). Whereas some authors highlight that internationalization may occur as a consequence of unexpected encounters (Brewer, 2001; Kontinen & Ojala, 2011, O’Farrell & Wood, 1994), others argue that firms actively develop their network for the internationalization process (Johansson & Vahlne, 2009; Kim et al., 2011). Entry nodes are the initial encounters of foreign organizations to connect to local firms and establish relationships with new customers

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(Jansson & Sandberg, 2008). Hilmersson and Jansson (2012) analyzed international network extension of exporting SMEs and found that firms with prior international experience actively search for entry nodes in order to enter into new business networks. Access to these nodes is enabled through either the existing business network or new networks in which the extending SME engages. By contrast, firms without prior international experience are passive and extend internationally by responding to production requests from foreign customers, which are looking for cheaper sources of supply.

Ellis (2000) investigated how firms identify markets for international extensions. He found that exchange relationships can be seller-initiated, buyer-initiated, broker-initiated or result from a trade fair or chance encounter. A similar categorization of network building mechanisms for internationalization is offered by Ciravegna, Lopez and Kundu (2014) who analyzed how high technology SMEs from developing and developed countries build and use networks to tap into their first foreign market. They found that new networks are strategically built to support internationalization, develop through client-supplier relationships, develop through personal contacts or emerge because of serendipity and contacts. The first mechanism sees network building as an active entrepreneurial process (Johanson & Vahlne, 2009; Kim et al., 2011) where an entrepreneur searches for instance at trade fairs for contacts, which provide access to foreign networks. Internationalization through client-supplier networks is a reactive mechanism where firms are pulled into new markets. Additionally, firms can actively and strategically leverage personal contacts in order to enter a new market. These personal contacts include inter alia colleagues from previous jobs or voluntary association members. A fourth network-building mechanism relies on serendipity and contacts. Hereby, internationalization occurs as a consequence of casual encounters of an entrepreneur (Brewer, 2001; Crick & Spence, 2005; Ojala, 2009) such as vacation trips or flights. However, these encounters can only lead to business opportunities if the entrepreneur engages actively in them (Ciravegna, Lopez & Kundu, 2014).

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3. Theoretical Framework

Hereinafter the aforementioned streams of literature will be brought together and existing gaps are highlighted, leading to the formulation of the research question this paper addresses as well as working propositions.

As mentioned before, social enterprises represent a relatively new research area where definitional debates exist and further research is needed (Mair & Martí, 2006; Zahra et al., 2009). This paper seeks to contribute to a better understanding of these organizations spanning institutional borders, and it examines in particular ESEs. While research about social enterprises primarily focuses on social enterprises integrating social and commercial values (e.g. Zahra et al., 2009, Santos, Pache & Birkholz, 2015; Dacin et al., 2011), there is limited work regarding social enterprises with a clearly stated environmental mission. As Yunus et al. (2010, p. 318) put forward, ”the social business can also be applied to environmental issues. […] These problems could also be addressed by social businesses using specific new social business models.” ESEs differ significantly from traditional social enterprises since their beneficiary is the natural environment instead of human individuals, leading to a set of specificities for ESEs, which will be explored in the following.

Firstly, the natural environment is not personalizable and consequently lacks a voice to communicate its needs in contrast to the human beneficiaries of pure social enterprises. Academic business literature debates about the environment as a stakeholder of for-profit firms (Driscoll & Starik, 2004; Phillips & Reichardt, 2000). Starik (1995, p. 215) put forward that “the natural environment, its systems, and living and non-living components, can be considered stakeholders by all organizations since all organizations significantly affect or are significantly affected by these entities.” Moreover, Haigh and Griffiths (2009) conclude that in light of contemporary debates about the environment and in particular the climate change the environment needs to be included as a primary stakeholder of a firm. Consequently, one can argue that acknowledging the environment as a stakeholder also induces the need to

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address and alleviate violations of this particular stakeholder. Despite the recognition of the interdependences of all living things and the importance of environment, there is a lack of agreement on how the representation of the environment is accomplished (Sama, Welcomer & Gerde, 2004). In contrast to traditional stakeholders, which are personified and hence can communicate and directly access firms, the environment does not have these possibilities. It must rely on organizations voluntary representing its voice (Sama, Welcomer & Gerde, 2004). While international nonprofit organizations like Greenpeace or the World Wildlife Fund seek to give voice to the environment for decades; ESEs evolve as a new form to tackle environmental challenges. By applying commercial means to achieve environmental impact, they build a bridge between the for-profit sector, where the environment is still subject of a stakeholder debate, and charities, which rely on donations to achieve environmental impact.

A second reason for studying ESEs represents the distinct impact assessment. Social impact assessment is defined as “the ability to assess (through direct measures or meaningful proxies) whether a program is generating value for its key constituents” (André & Pache, 2016, p. 667). Impact assessment represents a challenge for every social enterprise as social impact is non-quantifiable and multi-causal, and can be perceived differently (André & Pache, 2016; Ebrahim & Rangan, 2011). The key constituents of pure social enterprises are human beneficiaries. Therefore, the boundaries of the constituents are clearly defined and beneficiaries can communicate feedback, which facilitates social impact assessment. The constituent of ESEs though is the natural environment. There are different approaches to assess environmental impact. In the for-profit sector approaches and tools have been developed in order to manage environmental impact such as the life-cycle assessment, environmental accounting and eco-control (Schaltegger & Burritt, 2000), sustainability balanced scorecard (Hansen & Schaltegger, 2016) and environmental management systems (Tibor & Feldman, 1996). Moreover, the ISO 14001 standard ensures the correct functioning of an environmental management system (Schaltegger, 2002). However, the mission of ESEs

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exceeds these measurements, as these social entrepreneurial ventures seek to have a lasting impact for the society through the alleviation of environmental damages, whereby commercial measures serve solely as means. The impact assessment of ESEs is distinct from pure social enterprises as well as from for-profit enterprises and consequently represents a new area of research.

Thirdly, ESEs need to be examined distinctly from pure social enterprises with regards to the location of the beneficiary. The latter seeks to create social impact for a specific group of people, i.e. communities (Kannothra, Manning & Haigh, 2017). Communities of people are typical of small-scale, local-bound and are marked by strong ties and identities (Marquis & Battilana, 2009; Freeman & Audia, 2006). ESEs though can create environmental impact in multiple locations, and consequently, they are less location-bound than pure social enterprises. Drawing on these specificities of ESEs, frameworks developed for social enterprises with a pure social mission fail to capture the characteristics of ESEs; thus, there is a need to develop new frameworks. Smith and Young (2007) point out that despite the recognized increasing number of ESEs empirical analysis and discussion of these organizations in academic journals is very little.

Furthermore, there is a lack of theory with regards to growing the impact of social enterprises and ESEs in particular (Seelos & Mair, 2005; Vickers, 2010). Academic literature examined how social enterprises can increase their impact (e.g. André & Pache, 2016; Kannothra, Manning & Haigh, 2017); yet these studies highlight losing connection to beneficiaries as main risk. Social enterprises run the risk of mission drift by prioritizing commercial incentives over the impact on their local communities (Marquis & Battilana, 2009). In the case of ESEs the international extension can contribute to the environment in multiple locations; thus, ESEs are often not bound to a specific location and can easily become larger. This can be illustrated by ESEs offering a product to reduce plastic waste, e.g. reusable water bottles. This type of ESE creates environmental value by selling an alternative

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to a non-degradable product, i.e. plastic. Consequently, an increase in sales leads to an increase in the environmental impact. Reaching out to new locations and new potential customers can increase sales and hence fosters the creation of environmental value.

Academic literature acknowledges different growth strategies for social enterprises and scaling up is found to be the strategy most widely employed (Meyerson et al., 2010). While it is stated that in order to survive and achieve financial sustainability scaling up is needed (Vickers, 2010), little is known about how this process is carried out by social enterprises (Seelos & Mair, 2005). In this process, the complexity emanating from the different logics aggravates and represents “a significant gap in [the] understanding of hybrid growth and management of its related tensions” (Kannothra, Manning & Haigh, 2017, p. 14). For ESEs the commercial logic prescribes to secure a broader market presence and a superior market position by increasing profits and lowering costs while the environmental logic highlights developing and maintaining a low ecologic footprint and promoting fairness and justice (De Clerq & Voronov, 2011). Balancing these competing logics in the process of scaling up has not yet been explored in academic literature. Vickers and Lyon (2014, p. 467) highlight, that “attitudes towards growth and scaling up need to be understood in relation to organizational aims and ESE experiences of, and ability to engage with, institutional barriers and the key actors and agencies involved.” In their study, Vickers and Lyon (2014) explored different growth strategies of ESEs. Social entrepreneurial ventures offering a product that benefits the environment by reducing waste cannot be placed in these categories. While academic literature on social enterprises with a pure social mission recognizes the category of offering a product to solve social issues (Santos et al., 2015; Hockerts, 2015), there is a lack of recognition for this type of social enterprises with an environmental mission. Yet, there is a growing number of ESEs aiming at achieving environmental value by offering products; hence, analyzing them and their growth strategies evolves as an important issue.

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Scaling-up refers to reaching out to new geographical locations, where the social enterprise is not yet present (André & Pache, 2016). This paper assumes that these new locations are located beyond national borders. Hence, scaling up induces internationalization. International business literature offers different approaches to internationalization, one of the emphasizing the importance of relationships and networks for internationalization (e.g., Covielle & Munro, 1997; Coviello, 2006; Johanson & Mattsson, 1988; Johanson & Vahlne, 2009). Yet, international business literature and social enterprises have rarely been brought together (Marshall, 2011; Kalinic & Pater, 2013). The network approach to internationalization has not been applied to the internationalization of social enterprises. This seems surprising since the benefits of a network are access to local knowledge, overcoming resource constraints and access to local distribution networks (Marshall, 2011). These opportunities benefit all in particular social enterprises, which often lack sufficient resources and capabilities and run the risk of losing financial stability (André & Pache, 2016). Moreover, the network approach is often employed in order to explain the emergence of born globals, small firms, which operate from inception or start internationalizing shortly after inception (Coviello & Munro, 1995; Oviatt & McDougall, 1994). ESEs can be argued to show characteristics of this new type of organization (Kalinic & Pater, 2013). Hence, this paper applies the network approach to internationalization on ESEs. Hereby, the focus is directed at the network extension of ESEs, which seek to internationalize in order to increase the export sales of their environmental product. The internationalization of business relationships of SMEs in general and ESEs in particular represents an underdeveloped area in academic research (Nakos & Brouthers, 2002) and little is known about their extension of networks to increase exports (Johansson & Vahlne, 2009).

By combining the afore presented research streams of ESEs, scaling up of social enterprises and a network approach to internationalization, it follows that little is known about how institutional logics inherent in ESEs are translated into their network extension when

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scaling up beyond national borders; therefore, the research question this paper addresses is:

How do different institutional logics in environmentally-motivated social enterprises

influence their international network extension when scaling up?

In the preceding section, different mechanisms for the network extension to internationalize have been presented. Ciravegna, Lopez and Kundu (2014) identified four mechanisms, which can be used to connect to foreign networks in order to achieve exports to new geographical locations. They found that firms can either actively search for entry nodes into new locations, be pulled into new markets through client-supplier relationships, enter into international networks through personal contacts or gain access to international networks by chance. This framework will be applied to the case of ESEs. Moreover, Venkataraman et al. (2016) demonstrated that institutional logics can be regarded as strategic resources. By purposefully employing either the environmental logic or the commercial logic legitimacy can be ensured and strategic objectives achieved.

A possible international extension mechanism is to actively seek access to foreign markets by entering into new networks. Social entrepreneurs are presented as highly motivated, caring people who employ business principles in a new creative way to remedy shortcomings (Dees, 2001; André & Pache, 2016). In line with this image of a dedicated entrepreneur, one can propose that in order to grow their business, social entrepreneurs actively search for new contacts to enter into foreign business networks. Reaching a critical mass of consumers is vital for environmentally-motivated entrepreneurs and international growth can subsequently help to achieve a broad acceptance in the mass market (Jolink & Niesten, 2015). The access to international networks can be found through for instance trade fairs (Ellis, 2000; Ciravegna, Lopez & Kundu, 2014). In order to achieve the desired environmental impact, an organization can strategically employ the commercial logic. By drawing on commercial principles, new structures can be created that foster the creation of social and environmental value (Venkataraman et al., 2016). Consequently, this paper

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assumes that ESEs will engage in activities in order to reach out to new international beneficiaries by drawing on the commercial logic.

WP 1: ESEs are likely to use the commercial logic when actively searching for networks to

support internationalization.

A second network building mechanism for internationalization represents entering into client-supplier relationships (Ciravegna, Lopez & Kundu, 2014). There is a growing interest in sustainable practices and consumers increasingly demand green products (Gliedt & Parker, 2007; Sumathi et al., 2014). Hence, distributors need to rethink their offering and integrate more sustainable products in their range of products. ESEs can benefit from this trend and can be pulled into new markets by becoming the supplier of mainstream firms (Ellis, 2000; Ciravegna, Lopez & Kundu, 2014) looking for new, more sustainable products. For instance, mainstream supermarkets commit increasingly to corporate sustainability and offer a broader range of environmentally-friendly products (Chintakayala et al., 2018). Due to having a significant market share mainstream distributors represent a vital actor for ESEs in order to reach higher sales of their environmentally-friendly products and thus creating a higher environmental impact (Illge & Preuss, 2012). As found by (Venkataraman et al., 2016) organizations can strategically employ the commercial logic in order to reach a socially desired impact. This paper assumes that ESEs will make use of the commercial logic when entering into international client-supplier relationships in order to ultimately increase the environmental impact.

WP 2: ESEs are likely to use the commercial logic when entering into international

client-supplier relationships.

A third international network extension mechanism represents leveraging personal contacts (Ciravegna, Lopez & Kundu, 2014). The founder of the ESEs and employees cultivate personal contacts, which can be leveraged in order to enable internationalization. Social entrepreneurs are described as highly motivated people, who recognize environmental issues

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and develop and apply creative measures to solve these issues (Dees, 2001; Zahra et al., 2009; André & Pache, 2016). Environmentally-motivated entrepreneurs are found to “constitute and ‘shape’ the face of the company” (Schaltegger, 2002, p. 47). Academic literature on human resource management found that environmentally-motivated entrepreneurs hire people who share the same environmental values (Choi and Gray, 2008). Likewise, social entrepreneurs are found to recruit caring organizational members (André & Pache, 2016; Kopp, 2003). It follows that environmentally-motivated social entrepreneurs and all organizational members share the same environmental vision and are embedded in a personal network of environmentally conscious people.

A growing stream of literature reveals that internationalization and export decisions are affected by personal network relationships (Narooz & Child, 2017; Zhou et al., 2007; Zaefarian, Eng & Tasavori, 2016). Idris and Saridakis, (2018) found a positive relationship between the personal network of an entrepreneur and internationalization. Personal network relationships are based on shared visions and trust (McGrath, Vance & Gray, 2003). If an export opportunity evolves from this personal network consisting of environmentally conscious people, this export opportunity is likely to be grounded in the shared environmental mission. Therefore, this paper assumes:

WP 3: ESEs are likely to use the environmental logic when developing international networks

through personal contacts.

A fourth mechanism to extend a firm’s network beyond national borders represents extension through serendipity or chance. Meyer and Skak (2002, p. 181) indicate that this international network extension mechanism seems to be “somewhat overlooked by the literature” and represents an under-researched area (Crick & Spence, 2005). “[F]ortunate and unexpected discoveries made by chance” (Meyer & Skak, 2002, p. 181) however can enable internationalization. In their study, Ciravegna, Lopez and Kundu (2014) list encounters in circumstances such as vacation, flights or dinner parties as examples of serendipitous events.

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Through these events, environmentally-motivated social entrepreneurs can meet new acquaintances who offer valuable resources, knowledge or contacts for the ESE that foster internationalization (Meyer & Skak, 2002). If an ESE is able to benefit from these acquaintances is dependent on how the environmentally-motivated social entrepreneur and its partner cultivate the relationship after the first serendipitous encounter. This process is identified as crucial for the development of internationalization (Meyer & Skak, 2002). Crick and Spence (2005) found that entrepreneurs do not necessarily internationalize as part of their strategy but rather through serendipitous circumstances if they have an idea or vision of the development of the enterprise. Drawing on these findings, this paper assumes that environmentally-motivated social entrepreneurs can benefit from serendipitous encounters through sharing their environmental mission. Hence, it is proposed that ESEs make use of the environmental logic when extending their network internationally through serendipitous events.

WP 4: ESEs are likely to use the environmental logic when developing international networks

through serendipity.

ESEs operate along two logics, i.e. the environmental logic and the commercial logic. Academic literature has examined different strategies how organizations can deal with differing logics. However, these hybridization strategies were only examined in social enterprises with a clearly stated social mission (e.g. Pache & Santos, 2013; Battilana & Lee, 2014; Battilana & Dorado, 2010) and not in the context of ESEs. Moreover, except for recent work of Kannothra et al. (2017) challenges of different logics and challenges of growth have only been examined separately. Academic literature has either focused on strategies that social enterprises employ internally to meet social and commercial demands (Battilana & Lee, 2014; Pache & Santos, 2013) or on challenges social enterprises face when seeking to grow. These challenges of growth were examined with regards to accessing new markets, reaching out to new clients and expanding scale and scope of operations (Boyd et al., 2009; Battilana &

Environmentally-motivated social enterprises : how institutional logics influence their international scaling up