To B or Not To B? Understanding the Emergence of Social Entrepreneurship in the Financialized Economy

Abstract

This study aims at understanding the recent proliferation of social enterprises, a class of organizations explicitly committed to advancing non-financial stakeholders’ interests, against the historical backdrop of economic financialization, which institutionalized shareholder value maximization as the sole legitimate purpose of firms. These increasing claims of an organizational identity that is deviant from the dominant institutional logic pose an intriguing puzzle to organization theories. This study addresses this puzzle by examining why (mechanism) and when (facilitating context) organizations adopt an institutionally-deviant identity. Informed by an inductive qualitative analysis, this study first identifies two routes to a deviant identity: first, consistent with the current organizational identity literature, organizations strategically adopt a deviant identity to appeal to the stakeholders who are ‘disembedded’ from the dominant logic; and second, reminiscent of identity movements, organizations also politically claim a deviant identity to disassociate themselves from and transform the existing institutional framework. These arguments were then tested in the context of the Certified B Corporations, a growing form of social enterprises. The quantitative analysis supports both predictions by finding that claims of the B Corporation identity was facilitated both by the stakeholder discontent with the shareholder-centered approach and by the salient negative consequences of the economic financialization.