Social Entrepreneurship Intentions of Nonprofit Organizations

View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Institutional Knowledge at Singapore Management University Singapore Management University Institutional Knowledge at Singapore Management University Research Collection Lee Kong Chian School Of Business Lee Kong Chian School of Business 1-2015 Social Entrepreneurship Intentions of Nonprofit Organizations Wee Liang TAN Singapore Management University, wltan@smu.edu.sg So-Jin YOO University of Wales, Cardiff DOI: https://doi.org/10.1080/19420676.2014.954260 Follow this and additional works at: https://ink.library.smu.edu.sg/lkcsb_research Part of the Entrepreneurial and Small Business Operations Commons, and the Strategic Management Policy Commons Citation Wee Liang TAN and YOO, So-Jin. Social Entrepreneurship Intentions of Nonprofit Organizations. (2015). Journal of Social Entrepreneurship. 6, (1), 103-125. Research Collection Lee Kong Chian School Of Business. Available at: https://ink.library.smu.edu.sg/lkcsb_research/4811 This Journal Article is brought to you for free and open access by the Lee Kong Chian School of Business at Institutional Knowledge at Singapore Management University. It has been accepted for inclusion in Research Collection Lee Kong Chian School Of Business by an authorized administrator of Institutional Knowledge at Singapore Management University. For more information, please email libIR@smu.edu.sg. Journal of Social Entrepreneurship, 2015 Vol. 6, No. 1, 103 125, http://dx.doi.org/10.1080/19420676.2014.954260 Published in Journal of Social Entrepreneurship, 2015, Volume 6, Issue 1, pages 103-125 https://doi.org/10.1080/19420676.2014.954260 Social Entrepreneurship Intentions of Nonprofit Organizations WEE-LIANG TAN* & SO-JIN YOO**  Lee Kong Chian School of Business, Singapore Management University, Singapore; Wales Institute for Innovation, University of Wales, Cardiff, UK ABSTRACT Little is known about social entrepreneurship in nonprofit organizations (NPOs), especially about the factors that influence social entrepreneurship intentions at organizational level. Would existing NPOs, as opposed to new ones formed to embark on new social initiatives, strike out into a new territory, or engage in new ventures? What are the necessary internal organizational conditions? This study explores the direct effect of the organizational attributes on a NPO’s intention to start a social enterprise. With a sample of 92 charities in Singapore, we found that NPOs led by CEOs with commercial experience, and NPOs possessing high collective efficacy and organization innovativeness were more likely to start a social enterprise. A NPO’s social cause (mission) was also found to have a positive effect on its social entrepreneurship intention. Contrary to our expectations, resource availability and risk-taking propensity of the NPOs were not related to social entrepreneurship intentions. Findings and implications were discussed, and future research directions were provided. KEY WORDS: Nonprofit organizations, social entrepreneurship intentions, organizational attributes, Singapore Introduction Governments today face problems meeting social needs for which they are not necessarily able to provide solutions. Social entrepreneurship is rising in importance in providing solutions for these problems through actors, individuals, and organizations acting as new pioneers (Ellis 2010) in what Eggers and Macmillan (2013) call the solution economy. Social entrepreneurship has become the fount of new social innovations as individuals and organizations engage in entrepreneurial pursuits, pursuing opportunities beyond the tangible resources that they currently control and engaging in ‘innovative, social value-creating’ activities ‘within or across the nonprofit, business, or Correspondence Address: Wee-Liang Tan, Lee Kong Chian School of Business, Singapore Management University, 50 Stamford Road, Singapore 178899. Email: wltan@smu.edu.sg Ó 2014 Taylor & Francis 104 W.-L. Tan & S.-J. Yoo government sector’ (Wei-Skillern et al. 2007). The early social entrepreneurs include service organizations, nonprofit organizations (NPOs), created by individuals raising fund for new social initiatives such as Teach For America and City Year (Keohane 2013). They also include businesses created to address social agenda through the employment of the disadvantaged (work integration social enterprises) (Nyssens 2006; Kerlin 2006), new business start-ups and existing enterprises generating surpluses which are directed to serve social courses, philanthropists funding new initiatives, and financiers working in new sectors like the bottom of the pyramid through microenterprises and microfinancing. The spectrum of possible social entrepreneurs also includes existing NPOs created to serve social causes. Existing NPOs need to be distinguished from start-up NPOs, identified by Keohane (2013) as one group of early social entrepreneurs. The economic motivation for engaging in social entrepreneurship is obvious (Foster and Bradach 2005). NPOs undertake a variety of activities to support their mission-related work for resource providers (Froelich 1999). They often attract charitable donations from individuals and corporations for socially valued programmes or seek the grants and contracts from foundations or government sources. However, recent dynamics in the social and economic environments have blurred the boundaries between the public, the nonprofit, and the for-profit sectors (Mair and Noboa 2003). These dynamics stem from increasing competitive pressures, including competition for decreasing donations and grants and less dependence on current funding sources (Dees 1998). Declines in welfare system support, reductions in government funding, and lack of adequate sponsorship are also believed to contribute to the competitive pressures (Morris et al. 2007). At the same time, performance demands have risen among the various stakeholders involved with NPOs (Dees, Emerson, and Economy 2001; Herman and Renz 2004). Continual change in the environments associated with major resource providers creates threats and opportunities for nonprofit funding, and this source of funding has generally been declining as a percentage of total revenue (Froelich 1999). In response to these pressures, NPOs are advised to adopt more entrepreneurial management approaches prevalent in for-profit companies facilitating their transformation into social enterprises, a new type of organization informally known as hybrids (Morris et al. 2007). NPOs offer new services or products as part of their operations. These involve commercial activities such as selling products to customers or charging fees for programme services (Froelich 1999). They encourage their volunteers to venture into open source innovation and develop new ideas for processes, products, or improve services. One specific form of social entrepreneurship is the creation of social enterprises, new ventures that permit revenue generation with or without the employment of the disadvantaged. From the researchers’ perspective, NPOs also offer the opportunity to examine organizational entrepreneurship in a setting that is unique where the profit motive is not predominant. If NPOs establish new social enterprises, the net gain will be created in new services, Social Entrepreneurship Intentions of Nonprofit Organizations 105 products, and innovations. Thus, it is not surprising that policy-makers encourage and promote social entrepreneurship, social innovations, and social enterprises in the nonprofit sector. Indeed, government agencies and NPOs are increasingly adopting frameworks, methods, and strategies from the business world hoping to improve their performance (Dees and Anderson 2003). Much of the action in this area revolves around experiments using business practices and structures to serve social objectives. Nonprofits are challenged to ensure that revenues can be sustained while focusing on essential purposes (Morris et al. 2007). Yet, little has been known about social entrepreneurship in NPOs and particularly what drives entrepreneurship on the part of NPOs and the muchdesired social innovations. Existing NPOs are organizations with established missions, identified beneficiaries, developed programmes, and stakeholders. The question that is not addressed in the social entrepreneurship literature is what are the necessary organizational conditions required to spur them to engage in social entrepreneurship. Even large for-profit corporations take some time to recognize the need to introduce innovation and entrepreneurship, many of them only in limited ways in their organizations. Would established NPOs be any different and be willing to engage in new and innovative initiatives that social entrepreneurship envisages in the face of the apparent conflicting priorities between the social cause and the entrepreneurial one? Would their social missions stand in the way of social entrepreneurship which encompasses business-like behaviour and in many instances the generation of surpluses as the aim? This paper reports a research study exploring the role of organizational factors on social entrepreneurship intentions of the NPOs: the intentions to start a new venture that has both economic and social objectives. This study, in particular, intends to examine the roles played by the social cause (mission), collective efficacy, resource availability, and entrepreneurial orientation (EO) of the NPOs with the commercial experiences of CEO on the social entrepreneurship intentions. The paper is structured as follows. First, the relevant literature on social entrepreneurship intentions and organizational attributes is reviewed and research hypotheses developed. Then, a discussion of the research methodology and analysis follows and the findings and implications are discussed. Finally, conclusions and limitations are drawn and future research directions suggested. Social Entrepreneurship Intentions and the Role of Organizational Attributes Social entrepreneurship is a recent field of research where as with all new fields the practice and phenomenon have preceded research interest. Yet, as with all new areas even though social entrepreneurs have been documented to have existed for the last 30 years (Choi and Majumdar 2014), there is a lack of consensus over its definition (see Certo and Miller 2008; Hill, Kothari, and Shea 2010; Mair and Marti 2006; Mort, Weerawardena, and Carnegie 2003; 106 W.-L. Tan & S.-J. Yoo Short, Moss, and Lumpkin 2009). Light (2008) addresses in his book the continuum that confronts the field in having an exclusive versus an inclusive definition and seeks to provide guidance through his interview of 136 senior executives of high performing social benefit organizations. Most researchers agree with the need for a definition but as yet one has not gained the ascendancy. Instead of a universal definition, different meanings have been employed (Hill, Kothari, and Shea 2010), different schools of thought exist (see e.g. Dees and Anderson 2006) with researchers engaged in different discourses and employing different narrative logics (Nicholls 2010). There is even contention over the ‘social’ prefix to the concept. What does the sector comprise? What does the term imply (Choi and Majumdar 2014; Tan, Williams, and Tan 2005)? More recently, the lack of a clear definition has allowed for advocates for new approaches like the application of design thinking (Grassl 2012). Part of the confusion stems from the involvement of many actors. The field includes entrepreneurs starting businesses towards a social goal or with social beneficiaries in mind. It also accommodates philanthropists sparking new ventures through innovative financing and funding. Financiers exploring new avenues in previously neglected sectors like the bottom of the pyramid through microfinance can hardly be ignored. Policy-makers keen to harness the spirit of social entrepreneurship for new innovations and enterprises should also be included, as should NPOs, some of whom would have been considered pioneers in social entrepreneurship had the term been coined then. The presence of these actors lends itself to different perspectives. The lack of a universal definition of social entrepreneurship notwithstanding, most scholars agree on the critical role played by entrepreneurship and the social entrepreneurs (see, for example, Choi and Majumdar 2014; Grassl 2012). For the benefits of social entrepreneurship to accrue to society, the motivations of social entrepreneurs have been subject of scrutiny. The field of nonprofit management offers insights into the motivations for the creation of NPOs. Nonprofit scholars have examined the motivations in the context of the search for a theoretical basis for the existence of NPOs, in particular, the supply side of these organizations: ‘Why entrepreneurs will risk their time and capital to start such organizations when they are not permitted to earn a monetary profit in compensation’ (James 1997, 2). Rose-Ackerman (1996) and James (1997) attribute this to ideology, particularly religious ideology that motivates these entrepreneurs. This finding resonates with the reality as many NPOs are the result of entrepreneurial efforts by individuals, philanthropists, communities, or faith groups labelled philanthropic entrepreneurs (Boettke and Rathbone 2002). This explanation for NPOs points to the founders of nonprofits as ideologues whom the employees, customers, donors, and volunteers agree with. These employees, customers, donors, and volunteers often identify with the NPOs’ social missions, goals, services, or products offered, processes employed, and the beneficiaries served. However, this explanation explains entrepreneurship at the individual level of the founders. It may not explain new social entrepreneurial activities on the part Social Entrepreneurship Intentions of Nonprofit Organizations 107 of existing NPOs which occur at the organizational level. These stakeholders may not welcome new activities of a commercial nature. As there has been little research on social entrepreneurship by NPOs, the research draws upon the entrepreneurship and corporate entrepreneurship literature and prior research in the nonprofit field, including a behavioural approach which analyses social entrepreneurship by focusing attention on the individual founders and teams (Weerwardena and Mort 2006; Helm and Andersson 2010). Baierl et al. (2014) have employed the behavioural approach examining the antecedents of social entrepreneurial intentions on an individual level. Whilst their study addresses the need for an empirical investigation at the individual level, there is a need for an empirical investigation on the antecedents of corporate social entrepreneurship in NPOs. Entrepreneurship theory suggests that certain organizational factors influence the intentions towards entrepreneurial acts (Krueger 2000; Krueger, Reilly, and Carsrud 2000; Mair and Naboa 2003). The theory of planned behaviour suggests that entrepreneurship intentions influence future actions (Ajzen 1991; Krueger and Brazeal 1994; Krueger, Reilly, and Carsrud 2000). According to Ajzen (1991), the antecedents of intentions and attitudes serve to precipitate the intentions into behaviour (Krueger and Brazeal 1994; Krueger, Reilly, and Carsrud 2000). Krueger (2000) argues that perceptions of organization members channelled through intentions can inhibit or enhance the identification and pursuit of new opportunities and those elements of a cognitive infrastructure need to be present. Prior research drawing upon the theory of learned behaviour has shown that environmental factors such as social and cultural norms and politico-economic factors influence individuals’ business entrepreneurship intentions (Begley, Tan, and Schoch 2005; Begley and Tan 2001). Perceived desirability and feasibility are the two key antecedents leading to the start-up of new business ventures (Krueger, Reilly, and Carsrud 2000; Begley and Tan 2001; Begley, Tan, and Schoch 2005). Social entrepreneurship, it has been argued, is similarly influenced by perceptions of desirability and feasibility on the part of the incumbents (Mair and Naboa 2003; Krueger et al. 2011; Baierl et al. 2014). NPOs that manifest positive intentions towards social entrepreneurship would tend to launch social enterprises. Drawing upon this stream of research, Mair and Noboa (2003) develop a model of social entrepreneurship intentions and argue that the individual social entrepreneur’s empathy, which has emotional and cognitive aspects, is an antecedent attitude that positively influences his/her perceived desirability of social entrepreneurship. They proposed that the person’s beliefs on self-efficacy and social support available would act as enablers and positively influence perceived feasibility. Perceived desirability and perceived feasibility in their model, in turn, affect social entrepreneurial intentions (Abebe 2012). Baierl et al. (2014) in their study examined the influence of perceived feasibility (measured as the perceived probability of success) and perceived desirability (measured as perceived social impact) on social entrepreneurship intentions of individuals and found for the positive influence of perceived feasibility on an individual’s entrepreneurship intention. The attitudes towards 108 W.-L. Tan & S.-J. Yoo social entrepreneurship within the NPOs would influence their intention towards social entrepreneurship (Krueger, Schulte, and Stamp 2008) and act as either barriers or triggers to the entrepreneurial action. Farid (2005), employing Kuratko, Montagno, and Hornsby’s (1990) Corporate Entrepreneurship Assessment Instrument, examined the influence of organizational attributes on the risk-taking propensity of the managers in the NPOs. He found that the support for risk-taking encouragement, participation, and management support were statistically significant, indicating the influence of organizational attributes on the risk-taking propensity of the managers. Prior Work Experience of Top Managers Leaders in organizations play an important role in shaping organizations’ cultures and norms (Krueger 2000). Top management support is listed with work discretion, rewards and reinforcement, time availability, and organizational boundaries for their role in corporate entrepreneurship (Kuratko, Montagno, and Hornsby 1990; Hornsby, Kuratko, and Zahra 2002). Guth and Ginsberg (1990) suggest that ‘top management actions and responses in relation to the autonomous strategic behavior of middle managers may significantly influence the frequency and success of entrepreneurial effort in the firm’. Prior research found that the number of entrepreneurial ideas implemented increases with perceived top management support (Hornsby et al. 2009). A person’s exposure to entrepreneurship through prior work experience would indirectly influence his or her attitude towards entrepreneurship (Shapero 1975). Prior work experience of individuals has been shown to influence entrepreneurship intentions in the technological entrepreneurship (Jones-Evans 1996). Personal experience can motivate and inspire the idea generation process, and many successful new venture ideas often arise from the entrepreneur’s education, work experience, and hobbies (Vesper 1979). Relevant personal experience can help in filtering and guiding which ideas have a better chance of working in the idea generation process (Guclu, Dees, and Anderson 2002). The social entrepreneur’s background may shape what opportunities he or she recognizes (Corner and Ho 2010; Mair and Noboa 2003). Relevant experience does not have to be in the same field in which the new venture would operate as experience and knowledge of practices in other fields can sometimes help the social entrepreneur see new ways of doing things (Guclu, Dees, and Anderson 2002). If nonprofit leaders are heavily focused on their current missions, their ability to recognize new opportunities may be reduced (Dees 1998). As such, leaders with little commercial experience in NPOs are likely to look askance at opportunities to engage in innovative activities that involve the element of the economic: all the more so when the leaders rise from the social sector in the areas of social work or counselling. Thus, prior commercial work experience of the top manager can affect an NPO’s social entrepreneurship intention in a more positive way. This leads to the following hypothesis. Social Entrepreneurship Intentions of Nonprofit Organizations 109 H1: Top manager’s commercial sector experience will be positively related to nonprofit organization’s intent to start a social enterprise. Entrepreneurial Orientation Corporate entrepreneurship refers to ‘the process of new business creation within existing organizations to improve organizational profitability and enhance its competitive position or the strategic renewal of existing business’ (Zahra 1991). Research into corporate entrepreneurship posits that certain organizational factors explain the incidence of corporate entrepreneurship. These organizational traits or propensities innovativeness, risk-taking, and proactiveness are components of the EO of organizations (Miller and Friesen 1982; Covin and Slevin 1989). Among the three components of EO, innovativeness is associated with a strong organizational commitment to ‘engage in and support new ideas, novelty, experimentation, and creative processes that may result in new products, services or technological processes’ (Lumpkin and Dess 1996, 142). Risktaking refers to the ‘degree to which managers are willing to make large and risky resource commitments that is, those which have a reasonable chance of costly failure’ (Miller and Friesen 1978, 923). Proactiveness involves ‘an opportunity-seeking, forward-looking perspective involving introduction of new products or services ahead of the competition and acting in anticipation of future demand to create change and shape the environment’ (Lumpkin and Dess 2001, 431). The EO construct has recently been applied to nonprofit research. Helm and Andersson (2010) developed a nonprofit entrepreneurship scale based on EO in an effort to provide a scale that can be used to quantify social entrepreneurship. Davis et al. (2011) employed EO to examine the external scanning behaviour of home nursing administrators by profit and nonprofit start-ups, and found no significant difference in the EO between the nonprofits and the for-profits in that sector. According to Dees (1998), the entrepreneurial aspect of social entrepreneurship reflects the three components of EO stating ‘the recognition and relentless pursuit of new opportunities to further the mission of creating social value (proactiveness), continuous engagement in innovation and modification (innovativeness), and bold action undertaken (risk-taking) without acceptance of existing resource limitations’. As such, components of EO (innovativeness, proactiveness, and risk-taking) may help NPOs in creating social enterprises by initiating and developing new innovative business opportunities while taking proactive stance and risks on them (Morris et al. 2007). Morris et al. (2007) suggest that EO has important implications for NPOs although the nature of innovation, risk-taking, and proactiveness is believed to become less clear in NPOs due to some potential conflicts with their social mission. They further state ‘the achievement of a specific social mission can be compatible with, and complementary to, entrepreneurial behavior’. According to them, those who are entrepreneurial tend to ‘stimulate social and economic improvement by embracing change and innovation, pursuing 110 W.-L. Tan & S.-J. Yoo and recognizing opportunities that are mission-serving, using their resources imaginatively, and remaining accountable to their stakeholders’. This leads to the following hypothesis. H2: A nonprofit’s entrepreneurial orientation propensity will be positively related to its intent to start a social enterprise. Collective Efficacy Self-efficacy reflects a person’s perception of ability to execute a target behaviour (Bandura 1986), central to intentions towards entrepreneurship by influencing perceived feasibility of starting a business (Shapero and Sokol 1982). Stakeholders possessing positive perceptions of social entrepreneurship in a nonprofit are part of the intentionality equation. At organizational level, there has to be collective efficacy towards social entrepreneurship: ‘(un)less people believe that they can produce desired effects and forestall undesired ones by their actions, they have little incentive to act. People do not live their lives in individual autonomy’ (Bandura 2000). Bohn (2002) defines collective efficacy in organizations as ‘a generative capacity within an organization to cope effectively with the demands, challenges, stresses, and opportunities it encounters within the business environment’. Nonprofit activities are able to address social problems in so far as they involve the interdependent efforts of others (staff, volunteers, donors, and government agencies). Community projects in the area of education, for instance, depend on the pooling of resources, time, and efforts of community people, including community leaders working together to secure what they cannot accomplish on their own. A community project could involve a corporate sponsor funding a library, the local village chief’s sanction of the project, the local government’s provision of space, and the positive response of the community school. Such a collective exercise took place recently in the far-flung western region of China. The collective efficacy of the stakeholders in the library project sponsored by the Swire group from Hong Kong in respect of future projects would make them more likely to initiate future community projects. As defined in social cognitive theory, all efficacy belief constructs are ‘future-oriented judgments about capabilities to organize and execute the courses of action required to produce given attainments in specific situations or contexts’ (Goddard, Hoy, and Hoy 2004). Hence, NPOs with a positive collective efficacy towards social entrepreneurship will have high degree of social entrepreneurship intentions. This leads to the following hypothesis. H3: A nonprofit’s collective efficacy will be positively related to its intent to start a social enterprise. Resource Availability Although NPOs depend on resources in the same way as other organizations, they require resources to a much greater degree than other organizations because of their unique nature. NPOs are often engaged in a wide variety of Social Entrepreneurship Intentions of Nonprofit Organizations 111 resource acquisition activities attracting private contributions, obtaining government grants and contracts, or involving commercial activities to provide the financial resources necessary for continued pursuit of their missions (Froelich 1999). As resources are provided for specific purposes, NPOs often face resource scarcity (Anheier 2005). NPOs like charities, in particular, depend on externally generated resources from their donor base. For these organizations, there is often a dependence upon donors and philanthropists. The dedication of resources to specific activities in many countries is, more often than not, a subject of the tax laws as donors are often able to deduct against their taxable income the amounts contributed towards charitable causes. Thus NPO researchers have variously pointed to the integral role of resources to the capability of NPOs to flourish, innovate, and deliver their services (Anheier 2005). Entrepreneurial activities require resources. Time and resource availability are believed to influence employees’ perceptions of corporate entrepreneurship activities and the critical role of the financial resources in start-ups has been well supported in entrepreneurship literature (Pinchot 1985; Covin and Slevin 1991; Hornsby, Kuratko, and Zahra 2002). Corporate entrepreneurship research suggests that if corporations wish to encourage innovation and corporate entrepreneurship, they should provide resources for these to occur because entrepreneurial pursuits generally require considerable resources (Hornsby, Kuratko, and Zahra 2002). The resource-based view also suggests that entrepreneurship in NPOs would require resources (Weerwardena, McDonald, and Mort 2010). With their focus on the social agenda and resource scarcity associated with the traditional sources of income (Froelich 1999), pursuing new activities such as social entrepreneurship would be difficult without resources available. This suggests that if the incumbents in NPOs are provided with resources for social entrepreneurship, then they are more likely to get involved in social entrepreneurship activities. Hence, this leads to the following hypothesis. H4: A nonprofit’s resource availability for social entrepreneurship will be positively related to its intent to start a social enterprise. Social Cause (Mission) Prior studies suggested that perceived desirability and feasibility are the two key factors leading to the start-up of new ventures (Krueger, Reilly, and Carsrud 2000; Begley and Tan 2001; Begley, Tan, and Schoch 2005). It has been argued that social entrepreneurship is influenced by perceptions of desirability and feasibility on the part of the incumbents (Mair and Naboa 2003; Krueger et al. 2011; Baierl et al. 2014). The incumbents in an organization will be more likely to hold intentions towards entrepreneurial activities if such activities are perceived to be desirable and feasible. Social enterprises are hybrid organizations crossing two fields, enterprise and social causes, serving dual missions, and at times encountering difficulties in how they are structured (Cooney 2006; Murphy and Coombes 2009). The 112 W.-L. Tan & S.-J. Yoo social element is important in NPOs as it distinguishes this type of entrepreneurship (Tan, Williams, and Tan 2005). McDonald (2007) in his exploratory study suggested that ‘a clear, motivating mission can help guide a nonprofit organization in its efforts to be innovative’. NPOs are more likely to be motivated to engage in social entrepreneurship when activities are aligned with their social causes, and serve a related purpose that facilitates their work, be it income generation or the employment of the disadvantaged. However, some nonprofits may be concerned that an emphasis on entrepreneurship compromises the basic values, missions, and services of the nonprofits (Van Wart and Berman 1999). Nonprofits may be afraid that the social missions will take a back seat to revenue and profitability goals (Bush 1992), leading to an identity crisis in the sector, a loss of legitimacy, and eventual elimination of special privileges and protections for NPOs (Froelich 1999; Hansmann 1989). Indeed, NPOs having been steeped in meeting needs in social sectors may be inhibited from starting social ventures. The prospect of having social enterprises that could augment their revenue streams may not be perceived to be desirable. Instead, the social cause that they serve may act as an inhibitor. Thus, NPOs may prefer to stay in their social sector and not to start a new business venture. However, empirical evidence to date does not establish goal displacement as a common correlate of commercial revenue (Froelich 1999). Studies of commercial activity in NPOs discovered that such initiatives were generally related to and contributed substantively (not just monetarily) to mission accomplishment (Adams and Perlmutter 1991; Young 1998). Commercial revenues appeared to enable greater flexibility and autonomy for NPOs than traditional forms of support, and commercial activities incompatible with the missions were consciously avoided (Froelich 1999). After all, they are required to venture outside of their comfort zone into commercial activities, albeit with social outcomes and objectives. Indeed, most donors and volunteers tend to have little interest in the sources of NPOs’ funds. Among the relatively small percentage of donors and volunteers who attend to use of commercial activities, the use of activities that are consistent with or advance the organization’s mission is approved, and the use of commercial activities that do not advance the mission is relatively disapproved (Herman and Rendina 2001). Similarly, Weerwardena and Mort (2006) argued that a nonprofit’s social entrepreneurship may offer for the NPO an alternative to fundraising or to achieving its social agenda through business activities reducing the reliance on volunteers or grants. This leads to the following hypothesis. H5: A nonprofit’s social cause (mission) will be positively related to its intent to start a social enterprise. Method Social entrepreneurship takes various forms. It can be a new venture initiated with multiple purposes coupling the social with the economic. It also takes Social Entrepreneurship Intentions of Nonprofit Organizations 113 the form of business generating revenue, which can be rechannelled towards the social cause of the NPOs. Alternatively, it can be a business employing socially responsible processes or the disadvantaged as part of the business as in the case of the Greyston Bakery in New York, which hires ex-convicts in their bakery. Social enterprises are similarly defined in Singapore (Ministry of Social and Family Development 2012). In this study, the focus is on the intentions of the NPOs to start social enterprises. A mail survey was employed in this study. The research employed a research instrument developed using established scales where possible, details of which are provided below. To ensure face validity of the survey instrument, the researchers had the instrument reviewed by three academic peers and two nonprofit experts from the government ministry. In addition, following the advice of Dillman (1978), a pretest was prepared to detect questions that might be ambiguous or unclear in meaning or made the respondents reluctant to answer or disclose the information. The researchers contacted and requested five NPOs for the participation in the pretest survey. The participants were asked how they interpreted each part of the questionnaires in order to assess particularly how well they understood each construct scale. The participants were also requested to provide comments or suggestions about the overall design of the questionnaire in order to improve the final version of the questionnaires. Those organizations that participated in the pretest were excluded from the main survey for possible contamination effects on the main test. The questionnaires were mailed to a list of 390 NPOs on the Singapore Ministry of Community Youth and Sports database and additions to the list from other sources such as the database from the National Volunteer and Philanthropy Centre. The Ministry of Community Youth and Sports is the government department that is responsible for community and social development as two of its main foci. It promotes social enterprises through its ComCare Fund from which funding can be obtained for new social enterprises. The National Volunteer and Philanthropy Centre was formed to promote volunteerism and philanthropy in Singapore. To this end, it works closely with NPOs as the volunteers are a key resource for the NPOs. The executive directors and senior management of the NPOs were asked to complete the questionnaires. In total, 600 NPOs were approached, and followup phone calls were made on the incomplete responses. A total of 147 surveys, or 24.5% response rate was achieved. Of these responses, 46 NPOs started a social enterprise in the past provided, and the rest of the respondents had not started a social enterprise. Normality tests are used to determine if a data set is well-modelled by a normal distribution and to compute how likely it is for a random variable underlying the data set to be normally distributed. The sample was tested for normality. Nine organizations with outliers were excluded, and 92 NPOs formed the sample for this study. A majority of the NPOs had less than 100 employees (84.0%) and been in operation for more than 10 years (64.0%). The NPOs served the following beneficiaries: youth (49.5%), family (49.5%), and children (48.5%). As the NPOs at times served more than one group of beneficiaries, the total does not add up to 100.0%. Figure 1 depicts the respondents and the beneficiary groups they served. 114 W.-L. Tan & S.-J. Yoo Figure 1. Beneficiary groups served by the respondents The research instrument was developed with scale items to measure the constructs. Social entrepreneurship intention was measured by two items on a five-point scale in the form of the question whether the nonprofit would start a social enterprise within the next one or two to three years. Prior commercial experience of the chief executive is operationalized as a dichotomous variable (Yes or No). The influence of social cause was measured using three items, illustrated by the following statement: ‘Our organization’s priority is to run programs that directly tie to our social mission.’ Drawing on prior research, six items were developed to measure collective efficacy as the construct has not been previously operationalized in entrepreneurship research. Measures of group-referent capability were employed with the measures referring to the object of the efficacy perception as ‘we’ instead of ‘I’. An example of a group-referent collective efficacy belief item is ‘Our organization has the management know-how and skill to start and run a social enterprise.’ This approach has been applied in other contexts such as in schools (Goddard, Hoy, and Hoy 2004). New items were developed to measure resource availability borrowing ideas from Kuratko et al.’s (1990) Corporate Entrepreneurship Assessment Instrument. Three items were developed and the respondents in NPOs were asked to rate statements: ‘Our organization can raise enough funds to start a social enterprise,’ ‘We can staff a new social enterprise using existing manpower resources,’ and ‘Our organization can start a social enterprise without any form of assistance (such as subsidies or funding) from the government.’ These items were conceptually justified as the nonprofit sector in Singapore was usually less well-resourced in funding and staffing. Most of the people employed in this sector in Singapore were from the social work sector and might not be suited for social entrepreneurship ventures. The organizational attributes of innovativeness and risk-taking were examined employing items adapted from Covin and Slevin’s (1989) EO scale. Innovativeness was explored employing Social Entrepreneurship Intentions of Nonprofit Organizations 115 statements on the organization’s emphasis on innovations, whether it sought new ways to address social needs, and whether the organization was often in the lead as the first to introduce new products/services. To measure risk-taking the study employed three questions about the organization’s preference for high-risk projects: if the organization believed that bold and wide-ranging acts were necessary to attain its goals; if the organization’s response to uncertainty was a bold and aggressive posture; and if the organization had a strong preference for high-risk high-return projects. Organization age and size were employed as control variables in this study. All constructs in the study had face and content validities derived from the extant literature (Covin and Slevin 1989; Kuratko, Montagno, and Hornsby 1990; Goddard, Hoy, and Hoy 2004). Discriminant validities for the constructs were examined by exploratory factor analysis, using the principal component factor method with varimax rotation. After excluding 3 proactiveness items, 18 items loaded on 5 separate factors (social cause, innovativeness, risk-taking, collective efficacy, and resource availability) as anticipated, supporting their discriminant validities (see Table 1). A coefficient alpha test was performed to examine the internal reliability, and all of the independent variables (social entrepreneurship intention, 0.85; social cause, 0.74; innovativeness, 0.75; risk-taking, 0.74; collective efficacy, 0.88; and resource availability, 0.71) were above the cut-off of 0.70 suggested by Nunnally (1978). Means, standard deviations, and correlations among the variables are provided in Table 2. Analysis and Results A majority of the NPOs had fewer than 100 employees (84.0%) and had been in operation for more than 10 years (64.0%). The NPOs served the following beneficiaries: youth (49.5%), family (49.5%), and children (48.5%). As the NPOs at times served more than one group of beneficiaries, the total did not add up to 100.0%. They relied on donations (47.5%) and grants (37.6%) as their top two main sources of revenue. Surprisingly, approximately 10.0% of respondents indicated earned income as their primary source of income. 62.0% of top managers in NPOs had previous work experiences in commercial sectors, whereas 35.0% had no commercial experience in their previous workplace. This study explored the direct effect of the independent variables (commercial experience of CEO, organizational level of EO, collective efficacy, resource availability, and social cause) on the NPO’s intention to start a social enterprise. The hypotheses were tested using regression analysis. The control variables (organization age and size) were first entered into the regression. Then, independent variables were added into the base model to create the full model. H1 predicted that the top manager’s commercial experience in the previous workplace would have a positive effect on a nonprofit’s intent to start a social enterprise. As shown in Table 3, the coefficients were significant and positive (r D 0.21, p < 0.05), supporting H1. An NPO’s EO propensity was predicted 116 W.-L. Tan & S.-J. Yoo Table 1. Results of factor analysis for discriminant validity of constructs F1 CE F2 SC F3 Risk F4 F5 RA INNO 1. Our organization can develop a good concept to start a 0.76 social enterprise. 2. We can find enough skilled employees to start and run a 0.74 social enterprise. 3. Technology would not be a problem for us to start and 0.77 run a social enterprise. 4. Our organization is able to obtain reliable market 0.79 information and knowledge to start a social enterprise. 5. Our organization has the management know-how and 0.69 skill to start and run a social enterprise. 6. Initiating a new business venture would be highly 0.65 satisfying to our organization. 7. Our organization’s priority is to run programs that 0.63 directly tie to our social mission. 8. Our organization intends to grow a larger volunteer 0.85 base. 9. Our priority is to grow a larger donor base. 0.85 10. We have a strong preference for high-risk projects (with 0.71 chances of very high returns). 11. We believe that owing to the nature of the environment, 0.81 bold and wide-ranging acts are necessary to achieve the organization’s objectives. 0.66 12. When confronted with decision-making situations involving uncertainty, we typically adopt a bold, aggressive posture in order to maximize the probability of exploiting potential opportunities. 13. Our organization can raise enough funds to start a 0.76 social enterprise. 14. We can staff a new social enterprise using existing 0.54 manpower resources. 15. Our organization can start a social enterprise without 0.81 any form of assistance (such as subsidies or funding) from the government. 16. We favor a strong emphasis on innovations. 17. We are always looking for new ways to address social needs. 18. In our industry, we are very often the first to introduce new products/services. Eigenvalue 4.03 1.97 Percentage of variance 22.4 10.9 0.76 0.77 0.55 1.58 8.8 CE: collective efficacy; SC: social cause; Risk: risk-taking; RA: resource availability; INNO: innovativeness. Social Entrepreneurship Intentions of Nonprofit Organizations 117 Table 2. Means, standard deviations, and correlations among the variables Variable Mean SD 1. SE intent 2. Organization age 3. Organization size 4. Commercial experience 5. Social cause 6. Collective efficacy 7. Resource availability 8. Innovativeness 9. Risk-taking 5.42 25.4 43.2 1.59 7.71 18.7 6.74 10.6 8.2  1 1.91 21.9 ¡0.14 71.3 ¡0.01 0.49 0.31 2.14 0.37 5.03 0.58 2.38 0.35 2.04 0.55 2.01 0.38 2 3 4 5 6 7 8 0.11 ¡0.12 ¡0.05 0.04 0.02 ¡0.10 ¡0.13 ¡0.11 0.19 0.30 0.01 0.01 0.07 0.20 0.58 ¡0.08 0.15 0.27 0.09 0.55 0.30 ¡0.13 0.01 ¡0.02 0.16 0.43 0.31 0.46 p < 0.05; p < 0.01. to have a positive effect on its intent to start a social enterprise. Since items measuring proactiveness failed to load, only innovativeness and risk-taking factors were employed in testing the hypothesis. The organization’s innovativeness had a significant and positive effect (r D 0.28, p < 0.05), whereas risk-taking had no significant effect. Therefore, H2 was partially supported. H3 predicted that an NPO’s collective efficacy would have a positive effect on its intent to start a social enterprise. The coefficients were significant and positive (r D 0.27, p < 0.05) as expected, supporting H3. H4 predicted that resource availability would have a positive effect on the nonprofit’s intent to start a social enterprise. The coefficients were insignificant, and thus H4 was rejected. H5 proposed that the social cause of an NPO would have a positive Table 3. Regression analysis on social entrepreneurship intention Base model Control variables Organization age Organization size Independent variables Commercial experience Innovativeness Risk-taking Collective efficacy Resource availability Social cause R2 DR 2 F  p < 0.05; p < 0.01. ¡0.14 0.01 0.02 0.87 Full model ¡0.05 ¡0.01 0.21 0.26 0.13 0.28 0.02 0.23 0.52 0.50 10.85 118 W.-L. Tan & S.-J. Yoo effect on its intent to start a social enterprise. The coefficients were significant and positive (r D 0.23, p < 0.01), supporting H5. To examine the mean differences between the nonprofits with social enterprise experience (46 NPOs) and ones without it (92 NPOs), two sample t-tests were conducted. Forty-six NPOs with social enterprise experience had higher means in all dependent variables, and mean differences were particularly significant for collective efficacy, social cause (mission), and resource availability, and supported our hypotheses. In order to provide the evidence of how well the model predicted social entrepreneurship within an NPO setting, a correlation coefficients test was carried out to explore the relationships between the independent variables. As shown in Table 2, top managers’ commercial experiences and innovativeness of NPOs were significantly and moderately (r D 0.27, p < 0.05) correlated. Innovation becomes critical to the survival of the organizations and leadership is suggested to affect the innovativeness of the firm (Covin and Slevin 1991). Leaders can create and manage organizational cultures and norms (Krueger 2000) that promote innovation, and create an organizational structure needed to support innovativeness (Van de Ven 1986). Nonprofit managers should know how to shape and influence the work environment to make it conducive to creativity and innovation (Jaskyte 2004). If nonprofit leaders are heavily focused on their current missions, their ability to recognize new opportunities may be reduced (Dees 1998). Experience and knowledge of practices in other fields can sometimes help the social entrepreneur see new ways of doing things (Guclu, Dees, and Anderson 2002). As such, leaders with commercial experience in NPOs are more likely to look at the new opportunities and engage in innovative activities that involve the element of the economic. These two variables were not only significantly correlated, but showed a positive effect on social entrepreneurship intent in NPOs. Collective efficacy and social cause (mission) were also significantly and moderately (r D 0.30, p < 0.01) correlated. Perceived efficacy plays a key role in human functioning because it affects behaviour not only directly, but by its impact on other determinants. Perceived collective efficacy fosters groups’ motivational commitment to their missions, resilience to adversity, and performance accomplishments (Bandura 2000). NPOs are more likely to be motivated to engage in social entrepreneurship when activities are aligned with their social causes, and serve a related purpose that facilitates their work. Nonprofit activities are able to address social problems in so far as they involve the interdependent efforts of others. NPOs with a positive collective efficacy towards social entrepreneurship will have a high degree of social entrepreneurship intentions. These two variables showed a positive effect on social entrepreneurship intent in NPOs. Finally, resource availability was significantly related (r D 0.31, p < 0.05) to risk-taking propensity of NPOs. The absolute and relative levels of slack resources are suggested to engender experimentation and risk-taking of employees in organizations (George 2005). Thus, managers must perceive the availability of resources for innovative activities to encourage experimentation and risk-taking (Hornsby, Kuratko, and Zahra 2002). Unlike other Social Entrepreneurship Intentions of Nonprofit Organizations 119 variables, resource availability and risk-taking propensity showed no effect on social entrepreneurship intent in NPOs. Discussion and Implications This explorative research employs various theories such as planned behaviour, social cognitive theory, resource dependency theory, and strategic posture to explore the role of organizational factors on social entrepreneurship intentions of the NPOs. The findings in this study support the basic premise that organizational attributes affect social entrepreneurship intentions. NPOs with a high perceived organization efficacy show a higher degree of intention to start a social enterprise. This finding is consistent with the past study on the role of perceived feasibility on the entrepreneurship intentions in private entrepreneurship (Guerrero, Rialp, and Urbano 2008). Social entrepreneurship in NPOs is an organizational-level activity. The finding of the role of perceived organization efficacy points to the importance of the incumbents in the NPOs believing that they can produce desired effects and overcome obstacles by their actions. NPOs embarking on social entrepreneurship should do so when they have prepared the incumbents, its stakeholders. The belief in the collective abilities of the incumbents may require prior training or successes by way of ‘business-like’ projects. Having experienced successes in smaller projects may help develop collective efficacy. The social cause (mission) has a significant effect on social entrepreneurship intentions. It is not surprising since there is an alignment between starting a social enterprise and the social cause of the NPOs. The social enterprise being established can address the same social causes, especially when they employ the disadvantaged or generate income that is ploughed back into social causes. Nevertheless, the NPOs seeking to embark on social entrepreneurship need to consider their stakeholders the manner in which social entrepreneurship is a means to achieving the social cause. This is needful as social entrepreneurship activities often require involvement of other staff as team members or innovators and units in the organization who contribute resources. NPO managers often need to serve the conflicting demands of multiple stakeholders. Some stakeholders may prefer the status quo as they can become alienated when the nonprofit attempts to engage in entrepreneurial actions. Thus, they may demand that their contributions should be directed towards the nonprofit’s traditional needs, not towards new and potentially risky undertakings (Morris et al. 2007). The findings are clear in highlighting the role of top managers as Short, Moss, and Lumpkin (2009) have suggested as an area for future research. It is the constituents within the NPOs, particularly the strategic actors and leadership with the power and influence to shape the attitudes of the employees, who make a difference. Our study contributes to this gap in the literature by indicating the role of the top managers’ prior commercial experience. It stands to reason that social entrepreneurship requires the element of the business idea and model. Top managers of NPOs with prior commercial 120 W.-L. Tan & S.-J. Yoo experience would be better placed to lead in social entrepreneurship. NPOs headed by top managers without commercial experience would more often than not shy away from those with commercial experience. This finding supports the anecdotal evidence available. One of the authors attempted to interest a Singapore nonprofit to engage in social entrepreneurship in the form of a new service it could sell in addition to the nonprofit services it had provided. The top managers were from the social sector with no commercial experience and the proposal was not implemented because the same managers focused on what could be considered the social service aspects. In contrast, the same author personally observed the role of the top manager at a different nonprofit, who moved from private entrepreneurship into leadership at the nonprofit. The programmes and projects initiated were business-like. Social entrepreneurship is the order of the day at that nonprofit. That said, there is a need for further research to identify the ways in which commercial experience contributes to social entrepreneurship intentions. Innovativeness is another organizational attribute with a positive influence on social entrepreneurship intentions. It is a clear indication of an organizational attribute that works in tandem with the sense of ability towards an intention to start a social enterprise. The development of this orientation (innovativeness) and attitude within the organization would aid plans to engage in social entrepreneurship. There is a need to consider the organizational attribute for which was found no statistical significance. It was anticipated that resource availability would be a necessary ingredient in the nonprofit’s internal environment, but it was not the case in this study. Two possible explanations can be suggested. First, the prima facie finding is the other organizational attributes that matter more and not the availability of capital, time, and other resources. Second, it may be that in NPOs resource scarcity is the norm and the incumbents have grown accustomed to working under that constraint. For the incumbents then it has not been the resource availability that is critical to the commencement of projects but other factors such as the worthiness of the project or programme, the commitment of volunteers, the direction from the board, etc. This argument is plausible because in many Singapore NPOs, the incumbents also work at wages below their peers in comparable roles in for-profit enterprises. Most of them do so because of the social cause discussed earlier. There is a need to address the risk-taking and proactiveness attributes of EO that were not found to be significant. In their empirical research, Morris et al. (2007) raised the potential problems with the conceptualization and measurement of risk-taking and proactiveness of EO in the nonprofit context. They state ‘there may be important non-financial dimensions of risk, which may vary depending on the stakeholder of interest in nonprofits. The ability to determine the relationship between risk and return in a nonprofit context can be more problematic.’ They also argue that ‘potential differences among stakeholders and the need for consensus may make proactive behavior inappropriate. Since most nonprofits are organized to react to a given social problem or need, rule-bending behavior by managers may be inconsistent with how NPOs are chartered and funded. The need for transparency might not be Social Entrepreneurship Intentions of Nonprofit Organizations 121 consistent with the notion of pursuing new initiatives in secret or without formal approval.’ From the foregoing discussion, policy-makers desiring greater social entrepreneurship from NPOs can draw from the findings potential areas for capacity building in NPOs in addition to the provision of financial incentives if they are to see favourable results. They could introduce policies to address the antecedents to organizational efficacy. NPOs must possess the capabilities to embark on social entrepreneurship. To spur greater social entrepreneurship, it may be necessary to provide training and facilitate access to market information so that they have the wherewithal to start. Another consideration for the policy-makers would be the introduction of top managers with commercial experience into NPOs. If top managers do not perceive creating social enterprises as desirable or feasible, the social entrepreneurship intentions would be absent or fewer. Since entrepreneurship intentions are the precedent to action (Krueger, Reilly, and Carsrud 2000), steps are needed to be taken to address these attitudes that are antecedent to social entrepreneurial intentions. There may be a need to provide commercial experience or an alternative means of such experience for top managers lacking it. Conclusions, Limitations, and Directions for Future Research Although this exploratory study provides insights into the ways in which organizational attributes influence social entrepreneurship intentions, there are limitations as with any research. The major limitation is the context of Singapore. There could be socio-cultural or economic-politico factors that vary across countries. Each country has its social sector development history, and further research would be needed to tease out. Guidance could be drawn from prior studies on private entrepreneurship intentions on socio-cultural factors (see, for example, Begley and Tan 2001) and politico-economic factors (Begley, Tan, and Schoch 2005). Another limitation of the study is the nature of the NPOs. Most of the NPOs in our sample are charities in Singapore. There could be peculiarities related to charities, in light of their reliance on donations and government support. Future research should explore the social entrepreneurship intentions of different types of NPOs such as non-governmental organizations. Needless to say, there is a need for future research on the organizational attributes. Additional research should be conducted to identify the ways in which commercial experience contributes to social entrepreneurship intentions. There may be situations where commercial experience could be a hindrance in nonprofit settings. What are the activities, organizational factors, values, or norms that contribute to collective efficacy? Knowledge of these elements would enable NPOs to act on collective efficacy. It is suggested that entrepreneurship may flourish when NPOs have more active boards. They can address or at least counter the resistance of various internal and external stakeholders to innovative new directions (Morris et al. 2007). Active boards can be important sources of new ideas and 122 W.-L. Tan & S.-J. 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