Explicating the factors influencing firm performance: study of social enterprises in India

Abstract

Purpose The purpose of this study was to ascertain organizational factors that impacted the performance of social enterprises. Design/methodology/approach For this research study, a structured close-ended survey questionnaire was prepared based upon literature inputs. The data was collected from 370 executives in social enterprises in India. The data was analysed through structural equation modelling.  The data was analysed towards hypothesis development as well as model development explicating the success of social enterprises. Findings This research study’s findings developed a model towards explicating firm level performance in social enterprises. The antecedent factors were organizational commitment (OC), organizational orientation (OO), employee empowerment (EE) and top management support (TMS). The factor business innovation capability (BIC) was the mediating variable, whereas the firm performance (FP) of social enterprises was the dependent variable. Business innovation creativity had full mediation effect. Research limitations/implications In this research study, the variable influencing the performance of social enterprises were ascertained. TMS and EE were independent organizational variables in any social enterprise along with the two organizational factors of OC as well as OO that did matter for enhancement of BIC of social enterprises. BIC had full mediating effect based upon the mentioned factors of OC, organization orientation, EE and TMS, which subsequently manifested in superior social enterprises FP. Practical implications Social enterprises had to balance the twin objectives of social good (doing good for society) as well as earning economic benefits for the enterprise.  Given this challenge, social enterprises had to develop an organizational context in which employees were empowered towards undertaking social issues proactively. Furthermore, top management team must provide support for such causes. When this aspect coupled with the presence of OC and OO then in the social enterprise, BIC got developed.  With the presence of BICs, it became easier for social enterprises to undertake innovation that were also socially oriented and led to superior FP. Social implications It has often been observed in developing countries like India that social innovation and entrepreneurial ventures associated with these have become a necessity. However, such ventures often do not to scale up. Hence, its case for business continuance and sustenance have been challenging. This study provided insights regarding the existential aspect of social enterprises in terms of its performance. Originality/value This study was one of the first research studies that integrated the factors of OC, OO, EE and TMS in building organizational capability towards innovation in social enterprises. This in turn contributed towards the improvement of FP of social enterprises.