When starting and running a social venture, social entrepreneurs simultaneously pursue the creation of social and economic value. In this study, we introduce the notion of “the social entrepreneur’s dilemma,” that is, social entrepreneurs’ strategic choices that lead to more economic value appropriation tend to negatively affect social value creation, and vice versa. We focus on two choices related to the fundamentals of business strategy: competitive scope of activities and source of competitive advantage. Using a unique panel data of charter schools in Texas (1997-2007), we find evidence that both a broader scope and a differentiation strategy improve a school’s social value creation (academic performance), but reduce its economic value appropriation (economic performance). The trade-offs from the opposing effects become even more pronounced in a more turbulent environment: the positive impact of differentiation on social value creation would vanish, whereas the negative impact of scope expansion and differentiation on economic value appropriation would increase even further. Our findings provide insights on how theories of strategic management and the public and nonprofit literature can illuminate the challenges of value creation and appropriation in social entrepreneurship.
Chao’s research interests focus on the intersection between nonprofit and voluntary action and government. More specifically, he conducts research on collaboration within and across sectors, new media and nonprofits, and social entrepreneurship. He has many published articles in highly respected and influential journals, and has published a book titled “Social Entrepreneurship: An Evidence-Based Approach to Creating Social Value” (Wiley, 2014). His research has been recognized by his peers and won awards from multiple disciplines.
Chao currently serves as Editor-in-Chief of Nonprofit & Voluntary Sector Quarterly, the premier journal in the field. He is also a co-editor of the Brill Nonprofit Sector Research Book Series and serves on the editorial boards of many other journals. In addition, Chao serves as Senior Vice-President of the International Council of Voluntarism, Civil Society, and Social Economy Researcher Associations (ICSERA).