Motives, resources and business models for community-based social enterprise growth in Malaysia

Abstract

Community-based social enterprises (CBSEs) drive social and economic change by addressing social problems with innovative solutions. This change is critical to meeting community needs and promoting social unity and equal opportunity for the underprivileged community. CBSEs fund their social mission primarily through savings and earned income. Some CBSEs have successfully partnered with angel investors and received grants and sponsorship. The growth of CBSEs is limited by their resources, particularly financial resources. Currently, there is a dearth of literature on the growth of CBSEs. Therefore, research on the growth of CBSEs is critical as they contribute to the socioeconomic development of the country by creating jobs and improving the quality of life of the marginalised community. Thus, the objective of this study is to gain an understanding of the growth of CBSEs. This study is based on case methodology and CBSEs were selected as the research context. Primary data were collected through in-depth interviews with the founders/co-founders, shareholders, employees, and managers of five CBSEs in Malaysia. Data were analysed both manually and using NVivo 12 software. The study found that the growth of CBSEs is explained by their motives, resources, and business models. Access to resources from CBSE partners helped CBSEs to produce innovative goods and/or services that benefit society and are essential for achieving competitiveness and growth. The findings of this study added to the literature on self-determination theory, which states that CB social entrepreneurs engage in CBSE to serve their social mission with strong motives such as 1) personal emotions, 2) to serve God/religion, 3) social venture favourable opportunity that enables them to seek opportunities and create resources to achieve the social goal. Also, it revealed the specific resources that CBSEs need: (1) financial support, (2) social support, (3) team knowledge, skills, abilities, and inspiration, (4) digital support, (5) innovative skills, and (6) founder/co-founder’s knowledge, skills, abilities, and inspiration. Furthermore, the findings enrich the literature on resource-based view theory, knowledge-based view theory, and social capital theory. Also, it enriched the literature on institutional theory, which highlights that the actions of CBSEs are driven by their goal of gaining legitimacy and recognition from employees and other stakeholders in the entrepreneurial ecosystem. In addition, this study found that CBSEs have applied more than one social enterprise business model that is flexible and sustainable to achieve their social mission and financial return. Social venture favourable opportunity, CB social entrepreneur characteristics, and trust of social support play a critical role in the development of CBSEs. Motives, resources, and business models for the growth framework are generated. These insights are useful for CBSEs and policy makers to align support and initiatives for growth strategies.