Social Enterprises' Resource Acquisition: Bringing Signaling Theory into Focus

Abstract

Social entrepreneurship has been recognized by both scholars and practitioners as a powerful mechanism to address a variety of complex social issues, such as addressing poverty, reducing unemployment, and empowering women. With the rapid rise of social enterprise in the last two decades, most social enterprises still face many challenges in operation and development due to environmental uncertainty, the liability of newness, and tradeoffs in balancing financial and social objectives. Besides, social enterprises are expected to become financially self-sustainable so as to reduce their reliance on government funding. These financial and growth expectations require social enterprises to actively seek and acquire resources, especially financial resources, through diverse channels. The dissertation uses insights from entrepreneurship studies to explore the dynamics of social enterprises’ resource acquisition by examining an overarching question: what factors are associated with early-state social enterprises’ resource acquisition? Using a social entrepreneurship dataset collecting survey data from around the world, the first essay proposes two contrasting theories and tests whether the hybrid identity (e.g. with both social and financial motives) of social enterprise boosts or inhibits resource acquisition outcomes. The second essay follows up by focusing on nonprofit start-ups’ resource acquisition, and it further examines how founders’ experience, founding teams’ characteristics, and organizations’ innovativeness are associated with their acquisition of philanthropic grants. The third essay uses signaling theory to examine how human capital and social media signal a social enterprise’s venture quality, and how they could be associated with the social enterprise’s philanthropic donation and debt funding acquisition. In sum, this dissertation brings signaling theory into focus and specifically examines what signals through what signaling channels would be associated with social enterprises’ resource acquisition. It also advances knowledge in social enterprises’ sustainable development and cross-sector collaborations as well as offers actionable suggestions for practitioners in improving the strategy in communicating with external stakeholders.