Social business models in Norway : how do they finance and monetise social value creation? : a qualitative approach

2016

Although the total wealth has increased in many countries, social differences prevail and the

environment suffers. As a response to these challenges, social entrepreneurs find innovative

solutions to both social and environmental issues, which could relieve public welfare

systems and create an enormous socioeconomic surplus. In Norway, social entrepreneurship

is on the rise. However, while the majority of academic literature has discussed the potential

of social entrepreneurs to create social value (i.e. to benefit the society and/or environment),

very few studies exist that shed light on the challenges of capturing a sufficient part of the

value for the entrepreneur. Thus, the question arises how social entrepreneurs can design

their business models to ensure financing of their social venture. We aim to address this

question by a two-step approach. First, we categorise a sample of 30 social business models

according to their main features. This helps us compare them in how they help a social target

group, and how they finance their activities. We then, based on a multiple-case study with

in-depth interviews, identify challenges and opportunities that come with each social

business model type, and offer recommendations.

Based on our sample, we identified four main types of social business models in Norway.

The Ideal and the Two-Sided are non-commercial, and depend largely on grants, donations

and volunteerism. An important challenge these business models face is the short time

frame, the political risk and the inflexibility of the funding. The Inclusive and the ConsumerOriented

business models are more commercial, and need to balance their commercial and

social goals more carefully. On one hand, a purely commercial focus might harm the social

mission and the goodwill they receive. On the other hand, too much emphasis on “doing

good” might lead to financial losses, and thus jeopardise the core social activities.

Hereby, by using a business model perspective, our findings contribute to the literature on

social entrepreneurship in general and to Norway in particular. We describe challenges and

opportunities social entrepreneurs face in financing and monetising their value creation, and

provide concrete recommendations on how they can overcome these challenges.