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

Abstract

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.