Periodic Reporting for period 1 - BCorp (Between Social Values and Profitable Performance: The Case of B-Corporations)
Berichtszeitraum: 2016-06-01 bis 2018-05-31
It is an increasing trend the idea that business enterprises should have a social impact and thus, they should respond to a blended logic, not purely economic. Think of the following: the company Toms’ follows the ‘One to One’ business: for each item purchased Toms will help a person in need. For each pair of shoes, the company gives for free another pair to children in needs. Or they offer a sight visit to a person in need for each glasses they sell. And with others of its products, Toms sponsors a safe birth delivery or the supply of filtered water. With a different approach Ben & Jerry’s - ice cream leader brand - has created its social identity as the one of a company committed to environmental causes, sustaining around the world initiatives and movements to fight climate change.
How do companies can pursue profitability by developing a value & identity-based strategies? Particularly, this issue implies a non-trivial balance: on the one hand, entrepreneurs invest in classical profitable business-oriented actions, while, on the other hand, they also might engage in non-profit social values not related to their business. The term hybrid company has been coined recently to indicate the new phenomenon of those businesses whose mission and identity are a mix between the achievements of a competitive advantage and the realization of a non-profit social purpose.
To address this general research question and understand how social business hybrids can implement and profit from value and identity-based strategies balancing dual objectives, this project has studied the population of B-Corporations.
B-Corporations are a new corporate form that is spreading in the United States since 2007 that perfectly synthetize the combination of social actions and competitive benefits is fully realized in this kind of businesses and currently are a total of about 2,300 around the world. The concept of B-corporation is based on a fundamental idea of redefining the way to do business: compete not to be the best in the world, but for the best of the world.
How do companies can pursue profitability by developing a value & identity-based strategies? Particularly, this issue implies a non-trivial balance: on the one hand, entrepreneurs invest in classical profitable business-oriented actions, while, on the other hand, they also might engage in non-profit social values not related to their business. The term hybrid company has been coined recently to indicate the new phenomenon of those businesses whose mission and identity are a mix between the achievements of a competitive advantage and the realization of a non-profit social purpose.
To address this general research question and understand how social business hybrids can implement and profit from value and identity-based strategies balancing dual objectives, this project has studied the population of B-Corporations.
B-Corporations are a new corporate form that is spreading in the United States since 2007 that perfectly synthetize the combination of social actions and competitive benefits is fully realized in this kind of businesses and currently are a total of about 2,300 around the world. The concept of B-corporation is based on a fundamental idea of redefining the way to do business: compete not to be the best in the world, but for the best of the world.
The survey has been administered between June-Dec 2017 in USA, Europe, UK, Canada and South America and the final sample consists of 216 full questionnaires.
The first results propose a taxonomy of such strategies. This comprises four alternatives: (1) low economic objectives /low social objectives (Institutional hybrid) (2) high economic objectives/ low social objectives (Brand hybrid) (3) low economic objectives / high social objectives (Identity hybrid) and (4) high economic objectives /high social objectives (Reinforcing hybrid). In the Identity Hybrid the social objective identity supports the economic one. The company connects its business logic with the values of a pre-existing community and important mechanisms to implement strategies are authenticity and adaptation. Differently, the Brand Hybrid triggers an identity-based relationship with an ex-novo community. Here the economic objective supports the social one. The company pursues a differentiation advantage but it still connected to its community giving it a percentage of revenue or percentage of premium price for initiatives. The last category of Reinforcing Hybrid enacts at the same time cues of social communities and business communities. These are companies that blend two strategies: creating identity with a community both via values and via brand. Particularly, this stage of the company is reached with maturity.
Evidence from the experimental designs with 230 consumers show patterns of value-based strategies and symbolic consumption. Evidence highlights that these the congruence of values between company and community and the power over the community impact the probability that a consumer will buy a certain product, will impact the consumers' reservation price and also the meaning of consumption, namely the product becomes a symbol.
Finally, via a multimedia case on Stone Brewery – a craft beer producer - the project develops an analysis of focused niche-strategy of the company showing how this new entrant managed to compete with the ‘giant’ AB-In Bev and to develop a differentiation advantage by implementing a value-based strategy.
The first results propose a taxonomy of such strategies. This comprises four alternatives: (1) low economic objectives /low social objectives (Institutional hybrid) (2) high economic objectives/ low social objectives (Brand hybrid) (3) low economic objectives / high social objectives (Identity hybrid) and (4) high economic objectives /high social objectives (Reinforcing hybrid). In the Identity Hybrid the social objective identity supports the economic one. The company connects its business logic with the values of a pre-existing community and important mechanisms to implement strategies are authenticity and adaptation. Differently, the Brand Hybrid triggers an identity-based relationship with an ex-novo community. Here the economic objective supports the social one. The company pursues a differentiation advantage but it still connected to its community giving it a percentage of revenue or percentage of premium price for initiatives. The last category of Reinforcing Hybrid enacts at the same time cues of social communities and business communities. These are companies that blend two strategies: creating identity with a community both via values and via brand. Particularly, this stage of the company is reached with maturity.
Evidence from the experimental designs with 230 consumers show patterns of value-based strategies and symbolic consumption. Evidence highlights that these the congruence of values between company and community and the power over the community impact the probability that a consumer will buy a certain product, will impact the consumers' reservation price and also the meaning of consumption, namely the product becomes a symbol.
Finally, via a multimedia case on Stone Brewery – a craft beer producer - the project develops an analysis of focused niche-strategy of the company showing how this new entrant managed to compete with the ‘giant’ AB-In Bev and to develop a differentiation advantage by implementing a value-based strategy.
Social Business Hybrids & Hybrid Entrepreneurs
According to a general definition, hybrids are those organizations that combine aspects of multiple organizational forms experiencing different internal tensions and identities (Haveman & Rao, 2006; Hoffmann, Badiane, & Haigh, 2012). In organizational studies hybridity encompasses multiple organizational identities (Prat & Foremann, 2000), multiple organizational forms (Battilana & Lee, 2014; Pache & Santos, 2013), as well as multiple institutional logics (Pache & Santos, 2010). Hybrid organization studies have a tradition in the organizational and institutional theory offering insights into the opportunities and challenges faced by organizations with multiple logics (Havemann & Rao 2006, Marquis & Lounsbury 2007). More recently, the advances in this research field have also captured the attention of entrepreneurial scholars (McMullen & Warninck, 2016). Nowadays, thousands of ventures worldwide combine aspects of business with a social objectives (Lepoutre et al. 2013) and thus for this reason they represent a new form of ventures blending economic and social logics (Battilana & Lee, 2014). Differently from the pure social entrepreneurship (Battilana & Lee, 2014), the sustainability of social business hybrids depends both on the advancement of their social mission and on their commercial performance.
Social Identity to explain the Social Impact of Hybrid Companies
Using social identity theory Fosfuri et al. (2016) demonstrate that hybridity triggers demand-side dynamics especially for social business hybrids that care about the symbolic meaning of their products and services (Fosfuri et al. 2015; Santos et al. 2015). On the one hand, social business hybrids interact with the marketplace first, by supporting certain social values (Fosfuri et al., 2011) and thus, by establishing a value-based relationship with individuals who care about a particular set of social values. On the other hand, the social identity formed by people who care about the same social values the firm supports generates the pattern of consumption that is aligned with such values, transforming the product or the service in a symbolic consumption and thus, accordingly, ventures can compete by differentiating from competitors (Fosfuri et al., 2016).
The project has been developed along three main level of analysis and methodology. First, a survey to B-Corporations and their founders with the objective to have a comprehensive view of the phenomenon, profiling the new form of hybrid entrepreneurs and the founding teams, and at the same time to understand value & community-based strategies in relation with innovation activities and companies’ performance. Second, through experimental designs the project has had the purpose to understand the impact of different value-based strategies and the role of power of the company on the community and the extent of congruence of values between them on the rise of symbolic consumption. Finally, through a case study, the project has described more in details the trade-offs of how community-based strategies lead to a differentiation advantage.
According to a general definition, hybrids are those organizations that combine aspects of multiple organizational forms experiencing different internal tensions and identities (Haveman & Rao, 2006; Hoffmann, Badiane, & Haigh, 2012). In organizational studies hybridity encompasses multiple organizational identities (Prat & Foremann, 2000), multiple organizational forms (Battilana & Lee, 2014; Pache & Santos, 2013), as well as multiple institutional logics (Pache & Santos, 2010). Hybrid organization studies have a tradition in the organizational and institutional theory offering insights into the opportunities and challenges faced by organizations with multiple logics (Havemann & Rao 2006, Marquis & Lounsbury 2007). More recently, the advances in this research field have also captured the attention of entrepreneurial scholars (McMullen & Warninck, 2016). Nowadays, thousands of ventures worldwide combine aspects of business with a social objectives (Lepoutre et al. 2013) and thus for this reason they represent a new form of ventures blending economic and social logics (Battilana & Lee, 2014). Differently from the pure social entrepreneurship (Battilana & Lee, 2014), the sustainability of social business hybrids depends both on the advancement of their social mission and on their commercial performance.
Social Identity to explain the Social Impact of Hybrid Companies
Using social identity theory Fosfuri et al. (2016) demonstrate that hybridity triggers demand-side dynamics especially for social business hybrids that care about the symbolic meaning of their products and services (Fosfuri et al. 2015; Santos et al. 2015). On the one hand, social business hybrids interact with the marketplace first, by supporting certain social values (Fosfuri et al., 2011) and thus, by establishing a value-based relationship with individuals who care about a particular set of social values. On the other hand, the social identity formed by people who care about the same social values the firm supports generates the pattern of consumption that is aligned with such values, transforming the product or the service in a symbolic consumption and thus, accordingly, ventures can compete by differentiating from competitors (Fosfuri et al., 2016).
The project has been developed along three main level of analysis and methodology. First, a survey to B-Corporations and their founders with the objective to have a comprehensive view of the phenomenon, profiling the new form of hybrid entrepreneurs and the founding teams, and at the same time to understand value & community-based strategies in relation with innovation activities and companies’ performance. Second, through experimental designs the project has had the purpose to understand the impact of different value-based strategies and the role of power of the company on the community and the extent of congruence of values between them on the rise of symbolic consumption. Finally, through a case study, the project has described more in details the trade-offs of how community-based strategies lead to a differentiation advantage.