How social ventures grow: understanding the role of philanthropic grants in scaling social entrepreneurship

Lall, S. A. and Park, J. (2022) How social ventures grow: understanding the role of philanthropic grants in scaling social entrepreneurship. Business and Society, 61(1), pp. 3-44. (doi: 10.1177/0007650320973434)

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Abstract

Although early-stage finance is critical to the growth of most ventures, it is even more important for social ventures as they face the challenges of balancing their social and commercial objectives. Drawing on institutional logics and signaling theory, this study uses a panel data set of 3,401 nascent social ventures to investigate the important role philanthropic grant funding plays in the organizational and financial development of social ventures. We find mixed results, with positive effects on employment and subsequent access to debt finance, but no effects on revenues and access to equity. Our findings connect these theories by suggesting philanthropic grants provide social ventures with flexibility to invest in human capital without pushing them to pursue short-term financial objectives, and that receiving a philanthropic grant provides a signal that is interpreted differently by debt and equity financiers. These findings are especially relevant as funders increasingly use grants to support social entrepreneurship.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Lall, Dr Saurabh
Authors: Lall, S. A., and Park, J.
College/School:College of Social Sciences > Adam Smith Business School > Management
Journal Name:Business and Society
Publisher:SAGE Publications
ISSN:0007-6503
ISSN (Online):1552-4205
Published Online:26 November 2020

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