Downward accountability to beneficiaries in social enterprises: do partnerships with nonprofits boost it without undermining accountability to other stakeholders?

Abstract

The hybrid nature of social enterprises gives them a high potential for developing social innovations, but at the same time leads to tensions within these organizations. The barriers they face to gain access to traditional sources of funding are pushing social enterprises to reinforce their business models and rely more on commercial activities, and this fact increases the risk of mission drift and can weaken accountability towards beneficiaries of the social mission in favor of dominant stakeholders such as funders or clients of the commercial activities. Our research attempts to analyze whether partnerships between social enterprises and nonprofits strengthen accountability to beneficiaries without hindering accountability to other stakeholders, thus allowing both social and economic objectives to operate together. Based on a survey with a sample of social enterprises partnering with nonprofits, results reveal that as the partnership moves along a collaboration continuum to a transformational stage, accountability to beneficiaries is encouraged, whereas accountability to other types of stakeholders is also improved or, at least, not affected.

Between Mission and Money: A Lesson Learned From Social Enterprise Identity

“…Because Social Enterprise in Indonesia is mainly focused on the MSMEs, collaboration with large-scale corporations is expected to assist the sustainability of Social Enterprise from a commercial standpoint, ultimately affecting the sustainability of the beneficiaries. This finding in the Indonesian setting is consistent with prior research (Sanzo-Pérez et al, 2022;Selsky and Parker, 2005;Wangsirilert and Simon, 2017), which found that partnerships facilitate the establishment of impacts for beneficiaries. Furthermore, partnerships with large-scale companies with inherent business ethics, such as providing minimum wages under local regulations, indirectly provide specific operational standards for Social Enterprise to their beneficiaries.…”

“…Stakeholders are a group of individuals or organizations that influence and are influenced by the activities of an organization (Jones et al, 2017). Several previous studies stated that the stakeholders of Social Enterprises include service or product users, internal organizations (managers, staff, and others), local communities and governments, investors or fund providers, and other parts of the ecosystem (Mason, 2009;Sanzo-Pérez et al, 2022;Vidal, 2014) all of whom may have different and even conflicting interests (Nadzri et al, 2021).…”

The Value of Financial and Non-Financial Information towards Non-profit Organisations

“…Less has been written about horizontal accountability and downward accountability in both the literature and the actual world. (Osman & Agyemang, 2020;Sanzo-Pérez et al, 2022). This study in the hope can shed some light on these both types of accountability as in the context of NPOs, all the three types of accountability has their own vital roles.…”

Framing the fourth sector – dystopia or future contours?

“…While the third sector focuses primarily on addressing social needs through philanthropy and community service, the fourth sector represents a more integrated approach to social change by leveraging market mechanisms and entrepreneurial strategies. Both play vital roles in advancing social progress and addressing complex challenges, but they differ in their approaches to resource mobilization, governance structures, and models of social impact (Sanzo-Pérez et al, 2022;Zhu & Sun, 2020). As the boundaries between sectors continue to blur, understanding the distinctions and synergies between the third and fourth sectors is essential for developing effective strategies to address pressing global issues and promote sustainable development.…”