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Dynamic and Marketing Capabilities as Predictors of Social Enterprises’ Performance

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Abstract

Social enterprises (SEs) have an increasingly important role in developing more equitable societies worldwide. The capabilities of SEs are an important driver of their performance, but research in this area is still emerging, and the link between capabilities and performance has yet to be examined. By drawing on the dynamic capabilities perspective, it is suggested in this study that absorptive capacity—an organization’s ability to absorb, assimilate, and apply knowledge—affects a SE’s performance indirectly via its marketing capabilities. Using data from Hong Kong and Taiwanese social enterprises (n = 109), a set of hypotheses related to the capabilities–performance linkage were tested. The results show that the marketing capabilities of SEs mediated the relationship between absorptive capacity and financial performance. However, absorptive capacity was not associated with improved social performance via marketing capabilities. The paper concludes with a discussion of the implications of the findings and directions for future research.

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Fig. 1

Notes

  1. 1.

    RBV theory suggests that the sustainable competitive advantage of organizations requires the possession of resources that are valuable, rare, inimitable, and non-substitutable (VRIN) (Teece et al. 1997).

  2. 2.

    We tested the hypotheses using samples of SEs that have been established for three or more years, so we can include SEs with sufficient absorptive capacity and marketing capabilities, because the knowledge and skills of an organization accumulate over time (Cohen and Levinthal 1990) and therefore become more observable from 3 years onwards.

  3. 3.

    The items used to measure each construct of the framework all demonstrate a high level of reliability and validity (factor loadings > 0.6; Cronbach’s α > 0.7). Thus, the remaining scale is acceptable.

  4. 4.

    These include five measures for “marketing communication” and five for “selling.”

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Acknowledgments

We thanked all social enterprise founders and managers who participated in this research. Special thanks go to Ms. Shu-Hui SHIH and Ms. Jasmine LEUNG for their assistance with data collection. We also thanked the directors of Fullness Social Enterprises Society for their various support in this research.

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Correspondence to Yanto Chandra.

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Lee, E.K.M., Chandra, Y. Dynamic and Marketing Capabilities as Predictors of Social Enterprises’ Performance. Voluntas (2019). https://doi.org/10.1007/s11266-019-00155-y

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Keywords

  • Absorptive capacity
  • Marketing capabilities
  • Social performance
  • Financial performance
  • Social enterprises