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Achieving Shared Triple Bottom Line (TBL) Value Creation: Toward a Social Resource-Based View (SRBV) of the Firm

Journal of Business Ethics volume 152, pages 803–826 (2018)Cite this article

Abstract

While the economic and environmental dimensions of the triple bottom line (TBL) have been covered extensively by management theory and practice, the social dimension remains largely underrepresented. The resource-based view (RBV) of the firm and the natural resource-based view (NRBV) of the firm are revisited to lay the theoretical foundation for exploring how the social dimension might be addressed. Social capabilities are then explored by looking at the social entrepreneurship literature and illustrative cases with the purpose of elaborating RBV toward a social resource-based view (SRBV) of the firm. Three illustrative cases, which represent social businesses located in catastrophe-ridden Haiti, show how capabilities are used to overcome challenging constraints. The goal for the social entrepreneur is to employ the appropriate capabilities to ensure economic success, a positive environmental impact, and social benefits that leave the local community in a better position than without the business. Just as NRBV is a previous elaboration of RBV, so can SRBV be an elaborated theoretical foundation for future research. The components of a theory are systematically addressed by extending the range of variables (adding social capabilities), extending the domain (including stakeholders with economic, environmental, and/or social stakes), and offering propositions on variable relationships and outcome predictions (linking social capabilities and shared TBL value creation). By highlighting the social capabilities of social entrepreneurs, this research illuminates the micro-foundations of corporate social responsibility, emphasizing the value of individual level analyses.

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Notes

  1. Collective wealth has evolved into concepts such as TBL sustainability (Triple Bottom Line; economic, environmental and social; Elkington 1998) and shared value (Porter and Kramer 2006, 2011).

  2. Social business models can be adopted by firms of various sizes and start-ups (e.g., Pura Vida Coffee; Wilson and Post 2013) or existing firms (e.g., the Grameen Danone collaboration; Yunus et al. 2010).

  3. While many hybrid businesses in the literature have a focus on economic and social goals (e.g., Santos 2012; Doherty et al. 2014; Gupta et al. 2015), but do not necessarily cover the environmental side, our sample within this paper features businesses with TBL sustainability objectives.

  4. An organizational form is an “archetypal configuration of structures and practices” that is “regarded as appropriate within an institutional context” (Greenwood and Suddaby 2006, p. 30).

  5. The term “social capability” also exists in economics to describe countries’ overall education and technical competence, and the various institutions that shape the economic environment (e.g., Abramovitz 1986). That is not what is meant here.

  6. Although the social entrepreneurship literature more often utilizes the wording “resources” instead of ”capabilities,” we see this nevertheless in the spirit of an SRBV; due to the disparate terminology existing in the literature, these studies might only partly refer to resources and/or capabilities as defined earlier in this paper.

  7. Despite the name, this will feature economic, environmental, and social impact, depending on the respective business model. The cases CHIFA, EPRO, and CLEAPRO covered all three impact dimensions.

  8. That expression is just meant figuratively; the local community does not have equity stakes in the business. What is meant it that they are the ones this business wants to create value for.

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Acknowledgments

We would like to thank Cory Searcy and the two JBE reviewers of our manuscript for their very insightful and constructive feedback during the review process. Many thanks also to all colleagues who provided their helpful suggestions on earlier versions during the IPSERA, ERS, AOM and EDSI conferences.

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Authors and Affiliations

  1. University of Tennessee, 315 Stokely Management Center, Knoxville, TN, 37996-0530, USA

    Wendy L. Tate

  2. University of Applied Sciences Mainz, Lucy-Hillebrand-Str. 2, 55128, Mainz, Germany

    Lydia Bals

  3. Department of Strategic Management and Globalization (SMG), Copenhagen Business School (CBS), Kilevej 14, 2. Floor, 2000, Frederiksberg, Denmark

    Lydia Bals

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Conflict of Interest

Wendy L. Tate and Lydia Bals declared that they have no conflict of interest.

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Appendix: Yunus Social Business Profile, Source: YSB (2014, pp. 3–5)

Appendix: Yunus Social Business Profile, Source: YSB (2014, pp. 3–5)

Principles of Social Business

  1. 1.

    Goal: To solve social or environmental problems

  2. 2.

    Financial and economic sustainability

  3. 3.

    Investors repaid; no further private financial return

  4. 4.

    Profit funds expansion, improvements, or seeding other social businesses

  5. 5.

    Environmentally conscious

  6. 6.

    Market wages; better working conditions

  7. 7.

    Do it with joy

YSB applies business approaches to the world of social development. It has developed an innovative incubator fund methodology which bridges the gap between social businesses and social investors and donors. While the incubator searches, coaches, and selects social businesses, the fund provides debt and equity financing to the businesses after a thorough due diligence process. While a traditional investor invests for financial gain, a social investor invests to benefit society. A social investor’s goal is to maximize social return on his or her investment and is thus motivated to support the most effective social businesses. By investing in a social business incubator fund, the social investor benefits from standardized annual and semi-annual reports that detail both financial and social impact performance. The social investor will recoup up to the full nominal value of his or her initial investment. All profits from the social businesses are committed to be recycled into new social businesses.

The Fund receives capital from donors and investors. After a thorough due diligence process, the fund invests this capital into social businesses that have been selected and prepared by the incubator. As the social businesses pay back the capital, the fund reinvests it into other social businesses, and/or returns it to philanthropic investors in proportion to their share of the total capital contributed, up to the nominal value of his or her initial investment.

The incubator is responsible for searching and creating social business opportunities and helping the social businesses develop a strong and coherent business plan. It also provides coaching and capacity building to social business entrepreneurs, allowing access to useful networks that help them expand their businesses.

  1. 1.

    Searching and Creating Social Business Opportunities

YSB receives hundreds of social business plans on an annual basis. The incubator is responsible for screening the plans and moving forward with a handful that demonstrate the highest potential. In order to attract entrepreneurs, the incubator holds social business plan competitions, public events, and workshops.

  1. 2.

    Developing Social Business Plans

Once pre-selected, the incubator works with the business to improve the social business plan and prepare the business for investment. At this stage, the incubator will focus on whether the social business will be financially self-sustainable and determine how to maximize its social impact.

  1. 3.

    Training, Coaching, and Capacity Building

Pre- and post-investment, the Incubator continuously seeks to broaden the skill sets and capabilities of its entrepreneurs. This includes personal coaching and courses on topics such as business accounting or technical industry-specific topics. The Incubator is supported by a network of corporate pro-bono partners.

  1. 4.

    Networks

The incubator provides access to its local and international networks of potential buyers, partners, and experts that lend support to the social businesses.

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Tate, W.L., Bals, L. Achieving Shared Triple Bottom Line (TBL) Value Creation: Toward a Social Resource-Based View (SRBV) of the Firm. J Bus Ethics 152, 803–826 (2018). https://doi.org/10.1007/s10551-016-3344-y

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Keywords

  • Natural resource-based view
  • Resource-based view
  • Shared value
  • Sustainability
  • Triple bottom line
  • Social business
  • Social entrepreneurship