Social Entrepreneurship and Civic Ties in the Economy of Compassion
Policymakers have long valorized the role of new businesses in economic growth, investing significant public dollars in initiatives to attract entrepreneurs. Yet a narrow focus on individual founders obscures the institutional embeddedness of innovation in regional economies (Zeitlin 2008, Powell 1990). This paper argues that civic networks are central to the dynamics of entrepreneurial activity in the moral economy. Drawing on empirical case studies of two social enterprise incubators in the Greater Cincinnati, Ohio region of the United States, it finds that civil society organizations play an outsized role in recruiting, training, and financing new high-road firms. An analysis of 33 interviews, participant observation, and secondary sources collected from July 2014 to June 2015 indicates that civic ties function both as “pipes” that channel resources to nascent social enterprises and “prisms” that legitimate their membership in the moral economy (Podolny 2001). Whereas many studies emphasize symmetrical resource exchange between networked firms, this paper expands the conception of embeddedness to include multifaceted contributions of civil society organizations like unions and churches. These cases also highlight a strategy to improve work and employment at the regional level by creating entirely new populations of economic institutions rather than maintaining or changing existing ones.
Relatively little academic attention has been devoted to the institutional context of entrepreneurship in the moral economy, including intermediaries like social enterprise incubators that develop and launch new high-road firms. Despite a vast literature on the embeddedness of economic action, studies of social entrepreneurship often emphasize personal attributes of founders rather than the institutional opportunity structure of innovation (Aldrich 2005, Bornstein and Davis 2010). Studies that do specifically examine business incubators provide limited insight into the unique challenges of putting solidarity and compassion into practice. For instance, economic studies often measure the empirical link between incubation and startup performance in the narrow terms of profitability rather than job growth, quality, and inclusion (Amezcua 2010). In short, this paper contributes to the existing literature by highlighting relational dynamics among the broad range of actors – individuals, high-road firms, intermediaries, and civil society organizations – that uniquely characterize the moral economy.
Three qualitative data sources inform the empirical case studies at the heart of this paper. The Cincinnati Union Co-op Initiative (CUCI) and Interfaith Business Builders (IBB) are social enterprise incubators in the Greater Cincinnati, Ohio region of the U.S. I conducted 33 semi-structured interviews from July 2014 to June 2015 with a stratified purposive sample of people working in each incubator and its startups. I also interviewed a peripheral sample of individuals familiar with but not formally affiliated with each organization. I triangulated my thematic analysis of interview transcripts with field notes from participant observation during incubator events and meetings and a review of organizational documents and media coverage.
Part one of the paper details the history and activities of each incubator. Labor organizers founded CUCI in 2011 with a mission to “create an economy that works for all.” It has launched three unionized social enterprises in urban farming, residential energy efficiency, and retail grocery to date. IBB is a nonprofit founded by an ecumenical group of faith leaders in 1983. Its mission is to “develop and promote community-based, employee-owned businesses that create jobs and ownership opportunities for low-income people and communities.” IBB has launched four social enterprises in temporary day labor, construction, janitorial services, and food retail. Day-to-day, CUCI and IBB engage in a variety of activities to help marginalized workers establish their own businesses (identifying opportunities, writing business plans, securing financing, etc.). This section provides an overview of their efforts to push for jobs and prosperity by populating the market with high-road firms.
For CUCI and IBB, incubating social enterprises also entails extensive engagement with civil society organizations. Part two describes the composition of each incubator’s civic network. The discussion draws on responses to partner name generator interview questions and an analysis of annual reports from 2011 to 2015. CUCI has a higher number of civic ties in absolute terms and also partners with relatively more unions. In contrast, IBB has relatively more ties to faith-based organizations.
Part three asks how civic ties impact three processes at the center of each organizations’ social enterprise incubation process: recruitment, training, and financing. In some cases, civic ties function as “pipes” that channel resources to nascent social enterprises (Podolny 2001). For instance, CUCI and IBB have predominantly solicited donations from unions and churches, respectively. In other cases, civic ties function as “prisms” that legitimate their activities as contributions to the moral economy. For instance, CUCI often recruits laid-off workers after failed unionization campaigns as part of their efforts to promote solidarity within the labor movement. In contrast, IBB often recruits graduates of workforce development programs sponsored by local churches as an effort to emulate a Christian “economy of compassion.”
The paper concludes with a discussion of how social entrepreneurship fits into the broader push for jobs and prosperity. Rather than improving work and employment by changing existing institutions, CUCI and IBB exemplify efforts to build new narratives and capabilities at the regional level.
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