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Business Models and Business Model Innovation in Social Entrepreneurship Evidence from Germany and South Africa

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Business Models and Business Model Innovation in Social Entrepreneurship Evidence from Germany and South Africa Master programme in Economic Growth, Innovation and Spatial Dynamics Business Models and Business Model Innovation in Social Entrepreneurship Evidence from Germany and South Africa Maximilian Weis [email protected] Abstract: Social entrepreneurship experienced a significant rise in the past two decades. Yet, research on how companies in social entrepreneurship organize their business model is still rare. Therefore, this thesis aims to investigate how these companies combine social and economic value creation. More precisely, it is analysed how they design, organize and innovate their business model. First, a content analysis is applied to examine and verify the social business model taxonomy identified in the literature with evidence from 126 companies is Germany and South Africa. Second, based on 7 cases social business model innovations are identified that allow these companies to generate income while following their social mission and increasing their social impact. It is argued that the established business model taxonomy is not just a theoretical framework, but can be applied to firms engaging in social entrepreneurship in Germany and South Africa. Hereby, four distinct social business model types offer explanation for different mechanisms and logics how firms engaging in social entrepreneurship combine social and economic value creation. Moreover, it is argued that the identified social business model innovations are key facilitators that allow firms to spread their social mission in a more vital and sustainable manner. Key words: social entrepreneurship, business model, business model innovation EKHM52 Master thesis, second year (15 credits ECTS) June 2016 Supervisor: Bo Göransson Examiner: Lea Fünfschilling Word Count: 15,482 Acknowledgement While this thesis bears a single name, I would like to express my deepest appreciation to all those who contributed to the completion of this thesis. First, I would like to offer my special thanks to my thesis supervisor Bo Göransson, who accompanied me on this journey with valuable comments and guidance. Next, I would like to thank all the participants of my study, without which this would not have been possible. For their time, effort and interest in my study, I thank Dr. Andreas Heinecke, Christian Hiß, Dr. Frank Hoffmann, Brian Richardson, Sebastian Sladek, Judy Stuart and Noel De Villiers. Finally, I would like to thank my friends and colleagues for their various distractions, lunch and coffee breaks which made this project a lot more enjoyable. Maximilian Weis Lund June 2017 Table of Contents List of Figures ........................................................................................................................................ ii List of Tables ......................................................................................................................................... iii List of Abbreviations ............................................................................................................................ iv 1. Introduction ................................................................................................................................... 1 1.1. Objective of the Study ............................................................................................................. 1 1.2. Outline of the Thesis ............................................................................................................... 2 1.3. Supporting Information ........................................................................................................... 2 2. Theoretical Framework ................................................................................................................ 3 2.1. Social Entrepreneurship........................................................................................................... 3 2.2. Social Innovation ..................................................................................................................... 4 2.3. Business Models ...................................................................................................................... 4 2.4. Business Models in Social Entrepreneurship .......................................................................... 5 2.4.1. Social Business Model Type 1 – Social Capital .............................................................. 7 2.4.2. Social Business Model Type 2 – Political Capital .......................................................... 8 2.4.3. Social Business Model Type 3 – Human Capital ............................................................ 9 2.4.4. Social Business Model Type 4 – Economic Capital ...................................................... 10 2.5. Business Model Innovation in Social Entrepreneurship ........................................................ 10 3. Data & Methodology ................................................................................................................... 12 3.1. Data and Sources ................................................................................................................... 12 3.2. Methodology ......................................................................................................................... 14 3.2.1. Social Business Model Typology .................................................................................. 14 3.2.2. Social Business Model Innovations ............................................................................... 15 4. Results and Discussion ................................................................................................................ 17 4.1. Social Business Model Types ................................................................................................ 17 4.1.1. Social Business Model Type 1 ...................................................................................... 18 4.1.2. Social Business Model Type 2 ...................................................................................... 19 4.1.3. Social Business Model Type 3 ...................................................................................... 21 4.1.4. Social Business Model Type 4 ...................................................................................... 23 4.2. Social Business Model Innovations ....................................................................................... 24 4.2.1. Financing ....................................................................................................................... 25 4.2.2. Scaling and Growth ....................................................................................................... 27 4.2.3. Stakeholders .................................................................................................................. 29 5. Conclusions .................................................................................................................................. 32 5.1. Social Business Model Types ................................................................................................ 32 5.2. Social Business Model Innovation ........................................................................................ 35 5.3. Limitations and Future Research ........................................................................................... 37 6. Reference List .............................................................................................................................. 39 Appendix .............................................................................................................................................. 43 Appendix I ......................................................................................................................................... 43 Appendix II ....................................................................................................................................... 46 Appendix III ...................................................................................................................................... 46 Appendix IV ...................................................................................................................................... 47 i List of Figures Figure 1: Social Business Model Types ..................................................................................... 7 Figure 2: Analysis of Business Model Taxonomy ................................................................... 15 Figure 3: Identification of Social Business Model Innovations ............................................... 16 Figure 4: Distribution of Social Business Model Types among German and South African Sample ...................................................................................................................................... 17 ii List of Tables Table 1: Examined companies based on Social Business Model Type 3 ................................ 13 Table 2: Examined companies based on Social Business Model Type 4 ................................ 14 Table 3: Social Business Model Innovations ........................................................................... 36 iii List of Abbreviations CEO Chief Executive Officer CSR Corporate Social Responsibility DH discovering hands gUG DSE Dialogue Social Enterprise GmbH EWS Elektrizitätswerke Schönau eG FFF Future Farmers Foundation OA Open Africa SBM Social Business Model SBMI Social Business Model Innovation SBMT Social Business
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