Social Entrepreneurship and Circular Business Models: creating a triple bottom line value Written by Eva Laláková University of Amsterdam Master of Business Administration Entrepreneurship & Innovation Track Author: Eva Laláková Student number: 11811641 Supervisor: Dhr. Balazs Szatmari Second reader: dhr. Dr. Tsvi Vinig Date: June 22nd, 2018 . 0 Statement of originality This document is written by Student Eva Laláková who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents. 1 Table of contents Abstract ..............................................................................................................................................4 1. Introduction ....................................................................................................................................5 2. Literature review .............................................................................................................................9 2.1. Business model literature ..........................................................................................................9 2.1.1. The concept of business models .........................................................................................9 2.1.2. Business model innovation .............................................................................................. 10 2.1.3. The triple bottom line....................................................................................................... 11 2.1.4. Towards sustainable business models ............................................................................... 11 2.2. The concept of social entrepreneurship ................................................................................... 14 2.2.1. Social entrepreneurship and multiple value creation ......................................................... 14 2.2.2. Social enterprises and sustainable business model components......................................... 15 2.3. The concept of Circular Economy .......................................................................................... 17 2.3.1. Circular Economy and sustainable business models.......................................................... 19 2.3.1.1. Circular Economy related Offerings, Revenue Models and Partnerships .................. 20 2.4. Conceptual Model .................................................................................................................. 23 2.4.1. Hypothesis 1 .................................................................................................................... 23 2.4.2. Hypothesis 2 .................................................................................................................... 24 2.4.3. Hypothesis 3 .................................................................................................................... 27 2.4.4. Hypothesis 4 .................................................................................................................... 29 3. Methodology................................................................................................................................. 33 3.1. Sample ................................................................................................................................... 33 3.2. Measures ................................................................................................................................ 33 3.2.1. Independent variable: Social entrepreneurship ................................................................. 34 3.2.2. Dependent variable: Triple bottom line value creation ...................................................... 34 3.2.3. Mediating variable: CE enabled offerings ........................................................................ 34 3.2.4. Mediating variable: CE enabled revenue model ................................................................ 35 3.2.5. Mediating variable: CE enabled partnerships .................................................................... 35 3.2.6. Control variables ............................................................................................................. 35 4. Data Analysis ................................................................................................................................ 36 4.1. Dataset and demographics ...................................................................................................... 36 4.2. Reliability analysis ................................................................................................................. 37 4.3. Factor analysis ....................................................................................................................... 38 4.4. Check for Normality ............................................................................................................... 38 5. Results .......................................................................................................................................... 40 2 5.1. Correlations............................................................................................................................ 40 5.2. Mediation effect - separate ..................................................................................................... 41 5.3. Mediation effect – simultaneous ............................................................................................. 46 6. Discussion .................................................................................................................................... 51 6.1. Theoretical Implications ......................................................................................................... 51 6.2. Practical Implications ............................................................................................................. 55 6.3. Limitations and future research ............................................................................................... 56 7. Conclusions .................................................................................................................................. 59 8. References .................................................................................................................................... 61 9. Appendices ................................................................................................................................... 69 3 Abstract This research examined a research question of how do social enterprises create a triple bottom line value by incorporating circular economy principles into their business models. While the triple bottom line value creation was measured by three sub-constructs of environmental, social and economic performances, circular economy business model components concerned circular economy related offerings, circular economy related revenue models and circular economy related partnerships. The study utilised cross-sectional survey design, by collecting data from 121 organisations in the Netherlands including both social enterprises and regular for-profit businesses. The findings suggested that social enterprises create a triple bottom line value. This indicates that social enterprises as an organisational form can be considered as sustainable enterprises adopting sustainable business models. This allows businesses aiming for a positive triple bottom line performance to adjust their business operations accordingly. It can also stimulate investments into social enterprises and inspire policy makers to create more favourable regulatory environment for this type of organisations. Other important finding shows that Circular Economy related Revenue Models and Partnerships mediate the relationship between social entrepreneurship and triple bottom line value creation, while Circular Economy related Offerings have a positive mediating effect on environmental and social aspects of the triple bottom line. Though when the mediating effect is tested simultaneously, Circular Economy related Offerings become the most important business model component for explaining positive environmental performance of companies, while Circular Economy related Revenue Models is the only business model component leading to positive economic performance. This shows the value of Circular Economy principles in promoting sustainable value creation of companies, while drawing managerial attention upon the specific business model components that have the capacity to do so. Key words: business model innovation, circular economy, circular business models, entrepreneurship, social entrepreneurship, sustainability, sustainable business models, triple bottom line value 4 1. Introduction Nowadays, there is a wide agreement in the scientific community that business activities are one of the most significant contributors to many social and environmental problems, such as growing inequalities or climate change (Cohen & Winn, 2007). The urgent need to find solutions to such problems has allowed for the rise of the concept of sustainable development, which calls for initiatives that would "meet the needs of the present without compromising the ability of future