The increased attention recently paid to the phenomenon of social entrepreneurship has focused little attention on the process of social entrepreneurship or how entrepreneurial decisions are made in a social context. Focusing on the activity of nonprofit organizations that engage in risk-bearing, innovative activities in pursuit of a social outcome (in a nonprofit context, earned income opportunities), I examine the likelihood of entrepreneurial action among nonprofit organizations operating in an environment of resource scarcity. Given the increasingly-constrained resource needs affecting many nonprofit organizations in the United States, rational economic theory would suggest that nonprofit organizations would examine, if not pursue, earned income opportunities (EIOs). Yet, recent investigations of this phenomenon suggest that the rates of activity among nonprofit organizations with regards to EIOs vary greatly from industry to industry, and may be significantly less overall than economic logic would suggest.
I seek to better understand why the presumed positive relationship between economic need and entrepreneurial action does not exist at the level we expect, and suggest that that relationship is mediated or moderated by three key institutional factors: organizational competency/capability, organizational identity orientation, and the salience of stakeholder groups. Through a mixed-methods study employing exploratory and confirmatory interviews and a comprehensive survey of nonprofit executive directors and development executives, I seek to investigate whether these factors result in the conflicted resource-action relationship currently observed and hypothesized in the nonprofit sector.
The findings of my research support the view that institutional pressures, in particular the salience of stakeholders, and the perception of organizational capabilities, serve as key drivers and definers of an organization's likelihood of engaging in entrepreneurial activity. They also identify important demographic influences on nonprofit entrepreneurial activity in organizational age and revenue base - factors which play a significant role in moderating these institutional pressures. Finally, they point to fundamental differences between current and future entrepreneurial action, with different variables playing differing roles in predicting entrepreneurial activity. These results suggest that not only do the institutional factors examined here impact nonprofit entrepreneurship, but that different types of entrepreneurship exist, each of which may be influenced by significantly different elements.