A cognitive approach to the expected value of work integration social enterprises

Abstract

Research Summary: Oftentimes, social enterprises simultaneously pursue competing organizational goals. For example, this can mean having a social goal (e.g., integrating vulnerable populations into the labor market) and a commercial goal (e.g., being profitable). I propose a theory according to which for such social enterprises, how they are perceived depends on how their goals are presented and on the type of categorization process used by their evaluating audience. These two factors together impact a venture's legitimacy and expected value. I also show that these effects vary with the level of knowledgeability of the audience performing the evaluation. Taken together, the results of this paper have implications for the cognitive perspective on strategic entrepreneurship as well as the literature on categories in markets and on hybrid organizations. Managerial Summary: I study the different category primings that influence the customer's perception of work integration social enterprises (WISEs). These social enterprises can either direct their customers' attention toward comparability with a category prototype (prototype-based categorization), or toward a customer goal (goal-based categorization). I find support for the idea that, depending on which organizational goal is emphasized first and foremost by a WISE (e.g., social or commercial), the activation of either category priming impacts the venture's capacity to create value. Ultimately, this work establishes the cognitive foundations of social enterprises' competitive advantage by showing the type of category priming (goal-based vs. prototype-based categorization) that positively impacts a WISE's expected value as a function of “who” the targeted customers (less vs. more knowledgeable customers) are.