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The Janus face of participatory governance: How inclusive governance benefits and limits the social innovativeness of social enterprises

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  • Ralph Richter

    (Leibniz Institute for Research on Society and Space (IRS) (Erkner, Germany))

Abstract

According to Schumpeter, the creativity and motivational ability of distinguished entrepreneurs drive innovation in enterprises. It is the individual entrepreneur who comes up with new ideas and paves the way for their realization. Conversely, social enterprises are regarded as making decisions in a collaborative manner and in close participation with stakeholders. Accordingly, the question arises as to how participative governance and the loss of the individual business leader’s importance is reflected in the innovativeness of social enterprises. Does collaborative decision-making hamper the development of innovative solutions or do social enterprises benefit from their capacity to innovate? This question guided a cross-case analysis of four social enterprises, and the results are presented in this paper. The investigation revealed that participatory governance can have different consequences for the innovative strength of social enterprises. While the involvement of internal stakeholders (members, employees) appears to be beneficial for developing novel solutions but generates limited social impact, close collaboration with external stakeholders, such as local communities or regional authorities, is less advantageous with respect to identifying new trends, ideas, and opportunities. However, the involvement of external stakeholders in decision-making is beneficial concerning the safeguard of community interests and the legitimization of social enterprise activities. The results suggest that a balanced involvement of both internal and external stakeholders would be beneficial for enhancing the social innovativeness of social enterprises.

Suggested Citation

  • Ralph Richter, 2018. "The Janus face of participatory governance: How inclusive governance benefits and limits the social innovativeness of social enterprises," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 7(1), pages 61-87.
    • Handle: RePEc:trn:csnjrn:v:7:i:1:p:61-87
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    References listed on IDEAS

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    1. Roger Spear & Chris Cornforth & Mike Aiken, 2009. "The Governance Challenges Of Social Enterprises: Evidence From A Uk Empirical Study," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 80(2), pages 247-273, June.
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    3. Carlo Borzaga & Silvia Sacchetti, 2015. "Why Social Enterprises Are Asking to Be Multi-stakeholder and Deliberative: An Explanation around the Costs of Exclusion," Euricse Working Papers 1575, Euricse (European Research Institute on Cooperative and Social Enterprises).
    4. Nino Antadze & Frances R. Westley, 2012. "Impact Metrics for Social Innovation: Barriers or Bridges to Radical Change?," Journal of Social Entrepreneurship, Taylor & Francis Journals, vol. 3(2), pages 133-150, October.
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    Cited by:

    1. Richter, Ralph, 2020. "Innovations at the edge: how local innovations are established in less favourable environments," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue Latest Ar, pages 1-21.

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    More about this item

    Keywords

    Social enterprise; Participatory governance; Social innovativeness; Internal and external stakeholders; Cross-case analysis;
    All these keywords.

    JEL classification:

    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • O35 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Social Innovation

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