Resource mobilisation and pricing for Social Enterprises: The impact of marginalised versus better-resourced locations

Abstract

Democratic South Africa continues to slowly undo the adverse impacts of the Apartheid era where resource access was championed along racial lines as a consequence of Apartheid Spatial Planning which resulted in greater resource accumulation and distribution to the white minority at the cost of the majority black, coloured and Indian population. Social Enterprises (SEs) play a crucial role in tackling the country’s social challenges within the South African ecosystem alongside other sector players. The mobilisation of resources is a critical success factor for any SE to realise their objectives as these resources facilitate the organisation’s operations leading to positive value creation. Despite their value add, SEs face significant resource constraints in pursuit of their mandate. The objective of the research was to investigate through the geographic lens the key resources that SEs require to carry out their mandate and how these SEs mobilise these resources and price for their goods and services amidst the challenge of resource constraints. 15 SEs in South Africa were interviewed as part of the research located in Gauteng, Western Cape, and Mpumalanga provinces. The study highlighted relationships as the most important resource for SEs in South Africa and a gateway resource that facilitates access to other resource types. Furthermore, the establishment and leveraging of relationships was the most important strategy adopted alongside building credibility, aligning incentives through shared value, scavenging, shapeshifting bricolage, and optimisation. Finally, the research found that SEs adopt mostly discounted and value-based pricing as part of their financial resource mobilisation to a greater extent and absorption pricing to a lesser extent. The influence of geography had a positive and negative impact on both resource mobilisation and pricing strategies adopted by SEs with the location of the SE negatively impacting pricing charged to customers from marginalised areas on the one hand for some service offerings but justifying higher prices charged for services by some SEs based in better-resourced areas on the other hand. To guide managers a conceptual framework was developed which integrated pricing and resource mobilisation within the context of South Africa where the effects of Apartheid-based spatial marginalisation are still evident today