A dynamic capabilities view of barriers to growth: comparison of social and commercial enterprises

Abstract

Social enterprises play an important role in addressing issues of social welfare and catalysing social change. In a context characterised by inequality, poverty, and unemployment, the core social enterprise mandate of creating social value is an important one. Yet social enterprises struggle to grow and scale their impact. The strategic management framework of dynamic capabilities and its components of sensing, seizing, and transforming is concerned with how businesses maintain and sustain competitive advantage. This research study replicated a dynamic capabilities scale and an associated business performance survey instrument with social enterprise and commercial enterprise respondents. Statistical analysis was undertaken to determine how dynamic capabilities differed across these two enterprise groups and whether dynamic capabilities were levers of business performance for social enterprises. The results concluded that the dynamic capabilities scale showed strong validity and reliability within a social enterprise environment, but there was not a strong overall correlation to business performance. The findings of the study also revealed two potential barriers to growth where social enterprises differed markedly from their commercial enterprise counterparts around certain dynamic capability items. Finally, the study found that the organisational age and size of a social enterprise had a significant bearing on business performance.