Marketization of social sectors and strategic responses of social enterprises

Official URL: http://risc01.sabanciuniv.edu/record=b1640338 (Table of Contents)

Through a qualitative study of the field of supplementary education of the disabled in Turkey, this research first explores the changing field dynamics after marketization. I find that the practices of the profit-maximizer new entrants, and the changes in the beneficiaries and the workforce, coupled with institutional weaknesses lead to the degeneration of the sector. Second, I analyze the pressures exerted on the social enterprises and present a framework showing the differing levels of vulnerability to those pressures based on particular organizational characteristics. Later, I elaborate on the strategic responses of 10 incumbent social enterprises through comparative case studies. The responses vary from proactive acts of scaling, increasing free services, increasing high-income beneficiaries, creating alternative resources, to reactive strategies of decreasing free services, decreasing quality investments, cost cuttings in expenses, reducing high-cost beneficiaries, seizing, and finally quitting the market. Reasons for the differing responses are vision and cohesion of the board, imprinting effects and legitimacy of the organization, entrepreneurial orientation, escalation of commitment, level of engagement, frame of reference, and pro-social values of the founders, as well as the socioeconomic situation of the region. A mission drift, on the other hand, occurred in a situation when the organization was found with equal emphasis on profit and social value rather than a pure social aim, when its ownership structure became fragmented, when exposed to pressure from small shareholders for profit coupled with a pressure on the main shareholder to stay in the business, and when it embedded itself in profit-maximizers’network.