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Is your organization conducive to thecontinuous creation of social value? Toward asocial corporate entrepreneurship scale

Donald F. Kuratko a,*, Jeffery S. McMullen a, Jeffrey S. Hornsby b,Chad Jackson c

aKelley School of Business, Indiana University, 1309 E. Tenth Street, Bloomington, IN 47405, U.S.A.bBloch School of Management, University of Missouri–—Kansas City, Kansas City, MO 64110, U.S.A.cCollege of Business Administration, Kansas State University, Manhattan, KS 66506, U.S.A.

Business Horizons (2017) 60, 271—283

Available online at www.sciencedirect.com

ScienceDirectwww.elsevier.com/locate/bushor

KEYWORDSSocialentrepreneurship;Corporateentrepreneurship;Social value;Hybrid organization;Scale development;Social innovationstrategy

Abstract Over the last decade, explicit emphasis on the creation of social value hasgrown in profit-seeking firms as well as nonprofits and has even led to the emergenceof a new legal organizational classification known as for-benefit corporations. Likefinancial value, social value is dynamic and therefore subject to perpetual changes inthe firm’s external environment, changes that yield opportunities and threats for thefirm. Although social entrepreneurship researchers have begun to study the identifi-cation and exploitation of opportunities to create social value, this research hastaken place primarily within the context of startup organizations. In contrast,corporate entrepreneurship research has emphasized value creation within existingfirms, but focused primarily on the identification and exploitation of opportunities tocreate financial value. Combining the two, we examine the creation of social valuewithin the firm by proposing the social corporate entrepreneurship scale (SCES), anew instrument that measures organizational antecedents for social corporateentrepreneurship and offers managers an opportunity to analyze whether theperceived environment is supportive of corporate entrepreneurial behaviorsintended to create social as well as financial value. The article concludes with adiscussion of the instrument’s potential contribution to managerial practice.# 2016 Kelley School of Business, Indiana University. Published by Elsevier Inc. Allrights reserved.

* Corresponding authorE-mail addresses: dkuratko@indiana.edu (D.F. Kuratko), mcmullej@indiana.edu (J.S. McMullen), hornsbyj@umkc.edu

(J.S. Hornsby), cjackson@ksu.edu (C. Jackson)

http://dx.doi.org/10.1016/j.bushor.2016.12.0030007-6813/# 2016 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.

272 D.F. Kuratko et al.

1. The rise of social value creation inbusiness

Organizations vary in how much they emphasize theexplicit creation of social value, defined as creatingbenefits beyond those captured by their creator(Auerswald, 2009; Miller, Grimes, McMullen, & Vogus,2012; Santos, 2012). Some organizations, such asnonprofits, are focused almost exclusively on cre-ating social value, whereas others, such as profit-maximizing firms, may view it as a pleasant by-product of their activities. Most organizations existas variants somewhere in between these extremes.

For example, the Girl Scouts of America, a non-profit organization, has become known almost asmuch for a product that they use to fund theiractivities–—Girl Scout cookies–—as they are for theirscouting activities. Cookie sales introduce financialvalue to an organization that exists to create socialvalue. Beyond nonprofits seeking earned income aresocial enterprises, which seek to balance social andfinancial value by tackling social problems throughbusiness solutions. WaterHealth International, forexample, provides safe water to the poor in India,the Philippines, and Ghana at prices near cost(McMullen & Bergman, in press). Next on the con-tinuum are for-profit companies that prioritize fi-nancial value while remaining explicitly committedto social value in the form of social responsibility–—some are certified as for-benefit corporations (BCorps) and L3Cs (McMullen & Warnick, 2016) whileothers have inextricably linked the creation of so-cial value to their economic value proposition. Forinstance, Toms Shoes and Warby Parker (eyewear)both employ a ‘buy one, give one’ model in whichevery purchase results in a donation of the productto the disadvantaged. Finally, there are corpora-tions, such as Timberland and Patagonia, that arerenowned for their progressive stance towardcorporate social responsibility–—viewing it as partof their identity and integral to their brand–—asopposed to some obligation engaged in merelyto ensure the firm’s continuing social license tooperate.

In recent years, there has been a decidedincrease in the emphasis of social value creationby all organizations, including for-profit organiza-tions because (1) customers want to buy from thesecompanies, (2) employees want to work for them,(3) investors are willing to invest in them, and(4) entrepreneurs hope to start them. Seeking toleverage this growing customer desire for sociallyconscious capitalism, for example, Bono andBobby Shriver created the Product Red campaign,a licensed brand that partners with private compa-nies such as Nike, American Express, and Apple to

raise money for and awareness about AIDS in Africa.Studies have shown that meaning is one of the mostimportant job attributes to millennials (De Hauw &De Vos, 2010) and that companies known for theircorporate social responsibility tend to attract bet-ter talent (Bhattacharya, Sen, & Korschun, 2008).Even investors have become more conscious aboutthe social value of the activities responsible forgenerating the returns they are seeking. For exam-ple, both Toms Shoes and Warby Parker haveemerged in the last decade in well-establishedindustries, but each already boasts market capitali-zation of over $1.2 billion. Similarly, social impactfunds–—as well as online investing and givingto organizations such as Kickstarter, Kiva, andGrameen Bank–—have experienced explosive growthover the last decade (Höchstädter & Scheck, 2015;Santos, 2012). The rise of socially conscious entre-preneurship is also evident in the emergence ofsocial entrepreneurship and the B Corp movement,a legal organizational form in 27 states at last count(McMullen & Warnick, 2016). Thus, the explicitcreation of social value as an objective in itself,and not merely a pleasant by-product of the orga-nization’s activities, is clearly on the rise.

2. All value creation is a dynamicprocess

With this increased emphasis on making the orga-nization’s social value proposition more explicitcomes new challenges. A case in point is offeredby Muhammad Yunus, who is perhaps the mostvisible of all proponents for creating social valuethrough business. Since receiving the 2006 NobelPeace prize for his microfinance work with GrameenBank, Muhammad Yunus has increasingly advocateda new kind of capitalism aimed at aiding the poorthrough business. As opposed to the Grameen Bank,which seeks to aid the poor directly by giving themfull majority ownership of a profit maximizing busi-ness and thus the dividends and equity growth itgenerates, Yunus proposed a second form of socialbusiness which sought to benefit the poor indirectlythrough the social benefit of the goods and servicesit produces. Investors seeking social benefits createa special type of company, where the mission of thefirm is not profit-maximization but the maximiza-tion of social indicators to be specified. Dividendsare not distributed and all profits are retainedfor growth. This type of social business is a“no-loss, no-dividend, self-sustaining company,”where investors can “get back their investmentmoney, but . . . [p]rofit would be ploughed backinto the company to expand its outreach and

Is your organization conducive to the continuous creation of social value? 273

improve the quality of its product or service”(Yunus, Moingeon, & Lehmann-Ortega, 2010, p. 311).

In 2007, Grameen and Dannon formed a jointventure to test Yunus’s social business concept.Grameen Dannon, a yogurt factory in Bogra,Bangladesh, produces and provides fortified yogurtto malnourished children in villages; a single servingprovides 30% of a child’s daily requirement of cru-cial nutrients. A main goal of the project is to pricethe product affordably–—initially the yogurt cupssold for 5 taka (about 7 cents) for an 80-gram cupwhereas standard yogurt products sold for about30 cents a cup (Yunus et al., 2010). Owing to risinginput costs from a global food shortage in 2007—2008, Grameen Dannon ran into financial difficultiesand was forced to raise its prices 60% in April2008 with disastrous consequences. The social busi-ness lost around 80% of its sales in rural areas, whichled to the collapse of its sales network comprisedprimarily of rural women paid on commission. Afterone year, the business model had to be substantiallyrevised. After redesigning its product into 60-gramservings and abandoning its hyper-local distributionmodel in favor of a refrigerated truck that couldcarry product to nearby cities and Bangladesh’slargest city, Dhaka, Grameen Dannon increasedsales. It built a network of shops in Dhaka whererefrigeration was more readily available and sold itsproduct for higher prices in these cities, whichallowed the company to become viable.

Grameen’s experiments have contributed togrowing proof of concept and diffusion of Yunus’snotion of social business, but they have also re-vealed that a more explicit emphasis on social valueis difficult and potentially problematic. If GrameenDannon’s challenges are common to social business,then such organizations may have trouble adaptingto the demands of the market whenever thosedemands conflict with the organization’s mission.For example, the need to achieve operational via-bility led Grameen Dannon to raise prices despitethe joint venture’s intent to provide a productsolution for child malnourishment at prices thatthe rural poor could afford. Eventually, the compa-ny compromised by cross-subsidizing rural marketswith revenues generated by higher prices and in-tensified sales and marketing in the city. Though thischange entailed a deviation from the original focuson rural villages, management felt justified in thedecision because it believed that it would help thecompany place a nutritious product in the hands ofmore people than could otherwise be accomplished(Yunus et al., 2010). Such dilemmas suggest thatsocial businesses may have to be even more en-trepreneurial than profit maximizing businesses(PMBs) in order to identify opportunities that not

only yield profit but also remain consistent with themission of the enterprise. Unlike PMBs, which canpursue any market problem that promises thedesired return on investment, social businessesare designed to solve specific social problems. Thisleads to more self-imposed restrictions on the socialorganization’s ability to adapt to market conditionsthan those limiting profit maximizing competitors.As a result, social businesses may need an entrepre-neurial orientation even more than their profitmaximizing counterparts to achieve long-termfinancial sustainability and to stave off the compla-cency, rigidity, and stagnation that can accompanyorganizational bureaucracy.

There is, however, a second, less obvious–—butequally important–—lesson from Grameen Dannon’sexperience that applies to any business seeking tobe more explicit about its creation of social value.Grameen Dannon had to make adjustments to sur-vive and some of these adjustments related to itssocial objective, not just its financial objective. Allvalue creation is a dynamic process, requiring con-stant adaptation to the environment. GrameenDannon largely forgot this when designing its busi-ness model, contributing first to a financial crisisand then to a crisis regarding its social mission. Justas the cost of inputs and the value of outputs arepartly a function of changes in the environment thatare outside a firm’s control, so too are the externalcosts and benefits associated with innovations in-tended to create social value. Therefore, if businessis going to emphasize social value more, managerswill likely need to monitor the environment andcontinually revisit the ways it creates, delivers, andcaptures social value, just as it has to do withfinancial value. This, of course, raises the question:What have businesses done to ensure that theyidentify and exploit the opportunities to createfinancial value that arise from a perpetually chang-ing environment? And, might these practices betransferred successfully to the creation of socialvalue as well, such that organizations are betterequipped to identify and exploit opportunities givena dynamic understanding of the environment?

One of the key ways firms have learned to create,deliver, and capture financial value in a dynamicexternal environment has been by embracing cor-porate entrepreneurship in the firm’s strategy, put-ting all employees–—not just the top managementteam–—to work identifying opportunities for theorganization to create value (Kuratko, Ireland,Covin, & Hornsby, 2005). Consequently, scholarshave studied the phenomenon of corporate entre-preneurship and developed instruments to helpmanagers determine whether their organizationalclimate is conducive to it. For example, Kuratko,

274 D.F. Kuratko et al.

Hornsby, and Covin’s (2014) corporate entre-preneurship assessment instrument (CEAI) providesa way for managers to capture their employees’perceptions about whether they feel willing andable to propose possible solutions to the problemsabout which they become aware. Would this sameinstrument work for determining whether a busi-ness’s climate is conducive to identifying opportu-nities to create, deliver, and capture social value?

Despite the rapidly growing interest in socialentrepreneurship, there is no equivalent instru-ment regarding social value creation. And, despitethe fact that corporate social responsibility (CSR)has been studied for quite some time, CSR scholars’focus has been much more on protecting the busi-ness’s social license to operate in a society bydeveloping goodwill than it has been on identifyingopportunities to create, deliver, and capture socialvalue (Auld, Bernstein, & Cashore, 2008; Bansal &Roth, 2000). Therefore, the purpose of this article isto share an instrument created to assess an orga-nization’s readiness to engage in social corporateentrepreneurship. That is, do the members ofan organization perceive their organization as re-sponsive to their ideas for creating, delivering, orcapturing social value?

In the remainder of this article, we introduce anumber of social dimensions identified by researchas important to the creation of social value and usethese to adapt an existing measure of corporateentrepreneurship. We then conduct an exploratorytest of the instrument and report some preliminaryresults suggesting that the new instrument couldindeed help practitioners determine whether themembers of their organization perceive their firm asconducive to identifying and seizing opportunitiesto create, deliver, and capture social value.

3. Corporate entrepreneurship andsocial value

Leading strategic thinkers are moving beyondtraditional product and service innovations topioneering innovation in processes, value chains,business models, and all functions of management(Govindarajan & Trimble, 2005). This more com-plete corporate entrepreneurship strategy isdefined by Ireland, Covin, and Kuratko (2009,p. 21) as “a vision-directed, organization-wide reli-ance on entrepreneurial behavior that purposefullyand continuously rejuvenates the organization andshapes the scope of its operations through therecognition and exploitation of entrepreneurialopportunity.” To be successful, this entrepreneurialactivity must be integrated carefully into the

organization’s overall strategies (Kuratko, Covin,& Hornsby, 2014), and one way in which organiza-tions can facilitate this continued adaptation todynamic competitive environments is through aninternal entrepreneurial orientation that is ground-ed in corporate entrepreneurship. Firms that exhib-it corporate entrepreneurship are typically viewedas dynamic, flexible entities prepared to takeadvantage of new business opportunities when theyarise (Morris, Kuratko, & Covin, 2011).

Despite the espoused and observed positive ef-fects of corporate entrepreneurship, research hasyet to examine corporate entrepreneurship strate-gies as they relate to the creation of social value,partly because of the lack of any instrument suit-able for the unique features that the task introdu-ces. Accordingly, we propose a new instrumentfor measuring organizational antecedents forcorporate entrepreneurship related not just tothe identification and exploitation of opportunityto create financial value, but to create social valueas well. Previous research has shown that efforts incorporate entrepreneurship depend on individualmembers’ positive perceptions of the criticaldimensions that foster innovative activity; there-fore, it is important to capture these perceptionsto understand why innovative activity is–—or isnot–—flourishing within an organization.

We began with an established scale, the corporateentrepreneurship assessment instrument–—CEAI(Kuratko, Hornsby, & Covin, 2014)–—which measuresthe dimensions important to corporate entre-preneurship activity as it relates to the creation offinancial value. From there we incorporated a set ofnew dimensions from the research literature toform a new instrument, entitled the social corpo-rate entrepreneurship scale (SCES), capable ofmeasuring the antecedents to corporate entre-preneurship as it relates to the creation of socialvalue. Since the publication of the original instru-ment (Kuratko, Montagno, & Hornsby, 1990), theCEAI has undergone refinement of the items usedto capture the underlying dimensions requiredfor individuals to behave entrepreneurially(e.g., Hornsby, Kuratko, & Zahra, 2002; Hornsby,Kuratko, Shepherd, & Bott, 2009). These dimen-sions, however, have remained consistent and in-clude top management support, autonomy/workdiscretion, rewards/reinforcement, resource/timeavailability, and organizational boundaries. Studieshave found that these antecedents are associatedwith internal entrepreneurship and the subsequentfinancial performance of the firm (Zahra, 1991) andthat they are cross-cultural (Hornsby, Kuratko, &Montagno, 1999). Finally, numerous studies haveexplicitly established the reliability and validity of

Table 1. Antecedents for social value creation

Factor Research Citations

Stakeholder Salience Vanderkerckhove & Dentchev, 2005; Clarkson, 1988, 1995; Mitchell, Agle, & Wood, 1997;Waddock & Graves, 1997; Agle, Mitchell, & Sonnenfeld, 1999; Mair & Marti, 2006; Kuratko,Hornsby, & Goldsby, 2007.

Social Proactiveness Clarkson, 1988, 1995; Gilbert, 1988; Miles & Snow, 1978; Porter, 1985; Covin & Slevin,1989; Ozmoyer, Calantone, & DiBonnetto, 1997; Shrivastava, 1995; Schot & Fischer, 1993;Azzone & Bertele, 1994; Buysse & Verbeke, 2003; Carroll, 1979; Wartick & Cochran, 1985;Jauch & Glueck, 1980; Sandberg, 2002.

Governance Zahra, 1996; Dalton, Daily, Ellstrand, & Johnson, 1998; Dalton, Daily, Johnson, &Ellstrand,1999; Dalton, Daily, Certo, & Roengpitya, 2003; Forbes & Milliken, 1999; Zahra,Neubaum, & Huse, 2000; Daily, Dalton, & Cannella, 2003; Certo, 2003; Sundaramurthy &Lewis, 2003.

Transparency Gray & Collison, 1991; Roberts, 1992; Lowenstein, 1996; Solomon, 2000; Wheeler &Elkington, 2001; Livesey & Kearins, 2002; Lacy, Cooper, Hayward, & Neuberger, 2010.

Is your organization conducive to the continuous creation of social value? 275

the instrument (Goodale, Kuratko, Hornsby, &Covin, 2011; Hornsby, Kuratko, Holt, & Wales,2013; van Wyk & Adonisi, 2012). Thus, with minoraugmentation, the CEAI for corporate entre-preneurship readiness could serve as an excellentfoundation for establishing a new scale of socialcorporate entrepreneurship.

After revisiting the theoretical and empiricalresearch that underlies the organizational factorsmeasured in the CEAI, we reviewed research on CSRand social entrepreneurship to identify additionaldimensions generally considered necessary for so-cial value creation to occur. Table 1 provides theliterature support used to identify stakeholder sa-lience, social proactiveness, governance, and trans-parency as additional factors that enable theextension of corporate entrepreneurship modelsto the creation of social value.

4. The social corporateentrepreneurship scale (SCES)

Based on their importance to corporate decisionmaking and perceived trust, stakeholder salience,social proactiveness, governance, and transparencywere identified as likely to be critical to the socialcorporate entrepreneurship activity of an organiza-tion. In the pages that follow, we offer a briefexplanation of why we believe these dimensionscomplement the already established dimensionsof the CEAI to form the basis of our proposed newscale.

4.1. Stakeholder salience

Vanderkerckhove and Dentchev (2005) suggestedthat increased understanding of the roles that all

stakeholders play can provide entrepreneurialopportunities for the development of new productsand services. Specifically, by maintaining relation-ships with multiple stakeholders, entrepreneurs areexposed to the needs of their constituencies butdetermining how much priority managers shouldgive different groups has been a key challenge instakeholder research. Clarkson (1988), for exam-ple, recognized that companies have differentlevels of stakeholders. Primary stakeholders arethose “without whose continuing participationthe corporation cannot survive” whereas secondarystakeholders are those “who influence or affect, orare influenced or affected by, the corporation”(Clarkson, 1988; p. 259). Because an organizationis unlikely to give each stakeholder equal attention,researchers have sought to identify how managersallocate their attention to related groups.

How salient a group is to the organization’sdecisions is known as stakeholder salience.Mitchell, Agle, and Wood (1997) identified threekey attributes–—legitimacy, urgency, and power–—thataffect the salience that a group has with the organi-zation and, consequently, how decision makers at-tend to stakeholders. Legitimacy is “based upon, forexample, contract, exchange, legal title, legal right,moral right, at-risk status, or moral interest in theharms and benefits generated by company actions;”power refers to a stakeholder’s ability to influencea company’s behavior; and urgency is “the degreeto which a stakeholder’s claim calls for immediateaction” (Agle, Mitchell, & Sonnenfeld, 1999, p. 508).The researchers examined these stakeholder attrib-utes and found that they have a significant relation-ship with stakeholder salience, which in turn has asignificant relationship with corporate social perfor-mance. For entrepreneurial activity of a financialnature, the firm’s primary stakeholders tend to be its

276 D.F. Kuratko et al.

customers, employees, and stockholders/investors(Kuratko, Hornsby, & Goldsby, 2007), but for en-trepreneurial activity of a more social nature, thefirm’s corporate social performance tends to beaffected directly by its relationships with a broaderarray of stakeholders (Agle et al., 1999; Waddock &Graves, 1997).

4.2. Social proactiveness

Clarkson (1995) suggested that organizational pos-ture is an evaluative result stemming from the levelof stakeholder salience. Because the phrase ‘orga-nizational posture’ refers to how an organizationresponds to its environment, posture likely reflectsa company’s relationships with its stakeholders. Ithas been employed in management research toassess the overall approach that organizations useto implement their goals, a process that requiresactive thought and constant maintenance by deci-sion makers (Gilbert, 1988), and therefore has anextensive presence within the strategic manage-ment literature.

For example, Miles and Snow (1978) capturedposture as a firm’s decision about which marketsto enter and the competitive orientation in thosemarkets. Porter (1985) utilized a generic strategicframework of leadership and differentiation forbasing orientation as a posture. Covin and Slevin(1989, p. 77) defined strategic posture “as a firm’soverall competitive orientation.” According toOzmoyer, Calantone, and DiBonnetto (1997),posture affects how a firm selects and interpretsits environment and how it deploys its resources.The environmental management literature has em-ployed posture to address ecological issues andsustainable development (Azzone & Bertele,1994; Buysse & Verbeke, 2003). Especially pertinentwas the application of posture to the study of socialissues in which the construct had been used tocapture organizational responses to stakeholders(Clarkson, 1988, 1995).

The posture of a company can take various formsthat researchers have categorized in differentways. Miles and Snow (1978), for example, offereda typology of defenders, reactors, analyzers, andprospectors. Covin and Slevin (1989) incorporatedthe defender term and Mintzberg’s (1973) adaptiveorganizations offered an entrepreneurial classifica-tion, which focused on the risks that top manage-ment is willing to take to bring change, fosterinnovation, and gain competitive advantage.Within the context of social issues, this approachhas been modified to capture an organization’sapproach to corporate social responsibility. Intro-duced by Carroll (1979) and modified by Wartick and

Cochran (1985), the most accepted CSR categoriza-tion is reactive, defensive, accommodative, andproactive. Companies in a reactive posture denyresponsibility on social issues and do less thanrequired. Defensive companies reluctantly admittheir complicity in social issues and do the bareminimum in response. Accommodative companiesaccept responsibilities on social issues and take thenecessary actions to address them. Finally, proac-tive companies anticipate responsibility and searchfor ways to be leaders on the issues.

Socially proactive organizations seek to influenceand change environments rather than respond outof necessity or survival. Jauch, Osborn, and Glueck(1980, p. 49) defined a proactive strategy as “onein which strategists act before they are forced toreact to environmental threats and opportunities.”Because it involves monitoring customers and com-petitors, proactiveness can be resource intensive,but it also aids significantly in maintaining competi-tiveness (Sandberg, 2002). Proactive behaviorsinclude identifying opportunities, challenging thestatus quo, and creating favorable conditions.These characteristics are similar to the approachtaken by corporate entrepreneurs and thus could bea critical component of social corporate entre-preneurship.

4.3. Corporate governance

Daily, Dalton, and Cannella (2003, p. 371) definedcorporate governance as “the determination of thebroad uses to which organizational resources will bedeployed and the resolution of conflicts among themyriad participants in organizations.” Corporategovernance mechanisms are intended to providesome assurance that managers will strive to achieveoutcomes that coincide with shareholder interests.These mechanisms include compensation contractsthat encourage expected activities and behaviors, aproperly constructed board of directors, and inter-nal checks and balances for ethical and transparentconduct.

In practice, many governance reforms have beenenacted to ensure that both legitimate and effec-tive activities take place in the organization. Someof the reforms have included adding independentoutside directors to boards, separating the CEO andchairman of the board positions, inserting termlimits for directors, and establishing executive com-pensation packages that depend on closer corre-spondence between results and goals (Dalton, Daily,Johnson, & Ellstrand, 1999). Even though twometa-analyses of the general state of corporategovernance found little connection between thesereforms and the financial performance of firms

Is your organization conducive to the continuous creation of social value? 277

(Dalton, Daily, Certo, & Roengpitya, 2003; Dalton,Daily, Ellstrand, & Johnson, 1998), the future ofgovernance procedures cannot be overlooked in thelight of social corporate entrepreneurship activity.Indeed, Daily et al. (2003) identified a number ofthemes that are moving governance forward, suchas monitoring by the board of directors of executiveactivity and results, more active shareholder influ-ence, and the mechanisms in place for periods ofcrisis. As Ghoshal and Moran (1996, p. 41) stated:

The context in which social relations andeconomic exchange are embedded can induceself-aggrandizement or trust, individualismor collectivism, competition or cooperationamong participants. Economic progress re-quires both sets of behaviors in each set ofalternatives, not just one or the other.

It is apparent that in today’s dynamic and globaleconomic climate, the concept of a governancesystem that balances control and collaborationmay be the most conducive to activity directed atsocial impact (Sundaramurthy & Lewis, 2003). Asthe CERES (2010) sustainability roadmap indicatesin its critical element in 21st century corporatesustainability, this component of governance shouldbe included as an important antecedent for perceiv-ing an environment conducive to social entre-preneurship activity.

4.4. Transparency (disclosure)

Comprehensive transparency and disclosure of per-formance at all levels (environmental, social, andeconomic) is a critical component of any organiza-tion’s social entrepreneurship journey. It has longbeen recognized that what gets measured getsattention and what gets disclosed gets done. Dis-closure is a mechanism for companies to buildrelationships with key groups (stakeholders), andit is important to the process for identifying newbusiness opportunities (CERES, 2010).

Mandatory environmental and social disclosure ispushing into the mainstream. Globally, a number ofcountries already require some form of corporatesustainability disclosure, and there is growing sup-port for similar requirements in the U.S. For exam-ple, in 2009 Bloomberg launched a new product thatallowed clients to search, display, and store sus-tainability information on over 3,000 publicly trad-ed companies on their terminals. The growth insocial media has also begun to blur the line betweendisclosure and engagement, creating new opportu-nities for dialogue but also new pressure for trans-parency. As social media enables internet users toshare news and make their opinions about corporate

social issues known in real time, companies have tobe prepared for open and honest discussion of socialimpact performance issues as they arise (CERES,2010). Although transparency and full disclosurewill certainly help promote an atmosphere of trustand willingness to pursue entrepreneurial activitiesintended to create social and financial value, gov-ernment regulation and citizen advocacy groups willstill be a critical part of the oversight (Karkkainen,2001). In Table 2, we present the complete SCESscale that could be used in the assessment of afirm’s readiness for social corporate entrepreneur-ship to be activated.

5. An exploratory study

To pilot test the new scale, an exploratory study wasconducted. The SCES was administered to 152 com-pany managers. The data were collected through anonline survey with randomized questions that wasdistributed through the Qualtrix survey platform toan existing email list of mid- and senior-level man-agers in the Midwestern U.S. Following Dillman’s(2000) recommendation for conducting online sur-veys, an email introduction of the study was sent tothe population alerting them to the survey thatwould arrive in a few days. Subsequent reminderemails were sent in 5-day intervals, encouragingthem to complete the survey. A total of threereminder emails were sent with a random drawingfor five $100 Amazon gift cards as an incentivefor completing the survey. Through this samplingmethod, a total of 152 surveys were successfullycompleted for a response rate of 30.36%.

A series of self-report questions was also devel-oped to assess the intensity of social corporate en-trepreneurship activities in their firms. Despite thefact that social corporate entrepreneurship is a rela-tively new concept, the creation of social value hasbeen studied for some time under the guise of CSR.Indeed, the language of CSR has become so synony-mous with the creation of social value within a firmthat we chose to use it as a proxy in some elementsincluding number of new corporate social responsi-bility ideas suggested and number of new corporatesocial responsibility ideas implemented. However,we also included the number of new companiesstarted by the firm and the number of new companieswith a social mission started by firm to tap into socialentrepreneurship activity as directly as possible.

5.1. Sample description

Of the 152 respondents, 96 (63.16%) were male and56 (36.84%) were female. One respondent (.65%)

278 D.F. Kuratko et al.

had some college, 92 (60.53%) had a college degree,53 (34.64%) had a master’s degree, and 6 (3.92%)had a professional degree. In regard to the respond-ent’s job title, 39 (25.66%) identified themselves asentry-level management, 67 (44.08%) identified asmiddle-level management, and 46 (30.26%) identi-

Table 2. SCES instrument

fied as senior-level management. In regard towhether the respondents’ primary job duties relat-ed to CSR, 52 (34.12%) were related to CSR, and 100(65.79%) were not related to CSR. Since firm size hasbeen found to have potential links to social perfor-mance in previous studies (Deckop, Merriman, &

(Continued)

Table 2 (Continued )

Is your organization conducive to the continuous creation of social value? 279

280 D.F. Kuratko et al.

Gupta, 2006; Waddock & Graves, 1997) it wasimportant to examine the firm size of survey par-ticipants for consideration as a control variable. Ofthe 152 respondents, 7 (4.61%) had 1—4 employees,6 (3.95%) had 5—9 employees, 9 (5.92%) had 10—19employees, 26 (17.11%) had 20—99 employees, 24(15.79%) had 100—499 employees, 7 (4.61%) had500—749 employees, 3 (1.97%) had 750—999 em-ployees, 7 (4.61%) had 1,000—1,499 employees,3 (1.97%) had 2,000—2,499 employees, 12 (7.89%)had 2,500—4,999 employees, 12 (7.89%) had 5,000—9,999 employees, and 36 (23.68%) had 10,000 ormore employees.

5.2. Results

This exploratory study assessed the viability of astable set of organizational antecedents to socialcorporate entrepreneurship using the SCES. Fivefactors were identified: firm transparency, socialproactiveness, rewards, work discretion, and timeavailability. Additional analyses were conducted totest whether a statistically significant relationshipexists between perceived social corporate entre-preneurship organizational factors and the devel-opment of new social corporate entrepreneurshipinitiatives. While social proactiveness was found tohave significance in predicting the number of newcorporate social responsibility ideas suggested inthe last 12 months, the additional perceived factorsof transparency, rewards, work discretion, and timeavailability were found to correlate with the num-ber of new ideas suggested, but not at statisticallysignificant levels. Despite the exploratory nature ofthis research, the results are promising, suggestingthat additional research is merited on whetherand how perceived organizational factors leadan organization to implement a social corporateentrepreneurship strategy.

5.3. Limitations

This exploratory research had some key limitations.First, the study was based on self-reported managerperceptions at a single point in time and thus did notreflect changes over time. The resulting data couldtherefore be affected by the manager’s awareness–—or lack thereof–—of social corporate entrepreneur-ship activity in the firm. A second limitation arosebecause social corporate entrepreneurship is a newand developing approach, often lacking a commonvernacular. Therefore, we sought to leverage theclosest vocabulary equivalent–—the number of newcorporate social responsibility ideas recommended–—as a proxy for social corporate entrepreneurship.Some survey participants may have not been aware

of the current socially responsible activities of thefirm, which may affect the results of the research.Finally, the data being collected through an onlinesurvey primarily sent to managers working in firms inthe Midwest region could have been limiting.Additional studies should be conducted with newsamples from other locations to affirm the gener-alizability of the findings.

6. An innovative future

While corporate entrepreneurship has been iden-tified as one way in which organizations can facili-tate continued adaptation to dynamic competitiveenvironments through an internal entrepreneurialorientation, research has yet to examine corporateentrepreneurial strategies for creating socialvalue, owing to the lack of any instrument suitablefor the unique features that the task introduces.We developed a new instrument for measuringorganizational antecedents for corporate entre-preneurship intended to create social value enti-tled the social corporate entrepreneurship scale(SCES). Because sustained efforts in creating socialas well as financial value depend on individualmembers’ willingness to undertake innovativeactivities based on their positive perceptions ofthe necessary organizational antecedents to socialcorporate entrepreneurship, our new scale offersan opportunity to measure those perceptions. Thatis, using the new scale, managers can analyzewhether employees perceive the environment asconducive to social corporate entrepreneurshipbehaviors.

Our exploratory study of 152 company managerspilot tested the new instrument and revealed fivefactors: firm transparency, social proactiveness,rewards, work discretion, and time availabilitycorrelated with the number of new ideas sug-gested. This research was exploratory in nature,but the results provide support for conductingadditional research using the SCES to further re-fine and validate the instrument among organiza-tions seeking to measure the positive perceptionsof individuals concerning the necessary organiza-tional antecedents to social corporate entre-preneurship.

Social entrepreneurs apply entrepreneurship andcorporate innovation principles to many of thespecific social and environmental challenges theyface (Austin, Stevenson, & Wei-Skillern, 2006;Chell, 2007; Hartigan, 2006). By adapting some ofthe same principles that have been so effectivein successful corporate entrepreneurship to thecreation of social value as well as financial value,

Is your organization conducive to the continuous creation of social value? 281

leaders have a similar opportunity to generatetransformative, financially sustainable solutionsto social problems. Despite the growing emphasison corporate entrepreneurship, however, thestudy of social entrepreneurship within existingfirms has gone relatively neglected.

Because of the decided increase in the emphasisof social value creation by all organizations, in thisarticle we examined the ways to prepare an orga-nization for this mission. More significantly, if busi-nesses are going to emphasize social value more,managers and employees will likely need to monitorthe environment and continually revisit the waysthey create, deliver, and capture social value, justas they have done with financial value. As such, newinstruments are needed to measure individual per-ceptions of the current organizational environmentto determine whether it is conducive to individualefforts to create social value. By proposing a newinstrument that extends the work in corporate en-trepreneurship to the field of social entrepreneur-ship, we hope that the SCES will provide a betterunderstanding the organizational conditions thatfoster social value creation.

Though exploratory in nature, our efforts todevelop an instrument for measuring the readinessof a firm for social corporate entrepreneurshipcome at a time when interest in social entre-preneurship, social value creation, and the needfor socially conscious businesses to embracecontinuous innovation have never been stronger.Therefore, we hope this instrument serves as a steptoward equipping managers with the tools theyneed to enable individuals to propose innovativesolutions to social issues, thereby facilitatingprogress toward the organization’s goal of creatingsocial value.

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