Social entrepreneurship, hybrid organizations and B-Corps

The Humane side of Entrepreneurship: an empirical investigation

Valentina Cucino, Cristina Marullo, Eleonora Annunziata, Andrea Piccaluga

Entrepreneurial behavior brings a purely selfish orientation and very often motivated by profit. However, in recent years, overcoming the traditional view of capitalism has changed entrepreneurial behavior.

Firms have started to act by integrating the sustainable use of natural resources, better use of the capital produced and further investments in human capital (Melè, 2003; Spitzeck, 2011). Therefore, new entrepreneurial concepts such as social entrepreneurship, sustainable entrepreneurship and more recently humanitarian entrepreneurship have spread (Parente et al., 2018). This new orientation towards a new way of defining entrepreneurship has been defined by some authors as Humane Entrepreneurship (Kim et al., 2017; 2018).

Human entrepreneurship is defined as “a virtuous and sustainable integration of entrepreneurship, leadership and human resource management, in which successful implementation leads to a beneficial increase in the creation of quality and wealth jobs, perpetuated in a continuous cycle “(Kim et al., 2018). However, the orientation to this new entrepreneurial behavior encompasses two well-known concepts in the entrepreneurship literature: social entrepreneurship and sustainable entrepreneurship. Social enterprise and sustainable enterprise are two expressions of Humane Entrepreneurship because they both pay attention to their external relationships and impacts on society. However, by themselves they are not sufficient to express the concept of “humane enterprise”.

Current entrepreneurial theories emphasize primarily the “creation” of value and not the “distribution” of value for employees, stakeholders and companies (Kim et al., 2018). Adding the “human-centered” discussion to entrepreneurship requires advancing these traditional concepts and theories in order to understand how human capital affects economies in the 21st century. Today, entrepreneurship must be inclusive and sustainable, focusing on both the production of traditional profits and the needs of individuals and overall society (Kim et al., 2018).

Several authors have studied and developed the theoretical model (Parente et al., 2018; Kim et al., 2018). However, to date there are still few empirical studies that investigate the characteristics of human entrepreneurship (Bae et al., 2018; Kim et al., 2016). For this study, the authors selected Italian SMEs registered in the Italian Startup Companies Register, an official database in which companies operating in sectors with high social impact are identified (Decree No. 155/2006 Innovative startups with a social vocation – SIaVS). These companies were selected by the authors because their mission stated a clear orientation to the “social purpose”.

Although firms with a social mission are only a small subset of human-oriented firms, these firms deal with issues relevant to society such as human poverty, social inequality and environmental and social challenges. The creation of social value requires a different entrepreneurial orientation, which pays attention to the stakeholders and their needs. However, there is an empirical knowledge gap with respect to the weight and role that the characteristics of humane entrepreneurship assume within companies and their relationship with the performance in terms of value distribution carried out by companies with a social mission.

This study aims to provide a first empirical evidence on this phenomenon. Based on an investigation – a sample of Italian startups with a social mission, we investigate the role of different aspects that characterize human entrepreneurship. In particular, our research question aims to investigate: “Does human entrepreneurship influence the value distribution of startups with a social mission?”

The theoretical model of Humane Entrepreneurship is composed of multiple structures that interact continuously (Kim et al., 2018; Parente et al., 2018). This model consists of three main dimensions that have been considered in our study. The first dimension is leadership, understood as the role of the leader in the management of the company (Kim et al., 2018). According to Alvarez and Barney (2007) and Gonzalez et al. (2017) we adapt the concept of leadership to the identification of the opportunity that led to the establishment of the company. In this case we will talk about identifying the business opportunity. The second dimension of the model is entrepreneurial orientation. Following Kim et al., 2018 and Covin and Slevin (1988; 1991) we adopt the “Entrepreneurial orientation” EO, measured by the propensity of the top managers to (1) take risks related to businesses; (2) foster change and innovation to create competitive advantage; and (3) proactivity in competing aggressively with other firms.

Finally, the last part of the model is represented by humane entrepreneurial orientation. Through empathy, mutual trust, respect and support you can understand the needs not only of customers (Brown 2008; 1998) but also of employees (Judge and Piccolo 2004; Jude and Bretz, 1992). In addition to empathy, there are three other common elements that emphasize the “humane” management of people within an organization. These elements are (1) equity in terms of “the measure in which a society treats people fairly and the same way” (Agòcs and Burr 1996), (2) empowerment in terms of the “delegation of power and responsibility from higher levels of the organizational hierarchy to lower levels, especially in regard to an employee’s ability to make decisions “(Spreitzer, 2012) and (3) enablement in terms of “the extent to which a company provides the environment where each individual employee is able to develop skills and knowledge, consisting of both skill and infrastructure” (Kim et al., 2018). A “Humane Oriented” firm motivates employees by sharing their emotions and information, but not only. A “humanity-oriented” firm acts fairly and provides the creation of an environment in which each individual employee is able to develop skills and knowledge. When these elements are present together, there is Human Orientation.

Finally, current theories of entrepreneurship mainly emphasize the “creation” of value and not the “distribution” of value for employees, stakeholders and society (Kim et al., 2018). However, the concept of “distribution” of value is fundamental for achieving overall well-being.

The present study focuses on the “distribution” of value of only one of these three subjects. In particular, the analysis aims to provide indications regarding the “distribution” of value for stakeholders such as firms’ organizational performance in terms of network and ecosystem development (Crittenden et al., 2011; Parente et al., 2018). Therefore, adapting Darnall et al., 2010’s identification of categories of external stakeholders, we identify the company’s “distribution” value in terms of the number and intensity of relationships with stakeholders in companies with a social mission.

The paper proceeds as follows. Section 2 discusses the methodology used to answer our research question. Section 3 explains the preliminary findings of the study. However, research is still work in progress. Section 4 illustrates the limitations of research and future research. Section 5 illustrates the practical implications. The last section analyzes the original elements of the study.

#humane entrepreneurial orientation #humane entrepreneurship #stakeholders #start-up #well-creation