Institutional Constraints, Market Competition, and Revenue Strategies: Evidence from Canadian Social Enterprises

Abstract

Abstract This study examines the impact of external environment on social enterprises’ revenues strategies. Using a national survey of 1250 social enterprises in Canada, this study tests whether institutional constraints and market competition affect commercialization and revenue diversification of social enterprises. The results suggest that social enterprises’ revenue strategies are associated with both institutional constraints and market competition. With institutional constraints, for-profit and cooperative social enterprises rely more on commercial revenues and have a less diverse revenue structure than their nonprofit counterparts. In addition, social enterprises with parent organizations tend to be more commercialized. With market competition, specialist social enterprises providing social services have a more concentrated revenue structure than generalist social enterprises, while specialist social enterprises providing culture services rely less on commercial revenues and have a more diverse revenue structure than generalist social enterprises. The findings offer implications for social enterprises to rethink financial flexibility and autonomy.

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