Abstract
Background: Despite the important role of social enterprises in addressing the gaps in social service and infrastructure provision by national governments, the organisational capabilities that make social enterprises competitive and effective are still under-researched in emerging economies.
Aim: The purpose of the study is to extend the extant studies on the nexus between organisational ambidexterity and firm performance to the social enterprise context. More specifically, we draw on the Dynamic Capability Theory to investigate business-like social enterprises in Ghana and how organisational ambidexterity (i.e. exploitation and exploration) influences their social and economic performance.
Setting: Organisational ambidexterity was tested on 317 randomly selected social enterprises in Ghana.
Method: The study employed a quantitative research design via a survey questionnaire while the structural equation modelling technique in Analysis of a Moment Structure (AMOS) software was used to test the study’s hypotheses.
Results: It was found, among other things, that both exploration and exploitation are positively and significantly related to social performance (social marketing achievement and social value creation) and economic performance (commercial marketing achievement and economic value creation) of social enterprises. That is, the simultaneous pursuit of exploitative and explorative initiatives does not decrease but increase social enterprise performance. These results defy the conventional wisdom that the trade-off between exploitative and explorative functions may decrease organisation efficiency and bring unnecessary costs.
Conclusion: Organisational ambidexterity can be considered a cradle of strategic revitalisation and competitive advantage for social enterprises enhancing social and economic performance. Therefore, we suggest that social entrepreneurs should pursue exploitative and explorative ambidexterity simultaneously through appropriate structural ambidexterous mechanisms like structural separations or contextual ambidexterous mechanisms such as non-structural separations of units.
Keywords: organisational ambidexterity; social enterprise; social performance; economic performance; Ghana.
Introduction
The ability to act efficiently while being adaptive to the ever-changing, exacting, and tumultuous business environment has become a prerequisite for the survival of firms today more than ever before (Hölzl 2022; Weaver & Blakey 2022), rendering it a vital expedition in research to explore and determine the means to create and build organisational ambidexterity (OA) in companies (Hölzl 2022; Junni et al. 2013). Indeed, Kafetzopoulos (2021:1) captures this reality well: ‘Nowadays, a major topic for researchers and an important issue for almost all companies in the world is ambidexterity’. Organisational ambidexterity refers to a firm’s capability to pursue both exploitative and explorative innovation strategies, simultaneously, to secure sustainable competitive advantage (O’Reilly & Tushman 2008). The extant literature differentiates between two main internal strategies of OA, namely exploitative and explorative (O’Reilly & Tushman 2008; Hughes 2018), based on the structural ambidexterity framework (O’Reilly & Tushman 2008; Raisch & Tushman 2016). According to the dynamic capability theory (DCT), OA is a dynamic capability that helps organisations to adjust to changing business trends over time (Junni et al. 2013), enhance a firm’s financial performance (Auh & Menguc 2005), innovation (Rothaermel & Deeds 2004), new product development (Ferreira, Cardim & Branco 2018) and overall firm performance (Cao, Gedajovic & Zhang 2009; Kafetzopoulos 2020). This dynamic and innovative capability is also practical for social enterprises that do not possess abundant resources (Farhoud et al. 2021; Madden 2012; Weaver 2020).
The importance of social enterprises, defined as enterprises with ‘revenue-generating interventions for the alleviation of social problems’ (Weaver & Blakey 2022:3), in addressing crises such as ethnic, racial, religious discrimination, economic recessions, pandemics, and uncertainty, which are long-standing issues that tend to reoccur, has received increased attention among social activists, policymakers, practitioners, and academics. In Ghana, for example, the dynamic role of social enterprises is highly underscored due to the (1) ‘increased focus on the role of the private sector and (2) continuing gaps in social service and infrastructure provision by the state’ (Darko & Koranteng 2015:5). To help develop and support social enterprise development ecosystems in Ghana, government and private stakeholders have made several initiatives, including the Business Development Fund, the Ghana Regional Appropriate Technology Industrial Services (GRATIS), (Obeng & Blundel 2015), and Growth Mosaic, iSpace, and incubators like Impact Hub Accra, Reach for Change, and TechnoServe to offer business support to social entrepreneurs and small-business owners in an attempt to promote social entrepreneurship across the country (Agyeman-Togobo et al. 2016).
However, to successfully deliver social and economic value to the world, social enterprises have to respond quickly and adaptively in times of crisis to the ever-increasing societal problems and concerns (Farhoud et al. 2021; Weaver & Blakey 2022). In fact, Farhoud et al. (2021) postulate that social enterprises must move swiftly to identify novel business roles and opportunities in today’s exacting, turbulent marketplace. In particular, since the COVID-19 pandemic, companies across all sectors have had to adapt and shift rapidly to changing business demands in terms of government requirements regarding lockdowns and how customers’ needs and wants are to be met, as well as how they are to be protected. This way, social enterprise experts opine mission agility during this crisis and its aftermath – and without doubt, one key internal strategy to accomplish this is by deploying OA (Bacq & Lumpkin 2021; Weaver 2020).
Notwithstanding, the ambidexterity research map still has some blind spots (Kafetzopoulos 2020). Amongst these blind spots is the impact of OA on social enterprise performance, particularly in emerging economies. Organisational ambidexterity has been researched in different contexts like high-tech small and medium enterprises SMEs (Venugopal et al. 2020; Wang & Rafiq 2014), family-owned businesses (Mazelli et al. 2020), and environmental dynamism (Mammassis & Kostopoulos 2019), but the current study is one of the few to examine this focal relationship in the social enterprise context in Sub-Saharan Africa. A large share of the extant literature has been concentrated in the conventional entrepreneurship arena in the developed world (i.e. for-profit enterprises) (Gottschalck et al. 2021; Kafetzopoulos 2020; Santoro, Messeni-Petruzzelli & Del Giudice 2021; Simsek 2009). To this end, we have limited understanding and insight vis-à-vis the applicability of the OA framework in the social enterprise context in emerging economies and the extent to which it influences the performance of these not-for-profit organisations (Nowak & Raffaelli 2022).
Yet, as stated before, ambidexterity is critical not only for the organisational prosperity and performance of traditional entrepreneurship firms but also for non-conventional enterprises like social enterprises, which also need capabilities of exploitation and exploration to rapidly or swiftly respond to societal challenges at hand, by harnessing technological and social innovations (Kamaludin, Xavier & Amin 2021). Another blind spot on the ambidexterity research map, even within the conventional entrepreneurship literature, is the mixed findings on its impact on the performance of firms (Jurksiene & Pundziene 2016). While some scholars argue that pursuing OA benefits firms, since its elements complement each other (Cao et al. 2020; Gottschalck et al. 2021; Kafetzopoulos 2020), some postulate that OA has no significant impact (Venkatraman, Lee & Iyer 2007) and that OA may even decrease firm performance because its elements compete for scarce resources (Atuahene-Gima 2005). So, there is yet to be theoretical or empirical consistency about the effect of OA on enterprise performance, thus needing further inquiry for validation.
This study, answering researchers’ call for more empirical research to ‘examine whether ambidexterity leads to success’ (Kafetzopoulos 2020:4; Raisch & Birkinshaw 2008), moves the extant literature in advance by designing a comprehensive conceptual model that examines the relationship between OA and organisational performance in the social enterprise context in an emerging economy. Therefore, from the perspective of the DCT, we raise the nagging question: Does OA (exploitation and exploration) positively or negatively influence social enterprise performance in emerging economies like Ghana? To answer this question, the study empirically examines the independent effect of exploitative ambidexterity and explorative ambidexterity on each dimension of social enterprise performance (i.e. social performance, social marketing achievement & social value creation) and economic performance (commercial marketing achievement & economic value creation) based on a sample of 317 Ghanaian social enterprises. This sample includes firms that generate income from business activities (i.e. income from different sources like trading activities or service offering for new fundraising (Guo 2006), thus excluding Red Cross, the Salvation Army, United Way of Ghana, and religious-based organisations.
Accordingly, the study’s contributions are four-fold, reflected in its objective. Firstly, we introduce the concept of OA to social enterprise research in an emerging market and develop hypotheses concerning its influence on social enterprise performance. Informed by the DCT, this study serves as one of the limited studies to investigate the value and role of OA in social enterprises as a strategic technique for enhancing performance. Secondly, we investigate the social enterprise performance using a multidimensional performance framework, namely social performance (1) social marketing achievement and (2) social value creation, and economic performance (3) commercial marketing achievement and (4) economic value creation to address the prevailing contradictory findings in OA – performance associations on a micro-level, which in turn, extends the development of business models. This adds theoretical value to social enterprise research because one of the daunting aspects of social enterprise research is how to measure the impact of social interventions (Liu, Eng & Takeda 2015). Thus, distinguishing the differential effects of OA on diverse wings of firm performance can add theoretical value to research and practice.
Thirdly, we extend the debate regarding the role of OA in enhancing the performance of organisations to emerging economies like Ghana, which is under severe financial and economic debt, coupled with the aftermath of the COVID-19 pandemic. Scholars have called for the examination of OA in a different context (Cao et al. 2009) and culture (Malik et al. 2019; Peng 2019), since most of the existing studies are concentrated in the advanced world and in for-profit enterprises. We believe that the implications of the study’s findings may offer useful insights to other emerging economies that are known to experience similar economic downturns like Ghana. Lastly, it is envisaged that the study’s findings will enable managers and practitioners to appreciate the relevance of OA to social enterprises, its impact on performance, and, most importantly, how it can be deployed to improve social enterprise performance. Thus, the study may offer valuable insights to social enterprise owners/managers in achieving the amalgamation of the steadiness of organisational transformation and social service deliverance.
We have organised and structured the other sections of the manuscript in this fashion: In Section 2 the theoretical underpinnings of our research and the logical arguments of our hypotheses are particularised; in Section 3 the research methods employed to analyse the study’s hypotheses are detailed, while in Section 4 the findings of the study are addressed; in Section 5 is the discussion of the results in relation to the extant literature, while in Section 6, the last section, the managerial and theoretical implications of the study are delineated, pointing out potential, thought-provoking avenues for further research.
Literature review and hypotheses development
Organisational ambidexterity from a dynamic capability theory
The present study is rooted in the DCT, which is an outgrowth of the Resource-Based View (RBV) of the firm. The RBV attributes firms’ performance variances to diversity in resources owned and controlled by the enterprise, noting that resources that are rare, inimitable, organisable, and valuable in a special way generate superior firm performance (Hesterly & Barney 2015). However, recent scholars have criticised the RBV for being internally oriented and static, thereby failing to account for performance differences in turbulent, dynamic environments (Chinakidzwa & Phiri 2020; Zhou et al. 2019). Moreover, merely possessing resources is not sufficient; capabilities are needed to profitably transform resources into value (Chinakidzwa & Phiri 2020). Dynamic capabilities underscore the ‘key role of management in appropriately adapting, integrating, and reconfiguring internal and external experience, resources, functional competencies within a changing environment’ (Gregory, Ngo & Karavdic 2019:12).
The DCT is based on the premise that firms can rapidly and speedily adjust and change their internal resource arrangement to facilitate organisational processes after witnessing lucid signals from the marketplace (Morgan 2012). Dynamic capabilities are organisational capabilities that ‘enable the firm to implement strategies using new and different combinations and transformation of resources’ (Teece et al. 1997:8) to adapt the altering business conditions. We take the view that dynamic capabilities – in this case, OA, will enable social enterprises to develop and identify capabilities that will enable them to respond to social problems and market opportunities (Gregory et al. 2019). Since DCT has the power to explain performance differences in volatile, unpredictable, and dynamic markets like today’s turbulent, exacting marketplace caused or exacerbated by the COVID-19 pandemic, it forms the theoretical bedrock for our arguments.
The quest for a better way of achieving change in today’s competitive business and economy has sparked an accelerating research interest in OA during the recent two decades (Tarba et al. 2020). Scholars employed the human characteristic of ambidexterity as a symbol to represent organisations. Ambidexterity literally means ‘right on both sides’ (Simsek 2009:599). Therefore, organisations that are ‘capable of exploiting existing competencies as well as exploring new opportunities with equal dexterity are akin to humans employing both hands equally’ (Simsek 2009:599) Thus, OA is defined as a firm’s capability to concurrently orchestrate exploitative strategies and activities that streamline present operations to maximise value and explorative activities that accomplish future business opportunities and growth (Venugopal et al. 2020). Ambidextrous enterprises are not merely effective and efficient in managing current business requirements but also sufficiently flexible to adjust to the changes in the progressively dynamic, volatile, and unpredictable business environment (Limaj & Bernroider 2019), which in turn, leads to sustainable competitive advantage (Mazzelli et al. 2020).
Generally, the literature suggests two main forms of ambidexterity: exploitative ambidexterity and explorative ambidexterity. Exploitative ambidexterity permits organisations to respond to disruptions and changes by adjusting or adapting to current competencies and business demands, while explorative ambidexterity allows firms to respond to market changes by developing novel products and services and exploiting novel markets (Cegarra-Navarro, Sánchez-Vidal & Cegarra-Leiva 2011; Lubatkin et al. 2006). Exploration looks at ‘search, variation, risk-taking, experimentation, play, flexibility, and discovery’ (p. 71), while on the other hand, exploitation looks at ‘refinement, choice, production, efficiency, selection, implementation, and execution’ (March 1991:71). Empirical evidence shows that these two dimensions are important drivers of firm performance (O’Reilly & Tushman 2013), although the prevailing studies are limited to the for-profit context, particularly in SMEs (Lee & Kreiser 2018). Exploitative and explorative activities demand significantly diverse, often even conflicting cultures, capabilities, processes, and structures; thereby, inconsistencies, contradictions, and conflicts are predictable (O’Reilly & Tushman 2004). Whereas earlier research often deemed the trade-off required to accomplish high levels of exploitation and exploration as not possible to put into operation, other studies pointed out a series of solutions to implement OA, such as structural separation (O’Reilly & Tushman 2004) and non-structural, context-related factors like values, mindset or culture (Eisenhardt & Martin 2000).
As well, research underscores different types of strategies adopted by firms with regard to OA. For instance, scholars draw on a time-dependent perspective to differentiate between two approaches of OA as manifested in organisations: sequential ad simultaneous. On the one hand, the sequential ambidexterous approach occurs when a firm systematically uses a temporal cycle by either, firstly, implementing exploration or exploitation, followed by seasons of rotations (Venkatraman et al. 2007). On the other hand, simultaneous ambidexterity takes place when an organisation synchronously pursues exploitation and exploration simultaneously (O’Reilly & Tushman 2013). Other scholars also differentiate between structural ambidexterity and contextual ambidexterity that may affect a firm’s exploitative and explorative strategies. Structural ambidexterity addresses the overall organisational structure in distinct, discrete subunits that may influence the concurrent development of exploitation and exploration (Diaz-Fernandez, Pasamar-Reyes & Valle-Cabrera 2017; Simsek 2009). Research demonstrates that strategic structural ambidexterity enhances contexts for appropriate exploitation and exploration (Raisch et al. 2009), facilitates differentiation of tasks (Venugopal et al. 2018), and promotes diverse cultures and processes (O’Reilly & Tushman 2004). On the other hand, contextual ambidexterity involves the incorporation of both activities into one business unit, performed by all workers with no additional specialisation.
Organisational ambidexterity and social enterprise performance
Social enterprises are organisations that pursue a social mission and utilise innovative revenue generation approaches to fulfill their mission (Kilpatrick et al. 2021; Weaver 2020). Thus, social enterprises are characterised by social mission and value creation, social innovation, social change, and entrepreneurial spirit. Farhoud et al. (2021) stress that social entrepreneurs, as a result of the increasingly dynamic, volatile business environment, coupled with the unpredictable nature of government programmes and implementation of social interventions (Weaver & Blakey 2022), shift their enterprises’ resources and capabilities between novel and current products and services to execute social missions. Social entrepreneurs not only identify and solve social matters but also explore social needs, determine social opportunities, and develop strategies to meet them (Davis & Bendickson 2021; Weaver & Blakey 2022). Farhoud et al. (2021) postulate that social enterprises must move swiftly to identify novel business roles and opportunities in today’s exacting, turbulent marketplace.
Social enterprises are relevant modulators and facilitators of ambidexterity for several reasons. First, two diverse but mutually exacting systems interact within this context: the firm system and stakeholders’ expectations. The resulting feature of social enterprises, especially the influence of stakeholders (e.g. donors) in terms of expectation, allows them to reach an increased degree of exploration for growth and survival in the future and exploitation of existing processes and competencies simultaneously. In fact, the heightened requirements for accountability toward stakeholders demand not-for-profit enterprises to enhance resources, mobilise for the transformation and evolution, and at the same time guarantee frequent production to create social, economic, and environmental values. Through ambidextrous functioning, social enterprises can accomplish this (Peng 2019).
Social enterprises may build an environment that offers the necessary unique focus on performance and social support. Peng (2019:1) noted, ‘organizational ambidexterity might provide some strategic leads for balancing the possible paradoxes within different kinds of expectations of the stakeholders’ of not-for-profit organizations’. Due to the recent pandemic, stakeholders’ demands and resource tensions have led social enterprises to novel changes to secure augmented efficiency. In some instances, social enterprises should be able, with fewer means, to ‘do more and do it better’ (Peng 2019), which could create some kind of organisational tensions and organisational paradoxes (Bloodgood & Chae 2010); thereby requiring social enterprises to discover novel strategic visions to achieve a balance between organisational change and stability of social intervention efficiency. Thus, social enterprises must handle the contending pressures of distilling current routines and structures for efficiency with the need to innovate and grow. Secondly, because social enterprises develop and distribute social programmes, previously executed by governmental organisations, they should balance the efficient delivery of current products and services with alterations in the larger business context that might influence future demand (Peng 2019) in such areas as discontinued or new funding opportunities (Sherlock & Gravelle 2018) and changes in growth potential (Kaplan & Grossman 2010). Thirdly, social enterprises operate within a central mission which orchestrates the scope of their products, programmes, and services, making them unlikely to achieve growth via unrelated diversification. These conditions make social enterprises an exceptional context for investigating OA and exploring if and how social enterprise managers/owners attempt to engage in explorative and exploitative ambidexterity.
Research demonstrates that OA leads to superior performance since the firm demonstrates efficiency in executing present market demands, while simultaneously manifesting the flexibility required to adapt to new opportunities and challenges in the business environment (Peng 2019). Thus, we expect that OA will enhance social enterprise performance. While the cost related to achieving a greater level of both aspirations are high (Haibin and Atuahene-Gima, (2007), Ambidexterity in product innovation management: The direct and contingent effects on product development performance, and a score of businesses remain unsuccessful (O’Reilly & Tushman 2004), we believe that the unique context of social enterprises eases ambidextrous thinking and the implementation of it in a firm’s strategic orientation. Inspired by the DCT, we distinguish between exploitative and explorative ambidexterity and examine their relative impact on relative dimensions of social enterprise performance. Madden (2012) found that OA is positively related to the fiscal performance in a not-for-profit enterprise. Other studies (e.g. Peng 2019; Plimmer, Bryson & Teo 2017) found that OA can increase the performance of not-for-profit enterprises.
However, one crucial limitation of these studies is that they did not examine the relative effect of exploitative and explorative ambidexterity, nor did they use a multidimensional approach to capture social enterprise performance. However, the social entrepreneurship literature suggests that enterprise performance should be captured into multiple dimensions (Pearce, Fritz & Davis 2010; Van der Vaart 2021), because a multidimensional performance framework offers a healthier test of the focal relationship. Accordingly, we used two dimensions subdivided into four dimensions to capture social enterprise performance, namely social performance (1) social marketing achievement and (2) social value creation, and economic performance (3) commercial marketing achievement and (4) economic value creation (Liu et al. 2015). Thus, we expect that higher levels of exploitative and explorative ambidexterity will lead to a higher level of social enterprise performance, as reflected in the following hypotheses, informed by the DCT:
H1a: A social enterprise’s exploitative ambidexterity is positively related to its social performance in terms of social marketing achievement.
H1b: A social enterprise’s exploitative ambidexterity is positively related to its social performance in terms of social value creation.
H1c: A social enterprise’s exploitative ambidexterity is positively related to its economic performance in terms of commercial marketing achievement.
H1d: A social enterprise’s exploitative ambidexterity is positively related to its economic performance in terms of economic value creation.
H2a: A social enterprise’s explorative ambidexterity is positively related to its social performance in terms of social marketing achievement.
H2b: A social enterprise’s explorative ambidexterity is positively related to its social performance in terms of social value creation.
H2c: A social enterprise’s explorative ambidexterity is positively related to its economic performance in terms of commercial marketing achievement.
H2d: A social enterprise’s explorative ambidexterity is positively related to its economic performance in terms of economic value creation.
Conceptual framework
Figure 1 and Figure 2 demonstrate the conceptual framework that guided the study. The model 1a divulges that OA, specifically, exploitative ambidexterity (H1a-d) has a positive, significant effect on the respective dimensions of social enterprise performance, namely social performance: (1) social marketing achievement; (2) social value creation, and economic performance; (3) commercial marketing achievement; (4) economic value creation (Liu et al. 2015). Likewise, model 1b highlights that OA, specifically, explorative ambidexterity (H2a-d) will have a positive, significant effect on the respective dimensions of social enterprise performance, namely social performance: (1) social marketing achievement; (2) social value creation, and economic performance; (3) commercial marketing achievement; (4) economic value creation (Liu et al. 2015). Finally, we also used the size of the enterprises, specifically, turnover in the past three years, as a control variable because of their potential effect on enterprise performance (Liu et al. 2015).
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FIGURE 1: Conceptual model of the exploitative ambidexterity – social enterprise performance relationship. |
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FIGURE 2: Conceptual model of the explorative ambidexterity – social enterprise performance relationship. |
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Methodology
Aim, design, and setting of study
We examined the hypothesised relationships in a research context of Ghanaian social enterprises. A quantitative research design is employed, and the research instrument used is a survey questionnaire.
Selection and description of participants
To test the study’s hypotheses, we designed a large-scale empirical instrument and sent it to the owners/managers of the social enterprises to obtain primary data. We designed the questionnaire, based on the methodologies and recommendations from social entrepreneurship literature (Liu et al. 2015), and observed methodological measures to reduce concerns about responses biases (Podsakoff 2003). Moreover, we conducted a pilot-test incorporating numerous social enterprises owners, researchers, and managers to boost our survey questionnaire further. We employed a convenience sampling method as the address base and addressed the survey instrument to 1200 individual respondents who were owners/managers of social enterprises in Ghana. We have included social enterprises in the analysis of the study based on the following two criteria: firstly, the enterprise generates income from business activities (i.e. income from divergent avenues like trading ventures or service offering for novel fundraising (Guo 2006; Liu et al. 2015); and secondly, the enterprise has been able to generate sufficient revenue from multiple sources and has a track record of trading activities in the past three years. We found enterprises with annual revenue above Ghs80 000 (approximately $10 000).
With the inclusion criteria established, we sent out emails in January 2022, followed by a bespoke letter outlining the research scheme and purpose. After we sent out two mailing lists, 417 enterprises returned the survey instrument, representing a response rate of 34.75%. We tested the quality of the dataset created (Tabachnick, Fidell & Ullman 2007) before we proceeded to the empirical analyses. Firstly, we examined every item’s means, standard deviations (SDs), and minimum and maximum values for plausibility. However, we did not find any error concerning the accuracy of our data entry.
Nevertheless, some of the questionnaires reported missing values in diverse aspects of the questionnaire. We solved this problem by deleting these cases from the created dataset (Draper & Smith 1998), reducing the usable sample to 317 social enterprises. In addition, we checked for potential biases because of the cross-sectional survey nature of the study, since this could decrease the validity of the findings. Here, a commonly reported problem is the characteristic difference between the respondents of a study and non-respondents (Armstrong & Overton 1977). To test for any potential discrepancies between early and late responses, we used the non-parametric Kolmogorov-Smirnov test and Mann-Whitney U-test. Our analysis did not reveal any statistically significant response biases between the early and late responses. Apart from non-response bias, the impact of common method bias has been a relevant issue in entrepreneurship and management research (Podsakoff 2003). This bias points out a variance in findings associated with the employed measurement approach instead of to the constructs of the study (Podsakoff 2003). Harman’s single-factor test – a method commonly used to assess common method bias in a single-method research approach – was used to this effect (Malhotra, Kim & Patil 2006). Our analysis again demonstrates that common method bias is no issue in our applied measurement method.
Operationalisation of constructs
We adapted the Lubatkin et al.’s (2006) (from Gottschalck et al. [2021] scale to assess exploitation and exploration. Depending on their enterprise’s OA in the previous three years, the owners/managers of the social enterprises were asked to evaluate six (6) statements each on exploitation and exploration on a scale of 1 (strongly disagree) to 5 (strongly agree). Regarding the social enterprise performance, we measured it using the respondents’ subjective assessment for the reasons following. Firstly, obtaining and appropriately interpreting a social enterprise’s performance is daunting because there is scarcely any dependable access to data on performance for privately held enterprises (Dess & Robinson 1984). Secondly, social enterprises are not required by law to publish their financial performance and/or non-performance (Liu et al. 2015). Thirdly, research shows that managerial actions and decisions are driven principally by perceptions or views of organisational performance (Morgan, Kaleka & Katsikeas 2004). This way, strategic management scholars have made extensive use of perceived performance indicators, which have shown relevant reliability and validity applicable to objective performance assessments.
To assess the perceived performance of the social enterprises based on the four dimensions, we asked the respondents to rate the extent to which they have achieved their social and economic performance. Firstly, social performance is examined via social marketing achievement and social value creation by adapting the scale of Liu et al. (2015). Social marketing achievement involves the enterprise’s marketing programme’s effectiveness concerning whether or not it has accomplished its preset donor and volunteer contribution-based targets, and it was measured using five items. On the hand, the social value creation measures how well the enterprise is able to create social value, based on critical social performance indicators like serving more beneficiaries, bidding for public service contracts, expanding social service to more locations, among others (Gainer & Padanyi 2005). It was measured using five-scale items (Liu et al. 2015). Likewise, we examined economic performance based on economic marketing achievement and economic value creation, adapting the scale of Liu et al. (2015). Commercial marketing achievement involves the effectiveness of the enterprise’s marketing programmes vis-à-vis preset market-based goals (Cano et al. 2004). In contrast, economic value creation involves the ability of the enterprise to create economic value from its social mission programmes based on key economic performance measures in the past year. Accordingly, we measured the commercial marketing achievement using five items, while six items were used to capture the economic value creation of the social enterprises (Liu et al. 2015).
Previous studies have used size as a control variable (e.g. Alegre-Vidal & Chiva-Gomez 2013), stressing that large enterprises are likely to possess a strong resource-base of well-established reputation and brand to garner business opportunities in both social and commercial contexts. Thus, an enterprise’s size, measured in this study by the total revenue of the enterprises, may potentially influence its ability to achieve high social and economic performance. Therefore, we used turnover instead of staff (number of employees) because the total number of staff might not be a true reflection of the size of social enterprise, due, in part, to the fact that social enterprises tend to consist of paid and volunteer employees, and so there is a considerable variation in the hours of each volunteer (Liu et al. 2015; Liu & Ko 2012). Accordingly, we measured the size of the social enterprise using a 5-point Likert scale (1 = very small, 5 = very large) that allows for the differentiation of the total revenues of the social enterprises. An interval of Ghs 80 000 (approximately $10 000) was maintained between each point scale. By employing a Likert scale, we sought to quell the conventional problem that sometimes arises from firms’ reluctance to disclose financial information, coupled with the fact they may not provide accurate figures when they choose to disclose financial data (Zahra, Neubaum & El-Hagrassey 2003). Three hundred and seventeen (62% men, Mage = 48 years, SD = 12.91) participated in an online survey. The research study was carried out according to the principles of the Declaration of Helsinki.
Measurement validity and reliability
To evaluate the quality of our construct measures regarding construct dimensionality, reliability, and convergent/discriminant validity, we carried out a confirmatory factor analysis (CFA) via AMOS version 28. As a first step, we calculated the Kaiser-Meyer-Olkin (KMO) value to measure the sampling adequacy. As a rule of thumb, the KMO value must exceed 0.50 before one can proceed to the factor analysis (Janssens et al. 2008). Table 1 shows that the fit indices of the model fit are very satisfactory (χ2 = 512.068 [degrees of freedom {df} = 315; p < 0.001]; RMSEA = 0.06; NNFI = 0.95; CFI = 0.96; GFI = 0.87; RMR = 0.06; KMO = 0.95). Moreover, Table 1 shows that all of the average variance explained (AVE) exceeds the 0.5 thresholds (Fornell & Larcker 1981), while all of the composite reliabilities also exceed the 0.7 thresholds (Hair et al. 2014), indicating that our model meets the convergent validity and construct reliability threshold, respectively.
| TABLE 1: Measurement validity and reliability. |
Table 2 shows that the discriminant validity, a measure of non-linear correlation, is also confirmed (Hair et al. 2014; Henseler & Chin 2010).
Results and analysis
To test the formulated hypotheses of the study, we used bootstrapping analysis in AMOS. This procedure is considered the best approach for testing hypotheses (Hayes & Scharkow 2013). The empirical results are shown in Table 3.
| TABLE 3: The outcome of hypotheses test. |
Our H1a states that a social enterprise’s exploitative ambidexterity is positively related to its social performance in terms of social marketing achievement. Supportively, the finding confirms this assertion (β = 0.371, p = p < 0.001), indicating that a positive relationship exists between exploitative ambidexterity and social marketing achievement. Likewise, H1b predicts that a social enterprise’s exploitative ambidexterity has a positive effect on its social performance in terms of social value creation. Supportively, the results confirm this hypothesis (β = 0.492, = p < 0.001). These results reflect experts’ suggestions that social enterprise performance can be predicted based on their ability to advance a profound comprehension of the societal needs, as well as their capacity to address the needs responsively (e.g. Brooks 2008; Kamaludin et al. 2021). Moreover, H1c predicts that a social enterprise’s exploitative ambidexterity is positively related to its economic performance in terms of commercial marketing achievement. We find support for this hypothesis (β = 0.322, p < 0.01). As well, H1d predicts that a social enterprise’s exploitative ambidexterity has a positive effect on its economic performance in terms of economic value creation, an assumption that is supported (β = 0.412, p < 0.001). These echo the results of other studies that highlight the important role of exploitation in enhancing the economic performance of social enterprises (Madden 2012) and traditional for-profit firms (Atuahene-Gima & Murray 2007; Gottschalck et al. 2021).
Vis-à-vis our H2a-d, which predicted a positive association between explorative ambidexterity and social performance and economic performance, we found the following interesting results. Firstly, explorative ambidexterity was found to be positively related to social marketing achievement (β = 0.231, p < 0.01); thereby confirming H2a. Secondly, our H2b that a social enterprise’s explorative ambidexterity has a positive effect on its social performance in terms of social value creation is supported (β = 0.497, p < 0.001). Thirdly, H2c predicted that a social enterprise’s explorative ambidexterity is positively linked to its economic performance in terms of commercial marketing achievement, an assumption that is supported by our data (β = 0.465, p < 0.001). Lastly, H2d predicts a positive nexus between explorative ambidexterity and the economic performance of social enterprises in terms of economic value creation. This hypothesis is supported (β = 0.313, p < 0.01). These results parallel the prevailing notion in the literature that social enterprises’ ability to improve their social and economic performance depends on its capacity to explore social needs, determine social opportunities, and develop strategies to meet them (Davis & Bendickson 2021; Weaver & Blakey 2022). The finds, in relation to the extant literature, in terms of consistency and discrepancies, are discussed in the next section.
Discussions and conclusions
The purpose of this research was to investigate the nexus between OA and the performance of social enterprises in Ghana. Firstly, the study found support for the (H1a) positive relationship between exploitative ambidexterity and social performance (i.e. social marketing effectiveness and social value creation); thereby confirming previous studies and suggestions (i.e. Farhoud et al. 2021; Hughes 2018; Weaver & Blakey 2022), that organisations’ ability to respond to disruptions and changes by adjusting or adapting to current competencies and business demands through exploitative activities may enhance enterprise performance (Cegarra-Navarro et al. 2011). This finding indicates that the ability of social enterprises to embark on exploitative activities such as commitment to lower cost and quality, continual improvement of the dependability of its products and services to the society, and constant surveys of the existing community’s satisfaction may indeed enhance its social marketing effectiveness in terms of the acquisition of new donors, volunteers and growth of overall donors (Liu et al. 2015), as well as its social value creation in such areas as bidding for public service contracts and government grants and expanding social service to more beneficiaries (Peng 2019).
Likewise, our findings demonstrate that (H1b) exploitative initiatives of social enterprises are positively related to economic performance (i.e. commercial marketing effectiveness and economic value creation). For instance, it was found that exploitative ambidexterity significantly influences commercial marketing effectiveness; that is, the ability of the enterprise to grow its market share, acquire new enterprise customers, and increase sales from enterprise customers. Again, exploitative ambidexterity (H1c) significantly influences economic value creation in such areas as business unit profitability, enterprise customer satisfaction, and reaching enterprise financial goals (Madden 2012; Plimmer et al. 2017). Thus, the greater the capability of social enterprises to meet current customer needs and existing business demands by employing current knowledge and technology, the higher the chances of enhancing their social and economic performances concerning social marketing activities, social value creation, commercial marketing activities, and economic value creation.
Similarly, we found support for the positive association between explorative ambidexterity and social performance and the economic performance of social enterprises (H2a-d), which confirms earlier reflections (e.g. Farhoud et al. 2021; Gottschalck et al. 2021; Junni et al. 2013; Weaver 2020) concerning the potential of exploration to improve the performance dynamics of firms. For example, our results reveal that exploration initiatives of social enterprises are positively related to social performance in terms of social marketing achievement and social value creation (H2a-b). This means that the ability of a social enterprise to experiment with novel alternatives to expand product-market knowledge beyond its existing market, technology, and product expertise may improve its chances of increasing volunteer hours from current volunteers, acquiring new donors, and achieving growth in overall donation/volunteer time. Also, a social enterprise’s ability to look for novel technological and societal ideas by thinking or cogitating ‘outside the box’, basing its success on its capability to explore and exploit new technologies and social solutions and searching for creative ways to satisfy its customers or society’s needs and wants (Liu et al. 2015; Nowak & Raffaelli 2022; Weaver 2020) may indeed enhance its social value creation in terms of serving more poor and needy in the community, providing more social service, expanding social service to diverse locations, and bidding for public service contract.
Furthermore, findings divulge that exploration positively (H2d) enhances economic performance in terms of commercial marketing effectiveness and economic value creation (Bacq & Lumpkin 2021; Jurksiene & Pundziene 2016). Similarly, exploration improves the economic value creation of social enterprises concerning customer satisfaction, business unit profitability, and delivering value to the customer (Gottschalck et al. 2021; Santoro et al. 2021; Simsek 2009). Therefore, our finding indicates that as long as the social enterprises exhibit a forward-thinking and opportunity-seeking orientation in solving societal problems, their social and economic performance will correspondingly increase and grow.
Taken together, our results demonstrate that OA (i.e. exploitation and exploration) positively influence the investigated performance dimensions of Ghanaian social enterprises. Thus, the capability of social enterprises to concurrently orchestrate exploitative strategies and activities that streamline present operations to maximise value and explorative activities that accomplish future business opportunities and growth to improve social and economic performance (Gottschalck et al. 2021; Kafetzopoulos 2020; Venugopal et al. 2020). Our findings contradict arguments in the literature that OA has no significant impact on conventional firms (Venkatraman et al. 2007) and that OA can even decrease firm performance because its elements compete for scarce resources (Atuahene-Gima 2005).
One possible reason for the significance of the OA model in the social enterprise context is the nature of organisational structure. Social enterprises are organised and structured differently from traditional firms, but structural conditions tremendously influence OA effectiveness, whether an organisation is using structural ambidexterous mechanisms (i.e. structural separations) or contextual ambidexterous mechanisms (i.e. non-structural separations of units). Another possible reason may be due to the timing of the study, because we measured the performance of the social enterprises in the past three years, which may involve performance during the COVID-19 pandemic. This, because the pandemic forced firms to put mechanisms and strategies in place that not only enable them to address current needs but to explore future needs. Hence, the pandemic might have pushed the social enterprises to be more ambidextrous in addressing social needs, hence the significant performance gains. Also, during the pandemic, social enterprises activities were highly prominent. Thus, the pandemic might have occasioned the increased social performance of social enterprises.
These findings provide fresh insights into the long-standing debate about whether ‘ambidexterity leads to success’ (Kafetzopoulos 2020), or not, and whether the adoption of OA is beneficial to social enterprises or third-sector organisations. Thus, it can be concluded that the extent to which social enterprises can improve their social performance (social marketing achievement & social value creation) and economic performance (commercial marketing achievement & economic value creation) largely depends on their ambidextrous orientations regarding exploitation and exploration. Conclusively, OA can be viewed as a cradle of strategic revitalisation and competitive advantage for social enterprises to have enhanced social and economic performance, which, in turn, can help many people in need in a more effective, speedier, and efficient way in today’s complex society with its complex social problems and needs.
Implications
Theoretical implications
This study makes numerous theoretical contributions. Firstly, this quantitative survey concurrently investigates the two components of OA in association with the social and economic performance of social enterprises and extends the existing work on OA (Lubatkin et al. 2006; O’Reilly & Tushman 2013; Raisch et al. 2009; Simsek 2009) to the social enterprise context. Our focus on social enterprises in emerging economies adds theoretical value as it enables us to evaluate OA in the social entrepreneurship context. Contrary to expectations, we found that OA does not decrease but increases social enterprises’ social and economic performance. Secondly, the present study allows greater comparability and generalisability by being grounded in a well-established theoretical model (the DCT), which highlights how firms can integrate, realign, and readjust their strategies to adapt to the changing environment; thereby showing the applicability of the theory to the social enterprise setting. Thirdly, our study responds to calls by numerous field scholars for urgent, large-scale quantitative analysis of social enterprises (Liu et al. 2015; Meyskens et al. 2010). Fourthly, our results provide valuable insights into how both exploitative and explorative ambidexterity independently impacts diverse social enterprise dimensions; thereby exposing social managers to the performance effects of OA. Finally, our study, extended to an emerging market, unlike previous studies, allows for cross-cultural and cross-country validation of the OA model.
Managerial implications
The findings of the research also put forth several relevant managerial implications. The first implication is in regards to the relative, joint effect of exploitative and explorative ambidexterity. This implies that managers can develop and implement them jointly to improve performance, notwithstanding the conventional thinking that it is impossible to put them both into operation because of the trade-off necessary to accomplish high levels of exploitation and exploration. Therefore, the result offers valuable insights to social enterprise owners/managers on achieving the amalgamation of the steadiness of organisational transformation and social service deliverance via OA. The point is that although balancing the two may not be achieved on a silver platter, our results show that it is possible and that through solutions such as structural separation (O’Reilly & Tushman 2004) and non-structural separations (Eisenhardt & Martin 2000), firms, including social enterprises, can leverage the strategic gains from both exploration and exploitation simultaneously. Hence, social enterprises should not be side-minded, whether because of their culture, mission, perceived lack of resources and capabilities, or philosophy. Instead, they must engage in some level of exploration and exploitation to reap the benefits associated with the OA model.
Moreover, in a resource-constrained context like social enterprises, managers must manage the trade-offs between exploitation and exploration by focusing on such factors as efficiency, cost, and incremental innovation for exploitation and flexibility, speed, and radical innovation for exploration. Therefore, social enterprises must realign and readjust their competencies, structures, leadership skills, and strategies. Again, social enterprises’ managers should foster employee work engagement behaviours through social awareness (organisational awareness, attunement, empathy) and relationship management (teamwork, inspiration, influence) to facilitate a shared vision and a collective comprehension of how employees and leaders will manage the exploitation-exploration trade-off.
Because OA can only be nurtured in a supportive context and environment, where employees are motivated to make their own decisions in terms of the amount of exploration and exploitation since management is not involved in single decisions but responsible for shaping the context, social enterprises that aim to be ambidextrous must harness ambidextrous employees who can understand the demands of both exploitative and explorative activities and ultimately manage to accommodate its tension. Finally, our comprehensive analysis of the OA – social enterprise performance relationship may represent a solid foundation for policy recommendations to governments and national decision-makers regarding technological and institutional capacity and systems that must exist to enable social enterprises to achieve a relative balance between exploration and exploitation.
Limitations and further research
We admit that our research suffers from numerous limitations because of the research design, but also that these offer opportunities for further study. First and foremost, we examined only one dynamic capability of social enterprises – OA, which has been analysed in conventional entrepreneurship settings. This precludes the examination of other dynamic capabilities. Therefore, future studies should explore other dynamic capabilities that relate to social enterprise performance like technological capabilities, marketing capabilities, supply chain management capability, etc. Secondly, a research design that involves inviting respondents to complete a survey may be subject to self-serving bias (Mhelembe & Mafini 2019; Morgan et al. 2003). While we took meticulous measures to maximise respondent objectivity, questions about how valid it is for social enterprises to evaluate their own OA are still rife. Thus, future studies may employ a secondary data-based study design to overcome this shortcoming. Thirdly, because of the dynamic capability nature of OA, we did not include mediators and moderators in the model. Therefore, we advocate that future studies examine mediators like leadership quality, organisational culture, organisational learning/unlearning, or entrepreneurial orientation in the OA – social enterprise performance.
Thirdly, the cross-sectional nature of our study did not permit us to make definite causal inferences about the effect of OA over time, mainly because our focus lies in understanding the validity and causal inference of the hypothesised relationships instead of the causality. Also, a survey design that assesses a single point in time restricts any conclusions about causality. In future this concern should be addressed. Furthermore, given that social enterprises implement the OA model gradually and develop their exploration and exploitation over long periods of time, coupled with the reality that we examined the relationship between OA and social enterprise performance employing cross-sectional data, future scholars should use a longitudinal study design to offer valuable insights to the extant knowledge on this subject. It might use state-of-the-art technology such as but not limited to eye-tracking and electroencephalography to study, explore, and predict the consumer behaviour toward organisations, which may enhance the organisational strategies and enterprise performance as well. (Alsharif et al., 2021; 2022). Finally, future studies may not only replicate our research model in different emerging economies with different performance indicators, but also focus their investigation on providing a more fine-grained one, as to the drivers or determinants of OA in social enterprises. Anchoring this result with a theory-based delineations is a thought-provoking avenue for future research.
Notwithstanding these shortcomings, our study makes valuable contributions to the existing knowledge on the effects of OA on social enterprise performance, contributes to social enterprise theory and practice, and also offers managerial implications for social enterprise owners/managers.
Acknowledgements
The authors would like to thank Taif University Researchers Supporting Project number (TURSP-2020/338), Taif University, Taif, Saudi Arabia for supporting for this study.
Competing interests
The author(s) declare that they have no financial or personal relationship(s) that may have inappropriately influenced them in writing this article.
Author’s contributions
S.O. contributed to the conception of idea, drafting of the article, analysis and interpretation of data; final approval of the version to be published. A.R.H. contributed to the editing of the production; editor’s comments; revision of the manuscript for relevant intellectual content; solicitation of funding for the manuscript; and the final approval of the version to be published. A.H.A. did the revision of the manuscript for relevant intellectual content; editing of the production editor’s comments; solicitation of funding for the manuscript; and the approval of the version to be published.
Ethical considerations
This manuscript followed all ethical standards for research with direct contact with human subjects. In particular, the authors secured permission to carry out the research from the owners or managers of the social enterprises before the questionnaire’s administration. No respondent was forced, threatened, or coerced to participate in the study, and further, the authors ensured maximum confidentiality and anonymity in the data collection and analysis of study results. Any information collected from participants will not be made public without their permission. Furthermore, no information will be published about the identities of any specific individuals or the organizations they work for or are affiliated with.
Funding information
Taif University Researchers Supporting Project number (TURSP-2020/338), Taif University, Taif, Saudi Arabia.
Data availability
The data that support the findings of this study are available on request from the corresponding author.
Disclaimer
The data presented here do not necessarily reflect the official policy or position of any affiliated agency of the author.
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