Τετάρτη 24 Αυγούστου 2016

Mission accomplished? An empirical research on the link between Social Co-operative Enterprises’ strategic orientation and performance

Mission accomplished? An empirical research on the link between Social Co-operative Enterprises’ strategic orientation and performance

Dr. Niki Glaveli1 and Dr. Konstantinos Geormas2

1 Academic Staff, Division of Business Administration, Department of Economics, Aristotle University of Thessaloniki, nglaveli@auth.gr
2   Head, State Aid Unit,  geormask@gmail.com

The Social Co-operative Enterprise (SCE) is a relative new type institution of the third sector which despite its nonprofit character, is treated as a fully entrepreneurial entity. SCEs are called to integrate business principles into their functioning and adopt entrepreneurial behaviors in the provision of social goods and/or services. However, only a handful of researchers have so far investigated this type of behavior in social enterprises. This paper seeks to contribute to a further understanding of the strategic aspect of SCEs’ entrepreneurial behavior and expand the current knowledge on the link between SCEs’ strategic orientation, vision and performance. Using data from Greek SCEs, called KOINSEPs, we examined the mediating roles of commercial and social effectiveness (as well as direct associations) with regard to strategic orientation (SO) effects on profitability. More precisely, based on an extensive literature review, SO is conceptualized as a three dimensional construct consisting of the product, customer and market/competitor aspects. The findings designate that the customer orientation dimension, defined as an organization’s commitment to understand and satisfy customer/users preferences, plays the most vital role in enhancing SCEs effectiveness and subsequently profitability. Further, the development of a clear and shared (among the SCE members) vision has positive direct associations with SCEs performance (social effectiveness and profitability). We conclude with a discussion of directions for future research and implications for theory and practice.


1.      Introduction

Social Co-operative Enterprises (SCEs) are a relative new (in Greece it was established by the 4019/2011 Law) hybrid in nature and social mission-driven institutions of the third sector (or rather the fourth), which despite their nonprofit character are in fact located between profit and nonprofit organizations. Their contribution, particularly in a “neo-poor” country, related to: social innovation, the provision of social services and jobs to marginalized members of the society, the improvement of the quality of life of citizens and the strengthening of social cohesion and development, designate them as a major player in the economy and civil society and a valuable ally for the public sector.
Despite their social and not-for-profit nature, SCEs are treated as fully entrepreneurial organizations. They are called to integrate business principles into their functioning and adopt entrepreneurial behaviors in the provision of social goods and/or services in order to compete and survive in the demanding and sophisticating contemporary market place (Krlev, 2012; Borzaka et al, 2014). Strategic orientation (SO), which refers to the generation of organizational behaviors targeted to satisfy some need or desire in the marketplace, is considered as an essential construct for healthy organizations that seek to maintain fiscal viability and financial independence (Dacin, et al., 2010; as in the case of SCEs).  Indeed, installing and improving SO in SCEs is expecting to help them anticipate and react to market like constituencies more accurately and consequently achieve higher performance to accomplish their social mission (Shoham et al; Schmidt et al., 2015).
In an attempt to address various gaps in the current literature, in this article, we investigate three of the most fundamental and widely discussed SO behaviors that SCEs could adopt - in particular, customer, competitor and technology/product orientations - in order to improve effectiveness and (economic) performance.
The contributions of this paper are fivefold. First, it lays the theoretical rationality for bringing SO behavior into the SCEs context, where SO is a relative new, under-researched concept (Ma et al., 2012; Liu et al., 2012; Schmidt et al., 2015).  Second, it seeks to deepen understanding of the associations between SO behaviors (emphasizing the market orientation aspect of strategic orientation) and SCEs performance by examining potential mediators. Previous research has mainly focused on the direct effects of SO on performance (Morris et al., 2011) although some scientists (predominately in the profit context, rarely in the non-profit sector and hardly in the social entrepreneurship context) have tried to shed light on the contingencies through which this relationship may be formed (i.e. Voss and Voss, 2000; Liu et al, 2012). Third, vision, as an indicator of strategic behavior, is also entered in the equation. Fourth, as already stated previously, we investigate strategic behaviors in the SCEs context where research is even more restricted. Fifth, practical implications are provided as well as studies related to SO and performance in a Social Co-operative Enterprise context are invigorated.

2.      Background and hypotheses

2.1.Social (Co-operative) Enterprises in the marketplace arena

Social enterprises (SE) have recently appeared as a new significant phenomenon not only throughout Europe but also in other continents. Despite the lack of a universal definition of the term, in Europe the concept of social enterprise is increasingly used to identify a “different way” of doing business, which occurs when enterprises are created specifically to pursue social goals (Defourny and Nyssens, 2008). Under the European approach a SE is viewed as “an operator in the social economy whose main objective is to have a social impact rather than make a profit for their owners or shareholders. It operates by providing goods and services for the market in an entrepreneurial and innovative fashion and uses its profits primarily to achieve social objectives. It is managed in an open and responsible manner and, in particular, involve employees, consumers and stakeholders affected by its commercial activities” (EC Communication on the Social Business Initiative, SEC 2011/1278).
Although the concept of SE overlaps with the traditional social economy organizations and cuts across many legal forms (association, co-operative or any other type set up in recent years under national legislation, Galera and Borzaga, 2009) in fact it differs substantially by traditional not-for profit organizations because it involves  “enterprise”. This implies that they are income-generating ventures which aim at earning a considerable part of their revenues through trading (both with private and public sector), rather than rely on grants or donations.  Moreover, they pursue both economic and social returns on investment; bending however not on profit but on social benefit. As Dees (1998, p. 3) states “Wealth is just a mean to an end” for social enterprises. In this sense, a social enterprise despite its entrepreneurial nature,  also differentiates from conventional enterprises in that they have a primary social purpose which they try to achieve  in a stable, continuous and economically viable way. Any generated profits are (in their vast proportion) reinvested or otherwise used to achieve the social mission of the enterprise (Bacchiega and Borzaga, 2001).
Based on the discussion above, it could be supported that SEs are a unique hybrid business model, compelled by legal and political forces to seek financial independence to pursue its social mission, which is to provide general interest services and solutions to social issues (Dancin et al., 2011). This element in their functioning provides legitimacy to social enterprises to be commercially involved and competitive. In fact, due to their bottom-up (participative and multi-stakeholder) nature, SEs often prove to be more efficient in identifying emerging needs and in developing innovative responses to meet social needs than the public entities.

2.2.The Greek context

In the European context, Greece represents a latecomer in introducing social entrepreneurship. It was law 4019 of 2011 on “Social Economy and Social Entrepreneurship” which identified “Social Economy” as “the sum of economic, entrepreneurial, productive and social activities, undertaken by juridical entities or associations whose statutory aim is the pursue of collective benefit and the service of wider social interests” (Art 1), and the Social Co-operative Enterprise (SCE/ KOINSEP in Greek) as an entity of Social Economy. As the law stipulates, the Social Co-operative Enterprise is a civil co-operative with social purpose possessing entrepreneurial capacity (Balourdos and Geormas, 2012)
Law 4019/2011 distinguishes between three (3) forms of SCEs/KOINSEPs: i) Inclusion SCEs, targeting at the integration of vulnerable social groups into the economic and social life, ii) Social Care SCEs which produce products and provide social and welfare services targeted at vulnerable social groups, such as: the elderly, babies, children, people with disabilities and chronic illness and iii) Collective and Productive SCEs, with the purpose to serve local and collective interests and promote employment, social cohesion and local or regional development. Today, 1056 KOINSEPs are registered to the Social Economy Registry (36 Inclusion SCEs, 116 Social Care SCEs and 904 Collective and Productive SCEs; Data from the General Social Economy Registry as of 13.04.2016 data processing), however a much smaller number is in fact active.
In 2013 a Steering Committee was set up to develop a national strategy plan for social entrepreneurship in Greece[1]. The committee was an initiative of the Greek Ministry of Labour, Social Security and Welfare and the DG Employment, Social Affairs and Inclusion of the European Commission. The committee was comprised both from Greek and European experts on social economy. The report identified four axis of interventions:
1.      An enabling ecosystem for the Social Economy
2.      Direct financial support for starting and developing a social enterprise
3.      Access to finance to consolidate and scale social enterprises
4.      Good governance and public sector capacity building
In addition the report proposed certain steps for the development of the ecosystem. First, a central mechanism was to evolve to produce the necessary tools for the set-up and running of a social enterprise. The second major step had to do with the formation of one-stop shops in the 13 Greek prefectures. The responsibilities of these shops had to do with couching, mentoring, providing information for means of financing, tax issues, legal issues, needs for training. Their role resembles that of an incubator or a chamber. Finally, the third step had to do with the development of financial tools, such as subsidies, loans, microcredit, equities and so on. For the time being only the first step has been implemented.
In overall, the ecosystem to support SCEs is almost non-existing in Greece. Besides basic consultation from the Social Economy Registry, there are but a few bodies that SCEs can rely on for consulting and mentoring (European Commission, 2014, pg. 5-6).  Additionally, the lack of expertise and experience of professionals such as: lawyers or accountants in social economy issues and of the broad public administration contribute further to the inability of the ecosystem to support SCEs. Consequently, they are excluded from programs that subsidize SMEs’ start-ups and development.  Moreover, banks, also, are hesitant (even unable due to capital controls) in providing the required capital to set up and run a social enterprise (European Commission, 2014, pg. 1).
Last but not least, there are a number of cultural characteristics that affect the development of social entrepreneurship. Civil society in Greece is not well articulated, especially regarding the formation of institutions that could sustain SCEs effort. A recent study by CICOPA (2013) calls this “a fragmentation of bottom-up initiatives”. 
Additionally, evidence has shown that SEs have weaknesses related to the motives of the social entrepreneurs. In their majority they are “necessity entrepreneur” forced to set up their enterprise because they don’t have a better or any choice at all related to them being absorbed in the labor market.  As a result, the strategic orientation of such enterprises,  as well as their social impact are weak. Further, they don’t have expectations that their firms will grow, they don’t hire employees, and they are small in size (Poschke, 2010). 
Summing up, given the characteristics of the contemporary Greek economic and social context, such as: budget deficits and “uncontrollable” public debt, negative growth rate, high levels of poverty and unemployment rates (and subsequent emigration of the youth), aging population, suggest that SCEs could be an important ally of the public sector in identifying emerging needs (due to their bottom-up nature), integrating people into society, facing the difficulties encountered by social policy and even take over in some areas. To happen so, not only SCEs’ ecosystem needs to be improved but next to that the adoption of managerial techniques and instruments could help them advance the quality of their management, develop comparative advantages, compete in equal terms with private for-profit organizations and grow. Thus, a study of mechanisms/behaviors such as strategic orientation in the light of current empirical research is required with the expectations that this knowledge could be transferred to SCEs.

2.3.Strategic orientation

Strategic orientation (SO) is a widely used concept in the research field of strategic management and marketing. In the strategic management literature stream SO has been described as strategic choice, strategic thrust, strategic fit, and strategic predisposition (Chaffee, 1985; Lau and Bruton, 2010) emphasizing a cognitive understanding, interpretation and alignment between the external environment and firm’s resources. In the marketing literature, academicians and practitioners draw attention to customer value creation, emphasizing the market orientation (MO) component of SO (i.e. Shapiro, 1988; Narver and Slater 1990; Kohli and Jaworski 1990; Kohli et al., 1993; Slater and Narver 1994; Gatignon and Xuereb, 1997). Under this perspective some authors view strategic orientation of a market-driven firm as organizational competitive culture that efficiently and effectively generate the appropriate behaviors - i.e: customer, competitor and product orientations and interfunctional coordination - to create and maintain superior value for buyers/users to help the organisationachieve superior performance (Narver and Slater, 1990; Gatignon and Huereb, 1997). Whilst others adopt a market intelligence perspective (Kohli and Jaworski 1990, Kohli et al., 1993) and SO/MO is also conceptualized as a three dimensional construct: intelligence generation, intelligence dissemination (cross-functional) and responsiveness to disseminated information. However, these two approaches seem to overlap (i.e. Cadogan and Diamantopoulos, 1995) rather than be in contrast. In fact, they share several similarities in the sense that both regard customers as a core and stress the importance of responding to customer needs. Further, the proposed by the two streams dimensions of SO/MO present significant conceptual clash (i.e. Stoham et al., 2006).
Nevertheless, other types of strategic orientations have also been studied such as: brand (i.e. Baumgarth, 2010; Wong and Merrilees, 2008), entrepreneurial (i.e. Matsuno et al., 2002; Zhou et al., 2005), learning (i.e. Baker and Sinkula, 1999) and production and cost (Noble et al., 2002; Olson et al., 2005) orientation.
 The mainstream of quantitative empirical research, in alliance with the marketing behavioral perspective, adopts (as in the present study) the Gatignon and Xuereb (1997) proposal of SO dimensionality, specifically: customer orientation; the sufficient understanding of one’s target buyers to be able to create superior value for them continuously,  competitor orientation; the ability and the will to identify, analyze, and respond to competitors’ actions and technology/product orientation; which means that the firm is strongly R&D oriented, proactive in acquiring new technologies and uses sophisticated technologies in the development of its new products. However, various inconsistencies do exist since researchers may have different interest on the strategic orientations of an organization (Atuahene-Gima, 2001; Im and Workman, 2004; Zhou et al., 2005; Baker and Sinkula, 2005; Kaya and Seyrek, 2005; Salavou, 2005; Lau and Bruton, 2010). Variations are also apparent in the limited non-profit sector SO studies where some academics suggest that due to its uniqueness (i.e. dependence in donors and volunteers, free provision of services) some dimensions of SO might be irrelevant, whilst others like: donor and volunteer orientations should be added (Bennett, 1998; Shoham et al., 2006; Morris et al., 2007; Carmen and Jose, 2008; Schmidt, et al., 2015).
Focusing on social enterprises (SEs); only two empirical studies have extended the investigation of SOs in the social enterprise environment, and none in the SCE, context. More precisely, Ma et al. (2012) studies the market aspect of strategic orientation, whilst Liu et al. (2012) the market and entrepreneurial orientations of SEs.

2.4.  Strategic/market orientation and performance: Development of hypotheses

The marketing strategy literature has presented evidence that strategic orientation (emphasis is placed mainly on the MO aspect of the SO construct) of a market-driven organisation is a significant indicator of its performance (Aaker, 1991; Narver and Slater, 1990; Porter, 1991). The theoretical reasoning behind this assumption is that for an organisation to continuously achieve above normal market performance it needs to create sustainable competitive advantage; that is superior value (benefits received vs acquisition and use costs) for its customers/users. The ability to create superior value is founded on the quality of understanding of its environment and customers and the creation and maintenance of a value-driven culture.
Earlier studies, both in the for-profit and not-for-profit context provided evidence of a direct relationship between strategic/market orientation and objective and/or subjective /perceived organisational level performance, measured as: overall performance (Jaworski and Kohli, 1993), financial performance (Slater and Narver, 1994; Pelham and Wilson, 1996), sales growth (Slater and Narver, 1994), new product performance (Slater and Narver, 1994; Atuahene-Gima, 1996; Pelham and Wilson, 1996), quality, revenue increase and improvement in user/customer satisfaction and loyalty (Wood et al., 2000); relative income generation (Pearce II et al., 2010). However, some studies failed to support a direct positive relationship between objective performance measures and strategic/market orientation (Shiham et al., 2006), suggesting that the type of performance measures used (i.e. subjective vs objective or financial versus non financial) affects the existence or the strength of the relationship (i.e. Kohli and Jaworski, 1993; Voss and Voss, 2000; Langerak, 2001).
More recent publications view the relationship as more complex and attempt to explore routes/linkages and potential mediation (for example: customer loyalty and satisfaction, quality, innovatiness, for a meta-analytic review see i.e: Kirka et al. 2005; Shoham, et al., 2006) and moderation (for example: industry i.e. demand; competition i.e. intensity of; supply i.e. supplier power; product i.e. relative product quality; level of country development) effects of variables.
In the case of SEs, the two empirical studies and the one conceptual paper that were located by the authors follow a mix approach to the relationship between SO and performance. More precisely, Ma et al. (2012) explore antecedents (innovation, progressiveness and risk-taking as dimensions of entrepreneurship variable) and outcomes (social performance public performance/stabilization of local community and job creation) of MO (approach to SO) and supports a positive direct relationship between the two variables. Whilst, Liu et al. (2012) examined the mediating roles of market effectiveness and customer satisfaction in both the commercial and social domains with regard to market and entrepreneurial orientation effect on (social and commercial) performance and found positive associations and that success in one aspect of business (i.e. social or commercial) may enhance success of another. Lastly, Schmidt et al. (2015) proposes a conceptual framework that integrates three SOs (market, brand and entrepreneurial) arguing that they consist of two layers: a cultural and a behavior one with the cultural driving the behavioral. Further, the authors suggest that the behavioral layer will have a direct positive effect (moderating by enterprise, founder and market characteristics) on SEs’ performance which is viewed as a three part variable that consists of: economic performance, social effectiveness and institutional legitimacy.

2.5.The Theoretical Framework

In the light of the literature review - performed in the current paper - on the empirical research and theory examining SO and its relationship to organizational performance, the widely used (both in the for-profit and nonprofit settings) multi-dimensional conceptual approach to SO proposed by Gatignon and Xuereb (1997), that emphasizes the marketing behavioral perspective to SO, is adopted. As in the case of Liu et al (2012) and embracing the social and economic nature of SEs, we examine the effect of two mediators, commercial and social effectiveness, on the performance (profitability/objective measure) of SCEs (see Figure 1). Indeed, strategic orientation is central to organizational effectiveness (Evered, 1983), a dimension also of a business’s performance, in that it represents the strategy implemented by the organization to foster continuing performance improvements (Gatignon and Xuereb, 1997). Particularly, in the case of SEs (SCEs in our study) both commercial/economic (mean) and social effectiveness (end) are important (Dees, 1998). Next, to SO we add, and investigate, the relationships among a clearly articulated vision (social) and the study variables.

More precisely:

As stated earlier in the literature review section of the current paper, a strategic/market orientation provides SCEs with a better understanding of their environment (i.e. competitors) and customers’ needs, value chain and dynamics. This knowledge enables them to channel their resources appropriately and design (innovative) products and services (product/ technology orientation) that better satisfy customers’ needs, leading thus to enhanced customer satisfaction, attainment of market-based goals (commercial effectiveness) and ultimately to higher profits (i.e. Bennett, 1998; Carmen and Jose, 2008; Camarero and Carribo, 2008). Therefore, we suggest that there is a positive relationship between the three SO/MO orientations studied (customer, competitor and product/technology) and SCEs financial performance which is mediated by their commercial effectiveness (H1a, H1b, H1c and H9). Moreover, commercial effectiveness will be positively related to profitability (H6).

Figure 1: The proposed theoretical framework on the link between strategic orientation and performance in the SCEs context


Notes: The dotted lines represent direct effects that may be fully mediated; The bold letters highlight the hypotheses that were accepted.

     Insofar, a strategic/market orientation implies that a SCE will achieve its market-based goals but it could also help it meet the social purpose for which it was established. Social effectiveness refers to the achievement of social goals in terms of (Kendall and Knapp, 2000): inputs (i.e. composition of workforce – particularly in the case of inclusion SCEs), outputs (i.e. characteristics of products), outcomes (positive effects to intended beneficiaries such as: employment outcomes, user satisfaction) and impacts (long term impacts on the wider community such as: pollution reduction, integration, quality of peoples’ lives). Under this definition strategic/market orientation (three dimensions) is anticipated to improve (positively affect) social aspects of effectiveness such as: quality of products, integration, quality of peoples’ lives and workforce composition (H2a,H2b, H2c).
     Furthermore, we also expect that a linkage exists between SCEs’ commercial effectiveness and social effectiveness. Since, as literature suggests the primary focus of SCEs is to meet their social vision/mission and produce social value (Dees, 1998; Brooks, 2008) it is logical to expect that high levels of commercial effectiveness and profitability will enhance SCEs achievement of social goals (social effectiveness; H4 and H10). Particularly, in the case of Greece SCEs are obliged to re-invest 60% of their profits in the business in order to create more jobs and develop.  Similarly, social value creation can also support their commercial practice. SCEs with a social brand value attract more customers with regard to their commercial activities by creating psychological effects such as “concern for the community” (Napoli, 2006; Liston–Heyes and Liu, 2010), and thus can generate high market /commercial effectiveness and profitability though their commercial practices (H5 and H7) .
Finally, as the strategic management literature puts forward a coherent vision/purpose shared by all SCE members can operate as the “compass” that will unify employees to co-operate for the achievement of the organization social and market-based/commercial goals, increasing thus its effectiveness. Particularly in the case of SCEs a social value vision can connect people to an inspiring purpose, to something larger than themselves and increase the potential of positive attitudes towards the organization and their engagement towards goal attainment (Phanuel and Darbi, 2012). This view is echoed in the work of Bevan et al. (2005) and Buytendijk (2006), who both found that effective and high-performing organizations have a strong sense of shared purpose internally and this purpose is understood and shared with their external stakeholders. So, we incorporate vision as a characteristic of a strategic approach to the management of SCEs and test the hypotheses that a clearly stated cohesive vision will be positively related to SCEs effectiveness in both the commercial and social  domains of activities (H3a and H3b) and to SCEs performance (profitability; H8).

3.      Methodology

To test the proposed theoretical framework, an empirical study was carried out, the results of which we outline in this section. First, we provide details on the study design and sampling. Subsequently, we present the measurement scales of each examined variable.

3.1.Sampling and data collection

Our empirical study focused on Greek SCEs (KOINSEPs). Information was gathered through an electronic questionnaire that was eventually sent by e-mail in April 2015 to the total population (676; total population sampling) of SCEs which were registered in the National Social Registry in February 2015. In some cases the e-mail was followed by telephone contact.
Finally, 69 usable questionnaires (response rate of 10.21 percent) were gathered. However, 9 were excluded from correlation and regression analysis since they were founded in 2015 (and thus could not have profits in 2014). The distribution of the sample in terms of the type of KOINSEP (SCE) is representative of the population since 86.8% are Collective and Productive, 10.3% are Social Care and 2.9% are Inclusion KOINSEPs. Seventy –one percent (71%) were funded in the period 2014-2015. Founders’ initiative was the force behind the decision to start a KOINSEP for almost 80% of the respondents. Additionally, only 17.5% had profits.
Since the instrument was designed to be self-completed emphasis was placed on the clarity of presentation meaning that each section and statement was clearly numbered, balanced scales were utilized and emphasis was given to its general attractiveness in order to increase the response rate. The questionnaire consisted of two sections; the first included questions on demographics (characteristics of the entrepreneurs and the SCE) whilst the second aimed to collect information about the study variables.
To increase (content) validity, the questionnaire was send to experts in social economy/entrepreneurship in Greece and a pilot survey (to a sample of 5 entrepreneurs) was administered. Critics of the instrument were received and incorporated. The items that were reported to be difficult, ambiguous or inconsistent were revised.

2.2. Measurement

Strategic/market orientation
Based on Gatignon and Xuereb (1997) conceptualisation and Voss and Voss (2000) operationalization (adapted for SCEs), three variables assessed SO: customer orientation; competitor orientation; and technology/product orientation (see section Strategic Orientation for an analysis of the terms).   Finally, after validity testing (exploratory and confirmatory factor analysis) seven (out of the initial 8) items of the Voss and Voss (2000) scale assessed SO (3 for the product, 2 for the competitor and 2 for the customer dimensions). Sample items are: “We put emphasis on developing new high quality products”, “We keep a close eye to our competitors tactics and products”, “Our customers preferences/needs guide our business decisions”. Respondents indicated the extent to which each item characterised their organisation using a 7-point scale ranging from 1= Strongly disagree and 7=Strongly agree. The higher the mean score the higher the intensity of strategic orientation.

Shared vision
Three items from the proposed by Calontone et al. (2002) relevant scale measured shared vision i.e. “There is a commonality of (social) purpose in my organisation”.  Answer categories ranged from 1=Strongly disagree and 5=Strongly agree. Higher scores indicated a higher level of shared purpose and commitment to commonly set goals.

To measure commercial and social effectiveness we used 2 items. We asked respondents to specify the extent to which they believe that they were effective in achieving their commercial and social objectives. Response options were ranged from 1 = Not at all effective to 7 = Totally effective, with higher scores indicating higher levels of effectiveness.

An objective measure of profitability, level of profits per se, was used. The respondents were asked to indicate the level of profit generation in the last economic year (2014). Based on experts’ views, four options were available: no profits, 1-10,000 Euros, 10,001 – 30,000 Euros and 30,000+ Euros. We assigned values from 1-4 respectively for the four available options when entering the data in SPSS 20, so the higher the rating the higher the level of profits.

4.      Results and Discussion

4.1.Validity/reliability, descriptive statistics and correlations

Besides experts opinion who added to the content validity of the used measurement scales, we tested for discriminant validity by applying exploratory factor analysis (Extraction method: Principal Component Analysis, Rotation method: Varimax with Kaiser normalization) to all items that measured strategic orientation and shared vision. The results validate the expected factor structure of SO variable (three-dimensional construct that explain 81.527% of the total variance) and of shared vision (uni-dimensional construct that explains 88.429% of the total variance) with factor loading well above the .4 cutting point (ranged between .652 - .970). Further, as it can be observed in Table 1 Cronbach’s alpha were above .70 (ranged between .703 -. 932) suggesting that the construct measuring scales used were reliable.
The correlation coefficients (see Table 1) provide initial support for: i) the vital role of the customer orientation dimension in enhancing SCEs commercial effectiveness and subsequently economic performance and ii) the positive relationship between competitor orientation and social effectiveness. Further, the development of a clear and shared (among the social co-operative enterprise members) vision has positive direct associations with social effectiveness and profitability levels. Additionally, social effectiveness and commercial effectiveness are related. Last but not least, effectiveness - in both aspects of practice - seems to boost profitability.

Table 1: Construct means, alphas and correlations

Study variables
Scale mean
Strategic Orientation SO)

Product Orientation PO)
Competitor Orientation  (CO)
Customer Orientation CuO)
Shared Vision (SV)
Commercial Effectiveness (CE)
Social Effectiveness (SE)
Profitability (Pr)
Notes: SD: Standard deviation; * p<0.05 , ** p< 0.01 (two-tailed t-test)

4.2.Hypotheses testing

To further test our hypotheses we conducted a series of stepwise regression analyses, in total five (5) models were tested (see Table 2). To minimize the threat of multicollinearity the commercial and social effectiveness variables were mean-centered. To explore the mediating effects we followed Baron and Kenny’s (1986) procedure. Further, simple (linear) regressions were run to test the linkages between commercial and social effectiveness and between profitability and social effectiveness.
The analysis suggests that a direct relationship exists between shared vision and profitability (Model 1, H8 is accepted). Further, a strong cohesive vision also affects social effectiveness (Model 3, H3b gained support). These outcomes strengthen the stream of research which supports the view that a high level of shared purpose across the organization motivates people to set and deliver common goals, providing thus a sense of strategic direction (Springett, 2004) by diffusing the what and why (the end to which the strategy is directed) of the organization amongst its members (Ellsworth 2002, p4). Particularly, when this vision, as in our case, unifies employees towards a higher purpose, greater than just profit, this has a positive impact on profit levels and on the achievement of social goals. Relevant research evidence do suggests that a sense of (social) purpose is related to positive employee and customer attitudes (e.g. satisfaction), resulting thus to higher profits (Ellsworth, 2002).

Table 2: Regression analysis

Model 1

Model 2
Commercial Effectiveness

Model 3
Social Effectiveness
Model 4
Model 5

Product Orientation

Competitor Orientation

Customer Orientation


Shared Vision


Commercial Effectiveness

Social Effectiveness


Adjusted R2
Notes: The colored cells indicate the variables entered in each of the 5 Regression Models that were tested (stepwise method), only predictor’s b are reported; * p<0.10 , ** p< 0.05

Moreover, in our study it was found that commercial effectiveness predicts profitability (Model 4, H6 is supported) even when the interaction between commercial and social effectiveness is entered into the equation (Model 5, interaction between commercial and social effectiveness - SExCE). Thus, in line with other researchers’ findings, we can support our proposition that strategic orientation’s positive effect on profitability is mediated by commercial effectiveness (i.e. Bennett, 1998; Carmen and Jose, 2008; Camarero and Carribo, 2008, Model 2).  However, only customer’s orientation role in attaining commercial goals is revealed (H1a is accepted), proposing that a better understanding of customers’ needs, value chain and dynamics (enhances customer satisfaction) and can help SCEs reach their market-based goals (commercial effectiveness) and subsequently achieve higher profitability levels (mediation; Model 2 and Model 4).
It was also pinpointed that profitability directly affects social effectiveness (b= .309, p<0.10, F = 5.171, Adjusted R2 =  0.077) and that a linkage do exists between commercial and social effectiveness (commercial effectiveness      social effectiveness: b= .636, p<0.01, F = 33.292, Adjusted R2 = 0.397 and social effectiveness      commercial effectiveness: b = .192, p<0.01, F = 2.567, Adjusted R2 = 0.97) putting forward for consideration the view (i.e. (Liu et al., 2012) that commercial practice can support social effectiveness. Additionally, there are indications (linkage between social and commercial effectiveness) that social value created (social goals achieved) can support commercial effectiveness by adding to SCEs competitive stance (strong social brand/differentiation).

4.3.Theoretical and managerial implications

This study has implications for both theory and practice. First, a research in the SCEs context is conducting (filling a research gap) providing: i) justification/the rationality for bringing strategic/market orientation (SO/MO) into the SCEs sector and ii) highlighting the importance (for a SCE) of being customer oriented and having a cohesive and shared, amongst its members, vision in order to foster effectiveness in its functioning in both areas of practice: commercial and social. This means that SCEs need to understand their customers, and search continuously for ways to upgrade their offering (product /service) and spot new ideas for commercial and social opportunities, as well as for differentiating themselves from their competitors. 
Second, this research adds to the theory and literature on SO/MO, in the social sector particularly, by proposing and testing a framework which focuses on the route through which strategic/market orientation affects profitability (performance). More precisely, it is hypothesized that strategic/market orientation enhances profitability through the mediating effect of commercial and social effectiveness. Our findings demonstrate that the route between SO/MO and profitability (objective measure of performance) is indeed complex and could be mediated by commercial effectiveness. Particularly, customer orientation (dimension of SO/MO) plays the vital role in reinforcing commercial effectiveness and profitability. Further, it is suggested that customer orientation also supports social effectiveness through the linkage found between social and commercial effectiveness. The previous findings put forward for consideration the notion that an organizational culture which creates and preserves superior value for customers is the cornerstone for commercial and successively social results (the end/the mission of a SCEs effort) rationalizing the argument that when SCEs engage in both commercial and social goals, with the right management strategy, success in one aspect may enhance success in the other.
Third, the results give ground for our decision to include vision, as an indicator of strategic behavior, in the proposed model. The data analysis underlines that a strong shared social vision has both a direct and an indirect (through its impact on social effectiveness) effect on profitability, since it gives a sense of purpose that facilitates particularly social goals (social mission) achievement. So, compiling an inspiring vision (statement) and diffusing it amongst SCEs employees, has to be a priority for the management team of a SCE.

4.4.Limitations and directions for future research

The major limitation of this study results from the fact that the SCEs in the sample (due to the fact that the first SCE/KOINSEP in Greece was founded in 2012 – after the Social Economy 2011 Law was introduced) are in fact start ups. Considering that it takes a lot of time to establish a market oriented culture – and the initial costs of establishing an “enterprise” -  the results may underestimate or overestimate some of the hypothesized relationships. This limitation is also related to the fact that we used one-time survey data. Therefore, studies using longitudinal data could provide more accurate and deepen understanding of the proposed/examined relationships between the study variables.
Additionally, a large scale survey, the use of control variables for i.e. age and size (in our case would not add to the research due to similarities that exist among SCEs in our sample related again to the fact that the first SCE/KOINSEP in Greece was founded in 2012) that often appear in relevant research, as well as multilevel research to collect data from different sources could further strengthen the validity/generalizability of our results and deepen our comprehension of the under study relationships.
Last but not least, as suggested in the literature review section, the type of performance measures used (i.e. subjective vs objective or/and financial vs non financial) affects the existence or the strength of the relationship between SO and performance. So, different types of performance measures could be incorporated in the proposed model and tested. 

5.      Conclusion

This research has attempted to contribute to the ongoing quest to understand the strategic management aspect of social enterprises. Our research findings demonstrate that pursuing a clear/shared vision and customer orientation (dimension of SO/MO) can strengthen the profitability levels of a SCE (KOINSEP). Moreover, we have expanded our understanding between SO/MO and profitability relationships by exploring the mediating effects of commercial and social effectiveness and incorporating vision, as a variable, in the proposed framework.

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[1] http://ec.europa.eu/internal_market/social_business/docs/news/130708_social-economy-strategy-greece_en.pdf

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