Dynamic Capabilities in Social Entrepreneurship: A Case Study on Social Value Creation

Social enterprises address societal challenges in entrepreneurial ways. This duality of combining social purpose and business is said to cause tension. There is limited understanding of how this reflects dynamic capabilities in social enterprises. Another underexplored area is how individuals make sense of still-maturing organizational dynamic capabilities. This study examines how social enterprises manage tensions between social mission and financial sustainability. The study focuses on social entrepreneurs sensemaking of their organizational dynamic capabilities that enable social value creation. Using a qualitative approach and content analysis, this study contributes to the literature on dynamic capabilities in social entrepreneurship. It illustrates how sensing, seizing, and reconfiguring capabilities are described to manage tensions while developing a social business. The data consists of interviews of six social entrepreneurs. The analysis reveals how social entrepreneurs identify societal needs and develop business and mobilize resources with a value-driven approach. Furthermore, the dual mission does not cause only tensions, but also enables business, and this requires building dynamic capabilities for the organization. The findings illustrate how social entrepreneurs enhance organizational and network capabilities crucial for business development, without losing sight of their social mission.