Managing Contradictory Goals:
A Longitudinal Study of a Social Enterprise
Wendy K. Smith
University of Delaware
Marya L. Besharov
Cornell University
Meaning Meeting
April 23, 2009
Issues for Feedback
• Is our emerging model interesting?
• What theoretical gaps can our model address?
• What additional data can we collect?
Agenda
 Digital Divide Data: A social enterprise
 Opportunity to study managing contradictory goals
 Emerging model of managing contradictory goals over time
 Potential contributions and next steps
Digital Divide Data: A Social Enterprise
DDD Vision and Mission
“Digital Divide Data's vision is to create better futures for disadvantaged
people in the developing world.”
"Digital Divide Data's mission is to provide growth opportunities for our
staff and high quality services to our customers through sustainable
technology-related enterprises."
Digital Divide Data: A Social Enterprise (cont.)
 SOCIAL: 402 employees, 214 ‘graduates’, >10x average salary
 FINANCIAL: $1.5 M in revenues, 30% operating margin
Social Enterprises: A Growing Phenomenon
 Social enterprise – an organization that tries
to achieve a social mission through a profitgenerating business operation
 AKA: hybrid, fourth sector, not just for profit, sustainable
business, green business, impact business
 Social enterprises are growing in number
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B-Corp: 190 members; $1B in revenues; 42,000 users
Business Alliance for Local Economies: 20,000 members
Investors Circle: $130M invested in ‘impact’ businesses
Social Venture Network: 500 members
Business for Social Responsibility: 250 members
Social Enterprises: Multiple Contradictory Goals
 Social mission and financial performance
 Both goals are strategically critical to the
success of the social enterprise
 Contradictions across the social enterprise
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Selection and socialization (Battilana & Dorado 2009)
Motivation and incentives (Besharov 2008)
Identity (Foreman & Whetten 2002)
Growth strategy (Leonard, Epstein, & Smith 2007)
Funding sources (Chertok, Hamaoui, & Jamison 2008)
Managing Contradictory Goals
 Contradictory goals pervasive in organizations
 Social vs. financial
 Explore vs. exploit
 Learning vs. performance
 Effectively managing contradictory goals is
critical to organizational performance
(Cameron & Levine 2006; Eisenhardt & Westcott 1988; Gitell 2004;
Murnighan & Conlon 1991; Osono, Shimizu, & Takeuchi 2008; Smith &
Tushman 2005; Sundaramurthy & Lewis 2003)
Managing Contradictory Goals: Challenges
Contradictory goals involve
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Inconsistency
Ambiguity
Conflict
Complexity
Psychological forces encourage
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Consistency (Festinger 1957)
Clarity (Kahneman & Tversky 1979)
Conflict avoidance (Deutsch 1973)
Simplicity (Miller 1993)
Managing Contradictory Goals:
Prior Research and Open Questions
 Prior research has explored strategies for managing
contradictory goals involving:
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Org. structures (O’Reilly & Tushman 2008; Smith & Tushman 2005)
Cognition/framing (Gilbert 2006; Jarzabkowski & Sillince 2007)
Identity (Fiol, Pratt, & O’Connor 2009; Pratt & Foreman 2000)
Issue crafting (Sonenshein 2006)
Culture (Gibson & Birkenshaw 2004)
Change (Seo, Putnam, & Bartunek 2004)
Other?
 Open questions:
 How do strategies emerge and evolve over time?
 How do different domains relate to one another?
Research Question
 How does a social enterprise simultaneously
manage social and financial goals?
 How manage contradictory goals over time?
 How manage contradictory goals across multiple domains?
Methods
 Longitudinal case study
 Digital Divide Data
 Inductive, building theory from case study data
(Edmondson & McManus 2007; Eisenhardt 1989; Siggelkow 2007)
 Initial data collected
 13 interviews
 CEO (3), NA management (2), Asia management (2), Board Chair (1),
Operators (4), External consultant (1)
 Archival data
 Board agendas and minutes, articles, annual reports, org charts
 Additional data to be collected
 Interviews and observation
 Asia and North America
Initial Analysis
 Individually examine interviews and board packets
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Where are the tensions between social and financial?
How do these tensions change over time?
How are senior leaders managing these tensions?
What strategic issues are being raised?
What decisions are senior leaders making?
 Create tables/lists
 Interesting tensions over time
 How senior leaders managed these tensions
 Explore patterns
 Compare analyses with one another
Preliminary Model of Managing Contradictions Over Time
Differentiation
Establish the
Social Mission
2001-2003
Integration
Solidify the
Business Plan
Seek Support
for Both
2004-2006
2007-2009
Three methodological strategies
• Domains of action
• Issues raised
• Decision patterns
Methodological Strategy 1: Domains of Action
 Tensions manifest in multiple domains
 HR practices
 Growth strategy
 Governance
 External partnerships
Domain: HR Practices
Establish the Social
Mission
Solidify the
Business Plan
Seek Support for
Both
2001-2003
2004-2006
2007-2009
Operator Hiring
(disadvantaged vs. skilled)
Disadvantaged quotas
Performance criteria
Pre-operator training
Management Capacity
(local (Asia) vs. NA)
Expats shadow locals
Hire local quality mgmt
Local management training
Compensation
(‘consume the mission’ vs.
competitive salary)
NA mgmt volunteers
Expand & fundraise
for NA mgmt
Revenues fund NA mgmt
Key Tradeoffs
Domain: Growth Strategy
Establish the Social
Mission
Solidify the
Business Plan
Seek Support for
Both
2001-2003
2004-2006
2007-2009
New Products
(low skill vs. high margin)
Low skill work
High margin work
Trainable high margin work
New Offices
(underserved vs. productive)
Open two new offices
to expand mission
Seek profitability in
current offices
Plan future profitable
growth to expand social
mission
Key Tradeoffs
Domain: Governance
Establish the Social
Mission
Solidify the
Business Plan
Seek Support for
Both
2007-2009
Key Tradeoffs
2001-2003
2004-2006
Board of Governors
No Board
Rely on friends, family
Create Board
Expand Board
Create local advisory groups
(social vs. financial background)
Mix of social/financial
Mix of social/financial
(local vs. NA based)
All US based members Add local (Asia) members
Domain: External Partnerships
Establish the Social
Mission
Key Tradeoffs
Funding
(donors vs. investors,
earned revenues)
Strategic Partners
(NGO vs. for-profit)
Solidify the
Business Plan
Seek Support for
Both
2001-2003
2004-2006
2007-2009
Mostly donors
Earned revenues
cover operations
Cultivate socially
oriented investors
Primarily NGOs
Establish for-profit
partnerships
Establish social enterprise
partnerships
Cultivate relationship
with for-profit ‘mentor’
Partner with forprofit ‘mentor’
For-profit mentor adopts
socially responsible practices
Methodological Strategy 2: Issues Raised
 Focus on strategic issues raised as a measure of attention
allocation (Dutton & Dukerich 1991)
 Categorize issues
 Financial: P&L, operations, sales, management responsibility
 Social: Fundraising, social metrics, social mission
 Both: HR, governance, growth, accounting, budget
 Identify pattern of issue attention allocation over time
Issue Attention Allocation
Establish the
Social Mission
2001
Solidify the
Business Plan
2004
2006
Seek Support
for Both
2009
Methodological Strategy 3: Decision Patterns
 What type of decisions are made in each time period?
 Synergies
 Incorporate and address both goals
 Reduces conflict, promotes creativity (Rothenberg 1979;
Eisenhardt & Westcott 1989; Osono 2008)
 Trade-offs
 Privilege either social or financial
 Hard to make inconsistent trade-offs (Louis & Sutton 1991)
Decision Patterns: March 2005
Issues
Decisions
1.
Board Expansion
Financial vs. social background
Local (Asia) vs. NA members
1.
TRADE-OFFS
Add social background – social
Add local member – social
2.
Operator Hiring
Disadvantaged vs. Productive
2.
SYNERGY
Train disadvantaged and hire most skilled
3.
Management Compensation
Consume mission vs. pay competitive salary
Fund salary w/ revenues vs. donations
3.
TRADE-OFFS
Pay competitive salaries – financial
Pay management through revenues – financial
4.
Management Capacity
Local vs. NA management
4.
TRADE-OFFS
Transfer more responsibility to Asia – social
Managing Contradictions Over Time
Differentiation
Integration
Establish the
Social Mission
Solidify the
Business Plan
Seek Support
for Both
2001-2003
2004-2006
2007-2009
Potential Contributions
Outstanding Questions
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Approach to managing contradictory
goals evolves over time
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What explains transitions from one
phase to another?
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Pattern evident across multiple domains
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Are some domains leading or lagging?
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Differentiation precedes integration
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Does differentiation enable integration?
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Integration involves both synergies and
trade-offs
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What explains differences between
synergy and trade-off decisions?
A Concluding Thought
Differentiate in order to integrate - a meta-theme?
 Pattern evident across organizational phenomena/theories:
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Diversity – Ely & Thomas 2001
Innovation – Gilbert 2006; Smith 2005; Andriopoulos & Lewis Forthcoming
Identity – Besharov 2008; Fiol, Pratt, & O’Connor 2009
Mindfulness – Weick, Sutcliffe, & Obstfeld 1999; Langer 1989
Others?
Thank you!