Driven to Do the Right Thing

Several years ago, I came across the fascinating, divergent story of Judy Wicks, the founder of the socially conscious White Dog Café in West Philadelphia, and Richard Hayne, the founder of Philadelphia-based Urban Outfitters. In 1971, the couple split up after having established The Free People’s Store, a precursor to Urban Outfitters.

Wicks went into the restaurant business, developing a unique model in which she sourced meat and produce from local farms. One-hundred percent of the energy used at the White Dog Café and the neighboring Black Cat boutique was from wind energy. What’s more, Wicks regularly donated 20 percent of the profits to a foundation she established to support a range of local nonprofits and social-justice groups, prior to ultimately selling the business to Philadelphia restaurateur Marty Grimm in 2009.

Meanwhile, Hayne continued in the apparel business, building Urban Outfitters into a trendy fashion behemoth with $2.27 billion in sales for fiscal year 2011. In 2008, Forbes listed Hayne as the 262nd richest person in the U.S., as ranked by net worth (which, at that time, was $1.8 billion).

I was immediately struck by the question: What exactly motivates entrepreneurs to navigate the choices they face in creating a business model? In other words, why are some people drawn toward social entrepreneurship and others toward more traditional, commercial entrepreneurship?

My colleagues (Scott Newbert and Kevin Clark) and I sought to untangle this question through examining longitudinal data, which involved looking at what businesses were doing over a long period of time. Our timing was right: Scholarly studies published in 2009 and 2010 identified a need for more research into the question of whether there are systematic differences between social and commercial entrepreneurs. Prior research seemed to focus on social entrepreneurs in an anecdotal manner, emphasizing their role as “heroes,” but there was little data on characteristics that distinguished these two sets of entrepreneurs.

We decided to focus on a number of personal characteristics that seemed most relevant to entrepreneurship: tenacity (the tendency to stick to goals over time); the individual bases of commitment (whether entrepreneurs were driven by their own values or identity or by more calculative, surface-level motivation, such as financial success); and, finally, the type of goals they had.

What We Learned

Based on prior literature and our own hunches, we expected social entrepreneurs to be more tenacious than traditional, commercial entrepreneurs. In part, we thought they simply had to be. Many social entrepreneurs seek to establish businesses in areas without much structural support, such as inner cities and in locations with emerging economies where they may face a range of challenges, including unstable political and social systems, lack of an appropriate labor force, or less openness to investment.

We also expected that social entrepreneurs would exhibit more “value- or identity-based commitment” and less “calculative or instrumental commitment” than commercial entrepreneurs. It was important to try to understand why entrepreneurs are committed since it is those underlying feelings that motivate them to jump into action. Value-based commitment involves an issue that coincides with the entrepreneur’s values, while identity-based commitment refers to the fact that the issue may be a fundamental aspect of the entrepreneur’s identity. Clearly these would be deep, underlying reasons for someone to start a company. In contrast, calculative or instrumental commitment involves a more surface-level motivation, such as being a financial “success.”

Last, because of their focus on social value creation, we expected that social entrepreneurs would be focused more on setting high goals when it came to having an impact on people and communities. Commercial entrepreneurs, on the other hand, would likely be focused more on goals reflecting financial growth

Our results mostly supported our expectations, with one surprise. It is worth noting (not surprisingly) that the final number of social entrepreneurs included in our data set (94 individuals) was much lower than the number of commercial entrepreneurs (1120 individuals), so we had to be careful about our choice of statistical methodologies to compare the two groups.

What we did find with this comparatively small sample is that social entrepreneurs are relatively more tenacious, more committed to values and identity-based commitment, less committed to calculative and instrumental commitment, and more interested in having a large impact on people and communities than commercial entrepreneurs. Contrary to our expectations, though, we found that there were no differences between the two categories on goals reflecting financial growth. In other words, social entrepreneurs are just as concerned with increasing sales and building up their employee base as those who launch startups with commercial goals in mind.

In the end, why does it matter? For one, we were able to affirm that at a relatively deep level, the personal characteristics of social versus commercial entrepreneurs are appreciably different.

Given the recent investments organizations such as the United Nations have dedicated to solving myriad social ills, such as eradicating poverty and hunger, improving global educational opportunities, promoting gender equity, fighting diseases, and inspiring environmental sustainability, social entrepreneurs will clearly play a vital role in our future. By better understanding who social entrepreneurs are and why they do what they do, perhaps we can provide more effective guidance for those seeking to enact catalytic social change.

---

Narda R. Quigley is an organizational behavior professor at Villanova School of Business.