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Identity-based Explanation for the Reciprocal Relationship Between Social Enterprises and Local Communities

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 3047 words Published: 9th Nov 2020

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Statement of the topic

Social enterprises are organizations trying to tackle society's problems. Similar to other organizations, social enterprises are embedded in their context. While they influence their peripheral communities, they are also affected by local factors. Understanding the identity process between social enterprises and local communities is the aim of this research. There are two cases, Golbaf and RQ-Bank, that offer unique data for this research. Although these two cases differ in central aspects, they are an ideal set of complementary, revelatory cases for our research goal.

Motives and goals

This research has three main goals:

  • It would Provide a better understanding of the role of economic activities, particularly social entrepreneurially, in community identity. Indeed, it will extend the term of social impact and its assessment models.
  • This research tries to shed light on how social enterprise are influenced by local identity. In other words, how social enterprises are socialized, localized, and contextualized by social identities of their social environments.
  • It would introduce a new typology of social enterprise model. This typology is based on the relationship between social enterprises and society. Social enterprise’s literatures have not paid significant attention to the social aspects of social enterprises so far.

Research questions

The main question which this research will address is: How interrelated are social enterprises and local identities?

We can break it down to the following sub-questions:

  • How do social enterprises influence the local identity and identification?
    • How do social enterprises influence the individual identities in local communities?
    • How do social enterprises influence the collective identities in local communities?
  • What impact does local identity have on social enterprises?
    • What are the impacts of local identities on organizational performance of social enterprises?
    • What are the impacts of local identities on organizational identity of social enterprises?

Literature review (This section is not complete yet and I am still working on it)

Various research has discussed the mutual relationship between communities and organizations (Marquis & Battilana, 2009). Social entrepreneurship has been the subject of considerable interest in the literature (Austin, Howard, and Wei-Skillem 2006). Against this backdrop, it comes as a surprise that social identity has not yet been employed to explain the relationship between social enterprises and local communities.

Social identity theory could provide a theoretical basis for explaining human behaviors (Tajfel & Turner, 1979). This theory describes how individuals locate themselves in their social contexts (Stets & Burke, 2000). Other important concept in this area is collective identity, which is defined as the group members’ shared perceptions of the values, practices, and culture that define ‘who they are as a group,’ and what differentiates them from others (Bartel & Wiesenfeld, 2013). Identity and identification have become important theoretical concepts in the organizational studies (Gioia et al., 2013) and, more recently, their application has also gained traction in entrepreneurship research (Navis & Glynn, 2011).

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As Marquis and Battiliana (2009) argued, even in the global age, not only local communities continue to matter for organizations, but also local factors have become more salient. While reviewing classic and contemporary research from organizational theory, sociology, and economics that have focused on social enterprises, lack of research on this influencing dynamic become conspicuous. Prior studies have explored the effects of local identities on traditional organizations such as universities, hospitals, or governmental agencies (Hertel 2019). Nanson also (2018) discussed the influences of communities on the evaluation of social performance in organizations. He argued that the reference points based on which organizations evaluate their social performances are affected by communities' identities and stakeholders' expectations. Indeed, by using behavioral theory he has shown that based on their context organizations frame, interpret, and respond to feedback differently. Hertel (2019) developed a framework to describe community-based enterprise’s creation in a community with the help of social identity theory. His study has shown how a threat to a strong local and collective identity can lead to the emergence of new organizations and new collective identities. His research focused on the emergence of co-operated organization in the face of an identity threat. Hertel also has heeded calls for further explorations of how local communities can affect social enterprises. Wry and York (2015) followed an identity-based approach to understand the perception of social entrepreneur about competing social and commercial tension in social enterprise. Their studies provide a few bases for this research, although their concentration was on the social entrepreneur rather social enterprise. Smith and Woodworth (2012) studied social entrepreneur’s training programs and showed the importance of identity in in these curriculums. They argued that created identity increases the confidence required for making change. Jones, Latham, and Betta (2008) researched the how narratives construct entrepreneurial identity for social entrepreneurs. 

Such identity-based analyses have extended our knowledge in understanding the interrelated connection between organizations and communities. It seems that this relationship plays a more salient role in social enterprises, for social enterprises are more dependent on society. But this topic still has remained under-researched.

Research strategies

The study will adopt a deductive research strategy. The affecting mechanisms will be divided into two groups and will be analyzed separately (figure 1). The first group, social impact mechanisms, includes the mechanisms through which social enterprises have impacts on the local identities and identification. Indeed, this category considers influences of social enterprise on local identity. The second group, socializing mechanisms, contains the mechanisms that inject local identities to social enterprises. This group is mainly concerning social enterprises’ cultures and behaviors. Based on this assumption, two main steps for this study are defined and each of them focusing on one group of affecting mechanisms.

Figure 1

In order to understand the effects of social enterprises on the identity of local people the case of Golbaf seems appropriate. Golbaf is a tiny city in Iran that has faced a high level of emigration and many young people have left their community. After creating five small local, social enterprises with the support of Hami, an Iranian consulting firm for social enterprise, the level of emigration to big cities decreased. The interesting thing was that not only the level of emigration drastically decreased, but also some of them who had already emigrated to the city returned. It was hypothesized that these new enterprises created jobs and thus people preferred not to leave their community. Facts and evidence, however, showed that these kinds of enterprises did not create enough job opportunities to encourage people to remain in their community. To explain this, a new hypothesis is developed that the emergence of these social enterprises enhanced identity and identification among local community and as a result local people decided not to leave their community.

RQ-bank could be a suitable case to study to uncover the second mechanisms. RQ-bank has two advantages which make it a suitable case for this research. Firstly, RQ-bank has tried to develop a standard model which we will refer to as ‘McDonaldization’. Thus, RQ-bank expected that all officers perform in the same way, although it never happened. My hypothesis is that local factors play a salient role in these differences between different offices of the same social enterprise. Secondly, it has 217 offices in different regions with different local identity and identification. Hence, we have enough samples to study, compare and discover the correlation.


Some concepts will be used to provide initial direction for the study. As one of the goals of this study is introducing a new typology model for social enterprise, it will suggest new definition for some concepts. The central concepts are defined as follows:

  • Social enterprise: Businesses which reinvest their profits rather than sharing it among the shareholders. They are businesses not charities. Their core mission is solving a problem of society.
  • Local community: Social environment in which social enterprises are located. In this definition, the Geographic’s factors are considered rather relational factors.
  • Identity: This concept has many definitions and researchers have defined it differently, from cultural aspects to psychological aspects. In this study identity is concerning the sense of people to their own community. In other words, their perceptions of themselves and their capacities is defined identity.
  • Identification: Similar to identity, this concept is defined differently in different disciplines. In contrast with identity, which is focused on how a community understand themselves, identification rises from comparing themselves with other communities.
  • Social impact mechanisms: The mechanisms through them social enterprises influence society.
  • Socializing mechanisms: The mechanisms through them society influences social enterprises.

Data types, source, and collection

Given the different nature of the research questions, the data will be both qualitative and quantitative. For the first stage, the objective is observing a community to explore the perceptions, understandings, and behaviors of its members and analyze the changes among them due to the emergence of social enterprises. As described in question’s section, in order to develop a better understanding, the social impact mechanisms will be divided into two sub-groups. One will analyze the influence of the social enterprises at an individual level and the other will consider the influence at the collective level.

For analyses at a collective and community level, focus groups and observation can provide relevant information. On the other hand, in order to collect sufficient information at the individual level, participants need to be categorized and appropriate methods designed for each group. Local people had three main responses (behaviors) in the face of the emergence of social enterprises in their local community which can provide a good basis for categorizing participants. Also, age plays a crucial role in their identification, hence, I developed this matrix of participants based on which we can design creative, flexible, semi- or unstructured methods that enable and capture local people’s views.



Left and never came back

Left and came back

Never left


Between 20 and 40

Group 1

Group 3

Group 5

Older than 40

Group 2

Group 4

Group 6

Ethnographic data collection methods are particularly well-suited for phenomena rooted in local cultures and identities, as they allow the researcher to immerse in, and holistically understand, local cultures and identities. Such methods may include individual or group interviews, and participant observations. The information generated through this stage can be used to map out and contextualize local people’s social experiences and will help us to identify a range of minority, majority, or contradictory experiences or perceptions of emergence of social enterprise in a community (Cornel, 2015).

For the second stage of the study, the influence of local identity and identification on social enterprises can be explained from two perspectives. Firstly, the influence on the performance of the enterprises. Secondly, the influence on organizational culture and behavior. Therefore, the socializing mechanism will be broken down into two sub-categories.

For this stage, a quantitative method can be used. The next step is identifying the participants, and data, and information collection methods. It seems that we need to explore two groups. Firstly, local people must be scrutinized to gauge the level of identity and identification. We can categorize people based on the types of interactions that they have with the social enterprises. It seems that different local people have their own affecting mechanism and importance. Some local people work there, some are the customer and consumer of the social enterprise and some do not have direct interaction with the social enterprise. Therefore, I suggest the below table for our first participants.

Local people’ relationship with the social enterprise





Group 1

Group 3

Group 5


Secondly, social enterprises must be analyzed. The first sub-question is ‘what is the impact of local identity and identification on the performance of social enterprise?’ and it is concerned with data. The RQ-bank has sufficient data about the performance of each office and we do not have difficulties in this phase for data gathering. For the second sub-question, ‘What is the impact of local identity and identification on the organizational behavior and culture of social enterprise?’, a qualitative method is required. It can be done by conducting interviews and running focus groups and through observation. The important point here is that because eventually, we want to make a comparison between different offices in different local communities, we need an iterative process of combining quantitative and qualitative methods.

Problems and limitations

There is a barrier in front of us in this stage. We need to evaluate and maybe quantify the level of identity among local people. It is difficult to quantify and evaluate identity and identification. Identity and identification measurement is not easy. How should we measure the collective sense of identity? Inspired by what Kay (2005) and Hertel (2019) did to measure social capital and local identity, in this research the concept will be broken down into three measurable subcategories including belonging, willingness to invest private resources, commitment to traditional ceremonies and shared norms. These are all qualitative and their interpretation is open to subjectivity.


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