venturing for others with heart and head: how

VENTURING FOR OTHERS WITH HEART ANDHEAD: HOW COMPASSION ENCOURAGES

SOCIAL ENTREPRENEURSHIP

TOYAH L. MILLERIndiana University

MATTHEW G. GRIMESUniversity of Alberta

JEFFERY S. MCMULLENIndiana University

TIMOTHY J. VOGUSVanderbilt University

Social entrepreneurship has emerged as a complex yet promising organizationalform in which market-based methods are used to address seemingly intractablesocial issues, but its motivations remain undertheorized. Research asserts thatcompassion may supplement traditional self-oriented motivations in encouragingsocial entrepreneurship. We draw on research on compassion and prosocial mo-tivation to build a model of three mechanisms (integrative thinking, prosocialcost-benefit analysis, and commitment to alleviating others’ suffering) that trans-form compassion into social entrepreneurship, and we identify the institutionalconditions under which they are most likely to do so. We conclude by discussingthe model’s contribution to and implications for the positive organizational schol-arship literature, entrepreneurship literature, and social entrepreneurshipliterature.

Social entrepreneurship has captured the me-dia’s attention and the public’s imagination. Byusing market-based methods to solve socialproblems, social entrepreneurship marries twodistinct and ostensibly competing organiza-tional objectives: creating social value and cre-ating economic value (Austin, Stevenson, & WeiSkillern, 2006; Dees, 1996, 1998). Like charitablenonprofits, social enterprises seek to create so-cial value (Peredo & McLean, 2006; Shaw &Carter, 2007), but they employ a market-basedorganizational form to sustain this value cre-ation (Hartigan, 2006; Hockerts, 2006; Lasprogata& Cotten, 2003; Mair & Marti, 2006; Thompson,

2002). Social enterprises seek to create value forcustomers, but instead of full remuneration go-ing to investors, as is the case with commercialventures, the surplus benefits of organizationalactivity accrue primarily to targeted beneficia-ries (Alvord, Brown, & Letts, 2004; Austin et al.,2006; Mair & Marti, 2006). It is this concern forothers that makes social entrepreneurship bothadmirable and theoretically problematic givenour current understanding of what motivatesentrepreneurship.

To date, investigations by researchers fromeconomics, psychology, and management intothe motivations for market-based venture cre-ation have focused primarily on the role of ra-tional self-utility maximization (Licht, 2010) andprofit-seeking behavior (Baumol, 1990). Althoughresearch in the entrepreneurship literature hasconsistently suggested that entrepreneurs ex-hibit a preference for nonpecuniary rewards,such as the need for achievement (McClelland,Winter, & Winter, 1969), autonomy (Amit & Zott,2001; Hamilton, 2000; Moskowitz & Vissing-

We thank special issue editor Joshua Margolis and threeanonymous reviewers for seeing the potential in our paperand providing us with extremely constructive and thoughtfulguidance throughout the review process. An early draft ofthis manuscript was presented at the 2010 Research Collo-quium on Social Entrepreneurship; we thank the partici-pants for their constructive feedback regarding that draft.All the authors contributed to this article equally.

� Academy of Management Review2012, Vol. 37, No. 4, 616–640.http://dx.doi.org/10.5465/amr.2010.0456

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Jorgensen, 2002), or a taste for variety (Åstebro &Elhedhli, 2006) that enables them to bear the riskand uncertainty associated with new venturecreation (McMullen & Shepherd, 2006), each ofthese preferences remains primarily self-interested (i.e., oriented toward maximizing anindividual’s personal utility). Furthermore, thisfocus on self-interested and calculative motiva-tors may ignore the role that emotion plays inconditioning entrepreneurial behavior (Baron,2008; Goss, 2008). In particular, emotions that areprosocial motivate actions that are intended toserve the well-being of a group, even at theexpense of the individual actor. This effectivelybypasses self-interested calculations and trans-forms apathy into social concern and action(Bowles & Gintis, 2002; Montada & Schneider,1989; Thomas, McGarty, & Mavor, 2009).

Indeed, even though social entrepreneurshipis likely to be at least partly based in self-interest and a desire for social power (McClel-land, 1994), prior research asserts that these mo-tives are insufficient. In early conceptualizationsof social entrepreneurship (e.g., Dees, 1998,2007), scholars argued that the decision to startsuch ventures is substantially motivated by theother-oriented emotion of compassion. This re-quires that scholars examine more closely theways that people systematically incur substan-tial costs to promote other people’s interests(Camerer & Fehr, 2006; Rabin, 2002), employemotion in their decision making (Cardon, Win-cent, Singh, & Drnovsek, 2009), and recognizemore explicitly that “the self-utility that mayaccrue to the actor is affected by the utility ac-cruing to others” (Licht, 2010: 839).

The purpose of this article is to explore howcompassion may be responsible for encourag-ing social entrepreneurship—the process oflaunching a hybrid organizational form that cre-ates social value through market-based meth-ods. Compassion is characterized by its other-orientation and emotional connection linking anindividual to a suffering community (Goetz, Kelt-ner, & Simon-Thomas, 2010; Lazarus, 1991; Nuss-baum, 1996, 2001). Compassion serves as a pow-erful motivator of action, compelling individualsto alleviate others’ suffering (Batson & Shaw,1991; Omoto, Malsch, & Barraza, 2009). Thus,compassion serves as a prosocial motivatingemotion (i.e., the desire to benefit others), in con-trast to proself motivators (Bierhoff, 2005; DeDreu, Weingart, & Kwon, 2000). Although schol-

ars have suggested that compassion motivatessocial entrepreneurship (Dees, 1998), the mech-anisms by which it does so remain poorly un-derstood (Short, Moss, & Lumpkin, 2009; Zahra,Gedajlovic, Neubaum, & Shulman, 2009). By de-veloping these mechanisms, we address thisshortcoming and contribute to three areas ofmanagement research.

First, to date, much work has focused on dif-ferentiating social entrepreneurship from otherorganizational forms in order to define the phe-nomenon (Austin et al., 2006; Dees & Emerson,2001), but one hitherto overlooked aspect is itsmotivational antecedents. We examine the an-tecedents of social entrepreneurship, specifi-cally drawing out the theoretical relationshipbetween social entrepreneurship and compas-sion (Dees, 1998) to fill a gap in the emergingscholarly literature on social entrepreneurship.By exploring the theoretical antecedents of socialentrepreneurship, we offer a more thorough andrigorous exploration of the affective and cognitivemechanisms underlying this relationship andthe factors that have influenced the increasinglegitimacy of social entrepreneurship.

In addition to the social entrepreneurship lit-erature, we contribute to the entrepreneurshipliterature by elaborating on how new venturecreation can be an expression of prosocial mo-tivations and emotions that are focused on thealleviation of suffering. By focusing on socialentrepreneurship as an exemplar of other-oriented entrepreneurial action, we challengefuture studies of entrepreneurial motivation toaccount for the role of prosocial gains, as well asself-oriented factors such as autonomy and sta-tus (Ageev, Gratchev, & Hisrich, 1995; Herron &Sapienza, 1992; Kolvereid, 1996; Shane, Kolver-eid, & Westhead, 1991). In addition, we contrib-ute to the study of emotions in entrepreneurialaction, a topic often ignored in the literature(Cardon et al., 2009; Goss, 2005). In doing so weuncover how compassion, as an other-orientedemotion, plays a cognitive and affective role,influencing the way entrepreneurs think, calcu-late and analyze personal costs, and commit toorganizing for a cause.

Finally, prior research on compassion in pos-itive organizational scholarship (POS) has fo-cused exclusively on the role of compassionwithin existing organizations, such as how indi-viduals display compassion toward sufferingcolleagues (Dutton, Worline, Frost, & Lilius, 2006;

2012 617Miller, Grimes, McMullen, and Vogus

Frost, Dutton, Worline, & Wilson, 2000) and howcompassion can contribute to collective capabil-ities (Kanov et al., 2004). This work, however, hastended to ignore compassion’s possible influ-ence on whether and how an organization isfounded in the first place. By considering howcompassion might serve to motivate a broaderrange of activities and responses, including thefounding of a new organization intended to ad-dress social issues and alleviate others’ suffer-ing, we extend prior studies that have begun toexamine how decision making is influenced byother-orientation (De Dreu, 2006; Grant &Berry, 2011).

The remainder of the article proceeds as fol-lows. First, we contextualize our theorizing bydiscussing the unique and challenging natureof social entrepreneurship as a solution for ad-dressing social problems. Second, we proposethat compassion acts as a prosocial motivatorby way of its other-orientation. This emotionalconnection to others fosters integrative solu-tions to seemingly intractable social problems,distorts cost-benefit analysis in other-servingways, and encourages the commitment neededto undertake demanding and difficult re-sponses. Third, we show how the effects of com-passion, when combined with the perceived le-gitimacy of social entrepreneurship, increasethe likelihood of launching a social enterprise.In other words, we argue that compassion elicitsa set of cognitive and affective processes con-ducive to social entrepreneurship and, in tan-dem with the perceived legitimacy of social en-trepreneurship, encourages the choice to founda new social enterprise. Finally, we discuss thetheoretical and empirical implications of ourproposed model.


Scholars and practitioners alike are increas-ingly attending to hybrid organizations thatseek to apply market-based solutions to socialissues such that benefits accrue primarily totargeted beneficiaries, as opposed to owners(Alvord et al., 2004; Austin et al., 2006; Mair &Marti, 2006). A social issue refers to “a putativecondition or situation that is labeled a problemin the arenas of public discourse and action[e.g., poverty, illiteracy, unemployment]” (Hil-gartner & Bosk, 1988: 53–54). Scholars increas-ingly refer to these efforts to address social is-

sues using market-based mechanisms as socialentrepreneurship and the corresponding new or-ganizations as social enterprises (Austin et al.,2006; Dees, 1996, 1998). For example, Piramal Wa-ter Private Limited attempts to overcome the sig-nificant challenges of getting potable water tothe most impoverished communities in India.Piramal Water has organized around the mis-sion of “sarvajal,” meaning “water for all,” tocreate a solar-powered, unmanned “water ATM”that dispenses clean water for a very small fee.

Social enterprises like Piramal Water are dis-tinguished by their focus on creating socialvalue, such as getting potable water to impov-erished communities (Peredo & McLean, 2006;Shaw & Carter, 2007), through organizations thatrely on commercial, market-based approaches(Hartigan, 2006; Hockerts, 2006; Lasprogata &Cotten, 2003; Thompson, 2002)—for example,charging a small fee for the water. Social valuecreation occurs when an organization “achievesan equivalent social benefit with fewer dollarsor creates greater social benefit for comparablecost” (Porter & Kramer, 1999: 126). A social ben-efit is a solution to a social problem that accruesto society or a targeted segment of the popula-tion, as opposed to an individual or specificorganization (Thompson, 2002).

The Challenge of Social Entrepreneurship

Despite the increased attention given to socialentrepreneurship, the phenomenon remainsrare (Light, 2006), perhaps because it presentsvery distinct and poignant challenges (Chell,2007; Elkington & Hartigan, 2008; Hemingway,2005; Leadbeater, 1997). First, social entrepre-neurship can be viewed as particularly arduousbecause it “demands that entrepreneurs fusetogether key elements of different logics thatmay have little in common and may even be inconflict” (Tracey, Phillips, & Jarvis, 2011: 60). Spe-cifically, social entrepreneurship combines mar-ket-based organizing, where resources are ac-quired by promising direct financial returns thatare achieved by realizing the organizationalgoal of creating economic value, with charity-based organizing, where resources are acquiredby promising donors indirect social returns thatare achieved by realizing the organizationalgoal of creating social value (Battilana & Do-rado, 2010). The combination of these ap-proaches is clearly evident, for example, in so-

618 OctoberAcademy of Management Review

cial enterprises that look to make advancedtechnologies available to impoverished commu-nities—those at the “base of the pyramid” (Pra-halad, 2005). For example, the treadle pump andthe drip irrigation technology products offeredby IDE India provide impoverished rural farmerswith affordable methods for improving their eco-nomic position, but using market-based meth-ods rather than charity-based methods. Such atightly integrated combination of social andeconomic value creation differentiates socialentrepreneurship not only from traditionalmodes of entrepreneurship (Emerson & Twersky,1996) but also from traditional modes of respond-ing to suffering (e.g., charities).

Second, social entrepreneurship can beviewed as challenging because of the marketsand contexts in which it is implemented (Mair &Marti, 2006). Social entrepreneurship typicallyemerges in contexts where markets are per-ceived to have failed (McMullen, 2011) or wherethere are significant institutional voids (Austinet al., 2006; Dart, 2004; Haugh, 2005; Mair & Marti,2009; Seelos & Mair, 2005). The social entrepre-neur must bear not only the risk involved withlaunching a new enterprise but also the riskassociated with constructing new institutionsthat might support such an enterprise (Dacin,Dacin, & Matear, 2010). For example, microcreditorganizations (e.g., Grameen Bank and BRAC)provide the poor with the working capitalneeded to start entrepreneurial ventures. In ad-dition to the capital market innovation, the so-cial entrepreneurs who first created microcreditorganizations had to do more than just start aventure. They also had to engage in institutionalentrepreneurship by altering existing cultural,economic, and regulatory institutions (Dacin etal., 2010; Mair & Marti, 2009; McMullen, 2011).Culturally, microcredit operations had to over-come stereotypes about the poor by demonstrat-ing their ability to repay loans. Economically,microcredit organizations had to develop tech-nologies and distribution systems that couldovercome the physical barriers to deliver prod-ucts and services efficiently to geographicallyremote rural populations. Finally, to increasestability and lower transaction costs, micro-credit organizations had to help establish cen-tral monitoring agencies, such as the Micro-credit Regulatory Authority in Bangladesh.However, even in environments where the infra-structure exists, social entrepreneurs are often

required to engage in institution building fortheir relevant stakeholders (e.g., educating po-tential consumers, financiers, governmentalagencies, etc.; see Kerlin, 2006). In sum, socialentrepreneurship can be viewed as challengingbecause it requires marrying two ostensiblycontradictory organizational goals in environ-ments where even basic institutional infrastruc-ture may not be in place.

Motivating Social Entrepreneurship

Traditional rational and self-oriented expla-nations of founders’ motivations also seem in-adequate for explaining why an individualwould engage in the process of creating a socialenterprise that poses such significant chal-lenges and uncertainty (Carsrud & Brännback,2011; Grichnik, Smeja, & Welpe, 2010). For exam-ple, early entrepreneurship research empha-sized that entrepreneurs are motivated by finan-cial returns as compensation for their personalrisk taking (Casson, 1982; Kirzner, 1985; Knight,1921; Schumpeter, 1934). More recent work hascriticized this view as overly narrow (Carsrud &Brännback, 2011; Katz & Gartner, 1988), suggest-ing that motivations for venture creation mayreflect individual values and intrinsic satisfac-tions (Ageev et al., 1995; Herron & Sapienza,1992), such as increased job security, a morebalanced workload, and autonomy (Kolvereid,1996). Others point to status, prestige, continuedlearning, and creative control as motives of thechoice to create a venture (Shane et al., 1991).Still other work has attended to emotional moti-vations, such as passion, happiness, joy, anger,and fear, as influencing entrepreneurial action(Cardon et al., 2009; Grichnik et al., 2010; Welpe,Spörrle, Grichnik, Michl, & Audretsch, 2012).However, these motivations are often groundedin meeting (or failing to meet) self- or venture-related objectives (Cardon et al., 2009; Welpe etal., 2012). Despite these substantive contribu-tions to our understanding of the motivationsthat underpin venture creation, the motiva-tional effects of prosocial emotions remainunderexplored.

Social entrepreneurship, as noted, comprisesa particular subset of entrepreneurial activity,wherein the products and services attempt toaddress social problems (Mair & Marti, 2006). Assuch, several scholars have suggested that com-passion may act as a prosocial and emotional


motivator of social entrepreneurship (Dees, 1998,2007; Fowler, 2000), but they have left the mech-anisms by which it does so undertheorized. Al-though we acknowledge that compassion likelymotivates social entrepreneurship in concertwith other, more self-oriented motives, our pur-pose in this article is not to highlight the con-stellation and configuration of individual moti-vations that distinguish the founding of socialenterprises from other organizational forms.Rather, our purpose is to hone in on the role ofcompassion in encouraging this growing andimportant subset of entrepreneurial activity thatcurrently lacks a strong theoretical foundation(Short et al., 2009).

Figure 1 depicts our model of how compassionencourages an individual to engage in socialentrepreneurship. Note that we refer throughoutthe article to instances of compassion that aregeneralized to broad social problems and is-sues, as well as to suffering communities, asopposed to isolated cases of individuals in pain.Specifically, we argue that compassion, throughother-orientation and emotional connection with

others, acts as a prosocial motivator of cognitiveand affective processes that are considered pre-conditions for undertaking social entrepreneur-ship. These processes include (1) increasing in-tegrative thinking, (2) inducing prosocialjudgments regarding the costs and benefits ofsocial entrepreneurship, and (3) fostering com-mitment to alleviate others’ suffering. Further,these compassion-triggered processes increasethe likelihood of social entrepreneurship by en-abling individuals to do something so arduousand challenging. We once again acknowledgethat such processes in isolation do not suffi-ciently predict social entrepreneurship over thechoice to found a more traditional nonprofit orfor-profit organization. We posit, however, thatsuch processes, when used in institutional set-tings that are perceived to be conducive to so-cial entrepreneurship, increase its likelihood. Inother words, increases in the perceived legiti-macy of social entrepreneurship channel thecompassion-driven processes toward socialentrepreneurship.

FIGURE 1How Compassion Encourages Social Entrepreneurship


COMPASSION

Compassion is a prosocial emotion that con-nects an individual with a suffering community(Goetz et al., 2010; Lazarus, 1991; Nussbaum,1996, 2001) and produces sensitivity to the painand needs of others (Nussbaum, 1996; Ortony,Clore, & Collins, 1988). Compassion is a specificmanifestation of the broader feeling of empathy(Decety & Jackson, 2006; Kanov et al., 2004; Nuss-baum, 1996; Solomon, 1998), which, unlike com-passion, can be experienced in relation to an-other’s joy as well as another’s suffering. Uponnoticing the pain and suffering of others, indi-viduals may experience compassion, which elic-its suffering along with those in need and adesire to relieve this suffering. This desire issimilar to prosocial motivation, which Grant de-fines as “the desire to expend effort to benefitother people” (2008: 49). Specifically, we positthat compassion acts as a prosocial motivatorfundamentally through its other-orientation andemotional connection to others that are suffer-ing (Clark, 1997; Kanov et al., 2004; Nussbaum,1996, 2001; Solomon, 1998). That said, we alsoacknowledge the potential for compassionatebehaviors to reinforce positive self-directed feel-ings, which economists have labeled the “warm-glow” effect (Andreoni, 1989).

Compassion and Other-Orientation

Compassion is other-oriented because it di-rects one’s attention from self-concern to con-cern for others and their suffering (Nussbaum,2001; Solomon, 1998; White, 1999). First, compas-sion leads observers to understand what it feelslike to experience others’ pain as a result ofeither a vicarious response to affective cuesfrom others (e.g., mimicking the expressions ofothers; Hoffman, 1981) or intentional role taking(e.g., imaginatively transposing oneself into thefeeling and thinking of others; Batson, Early, &Salvarani, 1997). This other-orientation en-hances one’s awareness of others’ vulnerablecircumstances and gives a deeper appreciationof their context (Dutton et al., 2006; Frost et al.,2000; Lilius et al., 2008). At the same time com-passion increases one’s belief in the signifi-cance of others’ suffering and one’s understand-ing of the issues contributing to it (Nussbaum,2001). Nussbaum suggests that “in order for com-passion to be present, a person must consider

the suffering of another as a significant part ofhis or her own scheme of goals and ends” (2001:319). As compassion serves to orient one’s atten-tion to others, it becomes a prosocial motivatorthat encourages an effortful response for thebenefit of others (Batson, 1987). Specifically,Omoto and colleagues (2009) found that em-pathic concern generates other-oriented actionbut does not carry with it a corresponding ex-pectation of reward for oneself. In fact, compas-sion motivates actions to alleviate others’ suf-fering even at a cost to oneself (Batson &Shaw, 1991).

Compassion can also make individuals par-ticularly attuned to social issues by first makingothers’ suffering personally relevant (Batson &Shaw, 1991; Lewin, 1935) and then by generaliz-ing this concern to others suffering from similarcircumstances (Nussbaum, 2001; Ortony et al.,1988). The specific target of compassion—for ex-ample, a homeless street child— becomes asymbol or embodiment of a broader social issue,such as homelessness or poverty (Hilgartner &Bosk, 1988). Transfer of compassion occurs whenthe attention to another’s distress promotes ageneralized inclination to aid others, includingpotential recipients who may not have served asthe original source of concern (Barnett, Howard,King, & Dino, 1981). This generalizability of com-passion links specific suffering to a broader fab-ric of suffering (Coke, Batson, & McDavis, 1978;Hoffman, 1976). The result is not simply a desirefor any solution but for a solution that has thepotential to reach such a scale that it may im-pact the generalized population that is suffer-ing. If compassion extends only to a particularindividual and does not generalize to otherssharing a similar plight, then social enterpriseis likely to be considered a disproportionate andunnecessary response. A strong social issueconcern stemming from other-orientation wouldappear to be a necessary precondition for choos-ing social enterprise as a compassionate re-sponse to others’ suffering. Therefore, we focuson instances of compassion that are triggeredby and directed toward broader social issues,rather than individual and isolated cases ofsuffering.

Compassion and Emotional Connection

Compassion is also defined by its emotionalconnection to others—one suffers with others


and feels their pain (Blum, 1980). Emotions arelike “a lens that colors thoughts, actions, percep-tions, and judgments” (Goodwin, Jasper, & Pol-letta, 2001: 10), and they become important in theawareness, recall, and analysis of problems anddecisions (Baron, 2008; Frijda, 1988; Goss, 2008).Compassion is a longer-term emotion (Goodwinet al., 2001), which, through the distinct feelingsof suffering with another, supplies informationabout one’s interests and helps channel action(Ford, 1992; Izard, 1991). The intense feelings thataccompany compassion (e.g., sadness, outrage)can signal the depth to which one cares aboutan issue, jolt any feelings of ambivalence, andoverride contradictory desires (Ford, 1992;Gould, 2004). The emotion of compassion com-municates feelings toward the subject in waysthat rational language might not (Ekman, 1993;Gould, 2004).

Emotions are also important because they canadd immediacy to issues, supplying energy topropel an individual forward (Ford, 1992; Frijda,1988). Compassion involves an emotional en-ergy that is transacted with another during theempathic response (Figley, 1995) and that influ-ences whether and how a person will act (Bat-son & Shaw, 1991; Frijda, 1988; Lazarus, 1991).Compassion also ties an individual to a proso-cial goal by eliciting an emotional feeling ofsuffering that the individual wants to relieve(Batson & Shaw, 1991; Lewin, 1935). As a result ofthis distress, people will work to reduce others’suffering as a way to regulate their own emo-tions. In sum, the emotional connection to othersis an important aspect of compassion.

Compassion is also relational in its emotion-ality, which creates a connection between indi-viduals and suffering communities. As an indi-vidual engages in compassion, a deepenedbond emerges with those with whom compas-sion is exchanged—a relationship develops inwhich the individual is more readily availableto appreciate the other’s context and to feel theother’s experience of suffering in a similar way(Nussbaum, 1996). Emotions such as compassionshape individuals’ social identities such thatthey begin to view their situation as inter-changeable with that of a suffering group andeven begin to feel that they are a part of thatgroup (Nussbaum, 2001; Thomas et al., 2009). Theemotional connection of compassion can resultin a moral outrage that facilitates a goal of re-moving sources of suffering that are judged to

be unfair (Bagozzi & Pieters, 1998), and it moti-vates commitment until the problem is resolved(Batson & Shaw, 1991; Lewin, 1935). In fact, evo-lutionary approaches to compassion suggestthat its emotional dimension is tied to the needto promote cooperative norms and connectionwith other nonfamilial ties (Goetz et al., 2010;Nussbaum, 1996, 2001).

Although compassion is not a forward-lookingaspiration (Folger & Salvador, 2008), acting com-passionately may provide personal benefits(Andreoni, 1989). Because compassion producesa positive and shared identity with a sufferinggroup (Thomas et al., 2009), when individuals acton behalf of the group, they are likely to experi-ence positive feedback, emotional energy, andenthusiasm (Collins, 1993). The intrinsic satis-faction of acting compassionately and helpingothers may itself be a source of personal utility.Such personal utility may reinforce actors’ com-passionate efforts, yet this does not discount thenotion that compassion serves fundamentallyas a prosocial motivator. Rather, it suggests thata second-order warm-glow effect can reinforcecompassionate individuals’ behaviors (An-dreoni, 1989).

COMPASSION-TRIGGERED COGNITIVE ANDAFFECTIVE PROCESSES

Through other-orientation and emotional con-nection to others, compassion produces proso-cial motivation that has been tied to a variety ofaffective and cognitive processes relevant to so-cial enterprise. Below we argue that compassionspecifically increases the likelihood of socialentrepreneurship by encouraging higher levelsof integrative thinking, a more prosocial form ofweighing costs and benefits, and commitment toalleviating others’ suffering.

Compassion and Integrative Thinking

Research on motivated information process-ing suggests that the other-oriented nature ofcompassion will bias the way individualssearch for and evaluate information regardinghow to solve an issue (De Dreu, Nijstad, & vanKnippenberg, 2008; Ford, 1992). Compassion, be-cause of its other-oriented and emotional na-ture, serves as a prosocial motivator that en-courages one to search for solutions thatpromise collective gains rather than cater to sin-


gular interests. This is consistent with researchon how prosocial motives impact whether indi-viduals integrate diverse information from oth-ers in their efforts to solve problems (De Dreu etal., 2008) and whether they are more likely toincorporate the ideas of others who are different(Weingart, Bennett, & Brett, 1993). Prosocial mo-tivation can also increase attention to informa-tion about others’ perspectives such that an in-dividual can better understand the issue fromtheir perspective and identify more ways to helpthem effectively (De Dreu, Koole, & Steinel, 2000).In turn, this enhanced perspective taking in-creases cognitive flexibility, willingness to takerisks, and openness to complexity, all of whichexpand the individual’s access to ideas and po-tential solutions (Grant & Berry, 2011). The other-oriented nature of compassion also increasesan individual’s ability to make broad and cre-ative associations (Polman & Emich, 2011).Higher levels of integrative thinking enable an-alogical reasoning and facilitate transfer of so-lutions from one context to another (Thompson,Gentner, & Loewenstein, 2000; Vosniadou &Ortony, 1989).

Compassion may also promote more integra-tion of various perspectives to address a socialissue because it results in less advocacy of asingle perspective that could create conflict be-tween ostensibly competing goals. Increasedprosocial motivation specifically engendersconsideration of a wider array of actions to re-dress others’ suffering (Polman & Emich, 2011).Some evidence for this comes from studies thatshow that other-oriented motivation reduces thetendency to search for self-confirming informa-tion. For example, De Dreu and colleagues (2008)suggest that the tendency to bias one side of anissue is enhanced when one has a proself asopposed to a prosocial motivation, and Carne-vale and Probst (1997) suggest that proself ori-entations are more prone to black and whitethinking. Furthermore, Beersma and De Dreu(1999) found that prosocially motivated negotia-tors engage in more integrative problem solvingand arrive at more integrative agreements.Taken together, this research suggests that, as atype of prosocial motivation, compassion causesgreater receptivity to diverse information, whichfacilitates recombination of new ideas or ap-proaches for solving problems. This greateropenness to different ideas, in turn, allows formore integrative thinking about solutions.

Compassion and ProsocialCost-Benefit Analysis

Traditionally, decision making has been con-sidered a function of rational cost-benefit anal-ysis, where an individual is motivated by self-interest and calculative assessments of thelikelihood of accomplishing goals (Gould, 2004).According to such models, an individual willchoose to engage in activities when the per-sonal benefits outweigh the personal costs. Weargue that the other-oriented and emotional na-ture of compassion challenges such a tradi-tional atomistic analysis of the costs and bene-fits of possible actions. Compassion results in amore prosocial cost-benefit analysis where oth-ers’ outcomes are valued more highly (Goetz etal., 2010; Nussbaum, 1996, 2001), thereby increas-ing the perceived benefits of acting to alleviateothers’ suffering.

Compassion’s other-orientation shapes theevaluation of the importance of another’s suffer-ing and the need for intervention. For example,compassion emerges from judgments that suf-fering individuals are undeserving of their lot inlife, which Nussbaum (1996) refers to as the“judgment of nondesert.” Viewing others’ suffer-ing as unfair and unjust leads the compassion-ate individual to characterize beneficiaries asmore needy and worthy of help, increasing theperceived benefits of acting on their behalf (Bat-son & Shaw, 1991). The increased weight placedon the needs of others encourages a prosocialcost-benefit analysis where the individualviews benefits more broadly (i.e., benefits do notneed to accrue directly to the individual doingthe calculation), reducing the importance ofclear individual benefit, which is necessary inmore traditional formulations (Quiggin, 1997).Similarly, the weighting of benefits that accrueto others may motivate actions that might other-wise be avoided because of the significant costsincurred by the actor (Batson & Shaw, 1991). Inother words, high levels of compassion increasethe perceived benefits of acting and the per-ceived costs of not acting and decrease the rel-ative weight of the costs of acting.

The emotional connection inherent in compas-sion further increases the perceived benefits as-sociated with alleviating the pain and sufferingof others. An emotional connection to others andtheir suffering creates vivid images (Loewen-stein, 1996; Metcalfe & Mischel, 1999) and “moral


shocks” (Jasper, 1998) that lower emotional in-vestment in the current established order, in-crease indignation toward it, and create the de-sire to “go the extra mile” to change it (Lawrence& Suddaby, 2006; Voronov & Vince, 2012). Emo-tional connection to others creates a moral com-pulsion or genuine concern for others’ suffering(De Dreu & Nauta, 2009) such that it triggersmotivated information processing, where an in-dividual attends to, encodes, and retrieves infor-mation consistent with others’ goals and needs(De Dreu, 2006; De Dreu et al., 2008). Thus, com-passion leads to a wider search for and consid-eration of the benefits of acting. At the sametime it also generates an “emotional tax,” in theform of guilt in not aiding the suffering commu-nity, which serves as an additional cost (Elster,1998). Last, an emotional connection with others’suffering can alter individuals’ stances towardrisk such that they will undertake risks becausethose risks are consistent with their compas-sionate values and emotional appraisals (Ka-han, 2008). This may also occur because emo-tions “help the normal decision-making processby narrowing down the options for action, eitherby discarding those that are dangerous or byendorsing those that are advantageous. Emo-tions serve an adaptive role in speeding up thedecision-making process” (Shiv, Loewenstein, &Bechara, 2005: 91). In sum, the emotional connec-tion that characterizes compassion overrides atraditional mode of processing costs and bene-fits and thereby gives way to a prosocial cost-benefit analysis that overcomes the typical in-dividual’s reluctance to engage in activitieswith higher personal risk (Wu & Knott, 2006).

Compassion and the Commitment toAlleviating Suffering

Commitment is defined as a stabilizing forcethat acts to sustain behavioral direction evenwhen there is no expectation of equitable re-ward (Scholl, 1981). Compassion, as a prosocialmotivator (Bierhoff, 2005), enhances dedicationto a cause (Thompson & Bunderson, 2003) ormoral principle (Shamir, 1990), commitment tothe people who benefit from one’s efforts (Grant,2007), and willingness to continue in the face ofnegative feedback (Meglino & Korsgaard, 2004).When prosocially motivated through other-orientation and emotional connection, individu-als are more likely to see others’ goals as more

important and to increase their willingness toinvest time and energy in thinking about andacting on ways to help others, as well as to do soconsistently over time (Grant, 2008).

An emotional connection to others’ sufferingaffects one’s identity, thereby clarifying actionsas identity relevant and increasing the emo-tional energy of acting in accordance with thatidentity. Prosocially motivated individuals mayperceive acting to improve others’ lives (e.g., byreducing their suffering) as more congruent withtheir core values, and, thus, they may commit tohaving a positive impact because acting onthose values reinforces a key identity for them(Grant & Campbell, 2007). That is, compassionand emotional connection to others’ sufferingcan create a prosocial identity—images of theself as helpful, caring, and benevolent—that in-dividuals are motivated to verify and enact(Grant, Dutton, & Rosso, 2008). Incorporating an-other’s suffering into one’s identity can increaseone’s commitment to others (Aquino & Reed,2002; Flynn & Brockner, 2003; Frost et al., 2000).Individuals become more committed to goalsthat fulfill the core values of their identity (e.g.,alleviating others’ suffering; Gagné & Deci,2005). In addition, acting in a manner that alle-viates others’ suffering minimizes discrepanciesbetween one’s actual self and one’s ideal self(Higgins, 1987), which furthers commitment. Ac-cording to Collins (1993), individuals are moti-vated to maximize their overall flow of emo-tional energy, and connections with others arethe primary vehicle through which this energy iscreated. Compassion creates emotional ties thatserve as symbols of group membership and en-courage one to focus on the goal of alleviatingsuffering within that group such that the allevi-ation of suffering produces emotional energy(Goetz et al., 2010; Goss, 2008). In turn, the emo-tional energy reinforces commitment to those withwhom one is connected (Collins, 1993; Goss, 2008;Thomas et al., 2009). In sum, emotional connectionto others’ suffering has the capacity to reinforcedesirable aspects of a prosocial identity that isoriented toward the alleviation of that suffering.

COMPASSION-TRIGGERED COGNITIVE ANDAFFECTIVE PROCESSES ANDSOCIAL ENTREPRENEURSHIP

We previously described how compassionelicits a set of cognitive and affective processes,


including integrative thinking, prosocial cost-benefit analysis, and commitment to alleviatingothers’ suffering. In this section we build on thisfoundation to argue how these processes, in turn,facilitate engaging in social entrepreneurship.

Integrative Thinking andSocial Entrepreneurship

Compassion contributes to an individual’sability to process information in a more integra-tive fashion. Integrative thinking entails reject-ing framing issues and choices as “either/or,”thus allowing for a more flexible and holisticview of problems and potential solutions (Mar-tin, 2007). For example, Plambeck and Weber(2009) found evidence that when CEOs processissues as simultaneously positive and negative,which is to say integratively (Weick, 1998), theyare able to promote action that is broader andmore flexible. Specifically, integrative thinkingconsists of an ability, first, to see possibilitiesbeyond the status quo (Boles, Croson, & Mur-nighan, 2000; Stasser & Titus, 1985) and, second,to envision collective benefit from synthesizingseemingly competing interests (De Dreu & Car-nevale, 2003). Each of these effects of integrativethinking makes social entrepreneurship morelikely by enabling reconciliation of ostensiblycompeting organizational objectives (i.e., creat-ing economic value versus creating socialvalue). That is, social entrepreneurship rests ona distinctive version of integrative thinking thatresults in an organization that simultaneouslycreates economic and social value. Although so-cial entrepreneurship is a function of a particu-lar form of integrative thinking, it does not meanthat other organizational forms do not similarlyrely on integrative thinking.

Integrative thinking is a critical antecedent ofsocial entrepreneurship because it enables anindividual to combine social and economicgoals (Emerson & Twersky, 1996; Tracey et al.,2011). Traditionally, social value creation hasbeen considered inconsistent with or even dia-metrically opposed to profit maximization (Dart,2004; Eikenberry & Kluver, 2004), yet integrativethinking suggests the possibility of using oneobjective (i.e., profit) as a means of furtheringthe other objective (i.e., social value creation).As a result, economic and social value creationcan be viewed as mutually reinforcing, as op-posed to mutually exclusive, processes (Cho,

2006; Harding, 2004; Hartigan, 2006; Hibbert,Hogg, & Quinn, 2005; Lasprogata & Cotten, 2003).Thus, integrative thinking enables the reconcil-iation of seemingly competing objectives in theform of a “double bottom line” that tightly cou-ples and accounts for financial and social objec-tives (Austin et al., 2006).

Two examples of the implications of holdingdouble bottom line objectives include (1) refram-ing profit as a means of increasing the sustain-ability of ambitious organizational solutions to so-cial problems and (2) reframing beneficiaries ascustomers rather than as recipients of gifts. First,integrative thinking can produce the view thatprofit is a means of increasing organizational vi-ability and sustainability by stabilizing revenueand risk exposure (Carroll & Stater, 2009; Froelich,1999; Mair & Marti, 2006). Profits generated fromthe sale of goods and services may be perceivedas evidence of more efficient use of resources(Dees & Emerson, 2001; Gronbjerg, 1992; Massar-sky & Beinhacker, 2002) and better continuity, pre-dictability, and controllability of funds than char-itable donations (Carroll & Stater, 2009; Gronbjerg,1992). In offering advice from his social entrepre-neurship experience, social entrepreneur PaulKewene-Hite articulates an example of how inte-grative thinking might lead an individual to forma social enterprise:

If you’re going to deal with recycling or cleaningup streets or waterways, don’t just think in termsof pulling refuse out of the waterways and dis-posing of it, but puzzle through how you can turnthat refuse into something commercially viable.If you’re pulling out metals or plastics, recyclethem in a way that’s good for the environmentand for the venture (quoted in Goldsmith, 2010).

As Kewene-Hite suggests, the additional andinnovative step of converting “waste” into val-ued products requires a specific form of integra-tive thinking that entails transforming a socialproblem into a revenue-generating product orservice that can help make an organizationself-sustaining.

Second, integrative thinking can result inviewing beneficiaries as customers rather thanpassive recipients of a gift (Yunus, 2010). Con-sider, for example, Dignified Mobile Toilets(DMT), a social enterprise that offered the firstmobile toilet service in Nigeria. DMT was theresult of thinking about how to deliver a neces-sary service in a manner that was self-sustain-ing and would simultaneously lift providers out


of poverty. Each toilet serves 100 people per dayat a cost of $.10; 60 percent of the revenue goes tothe toilet manager and 40 percent returns to thecompany to sustain operations. This illustrationdoes not suggest that integrative thinking is ab-sent in traditional efforts to provide sanitation tothose without it; rather, it highlights a particularform of integrative thinking that balances com-mercial viability with solving social problems.

Prosocial Cost-Benefit Analysis andSocial Entrepreneurship

Social entrepreneurship is exceptionally chal-lenging, since the entrepreneur not only mustattempt the founding of an organization but alsomust work to establish an infrastructure thatsupports the organization (Austin et al., 2006;Mair & Marti, 2009; Seelos & Mair, 2005). Often,new markets and new distribution channelsmust be erected, old cultural stereotypes mustbe challenged, and innovative revenue streamsmust be uncovered in the context of minimaldisposable income (Mair & Marti, 2009; McMul-len, 2011). In purely economic terms, the per-sonal risks of such an approach are high and thebenefits unknown, rendering the objective plau-sibility of the associated action quite low. Assuch, a rational cost-benefit analysis is unlikelyto yield sufficient motivation to create a socialenterprise. We have argued that a prosocialcost-benefit analysis fundamentally changesthis calculation.

The prosocial distortion of cost-benefit analy-sis means individuals internalize benefits toothers, which results in envisioning a broaderarray of possible benefits (Grant & Berry, 2011).For example, an individual is more likely toview nonexistent markets and institutionalvoids as opportunities rather than threats (Dut-ton, 1993). Employing a traditional cost-benefitanalysis, an individual would deem such con-texts as requiring disproportionate financial in-vestment for minimal financial return, whereaswith a prosocial cost-benefit analysis, the indi-vidual would recognize the various social ben-efits that might supplement any financial re-turns. Along similar lines, the focus on benefitsto others would suppress the consideration ofthe considerable personal risks or costs in termsof time, resources, and emotional energy (Batson& Shaw, 1991; Quiggin, 1997; Shiv et al., 2005).This prosocially oriented form of motivated in-

formation processing is necessary for motivat-ing social entrepreneurship. Reframing daunt-ing conditions as opportunities and possibilitieshelps to overcome a key barrier to engaging insocial entrepreneurship. Although social entre-preneurship often requires substantive societalreforms, an individual’s emotional connectionwith sufferers in desperate need of such reformsmay override the associated and considerablepersonal risks.

In addition, engaging in a prosocial cost-benefit analysis can also make one less respon-sive to information that challenges beliefs in thefeasibility, desirability, or viability of the socialenterprise’s value proposition. As such, one isless likely to perceive risk. In this way a proso-cial cost-benefit analysis may motivate socialentrepreneurship by affecting well-known cog-nitive biases, such as the availability heuris-tic—predicting the likelihood of an outcomebased on how easily an example can be broughtto mind (Tversky & Kahneman, 1974). For exam-ple, the perceived benefit may be a function ofrecalling a readily available example likeGrameen Bank. Alternatively, the broader con-sideration of benefits may lead to a biasedsearch for evidence resulting from confirmationbias—seeking and overweighting informationthat confirms preexisting beliefs (Nickerson,1998). For example, when considering whether toform a social enterprise, an individual’s confir-mation bias may lead the individual to onlyinvestigate successful organizations (e.g.,Ashoka award winners, Grameen Bank) at theexpense of a more balanced search that wouldproduce more accurate estimates of the likeli-hood of success. As a result, a prosocial cost-benefit analysis may be rooted in cognitive bi-ases that make forming a social enterpriselikely, even when it may be inappropriate. Insum, we argue that a prosocial cost-benefit anal-ysis serves as a precondition to engaging in thechallenging process of social entrepreneurship.

Commitment to Alleviating Suffering andSocial Entrepreneurship

Prior research has shown that social entrepre-neurs are especially committed to serving soci-ety (Austin et al., 2006; Elkington & Hartigan,2008). Indeed, scholars have asserted that creat-ing a market-based organization to solve socialproblems requires exceptional commitment in


order to overcome the difficulties of combiningostensibly competing objectives within contextsof institutional voids (Dees, 1998; Mair & Marti,2009). We posit that commitment to alleviating asocial problem operates through two mechanismsthat increase the willingness to provide the timeand energy needed to respond to this challenge.

First, commitment allows for greater persis-tence and motivation to act on another’s behalf,thereby fostering the search for more creative so-lutions. Making decisions consistently with re-gard for others (i.e., commitment to alleviatingtheir suffering) results in more creative and flexi-ble thought processes than does making decisionsto benefit the self (Polman & Emich, 2011). Creativ-ity and flexibility are essential for forming a socialenterprise because such enterprises entail a novelcombination of existing approaches.

Second, commitment to alleviating suffering,identification with the beneficiaries of such ef-forts, and a self-image as “helper” may result increating a social enterprise because one delaysattending to possible risks (Goss, 2005). Identify-ing with beneficiaries corresponds with commit-ment such that inaction becomes attached toshame, guilt, or other negative emotions, and,therefore, inaction becomes implausible(Bowles & Gintis, 2002). In turn, the emotions ofcommitment distort one’s willingness to con-front information that indicates potentiallygreater risks of failure associated with startinga social enterprise. Commitment to alleviatingsuffering also delays one’s willingness or abil-ity to confront the possibility that social entre-preneurship may not be a plausible or desirableway to help those who are suffering (Brockner,1992; Staw, 1981). In other words, when an indi-vidual becomes committed to a course of actionor ideal, that individual may avoid or explainaway information that refutes the initial choice.Thus, higher levels of commitment to alleviatingothers’ suffering would also make an individualmore likely to engage in social entrepreneurshipbecause the individual would be less responsiveto information challenging his or her beliefs in thefeasibility or viability of the social enterprise.

LEGITIMACY, COGNITIVE AND AFFECTIVEPROCESSES, AND


The compassion-based cognitive and affec-tive processes described in the prior section

comprise necessary preconditions for predictingan individual’s choice to engage in social entre-preneurship, but the decision to specificallyfound a social enterprise also, importantly, de-pends on the degree to which the individualperceives social entrepreneurship as a legiti-mate means to achieve his or her desired ends.Once the individual makes the choice to foundan organization, he or she must decide whatform it should take. More specifically, legiti-macy, which refers to the congruence of an idea,organization, or organizational form with sociallaws, norms, and values (DiMaggio & Powell,1983; Scott, 2008; Suchman, 1995; Weber, 1978),shapes the decision to adopt an organizationalform, such as social enterprise. Tolbert, David,and Sine (2010) argue that institutional theoryprovides an important theoretical lens for un-derstanding why individuals choose a particu-lar form because it provides a framework fordescribing the sociocultural processes throughwhich ideas and forms emerge and develop le-gitimacy (Suchman, 1995).

Here we describe a particular series of insti-tutional changes that have led to the increasedlegitimacy of the social enterprise form. Thisincreased legitimacy does not fully determinean individual’s choice to engage in social entre-preneurship; rather, it increases the social ben-efits of that choice and the social costs of choos-ing alternative forms (Zuckerman, 1999). In thissection we first describe the conditions thathave given rise to the legitimacy of social enter-prise. We then describe how an individual’s per-ceptions regarding social enterprise’s legiti-macy interact with integrative thinking,prosocial cost-benefit analysis, and commit-ment to alleviating others’ suffering.

The Emerging Legitimacy of Social Enterprise

Scholars have offered various typologies oflegitimacy (Aldrich & Fiol, 1994; Archibald, 2004;Scott, 2008), yet Dart (2004) argues that a distinc-tion between pragmatic and moral legitimacy isparticularly useful for understanding the in-creased legitimacy of social enterprise. Prag-matic legitimacy is based on effectively servingindividual interests and meeting goals (Such-man, 1995). It is strongest when powerful andhigh-status individuals endorse a form. Morallegitimacy, alternatively, is based on prevailingsocial norms and values within a larger social


system. It encompasses society’s value-basedjudgments of whether an activity is “the rightthing to do” (Suchman, 1995: 579). This differsfrom pragmatic legitimacy’s focus on specific,powerful interests (e.g., funders) that makeclaims on whether an activity serves their inter-ests (Suchman, 1995).

Specifically, we argue that the pragmatic le-gitimacy of the social enterprise is increasingowing to (1) the increasing demands of powerfulfunders and consultants for greater accountabil-ity and (2) the growing presence of multiple com-peting interests that make claims on the “socialsector.” We also argue that the moral legitimacyof the social enterprise is increasing owing to (1)public disillusionment with governmental andphilanthropic interventions and (2) a “band-wagon effect” resulting from high-profile socialentrepreneurial successes.

Pragmatic legitimacy of social enterprise.First, philanthropists, venture capitalists, socialsector consultants, and other resource providershave begun pushing for increased accountabil-ity from organizations that provide solutions tosocial problems (Bendell, 2006; Grimes, 2010;Nicholls, 2009). This increase stems from a prag-matic interest in encouraging social sector orga-nizations to demonstrate evidence of multifac-eted (i.e., social and financial) returns andsustainable operations (i.e., a greater proportionof charitable dollars going toward investmentsrather than overhead expenses). Many resourceproviders are no longer satisfied with what theypresume to be a charitable one-way transfer offunds (Moody, 2008). These providers prefer toinvest in organizations that are capable of de-livering proof of effectiveness via performancemeasures or revenues generated at the point ofservice delivery (Miller & Wesley, 2010), in com-parison with charitable nonprofits, which oftenrely on informal ways of demonstrating quality(Glaeser & Shleifer, 2001; Grimes, 2010). From theperspective of these stakeholders, market-basedmethods provide clearer, measurable “proof” ofvalue creation through the sale of goods (Miller& Wesley, 2010; Tracey et al., 2011; Young &Salamon, 2002). In other words, when a customerpurchases a good, the organization’s approachto creating value is measurably accounted forand validated (Priem, 2007). This adds to theincreased legitimacy of market-based solutionsto social problems (Young & Salamon, 2002),such as those provided by social entrepreneurs.

Second, the social sector is now composed ofan increasingly eclectic group of interests, eachwith its own pragmatic claims regarding themost effective and efficient means of solvingsocial problems. For individuals and organiza-tions that operate in these organizational envi-ronments, these divergent interests may repre-sent an unstable tension between competingmodes of organizing, which institutional theo-rists refer to as “institutional contradictions”(Seo & Creed, 2002). Such tensions often serve asthe basis for institutional change and the in-creased legitimacy of innovative and novel or-ganizational forms, especially those better ableto address ostensibly competing interests (Do-rado, 2005; Levy & Egan, 2003; Rao, Morrill, &Zald, 2000; Seo & Creed, 2002). The increased“marketization” of the social sector, for example,reflects one of the ways that social sector orga-nizations are attempting to remain responsive tomultiple interests that differently prioritize so-cial and financial effectiveness (Salamon, 1993).This marketization includes both growing com-petition from for-profits looking to win govern-ment contracts to address social problems andsignificant reforms and actions signaling theactive embrace of for-profit values, routines, andmethods. The social enterprise form has alsogained pragmatic legitimacy because it simi-larly aligns with the divergent interests of thesocial sector.

Moral legitimacy of social enterprise. Severalchanges in the social sector are also contribut-ing to the growing moral legitimacy of socialenterprise. Within the United States, for exam-ple, there is growing public disillusionmentwith long-term effectiveness of traditional so-cial sector solutions (Lounsbury & Strang, 2009;Zahra et al., 2009). Growing distrust of the U.S.federal government “to do the right thing,” forexample, is at its highest level in recorded his-tory, where recent polls suggest that nearly90 percent of the public espouses such views(Zeleny & Thee-Brenan, 2011). Similar senti-ments have been expressed by the public to-ward other traditional solutions to social issues(Clayton, 2006). These shifts in public sentimenttoward greater disillusionment do not appear tobe tied to any substantive changes in traditionalcharitable organizations or their services;rather, several scholars have provocatively andpublicly suggested that they are tied to chang-ing values and norms within society regarding


the right way to solve social problems (Eiken-berry & Kluver, 2004; Young & Salamon, 2002).Fowler champions this position by stating thatcurrent approaches are “clinging to a demon-strably inadequate development model and in-stitutional arrangements to make it happen. Arethinking of the whole nature of NGDOs [non-governmental development organizations] anddevelopment, not premised on aid, may helpformulate a new way forward” (2000: 638). It isthese public cries for rethinking the nature ofsocial sector work, coupled with changing pub-lic opinion, that increase the moral legitimacy ofsocial enterprise as a new solution deemed bythe broader social system as the right approachfor solving social issues.

We also argue that the moral legitimacy ofsocial enterprise results from a contagion orbandwagon effect following the celebration ofsocial entrepreneurs. Both media and founda-tions have been active in promoting social en-terprise success stories, increasing the percep-tion that social enterprise is a “right way” tosolve social problems (Short et al., 2009). Newlyestablished social enterprise award programs(e.g., Fast Company’s Social Capitalist Awards),new foundations that exclusively support socialenterprises (e.g., Skoll Foundation), and new fel-lowship programs that similarly support socialentrepreneurs (e.g., Ashoka) all work to ensurethat “social entrepreneurship is legitimated byits hero entrepreneurs and their success stories”(Nicholls, 2010: 622). Similarly, perceived organi-zational successes attributed to the microfi-nance industry and particularly to the GrameenBank—and its Nobel Peace Prize winningfounder, Muhammad Yunus—increase the rec-ognition and the perceived normative rightnessof the social enterprise form. This growing per-ception is reinforced by television programs likethe Public Broadcasting Service’s recent seriesThe New Heroes, which focuses on individualssolving social problems with market-basedmethods. The combination of popular press at-tention and an infrastructure for spotlightingand celebrating social entrepreneurs increasessocial entrepreneurship’s moral legitimacy and,in turn, can result in bandwagon effects inwhich normative popularity spurs rapid adop-tion of a new organizational form (Abrahamson& Rosenkopf, 1993; Dart, 2004).

Perceived Legitimacy As a Moderator of theCompassion-Triggered Cognitive and AffectiveProcesses and Social Entrepreneurship

Together, the increased relative pragmaticand moral legitimacy of social entrepreneurshipcreate the conditions that will further channelthe cognitive and affective processes we haveidentified to compel individuals to engage insocial entrepreneurship (Dart, 2004; Nicholls,2010). The more legitimate that social entrepre-neurship becomes, the more likely it is that in-dividuals will be exposed to it and view it as aplausible remedy to social issues (Mair & Marti,2006). Rather than determining an individual’schoice of appropriate form, legitimacy works toexert certain pressures on the individual thatincrease the perceived social costs and benefitsof choosing a form that might be likely to attractresources (Brown, 1998). Moreover, the degree towhich the legitimacy of a particular organiza-tional form (such as social enterprise) will exertpressure on an individual’s choice is contingenton individual perception (Nicholls, 2010; Scott &Lane, 2000).

Therefore, we posit that increases in individ-ual awareness of the growing pragmatic andmoral legitimacy of the social enterprise as anappropriate organizational form will strengthenthe likelihood that each of the compassion-triggered cognitive and affective processes willyield the choice to engage in social entrepre-neurship. First, although integrative thinkingmakes unifying approaches to social problemsmore likely, social entrepreneurship becomesthe integrative solution given its perceived le-gitimacy. For instance, increased perceivedmoral legitimacy can result from residing in acommunity where there is growing disillusion-ment with traditional efforts to solve socialproblems and a rise in the popularity of socialenterprises. This will moderate the effect of in-tegrative thinking on the likelihood of forming asocial enterprise by increasing the likelihoodthat individuals will transcend traditional ap-proaches in their search for novel solutions likesocial enterprises that are capable of integrat-ing competing demands (Battilana & Dorado,2010; Ratcheva, 2009). Similarly, increased pres-sure from multiple stakeholders for greater ac-countability from organizations that address so-cial problems is likely to direct integrativethinking toward organizational solutions with


mechanisms capable of accounting for a doublebottom line (Grimes, 2010). Demonstrating bothfinancial and social returns allows individualsto satisfy a greater variety of pragmatic inter-ests. In sum, factors that increase moral andpragmatic legitimacy enable individuals to en-vision possibilities for integrating the compet-ing interests of social and economic value spe-cifically in the form of a social enterprise.

Second, prosocial cost-benefit analysis leadsindividuals to weight more heavily the benefitsassociated with working to alleviate the suffer-ing of others and the costs of failing to act onothers’ behalf. Similarly, increased perceptionsof the pragmatic legitimacy of social entrepre-neurship cause individuals to associate greatersocial benefits with social enterprise relative toother, more traditional organizational forms. Forinstance, greater pressure from powerful stake-holders for accountability heightens an individ-ual’s attention to the prosocial benefits of socialenterprise that might satisfy those stakeholders’concerns by simultaneously providing market-based accountability and a focus on solving so-cial problems. At the same time it also increasesthe perceived costliness of forms that fail to ac-count for their effectiveness in addressing socialissues. New methods of “blended value account-ing” used by social entrepreneurs, for example,provide increasingly legitimate ways of ac-counting for prosocial gains (Grimes, 2010; Nich-olls, 2009). Thus, despite the difficulty inherentin social entrepreneurship and the potentialcosts to the entrepreneur, perceptions of socialenterprise’s increased legitimacy enhance theperceived prosocial benefits of founding a so-cial enterprise. Therefore, the effects of a proso-cial cost-benefit analysis on the decision to cre-ate a social enterprise are amplified byperceived pragmatic and moral legitimacy.

Third, commitment to alleviating others’ suf-fering provides the motivation to undertake cre-ating a social enterprise. The increasing morallegitimacy of social enterprise strengthens com-mitment (by reinforcing the image of ineffectiveexisting solutions) and directs commitment toincreasingly legitimate solutions. For example,the emotional connection to beneficiaries makesthe commitment to alleviating suffering espe-cially likely to be shaped by perceived morallegitimacy. That is, one’s exposure to growingpublic disillusionment with government andnonprofit approaches and/or solutions, as well

as the promotion of novel solutions like socialentrepreneurship, means one will view socialentrepreneurship as the “right” solution andpursue it. Commitment to alleviating sufferingalso means that an individual is especiallylikely to respond to cues from powerful actors(i.e., pragmatic legitimacy). For example, asmore external pressures for accountabilitybuild, an individual will search for workingmodels that emphasize the gathering and docu-menting of such evidence (i.e., social enter-prises). Taken together, both perceived prag-matic and moral legitimacy are likely tochannel one’s commitment to socialentrepreneurship.

DISCUSSION

Our proposed model offers three contribu-tions. First, scholars have asserted that socialentrepreneurship is a compassionate responseto unmet needs within a society (Dees, 1998;Fowler, 2000), but there has been little theoreti-cal development of this argument. Our work fillsthis gap by providing a conceptual frameworkfor understanding how compassion encouragessocial entrepreneurship. This effort is facilitatedby a recent proliferation of work on the wide-ranging effects of prosocial motivation (Grant,2009; Grant & Berg, 2010; Grant & Berry, 2011) andemotion in entrepreneurship (Cardon, Foo,Shepherd, & Wiklund, 2012; Cardon et al., 2009;Goss, 2008). We argue that by serving as a proso-cial motivator, compassion influences cognitiveand affective processes (integrative thinking,prosocial cost-benefit analysis, and commit-ment) that, when combined with increased per-ceptions regarding the legitimacy of social en-terprise, render it more likely one will pursuesocial entrepreneurship. Thus, we explain themechanisms by which compassion encouragesan individual’s choice to found a social enter-prise and offer theoretical rigor to a field whereenthusiasm has outpaced conceptual develop-ment and refinement (Dacin et al., 2010).

Second, by acknowledging that compassioncan motivate the creation of a market-based or-ganization, our model calls into question thecomprehensiveness of rational and self-inter-ested explanations for venture creation. Shane,Locke, and Collins (2003: 258) argue that motiva-tions influence individuals’ decisions to “playthe game” of entrepreneurship. Although econ-


omists have long suggested that entrepreneursare profit seeking (Baumol, 1990), early entrepre-neurship theorists (Knight, 1921; Schumpeter,1928) pointed out that because entrepreneurshiprequires bearing uncertainty, motivations be-yond financial incentives are needed to explainwhy some people are more likely than others toengage in entrepreneurship (Licht, 2010; McMul-len & Shepherd, 2006; Schumpeter, 1934). Alongthese lines, a host of possible motives have beenoffered, including a person’s need for achieve-ment, the desire for independence or autonomy,and more basic survival-oriented motivations(Carland, Hoy, Boulton, & Carland, 1984; Carsrud& Olm, 1986; Hart, Stasson, Mahoney, & Story,2007). Thus, whether seeking to maximize eco-nomic gains or personal utility, the decision tofound a new firm has largely been cast as anattempt to realize the private accumulation ofwealth as either an end in itself (Baumol, 1990)or a means to a self-oriented end (Carsrud, Bränn-back, Elfving, & Brandt, 2009).

Social enterprise creation cannot rely solelyon self- or family-oriented motives because ofthe fact that the organizational form rarely leadsto the direct accumulation of private wealth.Therefore, the very existence of social enter-prises as an organizational form requires recog-nition that the motives for venture creation notonly may be more complex than originallythought but also may include some hithertooverlooked emotions like compassion. Becausesocial issues and social concern are often fusedwith emotion, the founding of a social enterprisecalls into question the sufficiency of calculative-based explanations regarding the entrepreneur-ial decision-making process (Bowles & Gintis,2002). As a result, we have argued that compas-sion can help individuals realize the accom-plishment of other-oriented, albeit personallyrelevant, goals (i.e., reducing the suffering ofanother) by creating market-based ventures thataccumulate social and economic wealth. Thisdoes not preclude the coexistence of prosocialand proself motivations. In fact, we note thatprosocial motivation resulting from compassioncan create proself benefits in the form of anenhanced self-image (Andreoni, 1989) or socialpower (McClelland, 1994). As such, the second-order proself effects of compassion can essen-tially reinforce one’s compassionate behaviors,yet they do not replace the fundamentally proso-cial nature of compassion.

Finally, our inquiry into how compassion en-courages social entrepreneurship significantlyexpands the domain of POS beyond its tradi-tional focus on individual and organizationalprocesses to include organization formation.POS scholars have largely focused on how vir-tuous motivations influence individuals, groups,or organizations to cope and even thrive in themidst of difficult circumstances (Cameron, 2003;Dutton et al., 2006; Roberts, 2006). We extend thisresearch on virtuous motivations (i.e., compas-sion) in two key ways. First, we build on recentwork in POS that has shown that virtuous moti-vations influence the way opportunities areevaluated (De Dreu, 2006; De Dreu & Carnevale,2003; Grant & Berry, 2011) to show that individu-als with higher levels of compassion will em-phasize the benefits of alleviating the sufferingof others (and the costs of failing to do so) intheir decision making. As a result, compassionprovides the impetus to act where a more ratio-nal approach might not. Second, we extendemerging work in POS on social change (Golden-Biddle & Dutton, 2012) by examining the emer-gence of a type of organization that exists toenact such change. Specifically, we develop amodel of how the virtuous motive of compassioncan move an individual to create an organiza-tion that is designed with the explicit purpose ofsolving a social issue.

Implications for SocialEntrepreneurship Research

We have theorized about how compassion mo-tivates an individual’s choice to engage in so-cial entrepreneurship, but the relationship ofcompassion to the future performance of a socialenterprise merits attention. We have arguedthat compassion reshapes how an individualviews and weighs benefits and costs; therefore,it is possible for the individual to assume morepersonal and/or organizational risk than a com-mercial entrepreneur. As a result, if the socialentrepreneur assumes more risk in the processof creating a new venture, do these ventures, onaverage, perform worse over time? In our de-scription of commitment, we argued that com-passion may delay one’s willingness or abilityto confront the possibility that social entrepre-neurship may not be a plausible or desirableway to help those suffering. Does such a delayimprove performance over time—keeping entre-


preneurs from ruling out new ideas too quick-ly—or decrease it—making them susceptible tothe escalation of commitment to a losing courseof action? Or perhaps commitment has an in-verted U-shaped relationship with performancesuch that moderate levels keep entrepreneursfrom exiting too quickly or staying too long.

Continued exploration of the multiple motiva-tions that underpin the complex activity of so-cial entrepreneurship is needed. We have notedthroughout this article that prosocial and proselfmotivations can coexist, but there are remainingquestions regarding the priority, sequencing,and interplay of these motivations. First, regard-ing prioritization, some scholars have suggestedthat social entrepreneurs balance proself andprosocial motivations (Peredo & McLean, 2006).Others have suggested that social entrepre-neurs prioritize their prosocial motivations rela-tive to proself motivations (Austin et al., 2006;Dees, 1998). Future empirical research shoulddirectly examine the configuration of multiplemotivations and how they impact theorganization.

Second, the weighting of proself and prosocialmotivations may vary over time. Specifically, asthe enterprise moves through stages of the or-ganizational life cycle, priorities and motivesare likely to change. For example, an individu-al’s initial decision to engage in social entrepre-neurship may be motivated by compassion anda desire to alleviate others’ suffering, but asincome, reputation, and/or other self-orientedbenefits grow, the entrepreneur’s motives or theenterprise’s motives may evolve, potentially re-sulting in mission drift. Could the other-orientedmotives that play such an influential role in thechoice to create a social enterprise eventuallybe eclipsed by more self-oriented motivationsafter the social enterprise launches? Battilanaand Dorado’s (2010) work on microfinance andKraatz, Ventresca, and Deng’s (2010) work on theprecarious nature of normative values withinliberal arts colleges may provide useful modelsfor exploring this question.

Finally, there may be complex dynamics be-tween prosocial and proself motivations result-ing from the simultaneous focus on a financialand social mission in social enterprises. For ex-ample, the social entrepreneur may occasion-ally be forced to distinguish between customersand target beneficiaries. Does this division ofattention put a social enterprise at a competitive

disadvantage relative to traditional nonprofitand for-profit organizations that can focus ex-clusively on one constituency or the other? Doescompassion allow the social enterprise to retainits social mission focus despite relentless mar-ket pressure to remain competitive? In futureresearch scholars may wish to trace the effectsof compassion on the social enterprise throughthe organizational life cycle in order to deter-mine if and when compassion is a strength orweakness for the organization.

While we have examined compassion as anemotional motivator of social entrepreneurship,future research should explore the potential roleof other emotions. Might prosocial emotions likegratitude, generosity, or forgiveness, or possiblynegative emotions like moral outrage, shame,or guilt, motivate social entrepreneurship aswell? If so, do social enterprises differ whenmore negative emotions (i.e., moral outrage,shame, or guilt versus compassion) motivatetheir founding? Some research has shown thatthe emotional valence of the entrepreneur,whether positive or negative, may trigger differ-ent assessments of the future, different risk per-ceptions, and different patterns of action (Foo,2011; Lerner & Keltner, 2001). In addition, futureresearch should consider how emotions likecompassion affect the process through whichsocial entrepreneurs connect with variousstakeholders (Cardon et al., 2012; Goss, 2008;Hemingway, 2005). For example, Miller and Wes-ley (2010) found that social venture capitalists’evaluations of social entrepreneurs’ passionpositively influenced their evaluations of the so-cial entrepreneurs’ effectiveness, thus bolster-ing access to additional resources.

Implications for Entrepreneurship Research

We have argued that compassion plays a keyrole in motivating social entrepreneurship andillustrated the mechanisms by which it does so,but we do not suggest that compassion isunique to social entrepreneurship. Compassionand other emotions may, in fact, be an importantmotive for founding other types of organizations,including profit-seeking ventures and philan-thropic organizations. Thus, future empiricalwork should explore the role of emotions such ascompassion in the decision to start other typesof organizations. The entrepreneurship litera-ture has tended to ignore prosocial emotional


motivators of entrepreneurial actions (Goss,2008). For example, are there prosocial emotions(e.g., group-based pride) at work in the opportu-nity identification process that lead to the cre-ation of profit-seeking ventures? Future re-search into whether prosocial emotionsinfluence the founding of commercial venturesmay help to address these questions and shedlight on our understanding of the opportunityidentification process. Finally, empirical re-search might further examine the cascading ef-fects of compassion on other motives to illus-trate the relationship between prosocialmotivations and proself motivations in thefounding process.

Implications for POS Research

There are potential extensions to the modelthat could contribute further to the literature onPOS. The literature on virtuous organizing andorganizations, for example, has consistentlystressed the importance of leadership as ameans of instilling virtue in an organization(Cameron & Caza, 2002; Whetstone, 2005). Newsocial enterprise creation has been described asan “expression of entrepreneurially virtuous be-havior” (Mort, Weerawardena, & Carnegie, 2003:76); as such, it offers a relevant setting for exam-ining when and how virtue (e.g., compassion) isseeded in the emerging organization. For exam-ple, prior research on early-stage technologycompanies has shown that founder imprintshave an enduring effect on organizational val-ues and practices (Baron, Burton, & Hannan,1999), perhaps by way of their early and lastinginfluence on the emotional tone of the organiza-tion (Martin, Knopoff, & Beckman, 1998). Alongthese lines, future research could explorewhether and how other virtues (e.g., generosity,gratitude, justice, or self-sacrifice) indepen-dently or in combination with compassion (oreach other) play a role in creating other-orientation and prosocial motivation that resultin social enterprises (Cameron, 2003).

The model we have developed focuses on howcompassion enables the choice to engage in so-cial entrepreneurship. However, future workcould explore the dynamics of compassion—how it is sustained or how it dissipates—overtime (Battilana & Dorado, 2010). Compassionmay exist as a “durable” emotion or affectivestate (Sonnemans & Frijda, 1994; Verduyn, Del-

vaux, Van Coillie, Tuerlinckx, & Van Mechelen,2009). Emotions are more durable when they are(1) oriented to past events (Kross, Ayduk, & Mis-chel, 2005), (2) the product of continued interac-tions with the target of compassion, or (3) inte-grated into a social identity (Abrams & Hogg,1990; Brewer, 1991). However, compassion canalso diminish over time. Consistent exposure toa particular social issue can desensitize peopleto the plight of others (Seu, 2003) or cause themto experience compassion fatigue—a depletionof emotional energy arising from the inability tomeet a seemingly insatiable need (Figley, 1995).Future research might examine the conditionsunder which compassion increases or decreasesover time.

CONCLUSION

We have explored the processes through andconditions under which compassion increasesthe likelihood that individuals will engage insocial entrepreneurship. By integrating researchon social entrepreneurship, organization cre-ation, and POS, we proposed that compassionelicits prosocial motivation, which fosters moreflexible thought processes and greater commit-ment to action. These processes, in combinationwith a set of favorable institutional conditions,result in a new social enterprise. Through ourmodel we have endeavored to show how proso-cial motives such as compassion may encour-age the choice to engage in social entrepreneur-ship. We hope these results shine light on howPOS can be useful to scholars from multipledomains seeking to understand a new market-based organizational form that is designed forthe explicit purpose of improving the lives ofothers.

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Toyah L. Miller ([email protected]) is an assistant professor of strategic manage-ment at the Kelley School of Business, Indiana University. She received her Ph.D. fromTexas A&M University. Her research interests include cognitive perspectives of socialentrepreneurship and international and governance perspectives of innovation andstrategic change in organizations.


Matthew G. Grimes ([email protected]) is an assistant professorof strategic management and organization at the University of Alberta. He receivedhis Ph.D. from Vanderbilt University. His research examines the microprocesses bywhich individuals and organizations navigate ostensibly competing value claims,identities, and institutional logics.

Jeffery S. McMullen ([email protected]) is an associate professor of entrepreneur-ship at the Kelley School of Business, Indiana University. He received his MBA andPh.D. from the University of Colorado. His research focuses on entrepreneurship as amethod of self-discovery and socioeconomic change.

Timothy J. Vogus ([email protected]) is assistant professor of man-agement at the Owen Graduate School of Management, Vanderbilt University. Hereceived his Ph.D. from the University of Michigan. His research focuses on thecognitive (mindful organizing, sensemaking) and emotional (compassion) processesthrough which individuals and workgroups enact highly reliable performance andaddress social problems.


venturing for others with heart and head: how

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