Mechanisms of Social Enterprise: Pathways to Building Capacity, Enhancing Capability, and Creating Sustainable Public Value

ABSTRACT

Social enterprise can be seen as citizen's active participation in the pursuit of public value in a financially sustainable manner. Despite a burgeoning interest in social enterprise in the public administration and policy fields, the marketing capabilities of social enterprises for sustainable public value creation have received little attention. While the literature has developed theoretical linkages between marketing capabilities and public value, the ability to partner with other organizations and to absorb and create knowledge as essential antecedents of marketing capabilities remain understudied. Using a capacity‐capability‐outcome framework, we investigated whether and how social capital influences social enterprise's marketing capabilities via the mediating mechanism of absorptive capacity in the context of East Asia. Our study extends current discourse in ‘ social enterprise as a means for public value creation ’ by testing several alternative pathways that explain capacity‐capability‐outcome as mechanisms that simultaneously contribute to financial performance and sustainable public value creation. Our study offers practical implications to social enterprise operators and policymakers.