Social incubation: Strategic benefits for social enterprise

Incubação social: Benefícios estratégicos para empreendimentos sociais

Incubación social: Beneficios estratégicos para las empresas sociales

Leandro da Silva Nascimento
Federal University of Rio Grande do Sul (UFRGS), Brasil
Bernardo Soares Fernandes
Federal University of Rio Grande do Sul (UFRGS), Brasil
Viviane Santos Salazar
Federal University of Pernambuco (UFPE), Brasil

Social incubation: Strategic benefits for social enterprise

Contextus – Revista Contemporânea de Economia e Gestão, vol. 18, pp. 163-177, 2020

Universidade Federal do Ceará

Copyright (c) 2020 Revista: apenas para a 1a. publicação.

Received: 13 June 2020

Accepted: 03 August 2020

Published: 24 August 2020

Abstract: This paper aimed to identify what are the strategic benefits that the social incubation process offers for social enterprise. We conducted a case study with a Brazilian social incubator. Social enterprises that participated in the social incubation program were the analysis units. Among the eight strategic benefits found, three of them have never been previously indicated in the studied literature, therefore being a novelty herein highlighted to improve social enterprise's commercial and social missions. By understanding these benefits, social entrepreneurs can make better decisions about joining social incubation. Besides, managers of social incubators can understand the limitations inherent to the social incubation herein stressed, and, from this, improve the programs. Hence, this paper advances knowledge in the social entrepreneurship field.

Keywords: social entrepreneurship, social incubator, strategy, social innovation, accelerator.

Resumo: Este artigo objetivou identificar quais são os benefícios estratégicos que o processo de incubação social oferece para os empreendimentos sociais. Um estudo de caso foi realizado com uma incubadora social brasileira. As unidades de análise foram constituídas por empreendimentos sociais que participaram do programa de incubação. Oito benefícios estratégicos foram identificados, três deles não constam na literatura analisada, sendo uma novidade aqui destacada para melhorar as missões comerciais/sociais dos empreendimentos sociais. Entendendo esses benefícios, os empreendedores sociais podem tomar melhores decisões sobre o ingresso na incubação social. Gestores de incubadoras sociais podem entender as limitações inerentes à incubação social aqui destacadas e, a partir delas, aprimorar os programas. Portanto, este artigo avança o conhecimento no campo do empreendedorismo social.

Palavras-chave: empreendedorismo social, incubadora social, estratégia, inovação social, aceleradora.

Resumen: Este artículo tuvo como objetivo identificar cuáles son los beneficios estratégicos que ofrece el proceso de incubación social para las empresas sociales. Se realizó un estudio de caso con una incubadora social brasileña. Las unidades de análisis fueron constituidas por empresas sociales que participaron en el programa de incubación. Se identificaron ocho beneficios estratégicos, tres de los cuales no están en la literatura analizada, siendo una novedad deste artículo. Al comprender estos beneficios, los emprendedores sociales pueden tomar mejores decisiones sobre adentrarse en una incubación social. Además, los gerentes de incubadoras sociales pueden comprender las limitaciones de la incubación social destacadas aquí para mejorar los programas. Así, este artículo avanza el conocimiento en el campo del emprendimiento social.

Palabras clave: emprendimiento social, incubadora social, estrategia, innovación social, aceleradora.

1 INTRODUCTION

Social entrepreneurship is a social phenomenon (Ghalwash, Tolba & Ismail, 2017) capable of generating social and environmental changes for regions and populations at the base of the pyramid (Goyal, Sergi & Jaiswal, 2016) in developing and developed countries (Fischer & Comini, 2012). In short, social entrepreneurship might be a driver for sustainable development (Belz & Binder, 2017; Bozhikin, Macke & Costa, 2019). Social enterprises are the agents that enable the emergence and effectiveness of social entrepreneurship (Weerawardena and Sullivan-mort, 2001), being responsible for social value creation (Naphatorn, 2019). Guided by social missions (Yunus, Moingeon & Lehmann-Ortega, 2010), social enterprises are hybrid organizations with dual goals (Siegner, Pinkse & Panwar, 2018; Yin & Chen, 2019) because to reach the social goal it is necessary to jointly develop a financial goal to guarantee the business models’ economic survival (Battilana, Sengul, Pache & Model, 2014; Stevens, Moray & Bruneel, 2015). Thus, social enterprises develop commercial operations that are common to traditional enterprises, such as the development of strategic plans (Goyal et al., 2016). As well as traditional enterprises, social enterprises, as small companies, have limitations, such as lack of resources (Muñoz & Kimmitt, 2019) and strategic capabilities (Mehrotra & Verma, 2015), which can be overcome through collaborative relationships with other small companies (Mellat-Parast & Digman, 2008). Social incubators are an option to boost the development of these relationships (Hmayed, Menhall & Lanteri, 2015; Marconatto, Ladeira & Wegner, 2019) since those programs also enable the development of business and management skills (Casasnovas & Bruno, 2013), and access to financing sources (Hmayed et al., 2015).

Thus, incubators are relevant for business creation and development around the world (Bruneel, Ratinho, Clarysse & Groen, 2012). Incubators are organizations that provide shared office spaces with business assistance and monitoring as value propositions for business (Hacket & Dilts, 2004). These shared spaces (coworking) in incubators are conducive for the cooperation between actors (Bouncken, Laundien, Fredrich & Görmar, 2018). Incubation programs enable small firms to develop in different ways (Blackburne & Buckley, 2019). On social purposes, there are social incubators, which emerge as a specific way of boosting social enterprise improvement and development not only in financial processes but also in social/environmental missions (Nicolopoulou, Karataş-Özkan, Vas & Nouman, 2017). As much as social incubators are relevant to the development and maturation of early-stage social enterprises (Casasnovas & Bruno, 2013; Pandey, Pandey & Ahlawat, 2017), studies on the aspects inherent to social incubation processes are scarce (Hmayed et al., 2015; Nicolopoulou et al., 2017). This scarcity limits knowledge in the context of social entrepreneurship, specifically on strategic management, since there is no background on the benefits with strategic utility (in other words, strategic benefits) arising from social incubators for the entry of social enterprises in incubation programs. Furthermore, an important component of social entrepreneurship effectiveness is the strategy (Kummitha, 2016).

This paper aimed to identify what are the strategic benefits that the social incubation process offers for social enterprises. To achieve this, we conducted a case study with a Brazilian social incubator. The units of analysis were social enterprises that were in the incubation process or that have already completed it. From the results, it was possible to identify that social incubation provides eight strategic benefits (three of them are a novelty herein highlighted) that enable social enterprises to improve commercial operations for financial self-survival and social value creation. These strategic benefits help to overcome multidimensional challenges (Goyal et al., 2016), mainly common in the initial stage of social enterprises (Marconatto et al., 2019). Therefore, this paper contributes to the social entrepreneurship field, as it highlights the role of social incubators to improve social enterprises’ financial and social/environmental performances, which can drive the spread of social impact. From a managerial perspective, besides contributing to help social enterprises to better understand the strategic benefits of social incubation, this research also contributes to social incubators’ management, since it highlights limitations inherent to the social incubation process that can be used by managers for improving social incubation programs.

2 LITERATURE OVERVIEW

This section starts with a brief overview of strategic management to support the discussion on strategic benefits. Then, the concept of social entrepreneurship, the characterization of social enterprises, and the relevance of social incubation for these enterprises are briefly presented.

2.1 Strategic management

The concept of strategy involves a series of definitions (Khalifa, 2019). A company's strategy comprises plans made prescriptively, changes in the planning, and decisions made in the course of previous planning, as well as emergent courses of actions not previously predicted (Mintzberg, 1978). Thus, strategy involves not only plans but also the behavior pattern of the organizations' decisions. Besides, strategy often involves the broader objectives and plans of companies, which also comprise tactical and operational issues (Mintzberg et al., 2003). Therefore, the strategic approach aims not only to deliberate plans but also (and as a final and main objective) to reach the best possible result for the company. Like traditional companies, social enterprises organize strategies to compete with other companies in the market to sustain their social goals, and thus competitiveness is an objective and the predictive variable of their overall performance (social and economic) (Kummitha, 2016).

Strategy and competitiveness are part of the strategic management field, which deals specifically with the direction of organizations to succeed (Rumelt et al., 1991) and the creation and maintenance of competitive advantage (Bowman et al., 2001). Strategic management is a field of study and research involving several topics, theories, and authors (e.g., Barney, 2001, 2002; Barney & Hesterly, 2009; Mintzberg, 1990; Rumelt et al., 1991). In this field, competitive advantage is the focus of the Resource-Based View (RBV) studies (Peteraf, 1993; Wernerfelt, 1984). This theoretical lens considers the organizations' resources, whereas their usages and combinations are capable of generating competitive advantages for organizations (Barney, 1991). These resources can be internal or external, tangible or intangible (Bengtsson & Kock, 2014); and their combination may provide differentiation from other market players, production efficiency, more significant social impacts, and more (Porter, 1989, 1999). The acquired benefits can provide new resources, improve the already existing ones, or become new resources (e.g., improved processes).

From the perspective of competitiveness, innovation happens when an actor performs a new combination of resources (Nelson & Winter, 1982; Schumpeter, 1912); this makes it stand out from other market players, obtaining more competitive advantages. Incubators are institutions that stimulate innovation in incubated enterprises (Barbero et al., 2014; Grimaldi & Grandi, 2005; Peters et al., 2004), and consequently, their competitiveness. Thus, the incubators provide benefits to the incubated companies, which may become new resources.

In this sense, herein strategic benefits are characterized as the benefits obtained from previous actions, which can be used strategically. Thus, the strategic benefits are a specific type of resource, which does not necessarily have different utilities from others, however, its classification is useful to understand the externalities of the relationship between actors; in this case, the externality between incubators and incubated organizations. More precisely, we understand that incubators provide strategic benefits to incubated companies in different ways, for tactical and operational issues, and are also capable of influencing them (Mintzberg et al., 2003). These are benefits because incubation offers them (Nicolopoulou et al., 2017; Schwartz & Hornych, 2012) and are strategic because they allow incubated companies to formulate strategies to sustain competitive advantage through innovations. For instance, one of the benefits of traditional/social incubation is the cooperative relationship between the incubated (Marconatto et al., 2019), and considering that cooperation is a common strategy pursued by companies (Franco, 2007, p.149), we can say this is a strategic benefit offered by the incubator. In this sense, strategic benefits can induce correct decision-making regarding the initial formation stage of companies, especially in social entrepreneurship.

2.2 Social entrepreneurship, social enterprise, and social incubator

Social entrepreneurship is an emerging research field (Belz & Binder, 2017; Saebi, Foss & Linder, 2019) based on the precepts of social management and traditional entrepreneurship (Short et al., 2009) since entrepreneurship can be a social process (Hunter & Lean, 2018). Thus, social entrepreneurship refers to an innovative activity with a social objective (Austin, Stevenson & Wei-Skillern, 2006), and takes shape through interconnected actors and results, i.e., when a social enterprise generates social value through its social and economic operations (Nascimento & Salazar, 2020). Its essence is the creation of social value through innovations in market solutions (products) that enable social transformation (Rosolen, Tiscoski & Comini, 2014). Social enterprises develop these solutions, which can be social or environmental and economic (Napathorn, 2020). Social enterprises have the same operating structure as traditional enterprises, with a focus on generating profit in all directions (Yunus et al., 2010). When a social enterprise appropriates this profit generation (Hlady-Rispal & Servantie, 2018), it propagates a positive impact on society and, then, generates social wealth (Zahra, Gedajlovic, Neubaum & Shulman, 2009). Thus, the existence of trade-offs between social and financial goals is a feature in the daily routine of social enterprises (Dacin, Dacin & Tracey, 2011; Wry & York, 2017). These trade-offs are accentuated in the initial stages and tend to be harmonized in the maturation stages of social enterprises (Yin & Chen, 2019).

As much as the social mission itself constitutes a competitive advantage for social enterprises (Muñoz, 2019), strategic actions focused on economic issues are also necessary to achieve sustained competitive advantage. As social entrepreneurship is a subject in development, there are still no precise definitions in the literature about some organizational characteristics and other business specificities related to social enterprises (Porter & Kramer, 2011). Thus, social entrepreneurship lacks theoretical depth (Austin et al., 2006; Lanteri, 2015), mainly on strategic management. This assumption emerges from the understanding that social enterprises generally face difficulties in several dimensions (Leal, Freitas & Fontenele, 2015), such as on the strategic one (Genú, 2018; Goyal et al., 2016; Leal et al., 2015), and many strategies used by traditional enterprises are also in social enterprises for financial purposes (Gras & Lumpkin, 2012). Besides, entrepreneurial firms such as early-stage social enterprises commonly lack sufficient strategic resources for business success (El Ebrashi, 2018; Garidis & Rossmann, 2019; Muñoz & Kimmitt, 2019; Pandey et al., 2017). It is from a set of strategic resources involving several dimensions, such as the uncertainty contextual environment and organizational goals, that enterprises can develop effective strategies (Khalifa, 2019). Besides tangible strategic resources, intangible ones are more salient for social enterprises’ growth and social mission (El Ebrashi, 2018).

Given the difficulties that social enterprises face, organizations such as social incubators that seek to contribute to the improvement of new social business models gain prominence in the social entrepreneurship field (Casasnovas & Bruno, 2013; Genú, 2018). Incubation is an important part of the social entrepreneurship ecosystem (Kummitha, 2016), and the bases of social incubation come from traditional incubation, which is why it is relevant to understand the context of traditional incubation. The first traditional incubator case happened in the 1950s, in the USA, and its goal was to encourage the emergence of startups to solve industrial problems (Aernoudt, 2004). The number of incubators has increased around the world; and there are different types of incubators, such as mixed incubators, economic development, technological, social, and basic research (Aernoudt, 2004; Barbero, Casillas, Wright & Garcia, 2014). Different kinds of incubators bring different types of output and innovation; despite their distinctions, they have similarities, such as the stimulus of entrepreneurship, innovation, economic development, and social impact (Peters, Rice & Sundararajan, 2004; Barbero et al., 2014).

In Brazil, the emergence of incubators occurred with a delay of around 10 years regarding the world scenario, the first incubator started in 1987; nevertheless, there was an increase of 25% per year between 1990 and 2000 (Silva & Veloso, 2013). Currently, there are 363 active incubators in Brazil, and estimations show that in 2017 there were more than 3,500 incubatees in the country, generating more than 14,000 jobs and revenues of over R$ 500 million (Associação Nacional de Entidades Promotoras de Empreendimentos Inovadores [ANPROTEC], 2019). The emergence of new incubators gradually increases according to the emergence of new enterprises that need support, taking into account that the incubatees are new enterprises that commonly begin their operations with fewer resources and in difficult situations (CB Insights, 2018; Dullius & Schaeffer, 2016; Marmer, Herrmann, Dogrultan & Berman, 2011; Serviço de Apoio às Micro e Pequenas Empresas de São Paulo [SEBRAE-SP], 2015). The engagement and entrance of small firms in incubators are due to their shortcomings, related to difficulties in financial resources (including funding), to acquire some advanced knowledge of management and technology and to have contact with experts and scholars through universities (Peters et al., 2004).

One of the most basic and attractive reasons for the entrance of small firms is the possibility of having access to low-cost operational infrastructure (Hackett & Dilts, 2004; Grimaldi & Grandi, 2005; Ratinho & Henriques, 2010), that includes physical facilities, telephone, internet, laboratories, among others (Peters et al., 2004). However, incubation is much more than only infrastructure (Ratinho & Henriques, 2010). Besides providing infrastructure, the incubators promote actions conducted internally, encourage the connection with external actors, and also the involvement in external entrepreneurship actions. The actions commonly aim to stimulate innovations (Grimaldi & Grandi, 2005); add value to solutions (Hackett & Dilts, 2004); assist startups to acquire their missing knowledge (Grimaldi & Grandi, 2005); provide mentoring with experts (Hackett & Dilts, 2004; Grimaldi & Grandi, 2005); training (Ratinho & Henriques, 2010) to assist the business in different ways (Hackett & Dilts, 2004); and aid to get financing (Grimaldi & Grandi, 2005; Ratinho & Henriques, 2010).

Regarding the benefits of incubation, Dee, Livesey, Gill, and Minshall (2011) pointed out that the advantages go beyond to help the initial stage of the incubated enterprises; since it seems that companies which have already been through an incubation process have better outcomes than companies that never had. Social incubators, specifically follow the same characteristics of incubators in general, however, these have a greater focus on social contributions (Guimarães, Maciel & Eidelwein, 2007; Nicolopoulou et al., 2017) as the encouragement “growth and continuity of companies employing people with low employment capacities” (Aernoudt, p. 129, 2004), such as “disabled people, minimum guaranteed income beneficiaries, low-skilled workers, long-term unemployed, immigrants, political refugees” (p. 129). Similarly to traditional incubators, social incubators also assist new social businesses, such as funding (Hmayed et al., 2015) and networking development (Marconatto et al., 2019). However, unlike traditional incubators that seek to maximize economic development, social incubators assist in the development and spread of social innovation, focusing on social value creation as the main result (Nicolopoulou et al., 2017). Thus, it is assumed the social mission that guides social incubators can highlight different characteristics from those existing in traditional incubators, but the literature on social incubation needs more research (Hmayed et al., 2015), mainly on the strategic benefits that social incubation programs for social enterprises can provide.

3 METHODOLOGICAL STRUCTURE

This research has a qualitative descriptive approach (Yin, 2016), as it focuses on the identification and description of the strategic benefits provided to social enterprises from the social incubation process. The strategy adopted was a case study that allowed greater analytical and contextual richness of the analyzed phenomena (Eisenhardt & Graebner, 2007). The selected case is a Brazilian social incubator that configures itself as an integrative analysis locus (Yin, 2015). Thus, the social incubator is an integrative unit of analysis that includes other actors (social enterprises) in the formation of the analyzed phenomena. In addition to the incubator itself, the collection units (Yin, 2015) have been expanded to social enterprises that have finished or were in the incubation in this incubator during the investigation. Hence, it was possible to compare the phenomenological perceptions among the incubator and the social enterprises about the strategic benefits provided by social incubation. The methodological design of this research follows Yin’s (2016) directions and Villarreal’s (2017) design.

The selection of a Brazilian case was due to the understanding that, as an emerging country, Brazil has several social problems and, consequently, there is a greater potential for the formation of social enterprises in different fields of activity. This diversity of business and social areas addressed enriches the analysis of the phenomena in this research on the social entrepreneurship scope. The reason for selecting the social incubator is due to its location in the Northeast region of Brazil, which has an aggravation of social problems compared to other regions of the country (Neves, Gonçalves & Lima, 2015). The social incubator receives social enterprises from all over the country for the incubation program, contributing to the socio-environmental development on a national level.

Another reason for choosing this case is that Brazil has been standing out for the development of its incubators; beyond growth and a large number of incubators, some of the Brazilian incubators are among the world's best. For instance, the incubator MIDITEC was considered the fourth-best private business incubator, and SUPERA was one of the 20 best university business incubators by the World Rankings 19/20 Report of UBI GLOBAL (Meyer & Sowah, 2019). The strong connection among different regional innovation ecosystems that comprise the incubators is related to this advancement in this developing country. That way, we understand that the favorable scenario for the development of traditional incubators in Brazil can also favor social incubators. Despite the widely analyzed scenario about traditional incubators, there is a lack of available data on contextual issues of social incubators. Aiming knowledge advancement about social incubators in Brazil, in this paper we focus on the analysis of social incubation and its characteristics, highlighting the specificities and strategic benefits of this incubation type for social enterprises.

The main source of data collection was semi-structured interviews, analysis of documents provided by the incubator, and direct observations at the incubation spaces (Yin, 2016). Details of the data are in Table 1. We carried out eight individual and one collectively semi-structured interviews with the founders of eight social enterprises that underwent the incubation process, one with the founder of a social enterprise that is resident in the incubator, and one with the incubator’s president. The interview script started with inquiries about the strategic benefits perceived by social entrepreneurs, as well as the limitations of the incubation. Seeking a comparative analysis, the script applied to the incubator’s president focused on strategic benefits through the view of the offering agent. We recorded and transcribed the interviews. Based on the researchers' reflexivity, we adopted a more denaturalized transcription technique, as it is better suited to the thematic content analysis technique adopted herein (Nascimento & Steinbruch, 2019).

Table 1
Data information
Collection techniqueWhy?What?How?So?
Semi-structured interviews (September-December/2018)Identify which strategic benefits the social incubation process offers for social enterprise.1 interview with the incubator's president, 8 interviews with the founders of eight incubated social enterprises, and 1 interview with the founder of a resident social enterprise in the social incubator.Interview script adapted to cross information between agents (incubator x incubated). Face-to-face interviews at the incubator and ranged from 30 and 60 minutes. Transcriptions resulted in 154 pages of single‐spaced transcripts.Evidence and phenomena were identified, generating rich information for analysis and results validation.
Documents, websites, and social networks (2018)Identify patterns and phenomena that could complement or contradict evidence from the interviewsOnline information. Social incubator documents: (i) Partial Accountability Reports and (ii) Educational Reports. These documents contained information on mentoring, courses, and business and management advice given to the incubatee.The documents were provided via email by the social incubator. Information was crossed among documents and reinforced from online information accessed (websites and social networks).The information was coded for analysis and highlighted discrepancies about certain information that emerged in the interviews.
Direct observations (September-December/2018)Provide greater robustness about the incubation environment and how interactions and incubation actions enhance the strategic benefits for the incubatee.Observation of the social spaces, the infrastructure, the form of relationship between social entrepreneurs, counseling, and mentoring meetings.One researcher had access to the spaces and lived with incubatee. In some moments there was interaction with incubatee, in other moments the researcher just observed without any contact. Field notes were taken for data analysis.It was possible to identify patterns that corroborated the evidence from the interviews and documents. As the observations occurred simultaneously with the interviews, social interaction made it easier for some social entrepreneurs to participate in the interviews.
Source: Developed by the authors.

This paper is part of larger research aiming to analyze issues of strategy and entrepreneurship in social enterprises. Consequently, besides the strategic benefits of social incubation, other themes were investigated in the interviews originally composed of distinct blocks with specific questions for each theme in the same interview. The other themes of this larger research are in other papers. But, herein, the interviews are analyzed in full to contextualize the specific theme addressed.

To identify and select interviewees, we used the snowball technique (Nov 2008). We identified saturation on the phenomena during the tenth interview (Strauss & Corbin, 1990). It should be highlighted that one interviewee was a social enterprise that did not undergo the incubation process, but has a fixed residence in the social incubator. The inclusion of this outlier was due to the repetitive mentions of this enterprise in the other interviews, demonstrating a possibility of its contribution to the analysis. All social enterprises are in Northeast Brazil. Information on the social incubator and social enterprises are shown in Table 2.

Table 2
Information about the social incubator and social enterprises
IdentificationInformation
CaseSocial IncubatorFounded in 2016 with a mission to incubate social projects and ideas, it is a non-profit association. The main goal is to expand the action and reach of social enterprises. This social incubator arose from the idea of building an ecosystem of social impact in Northeast Brazil. It is a Social Hub, whose social ecosystem brings social entrepreneurs closer to diverse areas such as housing, inclusion, sports, health, arts, environment, and work. Hence, it acts in a way to join all these initiatives to provide the greatest social impact possible, benefiting the most vulnerable people in Brazil. In addition to the annual incubation program, this social incubator offers other services for society, such as lectures, free courses, workshops, and forums, helping to stimulate the social and entrepreneurial spirit of the citizens.
Expanded units of collectionSocial Enterprise 1Founded in 2011 and incubated in 2016, this enterprise is in the education field. It is a school of positive impact working with corporate, superior, and mainly basic education, enabling the principles of social entrepreneurship to be in these educational spheres.
Social Enterprise 2Founded and incubated in 2017, this enterprise works in the education field. Its purpose is to improve the living conditions of low-income families living in a precarious situation. The focus is on providing low-cost services, such as architectural design, consulting, and reform for people at the base of the pyramid, especially in poor communities.
Social Enterprise 3Founded in 2010 and incubated in 2017, this enterprise works in the social inclusion field. The social mission is to contribute to the non-recurrence of people leaving chemical recovery centers through the empowerment and inclusion in the job market. It helps people in the rehabilitation process, social reintegration, and inclusion, through professional training courses in the building construction area.
Social Enterprise 4Founded in 2008 and incubated in 2017, this enterprise works in the environmental field. It works to raise awareness among residents in a beach region, helping families who work with selective garbage collection. The members of the social enterprise use a bike-tricycle to assist the collection and transport of the garbage that families sort. Annually, they obtained an average of 2.5 tonnes of waste from 150 families to sell it for the financial maintenance of the enterprise.
Social Enterprise 5Founded and incubated in 2017, this enterprise works in the social inclusion field. It performs communication workshops in communities, especially to young people to enable them to be producers of content (texts, photos, videos) about their communities. The business role is to provide visibility to the artists, and cultural activities that exist in the suburbs but have no space in the conventional media.
Social Enterprise 6Founded in 1986 and incubated in 2017, this enterprise is in the environment field. It works for the social causes of a fishermen community. In some months of the year, there is a shortage of fish and crustaceans that generates a lack of family income. Thus, some women created the enterprise to teach other women in the community to make craftsmanship and sell it, which helps in family income.
Social Enterprise 7Founded in 2016 and incubated in 2017, this enterprise works in the environmental field. This social business focuses on sustainable cooking, teaching people in the communities to use every part of foods, reuse food that would be waste to minimize cost, and, at the same time, generate household savings and nutritional improvement.
Social Enterprise 8Founded in 2015 and incubated in 2017, this enterprise works in the social inclusion field. It assists people living in the street, delivering food, drinks, and talking with them, that is, giving social attention. The actions occur once a week in many neighborhoods. The enterprise also develops other activities to meet basic needs for the same public, such as document emission, medical care, legal assistance, dental care, and even aesthetic care. Two founders of this social enterprise were in a group interview.
Social Enterprise 9Founded in 2006 in Guatemala, this enterprise failed and restarted in 2011 in Brazil in the sports field. This enterprise did not go through incubation but is in the incubator. It operates in the construction of sports courts in poor communities to provide sports practice, community centers, and spaces for cultural events. The enterprise operates in eight countries, but the headquarter is in Brazil.
Source: Developed by the authors.

The collected data submitted to thematic content analysis (Bardin, 2016), followed the steps of pre-analysis, exploration and treatment of results materials, inference, and interpretation of the phenomena. An iterative process (Gioia, Corley & Hamilton, 2013) made it possible to code the results (Bardin, 2016) from the interviews, documents, and observations, which were analyzed individually by each researcher and then compared and modified jointly. This iterative coding process generated eight categories of analysis, five were already in previous studies, and three were developed from the data, being a novelty proposed in this study. These categories are equivalent to the strategic benefits identified in this study and are detailed in section 4.

To ensure the rigor of this research, the researchers' self-reflexivity allowed possible biases minimization in data collection and analysis (Tracy, 2010), as well as the adoption of methodological triangulation (Villarreal, 2017; Yin, 2015). Specifically, triangulations of researchers, evidence sources, and data collection techniques ensure research validity and reliability (Bruning, Godri & Takahashi, 2018). Besides, we adopted the treatment of transcription as a quality criterion for qualitative research (Nascimento & Steinbruch, 2019).

4 ANALYSIS AND DISCUSSION OF RESULTS

The analyzed incubation program assists in the maturation process of social enterprises and is an environment conducive to organizational development. There is a selection process of social enterprises and projects to be incubated:

One of the products of our incubator is the incubation program, which is supported by the municipal government. The incubation program lasts 12 months. We open a public notice and all initiatives already formalized or ideas can participate. They sign up and we set up a multi-plural board of artists, journalists, private initiative, government, university, church, and opinion makers to hear all the initiatives. From there, we select the number of 35 initiatives to spend a year in the incubation program (Incubator president).

The incubator invites professionals from different sectors and areas of knowledge to identify the potential for social transformation that social enterprise projects present. During the year of incubation, several benefits are provided for the social entrepreneur to mature its proposal for generating social value, mainly due to the management orientation for the business (Casasnovas & Bruno, 2013). One of the reasons that social entrepreneurs cite as a major factor to participate in the incubation program is the legal formalization of the business. Social entrepreneurs have the desire to generate a solid enterprise and, through it, generate social impact for communities (Rosolen et al., 2014; Yunus et al., 2010). But it is possible that this process of constituting the legal entity is complex and unknown to entrepreneurs, thus being a present benefit in the incubation process, as reported: “we are trying to formalize our business, precisely through this incubation” (Social entrepreneur 4).

In this sense, besides the establishment of the National Register of Legal Entities (CNPJ), these entrepreneurs need to understand what actions they need to develop and their impact on social issues. This process of self-identification can be complex and obscure since there is a diversity of terms for social organizations (Silva et al., 2015). Also, entrepreneurs may know how to help a community through its social idea, but they may not have technical and theoretical knowledge about the types of organizations and in which one their social business would fit. Thus, even before the constitution of the CNPJ, social entrepreneurs need to identify which sector they belong to, and this can generate an identity conflict in the initial stage of maturation of the social enterprise, as observed:

First, I was doing it without realizing it, and after I was incubated here, I started to participate in (instructions), mentoring, and guidance. Then you define yourself, you can find yourself ... you think you are an NGO but you are not an NGO, you think you are an entrepreneur but you are not an entrepreneur ... and then you start to see that you are a social entrepreneur ... (Social entrepreneur 3).

These reports present a first strategic benefit, which is the (i) self-identification of the business. Self-identification allows entrepreneurs to understand their current and future activities and in which sector they are inserted. This benefit is important not only for the legal characterization, but this one is also part of the business's strategic management process and part of the business model in which the company will develop and work for an extended period. The self-identification makes it possible for legal formalization to take place correctly, avoiding, for example, formalizing an enterprise who works with the sale of goods and services in the market (to boost social impact) as an NGO, which a priori is not for profit and is a legal form incompatible with the mission of this social business. About this, another highlighted aspect is in the following reports:

We came here to be incubated with the prospect of becoming a social enterprise, but the current law does not include sector 2.5. There is the first sector, there is the second sector, and the third sector, which is for NGOs, right? And there is the sector that is not yet in force in our legislation, but it is in force in Europe and the United States, which is the sector 2.5 (Social entrepreneur 4).

In fact, within our social ecosystem in Brazil, there is no specific legislation for social enterprises (Social entrepreneur 1).

This points to the lack of legal maturity in Brazil when compared to other countries regarding social enterprises since the impossibility of being classified in sector 2.5 leads the social enterprise to be classified as a traditional company or as an NGO. But the enterprise is, in essence, neither one nor the other, but a mix of the two, and should, therefore, be formalized as a company in the two and a half sector, operating between the second sector - for profit, and the third sector - the creation of social value. This possibility of correctly identifying the context of the social enterprise through incubation is notable in the following report:

If I weren't here, I wouldn't have a broader view of what a social enterprise is, what an NGO is, and differentiate them from what people do to each other without any pretense of recognition (Social entrepreneur 7).

Another argument that reinforces the precariousness of the lack of regulation of sector two and a half in Brazil emerges in another report (Social entrepreneur 2). In this, the interviewee stated that, by adopting the legal nature of a company in the second sector, a social enterprise may have difficulties negotiating lower prices with traditional companies. Thus, entrepreneurs can be afraid to cooperate as they do with the third sector organizations, because, a priori, they may think they are selling at a lower price to a traditional company that will not generate the social impact it claims to create for society, which can cause a lack of trust in market relationships.

From these reports, we set the second strategic benefit: (ii) the assistance in the process of formalizing the legal nature of the social business. It can be seen that the process of instruction developed in the incubation generates contributions that make up the strategic management of the business, considering that it is related to the broader direction of the organization – the definition of which will be the target audience, and which will be the value delivered to consumers and society. Of note, analyzing that “when dealing with a diverse audience, it is necessary to elaborate the incubation process respecting the particularities of each enterprise and its entrepreneurs” (Genú, 2018, p. 111), as well as the analysis of the type of activity to be developed. After this process, the incubation helps to identify the legal procedures to be adopted to register the CNPJ.

The third strategic benefit identified is (iii) the dissemination of the social enterprise and its social actions to the public served. In this sense, many communities are unaware of the existence of social enterprises that operate there, which hampers the spread of social impact. The more people who know that there is a social enterprise working to mitigate the social problems of the community where they live, the more engaged these people can become with the proposal of the enterprise. For instance, Social Enterprise 2 works with low-cost architectural services, but if people are unaware of the existence of this organization and this service at an affordable price, they will not hire that product. As well, the community needs to know that there are organizations that are willing to help with local development, which can increase the acceptance of the actions proposed by the enterprise and attract volunteers to help these organizations in their causes, as disseminators of actions in the community. This lack of knowledge of social enterprises and the social actions they carry out is a reality for many communities, as shown by some reports:

Many people do not know what we are doing and the importance of this for their lives and the development of the community. The more people know, the greater the results that our business will generate for the community (Social entrepreneur 7).

People living on the periphery are often unaware of what happens in the location where they live, this includes the actions of people and projects that seek to generate social transformation (Social entrepreneur 5).

Thus, to have a greater social impact, social enterprises need to be recognized as agents of social transformation by the target audience. For this disclosure, the incubation process helps with actions mainly aimed at the marketing area. This includes mentoring and guidance about publicity and advertising for both the social business and the products offered. Besides, the social incubator allows social entrepreneurs to get to know other social businesses that may have complementary actions. In this way, a social enterprise can help to publicize the actions of the other enterprise, as well as generate common social actions, as shown in the following reports:

There are other incubated social enterprises that work with important social actions and I did not know. In fact, there is an enterprise that I am partnering with to create a common project that will help two different communities (Social entrepreneur 3).

We did a social event, a soccer game with children from the community. This event was to generate publicity for our social enterprise and also for others that are in incubation. We used a screen outdoor to show the logos of other social enterprises and the social actions that they also develop (Social entrepreneur 9).

Thus, the actions of social enterprises' disclosure represent a joint strategy of incubators and social enterprises. The knowledge acquired related to the dissemination of the business and the public reached can be important strategic resources for social enterprises after the incubation.

Going further, according to one of the reports already presented (Social Entrepreneur 3), the processes of mentoring and guidance are activities from the incubation that seek to develop and empower social organizations “through training, mentoring, debates, educational and inspirational activities, expanding their knowledge and providing a physical space for their development ”(Partial Accountability Report Document). Thus, it contributes to the maturation of both the idea and the formal constitution of the incubated social business. In one of the reports (Social entrepreneur 6), the incubation process is described as a space to participate in different training courses. These activities are in the following report:

Most initiatives arrive here with only one idea and in the incubation route, they will have a mix of experience, content, and network performance, for example; in the educational path they will have contact with the legal area, to be legally formalized. They will have contact with the accounting area to organize themselves, they will have training in an oratory course to speak better, they will have training in the area of communication to have a better brand of their project, to make good use of social networks, and they will have fundraising training (Incubator president).

These mentoring and guidance actions focus on management practices aimed at different areas of administration, since, as in any company, social enterprises also need to have efficient and effective management to achieve the social mission. Thus, these actions are strategic for enterprises considering that they affect their social, commercial, and legal structures; and that stimulates internal and external analysis and the redirection of business. Another aspect of the incubation is:

So, some incubated projects go through difficulties of how to generate income to maintain themselves, to cause more and more impacts, and to continue the social work they do [...] (Social entrepreneur 1).

The actions developed in the incubation sought to help overcome the difficulties encountered by most social entrepreneurs; from what could be observed, they face several obstacles at an early stage. This corroborates Genú’s (2018) assertion, that social enterprises, especially those in an initial stage, face a series of challenges, such as the presence of difficulties in the strategic dimension. Thus, it is clear that the social incubator seeks to propagate the sharing of social value (Guimarães et al., 2007) through the support provided to minimize the difficulties of social businesses during the incubation process.

The mentoring and guidance carried out during the incubation process are shown in Table 3. The information in the table was retrieved from the Educational Reports documents. There are ten types of mentoring and one of guidance (the last one), each of which has a specific objective. Regarding the execution time, they last between thirty minutes and two hours in the social incubator space and are made individually with each social entrepreneur who has an incubatee social business. As shown in the table, most of the professionals responsible for carrying out the activities have higher education and graduate degrees, demonstrating the incubator's concern with having a professional staff trained in a certain area to better instruct entrepreneurs on how to deal with the needs to remain competitive in the market.

Table 3
Description of mentoring/guidance provided by the incubation process
Mentoring/GuidanceDescription Professional responsible
Creation of Goods and ServicesMentoring to create new products and services for the projectAdministrator
Project MonitoringMentoring on products and services, website texts, folder, and Pitch presentationJournalist with a postgraduate degree in Communication and an MBA in Business Management
Project ModelingMentoring for project website alignment Marketing Professional
Visual communicationMentorship about remodeling the logo, visual identityBachelor of Design
Game DevelopmentMentoring on how to create board games for environmental, social and/or community educationEntrepreneur specialized in Design and Strategic Planning
Creation of Graphic MaterialMentoring of graphic material creation for the official project launch eventMarketing Professional
Pitch RoundMentoring to close the Pitch scriptJournalist with a postgraduate degree in Communication and an MBA in Business Management
Review of Legal NatureMentoring to review the legal nature of the businessLawyer with a master's degree
Accounting and TaxMentoring to survey tax issues with the city hallAccountant with a master's degree
Social Contract ReviewMentoring for analysis of the social contractLawyer with a master's degree
Formalization: How to Finalize the BylawsLecture on essential aspects of statutes and constitution of organizationsLawyer with a master's degree
Source: Adapted from the Educational Reports documents.

The initial stage of companies is full of important decisions related to the definition of their business models. These are decisions that target the company's performance in longer terms and that bring competitive advantage (Ries, 2011), which means they are strategic issues for these companies. Table 3 shows that the incubator is concerned with its incubatees' strategic decisions and seeks to give the necessary support for them to succeed. Considering the content of mentorings/guidances, we identified some (fourth, fifth and sixth) strategic benefits: (iv) support in marketing activities; (v) support in the process of creating goods or services; and (vi) support in the process of financial and accounting structuring.

The seventh (vii) strategic benefit identified in the incubation process is the formation of networks (Marconatto et al., 2019), as it is in the networks of contacts that information circulating can contribute both to the performance of the enterprise and the expansion of the social impact, in a cooperative process. This network generation process is thanks to the coworking space at the social incubator, where entrepreneurs can work and, at the same time, socialize with others. This physical approach between individuals in a professional coworking space facilitates knowledge transfers and encourages the creation and implementation of joint entrepreneurial ideas (Bouncken et al., 2018). The following report reinforces the arguments about the formation of networks within the incubator:

[...] There are incubated organizations and there are some organizations here in the incubator with fixed headquarters. They are organizations that can also strategically contribute to this ecosystem of incubated organizations, that's what we try to do (Social entrepreneur 9).

Thus, the emergence of networks mainly among incubatee social entrepreneurs allows new actions and possibilities for social transformation through joint action. Thus, it is possible to identify, for example, a new community in which one can act and generate social impact for the people who live there. Thus, this benefit can contribute to the strategies formulation and also influence the definition of key partners of the incubatee business models.

The last strategic benefit identified (viii), as reported (Social entrepreneur 1), is the possibility that the social enterprise will continue to have support with mentoring or guidance that it has already gone through, but that, perhaps, needs a review after the end of the incubation. After the incubation finishes, the doors of the social incubator remain open for a year, to receive those enterprises that have already completed the process and needed some specific support or want to hold a meeting or an activity in the physical space of the incubator. This demonstrates the incubator's concern with continuous support for social enterprises, enabling the generation of social impact to perpetuate, constituting a long-term strategic action. This is a benefit of the incubation process because such openness only happens with those businesses that have already incubated and depend on the knowledge that the incubator has about the business. This feature can be identified as a business opportunity and be useful for the planning and realization of company strategies.

Given the discussion carried out here, the strategic benefits derived from the analyzed social incubation process for social enterprises are in Table 4. In this, the first three strategic benefits were not in the previous literature analyzed, being considered a novelty of this study on social incubation. The first two are inherent to the Brazilian reality, which indicates the lack of specific legislation for social enterprises as a hybrid organizational form. The third demonstrates the relevance of the approximation between social enterprise and the potential communities that will be served or benefited. This benefit seeks to enhance the recognition of social entrepreneurship by these communities, which can occur through several social actions. The other five benefits are common to the traditional and social incubation process - support in marketing activities, support in the development of goods and services, support financial structuring, induction of the formation of networks, and more accessible physical space.

Table 4
Strategic benefits from social incubation for social enterprise
Strategic benefitConceptual basis
1Assistance for the entrepreneur's self-identification about his/her social enterprise, allowing to understand what enterprise's current and future activities are and in which sector it could fit into.Research findings
2Assistance in the process of formalizing the legal nature of the social business.Research findings
3Assistance for the identification and creation of social actions to deal with the communities served, enabling people at the base of the pyramid to understand the importance of these actions.Research findings
4Support in marketing activities that are essential for commercial activities and the dissemination of the social enterprises.Casasnovas & Bruno (2013); Hacket & Dilts (2004)
5Support in the process of creating goods or services to be marketed to create economic value.Grimaldi & Grandi (2005); Nicolopoulou et al. (2017)
6Support in the process of financial and accounting structuring for the financial viability of the social business.Hmayed et al. (2015); Ratinho & Henriques (2010)
7Induction of the formation of strategic networks among social entrepreneurs and other agentes.Marconatto et al. (2019)
8Access to the incubator's physical space (coworking) and the necessary guidelines during the incubation period and after its closure.Bouncken et al. (2018); Peters et al. (2004)
Source: Developed by the authors.

The identified strategic benefits can be used individually or together, as well as innovation studies guide to do with resources (J. Barney, 1991; Nelson & Winter, 1982; Schumpeter, 1912). For example, the management and innovation knowledge acquired through mentoring can help incubators make better use of their networks. The possibility of access to the incubator even after the incubation period can also support the various benefits, including regarding legal changes or self-identification.

Although the analyzed social incubator has delivered several benefits, there were reports from interviewees indicating that the incubator did not help with some of their needs. As Genú (2018) pointed out, there are common difficulties of the strategic dimension of social enterprises in early stages, and these are: measuring the social impact, measuring the company's performance, developing innovations and the social mission proposed by the company. Some of these shortcomings are in the case under review; for example, it has not been identified in Table 3 actions by the incubator to help overcome the difficulty that entrepreneurs have in measuring the social impact of their organizations. Also, the presence of mentoring or guidance in the incubation that helps to build ways of measuring the performance of the social enterprise was not identified, which would characterize an essential organizational resource for the strategic viability of the business. Regarding the strategic dimensions of the development of innovations and the social mission described above, it is possible to affirm that the mentoring/orientation carried out in the incubator helps to overcome these strategic difficulties, enabling the development of resources in social businesses through collaboration with the incubator. Thus, there are points of improvement that can be developed by the incubator to increase the efficiency and effectiveness of the strategic actions necessary for the longevity of early-stage social enterprises.

Going further, we can state that all the mentoring/guidance activities described in Table 3 are essential and contribute strategically to the survival of the enterprise and to the effectiveness of generating social impact (Austin et al., 2006). Additionally, another point in one of the reports as being a strategic benefit of the incubation process:

Now the incubatee ones can have the possibility to work with mentors in the construction of what will be written in some notices for resources access, do you know? (Social entrepreneur 1).

This report demonstrates the respondent's vision not only as a social entrepreneur who has gone through the incubation process but also as an educational manager at the same incubator, highlighting a more organizational bias that deviates a little from the social entrepreneur's view. For this purpose, this view is opposite from the understanding of the other interviewees, and a specific question about this support in the participation of fundraising notices deserves discussion:

As I am telling you about the lack of legal formalization, we did not identify any mentoring, any type of preparation in the social incubator that would help us in this process of notices (Social entrepreneur 8.2).

This report contradicts the version of the previous report (Social entrepreneur 1) that there is assistance during incubation for the participation of social enterprises in notices. Corroborating, Table 3 developed based on Educational Reports does not demonstrate the existence of mentoring or guidance to support social entrepreneurs to participate in such notices, even though this table was from a document of the incubator itself. This supports the refutation of the argument that there is the support of the incubator in this process for participation in notices (Social entrepreneur 1).

Going further, the above report (Social entrepreneur 8.2) demonstrates that, although the incubation process is beneficial, it can still be improved. This improvement, in this case, is due to the respondent's criticism of the lack of specific mentoring to assist the social enterprise to deal with notice processes, which are common in the social sphere. Besides, in another report (Social entrepreneur 6), the respondent stated that she had already participated in two public notices, but did not have any knowledge of how to proceed. Because of that, her enterprise was not selected in any of the processes. The respondent states that the lack of a professional from the social incubator to collaborate and guide in this process generates a deficiency that, probably, will continue, as the inscriptions in the notices must observe basic aspects, as reported:

Another relevant thing to emphasize is that almost half of the projects that participate in fundraising notices are disapproved for lack of adequacy because the proposals are not correct. So, the projects of many social enterprises are disapproved because of minimal things, such as not signing a copy. They are silly things, but some entrepreneurs fail, so besides the project having a differential, it has to be correct (Social entrepreneur 7).

Fundraising notices are usually complex and detailed and, in many cases, the social entrepreneur may not be familiar with these documents. When there is a notice that will provide resources to help social causes, the social entrepreneur due to inexperience and the lack of understanding of the terms contained therein may not be able to assemble a proposal consistent with the requirements of the notice and, therefore, not be selected to receive assistance. The inclusion of mentoring to support the incubatee enterprises to understand the notices and to correctly structure their proposals to compete for these notices is necessary since they are a strategic source of fundraising for many social enterprises in initial training.

Hence, the results demonstrate that social incubation shows some peculiarities when compared to traditional incubation actions indicated in the previous literature. As well as, point out some limitations of social incubation that can be improved for a greater appropriation of the strategic benefits by incubated social enterprises.

5 CLOSING REMARKS

Based on the case of the social incubator and nine social enterprises in the social incubation reality, it was possible to verify that the strategic benefits provided by incubation can improve both the economic and social performance of these enterprises. Thus, these strategic benefits are attractive to the entry of social entrepreneurs in the social incubation process. From the study, the incubation process provides a set of eight strategic benefits that, in the majority, drive the development of competitive advantages for these enterprises that need to generate economic value for self-survival amid competitive markets and, primarily, seek to create positive social impact. Three of these strategic benefits were not identified in the previous literature, being a novelty of this study about social incubation. They are 1) support to the self-identification of the type of legal characterization of the social business, 2) support to the legal constitution of the social business, and 3) support in the development of actions to communicate to the communities the social benefits developed by the social business.

As much as the incubation process analyzed here provides strategic benefits to social enterprises, the incubator has not helped these organizations overcome some of their difficulties, such as the lack of mentoring on how to measure their social impact and business performance and on how to participate in fundraising notices. Thus, to the extent that this research encourages potential social businesses to enter incubations, it also contributes to the exposure of how social incubators can help social enterprises and, also, how social incubators can increase and offer new actions that will further contribute to the maturation of incubatee social businesses. Thus, scholars and practitioners in the field of social entrepreneurship can expand the understanding of the social incubation process and how it helps in the strategic development of social enterprises.

This study can guide the management practice of social incubators regarding which activities and benefits should be considered by incubator managers, in addition to pointing out the difficulties of social enterprises that demand the support of incubators. An important finding of this study is that social enterprises have severe difficulty in recognizing their legal nature and that there is no possibility of legal registration as a company in the sector 2.5. This situation affects not only the legal aspect of social enterprises but also the tax and market issues of these businesses. In this way, actions related to public policies to enable such registration as a company in the sector 2.5 can support the emergence, survival, and competitiveness of these businesses, generating even more social value delivery.

This research has certain limitations, such as the analysis of a single social incubator, in a single Brazilian region. Another limitation occurred due to the lack of access to more documents that could increase the level of investigation. Punctually, a limitation present in this study is in the selection of a respondent: Social entrepreneur 1, who, besides being a social entrepreneur, is also an educational manager in the analyzed incubator, which generated the presence of certain bias in this interview minimized by the reflexivity of the researchers in the analysis of this report.

As a possibility for future research, analysis of incubatee social enterprises or those that have already completed incubation in other social incubators, especially in other regions of Brazil. This can enable a greater understanding of the strategic benefits provided by the social incubation process in an analysis under different contexts from the diversity of Brazilian environmental/social ecosystems. This investigative expansion can contribute to the identification of other strategic benefits, based on different social realities exposed from other cases. Aguinis, Villamor, Lazzarni, Vassolo, Amorós, and Allen (2020) claim that Latin America needs more management research on social enterprises to contribute to the social development of that region. Thus, the analysis of social incubation may extend to other Latin American countries in a cross-national study, advancing knowledge in the social entrepreneurship context.

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