Social enterprises’ objectives and choices of legal forms under the framework of Sustainable Development Goals – an analysis of 80 cases in Zhejiang Province, China

Abstract

Purpose This study aims to measure social enterprises’ (SEs’) social objectives under the United Nation’s 17 Sustainable Development Goals (SDGs) framework, and explore the impact of SEs’ social objectives on their choices of legal forms. Design/methodology/approach This study used semi-structured questionnaires followed up by field interviews and observations of the sampled SEs. The survey sample includes 80 participants of Social Entrepreneurs Stars Competition in Zhejiang Province of China. The authors conduct content analysis to measure the objectives of SEs. The authors also perform descriptive analysis, chi-square test and regression analysis on the data. Findings The findings confirm the theoretical discussions that SEs’ choices of legal forms reflect SEs’ strategies toward achieving social objectives. Similar to certain countries, some SEs in China register as nonprofit entities to concentrate on nonprofitable sustainability objectives, while others register as commercial enterprises or hybrid organizations to generate profits. However, some SEs focus on profitable non-sustainability issues and fail to prioritize social objectives over economic objectives. There are positive effects of social entrepreneurs’ background similarity and negative effects of social entrepreneurs’ educational level on their SEs’ choices to register as commercial enterprises. Research limitations/implications Due to the small size and nonrepresentative sample this study is based on, the findings need be further tested by a larger sample. SEs in different service domains rely on different types of financial resources (Mair et al., 2012; Doherty et al., 2014). In future research, the model can be expanded to test the effects of service domains and types of financial sources on SEs’ choices of legal forms. Practical implications To encourage more societal resources being allocated toward achieving the United Nations’ SDGs, policymakers and SE certification programs are recommended to explicitly incorporate sustainability objectives into the evaluation standards and supportive policies for SEs. Social entrepreneurs who aim to balance the social and economic objectives in their business are suggested to target the population with whom they share similar community background. Training or consulting programs for social entrepreneurs are suggested to provide advice tailored to their socio-economic background and personal experiences. Originality/value To the best of the authors’ this study is the first quantitative analysis to identify factors that associate with SEs’ choice of legal forms in China. The authors developed new instruments to measure SEs’ social objectives and service targets, access to financial resources and social entrepreneurs’ social-economic backgrounds.