Social entrepreneurship, stakeholder management, and the multiple fitness elements of sustainability: where cash is no longer king

Abstract Social entrepreneurs are driven to solve a particular social problem. Yet, they operate in a broad universe of stakeholders that expect the organization to at least not worsen a range of social ills. This complicates the organization’s work as various social goals can be in tension with each other. Based on Instrumental Stakeholder Theory and the concept of organizational fitness, this paper uses a revelatory case study to explore the unique stakeholder management challenges faced by social entrepreneurs. A series of nine interviews and review of archival materials reveals how Berkshares, Inc., a creator of a local currency, had to contend with competing social issues important to an array of stakeholders. The study showed that competing views of different social issues from different stakeholders in the community had a substantial impact on the management of the organization. Two primary points emerged from the data. First, the need to manage these competing dimensions greatly complicates organizational goal setting and initiative selection, potentially creating internal conflict and making decisions easily contested. Second, this challenge alters the nature of the transition from startup to maturity, such that marketing and external communication became much more critical for maintaining stakeholder support as the venture grew.