The Influence and Integration of Multiple Identities in Social Enterprise Design

Speaker A Our next presenter is Tyler Ryan. He's an assistant professor at the Wharton School of Business. He studies how startup firms in particular navigate between competing goals such as the pursuit of social and financial aims or the integration of science and technology. And that will be the subject of his talk. So I'll bring up Kyle.

Speaker B So I was really happy when John called to invite me to give this talk because it gives me a chance to speak to a different sort of obvious. I'm an organization theorist by training, but I have a long standing interest in the context of social enterprise, particularly this issue of how social enterprises get designed. Now this is something that we don't know a lot about, but I think it's really extraordinarily important. And I think that, as you can see from my title, that identities, and particularly the multiple identities that individual entrepreneurs bring to the act of discovering and creating opportunities, has a lot to do with how we get these organizations and how we get variance among different types of social enterprises. So I'm going to start right in. So the first thing I want to do is just give you a definition of what I'm talking about when I say social enterprise. So social enterprise is an organization that integrates social and financial aims, symbiotically in the core of the organization. So this makes these types of organizations and these ventures different than a for profit corporation that would have the primary goal of creating profits but then may have ancillary social responsibilities. And it also makes a difference in a charity or a nonprofit that might also try and integrate a little bit of revenue generation to support social outreach. So I want to give you just a couple of examples to make this more concrete. So one that I'm sure everyone would be aware of is these wind farms, right? So you have these startup organizations and they make money by producing green power. So this really is the deep and symbiotic integration of the social and financial components of the organization. They're fundamentally tied together in the heart of the productive activity. Another context, which is where I do a lot of my research is microfinance. And for those of you who don't know microfinance, the idea is you can make very small loans to poor people and that by doing this you can help break them out of cycles of poverty. Now as you do this and people repay the loans and there's interest, this is the revenue that then sustains the organization. And it's also an interesting context to think about the design of business models because there's different types of social enterprises. So there's some like the Grameen Bank founded by Mohammed Eunice in Bangladesh and they really focus on social outreach and the money they bring in is to sustain the social mission. Now, on the other end of the continuum, you have very large microfinance banks like Banco Seoul or compartemos. And these organizations engage in social leverage in terms of making these small loans as a way to support extraordinarily profitable business models. So both of these organizations have IPOed them. So really radical variance in the types of ways that the social and financial goals are integrated in these organizations, even though they're all technically social enterprises. And this is one of the things that got me interested in this context. Now, because social enterprises have the potential to address long standing social and environmental issues in a sustainable way, lots of people are excited about them and scholars too. Not to imply that scholars and people are mutually exclusive categories, at least not all the time. And so there's some research starting to come out on these organizations which is interesting in a lot of way, but also limited in a lot of ways. So just to give you a brief flavor, one stream of research focuses on social enterprises and social entrepreneurs and it really does this in the context of trying to show how they're different than normal organizations or normal entrepreneurs. So doing a lot of this boundary work, saying how they're different and why that matters, which is great in terms of setting up the context and giving a little bit of clarity about what we're engaging with. But it doesn't tell us much about where these organizations come from, what the entrepreneurs are doing, or what the outcomes might be. In addition to that, in recent years people like Willie Ocasio and some of his students have started to look at social enterprises from an organization theory perspective. And the reason the social enterprise is interesting for this group is because they see it as an exemplar of hybrid organizing. And this is the idea that you have the social aims and the financial aims. These are associated with different sorts of goals, different sorts of organizational processes, interests, capabilities, et cetera. And this makes these organizations really pregnant with conflict. So it's not to say that there's always going to be tension or conflict within a social enterprise, but what research has found is that typically you'll have one group of people who is really interested in the social aims, one group really interested in the financial aims and occasionally this will result in conflict. And this means that one of the things that social enterprises need to do is find a way to symbiotically, integrate these things in ways that make everyone happy so the organization can sustain its operations over time. Now, I think that this is great research, really insightful, really important, but it really only tells us about what happens in an established organization. So we can say oh, we have a social enterprise X, we can see different groups inside it, we can see how they spar over time, but it tells us nothing about where this organization came from in the first place. And if anything, it actually sets up a bit of a problem in trying to understand why an entrepreneur would do this, because the assumption is that the different goals come from different people, right? And this is also the source of the conflict, and it's also the source of the negotiation that produces the integration. So if we boil this down to the initial premise of where the organization came from, we have a big gap in terms of how and why an individual entrepreneur would want to do this stuff. And in fact, there's a lot of reasons to think they'd probably be pretty crazy to try and do it. So this is the question that I've been struggling with for a while. How can we understand how social enterprises are designed? How can we understand how individual entrepreneurs come to value social and financial aims and work to put them together in different ways as they develop organizations that may be more or less successful in different types of environments? So I think this implies three key issues, and this is what I'm going to structure the rest of the talk around. The first one is, okay, so where do these goals come from? How is entrepreneurship made meaningful in different ways? And why do different entrepreneurs want to pursue social aims, financial aims, or potentially both in one organization? So that's the first issue. The second one is how much tension does the entrepreneur feel between these two things? So if we go back to the organization theory literature, it assumes that these things are sort of naturally and innately in conflict, and it can vary by context, but it's a property of the aims themselves. But if we get down to cognitive psychology research, it shows us that, no, well, actually there can be a lot of variance in how different people think about these things fitting together. And there's good reasons to think that this is important for how they pursue the integration of the two. That takes me to the third question. How does this perception of tension affect the way that individual entrepreneurs would go about designing their organization? All right, so I'm going to walk through each of these in turn. This is really conceptual theoretical work, so I'd love to hear your feedback on it. No formal propositions, just some ideas about how I think this might all hang together. All right, so how do different types of goals become relevant to the entrepreneurial process? So I think it's useful to think of identities and the identities that an entrepreneur has when we're thinking about what they do and the ventures they're creating. So now, just to give you a quick definition of what I'm talking about, identities are meaningful categories that we apply to ourselves and to others based on the roles we have. So I'm a professor, so that's a role identity that I have. It's important to me also based on the groups we're affiliated with, social identities. So I'm with the Wharton School. This would be a social identity of mine. And we also have individual self meaning personal identities behaviors that we try and enact across lots of diverse contexts and with lots of different audiences. So a personal identity of mine is, I'm a nice guy, you can take my word for it, I promise it's true. And I try and behave that way across all of my different interactions with people through all of my different identities. All right, so what do identities so identities are meaningful and identities also motivate behavior. And so it's useful to think about what the expectations are that come with the identities we have. So when you talk about a role like professor, this is something that comes with behavioral expectations. We all know. I mean, if we are professors, what's expected of us in terms of teaching, research service and then how we should behave in the different interactions we have as a part of this role. Right? Now, in addition to that, we want to behave in ways that are consistent with these meetings, right? We feel good when we enact our identities, it confirms to us into the world that we are this kind of person, right? So when you enact an identity, well, this is a source of positive asset and this motivates you to try and behave in identity consistent ways over time. Now, in addition to that, we enact our identities in the context of social relations. So if you're a professor, you're going to have students, and the way that you behave in that identity is going to affect your students and that's going to create external accountability pressures, right? So if you act in a way that's crazy as a professor, your students are going to call you on it. So I don't know if any of you know Foucault, the old French now dead social theorist. He used to show up and lecture in a bathroom splayed out mermaid style on the front table in the classroom. So I mean, a clear violation of the role identity professor, right? And he did that on purpose. He was trying to get a reaction. But I think it makes the point that these things are meaningful and they motivate identity consistent behavior. So when you put these two things together, the internal and external accountability pressures, these things create identity sales. We want to act in ways that are consistent with our salient identities. And by acting in these ways a lot over time, we become good at this, right. You're going to get more knowledge and more capabilities that are associated with an identity. So these are three things I want you to keep in mind as I go through the rest of the talk, because they're the key constructs that I'm going to base my argument around. Internal accountability pressures. We want to enact our identities. External accountability pressures. Other people hold our feet to the fire. And by doing this, we generate knowledge and capabilities that are consistent with these identities. All right, now how does this link to entrepreneurship? So entrepreneurship, as opposed to a lot of other work context, doesn't have strong expectations about what you should do. So if you go to work in a bank, there's going to be a boss who's telling you how you have to behave, what your role involves, and you're not going to have a ton of discretion in terms of what you do. If you're an entrepreneur, you can do whatever you want, right? I mean, it's up to you. You can be as crazy as you want to be. And this makes entrepreneurship a really interesting context to look at identity because there's good reasons to think that entrepreneurs bring their identities that aren't related necessarily to entrepreneurship to the table. So when we look at the entrepreneurship literature, you don't see people talking about identity directly, but there's a lot of good evidence that it matters. So you see a lot of studies that show the opportunities people recognize are related to the industries in the work context where they're involved. Right? So you know something about these industries, you can spot opportunities in these spaces. You have some knowledge and capabilities to actually start to build a venture that addresses the need. Right, so all identity related stuff, and you're also going to have social relations tied to these identities that can help give you advice about what you're doing. So there looks like there's a pretty good link between who I am and what I do as an entrepreneur. So I think that this is important to consider when we're thinking about the meanings that entrepreneurs bring to the table and types of aims they want to pursue. These are probably going to be pretty consistent with their highly salient identities. Now, one of the fascinating things about identity theory is it's organized around this premise that we don't have one identity. We have lots and lots of different identities. We play lots of roles, remember it's of lots of groups, and we can have lots of different self meanings. And this plurality is something that creates a lot of richness in the self, but it also creates potential points of tension, right? So you can have identities that are associated with different sorts of aims, different sorts of goals, and typically this is really unproblematic because we just enact them separately. Right? So I would act differently in my role as a professor than I would in my role as a spouse. And this is not problematic, except that today is my anniversary and here I am talking to you as opposed to being with my wife. And so this is creating some tension for me today, honest to God, today is my anniversary and here I am. I bet it was a good example. So typically these are separate, but in the context of entrepreneurship, there's actually good reasons to expect that more than one identity could be salient in this context. So as I was hinting at in the previous example, not the one about my anniversary, but before that, good reasons to think that work identities are going to be relevant. Knowledge, capabilities, social relationships, all associated with what you might want to do as an entrepreneur. Also a lot of internal accountability pressures. We like to do things that are consistent with our work identities because this helps us convey who we are in the world, what our expertise is, what we want to contribute.

Speaker C And then lots.

Speaker B Of social relationships as well, creating external accountability pressures to keep us honest to these identities. Now, on the flip side, I think that personal identities are also going to be pretty relevant to the entrepreneurial process. And so just to reveal that a personal identity is a self meaning that you want to enact across your different roles, across your different identities. So if I think of myself as a nice guy, I want to be nice in my role as a spouse, as a parent, as a colleague, as an instructor, all of these different things. And in entrepreneurship, I think there's good reasons to expect that these things would be relevant because there are really no constraints on what you're doing. So to the extent you feel internally accountable to behave these ways, I think it's reasonable to assume this is going to become relevant to the venture creation process. Do you care about the environment as a personal identity? This is probably going to be something that you want to integrate into what you're doing as an entrepreneur. Now, something to keep in mind with this though, is that because personal identities are enacted across lots of different contexts, there's no really specific behavioral competencies that are associated with them. So it's a general sort of thing, a broad orientation, a set of goals you aspire to, but not really linked to any focus, knowledge, capabilities, or a specific set of social relationships that are going to keep you honest in a particular context. So we can start to put together a two by two. We can make these things relevant to MDAs, right? In a way that MDAs can understand. We can talk about types of entrepreneurs. So there's studies that have looked at work identities that are associated with financial aims as well as personal identities associated with financial aims. So we could think of accountants, corporate lawyer, manager, venture capitalist. All of these work roles are going to be associated with competencies and knowledge related to financial value creation as personal identities. There's also evidence that some people define themselves around the pursuit of wealth, power. Hedonism probably also relevant to the pursuit of financial aims. And on the other axis, we can talk about identities that might be associated with social aims, right? So we have studies that say, hey, if you're a teacher, if you're a priest, if you are a social worker, a social activist, a community organizer, all of these things are probably going to be related to the pursuit of social aims and then personal identities. People can define themselves around an interest in social justice, caring, benevolence, environmental stewardship, et cetera. This is all out there in the literature. And when you put these two things together, you can start to populate the two by two with different potential types of entrepreneurs. So in the off access boxes here, you have what I'd call a mixed entrepreneur. So these are people who have a work role identity that's associated with either financial or social aims and then a personal identity that's associated with the other, right? So you're going to have one set of aims that's associated with deep knowledge, competencies, social relationships, internal and external accountability pressures, and then the other, which is still important to you. There's internal accountability pressures, but you're not going to have the same type of knowledge capabilities or external pressure. And that's in contrast to what I call a balanced entrepreneur, who is someone who's had either sequential work roles or concurrent role identities that are associated with these different types of aims. So you could think about I mean, a good example is Mohammed Eunice, the founder of bank, grew up in Bangladesh. He spent a lot of his youth creating for profit ventures, was pretty good at it. Later in his life, he became a development economist. And when he went back to Bangladesh, he worked in different nonprofit organizations. So the sequential holding of these roles, you can also think of the venture capitalist who helps organize a Sierra Club membership in their town so that would be balanced. And to distinguish that from the mix, what it means is that they're going to have knowledge capabilities, internal external accountability pressures that are broadly similar for both these identities. And then this becomes really relevant for thinking about how you might experience the tension between the two. So when I was thinking about this, I actually found this really cool literature on bicultural identity integration. And it looks at people who are Chinese American or Israeli American and how they deal with the conflicting poles of their multiple identities. And it's really organized around two foundational premises that have been really empirically well validated. And one is that the perception of tension you have between your identities and needs that are associated with them is a function of how accountable you feel to both. So if you feel high accountability pressures to both and they're similarly strong, the tension is going to be maximized. And the other premise is that when you have more knowledge associated with the identities and the aims that are associated, you can start to think in more integratively, complex ways as you look for a way to put them together. And the idea is that if you have more nuanced knowledge, you can look for more and more nuanced matching points between the two. All right, so what does this mean for my types of entrepreneurs, the mixed and the balanced. So it suggests that for the mixed entrepreneurs, they're going to feel some tension between the social and financial aims that they want to pursue because they're internally accountable to both. But the external pressures are going to be stronger and the knowledge and capabilities are going to be stronger for the set of aims associated with their work role identity. And I'm getting the two minutes thing, so I'm going to race through a little bit. And then for the balanced entrepreneurs, what it suggests is the poles are similarly strong, the knowledge and capabilities are similarly strong for both of these identities. And this is relevant, I think, for how they go about the design process when they're starting organizations. So the most cognitively simple way that you can deal with competing aims is just to deny one, right? And this would be a traditional entrepreneur. You just want to make money, the social aims aren't important, or you just want to pursue social welfare, you don't care about the money and you deny the importance of the other. You ameliorate attention. This is really no big deal for you. And this is where the institutional theorists sort of stop, right? They assume that this is how people operate, that they're pretty simple this way. But when you get into the integrative complexity literature, what it shows very consistently is that when people actually have to engage the tension between these two poles, they start to get more complex in their thinking. And this can follow one of two paths. So broad categories. One path is negotiation. You look for ways to trade off one for the other. The other path you can take is synthesis. So you look for ways you can put A and B together to equal a C. That wouldn't have been apparent looking at each of them in isolation. Now, there's no systematic predictions about whether or not someone's going to pursue a negotiation or a synthesis approach, but there's consistent evidence that as the tension grows higher between your two identities and the associated aims, you're going to pursue these approaches in different ways. I won't do a ton on this because I know I'm out of time and I want to keep John happy, but I'll give you a bit of flavor for what I think is going to happen. So for the mixed entrepreneurs, if they're pursuing a negotiation approach, they have one identity that has lots of internal and external accountability pressures and one that has. So if you're looking for a way to trade off, you just expect you're going to trade off against the one that's not as not as pressing, there's not as many pressures associated with it. So this would be just a simple trading off, one for the other, probably associated with the personal identity. And this is really consistent with a lot of literature that's looked at work identities and found that it's really not problematic for people to leave their personal identities at the door when they come to work if this is something that's not easy to integrate in that context. Now, if you're a balanced entrepreneur, that's not going to be a feasible option. You're not going to want to trade off one for the other because you have to value both evenly, right? So it's really unclear how you'd engage in these trade offs. So what this research has found is that when you hold these things intention and you really start to think through the implications of the different trade offs that you could make, you start to get into more complex forms of cognition and you start to think about time as a variable. So instead of looking at trade offs one for the other right now, you might think you can trade off one for the other right now, but this isn't a service of doing something down the line that'll lead to a deeper and more meaningful integration. So I'm going to trade off the social goals. Now to get traction of this business. We need this to scale, we need to attract resources. And once we've achieved those goals, we can change the business model a little bit to get a more personally resonant integration. Now, in terms of synthesis, because the mixed entrepreneurs are going to have more knowledge and capabilities associated with one of these sets of aims as they pursue a synthesis approach, seems to reason that they're going to really focus on the one area where they know. So if they know financial aims, they're going to focus there when they're looking for the integration. They know social, they're going to look there as they're looking for the integration. And this is something I see all the time in my MBA students. So you see a lot of really well intentioned people come through who are benevolent and interested in poverty reduction or they are environmentalists and they're interested in doing something that's ecologically responsible, but they really have no idea what that means. And so they find something that can deliver those benefits. Then they start to work on the business model side or the financial model side. So my favorite is a student named Tom Arnold who got into carbon trade and he founded a business called TerraPass and he spent all of his time, all of his effort as he was trying to design the business, working on pricing models, working on marketing, working on resource acquisition to get that piece of the model. So it could be symbiotic with the social outreach stuff. Just indulge me one more second for the balanced entrepreneurs, though, because they have deeper and more nuanced knowledge about both sets of aims. These should be the people that come up with novel business models, right? They can hold the two sets of aims in focus, think about them in detail over a long period of time, and they can do the A plus b equals C, that's brand new. And so if I had more time I'd give you some examples. I have a paper on this that's coming out in Academy of Management review that's happy to send any of you, but actually coming up with new business models. So like Mohammed Eunice and Gramine Bank based on indeed knowledge of both the social outreach component as well as the financial component. And then in addition to that, there's good reasons to expect that as people are more integrated and complex and they're thinking about these things, they might come to the conclusion that you can't make A plus B work unless there's a C, which is a fundamental enabling condition that's different. And so the prediction is that these balanced entrepreneurs are not only the most likely to create new business models, but they're the most likely to engage in the forms of institutional entrepreneurship that you need to create the enabling context to actually do this work. So going out there and trying to educate people about what the business model is, build cognitive legitimacy, build sociopolitical legitimacy and do all of the necessary groundwork that you need to ensure resources are going to flow to these organizations. So that's all incredibly broad and it's a much more nuanced story on the ground but I'm completely out of time so I'll cut it off there and happy to take any questions you have.

Speaker C Canada, which brought together labor, business and government and we developed a course for vice presidents moving into presidential roles advocated by the head of Shell who had moved 22 times and was the president and didn't know how to be a good citizen in Canada. And so it was a ten day intensive of bringing great books values, higher level values, talking about with resources, with a higher cognitive function, in with new templates. So that of course is taking people primarily in a business model, helping them to become better citizens. Now, more recently working with the Jax model in these seven levels, it appears you talked about higher cognitive level at five. At the business unit level, high emphasis on profit, although there can be entrepreneurs with social objectives at six and seven, people who truly operate there tend to have more social consciousness and are working more globally and integrating values. And at level seven they're really interested primarily in societal sustainability. And that's where you see and I wanted to go back to the last presentation on business models. The business model increasingly looks at sustainability and these values. One resource I'd like to call your attention to there's a brilliant fellow who worked with Jax by the name of Warren Kinston and he has a hierarchy of values not only in the business domain but in the academic domain, in the political domain. And he compares hierarchies of values to show what level you need to go to integrate values below them, polar opposites below them. So it's a wonderful map. Of value integration as you move up these hierarchies within each domain and then who are the people who can bridge the domains, which is what you're talking about. And I think you'd find Warren Kinston's work extremely valuable. I think it's a wonderful path you're on and I think there's some resources love to talk to you.

Speaker B I would love that as well you.

Speaker D Thank you for your presentation. As I call your approaches social, psychological and identity based explanation on why and who and why social enterprises. But according to your type policy, do you have any idea according to the flood on table it will make a difference in terms of the longevity or performance or goal of the pushup enterprises?

Speaker B That's a really strict question and it opens up a whole nother layer of complexity to all of this. But the prediction would be so the reason that it gets more complex is that it's easy to bound the cognition and the knowledge of the entrepreneur in the stage before the venture has been launched. Once the venture is launched, you're engaging all sorts of other stakeholders with all sorts of other pressures that become relevant. And the forces that are pulling you in different directions aren't your own anymore, they are external. So this gets more complicated. But the prediction would be that if you're a balanced entrepreneur, you're going to be in a better position to sustain this deep integration and the hybridity of the organization over time because one, you're motivated to do it and two, you're going to have greater capability to see ways to do it. Now, the third thing I didn't talk about here, but I think is relevant to your question is that other studies have found the longer you spend being multivocal, talking to different audiences associated with these different aims, the better you come at translating one to the other for other audiences. So in terms of a position that's going to let you follow your vision long term over time as opposed to getting pulled one way or another and fundamentally off track the balanced entrepreneurs, for all of these reasons, I would predict that they'd have the best luck. But like I said, this goes from complex to really complex really fast.

Speaker A Thank you very much.