Competitive Strategy in Socially Entrepreneurial Nonprofit Organizations: Innovation and Differentiation

Social entrepreneurship has attracted an increasing volume of research in an attempt to understand the basis of successful value creation aimed at solving social problems. In an effort to advance social entrepreneurship research beyond its current focus on conceptualizing the concept, this article addresses the role of innovation in achieving greater social impact. Using multiple theoretical case studies, this research finds that innovation-based competitive strategies of socially entrepreneurial nonprofit organizations substantially contribute to the achievement of social value. Innovation-based strategies are uniquely characterized by a primary focus on differentiation, with innovations directed at product, process, and system change levels. They tend to actively involve both externally and internally focused learning. Nonprofit organizations' innovation strategies are strongly influenced by their organizational characteristics, in particular the need to build sustainable organizations. The article concludes with implications for theory and practice and directions for further research.