Franchising as a Strategy for Combining Small and Large Group Advantages (Logics) in Social Entrepreneurship: A Hayekian Perspective

Markus Beckmann, Anica Zeyen

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Abstract

This article develops a Hayekian perspective on social franchising that distinguishes between the end-connected logic of the small group and the rule-connected logic of the big group. Our key claim is that mission-driven social entrepreneurs often draw on the small-group logic when starting their social ventures and then face difficulties when the process of scaling shifts their operations toward a big-group logic. In this situation, social franchising offers a strategy to replicate the small group despite systemwide scaling, to mobilize decentrally accessible social capital, and to reduce agency costs through mechanisms of self-selection and self-monitoring. By employing a Hayekian perspective, we are thus able to offer an explanation as to why social franchising is a suitable scaling strategy for some social entrepreneurship organizations and not for others. We illustrate our work using the Ashoka Fellow Wellcome.
Original languageEnglish
Pages (from-to)502-522
Number of pages21
JournalNonprofit and Voluntary Sector Quarterly
Volume43
Issue number3
Early online date8 Jan 2013
DOIs
Publication statusPublished - 1 Jun 2014

Keywords

  • Social franchising
  • social entrepreneurship
  • Hayek

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