The extended business model of social enterprises : how the business model of social enterprises needs to generate proximity with the ‘business models’ of subsistence consumer merchants

Faruque Aly, Hussein and Mason, Katy and Onyas, Winfred (2025) The extended business model of social enterprises : how the business model of social enterprises needs to generate proximity with the ‘business models’ of subsistence consumer merchants. PhD thesis, Lancaster University.

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Abstract

This thesis looks at how Social Enterprises operate in difficult contexts to tackle complex social, environmental and governance challenges (Grassl 2012). This thesis focuses on the work of one particular social enterprise founded and operated by the author, following the work since conceptualization, development, implementation, and closure of its operations (from 2007 to 2016). Novo Dia, the social enterprise in question, operated in Maputo, Mozambique, offering housing products and services to families living with low income. Through the course of this thesis we draw on the conceptualization of subsistence marketplace communities, defining them as communities living with low income (Viswanathan and Rosa 2010), but having extensive social networks that provide support, are vehicles for exchange of information (Viswanathan et al. 2012), and have complex financial portfolios (Collins et al. 2009). Subsistence communities often are consumers, merchants and producers. Therefore, the term subsistence consumer merchant (SCM) has been used throughout this paper (Upadhyaya et al. 2014) to encompass their consumptive and productive activities. The research posits that the social enterprise had to navigate a number of institutions (formal – rules and regulations, and informal – cultures, traditions and informal behaviours) (North 1991) that formed the context of housing in Maputo, Mozambique. In order for the social enterprise to change or innovate the current institutions, it had to conduct institutional work (Lawrence and Suddaby 2006). Novo Dia used its business model (Osterwalder 2004) to conduct institutional work. Whilst implementing its business model, Novo Dia encountered a number of challenges that emanated from its activities, which we call institutional voids (Mair and Marti 2009). For example, Novo Dia, by offering the lowest priced housing unit (costing about 1600$), required the creation of financing products appropriate for families with low income, for which current microfinancing products with high interest were not appropriate. Another example of this are the different conflicting approaches to generating and capturing value between the social enterprise and the masons it employed. The research on Novo Dia raised the need to better understand how Subsistence Communities operated, their ‘business model’, and seek to generate proximity with these (Mason and Chakrabarti 2017; Boschma 2005). As COVID struck, an opportunity to research how subsistence marketplace communities navigated and adapted to the global crisis presented itself. As the business model literature did not capture the fluidity and iterative nature of Subsistence Marketplace Communities, covering their economic material and social-relational spheres of activity, the research turned to bricolage literature, or the ability address emerging challenges using resources available at hand (Mateus and Sarkar 2024; N Radjou, Prabhu, and Ahuja 2012). The research identified three bundles of practices (Lindeman 2012) that subsistence consumer merchants engaged with: consumption, resourcing and enterprising practices. This PhD thesis includes a methods paper looking at how a researcher-social entrepreneur can use autoethnography (Haynes 2011) as a research methodology, focusing on a pragmatic approach (Dewey 1929; Kelly and Cordeiro 2020; Kaushik and Walsh 2019) to autoethnography, through the use of a ‘learning by doing’ (Thompson 2010) methodology. We propose the development of an architecture of support designed to assist the researcher-social entrepreneur succeed in this duality of roles, recommending the inclusion of academic supervision to support research activities, and social entrepreneurial mentorship to offer support in the operational aspects of managing a social enterprise.