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

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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
JournalNonprofit and Voluntary Sector Quarterly
Volume43
Issue number3
Pages (from-to)502-522
Number of pages21
ISSN0899-7640
DOIs
Publication statusPublished - 06.2014

DOI

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